In the last couple of years many theories have been put forth explaining the decline of the labor share in advanced countries. In this newsletter we present a recent research which suggests that monopoly power together with globalization better explain the reduction in labor share.
Gourinchas and al and Wren-Lewis have been expecting for the pound to continue depreciating without benefiting the UK economy. But the announcement of the June 8 general election might reverse the trend as new research by Sornette and al. indicates and Didion evaluates Prime Minister May’s negotiating strategy.
Three interesting research papers have recently been published on alternative ways to formulate expectations: Coibio Gorodnichenko and Kamdar write on imperfect information, Khaw, Li and Woodford on myopia, and Gabaix and Laibson on distorted perceptions.