Stephen Cecchetti, Kim Schoenholtz, 08 June 2018

Global remittances total $600 billion annually - equivalent to about four times the value of development assistance. Yet despite huge innovations in the underlying technology, the cost of remittances remains persistently high, at around 7% on average. Stephen Cecchetti and Kim Schoenholtz discuss the causes of this, and suggest some options available to policymakers to lower costs. The G8, G20 and Sustainable Development Goals targetting lower remittance costs could be realised by a two-pronged approach of educating consumers on the one hand and fostering competition among providers on the other.

Jonas Kolsrud, Camille Landais, Johannes Spinnewijn, 04 April 2018

Household consumption is central to economic and welfare analysis, but it remains difficult to fully measure at an empirical level. Using evidence from Sweden, this column argues the case for using registry-based data to estimate consumption expenditures, particularly at the tails of income distributions. It also argues that previous suggestions that recent rises in income inequality haven’t been matched by rises in consumption inequality may be misguided.

Simon Boserup, Wojciech Kopczuk, Claus Thustrup Kreiner, 04 November 2016

Economists normally study wealth formation and inequality among the adult population, but some people already possess economic resources in early childhood. This column uses data from Denmark to examine childhood wealth and the role of wealth transfers early in life. A main result is that wealth inequality starts as early as childhood. Although overall wealth levels in childhood are low, they are better predictors of wealth in adulthood than parental wealth.

Brian Nolan, Max Roser, Stefan Thewissen, 27 August 2016

With inequality rising and household incomes across developed countries stagnating, accurate monitoring of living standards cannot be achieved by relying on GDP per capita alone. This column analyses the path of divergence between household income and GDP per capita for 27 OECD countries. It finds several reasons why GDP per capita has outpaced median incomes, and recommends assigning median income a central place in official monitoring and assessment of living standards over time.

Asha Abdel-Rahim, Dany Jaimovich, Aleksi Ylönen, 13 December 2015

One of the most important effects of armed conflicts is the forced displacement of large numbers of civilians. When conflicts end, many who have left their homes return, facing the challenge of rebuilding their lives in post-conflict areas. This column analyses the outcomes of returning households during a short-lived interwar period in the Nuba Mountains of Sudan. Returning households, particularly those that are female-headed, face worse economic conditions. But returnees fare better on various health indicators, likely related to changes in sanitary habits picked up during displacement.

Javier Cravino, Andrei Levchenko, 23 November 2015

Large exchange rate swings remain a prominent and recurring feature of the world economy. This column uses household consumption patterns to examine the distributional impact of the devaluation of the peso during Mexico’s ‘Tequila Crisis’. Cost of living increases are found to be 1.25 to 1.6 times higher for the poor compared to the rich. In the interests of equity, exchange rate policy should take account of such distributional impacts.

Raphael Auer, Simon Wehrmüller, 20 April 2009

Western bank exposures in Eastern Europe are an issue that is increasingly in policymakers’ sights. This column estimates the losses arising to the non-bank sector and government from foreign currency-denominated debt in Central and Eastern Europe. It also estimates the effect that these losses have had on the market-implied assessment of sovereign default risk. Both losses are reflected in wider CDS spreads, but government losses have a bigger impact.

Raphael Auer, Martin Brown, Andreas Fischer, Marcel Peter, 29 January 2009

Some policymakers are worried that Central and Eastern European firms and households that recently joined the carry trade are unprepared for the financial crisis’s macroeconomic shocks. This column presents micro-level evidence that the currency exposure is concentrated in households and firms that are better equipped to bear the risks, suggesting that aggregate risks may be smaller than feared.

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