Global cargo gravitation model: airports matter for forecasts

The reliability of forecast models in the aviation sector is an important factor for industry and policy makers likewise. Expanding airports and fleets usually is a cost and time intensive process, and in order to maintain efficient market behavior, accurate anticipation of future demand and structural changes is attempted. We present a new quantitative approach to air cargo forecasts utilizing global airport-dyadic ICAO CASS data in general linearized airport fixed effects gravity models. While the strong explanatory power of our time invariant constant model has its natural difficulties predicting a variety of smaller indicators from previous models found in literature, we achieve very good results for selected time variant variables as gross domestic product per capita or kerosene prices. This makes our model a perfect tool for forecast simulations: extrapolating general economic forecast data provided by IHS Markit yield similar results to Boeing cargo forecasts (2020), with a slight decrease in the long run. Additionally, we do not need to split or control our sample in regional groups due to airport fixed effects, which makes the model on the other hand suitable for country- and airport level forecasts as well. The utilization of a large unique bilateral freight data set also helps answering classical gravity model questions in aviation: we track the distance effect to a matter of sample selection, finding no significant interaction following state of the art gravity econometrics.

Households’ inflation perceptions and expectations: survey evidence from New Zealand

In this paper, we study how inflation is viewed by the general population of New Zealand. Based on unique representative survey data collected in 2016 and using descriptive statistics and multivariate regressions, we explore various aspects of how laypersons perceive inflation and form inflation expectations. We focus on how an individual’s economic situation, information search and interest in inflation, economic knowledge, and attitudes and values are related to inflation perception and expectation, as well as the individual’s reaction to them. We interpret our findings as a clear indication that laypersons’ knowledge about inflation is much better described by the imperfect information view prevailing in social psychology than by the rational actor view typically assumed in economics.

Motivations behind individuals’ energy efficiency investments and daily energy-saving behavior: The case of China

The impact of environmental motivations on the individual’s decisions regarding investments in energy efficiency and the adoption of energy-saving habits are analyzed for a representative sample of Chinese inhabitants from the larger Beijing area, replicating a comparative study on Western Europe. For the considered type of energy efficiency investments and daily energy-saving activities similarities and discrepancies between the two regions are discussed in regard to their sociocultural background as well as governmental regulations. The study provides empirical evidence that for Chinese environmental issues if all only play a tertiary role after monetary and regulatory incentives. The findings could suggest that in China policy programs aimed at raising environmental awareness and forming pro-environmental motivations might not lead to an increase in energy efficiency investments and daily energy-saving activities and the Chinese government’s interests in this regard might be better served by implementing corresponding incentives via regulations. In the long-term. However, social peer pressure might affect a change in the Chinese mentality.

Financial spillovers, spillbacks, and the scope for international macroprudential policy coordination

This paper discusses the scope for international macroprudential policy coordination in a financially integrated world economy. It begins with a review of the transmission channels associated with, and the empirical evidence on, financial spillovers and spillbacks. Limitations of the existing literature are also identified. The potential gains associated with cross-border macroprudential coordination, dwelling on both recent analytical contributions and quantitative studies based on multi-country models with financial frictions, are then evaluated. The issue of whether coordination of macroprudential policies simultaneously requires some degree of monetary policy coordination is also discussed. The analysis focuses on the potential for policy coordination between major advanced economies and a group identified as systemically-important middle-income countries (SMICs). Next, practical ways to promote international macroprudential policy coordination are considered. Following a discussion of Basel III’s Principle of reciprocity and ways to improve it, the paper advocates a further strengthening of the current statistical, empirical and analytical work conducted by international financial institutions to evaluate, and raise awareness of, the gains from international coordination of macroprudential policies.

Productivity and the pandemic: short-term disruptions and long-term implications

This paper analyses quarterly estimates of productivity growth at industry level for three advanced economies, France, the UK and the US, for 2020. We use detailed industry-level data to distinguish reallocations of working hours between industries from pure within-industry productivity gains or losses. We find that all three countries showed positive growth rates of aggregate output per hour in 2020 over 2019. However, after removing the effects from the reallocation of hours between low and high productivity industries, only the US still performed positively in terms of within-industry productivity growth. In contrast, the two European economies showed negative within-industry productivity growth rates in 2020. While above-average digital-intensive industries outperformed below-average ones in both France and the UK, the US showed higher productivity growth in both groups compared to the European countries. Industries with medium-intensive levels of shares of employees working from home prior to the pandemic made larger productivity gains in 2020 than industries with the highest pre-pandemic work-from-home shares. Overall, after taking into account the productivity collapse in the hospitality and culture sector during 2020, productivity growth shows no clear deviation from the slowing pre-pandemic productivity trend. Future trends in productivity growth will depend on whether the favourable productivity gains (or smaller losses) in industries with above-average digital intensity will outweigh negative effects from the pandemic, in particular scarring effects on labour markets and business dynamics.