In November, U.S. inflation was somewhat lower than expected (2.7% compared with November 2024). It will be interesting to see whether the downward trend continues in January. For the moment, caution is warranted. The government shutdown directly affected data collection and economic indicators. Currently, it’s challenging to accurately interpret the U.S. economy.
The BLS report will certainly bolster the case for those advocating further interest rate cuts.
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The current issue of the International Productivity Monitor is super interesting. For instance, the article “Adult Skills and Productivity: New Evidence from PIAAC 2023” by Dan Andrews, Balázs Égert and Christine de La Maisonneuve.
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Thought-provoking (irrespective of whether you agree)!
“Will AI Improve Undergraduate Economics Education?” by Matthew E. Kahn.
“For decades, undergraduate economics educators have followed a well-worn playbook featuring textbooks, lectures and problem sets. Students have passively listened, taken notes and studied for exams. AI disrupts this educational process. Some students are using this tool as a substitute for their own precious time. What is our best response? This paper provides a prospective analysis of how to restructure every phase of the undergraduate economics experience to improve the major and better prepare students for their uncertain future.”
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Super interesting!
“The chip landscape: Geographical distribution of wafer fabrication capacity” OECD Science, Technology and Industry Policy Papers.
“This paper strengthens the evidence base for semiconductor policy by mapping global semiconductor wafer fabrication capacity by economy, process node density, process technology and business model, building on the newly assembled OECD Semiconductor Production Database. The results show that semiconductor production capacity is highly geographically concentrated and underscore the importance of distinguishing between different semiconductor types and the limited scope for substitutability of production between fabrication plants. This structural rigidity creates bottlenecks that can amplify the impact of supply disruptions and limit the scope for remedial actions.”
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Highly relevant!
“The rise of non-bank financial institutions: implications for monetary policy” by Ryan Niladri Banerjee, Boris Hofmann, Ding Xuan Ng, and Gabor Pinter.
“Non-bank financial institutions (NBFIs) have grown significantly in recent years, mainly driven by the growth of investment funds, including hedge funds. These changes reflect the role of bond markets, which have expanded on the back of surging government debt. The rise of NBFIs adds uncertainty to monetary policy transmission, as there could be dampening and amplifying effects. Investment funds appear to strengthen transmission while at the same time making it less stable.”
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Highly relevant!
World Bank International Debt Report 2025
“A paradox is playing out in developing economies. On the bright side, inflation is abating. The oppressive interest rates of the last five years have begun to ease, which implies that the crushing debt service burdens of the last few years might start to shrink. For the right price, foreign bond investors are willing to provide financing again, enabling many countries to stave off default. For most countries, however, these are small consolations—not enough to overcome the grave setbacks of this decade. As this report documents, the upheavals of the early 2020s produced a financial riptide like no other: between 2022 and 2024, about US$741 billion more flowed out of developing economies in debt repayments and interest than flowed into them in the form of new financing. It was the largest debt-related outflow in more than 50 years. The human toll has been steep: among the 22 most highly indebted countries, one out of every two people today cannot afford the minimum daily diet necessary for lasting health.”