🎃👻 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 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

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

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

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 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 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

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/… 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

Thread: Update on tracking the economic impact of #COVIDー19.

Electricity usage declined in Europe in the past week and especially in #Italy soon after the lockdown in early March. The decline in energy usage is close to -30% with respect to the same period in 2019 The decline in energy usage has been more sizeable in countries hit harder by the pandemic. However, the correlation becomes weaker as time passes, suggesting that the shock becoming less idiosyncratic as the virus spreads

The #COVIDー19 crisis is having huge differential effects on workers and households; look, for instance, at the @BLS_gov chart on employment changes in March. But similar results elsewhere. Which are the policy options? 1/7 Distributing checks to almost all households is likely to miss the least vulnerable and partially waste money. On the contrary, targeting fiscal support measures should not be extremely difficult and costly, and it could achieve a better allocation. 2/7

In my second week of remote working and #StayAtHome, I decided to check the Washington DC/Bethesda MD suburbs: many many people around, kids at playgrounds, guys running/biking in groups, gatherings at the park. 1/5 complete nonsense. and often these are the same 'conscious and progressive' people who can only eat organic quinoa and drink coffee brewed in some remote African village. But they are so privileged and spoiled that they cannot give up any of their "freedom", even now 2/5

Molto onorato (e grato a @Confindustria @GiampaoloGalli per l'invito) di aver contribuito al 1 numero della nuova Rivista di Politica Economica, discutendo il legame tra debito pubblico e crescita, con attenzione al contesto di bassi tassi d'interesse

confindustria.it/home/centro-st… @Confindustria @GiampaoloGalli @upanizza @Leonardobecchet @SMerler @CottarelliCPI @MCroce_MacroFin @aaamigh @FGoria La prima lezione è che il rallentamento economico in corso non implica che sia ottimale espandere il debito pubblico. Un debito elevato ha costi economici e redistributivi e aumenta il rischio che un paese si trovi in un “equilibrio cattivo” 2/n

Starting now @IMFNews the 20th #ARCPOLAK research conference on #debt. Full program and papers here:

imf.org/en/News/Semina… First paper by Christoph Trebesch @kielinstitute (joint work with @carmenmreinhart and Sebastian Horn) with new insights and data on Chinese global lending. Data available here: sites.google.com/site/christoph…

New paper with @DZerfu & @migsarmiento17 on how multilateral development banks can affect loan terms in the syndicated loan market, forthcoming in the Journal of International Money and Finance. A short summary of the findings: 1. #MDBs’ participation is associated with higher
borrowing costs and longer maturities—signaling a greater willingness by MDBs to finance risky projects which may not be financed by the private sector

My paper with @isha89agarwal and @rupaduttagupta on commodity prices and bank lending has been accepted at Economic Inquiry. It took some time (and a few rejections), but comments helped us to improve the paper and add results based on admin loan-level data. A short summary 1/7 Developing countries are vulnerable to terms-of-trade shocks, with severe impact on output growth and macroeconomic and political stability (see @blattman). We extend this literature documenting a transmission channel via bank lending 2/7

Now out as an @IMFNews working paper: new evidence on the effect of negative policy rates on bank credit supply using loan-level data.

Short thread to outline our main findings 1/9

imf.org/en/Publication… A cut in policy rates expands aggregate demand, but:
1. in a low rates environment, the transmission of monetary policy becomes weaker
2. the ZLB is an important constraint (@krogoff)
3. beyond a “reversal” rate, lower rates could be contractionary (@MarkusEconomist) 2/9

E questo sarebbe il nuovo che avanza? Ho l’impressione sempre più fondata che alcune università allevino nuovi adepti per preservare la specie, come i panda in cattività. @micheleboldrin Ora capisco meglio (cc @albertobisin)

@micheleboldrin Ci sarebbe da scrivere un poema per ribattere a ogni sciocchezza, ma il semplice fatto che @PTridico e @gbracci_des si ispirino a Nuti e @albertobagnai per usare una semplice formuletta da libro di testo dà l’idea del livello della discussione /1 @micheleboldrin @PTridico @gbracci_des @AlbertoBagnai Nessuno studio invece a sostegno di questa incredibile affermazione:
“la misura [abolizione Fornero] consente di sbloccare un necessario ricambio generazionale, con effetti espansivi sull’occupazione a parità di domanda di lavoro aggregata.” @ricpuglisi /2

@Kumar_EconIneq @krogoff @IMFNews @MEDevEcon @upanizza @JustinSandefur @AtifRMian @BaldwinRE @ryanavent @davidmwessel @arindube @ThomasHerndon1 Here a simple scatter plot (done with @michaelstepner binscatter) of 5-year real growth against initial debt (WEO data), the same 20 advanced economies, absorbing country and year FE. OLS regression shows that 10 pps more in debt are associated with 0.2 pps lower growth @Kumar_EconIneq @krogoff @IMFNews @MEDevEcon @upanizza @JustinSandefur @AtifRMian @BaldwinRE @ryanavent @davidmwessel @arindube @ThomasHerndon1 @michaelstepner Same charts for total private debt (loans and debt securities) is flat, but if limited to hh debt the relationship is again negative