Life expectancies in Europe went down in 2019 and 2020 in all countries bar Norway (figure 1). They tended to go down more in countries with a relatively low life expectancy (figure 2) – strong and outspoken tendency. Correlation is not causation. But it can be argued that health and morbidity and life expectancy are influenced by health outcomes during, especially, childhood, including in the in-utero environment (look here, especially 3.1 b and 3.1 c. Look also here). If that’s right the data suggest that an important way to mitigate the (long term) consequences of Covid-19 is to have a strong long term public health system and policy (including policies aimed at diminishing poverty).

Aside of this short term health policies should, aside of Covid-vaccination, be broadened to

In 2019, the Irish rate of ‘gross fixed capital formation’ (which I hitherto will call fixed investment), was 54,6%. More than half of total national expenditure… This was over twice the rate in most other European countries. And three times the Irish rate in 2011 or the Italian rate in 2014. What happened? Was this real? Were they building three times as many houses and roads, buying three times as many planes and trucks and doing three times as much Research and Development (which is considered to be ‘gross fixed capital formation’) as only a few years before? Nope. But if that wasn’t the case, what was the case? Below, I’ll show the results of an update of my data on long term rates of fixed investments in a number of countries, adding 4 years to the series already published. This

Beveridge curves are graphical representations of the historical relationship between unemployment and the job openings/job vacancy rate. They should be called ‘Beveridge Ellipsoids‘ as they are banana shaped (an ellipsoid with one bent axis, aside of banana-shaped there does not seem to be an official name for such an ellipsoid). Just calling it a ‘curve’ is somewhat misleading as the banana-shape is no coincidence but caused by labor market dynamics: high unemployment leads to an outward shift (away from the origin) of the relation between vacancies and unemployment. Calling it the ‘Beveridge ellipsoid’ (or, when explaining it to students, ‘The Beveridge Banana‘) catches these dynamics much better than calling it a curve. Anyway: How does that work and how is it related to the

At this moment, retail energy prices (prices paid by consumers and companies for final use of energy) are, compared with other consumer prices, rising fast. Has this happened before? Yesterdays post shows that in the EU and since 2006 the rise is exceptional. But what shows when we look further back in time? For reasons of convenience and because the USA data stretch back to 1960 while the EU data only stretch back to 1997 I’ve tinkered a little with USA consumer price data. The answer to the question is clear: it has happened before – but the present spell of high energy price inflation (30+% a year) is starting to last exceptionally long. This answer leads to other questions: does, in a historical perspective, the present spell of energy price inflation also lead to a relatively

Inflation is up. A remarkable aspect of todays inflation is the relatively high increase of energy prices (graph), an international phenomenon. Rising prices are a bitch when nominal incomes stay behind, which at the moment is the case in Europe. This leads especially to problems for people with lower incomes who have less money to spare and who spent a relatively larger amount of their income on energy. So, what to do? Should we raise interest rates? Hmmm….

The relation between interest rates and inflation is week at best and even more so when inflation is not caused by domestic but by international events (see this blog by J.W. Mason). Also, the idea behind the policy of raising interest rate is that higher rates lead to lower investment and consumer spending, curbing demand

Does the switch to Green Energy mean that energy will be cheaper? To answer this question we’ll have to answer several sub-questionsfirst: is there a switch to Green Energy? Is capacity used efficiently? And is Green Energy cheap? As I will argue below, looking at the sub questions the answer to the lead question is: yes. But this answer leads to a related question: above, we’re talking about cost prices, which are down. You might have noticed that consumer prices of energy are up. Who’s getting rich?!

The answer to sub question 1 is clear. There is a serious shift to Green Energy. Total installed capacity of solar alone is 160.000 Megawatt in the EU, which is close to the around 230.000 megawatt capacity of coal power plants in the United States or India (graph 1). Not bad.

Will the war in Europe affect availability of wheat, one of the staple foods of the world? One of the economic successes of the last two decades is an increase in the production of wheat which enabled stable average global consumption per capita (at around 68 kg. per year) and a slightly increased used as feed (close to 20% of total production). This was possible because of a surprisingly fast increase of yields per hectare (graph).

Source: FAO-AMIS

And, of course, because total area stayed ore or less the same. Both of these developments are to quite an extent caused by increases in yields and area in Ukraine and Russia. How will the war affect this? Today, I attended a webinar about this. Main points: it’s clear that the 2022 harvest in Ukraine will be severely compromised,

Headline as well as ‘core’ consumer price inflation in the EU has increased (graph 1). How to rate these increases? Do we have to jack up interest rates and to restrict spending? Below, I’ll argue that when we try to understand present inflation using a non-neoclassical frame of analyses we do have to take into consideration that:

Not all increases are created equalWe should not just look at expenditure prices (consumption, investments) but also at factor prices and cost prices (wages, wage costs)We have to look at the short term (purchasing power of household income) but at the medium term, too (prices go up but, for some articles, down too)But Europe is in a full scale war and Wars are InflationaryWhat to do? At this moment the EU economy is not ‘overheated’ and inflation as

In January 1980 Jimmy Carter enacted a grain export embargo against the Soviet Union because of the 1979 Soviet invasion of Afghanistan. The embargo was ineffective as the resulting gap in Soviet imports, at the time and for quite some years to come a net grain importer, was filled by countries like Argentina. In 2022 things have changed. After 2000, Russia as well as Ukraine became major grain exporters, playing an important role in global food supply chains. In both countries production as well as exports have increased by leaps and bounds, which was enabled by increases in acreage and yields (graph 1 for wheat, graph 2 for maize). All data from this source. The invasion of Ukraine and the ensuing war will disrupt these chains not by halting imports but by disrupting production and

Egypt is alarmed. And rightly so. A war in one of the grain baskets of the world, Ukraine, will affect us all but Egypt, and Turkey, will be hit even harder than many other countries. And they know it. According to Reuters,

“Egypt, often the world’s top wheat importer, is working on a plan to buy wheat from other regions rather than Russia and Ukraine … “There are 14 approved countries Egypt could import wheat from, some of which are outside Europe” … Russia and Ukraine are frequently the top exporters of wheat to Egypt, making up around 50% and 30% of its wheat imports in 2021“. But this will not be enough as in the short run, i.e. two years, supply is more or less set.

Al Jazeera provides us with an infographic:

As we can see, Egypt relies on Russian and

Are we living in an epoch of high inflation? it’s a difficult question to answer as we’re lacking the tools to do this. Economics – heterodox and mainstream alike – is lacking a profound ‘periodic table’ of prices. This hampers them when they write and talk about inflation. There are a lot of pieces to this puzzle. The framework of the national accounts provides us with the distinction between expenditure prices (investments, government purchases, household consumption, exports), factor prices (wages, rents) and producer prices, including and excluding taxes. Gardiner Means developed the idea of ‘administered’, in-company prices. Joan Robinson made practical distinctions between prices and systems of price-setting: monopsony, imperfect competition and the like. And there is,

About one month ago I wroute about Euro Area inflation: “troubling but transitory“. One month more of data are in. It is even more troublesome but also more transitory. The increase of the consumer price index is dominated even more by energy prices than one month ago. As the Euro Area is a net importer of energy (among other items: natural gas from Russia.). This particular kind of inflation is, to use confusing terminology, highly deflationary… (for the non-energy sectors).

Purchasing Power is transferred to Russia (and other energy exporters) and siphoned off from other sectors. The rational response: investing in energy saving (let’s commute less…) and green energy. The problem: production costs of natural gas are very low, especially labor costs. Production costs of

It still has to feed into the management of pension funds or global wealth funds. Or, does it? It seems that Black Rock is already investing more in real estate… Look here and here. It might well be that this happens because because the smarties at Black Rock read the work of Jorda, Knoll, Kuvshinov, Schularick and Taylor, who gathered data on ‘‘The Rate of Return on Everything, 1870–2015”, including the rate of return on ‘houses’ (better: the rate of return on ‘land underlying houses’), for quite a period and a whole number of countries. We now know more, much more, about rates of return on, well, ‘everything’ than ever before. Macro can finally be Macro. But: what is a “rate of return”? And why is this important?

Source: Jordà, Òscar, Katharina Knoll, Dmitry Kuvshinov,

The Bank of England has a 28 MB Excel dataset containing: “A millenium of macro economic data”. A treasure trove. A good thing about it: as it are long term series and as these are roughly based on national accounts data and not just on economics 101 it’s not only focused on GDP but also on sectoral developments and flows between and within sectors. I can’t show it all, and…

will leave, to name only one (!) major part of it, the Flow of Funds data, which, among other things, show which sector provides loans and credits to other sectors, out of the discussion. Another major part which won’t be covered: international trade. The dataset is incredibly rich as you can see for yourself on the second Excel worksheet. I won’t discuss conceptual issues (the meaning and nature and

Inflation in the Euro Area is high and erodes the purchasing power of many (but not all) incomes. Bad. But it will be transitory. And there is no indication of endogenous macro-economic instability. Why do I think this?

I’ll first discuss the (largely) transitory nature of the present price increases, macro (in)stability comes next.

Graph 1 shows two metrics of inflation. The first is based on the ‘normal’ consumer price index, but this time without energy and without increases of indirect taxes (read: Value Added Tax, VAT). As we can see this inflation metric was quite low during a large part of 2021 and still is way below the 2,0% ECB inflation target. Crisis? What crisis! The data show that the recent (and large) increase in inflation is largely caused by energy

In September 2021, a Dutch judge decided, in a case of the FNV Union against Uber, that Uber drivers are employees, not dependent or independent contractors. Meaning, on the micro level, that these employees in one stroke were entitled to more money, more protection and more rights. In the macro-conceptual framework of the International Labour Organization (ILO) this means that they shifted from a somewhat informal status to a formal status (see below). While it shows up, in the conceptual framework of the economist Guy Standing, as a shift from the ‘precariat’ towards the ‘salariat’:

“the old salaried class has splintered into two groups: the salariat, with strong employment security and an array of non-wage forms of remuneration, and a small but rapidly growing group of

I love the national accounts (NA). The NA focus on the money-economy. Total wages (who pays, who receives), profits, imports, exports, consumption, bank credit, the value and ownership of fixed and financial capital and (on the other side of the sectoral balance sheets) debts. By focusing on different kinds of money flows and stocks and by tracking flows between sectors the national accounts enable us to map the relations between economic sectors like construction and industry (cement!) but also between spending categories like consumption and production as well as imports. ‘Input output’ and ‘supply and use’ tables enable an analysis of these ever changing relations.

Even when the flows as presented in the national accounts are monetary, some tinkering with granular data on

The post 2009 decade will stand out as a golden age for economic statistics. I do not mean econometric analysis, I mean statistics like asset prices, rents or estimates of inequality and household income. The empirical basis for a truly scientific macro economics has finally become less shaky. On an irregular basis, I will publish some posts on some of the treasure troves which have become available.

Here, already one example, based on the recent PhD of Matthijs Korevaar., ”Financial lessons from the long history of housing markets”. Finally a long term series of one of the most important price series there is: rents. How could we ever have done proper macro without it!

.

Why is this important? Economists like to argue using stylized facts which are based upon stylized

Technical addendum: ‘Individual consumption expenditure of general government’ equals spending on health care and education and the like. Collective expenditure equals the proverbial streetlamps. NPISH stands for Non Profit Institutions Serving Households like churches, unions and soccer clubs.

At this moment there is quite some talk about the specter of inflation. And indeed: some prices are increasing. Houses! The runaway increase of house prices sure is a specter to be bothered about! But should we also bother about ‘flow’ prices, like consumer prices or the prices of fixed investments? The answer is: life isn’t simple. There are many kind of ‘flow’ prices. We should look at them in tandem. The consumer price index has been developed and designed to estimate the purchasing

India and China are taking over. Cuban vaccines have entered phase three. It’s not the case that western countries are tacking the backseat. Yet. However… There are of course issues with the global vaccination effort. According to rumors, there are 29 million AstraZeneca doses produced in the Netherlands and stored in Italy which are not entering the vaccination chain because of… nobody knows (personal opinion: it sometimes feels as if the ‘intern from hell’ chairs the AstraZeneca board). Also, vaccines work excellent at the micro level, at this moment, when it comes to protecting the vulnerable. Vaccinating old men and women leads within weeks to a staggering decline in the death rate. The macro level is another issue. Only Israel, the fastest vaxer of them all, however seems to have

The ILO (International Labour Organization) has published a ‘flagship’ report about the platform economy. You know, the ‘Deliveroo‘, ‘AirBnB‘, ‘Uber‘ and ‘Mechanical Turk‘ economy. This economy is rapidly growing and is already changing our way of life – and work. I’m not going to parse the report (the ‘executive summary’ is 10 pages for a reason) but I will investigate if the platform economy is a new ‘mode of production’.

The first question is how to define a ‘Mode of Production’. Let’s be inspired by Engels and Marx: for living, breathing, procreating people, a Mode of Production is “a definite form of expressing their life … What they are, therefore, coincides with their production, both with what they produce and how they produce“. So, does the platform economy change

From the AFEE (Association for Evolutionary Economics):

February 24, 2021

Subject: An Open Letter Regarding a Proposal to Dismiss 145 Faculty Members at the University of Leicester

We are shocked to hear that 145 staff members have been placed at risk of compulsory redundancy at the University of Leicester. 

In particular, 16 people within the School of Business have been targeted because their work is deemed to fall within “Critical Management Studies” or “Political Economy”. Specifically, “class based” and “institutionalist” forms of political economy are deemed redundant. However, the “rational choice orthodoxy” has been excluded from this definition.

The proposed action threatens academic freedom. It betrays a lack of appreciation of

Covid 19 vaccinations are going well. Quite a number of vaccines have been approved. And these are being used. At the time of writing close to 100 million ‘jabs’ have already been provided, not just of the Moderna and Pfizer vaccine but also of the Sputnic, AstraZeneca and Sinovac vaccines. And the pace is quickening, for instance in countries like Brazil and Morocco (which uses AstraZeneca and Sinopharm vaccines in its 3.000 vaccination centres).

Look here for the scientific results of the Russian Sputnik vaccine. Look here for the results of the Chinese Sinovac vaccine. Look here for the Cuban/Iranian efforts (Cuba has not enough Corona cases to test it at home). Look here for Indian efforts, one for a vaccine which supposedly can be stored at 37 degrees Celsius.

I’m

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Eurostat has recently published new data on EU unemployment. It’s going down again. Which seems good. But there is more to this than meets the eye. To be counted as ‘unemployed’ one has to have no ‘gainful employment’ and to be actively seeking for a job. People who give up seeking are not counted as unemployed. Neither are people leaving the labor market. And people are giving up seeking as well as leaving the labor market…

Eurostat has engineered a ‘dashboard’ which maps the economic and some of the demographic and mental consequences of the Corona crisis and Corona policies, including data on labor flows. Good. Even when its name, the ‘recovery dashboard‘, sounds a little optimistic. When we look at these flows, it turns out that it has become much harder for the

Immigration is a hotly debated issue in the EU. To be more precise: immigration from the ‘south’ is hotly debated. Immigration from the East is much more important and increasing. Some facts:

Immigration into the EU is increasing and has been increasing for quite some time (the ‘first residence permits’ mentioned in the graph and the quote are not permanent residence permits)This is to a considerable extent caused by immigration into Poland from countries like Ukraine and Belarus. Immigration shifted from Syrian and Ukrainian war refugees to people from Ukraine and Belarus wanting to improve their lives EU countries are bending over backwards to restrict immigration from the south (consider the walls in for in stance Ceuta and Melilla, built and paid for by Spain). But not so for

Let’s start to vaccinate as many people as possible as soon as possible. This will, together with other technological solutions like air purifiers, UV-C lamps as well as large scale fast testing, enable us to escape the cycle of alternating lock downs. It will also enable us to at least pursue a policy of total eradication of Covid-19. Lock downs work – for a while. They can buy us time. But the economic, social and psychological consequences are immense and we will have to rely as much as possible on other means. Vaccinations are one of our best weapons in this fight.

No. Vaccinations are not a cure-all. Hepatitis, HIV. The flue. Despite vaccines we have not yet eradicated these murderous diseases. But vaccines can be a miracle cure. Look at Polio. Smallpox. Measles. What do Polio,

Source

Measuring the labor market and understanding labormarket data has recently been more of a challenge than usual. An large number of people seem to leave the official labor market, rendering unemployment data less useful. Also, a large number of new arrangements influence who are counted as unemployed or as workers. The best and at this point of time the most useful data we have might be data on total hours worked. Which, for the EU and the UK, show a pitiful sight. It resembles half of a war economy.

Many sectors of the economy are curtailed, leading to large declines in hours worked. The other half of a war economy, employing the redundant people, is absent. True, employing people as soldiers or producers of weapons of destruction is a terrible thing. but in the war