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We study how macroeconomic shocks affect U.S. public debt dynamics using a VAR with debt feedback. Following a fiscal austerity shock, the debt ratio initially declines and then returns to its pre-shock path. Yet, the effect is not statistically significant. In a weak economic environment, the likelihood of a self-defeating austerity shock is much higher than in normal times. An inflation shock only slightly reduces the debt ratio for a few quarters. A positive growth shock unambiguously lowers debt. In our specification, the debt ratio is stationary, whereas a VAR excluding debt may imply an explosive debt path.

Political Science --- Law, Politics & Government --- Public Finance --- Debts, Public. --- Inflation (Finance) --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Finance --- Natural rate of unemployment --- Debt --- Bonds --- Deficit financing --- Debts, Public --- Fiscal policy --- Econometric models --- E-books --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Econometrics --- Exports and Imports --- Inflation --- Macroeconomics --- National Budget, Deficit, and Debt: General --- Price Level --- Deflation --- Fiscal Policy --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- Public finance & taxation --- International economics --- Econometrics & economic statistics --- Debt sustainability analysis --- Vector autoregression --- Fiscal stance --- Prices --- External debt --- Econometric analysis --- Debts, External --- United States

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Only a few European economies and Korea and Taiwan Province of China reached high-income status during 1970-2010. Malaysia’s real income per capita increased to 26 percent of the U.S. level in 2010 from 20 percent in 1970. Despite relatively strong growth and a substantial improvement in export sophistication, Malaysia’s total factor productivity lagged behind that of Korea and Taiwan Province of China. We argue that what characterizes their experience in contrast to Malaysia’s is the creation of technologies by domestic firms and a push to leapfrog to the technological frontier at an early stage of development.

Economic development -- Malaysia. --- Economic development. --- Exports -- Malaysia. --- Industrial productivity -- Malaysia. --- Exports and Imports --- Macroeconomics --- Industries: Manufacturing --- Production and Operations Management --- Industrialization --- Manufacturing and Service Industries --- Choice of Technology --- Industrial Policy --- Technological Change: Government Policy --- Economic Growth and Aggregate Productivity: General --- Economywide Country Studies: Asia including Middle East --- Trade: General --- Innovation --- Research and Development --- Technological Change --- Intellectual Property Rights: General --- Macroeconomics: Production --- Aggregate Factor Income Distribution --- Industry Studies: Manufacturing: General --- International economics --- Technology --- general issues --- Manufacturing industries --- Exports --- Productivity --- Income --- Manufacturing --- International trade --- Production --- National accounts --- Economic sectors --- Industrial productivity --- Taiwan Province of China --- General issues

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A universal testing and isolation policy is the most viable way to vanquish a pandemic. Its implementation requires: (i) an epidemiological rather than clinical approach to testing, sacrificing accuracy for scalability, convenience and speed; and (ii) state intervention to ramp up production, similar to True Industrial Policy (TIP), on a global level to achieve a scale and speed the market alone would fail to provide. We sketch a strategy to tackle market failures and implement smart testing, especially in densely populated areas. The estimated cost of testing is dwarfed by its return, mitigating the economic fallout of the pandemic.

United States --- Financial Risk Management --- Macroeconomics --- Public Finance --- Demography --- Diseases: Contagious --- Industrial Policy --- Demographic Economics: General --- Health: General --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- National Government Expenditures and Related Policies: General --- Labor Economics: General --- Health Behavior --- Population & demography --- Health economics --- Economic & financial crises & disasters --- Public finance & taxation --- Labour --- income economics --- Infectious & contagious diseases --- Population and demographics --- Health --- Early warning systems --- Public expenditure review --- Labor --- Financial crises --- Expenditure --- COVID-19 --- Population --- Crisis management --- Expenditures, Public --- Labor economics --- Communicable diseases --- Covid-19 --- Income economics

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We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store-or-sow" model of growth. High volatility of permanent shocks results in high precautionary saving in the safe asset and low investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical evidence shows a nonlinear relationship between investment and saving and that investment is a hump-shaped function of the volatility of permanent shocks, as predicted by the model.

Business & Economics --- Economic Theory --- Risk. --- Saving and investment. --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Capital --- Supply-side economics --- Wealth --- Investments --- Economics --- Uncertainty --- Probabilities --- Profit --- Risk-return relationships --- Investments: Commodities --- Exports and Imports --- Macroeconomics --- Macroeconomics: Consumption --- Saving --- Investment --- Intangible Capital --- Capacity --- Intertemporal Consumer Choice --- Life Cycle Models and Saving --- Economic Growth and Aggregate Productivity: General --- Aggregate Factor Income Distribution --- Current Account Adjustment --- Short-term Capital Movements --- Agriculture: General --- International economics --- Investment & securities --- Precautionary savings --- Income --- Income shocks --- Current account surpluses --- Agricultural commodities --- National accounts --- Balance of payments --- Commodities --- Saving and investment --- Farm produce --- United States

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Policymakers in oil-exporting countries confront the question of how to allocate oil revenues among consumption, saving, and investment in the face of high income volatility. We study this allocation problem in a precautionary saving and investment model under uncertainty. Consistent with data in the 2000s, precautionary saving is sizable and the marginal propensity to consume out of permanent shocks is below one, in stark contrast to the predictions of the perfect foresight model. The optimal investment rate is high if productivity in the tradable sector is high enough.

Exports --- Petroleum --- Saving and investment --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Capital --- Supply-side economics --- Wealth --- Investments --- Coal-oil --- Crude oil --- Oil --- Caustobioliths --- Mineral oils --- International trade --- Econometric models. --- Macroeconomics --- Production and Operations Management --- Macroeconomics: Consumption --- Saving --- Investment --- Intangible Capital --- Capacity --- Fiscal Policy --- Intertemporal Consumer Choice --- Life Cycle Models and Saving --- Aggregate Factor Income Distribution --- Macroeconomics: Production --- Income --- Consumption --- Income shocks --- Precautionary savings --- Productivity --- Economics --- Industrial productivity