Updating,self-confidence,and discrimination

In this laboratory experiment, we show that people incorporate irrelevant group information when evaluating others. Individuals from groups that perform badly on average receive low evaluations, even when it is known that the individuals themselves perform well. This group-bias occurs both in a gendered setup, where women form the worse performing group, and in a non-gendered setup.The type of discrimination that we identify is neither taste-based nor statistical; it is rather due to conservatism in updating beliefs, and is even more pronounced among women. Furthermore, self-confident men overvalue male performers. When our data is used to simulate a job promotion ladder, we observe that women are driven out quickly.     

Is ethnic discrimination due to distaste or statistics?

Employing a vignette experiment, we test the empirical importance of key attitudes underlying the models of taste-based and statistical discrimination in explaining ethnic hiring discrimination. We find that employer concern that co-workers and customers prefer collaborating with natives drives discrimination.     

Religion,discrimination and trust across three cultures

We propose that religion impacts trust and trustworthiness in ways that depend on how individuals are socially identified and connected. Religiosity and religious affiliation may serve as markers for statistical discrimination. Further, affiliation to the same religion may enhance group identity, or affiliation irrespective of creed may lend social identity, and in turn induce taste-based discrimination. Religiosity may also relate to general prejudice. We test these hypotheses across three culturally diverse countries. Participants׳ willingness to discriminate, beliefs of how trustworthy or trusting others are, as well as actual trust and trustworthiness are measured incentive compatibly. We find that interpersonal similarity in religiosity and affiliation promote trust through beliefs of reciprocity. Religious participants also believe that those belonging to some faith are trustworthier, but invest more trust only in those of the same religion—religiosity amplifies this effect. Across non-religious categories, whereas more religious participants are more willing to discriminate, less religious participants are as likely to display group biases.     

Who are the trustworthy,we think?

A representative Swedish sample was asked to judge the relative trustworthiness of people from different groups, characterized by several dimensions such as political views and reading habits. A significant similarity effect was found in each of the seven dimensions analyzed. For example, rightwing voters consider Social Democratic voters to be much less trustworthy than rightwing voters, and vice versa. Thus, perceived trustworthiness appears to decrease generally with social distance, for which social identity theory offers a plausible explanation. Moreover, people who are old and live in small cities are generally considered more trustworthy than young people living in big cities. The results suggest reasons behind discrimination other than those underlying taste-based and statistical discrimination.     

Does Equal Pay Legislation Reduce Labour Market Inequality?

This paper considers a labour market model of monopsonistic competition with taste-based discrimination against minority workers to study the effect of equal pay legislation on labour market inequality. When the taste for discrimination is small or competition is weak, the policy removes job segregation and the wage gap completely. However, with a bigger taste for discrimination or stronger competition, equal pay legislation leads to more job segregation, and sometimes minority workers end up earning less than before. Profits of discriminating firms might increase, and discrimination can persist in the long run, although it would have disappeared without the policy.     

Gender discrimination in China: Experimental evidence from the job market for college graduates

This paper examines employment-related gender discrimination during the initial stages of a hiring process. It specifically focuses on recent college graduates in China. By examining firms’ responses to fictitious resumes with randomly generated information on gender and other key attributes of applicants (e.g., school reputation, student's academic achievement, and leadership experiences), this study is able to separate the effect of gender on a student's potential for getting an on-site interview from the confounding effects of other factors. The findings reveal that, with all other factors remaining constant, female applicants, on average, are less likely to be invited by hiring firms to on-site interviews as compared with their male counterparts. Furthermore, gender discrimination in computer and mathematics, architecture and engineering, and sales occupations appears to be driving the results of this study. The qualitative evidence based on interviews with firm recruiters suggests that the findings of this study are generally consistent with the role congruity theory of prejudice in psychology literature. While the finding that the quality of a job candidate (academic achievement and leadership experience) does not reduce gender discrimination offers some evidence to support a taste-based discrimination view, we do not have enough evidence to support a statistical discrimination view.     

Unconventional monetary policy and household debt: The role of cash-flow effects

We study the transmission of conventional and unconventional monetary policy shocks via the loan market, distinguishing between adjustable- and fixed-rate mortgages (ARMs and FRMs, respectively) and focusing on the relative importance of the income channel. Under ARMs, a conventional monetary policy shock implies a temporary cash-flow effect leading to a redistribution between savers and borrowers, a feature that is weaker, but more persistent, under FRMs. Also, an easing via unconventional operations – modelled as a shift in households’ preferences that reduces the term premium on long-term loan rates – has an expansionary effect on output and inflation, although more muted than the one recorded via a conventional monetary policy shock. In the former case, we find a modest contribution of cash-flow effect to the dynamics of consumption.     

我国通货膨胀路径中的结构性变化与非线性调整——基于TV-STAR模型的实证分析

本文使用TV-STAR模型研究发现,我国通货膨胀路径中结构性变化与非线性共存。结构性变化发生在1995年左右,结构性变化前的通货膨胀路径中存在高、低两个均衡点,结构性变化后的通货膨胀路径中存在唯一均衡点,但通货膨胀的持久性较变化前有较大幅度上升。同时发现通货膨胀与通货紧缩的非线性调整具有明显的非对称性,其临界值为4.091。基于广义脉冲响应函数发现,结构性变化后,我国通货膨胀对外来冲击的反应幅度下降,但反应速度上升。另外,正、负向冲击对通货膨胀的影响存在明显的非线性和非对称性。在多数情况下,正向冲击的影响更大,也更持久。在短期内,通货膨胀机制下的冲击影响要明显强于在通货紧缩机制下,但从长期来开,通货紧缩机制下的冲击影响更持久。在结构性变化之后,这种冲击的非对称效应也更明显。     

Inflation persistence,inflation expectations,and monetary policy in China

This paper constructs a quarterly series of GDP deflator inflation for China from 1979 to 2009 and tests for a structural break with an unknown change point in the dynamic inflation process. Empirical results suggest a significant structural change in inflation persistence. Employing a counterfactual simulation method, we show that the structural change is primarily attributed to better conduct of monetary policy and the resultant better anchored inflation expectations. This finding implies that the quiescence of inflation in China over the past decade could well be followed by a return to a high inflation era in the absence of a determined effort by the monetary authorities in managing inflation expectations. Therefore, the use of a preemptive monetary policy to anchor inflationary expectations and to keep inflation moderate is warranted in China.     

通货膨胀、汇率波动与货币政策——基于符号约束的贝叶斯VAR模型实证研究

通过构建通货膨胀形成的理论模型,本文运用符号约束的贝叶斯VAR方法探讨通货膨胀和汇率波动对产出增长的影响。结果发现：实际利率对通货膨胀和人民币升值冲击均有较大的响应,且受通货膨胀的影响更大,即稳定价格的货币政策比稳定汇率的政策更加有效;通货膨胀冲击下,实际利率在长期有所上升,但并未达到控制通货膨胀的效果,实际利率偏低阻碍了货币政策效果的发挥;人民币升值对产出增长具有较大的负面影响,对通货膨胀具有负向）中击,但由于油价上涨的原因,人民币升值并没有降低通货膨胀水平。     

不确定性、通货膨胀与产出增长

基于中国1952—2004年的数据,通过GARCH-M模型和广义脉冲响应函数对不确定性、通货膨胀与产出增长进行实证分析。结果发现:通货膨胀不确定性与产出增长负相关;产出增长不确定性与产出增长负相关;产出增长不确定性与通货膨胀正相关;通货膨胀不确定性与通货膨胀负相关;产出增长冲击和通货膨胀冲击对产出增长不确定性和通货膨胀不确定性的影响存在滞后性和非对称性;产出增长对产出增长冲击的动态响应最大,通货膨胀对产出增长冲击的动态响应以及产出增长对通货膨胀冲击的动态响应最小,通货膨胀对通货膨胀冲击的动态响应居中。     

中国通货膨胀及其波动性关系的实证研究

本文利用GARCH模型生成中国通货膨胀波动性的衡量指标,并实证分析1983年1月至2010年4月中国的通货膨胀与通货膨胀波动性之间的关系。结果表明:在中国,通货膨胀率是通货膨胀波动性的Granger原因,通货膨胀对通货膨胀波动性有稳定的正向影响关系,同时相同强度的通货膨胀冲击远远大于通货紧缩冲击对通货膨胀波动性的影响。对中国而言,控制通货膨胀比追求经济增长更重要。     

Inflation and the Income Share of the Rich: Evidence for 14 OECD Countries

This paper examines the distributional implications of inflation on top income shares in 14 advanced economies using data over the period 1920–2016. We use local projections to analyze how top income shares respond to an inflation shock, and panel regressions in which all variables are defined as 5-year averages to examine the impact of inflation on the position of the top-one-percent in the long run. Our findings suggest that inflation reduces the share of national income held by the top 1 percent. Furthermore, we find that inflation shocks and long-run inflation have similar effects on top income shares.     

Openness, income-tax progressivity, and inflation

This paper considers a model of an open economy in which the degree of income-tax progressivity influences the interaction among openness, central bank independence, and the inflation rate. Our model suggests that an increase in the progressivity of the tax system induces a smaller response in real output to a change in the price level. This implies that increased income-tax progressivity reduces the equilibrium inflation rate and that the effect of increased income-tax progressivity on inflation is smaller when the central bank places a higher weight on inflation or when there is greater openness. Examination of cross-country inflation data provides empirical support for these key predictions.     

ACCOUNTABILITY AND TRANSPARENCY ABOUT CENTRAL BANK PREFERENCES FOR MODEL ROBUSTNESS

Using a New Keynesian model subject to misspecifications, we examine the accountability issue in a framework of delegation where government and private agents are uncertain about the central bank's preference for model robustness. We show that, in the benchmark case of full transparency, the optimal inflation targeting weight (or penalty) is decreasing with the preference for robustness. Departing from the benchmark equilibrium, the central bank has then incentive to be less transparent in order to reduce the optimal inflation targeting weight and thus to become more independent vis‐à‐vis the government. We also find that greater opacity will increase the sensibility of inflation and model misspecification to the inflation shock but will decrease that of output‐gap. Since macroeconomic volatility could be increased or decreased under more opacity, there could exist in some cases a trade‐off between the level and the variability of inflation (and output gap). Persistent inflation shocks could be associated with a higher inflation targeting weight as well as a higher sensibility of inflation and output gap to the inflation shock but a lower sensibility of model misspecification.     

Long memory and level shifts: Re-analyzing inflation rates

A key application of long memory time series models concerns inflation. Long memory implies that shocks have a long-lasting effect. It may however be that empirical evidence for long memory is caused by neglecting one or more level shifts. Since such level shifts are not unlikely for inflation, where the shifts may be caused by sudden oil price shocks, we examine whether evidence for long memory (indicated by the relevance of an ARFIMA model) in G7 inflation rates is spurious or exaggerated. Our main findings are that apparent long memory is quite resistant to level shifts, although for a few inflation rates we find that evidence for long memory disappears. First version received: March 1998/final version received: October 1998     

Inflation,tax rules,and the prices of land and gold

Traditional theory implies that the relative price of consumer goods and of such real assets as land and gold should not be permanently affected by the rate of inflation. A change in the general rate of inflation should, in equilibrium, cause an equal change in the rate of inflation for each asset price. The experience of the past decade has been very different from the predictions of this theory: the prices of land, gold, and other such stores of value have increased by substantially more than the general price level. The present paper presents a simple theoretical model that explains the positive relation between the rate of inflation and the relative price of such real assets. More specifically, in an economy with an income tax, an increase in the expected rate of inflation causes an immediate increase in the relative price of such ‘store of value’ real assets. The behavior of real asset prices discussed in this paper is thus a further example of the non-neutral response of capital markets to inflation in an economy with income taxes.     

Financial market segmentation,stock market volatility and the role of monetary policy

We study a segmented financial markets model where only the agents who trade stocks encounter financial income risk. In such an economy, the welfare-maximizing monetary policy attains the novel role of redistributing the traders' financial market risk among all agents in the economy. In order to do that, optimal monetary policy reacts to financial market movements; it is expansionary in bad times for the financial markets and contractionary in good ones. In our quantitative exercise, a dividend shock generates different policy responses and consumption paths among the optimal and the 2% inflation targeting policy. The latter implies large distributional welfare losses and risk sharing losses of similar magnitude with those generated by business cycle fluctuations. In addition, the optimal monetary policy does not minimize stock price volatility and implies lower inflation volatility than other commonly used policies.     

Threshold,smooth transition and mean reversion in inflation: New evidence from European countries

Knowing the absence or presence of a unit root in inflation is helpful not only in distinguishing between different economic hypotheses but is also important to monetary authorities in implementing the policies of disinflation. Using data for fourteen European countries, this study investigates the issue of nonstationarity in inflation by considering the possibility of nonlinearity. In particular, we consider the properties of a threshold, smooth transition and structural break in testing for a unit root in the inflation rates. By and large, the results support the view that the inflation rates of the European countries are characterized by a unit root process based on the conventional linear unit root tests. However, the results of the nonlinear unit root tests show that the inflation rates are characterized by nonlinear mean reversion after considering the nonlinear properties of the threshold, smooth transition and structural break. The mean reversion in inflation favors the hypothesis of, for example, the natural rate of inflation and the sticky-price model and implies that shocks only have transitory effects.     

Downward nominal wage rigidity in Canada: Evidence against a “greasing effect”

The existence of downward nominal wage rigidity (DNWR) has often been used to justify a positive inflation target. It is traditionally assumed that positive inflation could “grease the wheels” of the labour market by putting downward pressure on real wages, easing labour market adjustments during a recession. A rise in the inflation target would attenuate the long‐run level of unemployment and hasten economic recovery after an adverse shock. Following Daly and Hobijn (2014), we re‐examine these issues in a model that accounts for precautionary motives in wage‐setting behaviour. We confirm that DNWR generates a long‐run negative relationship between inflation and unemployment, in line with previous contributions to the literature. However, we also find that the increase in the number of people bound by DNWR following a negative demand shock rises with the inflation target, offsetting the beneficial effects a higher inflation target has on closing the unemployment gap. As an implication, contrary to previous contributions that neglected precautionary behaviour, the speed at which unemployment returns back to pre‐crisis levels during recessions is relatively unaffected by variations in the inflation target.