Pei Kuang, University of Birmingham, joins us to present Central Bank Communications and House Prices Expectations.
‘We study how US consumers’ house price expectations respond to verbal and non-verbal communication about interest rate changes using several large online surveys. Verbal communication about interest rate hikes leads to little response of average house price expectations but large heterogeneity among household groups. Communication about rate hikes combined with a simple explanation of the mortgage rate channel causes large downward revisions to house price expectations. Consumers interpret heterogeneously Chair Powell’s voice tone and body language at the press conference which significantly influence their house price expectations. More negative evaluations are associated with larger upward revisions to house price expectations.
Wednesday March 29
Angus Foulis Senior Adviser – Centre for Central Banking Studies at the Bank of England joins us to present ‘Star Charities, Director Networks and Firm Performance’.
Angus joined the Bank in September 2013 after completing a PhD in economics at the London School of Economics. His initial research focused on financial stability, macroprudential policy, and the housing market. More recently he has been examining the nexus between household-level and firm-level data to explore how shocks to company owners affect corporate behaviour. In his policy work, Angus has worked on various aspects of macroprudential policy, including the design and use of macroprudential tools in the UK housing market.
Tomoaki Yamada joins us from Meiji University, Tokyo to present ‘The effects of monetary policy shocks on inequality in Japan’
Abstract: The impacts of monetary easing on inequality have been attracting increasing attention recently. In this paper, we use the micro-level data on Japanese households to study the distributional effects of monetary policy. We construct quarterly series of income and consumption inequality measures from 1981 to 2008, and estimate their response to a monetary policy shock. We find that monetary policy shocks do not have a statistically significant impact on inequality across Japanese households in a stable manner. When considering inequality across households whose head is employed, we find evidence that, before the 2000s, an expansionary monetary policy shock increased income inequality through a rise in earnings inequality. Such procyclical responses are, however, scarcely observed when the current data are included in the sample period, or when earnings inequality across all households is considered. We also find that transmission of income inequality to consumption inequality is minor, including during the period when procyclicality of income inequality was pronounced. Using a two-sector dynamic general equilibrium model with attached labor inputs, we show that labor market flexibility is central to the dynamics of income inequality after monetary policy shocks. We also use the micro-level data on households’ balance sheets and show that distributions of households’ financial assets and liabilities do not play a significant role in the distributional effects of monetary policy.
Tomoaki will be available for meetings, lunch or dinner. Please see your e mails to fill in the timetable there.
Wednesday March 22nd
Markus Nagler (University of Erlangen-Nuremberg) presents the following paper at the School’s research seminar: High-Pressure, High-Paying Jobs?
‘Work-related stress has reportedly increased over time. Using worker-level survey and experimental data, we investigate the labour market consequences of work pressure. We build a measure of pressure strongly associated with adverse health outcomes and show that pressure comes with a sizable earnings premium, reflecting workers’ willingness-to-pay to avoid pressure. As expected, we do not find a premium among civil servants who face strong labour market frictions. Our experimental evidence is consistent with worker sorting into high-pressure jobs and with a sizable market-level compensating differential. Differences in the prevalence and valuation of work pressure explain substantial shares of wage inequality.’
Friday March 17th