Author Archive

Beveridge Curves – Covid edition

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 present, unprecedented labor market and the very large outward shift of the curve in at least the USA (Figure 1 shows USA data, below I’ll also show EU data)?

Figure 1. Beveridge Ellipsoids in the USA

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Consumer energy prices: stylized post 1960 facts

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 high level of energy prices?

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The toll of high energy prices

April 5, 2022 5 comments

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….

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Energy is getting cheaper (cost price). But: who profits?

April 2, 2022 2 comments

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?!

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April 1, 2022 3 comments

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

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Inflation and the War in Europe

March 18, 2022 2 comments

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:

  1. Not all increases are created equal
  2. We should not just look at expenditure prices (consumption, investments) but also at factor prices and cost prices (wages, wage costs)
  3. 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)
  4. But Europe is in a full scale war and Wars are Inflationary

What to do? At this moment the EU economy is not ‘overheated’ and inflation as shown in the graph must be rated to be transitory. The War in Europe will however lead, for a number of reasons, to additional inflationary pressures – which can only be countered by civilian investments in food and energy production.

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The disruption of food supply and distribution chains as a vile and criminal act

March 9, 2022 6 comments

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 exports of grain (even when at the time of writing trucks with agricultural seeds are still driving from the Netherlands to Russia (private information)).

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The Ukraine war or the preponderance of ‘fertilizer and soil’ over ‘blood and soil’.

March 1, 2022 8 comments

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: Read more…

Do economists have the ‘periodic table’ of prices needed to pin down inflationary epochs?

February 12, 2022 Leave a comment
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Euro Area inflation: Putin wins. If we let him. By commuting too much.

January 9, 2022 15 comments

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).

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A golden age of macro economic statistics 5. Rates of return.

January 7, 2022 2 comments

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, Moritz Schularick, Alan M. Taylor. 2017. “The
Rate of Return on Everything, 1870–2015” Federal Reserve Bank of San Francisco Working
Paper 2017-25. p. 13.

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A golden age of macro economic statistics 4. A Bank of England treasure trove.

December 27, 2021 2 comments

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…

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Happy Christmas and a healthy 2022

December 24, 2021 2 comments

Euro Area inflation: troubling but transitory

December 13, 2021 2 comments

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?

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A golden age of macro economic statistics 3. Informal and precarious labor.

November 28, 2021 1 comment

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 proficians. The latter, which includes small-scale businesses, consists of workers who are project-oriented, entrepreneurial, multi-skilled, and likely to suffer from burn-out sooner or later. Traditionally, the next income group down has been the proletariat, but old notions of a mass working class are out-dated, since there is no common situation among workers. The earlier norm of this diminishing male-dominated class was a lifetime of stable full-time labor, in which a range of entitlements called “labor rights” was built up alongside negotiated wages. As the proletariat shrinks, a new class is evolving—the precariat”.

Source: Standing, G. (2014) ‘The precariat’, Contexts 13-4, pp. 10-12.

Source: ILO (2021), Conceptual Framework for Statistics on the Informal Economy (Geneva) p.  48.

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A golden age of macro-economic statistics 2. Macro-based CO2 emissions.

November 6, 2021 1 comment

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. Read more…

A golden age for macro economic statistics. Part 1: homestead rents or house rents?

October 31, 2021 1 comment

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!


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A little taxonomy of inflation – there is no thing like ‘the’ price level

May 18, 2021 2 comments


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 power of households, meaning that increases of the consumer price level should be analyzed together with increases in wage levels, other income components and hours worked. Focusing on one price index only, as central banks tended to do (they look at many, but policy is focused on one), is not very helpful. Surely not during crises when large sectoral differences lead to large differences between different price indexes (figure 1). The lock downs have, directly or indirectly, increased costs, led to disruptions of supply chains and a surge in hiring leads to shortages of labor in some places. Don’t bother. Or: do bother, but that means that we should not bother about erratic price developments but about the ability of households and companies to survive the disruptions.

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Vaccinations: a new world order (3 graphs)

March 28, 2021 2 comments

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 reached something like herd immunity since around ten days ago. The UK and the USA will have to double vaccination rates to reach this stage – will pressure to finally start to export vaccines mounts. The EU, china, India have a long road ahead. Interesting question: logic dictates that Israel will have to vaccinate inhabitants of the Palestine state, too. Will this happen? Is it already happening? Anyway, looking at daily data (the graph shows a seven day rolling average) China vaccinated 6 million people in one day, yesterday. For the time being, there are no limits to vaccination growth. Good.

vaccinations 28 3 2021


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Who owns the market? An ILO report about the platform economy

March 4, 2021 4 comments

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’.

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