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I carry out a business cycle accounting exercise (Chari, Kehoe and McGrattan, 2007) on the U.S. data measured in wage units (Farmer (2010)) for the entire postwar period. In contrast to a conventional approach, this approach preserves common medium-term business cycle fluctuations in GDP, its components and the unemployment rate. Additionally, it facilitates decomposition of the labor wedge into the labor supply and the labor demand wedges. Using this business cycle accounting methodology, I find that in the transformed data, most movements in GDP are accounted for by the labor supply wedge. Therefore, I reverse a key finding of the real business cycle literature which asserts that 70% or more of economic fluctuations can be explained by TFP shocks. In other words, the real business cycle model fits the data badly because the assumption that households are on their labor supply equation is flawed. This failure is masked by data that has been filtered with a conventional approach that removes fluctuations at medium frequencies. My findings are consistent with the literature on incomplete labor markets.

Labor --- Macroeconomics --- Price Level --- Inflation --- Deflation --- Business Fluctuations --- Cycles --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Energy: Demand and Supply --- Prices --- Energy and the Macroeconomy --- Wages, Compensation, and Labor Costs: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Labor Economics: General --- Labor Demand --- Labour --- income economics --- Wages --- Unemployment rate --- Labor supply --- Labor share --- Labor demand --- Unemployment --- Labor market --- Labor economics --- United States --- Income economics

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This paper presents a simple macroeconomic model of the oil market. The model incorporates features of oil supply such as depletion, endogenous oil exploration and extraction, as well as features of oil demand such as the secular increase in demand from emerging-market economies, usage efficiency, and endogenous demand responses. The model provides, inter alia, a useful analytical framework to explore the effects of: a change in world GDP growth; a change in the efficiency of oil usage; and a change in the supply of oil. Notwithstanding that shale oil production today is more responsive to prices than conventional oil, our analysis suggests that an era of prolonged low oil prices is likely to be followed by a period where oil prices overshoot their long-term upward trend.

Petroleum industry and trade --- Petroleum products --- Mazut --- Petroleum --- Hydraulic fluids --- Energy industries --- Oil industries --- Econometric models. --- Prices --- Refining --- Investments: Energy --- Macroeconomics --- Economic Theory --- Industries: Energy --- Bayesian Analysis: General --- Forecasting and Other Model Applications --- Nonrenewable Resources and Conservation: Demand and Supply --- Exhaustible Resources and Economic Development --- Energy: Demand and Supply --- Energy: General --- Macroeconomics: Production --- Hydrocarbon Resources --- Agriculture: Aggregate Supply and Demand Analysis --- Investment & securities --- Petroleum, oil & gas industries --- Economic theory & philosophy --- Oil prices --- Oil --- Oil production --- Natural gas sector --- Supply elasticity --- Commodities --- Production --- Economic sectors --- Economic theory --- Gas industry --- Elasticity --- Economics --- United States

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We study the impact of fluctuations in global oil prices on domestic inflation using an unbalanced panel of 72 advanced and developing economies over the period from 1970 to 2015. We find that a 10 percent increase in global oil inflation increases, on average, domestic inflation by about 0.4 percentage point on impact, with the effect vanishing after two years and being similar between advanced and developing economies. We also find that the effect is asymmetric, with positive oil price shocks having a larger effect than negative ones. The impact of oil price shocks, however, has declined over time due in large part to a better conduct of monetary policy. We further examine the transmission channels of oil price shocks on domestic inflation during the recent decades, by making use of a monthly dataset from 2000 to 2015. The results suggest that the share of transport in the CPI basket and energy subsidies are the most robust factors in explaining cross-country variations in the effects of oil price shocks during the this period.

Petroleum products --- Mazut --- Petroleum --- Hydraulic fluids --- Prices --- Econometric models. --- Refining --- Investments: Energy --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Price Level --- Deflation --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Energy and the Macroeconomy --- Energy: Demand and Supply --- Energy: General --- Monetary Policy --- Investment & securities --- Monetary economics --- Oil prices --- Oil --- Consumer price indexes --- Inflation targeting --- Commodities --- Monetary policy --- Petroleum industry and trade --- Price indexes --- United States

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This paper discusses Morocco’s Ex Post Evaluation of Exceptional Access Under the 2014 Precautionary and Liquidity Line (PLL) Arrangement. The case of Morocco demonstrated that with strong ownership, parsimonious conditionality can be effective in delivering on program commitments. The PLL arrangement with Morocco was successful in helping to reduce vulnerabilities. Fiscal balances improved, and the fiscal objective—a gradual reduction of the budget deficit to 3 percent of GDP by 2017—appropriately balanced the need to bring the debt-to-GDP ratio down closer to 60 percent in the medium term, while allowing for necessary investment and social spending. Going forward, to achieve higher and more inclusive growth, Morocco will require continued strong policies and accelerated fiscal and structural reforms.

Exports and Imports --- Finance: General --- Foreign Exchange --- Macroeconomics --- Public Finance --- Debt --- Debt Management --- Sovereign Debt --- Fiscal Policy --- Energy: Demand and Supply --- Prices --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Currency --- Foreign exchange --- International economics --- Finance --- Public debt --- Government debt management --- Fiscal policy --- Oil prices --- Expenditure --- Public financial management (PFM) --- Debts, Public --- Expenditures, Public --- Morocco

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This Selected Issues paper analyzes the high household savings in Sweden. Preliminary evidence suggests that the large increase in savings after the financial crisis may reflect the rising cost of elder care. Econometric analysis appears to confirm anecdotal explanations that extended life expectancy and a preference for higher-quality residential care have contributed to higher savings. Further analysis using more granular data is needed to test alternative hypotheses for the rise in household savings. Anecdotal reports also indicate that parental assistance in young people’s home purchases could be behind the increased saving and serves as an additional bequest motive. Investigating this possibility would benefit significantly from household level data.

Labor --- Macroeconomics --- Demography --- Wages, Compensation, and Labor Costs: General --- Demand and Supply of Labor: General --- Labor Economics: General --- Wages, Compensation, and Labor Costs: Public Policy --- Aggregate Factor Income Distribution --- Labour --- income economics --- Economic & financial crises & disasters --- Population & demography --- Wages --- Labor markets --- Real wages --- Wage bargaining --- Labor market --- Labor economics --- Income --- Global Financial Crisis, 2008-2009 --- Sweden --- Income economics