Archive for May 18th, 2020

ECB announces new measures to increase share of female staff members

May 18, 2020

I had earlier written on how and why central banks have to take measure to increase women staff in their organisations.

ECB’snew targets to increase women employment at the central bank:

The European Central Bank (ECB) today announced a new programme to further improve the gender balance of its staff at all levels. The strategy defines target percentages focusing on the annual share of women being appointed to new and open positions as well as targets for the overall share of female staff at various salary levels. The strategy covers the period until 2026, so as to fall within the mandate of President Christine Lagarde.

“We want gender balance to be the norm now rather than a revolution to fight later,” said President Lagarde. “Let us not forget that gender is one of the many dimensions of diversity that we must all value. We should mirror the society we serve.”


The new programme follows the ECB’s first set of gender targets, which aimed to double the share of women in management positions over the period from 2013 to 2019. The ECB exceeded one of its targets by achieveing a figure of 30% female senior managers at the end of 2019, compared to a target of 28%. The share of women in all management positions rose from 17% to 30%, which was still below the target figure of 35%.


The Impact of Interwar Protection: Evidence from India

May 18, 2020

Vellore Arthi, Markus Lampe, Ashwin R Nair and Kevin Hjortshøj O’Rourke in this NBER paper:

Research on the quantitative impact of interwar protection on trade flows remains scarce, and much of it has concluded that the impact was surprisingly small. In this paper we ask: Did Indian interwar protection hurt UK manufacturers, by raising tariffs on manufactured imports? Or did it favour UK interests, by discriminating against “foreign” (i.e. non- British) producers?

We answer this question by quantifying the impact of trade policy on the value and composition of Indian imports, using novel disaggregated data on both trade policies and imports for 114 commodity categories coming from 42 countries.

Indian trade elasticities were generally larger than those in the United Kingdom at the same time.

We find that even though Indian protection lowered total imports, it substantially boosted imports from the UK. Trade policy had a big impact on trade flows.


Measuring excess mortality: England is the European outlier in the Covid-19 pandemic

May 18, 2020

Janine Aron and John Muellbauer in this voxeu research:

Using prospect theory to explain 22 stock market anomalies

May 18, 2020

Nicholas Barberis, Lawrence Jin and Baolian Wang in this new NBER paper:

We present a new model of asset prices in which investors evaluate risk according to prospect theory and examine its ability to explain 22 prominent stock market anomalies. The model incorporates all the elements of prospect theory, takes account of investors’ prior gains and losses, and makes quantitative predictions about an asset’s average return based on empirical estimates of its volatility, skewness, and past capital gain. We find that the model is helpful for thinking about a majority of the 22 anomalies.


Designing fiscal policy support by segregating districts into vulnerability and resilience metrics

May 18, 2020

Good Friend, Prof Vipul Mathur of IIM Calcutta has been busy trying to find ways to make our pandemic policy data driven.

In an earlier paper he divided India’s districts based on economic contact intensity to argue which districts should remain in lockdown and which should be opened. We soon saw how everyone including policymakers were talking about red, orange and green zones.

In a second paper, he has divided households of districts into vulnerable and resilient categories. The fiscal support should go to the regions which are more vulnerable and less resilient.

In this work I try to understand the micro-implications of the COVID shock at the level of households. Using CMIE database, I create a metric of vulnerability and resilience of households, by analyzing the (wage) income, (consumption) expenditure, (liquid) assets and (short-term) liabilities of the households. Vulnerability can be interpreted as the extent of financial exposure to an adverse shock and Resilience is the capacity of the household to weather such an adverse shock.

The analysis suggests that around 14.4% of the households are the most robust with low-mid vulnerability and mid-high resilience. On the other hand, about 48.4% of the households are the most fragile, falling in high-mid vulnerability region with low-mid resilience. About 37.2% households fall in between the two extremes and have a mixed exposure with muddled resilience. I also consider two hypothetical scenarios, where I consider an aggregate shock to employment and prices to determine the impact at the margin. The analysis suggest that upon a 10% and 25% shock, approximately 23 and 75 million individuals may be find themselves at the margin of financial distress, respectively.

Policy Implication: Fiscal transfers are a scarce resource. This study attempts to inform the policy on fiscal transfers by proposing a way to fine-tune both the quantum and the sequence of such transfers by identifying and segregating the households in the two dimensional array of vulnerability and resilience. First, it charters out a possible sequencing path for fiscal transfers. For instance, in the order of sequence, the fiscal support will be most productive for households which rank the highest on vulnerability and lowest on resilience. Second, depending upon the vulnerability and resilience of a household, the optimal quantum of fiscal support needed will vary across households. To be most effective, the amount of household level fiscal transfers could be made conditional on the extent of exposure and capacity of a household to the economic shock

He has written an article on Moneycontrol explaining the paper.

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