The Unassuming Economist

In 2012, the magazine Global Finance gave Stanley Fischer, then central bank governor of Israel, an A for his handling of the economy during the financial crisis. It was the fourth year in a row that Fischer had received an A. It’s a grade the former professor—who taught both Federal Reserve Board Chairman Ben Bernanke and European Central Bank (ECB) President Mario Draghi—cherishes: “Those were some tough tests we faced in Israel.”

Fischer stepped down as central bank governor in June this year after eight years in the job, bringing the curtain down on an extraordinary third act of his career. The second act was as the IMF’s second-in-command during the tumultuous period of financial crises in emerging markets from 1994 to 2001. This role as policymaker came after a rousing opening act in the 1970s and 1980s, during which Fischer established himself as a preeminent macroeconomist, one who defined the contours of the field through his scholarly work and textbooks. It speaks to Fischer’s success that stints as the World Bank’s chief economist in the 1980s and as vice chairman at Citigroup in the 2000s—which would be crowning achievements of many a career—come across as interludes between the main acts.­ For the full profile, continue reading here. 

Also, see an introduction to my profiles of economists.

From a paper by Kristin Forbes, Jongrim Ha, and M. Ayhan Kose:

“Central banks often face tradeoffs in how their monetary policy decisions impact economic activity (including employment), inflation and the price level. This paper assesses how these tradeoffs have evolved over time and varied across countries, with a focus on understanding the post-pandemic adjustment. To make these comparisons, we compile a cross-country, historical database of “rate cycles” (i.e., easing and tightening phases for monetary policy) for 24 advanced economies from 1970 through 2024. This allows us to quantify the characteristics of interest rate adjustments and corresponding macroeconomic outcomes and tradeoffs. We also calculate Sacrifice Ratios (output losses per inflation reduction) and document a historically low “sacrifice” during the post-pandemic tightening. This popular measure, however, ignores adjustments in the price level—which increased by more after the pandemic than over the past four decades. A series of regressions and simulations suggest monetary policy (and particularly the timing and aggressiveness of rate hikes) play a meaningful role in explaining these tradeoffs and how adjustments occur during tightening phases. Central bank credibility is the one measure we assess that corresponds to only positive outcomes and no difficult tradeoffs.”

From a paper by Ahmet Niyazi Özker:

“This study examines the possible inflation scale effects of inflation rates observed in emerging market economies on countries with similar economic structures to Turkey. For this purpose, the role of inflation in the emergence process of emerging market economies and the potential fiscal impact costs of this process on Turkey, especially on public finance and tax burden, are analysed. The study focuses on the approach that countries among emerging market economies are in an inflationary interaction through mutual scale effects, and that this interaction mutually increases their cost burdens. The research also tries to reveal whether these increasing fiscal burdens create a budgetary drag effect in Turkey and investigates at what scale levels these effects occur. In addition, the study also evaluates the financial consequences of the scale effects brought about by economic growth in Turkey as related to the inflation rates in Turkey. The findings in the survey reveal that inflation in Turkey is primarily structural, and an inflationary process prevails in which cost inflation remains relatively secondary. In other words, this structural reality shows that the Turkish economy is directly affected by structural inflation dynamics that are effective on a global scale and that this effect also causes an increase in financial burdens at the local level. When this situation is evaluated in terms of the fiscal tax burdens related to emerging markets, specifically in Turkey, it is understood that inflation is shaped not only by national internal dynamics but also by similar structural economic problems at the global level, and that the pressures to increase the inflation rates in Turkey also bring the potential for a possible fiscal drag on the agenda.”

On cross-country:

• BIS residential property price statistics, Q4 2024 – BIS
• Global Real Estate Outlook – Edition May 2025. Market to pause and reflect – UBS
• Solving Africa’s Housing Deficit – CSIS
• Shops make a city great. The missing piece in our urbanist discussion. – Noahpinion 
• Monetary policy transmission: from mortgage rates to consumption – European Central Bank
• European homeowners face rising mortgage costs until 2030. Many fixed-rate loans taken out in era of low and negative interest rates are now coming to an end, the ECB warns – FT

Working papers and conferences:

• Macro reforms for housing affordability – Analysis & Policy Observatory
• The Effect of Airbnb on Housing Prices: Evidence from the 2017 Solar Eclipse – SSRN
• Global Housing Returns, and the Emergence of the Safe Asset, 1465-2024 – SSRN  

On other countries:  

• [Canada] Federal government’s ‘affordable housing’ strategy doomed without strong income growth – Fraser Institute
• [Canada] Ontario government will spend more—for less housing – Fraser Institute
• [Canada] Housing use of immigrants and non-permanent residents in ownership and rental markets – Statistics Canada
• [Germany] German home prices to rise 3% this year on tight supply; affordability to worsen – Reuters
• [Singapore] Singapore’s housing challenge: why some young adults still live with their parents. High property costs and cultural norms keep many Singaporeans living with parents, as singles face challenges buying homes as adults – South China Morning Post
• [United Kingdom] Ministers explore plans to ease rules for small builders in England. Industry welcomes drive to unblock development but warns mortgage lending reform is still needed – FT

From a paper by Sini Sabu:

“This study examines the asymmetric relationship between real exchange rate fluctuations and household inflation expectations in India via ARDL and multiple threshold nonlinear autoregressive distributed lag (MTNARDL) models. The results indicate that inflation expectations respond significantly to exchange rate appreciation but are less sensitive to depreciation. A threshold analysis confirms that only substantial exchange rate deviations affect expectations, whereas minor fluctuations have negligible effects. Empirical evidence suggests that an appreciation of the real effective exchange rate by 10 units reduces inflation expectations by approximately 3.2 percentage points, whereas a similar depreciation results in only a 1.4 percentage point increase. These findings challenge the assumption of symmetric exchange rate pass-through and emphasize the importance of exchange rate stability in monetary policy formulation. Given the implications for inflation targeting, policymakers should prioritize exchange rate interventions that minimize excessive appreciation, while also strengthening communication strategies to manage inflation expectations more effectively.”