Ricardo's threads | Nothing contributes so much to the prosperity and happiness of a country as high profits

Crying Wolf: Why Negotiating Lower Drug Prices Will Not Harm Pharmaceutical Innovation

07/22/2024 Ineteconomics Analysis

Increasing evidence that the IRA is probably not harming pharmaceutical innovation.
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Expert: Why Covid and Future Pandemics are a Bigger Threat than Nukes

07/18/2024 Ineteconomics Analysis

Dr. Phillip Alvelda tells INET’s Lynn Parramore about persistent political and public health failures exposing us to devastating diseases, while vastly underestimating their long-term health effects.
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Solidarity: A World-Changing Idea

07/17/2024 Ineteconomics Analysis

We need collective action and social movements to bring about change, but where is our sense of community and shared identity?

A New Era of Endless Labor Shortages? A Critical Analysis of McKinsey's New Report

07/15/2024 Ineteconomics Analysis

The McKinsey report's highlighting of an extremely high job vacancy ratio in recent years does not reflect the true state of the U.S. labor market.
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The Diffusion of New Technologies

07/11/2024 Ineteconomics Analysis

The concentration of innovation in a handful of urban centers engenders large and persistent regional disparities in economic opportunity.

How Do Tech Innovations Really Spread? New Evidence

07/11/2024 Ineteconomics Analysis

New technologies appear to yield long-lasting benefits for the pioneer locations where they were originally developed.
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The Economics of China

07/10/2024 Ineteconomics Analysis

How can we understand the bright and dark sides of China's gilded rise? Through the lens of American history.

A diverse investor base impacts the effectiveness of large-scale asset purchases

06/27/2024 European Central Bank Central banks

Large-scale asset purchases can impact the price of securities either directly, when securities are targeted by the central bank, or indirectly through portfolio rebalancing by private investors. We quantify both the direct impact and that of portfolio rebalancing, emphasising the role of investor heterogeneity. We use proprietary security-level data on asset holdings of different investors. We measure the direct impact at security level, finding that it is smaller for securities predominantly held by more price-elastic investors, i.e. funds and banks.

Consumer risk-taking and stock market investment: Insights using the CES’s consumer finance module

05/27/2024 European Central Bank Central banks

Households’ willingness to take on risks has clear implications for the transmission of financial shocks, both in the long run and over the business cycle. This article introduces a newly published research dataset from the ECB’s Consumer Expectations Survey (CES) and summarises insights these data provide into household risk-taking. In particular, it examines how an increase in wealth affects a household’s decision on whether or not to invest in the stock market. The evidence suggests that all but the wealthiest households have a substantial aversion to investing in the stock market.

Unlocking efficiency: optimal monetary policy when capital misallocation matters

04/19/2024 European Central Bank Central banks

Some firms have the capacity to contribute significantly to economic productivity but cannot obtain the necessary capital for investment, which instead flows to less productive firms. While “misallocation of capital” and its detrimental impact on productivity is traditionally beyond the scope of central banks, monetary policy can influence it through firms’ investment decisions. Using a New Keynesian model and granular data on Spanish firms, our results show that expansionary monetary policy reduces capital misallocation.

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