This week from CEPR: October 14

Thursday, October 14, 2021

Highlights from some of the latest research reports published in the Centre for Economic Po


licy Research (CEPR) network’s long-running series of discussion papers, as well as some other recent CEPR publications.

Also, links to some of the latest columns on Vox, the Centre’s policy portal, which provides ‘research-based policy analysis and commentary from leading economists’.

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    • New Discussion Papers


    • NEWS MEDIA CONTINUES TO POLARISE AND PERPETUATE GENDER AND ETHNIC STEREOTYPES   

    VISUAL STEREOTYPES IN NEWS MEDIA
    Elliott Ash, Ruben Durante, Mariia Grebenshchikova and Carlo Schwarz 
    CEPR Discussion Paper No. 16624 | October 2021 

    A CEPR study by Elliott Ash, Ruben Durante, Mariia Grebenshchikova and Carlo Schwarz introduces a new method for measuring gender and ethnic stereotypes in news reports, by combining computer vision and natural language processing tools, the method allows the analysis of both images and text and, crucially, the interaction between the two. The authors apply this approach to over 2 million web articles published in the New York Times and Fox News between 2000 and 2020 to show that: 

    • In both outlets, men and whites are generally over-represented relative to their population share, while women and Hispanics are under-represented. 
    • News content perpetuates common stereotypes such as associating women with narratives about caring roles and family; Blacks and Hispanics with low-skill jobs, crime, and poverty; and Asians with high-skill jobs and science. 
    • There are some significant differences across outlets, with Fox's content displaying a stronger association of Hispanics with immigration than the New York Times. 
    • Group representation in the news is influenced by the gender and ethnic identity of authors and editors. 
    • This suggests that it results, at least in part, from the choices of news makers, and could change in response to increased diversity in newsroom staff.

    These findings point to the challenging but critical need to maintain trust in scientists during a lasting pandemic that strains citizens and governments.


    • TOP CLIMATE-RELATED RISKS FOR INVESTORS AND FIRMS   

    WHAT DO YOU THINK ABOUT CLIMATE FINANCE?
    Johannes Ströbel and Jeffrey Wurgler 
    CEPR Discussion Paper No. 16622 | October 2021

    A CEPR study by Johannes Ströbel and Jeffrey Wurgler surveys 861 finance academics, professionals, and public sector regulators and policy economists located around the world about climate finance topics. Among the findings:  

    • They identify regulatory risk as the top climate risk to businesses and investors over the next five years, but they view physical risks as the top risk over the next 30 years. 
    • By an overwhelming margin, respondents believe that asset prices underestimate climate risks rather than overestimate them. 
    • Pressure from institutional investors is viewed as the most powerful force for change among financial mechanisms. Among non-financial mechanisms, carbon taxes and government subsidies are considered the most potent.
    • Most respondents believe that realisations of climate risk are not correlated with economic conditions. Those who believe in a correlation were more likely to see climate change as associated with good rather than bad economic conditions. 

    • WHAT CAN WE LEARN FROM COMPARING EUROPEAN HEALTHCARE SYSTEMS?     

    COMPARING EUROPEAN HEALTHCARE SYSTEMS
    Jan Boone 
    CEPR Discussion Paper No. 16602 | October 2021

    COVID-19 has shown that the damage caused by a health crisis is strongly affected by the performance of a country's healthcare system. A CEPR study by Jan Boone compares the performance of a number of health system features related to competition, efficiency and quality using data on European countries from before COVID-19. The research shows that – conditional on healthcare expenditure – the following efficiency measures lead to improved performance in terms of reduced mortality:  

    • Increasing the efficiency of the healthcare system by employing more nurses relative to doctors and improving the coordinating role of primary care is associated with better performance of the system.
    • Introducing a regulator specifically for healthcare quality and making provider quality reports public are associated with improved outcomes. 
    • Competition between providers, by allowing patients to choose their physicians, leads to lower mortality. 
    • But in terms of insurer competition, single payer systems tend to do better than multiple insurers, especially in countries where inpatient care is predominantly delivered by public hospitals.
    • The analysis confirms that income inequality and unhealthy lifestyle choices are associated with high mortality.

    Figure: Variation in nurses/doctors ratio across countries and time



    GLOBAL EVIDENCE ON TAX-MOTIVATED PROFIT SHIFTING: The role of intangible assets

    Fotios Delis, Manthos Delis, Luc Laeven, Steven Ongena           
    11 October 2021

    Tax-motivated profit shifting  - the ‘shifting’ of profits from a parent or subsidiaries located in high-tax jurisdictions to subsidiaries in low-tax jurisdictions, with the aim of increasing their net income - has come to the fore with the recently released Pandora Papers. 

    A study by Fotios Delis, Manthos Delis, Luc Laeven and Steven Ongena uses a new global profit-shifting database covering 95 countries to show that profit shifting on average has gradually declined since 2011 following efforts from governments and international organisations to contain the practice, most notably the OECD’s Base Erosion and Profit Shifting initiative. But firms across industries with high shares of intangible assets display an increase in profit shifting. 

     

    THE ECONOMIC GEOGRAPHY OF CLIMATE CHANGE

    Giovanni Peri, Frédéric Robert-Nicoud             
    11 October 2021

    Writing at Vox, Giovanni Peri and Frédéric Robert-Nicoud introduce a special issue of the Journal of Economic Geography on climate change, which provides foundations for well-informed policymaking by addressing two main themes of the economic geography of climate change: 

    1. First, climate change yields heterogeneous effects across space. 
    2. Second, a crucial aspect of human adaptation to climate change is geographic mobility. 

    As a consequence, limitations to mobility will worsen the socioeconomic costs of climate change. Other margins of adjustment covered in the issue include fertility, specialisation, and trade. 


    GLOBALISATION AND INFLATION: Insights from the ECB strategy review

    Mirco Balatti, Juan Carluccio, Francesco Chiacchio, Nuno Coimbra, Susana Parraga, Daniele Siena, Sebastian Stumpner, Fabrizio Venditti, Tina Žumer                                   
    11 October 2021

    Writing at Vox, Mirco Balatti et al. review the analysis of globalisation and inflation conducted in the context of the ECB strategy review. They show that: 

    • Although global factors (mainly commodity prices) matter for inflation synchronisation, their role in lowering both inflation and its sensitivity to the business cycle in advanced economies has been limited since the late 1980s. 
    • Global shocks can exert temporary pressure on price dynamics, but the destiny of inflation remains in the hands of central banks.

    ANTIDUMPING DUTIES, PRICES, AND CHINA: Free trade to the rescue!

    Gabriel Felbermayr, Alexander Sandkamp                   

    27 September 2021

    The recent combination of resurging demand and continuing disruptions in supply chains has led to a worrying return of inflation. In the EU, industry producer prices increased by 12.2% year-on-year in July 2021. 

    Writing at Vox, Gabriel Felbermayr and Alexander Sandkamp argue that removing EU antidumping duties would at least partially ease the pressure on input and consumer prices. In contrast, the recent abandonment of China’s differential treatment in the EU’s antidumping legislation might even have contributed to increasing import prices.


    POVERTY AND EXPOSURE TO COVID-19: The role of income support

    Ulugbek Aminjonov, Olivier Bargain, Tanguy Bernard                                      
    09 October 2021

    In many countries, poorer people have been more exposed to Covid-19 as they cannot afford to stay at home instead of going to work. 

    A study by Ulugbek Aminjonov, Olivier Bargain and Tanguy Bernard shows that in low- and middle-income countries, emergency income support schemes have significantly reduced differences in rates of contagion due to wealth or poverty status by allowing poorer people to also stay at home. As well as preserving livelihoods and alleviating poverty, income support has also been successful in curbing the spread of Covid-19.


    THE US MILITARY BUDGET IN 2019 WAS SMALLER THAN THAT OF THE NEXT THREE LARGEST MILITARY SPENDERS – CHINA, INDIA, AND RUSSIA – COMBINED.

    Peter Robertson                                 
    09 October 2021


     

    US military spending is said to be greater than the next 11 countries combined. However, the conventional use of market exchange rates to compare across countries dramatically overstates US spending relative to other countries. 

    Writing at Vox, Peter Robertson introduces a military purchasing power parity exchange rate for 59 countries based on the relative unit cost ratio across counties. This ‘military PPP’ shows that the US military budget in 2019 was smaller than that of the next three largest military spenders – China, India, and Russia – combined.


    NO BRAINERS AND LOW-HANGING FRUIT IN NATIONAL CLIMATE POLICY

    Francesco Caselli, Alexander Ludwig, Rick van der Ploeg                             
    08 October 2021 

    A new CEPR eBook, edited by Francesco Caselli, Alexander Ludwig and Rick van der Ploeg identities nation-specific climate change policies that will have the fastest and/or largest cumulative impact, and which are the most technically, financially, or politically feasible. Although the low-hanging fruit in climate policy vary across countries, this does not mean that one country cannot learn from the debates taking place in another. 


    THE SEARCH FOR A CONGRUENT EURO AREA POLICY MIX: Vertical coordination matters

    Marco Buti, Marcello Messori   
    13 October 2021 

    The way European policymakers solve the policy mix trilemma of asymmetric fiscal rules, no central fiscal capacity and constrained monetary policy in the post-pandemic economy will define the resilience of the euro area in the face of future shocks and the transition to a more sustainable growth model. 

    In a new CEPR Policy Insight, Marco Buti and Marcello Messori argue that moving to a structured vertical coordination between national and EU budgets would help ensure an adequate fiscal stance and avoid the overburdening of the single monetary policy.    


    AN ALL-WEATHER ECONOMIC POLICY FRAMEWORK FOR THE EURO AREA

    Ángel Ubide   
    08 October 2021 

    Writing at Vox, Ángel Ubide argues that the euro area’s economic policy framework is in need of reform so that monetary and fiscal policy can work together effectively to support inflation and growth. 

    The study identifies flaws in the current euro area fiscal framework and suggests how these could be fixed and complemented with a simple, state-contingent fiscal policy rule that achieves the right balance between supporting growth and inflation and ensuring debt sustainability.


    THE LONG-TERM CONSEQUENCES OF GLOBAL AUTOMATION, ITS CONSEQUENCES, AND EVALUATING POLICY OPTIONS

    Seth G. Benzell, Victor Yifan Ye   
    12 October 2021 

    Writing at Vox, Seth Benzell and Victor Ye introduce the first large-scale, multi-region, global overlapping generations model of automation, able to capture and quantify, key macro implications of foundational models of technological change.  

    The research shows that automation can boost output and growth, but these benefits are not equally distributed across or within regions. Nevertheless, in developed countries smart fiscal policy, such as universal basic income, can make new technologies a win-win for all age and skill groups.



    CARBON TAXATION AND INFLATION: Evidence from Canada and Europe

    Beatrice Weder di Mauro interviewed by Tim Phillips 12 October

    Governments will need to impose more carbon taxes, but central banks need to deliver price stability. So what is the effect of these taxes on inflation and economic activity? New research examines three decades of data from Canada and Europe.
    Read more about the research discussed and download the free discussion paper:



    THE ROBOTS ARE RESHORING!

    Alessandra Bonfiglioli interviewed by Tim Phillips, 08 October 2021

    Robots and offshoring are blamed for destroying manufacturing jobs in advanced economies. But could automation also be a way to make domestic manufacturing more competitive? If so, those outsourced jobs may return. Alessandra Bonfiglioli tells Tim Phillips why there may be reasons to welcome our new robot overlords.

    Read more about the research discussed and download the free discussion paper:
    Bonfiglioli, A, Crinò, R, Gancia, G and Papadakis, I. 2021. 'Robots, Offshoring and Welfare'. CEPR.