Au Matin


In the wake of recent financial convulsions, central banks have emerged yet again as the first responders to crisis. But to confront the crisis of anthropogenic climate change, there is growing acknowledgement that central banks should go further, beyond their limited remit of maintaining price stability.

Central banks should be more cognizant of their own role in creating credit-fueled growth; monetary policy already features distributing the benefits and burdens of decarbonization. Crucially, stepping up ambitions for active climate change mitigation would involve abandoning spurious notions of “market neutrality.”

In a recent e-book, PATRICK BOLTON , MORGAN DESPRES, LUIZ AWAZU PEREIRA DA SILVA, FRÉDÉRIC SAMAMA, and ROMAIN SVARTZMAN argue that facilitating decarbonization is in fact consistent with concerns over financial and price stability:

“An additional ambitious and controversial proposal is to apply climate-related considerations to central banks’ collateral framework. The goal of this proposal is not that central banks should step out of their traditional role when implementing monetary policies, but rather to recognise that the current implementation of market neutrality, because of its implicit bias in favour of carbon-intensive industries […] could end up affecting central banks’ very own mandates in the medium to long term. Honohan (2019) argues that central banks’ independence will be more threatened by staying away from greening their interventions than by carefully paying attention to their secondary mandates such as climate change. Thus, and subject to safeguarding the ability to implement monetary policy, a sustainable tilt in the collateral framework could actually contribute to reducing financial risk.”

Link to the book.

  • “The ECB has recently invoked a principle of market neutrality to justify the absence of
    environmental criteria from the design of its Corporate Sector Purchase Programme operations. It should be noted that this principle is not in the ECB mandate and is in fact relatively new […] It does not prohibit a market-based programme such as Green TLTROs.” In a recent report for Positive Money Europe, Jens van ‘t Klooster and Rens van Tilburg make the case for the ECB to use its Targeted Longer-Term Refinancing Operations to boost green lending. Link.
  • Sandra Batten, Rhiannon Sowerbutts and Misa Tanaka present a typology of risks associated with climate change and discuss their impact on monetary policy objectives. Link.
  • Paola D’Orazio and Lilit Popoyan examine ‘macroprudential greening’ and how central banks could incentivize the decarbonization of bank balance sheets. Link.

The top section of the newsletter this week is written by guest contributor Dominik Leusder. An economist in London (and Phenomenal World contributor), he is launching is own newsletter focused on finance and political economy. You can subscribe to it here.


Racial Disparities in Job Displacement

Postdoctoral Scholar at the Department of Demography at UC Berkeley NATHAN SELTZER studies the impacts of economic change on demographic processes. A recent Center for Equitable Growth paper, co-authored with Elizabeth Wrigley-Field, examines Black and white disparities in job displacement from 1981 to 2017.

From the abstract:

“Social scientists have documented vast racial disparities in labor market outcomes such as hiring and firing decisions, compensation, and opportunities for occupational advancement. Yet little is known about the racial patterning of job displacement (permanent involuntary layoffs), a remarkably common labor market outcome. Using data from the Displaced Worker Survey, covering nearly four decades of displacements, 1981-2017, we provide the first systematic analysis of Black/white displacement disparities since the 1990s. We find that Black workers were nearly always more likely to be displaced than whites, but the Black/white disparity has grown over time, with excess Black displacement doubling for women and tripling for men since the 1990s. Additionally, during the 1990s, being Black replaced lacking a college degree as the better predictor of displacement. To evaluate whether these disparities are explained by compositional differences—i.e. whether Black workers were more likely to be employed in displacement-prone jobs than whites—we decompose Black-white displacement disparities by job characteristics including occupation, industry, and public vs. private sector, and indexes reflecting displacement risk and job quality. The results support arguments that the public sector has become less protective for Black workers, but generally provide scant evidence that compositional differences explain the rise of racial disparities in displacement.”

Link to the paper, link to Seltzer’s website.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way:

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  • JFI Sources will be on break until the new year. See you in 2021, and thank you so much for reading.
  • Kim Stanley Robinson in Bloomberg on “air sewers,” a “process [that] involves using machinery to filter out CO₂ from ambient air, then disposing of the captured gas—either by injecting it underground, binding it to rock, or putting it to industrial use.” Link.
  • Aurélie Ouss on misaligned incentives and un-internalized costs of youth incarceration. Link.
  • “Blending the tools of micro-history with historical Geographical Information Systems (GIS) permits us to chart the social networks and everyday journeys of black working-class women activists and the middle-class men with whom they came into contact in Reconstruction St. Louis.” By Elizabeth Belanger. Link.
  • Forty percent of people who visited Feeding America food banks from March to June 2020 were first-timers. Link. h/t Halah
  • Can Nacar on tobacco worker labor struggles in the late Ottoman empire. Link.
  • “In this paper we survey the historical record for over two centuries on the connection between expansionary fiscal policy and inflation.” By Michael D. Bordo and Mickey D. Levy. Link.
  • Sascha Becker, Yuan Hsiao, Steven Pfaff, and Jared Rubin on Martin Luther’s network ties in the Early Reformation. “Based on novel data on Luther’s correspondence, Luther’s visits, and student enrollments in Luther’s city of Wittenberg, we reconstruct Luther’s influence network to examine whether local connections to him increased the odds of adopting Protestantism.” Link.
  • Daina Bellido de Luna on union-weakening practices in Chile. Link.
  • “We use random variation in both wait times and prices to estimate a consumer’s [value of time] with a data set of more than 14 million observations across consumers in U.S. cities.” A new NBER working paper uses data from ride-sharing application Lyft to analyze value of time. Link.
  • “The decline of the physical stature of the U.S. population during the decades preceding the Civil War occurred just as the United States was experiencing the beginning of modern economic growth. Height—a measure of a population’s nutritional status—was not expected to decline in a dynamic economy in which average income grew by 60 percent from 1820 to 1860. A consensus view has emerged that calorie and protein intake of the population did decline during the antebellum decades. Floud et al. suggest, most recently, that food intake declined by 9–14 percent, while Haines, Craig, and Weiss estimate that calorie and protein output declined by 11 and 18 percent, respectively, between 1840 and 1850. The divergence between nutritional status and income has been attributed to an increase in inequality and an increase in the price of protein-rich food.” By John Komlos and Brian A’Hearn. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations:

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