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Andrea Presbitero Profile picture
@a_presbitero
Oct 7, 2019 • 3 tweets • 2 min read • Read on X
New @nberpubs by Sebastian Edwards: a must read to understand the macroeconomic consequences of #populism

nber.org/papers/w26333

And here a related paper warning about #MMT-type of macro policies:

hoover.org/sites/default/… Image
Once in government, populists ignore constraints on public sector expenditure and monetary expansion. The risks of deficit finance are portrayed as exaggerated. Populists argue that monetary expansions are not inflationary because there is unutilized capacity @FabioGhironi
With a domestic money, some European countries with populist proclivities could fall into the trap of classical populism, and use money creation to finance massive fiscal expansion and social programs. This is what #MMT espouses. That path can lead to sharp declines in incomes.

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More from @a_presbitero

Andrea Presbitero Profile picture
Oct 31, 2022
🎃👻 Halloween treat 👻🎃

Glad to finally post a (quite long) 🧵on a new paper on reward credit cards, joint with @sumit_prof, @andrefjsilva & Carlo Wix #EconTwitter Image
The largest US banks paid out $35 bn in rewards (cash backs, miles, points) in 2019 @CFPB. A popular view is that the poor foot much of the bill for credit card rewards. See, for instance, @Aarondklein brookings.edu/opinions/how-c… or vox.com/the-goods/2245… @voxdotcom @EmilyStewartM
In the paper, we show that this "reverse Robin Hood" mechanism is, at best, an incomplete explanation of the redistribution of rewards across consumers. We argue, instead, that reward cards constitute a redistribution from naive to sophisticated consumers
Read 18 tweets
Andrea Presbitero Profile picture
Sep 3, 2021
Thrilled to have our paper on the expansionary effects of negative rates on bank lending accepted @J_Fin_Economics. A short🧵on the main results (some are new from previous drafts), joint with Margherita Bottero, @CMinoiu, @persistdebt, Andrea Polo & @enrico_sette
We document that negative interest rate policy (NIRP) has expansionary effects on credit supply and the real economy through a portfolio rebalancing channel, similar to QE, and different from conventional policy rate cuts just above the ZLB
The announcement of NIRP shifted down and flattened the entire yield curve. The reduction in yields across all maturities incentivizes banks to rebalance their portfolio away from low or negative yielding assets to higher-yielding assets, such as corporate loans. Our results:
Read 10 tweets
Andrea Presbitero Profile picture
Jun 5, 2021
Una piccola storia di razzismo. Ultimo giorno di elementari, molti bambini si trovano al parco, genitori al seguito. Dopo un anno noto che mia figlia, che è entrata nella classe solo quest’anno ha stretto amicizia con solo due bambine, entrambe straniere e figlie di immigrati 1/n
Sarà un caso, ma forse è un segnale che quelle due bambine non erano integrate e quindi hanno trovato un’amicizia naturale in un’altra bambina ‘nuova’. Mi piace anche pensare che mia figlia, cresciuta in un ambiente multiculturale, non si accorga del colore della pelle 2/n
Ieri queste dinamiche erano chiarissime. Poi un genitore si chiede se Emma (nome di fantasia) ha davvero 10 anni. Infatti è molto più alta della amiche e, soprattutto, ha genitori Africani. Insomma, la storia di Weah che aveva 40 anni 3/n
Read 12 tweets
Andrea Presbitero Profile picture
Sep 30, 2020
An update to the work with @davidmihalyi & @valentin_lang on the effect of the #DSSI on sovereign bond spreads in poor countries. In a nutshell, spreads declined, consistent with the liquidity provision from the suspension of debt service #ResolvingSovereignDebt
A thread 1/8 Image
The Debt Service Suspension Initiative (DSSI) provides debt relief to poor countries by deferring debt service due in 2020 without affecting the NPV of public debt. Liquidity provision under the DSSI accounts for about 20% of the fiscal shortfall due to the Covid-19 shock. 2/8
The DSSI is good for both creditors & debtors, but not all countries have joined. Why? A key motivation behind the reluctance to join are reputational concerns: participation may signal debt sustainability problems and trigger an increase in sovereign bond spreads 3/8 Image
Read 8 tweets
Andrea Presbitero Profile picture
Jun 1, 2020
The discussion on fiscal policy and r-g is even more important in times of unprecedented low growth and heightened uncertainty. In this thread, I summarize some findings on the role of public debt in amplifying the response of r-g to domestic and global shocks. 1/7
The main result is that high and increasing public debts, especially when denominated in foreign currency, can lead to adverse r-g dynamics in response to negative shocks 2/7
The idea is that liquidity shocks could lead to insolvencies in response to negative shocks, even with low-rates. This is especially true for high-debt countries, as the adverse effects of debt on growth and borrowing costs can lead to self-fulfilling bad equilibria 3/7
Read 7 tweets
Andrea Presbitero Profile picture
May 7, 2020
Just out @IMFNews a short note tracking the economic impact of #COVID19 and mitigation policies in Europe and the United States.
Below a short summary of the key findings:
imf.org/~/media/Files/… Image
First, the sharp decline in electricity usage and the unique spike in unemployment insurance claims (~33 million as of today) highlight that the Great Lockdown is novel not only for its magnitude, but also for the speed at which the economy and the labor market are affected Image
Second, although #COVID19 is a truly global shock, regions and countries where the outbreak is more sizable experience significantly more severe economic losses (in terms of employment, hours worked and electricity usage) ImageImage
Read 5 tweets

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