Alan Auerbach, Yuriy Gorodnichenko, Daniel Murphy, 18 December 2019

Despite decades of research, there still is no consensus over whether neoclassical, New Keynesian, or other frameworks accurately capture the underlying sources and mechanisms of economic fluctuations. The column uses new empirical data on demand shocks to evaluate the predictions of these models for labour share, labour wedge, wage and price response, and multipliers. Each model tends to do well by some metrics but poorly by others.

Thomas Piketty, 10 April 2018

Wealth inequality is a growing problem across advanced and developing countries alike. Though research on inequality is growing, much of it remains reliant on theoretical models. Thomas Piketty discusses the importance of data collection in the study of inequality, on both the academic and policy fronts.

Luca Dedola, Luc Laeven, Silvia Margiocco, 19 March 2018

In September 2017, the ECB held its second Annual Research Conference. This column surveys the contributions to the conference, which brought together academics and central bankers working at the cutting edge of economics, covering a wide range of research relevant for the ECB. ECB Vice-President Vítor Constâncio highlighted the value that the ECB attaches to research, which “contributes to shaping the intellectual framework that we use to understand economic developments and to take policy decisions”. Other speakers included Olivier Blanchard, Peter Diamond, Hyun Song Shin, and Jeremy Stein.

Fabio Ghironi, 07 December 2017

Most macroeconomists have accepted that their tools need to incorporate more real world phenomena, such as financial intermediation and labor market frictions. Fabio Ghironi discusses the need to incorporate more microeconomics to macroeconomics.

Beryl Chang, Fabrizio Ghisellini, 21 May 2017

Behavioural economics has identified phenomena that standard models could not explain. But its critics warn that it is becoming little more than a ‘pile of quirks’. This column argues that the future development of behavioural economics should focus on a streamlining process that will clarify core issues, fill conceptual gaps, and create tractable models. Behavioural models will only become a coherent alternative to homo economicus if this process occurs.

Massimiliano Marcellino, Angela Abbate, 04 February 2017

Exchange rates are important contributors to business cycle fluctuations in open economies. Forecasting exchange rates is not an easy task, however, perhaps due to the instability of their relationship with economic drivers. This column introduces a model that also allows for changing volatility when forecasting exchange rates. Modelling time variation in the cross-rate relationships, and in the volatilities of the shocks hitting the economic system, significantly improves forecasts.


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