economic research topics 2023

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Top 10 economic predictions for 2023

Executive Director and Asia-Pacific Chief Economist, S&P Global Market Intelligence

Director, Global Economics, S&P Global Market Intelligence

Principal Economist, S&P Global Market Intelligence

Senior Economist, IHS Markit

Below, we offer our top 10 economic predictions for 2023:

1. We expect COVID-19 to continue its transition to a global endemic and the status quo to prevail in Russia's war in Ukraine, with no material implications for the global economy.

Residual effects of the COVID-19 pandemic include episodic shortages that have complicated business planning and logistics and held prices higher than would otherwise have been the case. As the world moves into 2023 and continues the transition to an endemic, COVID-19-related shortages should become less frequent, helping prices in affected goods to ease further over the year.

Uncertainty around the course of the conflict in Ukraine remains and builds a premium into energy and other industrial commodity markets. We expect that the war in Ukraine will continue without major escalation through at least early summer, when a cease-fire may be achieved. That scenario will not end the conflict and economic sanctions and voluntary embargoes will remain. We do not expect renewed surges in commodity prices stemming from that conflict or the West's responses.

Looking ahead, softening global demand will be the dominant story and dampen inflation. While crude oil prices should ease over 2023, high energy costs will put a floor under the prices of processed materials and limit the decline in inflation.

2. Inflation will slow significantly in 2023, but achieving central bank targets will be a multiyear process.

After reaching multidecade highs in 2022, global inflation will moderate in response to tightening financial conditions, softening demand, and easing supply chain conditions.

Downward price pressures are already in the pipeline. S&P Global Market Intelligence's Materials Price Index, a comprehensive indicator of industrial commodity prices, has fallen nearly 30% from its record high in early March. Agricultural commodity prices are in the early stages of a correction and should decline through 2023, led by grain prices. Commodity price declines will filter downstream to intermediate and finished products, bringing some relief to businesses and consumers in 2023.

Yet, labor shortages and wage acceleration are contributing to the persistence of inflation, especially in services. In some sectors, such as machinery where price increases in 2022 did not keep up with input cost inflation, margin restoration will be a priority.

It could take several years to sustainably bring inflation rates down to central bank targets. Global consumer price inflation will likely ease to an average of 5% in 2023, finishing the year at a 3.5% year-on-year pace.

3. Global monetary policy tightening has further to go out heading to spring 2023 with much regional variation.

In the US, we expect the federal funds rate to peak near 5% next spring.

While the European Central Bank (ECB) moderated the size of its rate increases in December, its accompanying guidance was more hawkish than expected, suggesting the hiking cycle will continue well into 2023.

Many central banks in the region typically shadow ECB policy. The Bank of England (BoE) is an exception and faces US-style wage pressures. Still, with a recession already under way, recent fiscal tightening and concerns over a housing crash suggest the BoE will not go quite as far as the Fed. We expect a peak bank rate of 4% in spring 2023.

Monetary easing will likely begin earliest and be most pronounced in Latin America and emerging Europe. There, central banks tightened policy relatively early and substantially as inflation soared from 2021. We expect the Brazilian central bank to start lowering rates in mid-2023.

We do not expect the Fed to reverse course until it is confident that inflation will decline toward its 2% objective, implying rate cuts only from 2024 and disappointing futures market expectations of easing from late 2023. In broad terms, we see the same outlook for the ECB.

4. Mild recessions are forecast in the United States and Europe, but resilience in Asia Pacific will prevent a global recession.

In the US, persistently elevated inflation and extraordinarily tight labor markets have prompted a sharp monetary tightening that has resulted in higher Treasury term yields, wider spreads to yields on private bonds and mortgages, US dollar appreciation, a swoon in stock prices, a sudden reversal in house prices, and a notable increase in financial market volatility.

With a lag, and against the backdrop of waning pandemic-era fiscal relief, this broad and significant tightening of financial conditions will tip the US economy into a mild recession in the first half of 2023.

We forecast relatively short-lived and mild recessions in the EU/eurozone during the fourth quarter of 2022 and the first quarter of 2023, reflecting multiple headwinds and matching consistently with recent Purchasing Managers' Index™ (PMI™) data. The primary driver of expected real GDP contractions is private consumption given an acute squeeze on household real incomes due to exceptionally high inflation. A more severe, energy-driven recession will remain a potential risk beyond the current winter.

Asia Pacific is forecast to be the fastest-growing region of the global economy in 2023, acting as a counterweight to recessions in the US and the EU. This scenario reflects improving growth prospects in mainland China and continued economic expansion in other major Asia Pacific economies, including India and Southeast Asia. Australia, Indonesia, and Malaysia will continue to benefit from high commodity export revenues, particularly for oil, liquefied natural gas (LNG), and coal. Recessions in the US and the EU will dampen the region's economic performance since these economies purchase 27% of the region's exports.

Moderate expansions in Asia Pacific, the Middle East, and Africa will keep the global economy moving forward through 2023. Global real GDP growth is projected to slow from near 3% in 2022 to half that pace in 2023.

5. Housing markets will continue to weaken in the face of rising mortgage rates, but price declines may be tempered in some markets by still tight supplies relative to demographics.

In response to monetary tightening, mortgage rates will remain elevated through 2023. As a result, consumers who had previously locked in low rates will opt to remain in their current homes, and potential new homeowners will stay on the sidelines as purchasing a home is no longer affordable. Recession expectations and the cost-of-living crisis will further reduce demand and push prices lower in 2023, especially in overvalued markets.

We do not expect a market crash or full correction of price bubbles owing to the relative strength of labor markets. However, a need for even higher interest rates to counteract persistent above-target inflation or a significant increase in unemployment would increase the risk of a crash, leading to deeper and longer recessions. The highest risks are in Europe, the US, Canada, and Australia.

6. The US dollar has likely peaked and will retreat in 2023, but it will remain elevated compared with prior years.

Supported by favorable interest rate spreads and investors' flight to safety, the US dollar appreciated sharply over the first ten months of 2022, reaching unsustainable heights against the yen, the euro, and other major currencies before pulling back.

These forces will buoy the dollar through the first half of 2023. Subsequently, we expect the dollar to depreciate under the weight of large US current-account deficits and subdued economic growth.

The euro, which has weakened in response to the eurozone's vulnerability to the impacts of the Russia-Ukraine war and cautious monetary policies, will recover gradually. Meanwhile, some narrowing of US-Japan, long-term interest rate spreads and Japan's comparatively mild inflation rate will lead to some unwinding of the yen's sharp 2022 depreciation against the US dollar.

7. Emerging and developing economies (EMDEs) will remain resilient during 2023, but pockets of vulnerability will result in a two-tier growth path.

Higher interest rates in advanced economies, in combination with the expiration of most COVID-19 support measures in 2022, will have spillover effects for EMDEs.

The risks of higher default rates among domestic borrowers and sovereign debt restructuring have increased, but a wave of crises remains unlikely. Real GDP growth will be more vulnerable in EMDEs with slow policy responses, higher debt loads, and smaller external buffers, such as Zambia, Malawi, and Belarus.

The possibility of debt restructuring under the G-20 common framework, instead of disorderly defaults, is more likely for low-income, debt-distressed countries, especially in sub-Saharan Africa.

As a region, Asia Pacific has adopted more prudent policies since the Asian Crisis of the late 1990s and has more manageable debt levels and healthier external buffers. Asia Pacific will also benefit from lingering pent-up demand from the later lifting of COVID-19 lockdown measures, the resumption of pandemic-delayed infrastructure programs, relatively low inflation, and the modest recovery in mainland China's growth.

In contrast, emerging Europe will be severely affected by the slowdown in the eurozone and the continued impact of Russia's war in Ukraine.

8. Mainland China's easing of containment policies will propel a choppy economic recovery.

Given the likely outbreak waves in the wake of policy changes, the government will proceed to exit by balancing between alleviating public fatigue of containment measures and minimizing potential public health fallouts from the exit.

While financial markets may stage energetic rallies in response to the retreat of the policy, initial recovery of the real economy will be subdued, calling for accommodative economic policies to smooth the bumpy path.

9. Supply chain disruptions will ease markedly in 2023, but tensions from labor shortages will remain.

One of the lessons from the COVID-19 pandemic and its following recovery was that global supply was not geared to face the extreme demand shock that occurred upon the reopening of the world's major economies.

The recessions in Europe and North America that we anticipate in 2023 will help narrow the global supply-demand gap. That process has already started: S&P Global's PMI™ data show that global supplier delivery times in the manufacturing sector in November were down significantly from the peak in early 2022, with room to narrow further in some industries—equipment goods, mostly—as demand softens in 2023.

However, the easing of supply chain disruptions will likely be limited given labor shortages.

10. Labor shortages will remain a challenge in 2023 even as unemployment rates are predicted to rise modestly.

Economies that depended on migration for the provision of labor to keep their economies humming before the pandemic — the US, Canada, Western Europe, and Australia — will see migration flows improve, but probably not fast enough to head off capacity constraints.

In emerging markets, the wave of workers that moved from urban to rural areas during the worst of the pandemic will be slow to return, alongside a continued slow recovery of cross-country labor migration. Gulf Cooperation Council countries are an exception as migrants from East Africa and South Asia will remain crucial in supporting planned investments, given the insufficient local labor markets.

Another exception is emerging Europe — a significant share of Ukrainians and Russians who emigrated owing to the war in 2022 will remain abroad in 2023, boosting the population and potential labor force of other countries across Europe and Central Asia. Nevertheless, several countries face the risk of wage-price spirals amid skills mismatches and slow progress in containing inflation expectations.

Globally, hiring freezes will be more common than mass layoffs in 2023 as employers seek to retain talent. Job losses will be concentrated in sectors that are sensitive to credit conditions, such as real estate and finance.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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Major economic developments of 2023 and how they’ll evolve in 2024

Subscribe to the economic studies bulletin, chloe east , chloe east nonresident fellow - economic studies , the hamilton project @chloeneast ben harris , ben harris vice president and director - economic studies , director - retirement security project @econ_harris sanjay patnaik , sanjay patnaik director - center on regulation and markets , bernard l. schwartz chair in economic policy development, senior fellow - economic studies @sanjay_patnaik louise sheiner , louise sheiner the robert s. kerr senior fellow - economic studies , policy director - the hutchins center on fiscal and monetary policy @lsheiner tara watson , and tara watson director - center for economic security and opportunity , senior fellow - economic studies @taraelizwatson marta wosińska marta wosińska senior fellow - economic studies , center on health policy @mwosinska.

December 21, 2023

17 min read

With 2023 winding down, we asked six Brookings experts to take a moment to look back on some of the biggest economic policy developments of 2023 and the ways they expect them to evolve in 2024. Explore their reflections on fiscal policy, the social safety net, climate economics, and more below.

On some dimensions, the U.S. labor market appears to have mostly recovered from the COVID-19 shock and to be stronger than before. By early 2022, the unemployment rate fell back to the very low levels seen right before the pandemic, and it has remained relatively stable throughout 2023 despite slowing job growth and rising interest rates. Median real weekly earnings among workers are now slightly higher than they were at the end of 2019. However, these encouraging points do not paint the full picture. The percent of the population out of the labor force is still much higher than before the pandemic. And half a million workers went on strike in 2023 demanding higher wages and improved working conditions. All of this comes against the backdrop of high, albeit falling, rates of inflation over 2023. The question remains of how workers have fared in the labor market overall.

In a Hamilton Project piece with Wendy Edelberg and Noadia Steinmetz-Silber, we reviewed evidence about how workers’ real pay has changed over the last few years in the U.S. We considered multiple measures of pay for different types of workers and used different measures of inflation, in comparison to various reference periods. Overall, we see some reasons for optimism. All pay measures that we examine have increased slightly relative to the end of 2022 and the end of 2019. Comparing to longer-run trends, most pay measures, adjusted for inflation using PCE, are recently showing gains that are somewhat above the levels predicted by historical trends. And the measures generally show that workers in lower-wage occupations and industries and those with lower earnings have seen larger gains since 2019.

However, not all of the news about real pay is as positive. First, even with recent gains, pay at the bottom of the distribution is still quite low and puts many households at or below the poverty line. Additionally, this trend of rising real pay at the bottom of the distribution appears to be weakening in recent quarters. Second, workers in the middle of the distribution saw more mixed changes in pay than those at the bottom or the top—some metrics show small gains and some show small losses for those in the middle. And finally, when pay is adjusted using CPI instead of PCE, which reflects the prices that are most salient to the average consumer, pay changes are weaker and, in some cases, were even negative.

Going forward I will be looking out for several key indicators of workers’ well-being. First, it is important to continue to pay attention to how real pay is changing, especially for different types of workers rather than just in the aggregate or for the average worker. Second, it will be crucial to focus on metrics of working conditions and worker compensation that are less traditionally studied, such as schedule reliability and access to benefits, particularly as alternative work arrangements like contractor and gig work become more common.

Sanjay Patnaik

Related to climate change, one of the most important developments in the domestic policy space was the implementation of the Inflation Reduction Act , the U.S.’ first major legislation to address climate change. A major issue the Center on Regulation and Markets has focused on is permitting reform, a topic that is often neglected but without which the expected climate benefits of the IRA are unlikely to materialize . In addition to regularly engaging with a wide range of stakeholders on this topic, we published an article on how permitting could be reformed in the U.S. to make it more streamlined and allow necessary infrastructure to be built faster.

Another essential aspect of the IRA we focused on was the potential impact of the IRA on U.S. greenhouse gas emissions, which was modeled and estimated by several research groups ahead of the passage of the IRA. However, the U.S. currently does not have an independent government office that could estimate the carbon impact of certain legislation in a non-partisan and independent manner. We therefore launched a Brookings task force on creating the blueprint for a federal Office of Carbon Scoring in the U.S., “to provide the institutional, analytical, and policy foundation for establishing a federal Office of Carbon Scoring (OCS) that would analyze the potential impact of proposed legislation on greenhouse gas emissions and other relevant climate metrics.” We also published a commentary on how carbon scoring could help Congress make real progress on climate change , further outlining our idea of carbon scoring in greater detail.

Another timely topic we focused on in the climate space was the behavior of firms in carbon markets, which are becoming increasingly important around the world, not only though mandatory carbon pricing regulations but also through voluntary carbon markets. On this topic, I published a working paper on how carbon permit markets can lead firms to capture surplus rents by drawing on empirical evidence from the European Union Emissions Trading Scheme (EU ETS). Similarly, we advanced our work on climate risk management, which is increasingly becoming important for governments, corporations, and consumers. In our most recent working paper on this topic , we propose a new framework for how firms can manage their climate risk exposure.

One important trend to watch out for in 2024 relates to a potential carbon border tariff in the U.S., as several bills related to a carbon tax in the U.S. were released recently , undoubtedly in response to the EU’s Carbon Border Adjustment Mechanism (CBAM). Three of the bills were bipartisan, which is a strong indication that there is potential room for the U.S. to institute some kind of carbon border fee, which would align it more closely with the EU.

Rayan Sud, Sanjay Patnaik, Robert L. Glicksman

February 14, 2023

March 16, 2023

Louise Sheiner

In 2023, investors began worrying about federal budget deficits again. Interest rates on U.S. Treasuries moved up sharply, despite the fact that budget analysts have been warning about the challenges of debt sustainability for decades. Why all the renewed attention to the deficit? A few possible reasons include:

The budget deficit increased sharply in fiscal year 2023. After adjusting for the announcement and subsequent cancellation of Biden’s student loan forgiveness program, the deficit doubled from about $1 trillion in FY 2022 to $2 trillion in FY 2023.
The standoff over the debt limit, the threat of a government shutdown, and the downgrading of U.S. debt by Fitch all increased concern about political dysfunction in Washington—perhaps suggesting to investors that it would take longer than they had anticipated for the government to start addressing the long-run budget challenges.
The increase in interest rates—perhaps caused by renewed deficit worries, perhaps not—also led to increased concern over the deficit. The higher are interest rates, the faster the rise in the debt for any given set of tax and spending policies.

But in my view, nothing fundamental changed in 2023. A detailed breakdown shows that the jump in the deficit in 2023 reflected temporary and/or one-time factors that don’t imply that future deficits will be higher. And even before the recent political events, it didn’t seem likely that Congress was going to address our long-term fiscal challenges any time soon.

Since nothing fundamental changed in 2023, it is hard to understand the recent increase in rates: Were markets just not paying attention to fiscal issues until recently? Did they misinterpret the jump in the FY 2023 deficit as signaling larger deficits in the future? Or perhaps the recent increase isn’t about fiscal issues—perhaps it reflects changes in expectations about Federal Reserve policy or even increased productivity growth because of artificial intelligence. A surge in productivity growth, should it materialize, could greatly improve our fiscal outlook, offsetting the effects of higher interest rates.

Recent data suggest that at least part of the surge in rates was temporary: After hitting a post-2007 peak in October 2023, interest rates on Treasuries have been drifting down. Still, the rate on 10-year inflation-protected Treasuries on December 19, 2023 was about 1½ percentage points higher than its average in 2019. Will rates continue to decline, or will they settle at this higher level? Will the focus on the deficit continue—or will it fade away? These are issues I will be watching in 2024.

September 20, 2023

Louise Sheiner, Alexander Conner

November 22, 2023

Tara Watson

I’ve been watching the evolution of the U.S. safety net retreat back to a “new normal” after massive expansion in the COVID era. Food assistance—SNAP (the Supplemental Nutritional Assistance Program)—temporarily increased benefits and added an emergency allotment, changes that had phased out by early 2023. In 2021, the temporary expansion of the federal Child Tax Credit (CTC) made an enormous difference, especially for lower-income families. We saw child poverty fall by almost half for that one year.

Despite the end of SNAP emergency allotments and the expanded CTC, we are not quite returning to the pre-COVID safety net. In 2021, the federal government updated the Thrifty Food Plan, a change that was already in the works and boosted the amount of food assistance SNAP provides. Even with the end of the temporary measures, food assistance will remain above 2019 levels.

And states were also making changes to their safety net supports. The safety net is actually not one safety net, but at least 51 safety nets comprised of a patchwork of federal, state, and local programs. Over the last decade, many states were creating or expanding state Earned Income Tax Credits . Many states increased their TANF cash assistance programs before and during COVID, whereas others let the value of TANF benefits continue to erode. Even though the federal government helps equalize support across states, striking differences remain.

Looking ahead, there are a few safety net issues that will be important in the coming year or two:

First, there will be continued discussion about the CTC. There was momentum around getting the 2021 expansions made permanent, an effort which ultimately failed. But the more modest current version, which was part of the 2017 Trump tax law, will expire in 2025. There are debates about how much if any should go to non-earners, and how high up in the income distribution the credit should go. My colleagues proposed one compromise version .

Second, there is a bipartisan support for long-overdue reforms to the Supplemental Security Income program for low-income Americans with disabilities—raising the asset limits. Right now if single individuals have more than $2,000 in the bank they can’t qualify for benefits, which is a strong disincentive to save. There’s an opportunity to fix that in 2024.

Third, it will be interesting to see how states continue to use their income tax systems to help support children and families. When the expanded federal CTC ended at the end of 2021, some states opted to build on that success by developing their own CTCs. As states continue to experiment, it could widen the significant differences across states in safety net support.

Gabriela Goodman, Tara Watson

November 28, 2023

Lauren Bauer

August 19, 2021

Marta Wosińska

For over two decades, drug shortages have plagued various parts of the healthcare system, mostly in the hospital setting—only occasionally hitting the national headlines. 2023 was yet another year with over 100 unique drugs on FDA’s drug shortage list . The persistent nature of shortages may have gone unnoticed yet again were it not for some high-profile shortages, the most prominent and unnerving of which have been shortages of inexpensive, standard-of-care cancer treatments.

Drug shortages are primarily driven by economic forces. Most shortages occur with generic drugs where the fierce price competition that drives spending down for consumers and payers also turns up the dial on cost cutting. Companies making generic drugs have little incentive to invest in quality oversight and in buffering their supply chains, which raises the risk of manufacturing disruptions that then turn into shortages. This dynamic is particularly consequential for the hard-to-manufacture sterile injectable drugs. Companies also have a strong incentive to purchase cheaper inputs and off-shore production to lower cost environments, which can expose our drug supply chains to geopolitical risks.

With cancer shortages in the headlines, several Congressional committees held hearings on the issue including HSGAC , House Energy & Commerce and Senate Finance . Proposals for administrative and legislative actions abound , but there continues to be lack of appreciation for what actions will address root causes, what actions might help but might also be potentially wasteful, and what actions might frankly make things worse. The inability of policymakers to sort through the various ideas is particularly concerning because addressing shortages will require greater government spending, for which there is currently limited appetite.

To inform executive branch actions and legislation, colleagues and I have put forward a number of analyses coupled with policy recommendations, which I had the opportunity to highlight recently in my testimony with the Senate Finance committee. In a June report , Richard Frank and I proposed what the Medicare program and FDA can do to prevent and mitigate shortages of generic sterile injectable drugs caused by manufacturing quality lapses. To address the risk of future shortages due to geopolitical and climate change risks, colleagues and I developed a framework for how the federal government should assess which supply chains are most vulnerable to disruption—a key step in prioritizing government support. Other work includes recommendations on CMS’s proposal for building buffer hospital inventories and for implementing the IRA drug shortage provisions . Most recently, I had the opportunity to reiterate many of these recommendations in my testimony with the Senate Finance committee.

There is currently motivation in Congress to address drug shortages, but this may subside once the cancer drug shortages disappear from national news. Our Brookings team will continue to be actively engaged in educating policymakers and stakeholders on the issue, working to ensure that the suffering so many patients endured this year from drug shortages will cease to be the norm.

December 5, 2023

Marta Wosińska, Richard G. Frank

June 21, 2023

Marta Wosińska, T. Joseph Mattingly II, Rena M. Conti

September 13, 2023

The Brookings Institution is financed through the support of a diverse array of foundations, corporations, governments, individuals, as well as an endowment. A list of donors can be found in our annual reports published online here . The findings, interpretations, and conclusions in this report are solely those of its author(s) and are not influenced by any donation.

Economic Studies

Vanessa Williamson

May 14, 2024

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The most important economic questions of 2023

By Irina Ivanova

January 4, 2023 / 8:02 AM EST / MoneyWatch

American consumers, bruised by a grueling 2022, face another year of living dangerously.

Optimists and pessimists alike can point to their preferred indicators to predict how the year ahead is likely to go. In one corner, a recession looks probable this year. The Federal Reserve is also virtually certain to keep hiking interest rates, and wages continue to lag inflation. In the other are clear signs that last year's red-hot inflation is cooling, while the labor market keeps churning out jobs.

"Year-over-year inflation is continuing to fall and gasoline prices have returned to reasonable levels," David Kelly, chief global strategist at JPMorgan Funds, said in an email making the case for a brighter outlook. "The country is showing continued signs of moving on beyond the pandemic and, hopefully, both the bond market and stock market should do better in 2023 than in 2022."

With that in mind, here are biggest questions facing the U.S. economy in the year ahead.

After a brutal 2022 for stocks, here's what Wall Street predicts for 2023

Will the U.S. enter a recession?

The economy will almost certainly slow, with one survey from the Conference Board calling a recession a near certainty . Yet most economists don't expect it to crash.

The signals flashing red are plentiful. The number of workers claiming jobless assistance has risen to their highest levels in a year. Interest rates on short-term Treasury bills have been higher than long-term interest rates since late last year — a condition known as an "inverted yield curve" that is a reliable predictor of recession. The Fed itself predicts anemic economic growth and a spike in the unemployment rate next year.

Any downturn is likely to be modest, according to many economists. Given how much trouble employers have had hiring during the pandemic recovery, most will be loath to lay off workers. And consumers are still in relatively good shape, having built up savings during the pandemic.

Will inflation subside?

The worst inflation in 40 years has eased since peaking in the summer, with prices in December increasing about 6.5% from a year ago, according to estimates from economists surveyed by FactSet.

"The evidence suggests we're already past peak inflation. So the year-on-year rate of inflation should start to move lower," Michael Gapen, chief economist at Bank of America, told " Face the Nation " this week.

However, he added, "It will probably take two to three years to get inflation back down to levels that we knew prior to the pandemic — in other words, low, stable and something we didn't necessarily talk about."

The good news is that many of the factors driving inflation higher have receded: Global supply chains are unsnarling, rents are falling and surveys show consumers are spending less than a year ago.

Still, at an annual rate of 6% inflation is triple the Fed's preferred target of 2% per year. Having been burned by declaring price hikes "temporary" last year, the central bank will be leery of declaring inflation dead too soon and could continue to hike interest rates until the U.S. is well into a recession.

Fiona Greig, global head of investor research and policy at Vanguard, sees the economy at a turning point.

"We've seen a cresting of the potential inflation measures, maybe a cresting of the hotness of the labor market," she said. "The question is, do we land softly, do we plummet quickly? Obviously, the Fed's policy actions play a role here."

Will gas prices spike again?

There's good news on this front, too. Gasoline prices are unlikely to return to last summer's record high, according to Patrick DeHaan, head of petroleum analysis at GasBuddy.

"I don't think Americans will have to dig as deep into their wallets this year to fill their tank. Most, if not all of the country will be able to avoid record-setting prices this year," DeHaan said. He predicts that national average gas prices this year across most of the U.S. will hover between $3 and $4 for a gallon of regular.

The chief factor restraining fuel prices is increased refining capacity in Texas, Nigeria, the Middle East and Asia. Closures of refineries, which turn crude oil into finished products including gas, diesel and jet fuel, were a major reason prices sure after COVID-19 exploded in 2020.

"COVID shut down refineries for months and months — some didn't come back online until this summer," DeHaan said.

The biggest question mark for gas prices is Russia's war in Ukraine , as well as the outcome of China's reopening as its COVID-19 cases increase. Changes in either area could dramatically reduce global oil supplies, which would likely drive up fuel prices.

"The EU continues to sanction Russia, and Russia has promised to respond to price caps. Ten months into this, there's still a level of stability even though that's not the ideal outcome," DeHaan said. "To lose [Russia's] output would be a big hit to the global economy at the time it's still recovering from COVID."

How safe is your job?

While the Fed has made weakening the job market a key pillar of its inflation-fighting strategy, the hit to employment this time around is likely to steer clear of the worst-case scenarios.

"Laying off people is a pretty dramatic move in light of the labor shortages we've been dealing with," said Vanguard's Greig. "There may be other cost measures that companies think about. Meaning, maybe they slow hiring rather than laying people off, maybe year-end compensation this year was more tepid than typical years."

Most economists expect the nation's unemployment rate to top out at between 5% and 6% — equivalent to another 3.5 million Americans losing their jobs. The pain will likely be concentrated in a few industries, including the interest-rate-sensitive housing sector and technology, which has seen large-scale layoffs.

Industries where hiring has exceeded the pre-pandemic trend, including retail, professional and business services, manufacturing, and transportation and warehousing, are also in danger of cutbacks, Deutsche Bank predicted. On the other hand, the still-understaffed areas of local government, health care and leisure and hospitality are collectively short 4 million workers, meaning they could continue to drive employment growth as hiring elsewhere slows.

Will you get a raise?

Worker wages have trailed the rate of inflation for more than a year, and employees are eager to catch up.

The signs on this front are mixed. Some government data shows that worker raises, which accelerated in the first half of 2022, have slowed. But people's expectations for higher pay haven't, with the amount of money Americans say they need to switch jobs recently hitting a record high.

And there's one method of getting a raise to stay ahead of inflation: switching jobs. Wages for job-switchers are growing by over 8% per year, exceeding the rise in consumer prices, according to the Federal Reserve Bank of Atlanta .

"There are many jobs if one wants to be employed. That's a good thing for the American worker," said Greig.

When will the stock market recover?

The S&P 500 lost nearly 20% of its value in 2022 and wiped out trillions in Americans' wealth. But a similar plunge is unlikely this year , Wall Street analysts said.

In the past 70 years, there have been only three instances in which the S&P 500 ended a year in the red and then went on to fall the following year: in 1973, 2000, and 2001, according to investment firm LPL Financial.

"Through many economic downturns, recessions and geopolitical crises over many decades, the stock market has always recovered. Those patient and courageous investors who were able to take advantage of those declines have usually been rewarded nicely," LPL analysts said in a research note.

The big question for investors is when. Most believe that when the Fed signals an end to interest-rate hikes, stock will rally. But that may not happen until the end of the year, or even until 2024. In the meantime, financial pros point out that low stock prices often present a good buying opportunity.

"Keep a long-term perspective — don't worry too much about asset prices being low," Greig said. "Markets are volatile and that's why a diversified approach, and simply staying the course, tends to perform pretty well."

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Global economics: five big themes for 2023

In January we released our Outlook 2023, where we examine our five big themes for our 2023, as part of The Wealth Report series. Below are some of the key findings we predict to have an affect on economies this year.

1. Rate of inflation

The rate of inflation will dictate when central banks can end the current cycle of rising interest rates. The results will reverberate through borrowing costs and global asset prices.

Two-thirds of our Attitudes Survey respondents cited inflation as the biggest risk for their clients’ ability to create and grow wealth in 2023 – interest rates were cited by just under 60%.

Peak inflation appears to have been in 2022 as the US’s headline rate cooled further to 6.4% in January from a high of 9.1% in June. In the UK the peak seemed to be later in October, with the effect of energy price caps, and has cooled from 11.1% to 10.1%. Energy prices have cooled globally. In part thanks to a mild winter natural gas prices are back at where they were at the outset of 2022, a fifth of the peak. Supply chain pressures have eased and with China abandoning the zero-Covid stance the potential for future disruption is lower.

According to the IMF global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024.

2. Reset opportunities

There will be opportunities to reset as we enter a new investment environment, despite recessions across many major economies. Consensus being that we will see interest rates peak in the first half of 2023 and potential cuts at the end of the year. However, we will not see rates back to the ultra-low levels experienced since the Global Financial Crisis.

The Federal Reserve slowed their hiking pace in February, opting for 25bps (the slowest since March 2022) where the ECB and Bank of England implemented 50 bps hikes, a step down in pace from the latter half of 2022 but reflecting the stickier inflation on this side of the Atlantic. Currently market expectations are for a peak of 5%, 3% and 4.5%, respectively.

Economic downturns are already evident. However, the mood music has shifted in 2023 – The IMF began the year by revising their forecasts up , they expect global GDP to grow by 2.9% this year, 0.2 percentage points higher than in October. Alongside the IMF, the most recent Consensus Economics forecasts predicted that the euro zone too will avoid recession. There is a lag as the impact of higher rates works through economies and it’s not certain they will stop hiking but there is optimism for 2023.

3. Real estate

Real estate was the top cited opportunity among our Attitude Survey respondents, with 46% citing it, many are seeking diversification and a hedge against inflation. Residential and commercial property are both in the spotlight. Higher interest rates will temper demand for residential property in 2023. Some 15% of UHNWIs are looking to purchase a residential property this year, down from 21% in the previous year’s survey.

4. Geopolitical tensions

Tensions in 2022 were dominant and will continue to weigh on sentiment through 2023. Many will be familiar, but there will undoubtedly be surprises. The on-going war in Ukraine does not have a defined path and still offers a lot of unknowns. Energy markets – as mentioned earlier – have quietened and oil is around $80 a barrel from over $120 last year. If we see renewed offensives though, this could have significant effects.

5. The big three

The reopening of the Chinese mainland, dubbed the economic event of 2023 by The Economist , will offer a boost to global growth and was a primary reason for the IMF’s upgrade. After two years of strict zero-Covid policies, the government reopened the Chinese economy and international travel resumed on 8 th January 2023 after 1,016 days of closed borders. It was confirmed that the economy grew by 3% in 2022 the slowest since the 1970s. They have set the target at 5% for 2023.

This year India will overtake China as the world most populous country and will be among the fastest growing countries. This may have already happened as it was confirmed China’s population shrank in 2022 for the first time in 60 years. The Indian economy is the fifth largest in the world after displacing the UK in 2022 and is pipped to be one of the fastest growing this year with 7% growth forecast.

The agility of the US economy will be evident, some 11% of our survey respondents cited the US as an opportunity to grow wealth, and they may yet avoid recession. There is a lot of optimism for the US and US based assets, not least for currency benefits but due to the safe-haven status during volatile times. With the perception of peak inflation and potential reversal of rates at the end of 2024, equity markets are up 4-5% the past quarter.

Read more or get in contact: Flora Harley, residential research

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Economic Letter Countdown: Hot Topics from 2023

As we launch into a new year of research, here’s a look back. Check out the list of our most popular FRBSF Economic Letter topics of 2023, featuring research insights from San Francisco Fed economists. Read more in the blog .

The Federal Reserve Bank of San Francisco (SF Fed) serves the public by promoting a healthy, sustainable economy, and supporting the nation’s financial and payment systems. With offices in Los Angeles, Seattle, Salt Lake City, Portland and Phoenix, the Bank serves the Twelfth Federal Reserve District, which includes one-fifth of the nation’s population and represents the world’s fourth-largest economy. As part of the nation’s central bank, the SF Fed informs monetary policy, regulates banks, administers certain consumer protection laws and acts as a financial partner to the U.S. government.

Goldman Sachs economists and strategists share insights on the key factors driving the global economy.

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The US economy is on its final descent to a soft landing

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Read Goldman Sachs Research's full 2024 Outlook reports here.

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Why clients should stick with US stocks

US equities continued to outperform in 2023, with a 26% total return that exceeded non-US developed equities at 19%, emerging markets at 10%, and Chinese equities which lost 11%. Such strong performance has pushed US equity valuations into their top historical decile, meaning US stocks have been cheaper at least 90% of the time.

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The 60/40 portfolio should offer a better risk-reward in 2024

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Oil prices are forecast to trade between $70 and $100 a barrel in 2024

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AI may start to boost US GDP in 2027

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Millennial and Gen Z values could change the economy

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AI investment forecast to approach $200 billion globally by 2025

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Will the UK economy go into recession in 2023?

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How fragile is the US consumer?

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What’s next for China’s economy?

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The probability of US recession in the next year has fallen to 20%

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Is it Time to Invest in Emerging Markets?

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Goldman Sachs CEO David Solomon on the Economy, Markets and the Firm’s Performance

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Investors Expect Equity Capital Markets Activity to Double This Year

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China’s Reopening is Poised to Boost Global Growth

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A Deal on the Debt Limit is Likely—but Not Without a Lot of Uncertainty

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Commodities: An Underinvested Supercycle

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Why the US Dollar May be Past its Peak

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The Global Economy in 2075: Growth Slows as Asia Rises

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Outlook 2023 - Caution: Heavy Fog

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What’s Ahead for Economies and Markets in 2023?

What’s in store for economies and markets in 2023? In this episode of Exchanges at Goldman Sachs , Jan Hatzius, head of Goldman Sachs Research and the firm’s chief economist, and Dominic Wilson, Senior Advisor in the Global Markets Research Group, explain why they believe the U.S. can avoid a recession and how the economic landscape is improving in Europe and China in 2023.

M&A in 2023: A Complex but Optimistic Outlook for Deal-Making

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2023 Commodity Outlook: An Underinvested Supercycle

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The Outlook for Financial Services

Banks are often seen as a leading indicator for the economy—so what are they telling us now about the picture in the US? GS Research’s Richard Ramsden and Alex Blostein discuss the broader sector in the latest episode of Exchanges at Goldman Sachs , also sharing the themes and sentiment they took away from the recent GS US Financial Services Conference.

Jan Hatzius, Goldman Sachs' Chief Economist, on 2023 US Outlook

What makes the US likely to avoid recession in 2023? Our Chief Economist Jan Hatzius says there are two opposing forces at play, one positive and one negative – and the positive one should prove stronger.

Asset Allocation Outlook for 2023: Greater Diversification and Divergence

Market volatility, inflation and positive correlations across assets have put a question mark on the diversification benefits of multi-asset portfolios. In the latest episode of Exchanges at Goldman Sachs , Goldman Sachs Research’s Christian Mueller-Glissmann, who heads asset allocation research, breaks down what investors should keep in mind when building portfolios in 2023.

Is It Time to Switch from Stocks to Bonds?

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The Bear Market in Global Stocks is Forecast to Get Deeper in 2023

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US Stocks are Forecast to Have Less Pain but No Gain in 2023

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2023 US Economic Outlook: Approaching a Soft Landing

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Japan Economics 2023 Outlook: Focus on Wage Growth and BOJ Leadership Change

While our Goldman Sachs Research economists expect Japan’s real GDP growth to slow to 1.3% in 2023, from 1.5% in 2022, they look for growth to continue to outpace its potential. Consumption is likely to directly benefit from economic reopening, and they also expect capex to remain firm on the back of pent-up demand, labor shortages due both to demographics and reopening, and supply chain rebuilding.

Asia Views: 2023 Outlook: Inflation Peaks and Growth Troughs

Economic growth is likely to start 2023 on the weak side across most of the Asia-Pacific, according to Goldman Sachs Research economists, as a fading reopening boost, slowing global manufacturing cycle, and past monetary tightening weigh on activity. As these headwinds fade and China’s reopening gets underway, they expect growth to reaccelerate. While most of our economists’ GDP forecasts are a little below consensus for 2023 as a whole, they are more positive on second-half growth, particularly in China.

China 2023 Outlook: After Winter Comes Spring

After a very challenging 2022, Goldman Sachs Research economists expect China GDP growth to accelerate from 3.0% this year to 4.5% next year on the back of China’s potential exit from its zero-Covid policy, which they assume will start shortly after the “Two Sessions” in March. China’s reopening would imply a strong consumption rebound, firming core inflation, and gradually normalizing cyclical policies in 2023.

2023 Europe Outlook: Milder Recession, Higher Terminal Rate

Goldmans Sachs Research economists maintain their long-held view that the energy crisis will push the European economy into recession this winter, as surveys and production data point to a sizeable slowing in energy-intensive industries, and high inflation will reduce real household incomes. But they now see a shallower recession as the hard data have remained surprisingly resilient, the rebalancing of the gas market has reduced the risk of energy rationing and governments have provided significant fiscal support.

Why the US is Expected to Escape Recession in 2023

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Macro Outlook 2023: This Cycle Is Different

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Europe’s Energy Crisis: End in sight or far from over?

Plentiful natural gas supplies and mild weather across Europe are creating optimism that the continent may be able to avoid shortages and blackouts this winter. But is that optimism premature? In this episode of Exchanges at Goldman Sachs , Goldman Sachs Research’s Samantha Dart, a senior energy strategist who focuses on the natural gas markets, and Jari Stehn, our chief European economist, discuss the state of Europe’s energy crisis and its impact on the broader European economy.

The US Economy Is Poised to Slow as the Fed Taps the Brakes

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Will the US go into recession?

Can the Federal Reserve slow the U.S. economy enough to bring down inflation without causing a recession? It’s a delicate balance, but there are several reasons that it could be more achievable than in the past, according to economists at Goldman Sachs.

Stagflation Risk

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The Case for Commodities: ‘Super-Backwardation,’ Structural Demand and Inventory Shortages

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Moving to Seven Rate Hikes in 2022

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What’s Ahead for the Housing Market

In this episode of Exchanges at Goldman Sachs , Douglas Yearley, Chairman and CEO of Toll Brothers, and Terry Hagerty, Goldman Sachs’ co-head of Homebuilding and Building Products, discuss the outlook for the housing and home building market in 2022.

Piloting Through: Why Investors Should Stay the Course

In this episode of Exchanges at Goldman Sachs , Sharmin Mossavar-Rahmani, head of the Investment Strategy Group and chief investment officer for the Consumer and Wealth Management Division discusses the investment themes outlined in ISG’s 14th annual investment outlook, Outlook 2022: Piloting Through , and explains why investors should continue to stay invested.

Is 2022 the Endemic Year?

In the latest episode of Exchanges at Goldman Sachs , Jeffrey Shaman, Director of the Climate and Health Program at Columbia University’s Mailman School of Public Health, and Dr. Eric Topol, Founder and Director of the Scripps Translational Science Institute, discuss the rapid spread of the Omicron variant of SARS-CoV-2 and the potential shift to an endemic phase of the pandemic in 2022.

2022: The Endemic Year?

While the lightning spread of the Omicron virus variant has led to a record surge in cases globally, its more transmissible but milder nature has also raised the question of whether it’s ushering in a more manageable, endemic phase of the virus in 2022.

Asset Management: Investment Ideas 2022

Explore Goldman Sachs Asset Management's key themes of 2022 and the potential sources of attractive returns they could create.

US Economics Analyst: 10 Questions on the Political and Policy Outlook for 2022

Will Congress pass any reconciliation package this year? Will Democrats maintain control of Congress after the November midterm elections? Goldman Sachs Research’s economists offer insight into these questions and more.

European Economics Analyst: 10 Questions for 2022

Although the renewed surge in Covid infections is likely to weigh on services activity over the winter, Goldman Sachs Research expects a more manageable hit to European economic activity than last year.

Asia Economics Analyst: Ten questions for 2022

Regional growth will decelerate this year, but should remain above trend in many economies.

David Solomon on the Firm’s Performance, the Global Economy and What to Expect in 2022

In the latest episode of Exchanges at Goldman Sachs , Goldman Sachs Chairman and CEO David Solomon shares his thoughts on the year ahead and what he expects for the global economy, markets and corporate activity.

Investment Strategy Group's Outlook 2022: Piloting Through

In 2021, the US economy showed its resilience and US equities outperformed once again, supporting the Investment Strategy Group’s long-held tenets of US Preeminence and Staying Invested . While risks have risen, we expect a favorable economic backdrop to continue to support equities this year.

Global Views: Earlier Runoff, Four Hikes

Chief Economist Jan Hatzius discusses the Omicron variant's effect on the economic outlook for 2022, and how persistent inflationary pressures could modify the Fed’s schedule for hikes and balance sheet normalization.

What’s Next for M&A?

The record wave of M&A activity that we witnessed in 2021 is showing no signs of slowing as we turn the page on a new year. Goldman Sachs’ Stephan Feldgoise and Mark Sorrell, co-heads of the global mergers and acquisition business in the Investment Banking Division, explain the drivers behind the deal-making activity and the outlook for 2022.

What’s Ahead for Global Economies and Markets in 2022?

Global economies and markets are facing a more complicated landscape amid rising rates, slowing growth and shifting monetary and fiscal policies. Goldman Sachs’ Jan Hatzius and Dominic Wilson examine what’s in store for 2022.

Inflation: Here Today, Gone Tomorrow?

As U.S. inflation hits 30+ year highs, experts debate whether the “temporary” pandemic-related inflationary pressures could prove persistent. In the latest Exchanges at Goldman Sachs episode, Goldman Sachs’ Allison Nathan speaks with Mohamed El-Erian, President of Queens’ College, Cambridge University, and Chief Economic Advisor at Allianz, and Jan Hatzius, Goldman Sachs’ Chief Economist and head of Goldman Sachs Research, for their views on where inflation goes from here—and what that means for the economy, monetary policy, interest rates and assets.

Outlook 2022: The Long Road to Higher Rates

Goldman Sachs Research says the fastest pace of the recovery now lies behind us, but there are reasons for optimism on global growth heading into 2022.

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Engaging Economic Research Topics in 2023: Unraveling Economic Complexities

Are you searching for economic research topics? If yes, then have a close look at some of the best economic research topics to try in 2023.

Economic research is a fundamental component of modern economics, as it provides a framework for understanding the complexities of the global economy. It encompasses a wide range of topics, including macroeconomics, microeconomics, econometrics, and applied economics, each with its own unique set of research questions and methodologies.

Economic research can be conducted using a variety of methods, including theoretical modeling, empirical analysis, and experimental research, and can be used to inform policy-making, advance knowledge, and address real-world economic problems. In this article, we will explore some of the key topics in economic research, including their theoretical underpinnings, research questions, and implications for economic policy and practice.

Whether you are a student, researcher, policymaker, or simply interested in economics, this article will provide an overview of some of the most important and relevant topics in contemporary economic research.

Definition of economic research

Table of Contents

Economic research refers to the application of economic theories and methodologies to study economic issues and problems, such as market behavior, consumer preferences, economic growth, income distribution, and international trade. It involves the use of empirical data, statistical models, and econometric techniques to develop insights into economic phenomena.

Importance of economic research

Economic research is important for several reasons:

Informing policy-making

Economic research can provide insights into the causes and consequences of economic phenomena, and help policymakers identify effective policies and interventions to promote social welfare, economic growth, and sustainability.

Advancing knowledge

Economic research contributes to our understanding of how the economy works, and can help us identify new areas of inquiry and build on existing knowledge.

Supporting innovation

Economic research can inform innovation and entrepreneurship by providing insights into consumer behavior, market dynamics, and technological change.

Addressing real-world problems

Economic research can help address real-world economic problems, such as income inequality, unemployment, and climate change, by identifying effective solutions and policy interventions.

Driving economic growth

Economic research can inform strategies to promote economic growth and development, such as through investment in education, infrastructure, and innovation.

Assessing risks and opportunities

Economic research can help individuals and organizations assess risks and opportunities in the economy, and make informed decisions about investments, financial planning, and other economic activities.

Enhancing accountability

Economic research can help hold individuals and organizations accountable for their economic decisions and actions, by providing evidence and insights into their economic impact.

Informing public discourse

Economic research can help shape public discourse on economic issues, by providing a deeper understanding of the economic implications of policy decisions, technological change, and other factors.

Fostering collaboration

Economic research can foster collaboration between researchers, policymakers, and other stakeholders, by providing a common language and framework for understanding economic issues and identifying shared solutions.

Encouraging critical thinking

Economic research can encourage critical thinking and a deeper understanding of complex economic issues, by challenging assumptions and providing evidence-based insights.

Overall, economic research plays a critical role in informing decision-making and promoting a more just and sustainable global economy.

Economic Research Topics

Have a close look at some of the best economic research topics.

Macroeconomics

Macroeconomics is the study of the economy as a whole, focusing on the aggregate behavior of economic variables such as GDP, inflation, employment, and trade. It aims to understand the causes and consequences of fluctuations in the economy, and to develop policies to stabilize the economy and promote economic growth. It’s not a very easy subject for students to understand, so an A-level economics tutor to understand the concepts better.

Topics for economic research in macroeconomics:

Economic growth and development

Economic growth is the increase in the output of goods and services over time, while development refers to the improvement in the well-being of individuals and societies. Research in this area can focus on factors that contribute to economic growth, such as investment, technology, and human capital , as well as on policies that promote inclusive development.

Inflation and deflation

Inflation is the sustained increase in the general price level of goods and services, while deflation is the opposite, a sustained decrease in the general price level. Research in this area can examine the causes and consequences of inflation and deflation, including their impact on economic growth, employment, and income distribution.

Monetary and fiscal policy

Monetary policy involves the use of interest rates, money supply, and other tools by central banks to influence economic activity, while fiscal policy involves the use of government spending and taxation to achieve economic objectives. Research in this area can examine the effectiveness of these policies, their impact on the economy, and their interaction with each other.

International trade and globalization

International trade refers to the exchange of goods and services between countries, while globalization refers to the integration of economies and societies across borders. Research in this area can examine the effects of trade and globalization on economic growth, income distribution, and employment, as well as on the environment, culture, and political systems.

Unemployment and labor market dynamics

Unemployment is the state of being without a job, while labor market dynamics refer to the behavior of employers and employees in the labor market. Research in this area can examine the causes and consequences of unemployment, the effects of minimum wages and other labor market policies, and the impact of technological change and globalization on the labor market.

Income inequality and poverty

Income inequality refers to the unequal distribution of income among individuals or groups, while poverty refers to the lack of basic necessities of life. Research in this area can examine the causes and consequences of income inequality and poverty, the role of education, health, and social policies in reducing poverty and inequality, and the impact of globalization and technological change on income distribution.

Microeconomics

Microeconomics is the study of individual economic behavior and decision-making, focusing on how individuals and firms interact in markets. It examines the behavior of consumers and producers, the determination of prices and quantities, and the effects of government policies on market outcomes.

Topics for economic research in microeconomics:

Market structures and competition

Market structure refers to the number and size of firms in a market, the degree of product differentiation, and the ease of entry and exit. Research in this area can examine the effects of market structure on competition, innovation, and pricing behavior, as well as the role of antitrust policies in promoting competition.

Consumer behavior and demand

Consumer behavior refers to the choices made by individuals when purchasing goods and services, while demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price. Research in this area can examine the determinants of consumer behavior, the effects of advertising and product differentiation on demand, and the impact of consumer preferences on market outcomes.

Production and cost analysis

Production refers to the process of transforming inputs into outputs, while cost analysis refers to the study of the costs incurred by firms in producing goods and services. Research in this area can examine the determinants of production and cost, the effects of economies of scale and scope on cost, and the impact of technological change on production and cost.

Pricing strategies

Pricing strategies refer to the methods used by firms to set prices for their products or services. Research in this area can examine the determinants of pricing behavior, the effects of price discrimination and bundling on market outcomes, and the impact of pricing strategies on consumer welfare.

Game theory and strategic behavior

Game theory is a branch of economics that studies the behavior of individuals or firms in strategic situations, where the outcome of their actions depends on the actions of others. Research in this area can examine the use of game theory to model strategic interactions, the impact of strategic behavior on market outcomes, and the role of government policies in regulating strategic behavior.

Behavioral economics

Behavioral economics is the study of how psychological and social factors influence economic decision-making. Research in this area can examine the role of cognitive biases and heuristics in economic behavior, the effects of social norms and peer pressure on economic outcomes, and the implications of behavioral economics for public policy.

Econometrics

Econometrics is the application of statistical methods to economic data in order to test economic theories, estimate economic relationships, and make economic forecasts. It is a key tool for empirical research in economics.

Topics for economic research in econometrics

Statistical inference and hypothesis testing

Statistical inference involves making conclusions about population parameters based on sample data, while hypothesis testing involves testing hypotheses about the values of population parameters. Research in this area can examine the use of statistical inference and hypothesis testing in econometric analysis, as well as the limitations and challenges associated with these methods.

Time series analysis

Time series analysis involves the analysis of data that is collected over time, such as economic indicators like GDP, inflation, and unemployment. Research in this area can examine the use of time series methods in econometric analysis, such as autoregressive models and moving average models, as well as the challenges associated with analyzing time series data.

Panel data analysis

Panel data refers to data that is collected on the same individuals or entities over time, such as data on firms or households. Panel data analysis involves using this data to estimate economic relationships and test economic theories. Research in this area can examine the use of panel data methods in econometric analysis, such as fixed effects models and random effects models, as well as the advantages and disadvantages of panel data analysis.

Causal inference and program evaluation

Causal inference involves determining whether a particular treatment or policy intervention caused a particular outcome, while program evaluation involves evaluating the effectiveness of policy interventions. Research in this area can examine the use of causal inference and program evaluation methods in econometric analysis, such as randomized controlled trials and difference-in-differences models, as well as the challenges associated with these methods.

Big data and machine learning in economics

Big data refers to the large volumes of data that are generated in the digital age, while machine learning involves using algorithms to analyze and make predictions based on data. Research in this area can examine the use of big data and machine learning methods in econometric analysis, as well as the challenges associated with analyzing large and complex data sets.

Spatial econometrics

Spatial econometrics is concerned with the analysis of spatially dependent economic variables, such as regional economic growth and urbanization. Research in this area can examine the use of spatial econometric models in econometric analysis, such as spatial autoregressive models and spatial panel models, as well as the challenges associated with analyzing spatial data.

Applied economics

Applied economics involves the application of economic principles and theories to real-world problems and issues. It is concerned with the practical implications of economic research, and often involves interdisciplinary collaborations with other fields, such as public policy, business, and social sciences.

Topics for economic research in applied economics:

Health economics

Health economics is concerned with the analysis of healthcare systems and the economic factors that affect the health of individuals and populations. Research in this area can examine topics such as healthcare financing and insurance, healthcare delivery and organization, healthcare technology and innovation, and the social determinants of health.

Education economics

Education economics is concerned with the analysis of educational systems and the economic factors that affect educational outcomes. Research in this area can examine topics such as education financing and funding, educational inequality and access, education quality and performance, and the impact of education on economic growth and development.

Environmental economics

Environmental economics is concerned with the economic analysis of environmental problems and the policies and mechanisms that can be used to address these problems. Research in this area can examine topics such as climate change, pollution and waste management, natural resource management, and environmental regulation and policy.

Urban economics

Urban economics is concerned with the economic analysis of cities and urban areas, including the economic factors that drive urban growth and development, the impact of urbanization on social and economic outcomes, and the policies and mechanisms that can be used to promote sustainable and inclusive urban development.

Agricultural economics

Agricultural economics is concerned with the economic analysis of the agricultural sector, including the factors that affect agricultural production and productivity, the impact of agricultural policies and programs on rural development and poverty reduction, and the role of agriculture in food security and nutrition.

Development economics

Development economics is concerned with the economic analysis of development processes and the policies and mechanisms that can be used to promote economic growth and development. Research in this area can examine topics such as poverty reduction and social welfare, trade and globalization, financial markets and development, and the role of institutions and governance in development.

In summary, economics research covers a wide range of topics and approaches, including macroeconomics, microeconomics, econometrics, and applied economics.

Some key topics for research in economics include economic growth and development, market structures and competition, statistical inference and hypothesis testing, health economics, education economics, environmental economics, urban economics, agricultural economics, and development economics.

As the world continues to face complex economic challenges, there is a growing need for rigorous and innovative research in economics to inform policy-making and address pressing issues such as inequality, climate change, and technological disruption.

Future research in economics will likely involve interdisciplinary collaborations with other fields such as data science, engineering, and behavioral sciences.

Additionally, there will be an increasing focus on incorporating diverse perspectives and experiences in economic research, as well as addressing issues of ethics and social responsibility in economic analysis.

Overall, the future of economics research holds great potential to contribute to a more just and sustainable global economy.

Frequently Asked Questions

What is economics research.

Economics research involves the application of economic theories and methods to understand and address real-world economic problems and issues. It can involve a range of approaches, from theoretical modeling and econometric analysis to field experiments and case studies.

What are some key areas of economics research?

Some key areas of economics research include macroeconomics, microeconomics, econometrics, and applied economics. Within these areas, researchers may focus on topics such as economic growth, market competition, statistical analysis, health economics, environmental economics, urban economics, and development economics.

Why is economics research important?

Economics research plays a critical role in informing policy-making and decision-making in a range of fields, from government and business to international organizations and non-profit organizations. By providing insights into the causes and consequences of economic phenomena, economics research can help to identify effective policies and interventions to promote social welfare, economic growth, and sustainability.

What are some emerging trends in economics research?

Emerging trends in economics research include a growing focus on interdisciplinary collaborations with other fields, such as data science and behavioral science, as well as an increasing emphasis on incorporating diverse perspectives and experiences into economic analysis.

How is economics research conducted?

Economics research can be conducted using a range of methods, including theoretical modeling, econometric analysis, field experiments, and case studies. Researchers may also use data from a variety of sources, including surveys, administrative records, and experimental data.

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What’s the Latest Research in Development Economics? A Roundup from NEUDC 2023

Almedina music, david evans.

There are so many studies regarding so many aspects of development economics that it can be difficult to keep up. Last week was the North East Universities Development Consortium annual conference , often called NEUDC. Researchers presented more than 130 papers across a wide range of topics, from agriculture to education and from labor to climate; almost all of the studies are available for download . This is a great snapshot of the latest research in development economics.

Where the studies are from and what methods they use

The studies take place all over the world (Figure 1). India has more than twice as many studies (23) than the next highest country, Brazil (with 10 studies). Kenya has eight, Indonesia has six, and Bangladesh, Malawi, and Pakistan each have five. A total of 43 countries are represented (not even including regional or cross-country studies that include dozens of countries). If you examine the studies per country population, the top countries are Guinea-Bissau, Uruguay, Malawi, Chile, and Jordan. (Guinea-Bissau and Uruguay just have one study each but have smaller populations.)

Figure 1. Where are recent development economics studies focused?

Source: This map draws on a sample of more than 135 studies from the NEUDC 2023 conference. We categorized studies and excluded those that covered more than three countries (often broad global or regional analyses).

The research continues to draw on a wide range of empirical strategies—i.e., not just randomized controlled trials, or RCTs (Figure 2). RCTs are the single largest group, but there are still lots of studies using difference-in-differences, fixed effects, and regression discontinuity.

Figure 2. What empirical methods do recent development economics papers use?

Source: This figure draws on 124 studies for which we found it easy to ascertain and categorize the empirical strategy. Some studies used multiple methods, in which case we categorized the two main methods we found.

What we learned from 130+ NEUDC studies

We went through each study, and we provide a micro-summary below. Obviously these are just our quick takes. Many studies have more than one thing to teach us, so if our microsummary piques your interest, click the link to the study! Also, take these micro-summaries with a grain of salt: some of these studies are still preliminary (that’s indicated on the front page of the studies themselves), and we also largely take the studies’ claims at face value (we aren’t peer reviewers). Still, there’s a lot of exciting research here, teaching us more about both problems and solutions in low- and middle-income countries (and beyond). We hope you learn as much reading them as we did writing them!

Guide to the methodological hashtags:

Households and human capital

Education and early childhood development.

Schools in Chile with more poor students tend to have lower test scores. A program that provides extra funding to those schools benefits disadvantaged students at both low and high levels of support. The results for advantaged students in the same schools are less consistent. (Cerda) #RD
A school voucher program in India benefits recipients, but because voucher amounts are linked to schools' tuition fees, schools have an incentive to raise their fees, which hurts non-beneficiary students. The net effect is still positive, but failing to account for the effect on non-beneficiaries would dramatically overstate the benefits. (Sahai) #DID
A ten-hour virtual training to help teachers in India better manage emotions, set goals, and solve problems led to a greater belief that they could boost students' learning and put more effort in their teaching. (Kaur) #RCT
Lots of families in western Kenya don't have books to read to their kids. When those storybooks were offered, the vast majority of families took them. The more expensive they were, the less likely people were to buy them; but even with a low subsidy, more than 90 percent of families bought them. But three months later, kids still didn't have stronger vocabularies. (Bonds, Hamory, and Ochieng) #RCT
In Tanzania, 10 percent more stagnant water increases diarrhea incidence among children by 30 percent and reduces test scores by 7 percent of a standard deviation. Access to improved sanitation and water sources mitigates the effect of stagnant water on these health and learning outcomes, but this effect increases with high temperatures and population density. (Berggreen and Mattisson) #DID
A “learning how to learn” approach in Uganda raised the pass rate in the national exam (progression from primary to secondary school) from 51 percent to 71 percent. The approach “trained teachers to teach students to learn like scientists: posing sharp questions, framing specific hypotheses, using evidence and data gathered from everyday life whenever possible.” (Ashraf, Banerjee, and Nourani) #RCT
In Chile, “classroom peers and older high school peers significantly shape students’ choices of college majors in male-dominated fields.” (Valdebenito) #RD
In Peru, a 20-minute interaction between engineering students and high school students increased students’ preferences towards engineering, especially among female students with high math aptitude. (Agurto et al.) #RCT
In India, primary students taught by college students scored 0.34 SD higher in math, 0.22 SD in science, and 0.15 SD in language higher than those taught by regular teachers. (Ganimian, Mbiti, and Mishra) #RCT
A country-wide effort to improve toilet access and other aspects of sanitation in India (the "Clean India Mission") boosted children's math—but not literacy—scores. Results are similar for boys and girls. (Karmakar and Villa) #DID #ES
Eleven months after introducing a program in India to encourage teachers to blend their teaching with high-quality videos, student math scores got worse, teachers taught less effectively (e.g., they gave worse feedback to students and monitored student learning less), and students had worse attitudes towards science and math. (de Barros) #RCT
In the Dominican Republic, all Major League Baseball teams run training academies for adolescent boys. Despite public perceptions that this leads youth to undervalue formal education, exposure to these academies has no measurable impact on school attendance. (Marein and Palsson) #DID
A common policy to get more underrepresented groups into college is to rank students within high schools (so that kids from poorer high schools have a shot). But in Chile, high school students switch schools to game the system, such that the current policy had a tiny impact, which would have been more than five times as large if students weren't switching schools. (Concha-Arriagada) #FE
With the introduction of a new bus line and a new train line in Lima (Peru), "a 17 percent reduction in commuting time to college increases enrollment rates by 6 percent," with that mostly driven by enrollment in private colleges. Boys are willing to travel 50 percent longer than girls to attend a better college. (Alba-Vivar) #DID
Study groups in Chinese primary schools boost student achievement. The effects are biggest for kids who were previously not doing so well in school but who are in high-achieving study groups. It also boosts those kids' level of motivation. (Gao et al.) #IV
An additional year of education for women in India led to "a 27% decrease in less severe physical domestic violence, a 9% decrease in sexual violence, and a 10% decrease in injuries due to domestic violence." This was likely due to women finding better partners, improved attitudes, and potentially a higher likelihood of reporting violence. (Bergonzoli, Bahure, and Agarwal) #RD
Higher export prices for crops grown by women in Peru reduce "domestic violence, including severe physical violence and female homicide... The effects are stronger in districts with more unequal gender norms." (Frankenthal) #FE
In India, short-term exposure to domestic violence doesn't seem to affect women's attitudes about violence, but over time, women who experience violence are more likely to tolerate violence—potentially as a coping mechanism. (Frezza) #RD
Girls' clubs for adolescents in Côte d'Ivoire alone boosted some girls' mental health but not employment outcomes. Adding separate clubs for husbands and future husbands boosted employment and sexual and reproductive health outcomes. (Boulhane et al.) #RCT
Women living in neighborhoods with low risk of harassment or assault on the streets are 8.5 percentage points more likely to participate in the labor market relative to women in higher risk neighborhoods—in Indonesia and India. (Cahill) #PSM
A successful school-expansion program in India “increased voter prioritization of leader competence over gender, boosting the share of women among candidates and state parliamentarians and the overall capability of elected officials.” (Anukriti, Calvo, and Charavarty) #RD
In Pakistan, providing correct information about support for women voting in society to men does not change the turnout of women, while providing the same information to women or both lowers female turnout. “This blow-back effect is caused by men discouraging women from political participation because they believe women will act according to their own (and different from men’s) preferences.” (Gulzar, Khan, and Sonnet) #FE
An anti-poverty program in Malawi improved households’ consumption, food security, and dietary diversity outcomes, regardless of whether men or women were targeted and whether a gender transformative training was incorporated in the program. (Bedi, King, and Vaillant) #RCT
A conditional cash transfer (CCT) program in Peru reinforced traditional gender-role attitudes among children, especially girls. Beneficiary mothers spent more time on home production, and this priority could be a channel for perpetuating traditional gender role attitudes. (Luong) #RD
Families historically exposed to higher levels of slavery in Guadeloupe and Martinique tend to be more matrifocal, with weaker fathers after emancipation. These families also face higher child mortality, stemming from poorer family environments rather than local conditions. (Beigelman) #FE
“On an online marriage market platform in India, ... working women are 14.5% less likely to receive interest from male suitors... Women employed in ‘masculine’ occupations are 3.2% less likely to elicit interest from suitors relative to those in ‘feminine’ occupations.” (Afridi et al.) #RCT
Providing "mentored girls' clubs, life skills, and vocational training" to adolescent girls in northern Nigeria reduced marriage two years after the intervention by 65 percentage points! A major reason is that it boosted girls' likelihood of staying in school. (Cohen, Abubakar, and Perlman) #RCT
A radio campaign against female genital cutting in Egypt reduced cutting by 13 percent. But those girls also saw their bride prices fall by nearly a quarter and child marriages rose. Across Africa, cutting is more common in settings with bride price. (Khalifa) #DID
Several years after the start of a cash transfer program in Malawi, those who benefited as adolescent girls were more likely to move longer distances for marriage, and those moves happened over a longer period of time, into young women's mid-twenties. (Ibrahim) #RCT
Parents in Pakistan prefer grooms who are relatives; they also prefer marriages where their daughters will have more freedom (e.g., to leave the house unaccompanied or to make health decisions independently). (Calvi, Farooqi, and Kandpal) #SurveyExperiment
In Lahore (Pakistan), women are more likely to sign up for a job search platform than they are to take a job. For less-educated job seekers, jobs with explicit gender requirements are more likely to exclude women. Women with more education are more selective about jobs, but the jobs themselves are less likely to be gender-restrictive. (Gentile et al.) #RCT
Offering women in West Bengal (India) the ability to multitask work with childcare and to work from home boosts labor market participation, especially for those from more traditional households. Flexible work also increases women's likelihood of accepting out-of-home work later. (Ho, Jalota, and Karandikar) #RCT
Increasing the minimum wage by nearly a quarter in Morocco narrowed the gender pay gap in the formal sector by about a quarter. But it also led a small fraction of women (but not men) to leave the formal labor market. (Paul-Delvaux) #DID
In India, horizontal communication between cisgender participants reduces discrimination against transgender people: when involved in a group discussion with two neighbors, there is no longer discrimination at all on average, even when making private choices. This effect is 1.7x larger than top-down communication that informs participants about the legal rights of transgender persons. (Webb) #RCT
In a lab in the field experiment in Bangladesh, the “less capable women are perceived compared to men, the less they are involved in decision-making. After the information treatment (on women’s abilities), individuals with the lowest perceptions about the wife’s skills are 20 percent more likely to make allocations in her favor.” (Nani) #RCT
Employers in Bangladesh discriminate paternalistically, i.e., they restrict women’s employment choices to protect them from what employers perceive as unsafe. Informing about safe worker transport at the end of the shift increases demand for female labor by 22 percent and female labor supply by 15 percent. (Buchmann, Meyer, and Sullivan) #RCT
Offering female entrepreneurs in Jordan access to virtual storefronts by (1) creating and managing Facebook pages for their businesses and (2) offering them digital marketing training created in collaboration with local influencers, increased business survival and revenues. Effects are driven by women with low physical mobility due to social norms at baseline. (Alhorr) #RCT

Health (including mental health)

Sharing information about either "the prevalence of mental health issues and the efficacy of treatment" or "the mental health struggles of a Nepali celebrity and how he benefited from treatment" boosted people's stated willingness to seek mental health treatment and to pay for counseling. The effects were biggest for those with "less severe symptoms of depression and anxiety." (Lacey et al.) #RCT
Sometimes people are uncertain about how risky a behavior is. In Malawi, people with greater uncertainty about how risky regular unprotected sex with an HIV-infected partner update their beliefs more drastically in response to new information. (Kerwin and Pandey) #RCT
Groups of friends among Syrian refugees in Jordan are good at identifying who needs mental health support. Sometimes friends don't want to share info about mental health services because of stigma, but if you nudge the sharers to disclose that they're being financially compensated for sharing the info, they're more likely to share it. (Smith) #RCT
Home visits inviting adults in Kenya to get vaccinated against COVID increased vaccine doses by ten percent, especially among women and people with less education or income. Announcing the home visit ahead of time (so people could either making a point of being home for the appointment or being out to avoid it) further boosted vaccinations. (Carney et al.) #RCT
Providing frontline health workers in Guinea-Bissau "with evidence of their program’s effectiveness in improving local health indicators" significantly boosted the effort of health workers, even six months later. (Fracchia) #RCT
A "mother and child health and family planning program in Bangladesh" boosted height in adulthood for those who participated as children (as well as education among the men). In the next generation, daughters of beneficiaries tend to be taller and have better cognitive development. (Barham et al.) #DID
Introducing “a competitive selection system for recruiting CEOs in public hospitals in Chile reduced hospital mortality by 8%”, driven by hospitals in which the new CEOs had managerial qualifications. “These CEOs improved operating room efficiency and reduced staff turnover.” (Otero and Muñoz) #DID
In Rajasthan (India), posting of a mid-level health care provider increased the monthly patient load by 68 percent. The number of patients diagnosed with hypertension and diabetes at treatment facilities increased as well. After one year, elderly deaths declined by 12 percent. (Agte and Soni) #DID

Migration and refugees

Mexican regions experiencing larger inflows of Mexican low-skilled deportees have higher rates of firm creation, firm survival, and revenue. (Osuna-Gomez and Medina-Cortina) #FE
In Vietnam, the Ho Khau reform, which reduced migration barriers, had more impact on reducing spatial inequality than place-based incentives. (Huynh) #DID
In Uganda, “landslides increase long-term displacement and migration, and affected households have substantially worse economic and mental health outcomes years afterward.” (Baseler and Hennig) #FE #DID
In the Philippines, typhoons increase international migration from affected municipalities, and incentivize migrants to leave for lower paying overseas jobs. (Murathanoglu) #FE
Municipalities from which more Moroccan soldiers were deployed to France before independence were more likely to send emigrants to France after independence. But this wasn’t true with those sent to Algeria. (Salem and Seck) #FE

Safety nets (including cash transfers and peer support)

How do you target disaster aid to households? In post-2015 earthquake Nepal, the “property damage criterion excludes many liquidity-constrained households that have high demand for aid, and it includes wealthy, well-insured households that have low demand.” Dividing aid equally among all affected households has larger welfare gains. (Gordon, Hashida, and Fenichel) #RD
In Mumbai (India), residents who received a subsidy that could only be used for rice or wheat spent less on packaged snacks. The effect was bigger in households with children. (Aouad, Ramdas, and Sungu) #RCT
With access to safety nets, middle-income households in Colombia are more likely to borrow from formal lenders, and in the long run, they substitute away from predatory loans toward formal loans when experiencing severe shocks. (Álvarez et al.) #RD
An unconditional grant to poor kids in South Africa reduced the likelihood that girls would be underweight or obese, but it boosted the likelihood that they'd be overweight. There were no substantive effects for boys on average. (Chakraborty and Villa) #RD
Peer groups in Nepal where most people know each other don't necessarily choose a peer monitor in lab games. But groups where few people are immediately connected do. (Iacobelli and Singh) #RCT #DID
Using data from six low- and middle-income countries, a proxy means test (PMT)—i.e., using a short list of household characteristics to decide if a household is poor—fails to accurately predict eligibility for social protection programs: “the accuracy of the PMT prediction algorithm decreases steadily over time, by roughly 1.7 percentage points per year,” even though the PMT model is updated only every 5-8 years. (Aiken, Ohlenburg, and Blumenstock)

Working and saving

Banking and credit.

Encouraging commercial banks in India to increase lending to minority borrowers in “minority concentration” districts in India increased minorities’ access to bank credit. (Khan and Ritadhi) #RD
In Kenya and Pakistan, equity-like contracts stimulate more profitable investments. Risk preferences play an important but nuanced role: loss-averse individuals prefer equity; however, individuals exhibiting non-linear probability weighting prefer debt. (Meki) #RCT
In Ghana, individual incentives increased adoption of a new technology; adding endorsement by a trusted peer doubles the impact of the individual subsidy. (Riley, Shonchoy, and Darko Osei) #RCT
Lots of people in urban India don't have access to credit for when there's a financial crunch or to professionals for mental health problems. Many would like to talk to the people they know, but—from a survey—68 percent underestimate others' willingness to engage on these topics. Helping people realize that boosts sign-ups for potential savings groups or for a potential program to get trained to be a volunteer to listen to other people's anxieties. (Jain and Khandelwal) #RCT

Firms and microenterprises

Fifteen years after the Indian Ocean tsunami, Indonesian business owners exposed to the tsunami had lower levels of capital and profits than those not exposed. These effects were biggest in rural areas. (Lombardo, Frankenberg, and Thomas) #FE
Providing firms in Addis Ababa (Ethiopia) with more information about candidates with college degrees led firms to hire faster, but they often hired candidates without college degrees and downgraded their expectations about college graduate productivity. (Wu and Wang) #RCT
For US firms, entering the whaling industry entails lots of sunk costs such that firms are slow to enter but also slow to leave the market. (Yun)
In Kenya, “informality is particularly prevalent in downstream economic activities and smaller regional markets.” (Wiedemann et al.) #DID #SC
Vendors in the Kolkata (India) vegetable market subsidized to sell additional produce earned over 60 percent higher profits, after excluding the value of the subsidy. And yet, “after the subsidy ended vendors largely stopped selling the additional produce” which may reflect “social or private preferences”. (Banerjee et al.) #RCT
In Tanzania, rural firms smooth both negative and positive input price shocks more than urban firms. Urban firms pass nearly 95 percent of input price increases to customers, while rural firms pass only 55 percent of input price increases. (Rudder) #FE
Some firms in Sri Lanka have much higher returns to inputs than others, and new econometric tools to test how much putting inputs into the wrong firms affects growth suggest that output could quadruple with better allocation of resources. (Hughes and Majerotvitz) #RCT
When steam power started replacing water power in the United States, water-powered mills shut down rather than transforming to steam mills, suggesting that shifting technologies is costly. (Hornbeck et al.) #FE
In Malawi, a survey of shopkeepers shows that they have widely varying strengths across different dimensions of productivity (like attracting customers, managing a storefront, and maintaining inventory across many products). So a one-size-fits-all management training intervention may have disappointing results. (Huntington, de la Parra, and Shenoy)

Labor (including child labor)

In Uganda, an experiment with job referrals reveals that gender discrimination exists in both directions (favoring the majority gender in a given sector) but that it's worse in male-dominated sectors. But when men can make referrals anonymously, they discriminate less. (Alfonsi and Ferreira) #RCT
A subsidy to help people find jobs in Ethiopia seems to have smaller effects when more people participate (i.e., general equilibrium effects). The net impact on people's wellbeing still seems to be positive. (Van Vuren) #RCT
If the unemployment rate is 1 percent higher at the time a person first starts looking for a job in Indonesia, that person is likely to have worse long-term economic prospects: 21 percent lower income and 7 percent lower likelihood of being employed. These effects are smaller than those in high-income settings. (Marshan) #FE
When farmers in Burundi train their workers, they don't capture all the benefits, since the workers often take those skills and work for others. A contract that keeps workers with the same employer boosts employers' willingness to train massively (by 50 percentage points). (Cefala et al.) #RCT
A comprehensive training and mentoring program targeted to youth at risk in Rio de Janeiro (Brazil) boosts employment among men but it also—surprisingly—boosts fertility and subsequently welfare receipts among women. (Barros et al.) #RCT
How much a person is willing to work may in part just be driven by getting used to working. In Chennai (India), providing casual workers with incentives to work over a couple of months boosted how much they worked during that time (by 23 percent), and those same workers worked 16 percent in the following two months, after incentives were removed. (Cefala et al.) #RCT

Governments, institutions, and conflict

Conflict and crime.

Which connections do people value most in times of crisis? During social unrest in Haiti, daily contacts decrease but total talk time remains constant. Checking in on close friends, family, and others remains a priority. (Putman and Lybbert) #DID
Historical genocide violence of the Cambodian population impacts today’s household wealth and village-level poverty rates, driven by lower human capital, limited structural transformation, and restricted public goods provision. (Mehrotra) #IV
In Rio de Janeiro (Brazil), installing peacemaker units of police officers reduced crime rates, which boosted available credit, which in turn further reduced crime. (Tomkowski, Monteiro, and Caluz) #DID
Sanctioning public acts of repression, such as beating or arrests of protesters, can encourage a regime to prevent protest through less-public means, such as obstruction or harassment of organizers (based on data from 150 countries). (Andirin et al.) #FE
The political leaning of Brazilian players during the 2022 World Cup affected fans’ reactions depending on their political alignment. Celebrations after goals scored by a player were more intense among politically congruent fans. (Ajzenman, Ferman and Sant'Anna) #RCT
In southern Ethiopia, areas with more droughts also have more violent conflict. But when herders get and use insurance to protect against drought, it reduces conflict significantly (between 17 and 50 percent). (Sakketa, Maggio, and McPeak) #RCT
A law in Brazil requiring firms with more than a hundred workers to reserve at least two percent of their job openings for people with disabilities increased employment of people with disabilities. When firms got fined for not meeting the quota, nearby firms—even those not covered by the law—also boosted their disability employment. (Berlinski and Gagete-Miranda) #DID
In Uruguay, introducing individual retirement accounts as a complement to the traditional defined benefit pension led more people to work into their fifties. It also may have reduced tax evasion. In early old age, people had similar income levels across the two systems, but when people had the chance to go back to the defined benefit system, many did. (Lauletta and Bérgolo) #RD
If the government doesn't enforce people sticking to contracts, how do they work? Gamblers on horse races in Pakistan provide a window, since such betting is illegal and so the government doesn't enforce the contracts. "Even in the absence of legal enforcement authority, personal relationships, and violence, more than 70% of gamblers fulfill their contractual obligations." (Mehmood and Chen) #RCT
South African municipalities with higher historical exposure to post-apartheid Truth and Reconciliation Commissions on media have lower levels of violence today. (Gautier, Horta-Saenz, and Russo) #FE
Losing a sibling during the 1994 Rwandan Genocide leads to more schooling and more siblings born after the genocide. (Gautier) #IV

Regulation, tax, and government

In Indonesia, “electoral defeats of the incumbent village head increase turnover in the village bureaucracy and reduce nepotism.” (Bazzi et al.) #RD
In India, after a bureaucrat is transferred to an important ministry with the power to make influential policies, the annual growth rate of the value of the bureaucrat’s assets is 10 percent higher, and it’s 4.4 percent higher for the number of their assets. (Chaudhury and Yuan) #DID
In China, “over 65% scoring auctions in public procurement show evidence of scoring rule manipulation.” (Chen) #FE
In Brazil, “high-ability students in (anti-corruption) audited municipalities are less likely to choose majors tailored toward public sector careers, such as business administration and law.” (Xun) #DID
In rural Bangladesh, the introduction of Village Courts more than doubled the share of disputes resolved in state-sanctioned courts, but the informal dispute resolution mechanism “shalish” remains most used. (Mattsson and Mobarak) #RCT
A comparative welfare analysis of 40 policies implemented in low- and middle-income countries since 1997 shows that the marginal value is low. (Morris)
Successful democratizations lead to substantial redistribution: the size of the public sector grows, income inequality falls, and the labor share of income rises, according to data from 90 countries. (Miller) #DID
In India, “local democracy aligns spending more closely with citizen preferences, but these gains accrue more to men, upper castes, and other advantaged social groups.” (Arora et al.) #FE #DID
In Brazil, “when a young politician is in office, there is a reduction in deforestation and greenhouse gas emissions without significant effects on local GDP.” (Dahis, de las Heras, Saavedra) #RD #DID
Appointing “a new city party secretary (PS), who serves as the leader of the local Chinese Communist Party (CCP) organization, is associated with a significant increase in the revealed comparative advantage in industries where the PS’s previous work location exhibited better performance.” (Lin et al.) #FE
Electoral turnovers improve country performance. “Electing new leaders leads to more policy change, it improves governance, and it reduces perceived corruption,” based on data from over 4,000 national elections since 1945. (Marx, Pons, and Rollet) #RD
In Senegal, bureaucrats with full discretion for building the lists of potential property tax payers tend to undervalue properties, and they do so even more for higher-value properties, resulting in a regressive tax profile. “In contrast, a rule-based system where bureaucrats record property characteristics (not values) that an algorithm then uses to compute values, significantly reduces this tax gap.” (Knebelmann, Pouliquen, and Sarr) #RCT
In Uzbekistan, mandating the use of online electronic fiscal devices, which provide regulators with real-time information on business transactions, increases company revenue reports to tax authorities by 13 percent. Adding a direct communication channel with citizens and financial rewards to act as enforcement agents increases firms’ reported revenues by an additional 34 percent. (Kobilov) #DID
Research projects developed in partnership with policymakers are 17 to 20 percentage points more likely to result in observed policy change. (Bonargent)
Do religions codify ecological principles? In Benin, a 1 SD increase in African Traditional Religions adherence has a 0.4 SD positive impact on forest cover change. (Deopa and Rinaldo) #IV
When Israel reduced child allowances to large families in 2003, Jewish families substituted by enrolling their young boys in ultra-Orthodox religious schools. In the long-term, fewer boys enrolled in high schools, without affecting families’ fertility or labor supply decisions. The reform led to a 13 percent decline in completed fertility among Arab families. (Gershoni et al.) #RD
In Brazil, exposure to a church-affiliated TV channel increases fertility rates, lowers female labor force participation, lowers schooling for young women in the next generation, and leads to more votes for Pentecostal candidates. (Mello and Buccione) #DID
In Brazil, the removal of progressive Catholic leaders halted the land invasion movement, a conflict in which poor and landless peasants invaded large landholdings to force land redistribution. (Martinez-Bravo, Solá, and Tuñón) #FE
Hate or fear? In the ongoing conflict between Christians and Muslims in Jos (Nigeria), fear explains 76 percent, and hate 24 percent of the non-cooperative behavior. (Ortiz) #RCT
Climate change leads to welfare losses of 4.8 percent of GDP across 271 regions in sub-Saharan Africa, with country-level losses as high as 43.8 percent of GDP. “Lowering trade costs can offset these losses by connecting deficit regions to surplus regions and the world market.” (Porteous)
In South Korea, under a better bureaucrat, exports increased by 40 percent. "In subsequent appointments, exports increase in products with greater bureaucrat experience." (Barteska and Lee) #FE
Giving information on tariff costs and local prices to traders (via a cell phone platform) at the Kenya-Uganda border increases switching across markets and routes, leading to large increases in traders’ profits and significant formalization of trade. (Wiseman) #RCT

Agriculture, infrastructure, and the environment

Agriculture and land.

In India, redistribution of land ownership led to an overall increase in durable asset ownership, nonfarm employment and years of schooling, including among lower-caste descendants of households that did not receive land. (Batra) #RD
Households’ agricultural production in Côte d’Ivoire improves during the agricultural season overlapping with oxen delivery, and increases in land holdings and input use in the subsequent season. (Brudevold-Newman, Donald, and Rouanet) #RCT
In Kenya, an information campaign (training farmers to identify hybrid maize seeds that are quality-verified) improved farmers' purchasing decisions and led to gains in maize yields. While improved information caused sellers to exit the market, there are no effects on prices or quality among stayers. (Hsu and Wambugu) #RCT
Increasing agricultural technologies cannot rely on market prices as a mechanism for targeting high-return farmers. In Bangladesh, when farmers receive a new wheat seed variety for free, they adopt it as much as farmers that chose to buy it at a subsidized price. (Mahmoud) #RCT
Improving the allocation of inputs (like land, labor, and credit) across farms in Thailand could boost productivity by more than a third. But improving allocation of multiple inputs is more productive than focusing entirely on improving allocation of just one input. (Silver)
A government program to subsidize the price of fertilizer encouraged farmers to specialize based on their comparative advantage: some boosted their agricultural yields; others left agriculture. (Diop) #DID
Social networks are key to people adopting new agricultural technology. But in Malawi (and a theoretical model predicts similar results elsewhere), using people with lots of connections to get farmers to adopt new seeds works best when lots of farmers in the network have similar farms (so that the seeds are similarly likely to work). (Chakraborty) #FE

Climate and pollution

Increasing water prices led to a decline in water use of richer households in Cape Town (South Africa). However, richer households substituted municipal water with privately drilled groundwater. (Cole et al.)
In Mozambique, “providing information on flood risk [such as physical damage and disease outbreaks] increased the implementation of suggested mitigation strategies.” (Leefers) #RCT
In the Philippines, large-scale tree planting reduced regional poverty and increased economic activity. (Pagel and Sileci) #DID
In Vietnam, rising temperatures lead more workers to move from agriculture into other industries, both in the short run and the long run. (Pham) #FE
Reducing localized emissions from vehicles within India’s 10 largest cities leads to a 3 times larger GDP gain than a policy controlling agricultural fires. “Further accounting for labor reallocation leads to a 6 times larger GDP gain.” (Tiwari)
In Colombia, “extreme temperature events increase the frequency of land sales and decrease the average farm size within municipalities.” (Arteaha et al.) #FE
In India, industrial water pollution does not seem to affect crop yields. Farmers respond to industrial water pollution by switching irrigation sources from surface water to (costly) groundwater and expanding irrigation. (Hagerty and Tiwari) #RD
To address sea level rise, the Indonesian government proposed a sea wall. Moral hazard generates severe lock-in and limits migration inland, even over the long run. (Hsiao) #RD
The 2009 tightening of environmental standards in the US shifted used lead-acid battery recycling, an industry that emits large amounts of lead pollution, to Mexico. Lead pollution exposure reduced students’ text scores by 0.05-0.09 standard deviations. (Litzow et al.) #DID
The Green Municipalities Program in the Brazilian Amazon (PMV) increased secondary forest cover (in places that have been previously deforested) by 9 percent. (Shinde et al.) #DID
In Nairobi (Kenya), improved stove ownership reduced high-frequency particulate matter (PM) exposure from 122 µg/m3 to 49 µg/m3, with a 0.24 SD reduction in self-reported respiratory health symptoms. (Berkouwer and Dean) #RCT
The beef cattle sector drives deforestation worldwide. In the Brazilian Amazon, large intermediaries drive down prices for farmer and cattle supply, but the deforestation frontier is largely competitive and thus emissions remain unaffected. (Barrozo) #IV

Infrastructure and transport

Chinese infrastructure projects significantly increased nighttime light in the African recipient regions, and the effects persist over time. World Bank projects, however, did not exhibit significant impacts on nighttime light. World Bank and Chinese infrastructure projects both positively influence women’s education attainment and health. (Chai and Tang)
Motortaxi drivers in Uganda admire other drivers who speed. Drivers are more likely to want financial incentives to limit speeding if those incentives are visible, so they can use them to justify their reduced speed to other drivers. (Raisaro) #RCT
In Mexico, urban localities that spent an additional month downwind from a 0.1 degree × 0.1 degree grid cell that has adopted conservation agriculture experience a 1.3 percent reduction in the number of infant deaths. (Ferguson and Govaerts) #ES #DID
Discontinuous incentives around the range thresholds of Chinese driving-range-based subsidies made low-end electric vehicle manufacturers’ invest in reducing the production costs of driving ranges by 30 percentage points. (Zhang) #FE
“Commuters in Jakarta (Indonesia) are 2-4 times more sensitive to wait time compared to time on the bus, and inattentive to long routes.” (Kreindler et al.) #DID
“Winning random lotteries for the ownership of condominium houses in Ethiopia leads to significant gains in educational attainment: educational enrollment increases by 4.5-11%, secondary school completion rates by 10.5% and post-secondary attendance rates by 16%.” (Agness and Getahun) #IV

The order of authors on this blog was determined by a virtual coin flip. This blog post benefited from research assistance by Amina Mendez Acosta and editing by Jeremy Gaines . A version of this post will also appear on the CGD Blog.

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Senior Fellow, Center for Global Development

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Articles on Global Economy 2023

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Global economy 2023: COVID-19 turned global supply chains upside down – 3 ways the pandemic forced companies to rethink and transform how they source their products

Nada R. Sanders , Northeastern University

Global economy 2023: what happens next with industrial action

Stéphanie Matteudi-Lecocq , Université de Lille ; Jim Stanford , University of Sydney ; Marick Masters , Wayne State University ; Nabiyla Risfa Izzati , Universitas Gadjah Mada ; Phil Tomlinson , University of Bath , and Rubén Garrido-Yserte , Universidad de Alcalá

Global economy 2023: why there will still be plenty of pressure on food prices in the year ahead

John Hammond , University of Reading and Yiorgos Gadanakis , University of Reading

Global economy 2023: how countries around the world are tackling the cost of living crisis

Alan Shipman , The Open University ; Aymen Smondel , Université Côte d’Azur ; Bhima Yudhistira Adhinegara , Center of Economic and Law Studies (CELIOS) ; John W. Diamond , Rice University ; Luis Garvía Vega , Universidad Pontificia Comillas ; Mohamad Hassan Shahrour , IAE Nice - Université Côte d'Azur ; Peter Martin , Crawford School of Public Policy, Australian National University , and Wayne Simpson , University of Manitoba

Global economy 2023: how governments could make the energy crisis worse this year

Adi Imsirovic , University of Surrey

Global economy 2023: Why central banks face an epic battle against inflation amid political obstacles

Steve Schifferes , City, University of London

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Senior Lecturer in Economics, The Open University

Professor of Industrial Strategy, Co-Director Centre for Governance, Regulation and Industrial Strategy (CGR&IS), University of Bath

Honorary Research Fellow, City Political Economy Research Centre, City, University of London

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Professor of Business and Adjunct Professor of Political Science, Wayne State University

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Economist and Director, Centre for Future Work, Australia Institute; Honorary Professor of Political Economy, University of Sydney

Professor, Department of Economics, University of Manitoba

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Director del Instituto Universitario de Análisis Económico y Social, Universidad de Alcalá

Distinguished Professor of Supply Chain Management, Northeastern University

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Perspectives on the Banking Turmoil of 2023

The banking turmoil of March 2023 was a significant incident in the U.S. financial system that threatened to create a general macroeconomic problem. There were multiple factors at play that explain what happened. In this article, I discuss some of those factors in detail to gain a more complete understanding of why and how the turmoil happened and the way policy addressed it.

During the first two weeks of March 2023, several medium-to-large U.S. banks experienced significant stress, and two of these banks — Silicon Valley Bank (SVB) and Signature Bank — were taken over by regulators and closed. As is generally the case, multiple factors combined to create the conditions propitious for these events. The crisis resulted in a massive shift in the way funds flow from depositors to banks and other investment alternatives. The Federal Reserve played a critical role in containing the impact of the crisis and redirecting some of the funding to where it was urgently needed. Incentives, market discipline and fear of contagion are important considerations behind the decisions taken during the crisis and the implications of the events for the future performance of the U.S. financial system. In this article, I provide some detailed perspectives on these various issues with a view to improving understanding of the forces driving the events and the way policy responded. 1

The Early Gestation of the Crisis

Many of the conditions behind the recent stress in the U.S. banking system originated a few years prior. To begin, bank deposits increased considerably during the pandemic, as shown in Figure 1. After an initial surge — which had as counterpart a surge in both business lending (via lines of credit drawdowns) and bank reserves — deposits continued growing rapidly for more than a year. As banks were receiving these extra deposits, the economy continued to struggle through the pandemic, with limited demand for new bank loans. Much of the increase in deposits, then, ultimately went to increase banks' reserves and, importantly, holdings of long-term securities.

Figure one, showing commercial bank balance sheets between January 2019 and July 2023.

At the time, expectations for the level of interest rates were very low , even for horizons of two to three years out. The U.S. economy was coming from an extended period of persistently low interest rates and inflation rates, and expectations for future inflation were notably subdued. The U.S. government was issuing large amounts of debt, the result of a huge fiscal effort intended to support businesses and households coping with the pandemic. The housing sector was very active, and mortgage-backed securities (MBS) issuance was consequently quite high. Banks absorbed considerable amounts of MBS.

Treasuries and agency securities (debt and agency-guarantee MBS) have little-to-no credit (or default) risk. However, interest-rate risk can, in principle, be significant for securities with longer maturities. The expectation of persistently low interest rates and inflation made that risk less prominent at the time. And given the prospects for low future rates, securities with fairly long maturity were issued with very low coupon payments. It was a good time to issue long-term debt, and it also seemed relatively safe for banks to hold that debt as a way to allocate deposit funding that was widely available but not much needed for lending to businesses and households.

The Onset of Higher Inflation and Interest Rates

Around the second quarter of 2021, however, signs of inflation in the economy appeared more and more evident. Initially, it was hard to disentangle how much of that inflation was associated with the disruptions in supply and demand caused by the pandemic and also whether those inflation pressures would dissipate by themselves as health risks became more manageable and the economy returned to normal.

Later in 2021, however, it became clear that interest rates needed to increase and that the Fed would embark in a process of monetary policy tightening. The first rate hike occurred in March 2022, and the speed at which policy rates increased during 2022 was unprecedented .

These higher interest rates meant the securities purchased during the pandemic (at very low coupon payments) were no longer a great investment. Initially, banks' balance sheets and earnings did not show the impact of the repricing, as deposit interest rates often take time to adjust to changes in policy interest rates. This is particularly true when rates move fast, as they did in 2022. 2 So, while interest payments from the banks' holdings of securities were low relative to the prevailing policy rate, the deposits funding those holdings were also paying relatively low interest rates. That is, low-interest securities were being financed with low-interest deposits.

If inflation were to prove temporary, perhaps policy rates could increase less and maybe even go back down soon enough. If that would have happened, losses for banks holding low-interest securities would have been less substantial: Deposit rates would have come back down, and the funding-cost mismatch would have lasted for only a few months. However, inflation persisted, and the policy rate continued to increase briskly during 2022. During the second half of the year, depositors reallocated large amounts of funds into higher-yielding investments . As bankers recognized this, deposits began to reprice.

The Height of the Crisis

With 2023 underway, more and more depositors realized there were very attractive interest rates available for investing cash in the market. Flows into, for example, prime money market mutual funds (MMFs) increased quickly, and bank deposit growth effectively stalled.

In early March, depositors at several mid-size banks — including SVB and Signature Bank — became concerned that deposits repricing at permanently higher interest rates would cause bank profitability to suffer, putting some of these banks in trouble. 3 The large proportion of uninsured deposits at some of the banks was also a source of fragility. 4 In fact, a few regional banks had multiple sources of weakness, and depositors fled from these weaker banks first, as is often the case during banking crises. 5

As stress at regional banks got in the news, awareness among depositors increased, and repricing of deposit terms became more widespread. Earning prospects for banks holding significant bond portfolios looked a lot worse: Bonds were paying around 3 percent, and the cost of funding with deposits was anticipated to go up to 4 or 5 percent.

In this context, it is not surprising that banks' stock prices suffered. Arguably, the large drops in bank stock prices created even more awareness and concern among depositors. In many cases, deteriorating confidence in the financial condition of their banks drove depositors (both insured and uninsured) to move their cash holdings to other (larger) banks or outside the banking system.

Figure 2 shows the evolution of deposits and borrowings for all U.S. commercial banks in the first half of 2023. Borrowings include collateralized loans from Federal Home Loan Banks (FHLBs) as well as borrowings from the Fed.

Figure two, showing the change in deposits and borrowings of all commercial banks between January 2023 and June 2023.

As is clear from the figure, both borrowings and large time deposits increased consistently, with borrowings jumping abruptly during the first two weeks of March. Total deposits — driven mainly by other deposits, which include core deposits such as checking and savings accounts, a more stable source of funding for banks — decreased consistently until the end of April and then stabilized at a significantly lower level.

However, Figure 2 hides important differences in deposit flows across the size distribution of banks: The publicly available data only separates the top 25 largest domestic banks from the rest. As a result, visibility of this issue is limited. In May, economists at the New York Fed with access to more granular (confidential) data confirmed that there were significant flows of deposits in March 2023 from banks with assets between $50 billion and $250 billion (which the authors call super-regional and which included both SVB and Signature) to banks with more than $250 billion in assets.

The Shift in Bank Funding Sources

While large banks (those with assets over $250 billion) initially saw significant increases in deposits, those inflows had reverted to much lower values by the end of March 2023. Borrowing increased for banks of all sizes.

Figure 3 illustrates one aspect of the flow of funding to banks that resulted from this shift — in particular, the FHLB channel. We can think of this process as a partial rerouting of the existing bank funding. The funding that was going directly from depositors to banks before March became intermediated by MMFs and FHLBs after the turmoil.

Figure three, demonstrating flow of funding to banks.

There are two important implications of this rerouting of funds:

Not all MMF funding goes to FHLBs to then lend to banks. MMFs also deposit with the Fed in the overnight reverse repo facility (ON RRP) and buy bonds directly in the market.
FHLB funding to banks tend to reprice much faster than core deposits. So, this rerouting implied that the sensitivity of bank funding to interest rate movements increased considerably. 6

Collateral Funding and the Fed's Response

In an effort to contain the crisis, the Fed also created the Bank Term Funding Program (BTFP) during the second week of March. The program offered advances (collateralized loans) to banks with terms of one year or less at a market rate consistent with the expected path of interest rates in the year ahead from the day of origination (plus a premium of 10 basis points). The collateral was restricted to Treasury and agency securities (including MBS) valued at par and owned by the borrower when the program began. Note that these are the same categories of securities that banks had accumulated during the pandemic, as deposits surged.

One way to think about this new Fed-provided funding, then, is as a replacement of the funding by depositors prior to the banking stress. In summary, depositors' funding decreased and was replaced by funding from the FHLBs and the Fed. These sources of funding are, in principle, more tightly linked to the level of market interest rates and in that way diluted the advantage that banks were perceived to have as interest rates changed and core deposits were slow to reprice.

As Figure 4 shows, the primary credit facility at the Fed's discount window also saw an increase in activity during the height of the crisis, but that lending quickly normalized in the following weeks. The discount window only provides loans with a maximum maturity of 90 days. Also, while the collateral taken for those loans is broader (including business and consumer loans), haircuts are applied to the securities pledged at the discount window, making it less attractive to fund Treasury and MBS, with the no-haircuts BTFP as a better alternative. A notable pattern in Figure 4 is displayed by "Other Credit Extensions," which includes the loans that the Fed made to those banks that were eventually closed amidst the turmoil.

Figure four, showing amount of loans from Fed facilities between January 2023 and around June 2023.

Interestingly, FHLB advances are also collateralized loans with more restricted collateral classes than the discount window but comparable to the collateral at the BTFP. In that way, FHLB and BTFP advances are closer substitutes. An important limitation for the BTFP, however, is that the collateral pledged for those advances had to be securities that the borrowing bank owned prior to March 12, 2023. In other words, BTFP funding could not be used by banks to purchase new securities after March. There are, of course, also differences in the way FHLB and BTFP advances are being priced, but conditional on term of maturity, those differences in interest rates are not likely to be significant.

On the other side of the same coin, then, from the perspective of collateral funding, we can think that a large portion of Treasuries and agency securities held by banks before March 2023 were being financed with deposits. After the March stress, however, funding for bank holdings of Treasuries and agency securities shifted, and banks instead funded a significant share of their eligible securities with FHLB and BTFP advances.

Policy and the Fear of Contagion

Both Signature and SVB were medium-to-large banking organizations. SVB grew rapidly during the pandemic, becoming the 16th largest bank in the U.S. by December 2022, while Signature ranked 29th. Both banks suffered a rapid loss of depositors' confidence in early March 2023. Abnormally high concentrations of uninsured deposits likely contributed to the massive shift in sentiment among depositors of these banks. At year-end 2022, over 90 percent of the deposits at these banks were uninsured. Other items influencing the sudden nature of the panic included the banks' customer concentration in particular industries as well as technological improvements allowing both increased communication among depositors and increased speed at which fund withdrawals could happen.

Bank instability has received a lot of attention in the financial economics literature. Indeed, the 2022 Nobel Memorial Prize in Economic Sciences recognizes work on this issue. This literature has made significant progress in understanding how rational behavior by uninsured depositors can result in panics triggering a wave of fund withdrawals from a bank, possibly generating inefficient liquidation of productive investment. These panics can be caused by factors that coordinate the change in mood of depositors even without constituting a significant reassessment of the financial conditions of the bank, aside from the obviously consequential loss of confidence by depositors itself.

When conditions are suited for bank fragility, instability in one bank may trigger a loss of confidence in another bank. This kind of contagion is a looming threat for bankers and policymakers trying to contain a crisis. It is reasonable to think that a problem in only one or two banks can be addressed by reallocating assets (and liabilities, in principle) to other banks, other financial institutions or large investors on the sidelines. However, if the crisis spreads to many banks through contagion, the situation can become unmanageable and have a significant impact on the aggregate economy. With these concerns in mind, government interventions during crises are often designed to be clear and assertive — "decisive actions" signaling unambiguous support to the financial system — and thus intended to suppress the possibility of mood-driven contagion. In March 2023, the decision was made to fully protect all depositors, insured and uninsured, in SVB and Signature .

These actions were taken in application of a systemic risk exception. The U.S. deposit insurance system contemplates insuring depositors up to a maximum of $250,000. Part of the philosophy behind this limit is the presumption that large depositors tend to be more sophisticated and can exercise helpful market discipline on bank managers over the way they run their bank. 7 When the limit on deposit insurance is lifted ex post, that undermines the incentives of large depositors to oversee bank activities in the future. Presumably, optimal bank regulation should adapt and reflect this new situation accordingly. Regulators need to fill the gap left by inattentive depositors.

Similarly, larger banks in the U.S. (those with more than $250 billion in assets) are subject to stricter supervision and regulation in part due to the systemic concerns that financial trouble in those banks can bring to the system as a whole. When smaller banks are treated as "systemic," regulation also needs to adapt to this new situation. What constitutes a systemic event is not clear-cut and can change over time. We might have learned in March 2023 that some banks are more systemic than previously thought. If this is the case, then it makes sense for the bank regulatory framework to reflect this improved understanding going forward. 8

It is also possible, however, that some of the ex-post response to the crisis reflects time inconsistency : The policies that were deemed ex ante optimal — in part to influence prudent behavior by economic agents, preemptive of crises — are no longer desirable ex post in the midst of the crisis. Finding ways to address the well-understood perils of such limited policy commitment is important.

At the same time, since regulation is costly, pressures to deregulate take a cyclical pattern, and they always come back. It seems unlikely that the answer to each new crisis is more and more regulation. Market discipline should play a role. Consequently, it remains an important assignment to try to design regulation in ways that make it more amenable (during a crisis) to maintaining commitment over the level of investor protection decided ex ante.

A lot of factors influenced the banking turmoil of 2023. This article provides perspectives on some of those factors without attempting to be exhaustive. Each of the banks that experienced stress had very specific situations that contributed to their problems. We have taken a step back from those details and have outlined some broader issues that also played a role on the way events unfolded. The hope is that these perspectives help in thinking about the various fundamental reasons behind banking crises to, then, be able to address those more accurately and effectively in the future.

Huberto M. Ennis is group vice president for macro, micro and financial economics in the Research Department at the Federal Reserve Bank of Richmond.

For additional perspective, see the recent remarks by Richmond Fed Research Director Kartik Athreya .

It seems unsurprising that deposits took some time to reprice. After experiencing a very long period of interest rates near zero, the fast pace of policy-rate tightening left many depositors with underpriced deposits and either not realizing or not having a good plan for how to reallocate money into higher-yielding investments.

A thorough account of the multiple weaknesses at SVB, for example, appears in the April 2023 review led by Federal Reserve Board Vice Chair Michael Barr .

On March 8, Silvergate Bank (a smaller institution providing services to cryptocurrency investors) was also closed and liquidated, adding to the sense of instability in the banking sector at the time.

For more on how bank runs tend to affect weaker banks more intensely, see the 1997 paper " Contagion and Bank Failures During the Great Depression: The June 1932 Chicago Banking Panic ."

This was also a period of significant cross currents in the bond market, where MMFs are a critical group of investors. As a result of federal debt-ceiling tensions, the Treasury Department adjusted its issuance of debt and the amount of cash held in its Treasury General Account at the Fed. MMFs also shifted to invest heavily in shorter tenors given the uncertainty surrounding monetary policy. Furthermore, the Fed was reducing the size of its balance sheet (and continues to do so as of this writing), which implies that the private market needs to absorb an increasing portion of the outstanding government securities. The net impact of these various factors on the observed outcomes in the banking system is not easy to disentangle and is left aside for the purpose of this discussion.

Fed Vice Chair Barr's review clearly highlighted managerial failure as one deficiency in the case of SVB .

Discussions for reforming the current U.S. bank capital and regulatory framework are already underway. See also the recent speech by Fed Governor Michelle Bowman .

To cite this Economic Brief, please use the following format: Ennis, Huberto M. (October 2023) "Perspectives on the Banking Turmoil of 2023." Federal Reserve Bank of Richmond Economic Brief , No. 23-35.

This article may be photocopied or reprinted in its entirety. Please credit the author, source, and the Federal Reserve Bank of Richmond and include the italicized statement below.

Views expressed in this article are those of the author and not necessarily those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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The Reporter

Program Report: Political Economy, 2023

The mission of the NBER’s Political Economy Program is to provide a forum for the discussion and distribution of theoretical and empirical research that identifies and addresses political constraints on economic problems. The program flourished under the vision and leadership of founding director Alberto Alesina from its launch in 2006 until his untimely death in 2020. As codirectors, we are grateful to him for shaping it into the active research hub it is today. The program currently has 95 affiliates, who have produced more than 1,000 working papers since the last program report, in 2013.

Political Economy is a broad-tent program in terms of methodology, geography, time period, and topics covered. Members study not only what might be thought of as traditional political economy — the links between economics and politics, such as the study by Daron Acemoglu, Suresh Naidu, Pascual Restrepo, and James Robinson of how elections and institutions impact growth 1 — but also investigate how forces like moral values and behavioral impulses impact politics and economics. Benjamin Enke’s investigation of morality and voting 2 and Pietro Ortoleva and Erik Snowberg’s exploration of the role of overconfidence in political behavior 3 are but two examples of the latter.

We cannot cover the full breadth of program affiliates’ output in the decade since the last report. We therefore will not revisit the four topics — institutions, diversity, US elections, and culture — that it highlighted, except to say that they are still highly researched. As one illustration, Alberto Bisin and Paola Giuliano convene a full-day meeting on cultural economics adjacent to the spring program meeting. We highlight instead three different topics on which program affiliates have focused their efforts: political polarization, state capacity, and conflict. All have large welfare significance.

Polarization

Extreme populist parties have gained strength across democratic nations in the years following the 2008–09 financial crisis, and alongside this phenomenon has grown researchers’ interest in polarization. In addition to studying diverging political views, Levi Boxell, Matthew Gentzkow, and Jesse Shapiro document a rise in affective polarization — negative attitudes toward nonmembers of one’s political party — in six of 12 OECD countries investigated, with the greatest increase in the United States. 4 [Figure 1] Party identification now seems to operate as a key dimension of individual identity, with research demonstrating a connection between partisanship and a range of nonpolitical behaviors, from Gordon Dahl, Runjing Lu, and William Mullins’s study of fertility 5 to Emanuele Collonnelli, Valdemar Pinho Neto, and Edoardo Teso’s look at hiring in Brazil. 6

The central concern of the research on polarization is understanding the causes of its rise and underlying drivers. The bulk of the empirical analysis supports a role for three major causes: trade and globalization, ethnocentrism, and the media. Regarding trade, Cevat Aksoy, Sergei Guriev, and Daniel Treisman demonstrate that, across 118 countries, opinions of the incumbent politician diminish as imports increase. 7 Moderates are driven out of office in the face of rising Chinese trade exposure, Christian Dippel, Robert Gold, and Stephan Heblich show for Germany; 8 and David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi document for the US. 9

Evidence of a role for ethnocentrism in the rise of populism is provided by, among others, Simone Moriconi, Giovanni Peri, and Riccardo Turati, who show that low-skilled immigration has driven nationalistic preferences across 12 European nations since 2007. 10 Immigration also decreases support for redistributive policies, according to Alesina, Elie Murad, and Hillel Rapoport, 11 contributing to a long literature that seeks to understand why inequality does not predict support for increased redistribution, a puzzle that has great relevance for our understanding of polarization. In fact, Alesina, Armando Miano, and Stefanie Stantcheva find that just having survey respondents think about immigration lowers support for redistribution. 12 Jesper Akesson, Robert Hahn, Robert Metcalfe, and Itzhak Rasooly find similar effects for race. 13

Outside of the connection with polarization, program affiliates remain interested in how racial, ethnic, religious, and gender identity impact political preferences, behavior, and, most of all, treatment received in the political sphere. Elizabeth Cascio and Na’ama Shenhav analyze 100 years of women’s voting in the United States. 14 Across contexts, contributors are exploring how ethnic and religious concordance between representatives and voters impacts receipt of public goods. See, for example, Kaivan Munshi and Mark Rosenzweig on India 15 and Brian Beach, Daniel B. Jones, Tate Twinam, and Randall Walsh on California. 16 Researchers are also continuing to explore how voters’ voices are suppressed by race, as in Federico Ricca and Trebbi’s work on how endogenous political institutions keep minorities from voting in the present-day US 17 and Enrico Cantoni and Vincent Pons’ analysis of voter ID laws. 18

Returning to polarization, ethnocentrism and economic causes are not necessarily at odds: Jiwon Choi, Ilyana Kuziemko, Ebonya Washington, and Gavin Wright provide evidence for an interactive role for the two forces in political beliefs. 19 Nor are they the only two explanations explored for increased polarization. Political economists have for quite some time been asking questions around how our biases impact how we take in media and how media further our biases. Ester Faia, Andreas Fuster, Vincenzo Pezone, and Basit Zafar study the former 20 and Gregory J. Martin and Ali Yurukoglu the latter. 21

Increasingly, the field of political economy, like the public’s attention, has also turned to social media and its role in furthering discord. Gene Grossman and Elhanan Helpman model how parties’ ability to push fake news to their supporters increases both policy divergence and suboptimal outcomes. 22 Acemoglu, Asuman Ozdaglar, and James Siderius demonstrate platforms’ role in this process, showing that they are incentivized to create algorithms that amplify low-reliability content. 23 But even outside of fake news, Renee Bowen, Danil Dmitriev, and Simone Galperti show that our sharing behavior furthers polarization. 24 Rafael Di Tella, Ramiro Gálvez, and Ernesto Schargrodsky find that following a political event, in this case the 2019 Argentina presidential debate, only those inside the echo chamber became more polarized. 25 On the other hand, intriguingly, Boxell, Gentzkow, and Shapiro describe how polarization has increased most in recent years among demographic groups least likely to use social media. 26 Nonetheless, Thomas Fujiwara, Karsten Müller, and Carlo Schwarz find that social media affects vote shares in US elections. 27

While there is no consensus on the role of social media in politics, and certainly not on whether social media enhance or diminish welfare more broadly, what is clear is that the role of new media in campaigns, information acquisition, and political movements will be exciting areas of future inquiry, both in relation to and outside of the impact on political polarization. The same is true of other potential drivers of polarization, such as income and wealth inequality.

State (In)Capacity

Over the past decade, program affiliates have sought to understand the emergence of weak versus capable states. Studies by Timothy Besley, Robin Burgess, Adnan Khan, and Guo Xu, 28 who examine the cross-national relationship between per capita income and the level of government bureaucracy [Figure 2], and Acemoglu, Camilo García-Jimeno, and Robinson who look at the networks of Colombian municipalities are recent examples. 29 The field has reached something of a consensus on the importance of strong states in long-run development, as Melissa Dell, Nathaniel Lane, and Pablo Querubin show for northern Vietnam 30 and Charles Angelucci, Simone Meraglia, and Nico Voigtländer demonstrate for England. 31

Program Report Figure 2: This is a scatter plot titled GDP per Capita dn country-Level Bureaucracy Score. The points of the scatter plot are abbreviations of countries instead of dots. The y-axis is labeled GDP per capita ($1,000s) and ranges from 0 to 80. The x-axis is labeled average bureaucracy score and ranges from 0 to 1. A vertical dotted line depicting the mean, about 0.5, is placed in the middle of the scatter plot. The distribution of the points creates an upward trajectory from the bottom left corner to the upper right corner. The majority of the data points are concentrated within a rectangular space from 0 to 40 on the y-axis and 0.2 to 0.8 on the x-axis. The source line reads Source: Besley T, Burgess R, Khan A, Xu G. NBER Working Paper 29163.

A strong state, however, is not necessarily a driver of welfare gains, particularly if the state is in the hands of powerful elites. State capture is therefore another interest, with empirical investigations ranging from Claudio Ferraz, Frederico Finan, and Monica Martinez-Bravo’s work on traditional elites in Brazil 32 to Patrick Francois, Ilia Rainer, and Trebbi’s study of autocratic cabinet allocations to ethnic groups in sub-Saharan Africa. 33

Another factor that can weaken state capacity is the misalignment of incentives of government officials. Raymond Fisman and Yongxiang Wang find heavy manipulation of accidental death data in China due precisely to this cause. 34 Acemoglu, Leopoldo Fergusson, Robinson, Dario Romero, and Juan F. Vargas point to the perils of the lack of state capacity along critical dimensions when the incentives for representatives of the state are high powered. 35

In addition to moral hazard, asymmetric information within the government can be a cause of weakness. Ernesto Dal Bó, Finan, Nicholas Li, and Laura Schechter provide experimental evidence of this issue for agricultural inspectors in Paraguay. 36 Oriana Bandiera, Michael Carlos Best, Adnan Qadir Khan, and Andrea Prat show how improvements in efficiency arise from the delegation of authority to procurement officers in Pakistan. 37

A final factor that can hobble state capacity is corruption, a huge topic of investigation. To provide two examples of its documentation, Fisman and Wang show that politically connected firms in China are allowed to get away with two to three times higher workplace fatality rates than unconnected firms. 38 In the US, Filipe R. Campante and Quoc-Anh Do demonstrate that corruption tends to be higher in systems where the centers of political power are more geographically isolated from principals/voters, a finding that suggests that corruption matters to voters. 39 Finan and Maurizio Mazzocco demonstrate this explicitly, showing that Brazil’s anti-corruption audits are highly valued by voters notwithstanding their costs. 40 In Mexico, Eric Arias, Horacio Larreguy, John Marshall, and Pablo Querubin find that the frequency of malfeasance is important for electoral accountability. 41

The most difficult questions about corruption revolve around how to stamp it out and what might be the unintended consequences of eliminating it. Raúl Sanchez de la Sierra, Kristof Titeca, Haoyang Xie, Albert Malukisa Nkuku, and Aimable Amani Lameke present a case study of the internal organization of the traffic police in the Democratic Republic of the Congo, where the effects of anti-corruption efforts are ambiguous and depend on the transfer schemes and quotas allocated between lower-ranked and higher-ranked police officers. 42 In El Salvador, Zach Y. Brown, Eduardo Montero, Carlos Schmidt-Padilla, and Maria Micaela Sviatschi find that policies aimed at pacifying and reducing nonaggression among criminal gangs increased extortion. 43 Lauren Cohen and Bo Li provide evidence that in the US the Foreign Corrupt Practices Act, a statute aimed at curtailing foreign bribery, is misused strategically against foreign firms located in a senator’s state when the senator is up for reelection. 44

Political capture of public officials, a phenomenon often associated with corruption, has also received growing attention. Xu, Marianne Bertrand, and Burgess demonstrate that social proximity facilitates political capture of bureaucrats in India, 45 while Silvia Vannutelli shows that removing the ability of Italian mayors to hire their own financial auditors yields municipal fiscal improvements. 46 [Figure 3]

Program Report Figure 3: This figure is a plot of singular dots, including a 95 percent confidence interval, for every x value titled Effect of Auditor Independence on Net Surplus. The y-axis is labeled Treatment effect and ranges from -15 to 30. The x-axis is labeled Years relative to increase in auditor independence and ranges from -7 to 2. A vertical dotted line is placed between -1 and 0 indicating an increase in auditor independence. Going from -1 to 0 on the x-axis corresponds to a shift of 0 to about 12 for treatment effect. Data points to the left of the dotted line have lower values than points to the right. On the left, all values are 0 or below while on the right, values range between 10 and 20. The figure annotation reads Thin blue lines represent 95% confidence intervals. The source line reads Source: Vannutelli S. NBER Working Paper 30644.

Increasing Conflict and Violence

Since 2013 the world has seen the rise and fall of the Islamic State in the Middle East, heightened conflict in Syria in the aftermath of the Arab Spring, insurgencies in Yemen, Afghanistan, and Nigeria, and Russian invasions of Ukraine, first in 2014 and then on a larger scale in 2022. All these conflicts have far-flung economic, social, and political consequences. Program affiliates have increasingly turned their attention to conflict, beginning with its origins. Acemoglu, Fergusson, and Simon Johnson 47 and Cemal Eren Arbatli, Quamrul Ashraf, Oded Galor, and Marc Klemp 48 investigate anthropological and economic origins from a broad historical perspective. Other researchers consider cultural origins, including Eoin McGuirk and Marshall Burke in the context of Africa , 49 or institutional constraints, like Oendrila Dube and Naidu 50 and Antonella Bandiera, Lelys Dinarte Diaz, Juan Miguel Jimenez, Sandra Rozo, and Sviatschi in Latin America. 51

Researchers also seek to understand the incentives and strategies of the actors. Studies by Efraim Benmelech and Esteban Klor 52 and Trebbi, Eric Weese, Austin L. Wright, and Andrew Shaver 53 focus on the role of insurgent groups in Asia. Veli Andirin, Yusuf Neggers, Mehdi Shadmehr, and Shapiro estimate various regimes’ tolerance for citizen action by studying the frequency of political protests. 54 [Figure 4]

Program Report Figure 4: This is a cartogram of a world map titled Protest tolerance by Country. The map key shows that countries are colored coded by their estimated tolerance ranging from 0 to 1. Countries not in the sample are left colorless. Using shades of blue, darker shades indicated a higher level of estimated tolerance. The majority of the countries in North and South America have higher estimated tolerance scores while the majority in Asia and Africa have lower estimates. In Europe, countries in the west have higher estimated scores and scores decline as you move east. The figure annotation reads A country’s tolerance score is defined as the estimated ratio of the cost of repression to the cost of protest. The source line reads Source: Andirin V, Neggers Y, Shadmehr M, Shapiro J. NBER Working Paper 30167.

Burke, Solomon Hsiang, and Edward Miguel outline the role of climate in conflict. 55 Murat Iyigun, Nathan Nunn, and Nancy Qian take the long view, investigating the question empirically over five centuries of conflicts in Europe, North Africa, and the Near East, from 1400 to 1900. 56

Increasing attention to the topic of violence has generated closer interactions between political economy and other subfields of economics, particularly development and economic history. Several of the studies cited above focus on developing countries. Similarly, Ying Bai, Ruixue Jia, and Jiaojiao Yang’s work on the role of Zeng Guofan in the Taiping Rebellion in nineteenth century China connects to both subfields. 57 Leander Heldring, Robinson, and Parker Whitfill’s study of the political consequences of World War II bombings makes clear the link between political economy and economic history. 58

Political economy connects economics to international relations. Nation building, nationalism, and war are at the core of work by Alesina, Bryony Reich, and Alessandro Riboni. 59 Conflict studies also bridge the boundary to cultural anthropology. The long-run impact of conflict on cooperation is explored by Michal Bauer, Christopher Blattman, Julie Chytilová, Joseph Henrich, Miguel, and Tamar Mitts 60 and Sarah Lowes and Montero 61 among others. Dal Bó, Pablo Hernández, and Sebastián Mazzuca explore the trade-off between predation and production in proto-states. 62 These linkages are evidence of the sort of interdisciplinary and cross-field conversations that the Political Economy Program has fostered since its launch.

In the words of Alesina and Roberto Perotti: “Political-economy models begin with the assertion that economic policy choices are not made by social planners, who live only in academic papers.” 63 From state polarization to state capacity to war to many of the other topics that we did not cover in this brief report, researchers in political economy have met complex big-picture questions of the last decade with analytical rigor. We anticipate that they will bring this same approach to the high-impact questions of the decades to come, reinforcing the real-world relevance of this field.

* Francesco Trebbi is the B.T. Rocca Jr. Chair of International Trade at the Haas School of Business, University of California, Berkeley. Ebonya Washington is the Laurans A. and Arlene Mendelson Professor of Economics and a professor of international and public affairs at Columbia University. They are codirectors of the NBER’s Political Economy Program.

Researchers

Global Economics Intelligence executive summary, September 2023

Overall, consumer confidence remained broadly stable across our surveyed countries but still leaned toward saving rather than spending—although confidence dipped in China. In Brazil, consumer confidence rose to 96.8 in August, up from 94.8 in July—the highest reading since February 2014. Russia is somewhat of an outlier among our surveyed economies: domestic consumer demand remains robust, fueled by growth in real wages and consumer credit, which in July was up by 11% since the start of the year.

Core inflation has been on a downward trend in the US, standing at 4.3% for the 12 months ending August 2023 (4.7% July 2023)—and significantly down from the September 2022 figure of 6.6%. The Federal Reserve Bank of New York’s one-year-ahead inflation expectation rose to 3.6% at the short-term horizon, breaking a series of four consecutive declines. Overall, the inflation outlook remains stable with inflation expectations of around 2.0–2.5%. Eurozone inflation is expected to be 4.3% in September 2023, down from 5.2% in August 2023 (5.3% in July), according to Eurostat—the main driver being food-price inflation (9.7% in August but down to 8.8% in September). In the UK, consumer price index (CPI) inflation unexpectedly fell to 6.7% in August (6.8% in July), while core inflation (excluding the price of energy, food, alcohol, and tobacco) dropped to 6.2% from 6.9%. Inflation is resurgent in Russia, affecting both consumers and producers; it is declining in India after recent increases and remains close to 0% in China. Oil prices surged to $85–90 per barrel amid OPEC’s extension of oil production cuts, whereas food prices are continuing the downward trend that began in 2022.

In August, central banks in the eurozone, Russia, and the UK raised interest rates, whereas Brazil’s central bank reduced interest rates for the first time since 2021 in July. The eurozone and Russia raised interest rates again in September, with the European Central Bank (ECB) hiking its key interest rate by 25 basis points to 4.5% on September 14 and rates in Russia reaching 13.0%. In the US, September’s Federal Open Markets Committee (FOMC) meeting concluded with no new hikes of the current interest rate, while the Bank of England maintained its policy rate at 5.25% this month. Meanwhile, US national debt reached a historic milestone by passing $33 trillion for the first time.

The buoyancy of India’s economy contrasts with other surveyed countries. The economic activity index for the second quarter of 2023 nowcasts growth of 6.6% in India versus real GDP growth of 7.8% in the first quarter (April–June). Meanwhile, annual average real GDP growth in the eurozone is expected to slow from 3.4% in 2022 to 0.7% in 2023 before recovering to 1.0% in 2024 and to 1.5% in 2025. The ECB has significantly downgraded its short-term outlook amid deteriorating survey indicators and tighter financing conditions, including more adverse credit supply effects. The Bank of England anticipates more modest near-term growth below 0.5%, while the OECD’s interim September 2023 outlook sees UK GDP growing by 0.3% in 2023 and 0.8% in 2024. By contrast, in the emerging economies, China’s industrial output growth accelerated to 4.5% year-on-year in August (3.7% in July), while Russia’s economy is expected to continue to grow this year by around 2.0–2.5%, with quarterly growth likely to slow toward the end of the year. Brazilian GDP expanded by 0.9% quarter-on-quarter in the second quarter of 2023, compared to 1.9% in the first quarter.

Manufacturing has been contracting for the past 12 months, while the services sector has experienced a noticeable slowdown. In the world of manufacturing, emerging markets are expanding, while developed markets remain in the contraction zone (Exhibit 1). In the US, the industrial production index rose slightly in July to 102.9 (June 102). August’s purchasing managers’ index (PMI) for manufacturing declined to 48 after rising to 49 in July. It remains a bleaker picture in Europe: although the manufacturing PMI rose to 43.7 in the flash estimate for August, it remains squarely in contraction territory. It was a similar story in the UK: the UK manufacturing PMI posted 43.0 in August, down from 45.3 in July, the lowest level since May 2020. However, Brazil’s manufacturing PMI went the other way, edging into expansion after a ten-month sequence of contraction, with a rise from 47.8 in July to 50.1 in August. India’s manufacturing index reached 58.6 in August (57.7 in July)—attributable to new orders and production increases.

For services, the majority of countries reported worse PMI numbers than a month ago. In August, the US services PMI decreased again to reach 50.5, hovering just above the contraction zone, whereas the eurozone services PMI fell into contraction at 48.3—a 30-month low. It was a similar story for the UK, with the services PMI registering 49.5. In India, the services PMI dropped to 60.1 in August after surging to a 13-year high of 62.3 in July but remained well inside the expansion zone. Brazil’s services PMI edged up to 50.6 in August from 50.2 in July.

Unemployment rates remain stable across most surveyed economies, with slight decreases in Brazil and India and a small increase in the US, where the rate rose to 3.8%, slightly higher than July’s 3.5% (and comparable to the pre-COVID-19 level of 3.5% in January 2020). The UK’s unemployment rate for May–July 2023 increased by 0.5 percentage points during the quarter to 4.3%. In China the surveyed urban unemployment rate ticked down to 5.2% in August (5.3% in July).

Equity markets turned in a mixed performance in September; after a “red” August, some markets made gains, while others still struggled to grow. For US equities in August, year-to-date returns for the S&P 500 and Dow Jones were respectively down to 14.0% (19.5% in July) and up to 10.2% (8.3% in July). Across the Atlantic, European equities have been stable throughout 2023 with the Eurostoxx 600 index 3% below its highest value in 2023.

Data from World Trade Monitor indicates that world merchandise trade was down 0.6% in July 2023 compared to June, which also saw a 0.6% drop. July’s decrease was largely driven by a drop in trade for China. Across countries, exports rose for the US and Russia but fell for China, Brazil, and the eurozone, while imports increased for the US, Russia, and Brazil but fell for China. In China, contraction in cross-border trade slowed to –8.2% in August (–13.5% in July); exports growth declined by 8.8% in August (–14.3% in July), while imports growth was down 7.3% (–12.3% in July).

Data from the flash forecast (August 31) for the Container Throughput Index produced by the RWI - Leibniz Institute for Economic Research and Institute of Shipping Economics and Logistics (ISL) saw overall container trade decline across all regions, including Chinese ports, with a seasonally adjusted small decrease to 121.9 points in July versus June. Global supply chains are currently experiencing very low pressures, although pressures have been rising over recent months.

Encouragingly, the latest McKinsey Global Survey on the economy 1 “ Economic conditions outlook during turbulent times, September 2023 ,” McKinsey, September 29, 2023. finds respondents sharing a more positive than negative outlook for the second consecutive quarter. They are also more hopeful than not about their countries’ economies, though sentiments vary significantly by region. In Europe, where respondents are most concerned about the effects of inflation, expectations for the next six months have turned more negative, whereas respondents in North America offer increasingly brighter views (Exhibit 2). Looking ahead, respondents in Europe are much less likely now than in March and June to expect improvements in their countries’ economies and are currently the least optimistic group across regions. India and North America respondents have become more hopeful about the months ahead.

“ Economic conditions outlook during turbulent times, September 2023 ” is based on the responses of 997 participants to an online survey undertaken from August 31 to September 8, covering the full range of regions, industries, company sizes, functional specialties, and tenures.

Perceived top economic risks have shifted since June’s survey, as the threat of rising interest rates fades. Today, respondents—especially in Asia–Pacific—are keeping a close watch on economic activity in China. China’s slowing economic activity is the second-most-cited risk to the global economy—with 41% of respondents registering it as a concern—and also one of the top five most-cited risks to respondents’ home countries. Respondents in Greater China, meanwhile, now highlight uncertainty in the real estate sector most often as a threat to their economy. Additionally, geopolitical instability and inflation remain two of the most frequently cited risks both to the global economy and to respondents’ home countries.

Notable from the full report

In advanced economies, US growth was revised upward for 2023, in contrast to Europe. Manufacturing is under significant pressure, while services in Europe dip into contraction.

United States. The US Federal Reserve revised 2023 GDP growth projections to 2.1%, which is 1.1 percentage points higher than June’s projection. September’s FOMC meeting concluded with no new hikes of the current interest rate—this as the CPI showed promising figures throughout the month, while hirings slowed. The current rate remains in the range of 5.25% to 5.5%.

Eurozone. Overall, annual average real GDP growth is expected to slow from 3.4% in 2022 to 0.7% in 2023 before recovering to 1.0% in 2024 and to 1.5% in 2025. Compared with the European Central Bank’s June 2023 projections, the GDP growth outlook has been revised downward by 0.2 percentage points for 2023, 0.5 percentage points for 2024, and 0.1 percentage points for 2025 (exhibit). This represents a significant downgrade of the short-term outlook amid deteriorating survey indicators and tighter financing conditions, including more adverse credit supply effects.

United Kingdom. UK Prime Minister Rishi Sunak announced a scaling back of the government’s net-zero commitments in order to support households, tabling some green targets and delaying others, such as pushing back the ban on the sale of new petrol and diesel cars from 2030 to 2035 and allowing people more time to switch gas boilers to heat pumps, having previously announced new oil and gas exploration in the North Sea.

In emerging economies, growth in China has accelerated as trade contraction slows, and China is rolling out policies to stimulate the housing market. Russia hiked interest rates again, and six countries were invited to join BRICS. 1 Brazil, China, India, Russia, and South Africa.

China. Industrial output growth accelerated to 4.5% year-on-year in August (3.7% in July). Contraction in cross-border trade slowed to –8.2% in August (–13.5% in July). Exports growth declined by 8.8% in August (–14.3% in July), while imports growth was down 7.3% (–12.3% in July). China has rolled out a basket of policies to stimulate the housing market since late August, including expanding the definition of first-time buyers to those who have mortgage records but no local homeownership, cutting the minimum down payment ratio by ten percentage points on a nationwide basis, and lowering interest rates for both new and existing mortgages.

India. The spotlight shifted to India under its G-20 presidency, with leaders of the world’s most powerful nations gathering to discuss bilateral and sustainable commitments. Among the many issues discussed, an India-Middle-East-Europe economic corridor was announced, designed to enhance connectivity and economic integration across continents. Additionally, the Global Biofuels Alliance (GBA) was launched with the goal of driving development and deployment of biofuels across the world to sustain the transition to a zero-emissions environment.

Brazil. In August, Brazil recorded a balance of trade surplus of US $9.8 billion (US $8.9 billion in July), with exports totaling US $31.2 billion (US $28.9 billion in July) and imports at US $21.4 billion (US $20.0 billion in July). Exports to China, the US, and Argentina rose. Meanwhile, BRICS members announced an expansion of the group, inviting six new entrants. By January 1, 2024, Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates will join existing member nations.

Russia. Strong domestic demand has led to capacity utilization being at an all-time high, with record-low unemployment at 3.0% in July. Consequently, market shortages have increased price pressures: the consumer price index rose by 5.2% year-on-year in August with core inflation at 4.0%. The median value of expected consumer inflation stabilized above double digits and exceeded 11% in July–August. Inflation is further fueled by continued depreciation of the ruble, which has lost 14% of its value since the beginning of the summer. In response to rising inflationary pressure and the ruble’s slide, the Bank of Russia raised its key rate to 12% in August, and then again to 13% in September. The tightening is expected to slow the pace of growth toward the year-end.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks , as well as focused insights on the latest national and regional developments. View the full report for September 2023 here . Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports are available free to email subscribers and through the McKinsey Insights app . To add a name to our subscriber list, click here . GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute .

The data and analysis in McKinsey’s Global Economics Intelligence are developed by Jeffrey Condon , a senior expert in McKinsey’s Atlanta office; Krzysztof Kwiatkowski , an expert at the Waltham Client Capability Hub; and Sven Smit , a senior partner in the Amsterdam office.

The authors wish to thank Nick de Cent, as well as José Álvares, Fiorella Correa, Marta Dabrowska, Juhi Daga, Darien Ghersinich, Pragun Harjai, Ricardo Huapaya, Yifei Liu, Marianthi Marouli, Tomasz Mataczynski, Frances Matamoros, Erik Rong, Paula Trejos, and Sebastian Vargas, for their contributions to this article.

The invasion of Ukraine continues to have deep human, as well as social and economic, impact across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As a result, this document and the data and analysis it sets out should be treated as a best-efforts perspective at a specific point in time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.

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The triple play: Growth, profit, and sustainability

400+ Economic Project Topics: How to Choose and Excel in Research

Economic project topics play a pivotal role in the academic journey of students pursuing degrees in economics or related fields. These topics serve as the foundation for research, analysis, and the development of critical thinking skills.

Selecting the right economic project topic is crucial, as it can significantly impact the success of your research and the depth of your understanding of economic principles.

In this blog, we’ll guide you through the process of choosing the right economic project topic, explore different categories of topics, and provide tips for a successful research journey.

How To Select Economic Project Topics?

Table of Contents

Before diving into the categories of economic project topics, it’s essential to understand the process of selecting a topic that aligns with your interests, expertise, and available resources. Here’s a closer look at how to choose the right topic:

Identifying Your Interests and Expertise

Passion for your research topic can be a powerful motivator. Consider areas within economics that genuinely interest you.

Do you have a fascination with microeconomic concepts like market dynamics and consumer behavior, or are you more drawn to macroeconomic issues like fiscal and monetary policies? Identifying your interests will make the research process more enjoyable and rewarding.

Moreover, leveraging your expertise can lead to a more fruitful research experience. If you have a background in a specific industry or possess unique skills, it may be wise to select a topic that aligns with your strengths.

Your existing knowledge can provide valuable insights and a competitive edge in your research.

Assessing the Relevance and Timeliness of Topics

Economic research should address current and relevant issues in the field. To ensure the significance of your project, consider the timeliness of the topic.

Are you exploring an emerging economic trend, or does your research address a longstanding issue that still requires attention?

Additionally, think about the broader implications of your research. How does your chosen topic contribute to the existing body of knowledge in economics?

Assessing the relevance and potential impact of your research can help you choose a topic that resonates with both academic and real-world audiences.

Considering Available Resources and Data

Practicality is a crucial factor in selecting an economic project topic. Assess the availability of resources and data required for your research. Do you have access to relevant datasets, surveys, or academic journals that support your chosen topic?

It’s essential to ensure that the necessary resources are accessible to facilitate your research process effectively.

400+ Economic Project Topics: Category-Wise

Economic project topics encompass a wide range of areas within the field. Here are four major categories to explore:

100+ Microeconomics Project Topics

The impact of advertising on consumer behavior.
Price elasticity of demand for luxury goods.
Analyzing market structure in the tech industry.
Consumer preferences for sustainable products.
The economics of online streaming services.
Factors affecting pricing strategies in the airline industry.
The role of information asymmetry in used car markets.
Microeconomics of fast fashion and its environmental effects.
Behavioral economics in food choices and obesity.
The impact of minimum wage on small businesses.
Market competition and pharmaceutical drug prices.
Monopoly power in the pharmaceutical industry.
Economic analysis of the gig economy.
Elasticity of demand for healthcare services.
Price discrimination in the hotel industry.
Consumer behavior in the sharing economy.
Economic analysis of e-commerce marketplaces.
The economics of ride-sharing services like Uber.
Factors influencing the demand for organic foods.
Game theory and strategic pricing in oligopolistic markets.
Microeconomics of the coffee industry.
Analyzing the effects of tariffs on imported goods.
Price elasticity of demand for electric vehicles.
The economics of artificial intelligence and job displacement.
Behavioral economics in the stock market.
Impact of advertising on children’s consumer choices.
Monopolistic competition in the smartphone industry.
Economic analysis of the video game industry.
The role of patents in pharmaceutical pricing.
Price discrimination in the airline industry.
Analyzing consumer behavior in the luxury fashion industry.
The economics of addiction and substance abuse.
Market structure in the online advertising industry.
Price elasticity of demand for energy-efficient appliances.
Economic analysis of the fast-food industry.
The impact of product recalls on consumer trust.
Factors influencing consumer choices in the beer industry.
Microeconomics of the music streaming industry.
Behavioral economics and food labeling.
Economic analysis of the fitness and wellness industry.
The economics of organic farming and sustainability.
Analyzing the demand for mobile app-based services.
Price discrimination in the entertainment industry.
Economic analysis of subscription box services.
Consumer preferences for eco-friendly packaging.
Game theory in online auction markets.
Analyzing the effects of congestion pricing.
The economics of university tuition and student loans.
Microeconomics of the fashion resale market.
Behavioral economics in online shopping cart abandonment.
Market structure in the pharmaceutical distribution.
Analyzing the economics of cryptocurrency.
Economic analysis of the real estate market.
Price elasticity of demand for streaming music services.
Consumer choices in the electric vehicle market.
The economics of food delivery services.
Monopoly power in the cable television industry.
Factors influencing consumer decisions in the cosmetics industry.
Behavioral economics and charitable donations.
Economic analysis of the online dating industry.
The impact of healthcare regulations on prices.
Price discrimination in the cruise line industry.
Economic analysis of the fashion resale market.
Analyzing the effects of subsidies on agriculture.
Consumer preferences for eco-friendly transportation.
Market structure in the book publishing industry.
Microeconomics of the craft beer industry.
Behavioral economics and impulse buying.
Price elasticity of demand for video game consoles.
Economic analysis of the coffee shop industry.
The economics of mobile payment systems.
Analyzing consumer choices in the fast-food breakfast market.
Monopolistic competition in the smartphone app industry.
Factors influencing consumer decisions in the beauty industry.
Behavioral economics in the context of online reviews.
Economic analysis of the organic skincare industry.
The impact of government regulations on tobacco prices.
Price discrimination in the movie theater industry.
Microeconomics of the subscription box industry.
Analyzing the effects of trade barriers on agricultural exports.
Consumer preferences for sustainable fashion.
Market structure in the video game console industry.
The economics of mobile app monetization.
Price elasticity of demand for streaming television services.
Economic analysis of the organic food industry.
Behavioral economics and the psychology of pricing.
Analyzing consumer choices in the electric scooter market.
Monopoly power in the cable internet service industry.
Factors influencing consumer decisions in the wine industry.
Economic analysis of the impact of product reviews on sales.
The economics of online crowdfunding platforms.
Price discrimination in the music festival industry.
Microeconomics of the meal kit delivery industry.
Behavioral economics and the impact of discounts on purchasing behavior.
Analyzing the effects of trade agreements on global supply chains.
Consumer preferences for sustainable home appliances.
Market structure in the online marketplace for handmade goods.
The economics of esports and gaming tournaments.
Price elasticity of demand for online streaming subscriptions.
Economic analysis of the fast-casual restaurant industry.
The impact of government subsidies on renewable energy prices.

100+ Macroeconomics Project Topics

The impact of fiscal policy on economic growth.
Analyzing the effectiveness of monetary policy.
Inflation targeting and its implications.
The relationship between unemployment and inflation.
Factors influencing exchange rates.
The effects of globalization on income inequality.
Assessing the economic consequences of trade wars.
The role of central banks in financial stability.
Economic growth in emerging markets.
Government debt and its impact on the economy.
The economics of healthcare reform.
Income distribution and poverty alleviation strategies.
The economics of renewable energy adoption.
The impact of automation on employment.
Economic consequences of climate change.
The economics of the gig economy.
The Phillips Curve and its modern relevance.
The economics of housing bubbles.
Economic development in sub-Saharan Africa.
The economics of education funding.
The impact of technology on productivity growth.
The role of the IMF in global financial stability.
Economic consequences of Brexit.
The economics of cryptocurrency.
Economic implications of aging populations.
The economics of natural disasters.
The effects of income tax cuts on the economy.
The relationship between economic freedom and growth.
The role of infrastructure investment in economic development.
The economics of health insurance markets.
The impact of minimum wage laws on employment.
The economics of food security.
The effects of government subsidies on industries.
The role of the World Bank in global development.
Economic consequences of government regulation.
The economics of corporate mergers.
The relationship between government spending and economic growth.
Economic effects of monetary policy on asset prices.
The economics of social safety nets.
The impact of income inequality on economic growth.
The role of entrepreneurship in economic development.
Economic consequences of trade deficits.
The effects of financial deregulation.
The economics of the opioid crisis.
The relationship between economic growth and environmental sustainability.
The impact of tax evasion on government revenue.
Economic development in post-conflict regions.
The economics of the sharing economy.
The role of the World Trade Organization (WTO) in international trade.
Economic consequences of government debt crises.
The effects of population aging on healthcare systems.
The economics of public-private partnerships.
The impact of economic sanctions on countries.
Economic implications of income tax reform.
The role of venture capital in innovation.
The economics of foreign aid.
The relationship between education and economic growth.
Economic effects of natural resource extraction.
The economics of financial market crashes.
The role of economic incentives in behavior.
Economic consequences of currency devaluation.
The effects of income tax progressivity on income distribution.
The economics of income mobility.
The impact of government subsidies on renewable energy.
Economic development in post-communist countries.
The economics of intellectual property rights.
The relationship between government corruption and economic growth.
Economic consequences of government budget deficits.
The effects of financial globalization.
The role of behavioral economics in policy-making.
The economics of healthcare access.
The impact of automation on manufacturing jobs.
Economic implications of population growth.
The economics of housing affordability.
The relationship between monetary policy and asset bubbles.
Economic effects of immigration policies.
The role of economic forecasting in decision-making.
The economics of taxation on multinational corporations.
Economic development in the digital age.
The impact of economic shocks on consumer behavior.
Economic consequences of natural disasters.
The effects of income inequality on social cohesion.
The economics of financial innovation.
The relationship between economic freedom and entrepreneurship.
Economic implications of healthcare reform.
The role of gender inequality in economic development.
The economics of climate change mitigation.
The impact of government regulations on small businesses.
Economic development in the Middle East.
The economics of consumer debt.
The relationship between trade policy and national security.
Economic consequences of housing market crashes.
The effects of monetary policy on income distribution.
The economics of sustainable agriculture.
The role of economic sanctions in international diplomacy.
Economic implications of corporate tax reform.
The economics of innovation clusters.
The impact of government procurement policies on industries.
Economic development in post-apartheid South Africa.
The relationship between economic inequality and political instability.

100+ International Economics Project Topics

Impact of Trade Wars on Global Economies
Exchange Rate Determinants and Fluctuations
The Role of Multinational Corporations in International Trade
Effects of Brexit on International Trade
Comparative Analysis of Free Trade Agreements
Currency Manipulation and Its Consequences
Economic Integration in the European Union
Global Supply Chains and Vulnerabilities
The Impact of China’s Belt and Road Initiative
Trade Liberalization in Developing Countries
Globalization and Income Inequality
Economic Consequences of Economic Sanctions
International Trade and Environmental Sustainability
The Role of the World Trade Organization (WTO)
Foreign Direct Investment and Economic Growth
Exchange Rate Regimes: Fixed vs. Floating
International Financial Crises and Their Causes
NAFTA vs. USMCA: A Comparative Analysis
The Effects of Tariffs on Import-Dependent Industries
Trade and Economic Development in Africa
Offshoring and Outsourcing in a Global Economy
The Economics of Remittances
Currency Wars and Competitive Devaluations
International Trade and Intellectual Property Rights
The Impact of Economic Openness on Inflation
The Eurozone Crisis: Causes and Solutions
Trade Imbalances and Their Consequences
The Economics of International Migration
Exchange Rate Volatility and Speculation
The Silk Road: Historical and Modern Perspectives
The Role of International Aid in Development
Globalization and Cultural Homogenization
International Trade and National Security
The Economic Effects of Brexit on the EU
Sovereign Debt Crises and Bailouts
The Economics of Global Energy Markets
International Trade and Human Rights
The Asian Financial Crisis of 1997
The Economics of International Tourism
The Impact of Global Economic Institutions
International Trade and Technological Innovation
Comparative Advantage and Trade Theory
Globalization and Income Redistribution
International Trade and Agriculture
The BRICS Countries in the Global Economy
Exchange Rate Pegs and Currency Boards
The Economics of Global Health Challenges
International Trade and Gender Inequality
The Effects of Economic Migration on Sending and Receiving Countries
The Role of Non-Tariff Barriers in International Trade
International Trade and Economic Development in Latin America
The European Debt Crisis and Austerity Measures
Globalization and Income Mobility
The Impact of International Trade on Small and Medium-sized Enterprises (SMEs)
The Economics of Regional Integration: ASEAN, Mercosur, etc.
Trade Agreements and Dispute Resolution
Exchange Rate Forecasting Models
The Economics of Foreign Aid Allocation
The Role of International Trade in Poverty Alleviation
International Trade and Economic Freedom
The Economics of International Banking
Globalization and Income Convergence
The Effects of Political Instability on International Trade
Trade and Economic Development in South Asia
The Role of Special Economic Zones (SEZs) in Trade
International Trade and Labor Standards
Economic Consequences of Trade Deficits
The Economics of International Taxation
Trade and Economic Development in the Middle East
Globalization and Income Polarization
The Impact of Global Value Chains (GVCs) on Trade
International Trade and Health Care Systems
The Economics of Bilateral vs. Multilateral Trade Agreements
Trade and Economic Development in Southeast Asia
Exchange Rate Parity Conditions
The Economics of International Migration Policies
The Role of Trade Facilitation Measures
International Trade and Human Capital Development
Globalization and Income Insecurity
The Effects of Trade on Environmental Sustainability
The Economics of Foreign Direct Investment (FDI) Incentives
Trade and Economic Development in Eastern Europe
The Role of Export Credit Agencies (ECAs) in Trade
International Trade and Technological Transfer
Globalization and Income Resilience
The Impact of Global Economic Shocks
Trade and Economic Development in Oceania
Exchange Rate Risk Management Strategies
The Economics of Foreign Exchange Reserves
International Trade and Economic Geography
The Role of Trade Promotion Agencies
Globalization and Income Diversity
The Effects of Exchange Rate Intervention
International Trade and Financial Inclusion
Trade and Economic Development in the Caribbean
The Economics of Trade Agreements on Services
The Role of Export Processing Zones (EPZs) in Trade
International Trade and Income Mobility
Globalization and Income Equality Policies
The Impact of Trade Disputes on International Relations.

100+ Economic Policy Project Topics

The impact of minimum wage laws on employment rates.
The effectiveness of quantitative easing in stimulating economic growth.
Analyzing the consequences of trade tariffs on international commerce.
The role of government subsidies in shaping agricultural markets.
The economic implications of healthcare reform policies.
Examining the relationship between income inequality and economic growth.
Evaluating the effects of corporate tax cuts on business investments.
The impact of immigration policies on labor markets.
Analyzing the economic consequences of climate change regulations.
Assessing the effectiveness of financial regulations in preventing economic crises.
The role of central banks in controlling inflation.
The economic implications of universal basic income programs.
Investigating the relationship between education spending and economic development.
The impact of government debt on future generations.
Analyzing the effects of fiscal stimulus packages on economic recovery.
The role of monetary policy in addressing unemployment.
Evaluating the economic consequences of government healthcare programs.
The impact of exchange rate fluctuations on international trade.
The economic implications of public-private partnerships in infrastructure development.
Analyzing the effects of antitrust laws on competition in markets.
The role of social welfare programs in poverty reduction.
Evaluating the economic consequences of aging populations.
The impact of housing policies on real estate markets.
Investigating the relationship between foreign aid and economic development.
The economic implications of globalization on income distribution.
Analyzing the effects of regulatory capture in financial markets.
The role of tax incentives in promoting renewable energy.
Evaluating the economic consequences of healthcare privatization.
The impact of immigration reform on labor market dynamics.
Investigating the relationship between government debt and interest rates.
The economic implications of trade liberalization agreements.
Analyzing the effects of corporate social responsibility on profitability.
The role of fiscal policy in addressing economic recessions.
Evaluating the economic consequences of income tax reforms.
The impact of technology policies on innovation and economic growth.
Investigating the relationship between monetary policy and asset bubbles.
The economic implications of minimum wage adjustments.
Analyzing the effects of government regulations on the pharmaceutical industry.
The role of foreign direct investment in economic development.
Evaluating the economic consequences of healthcare cost containment measures.
The impact of labor market policies on workforce participation.
Investigating the relationship between exchange rates and export competitiveness.
The economic implications of intellectual property rights protection.
Analyzing the effects of fiscal austerity measures on economic stability.
The role of government spending in stimulating economic growth.
Evaluating the economic consequences of energy subsidies.
The impact of trade agreements on job displacement.
Investigating the relationship between infrastructure investment and productivity.
The economic implications of financial market deregulation.
Analyzing the effects of income tax credits on low-income families.
The role of social safety nets in mitigating economic shocks.
Evaluating the economic consequences of healthcare rationing.
The impact of labor market flexibility on employment stability.
Investigating the relationship between corporate governance and firm performance.
The economic implications of government subsidies for renewable energy.
Analyzing the effects of taxation on wealth distribution.
The role of sovereign wealth funds in economic development.
Evaluating the economic consequences of currency devaluation.
The impact of government regulation on the gig economy.
Investigating the relationship between foreign aid and political stability.
The economic implications of healthcare privatization.
Analyzing the effects of income inequality on social cohesion.
The role of infrastructure investment in reducing transportation costs.
Evaluating the economic consequences of carbon pricing policies.
The impact of trade protectionism on domestic industries.
Investigating the relationship between public education funding and student outcomes.
The economic implications of housing affordability challenges.
Analyzing the effects of labor market discrimination on wage gaps.
The role of monetary policy in addressing asset price bubbles.
Evaluating the economic consequences of financial market speculation.
The impact of government procurement policies on small businesses.
Investigating the relationship between population aging and healthcare expenditures.
The economic implications of regional economic integration.
Analyzing the effects of government subsidies on agricultural sustainability.
The role of tax incentives in promoting technology startups.
Evaluating the economic consequences of trade imbalances.
The impact of healthcare cost containment measures on patient outcomes.
Investigating the relationship between government debt and economic growth.
The economic implications of housing market speculation.
Analyzing the effects of labor unions on wage negotiations.
The role of economic sanctions in shaping international relations.
Evaluating the economic consequences of natural resource depletion.
The impact of fiscal policy on income redistribution.
Investigating the relationship between education quality and workforce productivity.
The economic implications of government investment in green infrastructure.
Analyzing the effects of income tax evasion on government revenue.
The role of gender-based economic disparities in overall growth.
Evaluating the economic consequences of healthcare fraud.
The impact of public transportation policies on urban development.
Investigating the relationship between corporate social responsibility and consumer behavior.
The economic implications of government support for the arts and culture sector.
Analyzing the effects of government subsidies on electric vehicles.
The role of economic diplomacy in promoting international trade.
Evaluating the economic consequences of financial market volatility.
The impact of globalization on wage convergence or divergence.
Investigating the relationship between economic sanctions and human rights violations.
The economic implications of government investments in digital infrastructure.
Analyzing the effects of government interventions in housing markets.
The role of economic policies in addressing income mobility.
Evaluating the economic consequences of occupational licensing regulations.

Research Methodologies: Economic Project Topics

The methodology you choose for your economic project can significantly impact the outcomes of your research. Here are some common research approaches:

Quantitative Research

Quantitative research involves collecting and analyzing numerical data. Common methods include:

1. Surveys and Questionnaires: Conduct surveys to gather data from respondents and use statistical analysis to draw conclusions.

2. Data Analysis and Regression Models: Employ statistical software to analyze datasets and establish relationships between variables using regression analysis.

Qualitative Research

Qualitative research focuses on understanding the underlying reasons, motivations, and perceptions of individuals or groups. Common methods include:

1. Interviews and Focus Groups: Conduct interviews or group discussions to gain insights into specific economic behaviors or attitudes.

2. Content Analysis: Analyze textual or visual data, such as documents, reports, or media, to identify themes and patterns.

Mixed-Methods Research

Mixed-methods research combines both quantitative and qualitative approaches to provide a comprehensive understanding of economic phenomena. Researchers often collect numerical data alongside qualitative insights.

Tips for Successful Project Topic Selection

To ensure a successful research journey, keep these tips in mind:

Narrowing Down Your Focus: While it’s essential to choose a topic you’re passionate about, make sure it’s specific enough to be manageable within the scope of your project.
Staying Informed About Current Economic Events: Stay up-to-date with economic news and events to identify emerging trends and issues that may inspire your research.
Seeking Guidance from Professors or Advisors: Don’t hesitate to seek advice from your professors or academic advisors. They can provide valuable insights and help you refine your research questions.

Selecting the right economic project topics is a critical step in your academic journey. By identifying your interests, considering the relevance and timeliness of topics, and assessing available resources, you can embark on a rewarding research journey.

Whether you choose to delve into microeconomics, macroeconomics, international economics, or economic policy, remember that your research has the potential to contribute to the broader understanding of economic principles and their real-world applications.

Start your research journey today, and you’ll not only gain valuable knowledge but also make a meaningful contribution to the field of economics.

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500+ Economics Research Topics

Economics is a vast and fascinating field that explores how individuals, businesses, and governments make decisions about the allocation of resources. As such, it provides a wealth of research opportunities for those interested in understanding and analyzing the complexities of modern society. From macroeconomic issues such as globalization and monetary policy, to microeconomic topics such as consumer behavior and market competition, there are numerous research topics that economists can investigate. In this post, we will explore some of the most interesting and relevant economics research topics that are shaping our world today.

Economics Research Topics

Economics Research Topics are as follows:

The impact of technological change on income inequality.
An analysis of the relationship between exchange rates and foreign direct investment.
The effects of tax incentives on small business growth and development.
The determinants of economic growth in developing countries.
The impact of globalization on economic growth and development.
An analysis of the effects of the minimum wage on employment and poverty.
The role of central banks in managing inflation and economic stability.
An investigation into the factors influencing consumer behavior and spending.
An analysis of the impact of trade liberalization on economic growth.
The effects of income inequality on social welfare and economic stability.
The role of international trade in economic development.
An investigation into the relationship between education and economic growth.
An analysis of the effects of corruption on economic growth and development.
The impact of the gig economy on employment and wages.
An investigation into the causes and consequences of financial crises.
The role of innovation in economic growth and development.
An analysis of the impact of government spending on economic growth.
The effects of globalization on the environment.
The impact of climate change on economic growth and development.
An investigation into the determinants of poverty and inequality.
The role of entrepreneurship in economic growth and development.
An analysis of the effects of monetary policy on economic growth and stability.
The impact of immigration on labor markets and economic growth.
An investigation into the factors influencing international trade flows.
An analysis of the effects of foreign aid on economic development.
The role of financial intermediaries in economic development.
An investigation into the causes and consequences of income inequality.
The impact of trade agreements on economic growth and development.
An analysis of the effects of government regulation on business and economic growth.
The role of technology transfer in economic development.
An investigation into the effects of economic sanctions on trade and economic growth.
The impact of population growth on economic development.
An analysis of the effects of infrastructure investment on economic growth.
The role of natural resources in economic development.
An investigation into the effects of labor market policies on economic growth and employment.
The impact of financial innovation on economic growth and stability.
An analysis of the effects of income tax policy on economic growth and income distribution.
The role of social capital in economic development.
An investigation into the impact of economic policies on international trade.
The effects of financial liberalization on economic growth and stability.
The impact of urbanization on economic development.
An analysis of the effects of international migration on labor markets and economic growth.
The role of institutions in economic development.
An investigation into the effects of exchange rate volatility on international trade.
The impact of demographic change on economic growth and development.
An analysis of the effects of government debt on economic growth and stability.
The role of foreign investment in economic development.
An investigation into the effects of labor market flexibility on economic growth and employment.
The impact of intellectual property rights on innovation and economic growth.
An analysis of the effects of economic inequality on social mobility and economic growth.
The impact of COVID-19 on the global economy.
The role of financial markets in economic growth.
The effectiveness of monetary policy in stabilizing the economy.
The relationship between income inequality and economic growth.
The impact of government regulations on business activity.
The role of technology in shaping the future of the economy.
The effect of globalization on the labor market.
The impact of trade policy on economic growth.
The relationship between education and economic growth.
The effectiveness of fiscal policy in stimulating economic growth.
The impact of immigration on the labor market.
The effect of tax policy on economic growth.
The role of entrepreneurship in economic development.
The impact of environmental regulations on economic growth.
The effect of international capital flows on the economy.
The relationship between innovation and economic growth.
The impact of demographic changes on the economy.
The role of infrastructure investment in economic growth.
The effect of monetary policy on income inequality.
The impact of government debt on economic growth.
The relationship between corruption and economic growth.
The effect of globalization on income inequality.
The impact of education on income inequality.
The role of social welfare programs in reducing poverty.
The effect of minimum wage laws on the labor market.
The impact of health care policy on economic growth.
The relationship between energy prices and economic growth.
The effect of government subsidies on business activity.
The impact of exchange rate fluctuations on trade.
The role of financial innovation in economic development.
The effect of social media on consumer behavior.
The impact of consumer confidence on economic growth.
The relationship between economic growth and political stability.
The effect of demographic changes on income inequality.
The impact of government spending on economic growth.
The role of labor unions in the labor market.
The effect of natural disasters on the economy.
The relationship between economic growth and environmental sustainability.
The effect of corporate social responsibility on business activity.
The impact of intellectual property rights on innovation.
The effect of cultural differences on business activity.
The impact of financial crises on the economy.
The relationship between economic growth and health outcomes.
The effect of government corruption on economic growth.
The impact of demographic changes on the labor market.
The effect of foreign aid on economic growth.
The impact of technological change on the labor market.
The effect of monetary policy on income distribution.
The impact of trade agreements on economic growth
The effect of corruption on economic development
The relationship between financial development and economic growth
The impact of foreign aid on economic growth in developing countries
The role of innovation in promoting economic growth
The impact of globalization on income inequality
The relationship between inflation and economic growth
The role of natural resources in economic development
The impact of government expenditure on economic growth
The relationship between income distribution and economic growth
The impact of monetary policy on economic growth
The role of education in promoting economic growth
The impact of entrepreneurship on economic development
The relationship between taxation and economic growth
The impact of infrastructure on economic growth
The role of international trade in economic development
The impact of fiscal policy on economic growth
The relationship between financial liberalization and economic growth
The impact of economic integration on economic growth
The role of institutions in promoting economic development
The impact of foreign direct investment on economic growth
The relationship between inequality and economic growth
The impact of social welfare programs on economic growth
The role of technology in promoting economic growth
The impact of political instability on economic growth
The relationship between corruption and economic growth
The impact of labor market policies on economic growth
The role of human capital in promoting economic development
The impact of health care on economic growth
The relationship between exchange rates and economic growth
The impact of foreign trade on income distribution
The role of entrepreneurship in economic development
The impact of environmental policies on economic growth
The relationship between foreign aid and poverty reduction
The impact of financial sector reforms on economic growth
The role of social capital in promoting economic development
The impact of regional integration on economic growth
The relationship between public investment and economic growth
The impact of monetary policy on income distribution
The role of international migration in economic development
The impact of labor market flexibility on economic growth
The relationship between trade and technology transfer
The impact of institutional quality on economic growth
The role of financial sector development in promoting economic growth
The impact of regional inequality on economic growth
The relationship between education and poverty reduction
The impact of foreign debt on economic growth
The role of social protection in promoting economic development
The impact of energy policies on economic growth
The relationship between foreign trade and environmental sustainability
The impact of international trade on income inequality.
The relationship between public debt and economic growth.
The effect of tax policy on international capital flows.
The impact of government subsidies on technological innovation.
The role of financial development in reducing poverty.
The effect of regulation on market structure.
The impact of globalization on financial stability.
The relationship between financial development and income inequality.
The effect of fiscal policy on long-term economic growth.
The impact of financial frictions on business cycles.
The role of international capital flows in financial crises.
The effect of natural resource abundance on economic growth.
The impact of fiscal decentralization on economic growth.
The relationship between institutions and economic growth.
The effect of financial innovation on market efficiency.
The impact of international migration on the labor market.
The role of corporate governance in firm performance.
The effect of monetary policy on the housing market.
The impact of environmental policy on the energy sector.
The effect of competition policy on market outcomes.
The impact of technology adoption on productivity.
The effect of regulation on consumer welfare.
The impact of trade policy on export performance.
The relationship between social capital and economic growth.
The effect of labor market institutions on the gender wage gap.
The impact of financial liberalization on economic growth.
The role of human capital in technological innovation.
The effect of trade openness on innovation.
The impact of natural disasters on economic growth.
The relationship between inequality and economic growth.
The effect of exchange rate volatility on international trade.
The impact of banking regulation on financial stability.
The role of venture capital in financing innovation.
The effect of regional trade agreements on economic growth.
The impact of financial development on economic growth in emerging markets.
The relationship between government spending and economic growth.
The effect of monetary policy on credit markets.
The impact of innovation on firm performance.
The role of social networks in job search and labor market outcomes.
The effect of international capital flows on income inequality.
The impact of natural resource dependence on political instability.
The relationship between financial development and income mobility.
The effect of tax competition on fiscal policy.
The impact of labor market institutions on unemployment.
The role of infrastructure investment in economic development.
The effect of monetary policy on financial market volatility.
The impact of fiscal policy on income redistribution.
The role of digital currencies in the future of finance.
The effects of the gig economy on labor markets.
The impact of artificial intelligence on economic growth.
The relationship between climate change and economic growth.
The role of blockchain technology in supply chain management.
The effects of automation on the labor market.
The impact of E-commerce on traditional retail industries.
The relationship between social media and consumer behavior.
The role of data analytics in business decision-making.
The effects of globalization on income inequality.
The impact of digital platforms on the sharing economy.
The relationship between education and economic growth in the digital age.
The role of fintech in financial inclusion.
The effects of trade policies on global supply chains.
The impact of corporate social responsibility on business performance.
The relationship between immigration and economic growth.
The role of venture capital in stimulating innovation and economic growth.
The effects of the circular economy on sustainable development.
The impact of cybersecurity threats on the global economy.
The relationship between gender inequality and economic growth.
The role of green finance in promoting sustainable development.
The effects of automation on income inequality.
The impact of the sharing economy on traditional business models.
The relationship between human capital and economic growth.
The role of technology transfer in international trade.
The effects of regulatory frameworks on innovation.
The impact of government policies on the growth of start-up companies.
The role of venture philanthropy in social entrepreneurship.
The effects of digital disruption on the financial services industry.
The impact of the circular economy on job creation.
The relationship between health outcomes and economic growth.
The role of impact investing in social and environmental sustainability.
The effects of trade agreements on the global economy.
The impact of entrepreneurship on economic growth.
The relationship between innovation and income inequality.
The role of corporate governance in sustainable business practices.
The effects of immigration policies on labor market outcomes.
The impact of international capital flows on economic development.
The relationship between corporate social responsibility and financial performance.
The role of innovation clusters in regional economic development.
The effects of digitalization on productivity.
The impact of the sharing economy on urban development.
The relationship between social entrepreneurship and economic growth.
The role of government policies in promoting sustainable development.
The effects of demographic changes on the economy.
The impact of digitalization on economic development in developing countries.
The relationship between consumer behavior and sustainability.
The role of private equity in stimulating economic growth.
The impact of government spending on economic growth
The effects of minimum wage laws on employment and poverty rates
The role of government subsidies in promoting renewable energy adoption
The impact of trade liberalization on economic growth and income inequality
The effectiveness of monetary policy in managing inflation and unemployment
The determinants of foreign direct investment flows in emerging markets
The role of financial markets in economic development
The impact of globalization on the labor market
The effects of tax policies on economic growth and income distribution
The role of human capital in economic growth and development
The economics of climate change and the environment
The effects of population aging on economic growth and social welfare
The impact of social safety net programs on poverty reduction
The effects of corruption on economic development and political stability
The impact of technological innovation on labor market outcomes
The economics of healthcare policy and healthcare markets
The determinants of entrepreneurship and small business success
The effects of income inequality on economic growth and social welfare
The economics of urbanization and regional development
The role of foreign aid in promoting economic development
The impact of fiscal policy on economic growth and government debt
The effects of financial regulation on economic stability and growth
The economics of education policy and school choice
The determinants of consumer behavior and market outcomes
The role of multinational corporations in the global economy
The effects of immigration on labor markets and economic growth
The impact of monetary policy on financial markets and stability
The economics of natural resource management and conservation
The determinants of industrial competitiveness and productivity
The effects of trade policies on economic growth and regional integration
The role of institutional quality in economic development
The impact of technological change on income inequality
The economics of innovation and intellectual property rights
The effects of financial globalization on emerging markets
The role of infrastructure investment in promoting economic development
The impact of exchange rate policies on international trade and investment
The determinants of consumer credit and debt behavior
The effects of social media and online platforms on market competition
The role of international organizations in global economic governance
The impact of natural disasters on economic development and poverty
The economics of gender inequality and discrimination
The effects of government regulation on business behavior and market outcomes
The role of behavioral economics in understanding market behavior
The impact of public investment on economic growth and social welfare
The determinants of household saving and investment behavior
The economics of renewable energy and clean technology adoption
The effects of economic sanctions on international trade and investment
The role of information and communication technologies in economic development
The impact of globalization on income distribution and poverty
The economics of international migration and remittances.
The effects of income inequality on economic development
An analysis of the efficiency of market structures in different industries
The role of technology in economic growth and development
The impact of international trade on economic development
An investigation into the determinants of inflation
The effects of labor market regulations on employment and productivity
An analysis of the relationship between economic growth and environmental sustainability
The role of institutions in economic development
The impact of foreign aid on economic development
The effects of taxation on economic growth
An investigation into the factors that contribute to economic fluctuations
The effects of globalization on income distribution
The impact of education on economic growth and development
The role of infrastructure in economic development
The effects of trade liberalization on economic growth
An analysis of the impact of exchange rates on trade and investment
The relationship between innovation and economic growth
The impact of government policies on the agricultural sector
The effects of corruption on economic development
An investigation into the effects of demographic changes on economic growth
The impact of financial crisis on economic growth
The effects of foreign direct investment on economic growth
An analysis of the effects of natural resources on economic development
The impact of healthcare on economic growth
The effects of international migration on the economy
The relationship between poverty and economic development
The role of infrastructure in promoting economic growth
An investigation into the effects of regional economic integration
The impact of foreign trade on economic development
The effects of government regulation on economic growth
An analysis of the role of technology in improving economic efficiency
The impact of population growth on economic development
The effects of government spending on income inequality
The role of the financial system in economic growth
The impact of energy policies on economic development
An investigation into the effects of intellectual property rights on economic growth
The effects of trade on labor markets
The role of social capital in economic development
The effects of regional inequality on economic development
An analysis of the impact of financial market development on economic growth
The impact of international trade on technological progress
The effects of financial regulation on economic growth
The role of institutions in promoting entrepreneurship
The impact of healthcare policies on economic growth
An investigation into the effects of income redistribution on economic growth.

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Economic Outlook

1. Economic growth is likely to decelerate in 2024 as the effects of monetary policy take a broader toll and post-pandemic tailwinds fade.

We expect real GDP growth to walk the line between a slight expansion and contraction for much of next year, also known as a soft landing. After tracking to a better-than-expected 2.8% real GDP growth in 2023, we forecast a below-trend 0.7% pace of expansion in 2024. Among the major components of GDP, consumer spending is likely to rise at a more muted pace next year, while fiscal spending could swing from a positive contributor in 2023 to a modest drag. Notable drops in business investment and housing activity in 2023 set the foundation for improved performance in 2024, even if the outlook remains muted amid higher interest rates; 2023 strength in services sector is likely to soften.

2. We assume the hiking cycle is over, leaving the Fed Funds on hold at 5.25%-5.5% until the middle of 2024.

If inflation continues its moderating trajectory over the coming quarters, we think it is likely the FOMC will start to slowly normalize policy rates near the midpoint of next year. We forecast 25 bps cuts at each meeting beginning in June, bringing the Fed Funds target range to 4.00%-4.25% at the end of 2024. Concurrently, quantitative tightening, the Fed’s balance sheet runoff program, is expected to be maintained at the same pace through 2024. At $95 billion per month, quantitative tightening is projected to remove approximately $1 trillion from the economy next year.

3. The U.S. consumer could begin to bend, but not break.

There are numerous reasons to expect consumer spending growth to slow next year from its firm pace in 2023: diminished excess savings, plateauing wage gains, low savings rates and less pent-up demand. Additionally, the restart of student loan payments and uptick in subprime auto and millennial credit card delinquencies are emerging signs of stress for some consumers. On the flipside, household balance sheets and debt servicing levels remain healthy. Tight labor markets continue to support employment and therefore income levels. Considering the cross currents, we think consumer spending growth can stay positive overall in 2024, but at a lower rate than 2023.

4. The larger-than-expected fiscal boost to the U.S. economy in 2023 could flip to a slight headwind in 2024.

The fiscal deficit roughly doubled to $1.84 trillion—7.4% of GDP—in fiscal 2023 from $950 billion in 2022. While the full extent of this year’s deficit expansion would not be considered stimulus in a classic sense, it is clear the federal government took in a lot less cash than it sent out. Looking to 2024, we expect the federal deficit to narrow to a still very large 5.9% of GDP, reflecting a bit of belt-tightening on the spending side partly offset by higher interest outlays on government debt.

5. Labor markets are showing signs of normalization to end 2023; unemployment could drift higher in 2024 while remaining low in historical context.

Momentum in the job market is starting to wane with slowing payroll growth and modestly rising unemployment, as well as declining quit rates and temporary help. Increased labor force participation and elevated immigration patterns over the past year have added labor supply, while a shortening work week indicates moderating demand for labor. Considering the challenges to add and retain workers coming out of the pandemic, businesses could be more reluctant than normal to shed workers in a slowing economic environment. Even so, less hiring activity could be enough to cause the unemployment rate to tick up to the mid-4% area by the end of next year due to worker churn. Already slowing wage gains should slow further in the context of a softer labor market.

6. Inflation trends are cooling, but likely to remain above the Fed’s 2% target through 2024.

After reaching a four-decade high in 2022, inflation on both a headline and core basis has moderated significantly in 2023. Some categories have seen more improvement than others. For example, core goods inflation dropped from a peak of 12.4% in February 2022 to 0% in October 2023. Progress on core services inflation, which includes the sticky shelter category, has been slower. After peaking at 7.3% in February 2023, core services inflation was still running an elevated 5.5% in October 2023. We expect moderating shelter inflation in 2024 as the lag in market rents pricing should catch up in the inflation readings. We forecast core PCE prices—the Fed’s preferred inflation metric—to rise 2.4% in 2024, down from 3.4% in 2023.

7. Housing sector activity has dropped 30%-40% over the past 18 months amid the surge in mortgage rates.

With housing affordability metrics at a 40-year low, combined with 75% of mortgages locked in at 4% or below, the U.S. housing market is effectively frozen. Real residential investment tumbled at a 12% seasonally adjusted annual rate over the past six quarters. Meanwhile, home values rose 6% in 2023—to near all-time highs—amid tight supply and historically low vacancies. Given the already large drop in recent years, we think the housing market is one area of the economy that could perform better in 2024 than in 2023, even if trends remain soft in the near term.

8. Supply chain bottlenecks are mostly in the rearview, while global supply chain restructuring will take time.

Over the past year, as inventory constraints and shipping costs have fallen, supply chain considerations have shifted from short-term tactics to longer-term strategies of minimizing costs while ensuring resiliency. Legislation passed in 2022 including the CHIPS and Science Act and Inflation Reduction Act provides incentive for certain strategic industries—including semiconductors and renewables—to onshore production. This has resulted in rising business investment in high-tech manufacturing structures over the past year. Bigger picture, we expect global supply chain adjustments to continue at a conservative pace, as even the simplest changes are both costly and complex.

9. Pressures on the commercial real estate sector are likely to intensify.

The higher-for-longer interest rate environment and challenges among small and regional banks are resulting in tightening of lending standards and slowing slow growth. This is occurring across all loan types, but most acutely for the commercial real estate sector, where small and regional banks have meaningful exposure. With nearly $550 billion of maturing commercial real estate debt over the next year, losses are expected to mount for lenders and investors. While we do not expect this to be a systemic issue, reduced lending activity and potential investor losses could be an economic headwind.

10. Geopolitical risks will remain top of mind.

Elevated trade tensions with China, the ongoing Russia-Ukraine war and conflict in the Middle East all point to continued uncertainties and risks heading into 2024. While direct U.S. economic impact has been limited thus far, the larger risk is for a supply shock of a critical commodity or good—energy, food, semiconductors—that triggers significant market disruption. Next year’s U.S. presidential election could be more impactful than recent cycles on geopolitics given the backdrop of already elevated tensions.

Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve, J.P. Morgan forecasts.

Meet Ginger

Ginger Chambless is Head of Research for Commercial Banking. In this role, she produces curated thought leadership content for CB clients and internal teams. Her content focuses on economic and market insights, industry trends and the capital markets. Connect on LinkedIn .

JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.

Find more economic and market insights in a weekly update from Ginger Chambless.

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134 Economics Thesis Topics: Ideas for Outstanding Writing

Writing a thesis is not an easy task. For most of the students, it can be even intimidating, especially when you do not know where to start your research.

Here, we have provided an economics thesis topics list. After all, everyone knows that choosing the right idea is crucial when writing an academic paper. In economics, it can combine history, math, social studies, politics, and numerous other subjects. You should also have solid foundations and a sound factual basis for a thesis. Without these elements, you won’t be able to master your research paper.

The issue is:

It is not always clear what could be seen as an excellent economics thesis topic. Our experts can assist you with this challenge. This list contains some outstanding examples to get you started.

⭐ Thesis in Economics
🔥 Supreme Thesis Topics
👍 Bachelor’s Thesis
😲 Master’s Thesis

📊 Microeconomics

📈 macroeconomics.

🤔 Developmental
👨‍💼 Behavioral
💼 Financial
🌱 Agricultural
🤝‍ Sociology
📚 Ph.D. Topics
📝 How to Pick a Topic

⭐ What Does a Thesis in Economics Look Like?

A good thesis in economics is a blend between an empirical paper and a theoretical one. One of the essential steps in choosing a topic in economics is to decide which one you will write.

You may write, research, analyze statistical data and other information. Or build and study a specific economic model.

Or why not both!

Here are some questions you can ask when deciding what topic to choose:

What has already been written on this topic?
What economic variables will my paper study?
Where should I look for the data?
What econometrics techniques should I use?
What type of model will I study?

The best way to understand what type of research you have to do is to write a thesis proposal. You will most probably be required to submit it anyway. Your thesis supervisor will examine your ideas, methods, list of secondary and primary sources. At some universities, the proposal will be graded.

Master’s thesis and Bachelor’s thesis have three main differences.

After you get the initial feedback, you will have a clear idea of what to adjust before writing your thesis. Only then, you’ll be able to start.

🔥 Supreme Economics Thesis Topics List

Fast fashion in India.
The UK housing prices.
Brexit and European trade.
Behavioral economics.
Healthcare macroeconomics.
COVID-19’s economic impact.
Global gender wage gap.
Commodity dependence in Africa.
International trade – developing countries.
Climate change and business development.

👍 Economics Bachelor’s Thesis Topics

At the U.S. Universities, an undergraduate thesis is very uncommon. However, it depends on the Department Policy.

The biggest challenge with the Bachelor’s Thesis in economics concerns its originality. Even though you are not required to conduct entirely unique research, you have to lack redundant ideas.

You can easily avoid making this mistake by simply choosing one of these topics. Also, consider visiting IvyPanda essays database. It’s a perfect palce to conduct a brainstorming session and come up with fresh ideas for a paper, as well as get tons of inspiration.

The impact of the oil industry on the economic development of Nigeria. The oil industry is vital for the economic development of Nigeria. In this thesis, students can discuss the notion of the resource curse. Analyze the reasons why general people are not benefiting from the oil industry. Why did it produce very little change in the social and economic growth of the country?
Sports Marketing and Advertising: the impact it has on the consumers.
Economic opportunities and challenges of investing in Kenya .
Economic Development in the Tourism Industry in Africa. Since the early 1990s, tourism significantly contributed to the economic growth of African countries. In this thesis, students can talk about the characteristics of the tourist sector in Africa. Or elaborate on specific countries and how their national development plans look like.
Globalization and its significance to business worldwide .
Economic risks connected to investing in Turkey .
The decline in employment rates as the biggest American economy challenge .
The economics of alcohol abuse problems. In this thesis, students can develop several essential issues. First, they can examine how poverty is connected to alcohol abuse. Second, they can see the link between alcohol consumption and productivity. To sum up, students can elaborate on the economic costs of alcohol abuse.
Causes and solutions for unemployment in Great Britain.
Parallel perspective on Global Economic Order: China and America. This thesis can bring a comparative analysis of the economies to a new level. China and The US are the world’s two largest economies. These two countries have a significant impact on the global economic order. So, looking at the set of institutions, policies, rules can be constructive.
The new international economic order after COVID-19
Financial stability of the banking sector in China.
New Electronic Payment Services in Russia.
The influence of culture on different entrepreneurial behaviors.
The impact of natural cultural practices on entrepreneurial activity.
The relationships between national culture and individual behavior.
The main reasons for salary inequalities in different parts of the U.S.

😲 Economics Master’s Thesis Topics

Student life can be fascinating, but it comes with its challenges. One of which is selecting your Master’s thesis topic.

Here is a list of topics for a Master’s thesis in economics. Are you pursuing MPhil in Economics and writing a thesis? Use the following ideas as an inspiration for that. They can also be helpful if you are working on a Master’s thesis in financial economics.

The impact of visual aid in teaching home economics.
The effect of income changes in consumer behaviors in America.
Forces behind socio-economic inequalities in the United States. This thesis can explore three critical factors for socio-economic differences in the United States. In the past 30 years, social disparities increased in the United States. Some of the main reasons are technology, trade, and institutions.
The relationships between economic growth and international development.
Technological innovations and their influence on green and environmental products.
The economics of non-solar renewable energy .

Renewable energy is beneficial for various economic reasons.

The economic consequences of terrorism . Terrorism not only takes away lives and destroys property but also widely affects the economy. It creates uncertainty in the market, increases insurance claims, slows down investment projects, and tourism. This thesis can address all of the ways in which terrorism can affect economies.
Corporate Social Responsibility (CSR) implementation in the Oil and Gas Industry in Africa.
Use of incentives in behavioral economics.
Economic opportunities and challenges of sustainable communities .
Economics of nuclear power plants.
Aid and financial help for emerging markets. This topic is very versatile. Students can look at both the positive and the adverse effects that funding has on the development. There are plenty of excellent examples. Besides, some theories call international help a form of neocolonialism.
Multinational firms impact on economic growth in America .
The effect of natural disasters on economic development in Asia.
The influence of globalization on emerging markets and economic development.

📑 More Economics Thesis Topics: Theme

For some students, it makes more sense to center their search around a certain subject. Sometimes you have an econ area that interests you. You may have an idea about what you want to write, but you did not decide what it will be.

If that’s the case with you, then these economics thesis topics ideas are for you.

An analysis of the energy market in Russia.
The impact of game theory on economic development.
The connection between minimum wage and market equilibrium.
Gender differences in the labor market in the United States. This topic can shed light on gender differences in the labor market in the United States. In the past years, the overall inequality in labor in the markets decreased. However, there is still a lot of work that can be done.
Economic reasons that influence the prices of oil .
Relationship between the Lorenz curve and the Gini coefficient.
Challenges of small businesses in the market economy.
The changes in oil prices: causes and solutions . Universal economic principles do not always apply to the sale and purchase of the oil. The same happens with its cost. In the thesis, talk about what affects the prices. What are the solutions that can be implemented?
The economic analysis of the impact of immigration on the American economy.

Immigration has a little long-run effect on Americans’ wages.

Economic inequality as a result of globalization . Economic inequality becomes even more apparent on the global level. There is a common belief that globalization is the cause of that. Discuss what can be the solutions to these problems. This topic is vital to minimize the gap between the rich and the poor.
The economic explanation of political dishonesty .
Effect of Increasing Interest rates costs in Africa .
The connection between game theory and microeconomics.
Marketing uses in microeconomics.
Financial liability in human-made environmental disasters.
Banks and their role in the economy. Banks are crucial elements of any economy, and this topic covers why. You can explain how banks allow the goods and services to be exchanged. Talk about why banks are so essential for economic growth and stability.
Inflation in the US and ways to reduce its impact.
The connection between politics and economics.
Income Dynamics and demographic economics.
US Market Liquidity and macroeconomics.
Macroeconomics and self-correction of the economy .
The American economy, monetary policy, and monopolies .
The importance of control in macroeconomics. One of the central topics in macroeconomics is grouped around the issue of control. It is quite reasonable that control over money and resources should become a topic of discussion.
Analysis of Africa’s macroeconomics and its performance.
Economics of education in developing markets.
Problems and possible solutions for Japan macroeconomics .
Comparative analysis of British macroeconomics concerning the US .
Public policies and socio-economic disparities.
The world problems through macroeconomic analysis. Indeed, macroeconomics is very complicated. There are many influences, details, and intricacies in it. However, it allows economists to use this complex set of tools to examine the world’s leading problems today.

There are four main problems in macroeconomics.

The connection between employment interest and money.

🤔 Development Economics

Economics of development . This topic is very rich in content. First, explain what it is. Then pay particular attention to domestic and international policies that affect development, income distribution, and economic growth.
The relation between development and incentive for migration.
The impact of natural disasters on the economy and political stability of emerging markets.
The economic consequences of population growth in developing countries.
The role of industrialization in developing countries . The industrialization has been connected with the development. It promotes capital formation and catalyzes economic growth in emerging markets. In this thesis, you can talk about this correlation.
Latin American economic development.
Gender inequality and socio-economic development .
Problems of tax and taxation in connection with economic growth.
The economic impact of terrorism on developing markets.
Religious decline as a key to economic development. Not everyone knows, but a lot of research has been done in the past years on the topic. It argues that decreased religious activity is connected with increased economic growth. This topic is quite controversial. Students who decide to write about it should be extra careful and polite.

👨‍💼 Behavioral Economics

Risk Preferences in Rural South Africa.
Behavioral Economics and Finance .
Applied behavioral economics in marketing strategies. If you want to focus your attention on marketing, this topic is for you. Behavioral economics provides a peculiar lens to look at marketing strategies. It allows marketers to identify common behaviors and adapt their marketing strategies.
The impact of behavioral finance on investment decisions.
Behavioral Economics in Child Nutrition Programs in North Texas.
Guidelines for Behavioral Economics in Healthcare Sector.
Cognitive and behavioral theories in economics .
Cross-cultural consumer behavior and marketing communication. Consumers are not only affected by personal characteristics, but also by the culture they are living in. This topic focuses on the extent it should determine marketing strategy and communication.
Behavior implications of wealth and inequality.

The richest population holds a huge portion of the national income.

Optimism and pessimism for future behavior.

💼 Financial Economics

Financial Economics for Infrastructure and Fiscal Policy .
The use of the economic concept of human capital. Students can focus on the dichotomy between human and nonhuman capital. Many economists believe that human capital is the most crucial of all. Some approach this issue differently. Therefore, students should do their research and find where they stand on this issue.
The analysis of the global financial crisis of 2020s. Share your thoughts, predictions, ideas. Analyze the economic situation that affects almost everyone in the world. This thesis topic will be fresh and original. It can help to start a good and fruitful conversation.
The big data economic challenges for Volvo car.
The connection between finance, economics, and accounting.
Financial economics: Banks competition in the UK .
Risk-Taking by mutual funds as a response to incentives.
Managerial economics and financial accounting as a basis for business decisions.
Stock market overreaction.

🌱 Agricultural Economics

Agricultural economics and agribusiness.
The vulnerability of agricultural business in African countries.
Agricultural economics and environmental considerations of biofuels .
Farmer’s contribution to agricultural social capital.
Agricultural and resource economics. Agricultural and resource economics plays a huge role in development. They are subdivided into four main characteristics which in this topic, students can talk about: – mineral and energy resources; – soil resources, water resources; – biological resources. One or even all of them can be a focus of the thesis.
Water as an economic good in irrigated agriculture.
Agriculture in the economic development of Iran.
The US Agricultural Food Policy and Production .
Pesticides usage on agricultural products in California.

The region of greatest pesticide use was San Joaquin Valley.

An analysis of economic efficiency in agriculture. A lot of research has been done on the question of economic efficiency in agriculture. However, it does not mean there is no place for your study. You have to read a lot of secondary sources to see where your arguments can fit.

🤝‍Economic Sociology

Theory, approach, and method in economics sociology.
Economic sociology of capitalism. While economists believe in the positive effect capitalism has on the economy, the social effect is quite different. The “economic” part of the issue has been studied a lot. However, the sociology of it has been not. This thesis can be very intriguing to read.
Political Economy and Economic Sociology.
Gender and economic sociology .
Progress, sociology, and economics.
Data analysis in economics, sociology, environment .
Economic sociology as a way to understand the human mind.
Economic sociology of money.
Economics, sociology, and psychology of security.
Major principles of economic sociology. In the past decade, economic sociology became an increasingly popular field. Mainly due to it giving a new view on economics, human mind, and behavior. Besides, it explores relationships between politics, law, culture, and gender.

📚 The List of Ph.D. Topics in Economics

If you decide to go to grad school to do your Masters, you will likely end up getting a Ph.D. as well. So, with this plan in mind, think about a field that interests you enough during your Masters. Working with the same topic for both graduate degrees is easier and more effective.

This list of Ph.D. Topics in Economics can help you identify the areas you can work on.

Occupational injuries in Pakistan and its effect on the economy. Injuries are the leading cause of the global burden of disability. Globally, Pakistan was ranked 9th populated country with a large number of unskilled workers. In this dissertation, consider the link between occupational injuries and their effects on the economy.
The study of the Philippines’ economic development.

The Philippine economy is projected to continue on its expansionary path.

Financial derivatives and climate change .
Econometric Analysis of Financial Markets.
Islamic Banking and Financial Markets .
Health economics and policy in the UK.
Health insurance: rationale and economic justification. In this dissertation, students can find different ways to explain and justify health insurance. Starting to philosophical to purely economic grounds. In the past years, there was a lot of discussion regarding the healthcare system for all. What are some of the economic benefits of that?
Colombian economy, economic growth, and inequality.
Benefits of mergers and acquisitions in agribusiness.
Methods to measure financial risks when investing in Africa.
The significance of financial economics in understanding the relationship between a country’s GDP and NDP.
Network effects in cryptocurrency. Cryptocurrencies are not new anymore. However, it is still an original subject for a dissertation. Students can decide to choose several crypto coins and evaluate the importance of the network effect. This effect is particularly significant for Bitcoin. Explain why.
The comparison of the Chinese growth model with the American growth model.
An economic justification versus political expediency.
Pollution Externalities Role in Management Economics .

📝 How to Select an Economics Thesis Topic

As your academic journey is coming to an end, it’s time to pick the right topic for your thesis. The whole academic life you were preparing to undertake this challenge.

Here is the list of six points that will help you to select an economics thesis topic:

Make sure it is something you are genuinely interested in. It is incredibly challenging to write something engaging if you are not interested in the topic. So, choose wisely and chose what excites you.
Draw inspiration from the previous student’s projects. A great place to start is by looking at what the previous students wrote. You can find some fresh ideas and a general direction.
Ask your thesis advisor for his feedback. Most probably, your thesis advisor supervised many students before. They can be a great help too because they know how to assess papers. Before meeting with your professor, do some basic research, and understand what topic is about.
Be original, but not too much. You do not want to spend your time writing about a project that many people wrote about. Your readers will not be interested in reading it, but your professors as well. However, make sure you do not pick anything too obscure. It will leave you with no secondary sources.
Choose a narrow and specific topic. Not only will it allow you to be more original, but also to master a topic. When the issue is too broad, there is just too much information to cover in one thesis.
Go interdisciplinary. If you find yourself interested in history, philosophy, or any other related topic, it can help you write an exceptional thesis in economics. Most of your peers may work on pure economics. Then, the interdisciplinary approach can help you to stand out among them.

Some universities ask their students to focus on topics from one discipline.

Thank you for reading the article to the end! We hope this list of economics thesis topics ideas could help you to gather your thoughts and get inspired. Share it with those who may find it useful. Let us know what you think about it in the comment section below.

🔗 References

Economics Thesis Topics List: Seminars Only
How To Pick A Topic For Your Economics Research Project Or Master’s Thesis: INOMICS, The Site for Economists
What Do Theses and Dissertations Look Like: KU Writing Center, the University of Kansas
Writing Economics: Robert Neugeboren with Mireille Jacobson, University of Harvard
Economics Ph.D. Theses: Department of Economics, University of Sussex Business School, IDEAS_RePEc
World Economic Situation and Prospects 2018: United Nations
Undergraduate Honors Theses: Department of Economics, University of California, Berkeley
Economics Department Dissertations Collection: Economics Department, University of Massachusetts Amherst
Topics for Master Theses: Department of Economics, NHH, Norwegian School of Economics
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The dilemma I faced in getting Thesis proposal for my M Phil programme is taken away. Your article would be a useful guide to many more students.Thank you for your guidance.

Thanks for the feedback, John! Your opinion is very important for us!

I wants it for msc thesis

These are very helpful and concise research topics which I have spent days surfing the internet to get all this while. Thanks for making research life experience easier for me. Keep this good work up.

Thank you, Idris!

Glad to hear that! Thank you for your feedback, Idris!

Excellent research

For research

A very well written, clear and easy-to-read article. It was highly helpful. Thank you!

Thanks for your kind words! We look forward to seeing you again!

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Best Economics Research Topics and Ideas for Student in 2023

Today, economics is one of the most demanding subjects all over the world. Many reputed colleges and universities offer degree courses in economics. The major economics student is given a lot of economics research paper assignments to be completed at home.

Getting good grades in these research papers is essential for the students since it will affect their academic and professional life in the future. This blog will discuss the best Economics Research Topics for the year 2023.

What Is an Economics Research Paper?

An economics research paper is a collection of various well-searched data information content written in an organized pattern. Different types of economics research papers are as follows:

Analytical research paper : In this type of research paper, you ask a question and then gather all the needed data from various sources for analyzing your viewpoint.
Definition paper: It only describes the facts or arguments without using the writer’s personal bias. Its sole purpose is to provide relevant information on the given research topic.
Argumentative or persuasive research paper: This type of research paper presents 2 sides of any controversial issue from the writer’s point of view. Here you need to include the findings and arguments of the research from the given issue. Here you need to present the whole paper with relevant statistical data.
Compare and Contrast Paper: These types of research papers are used to analyze the differences between the 2 viewpoints of the author as well the subject. Both sides should be properly compared and contrasted in the paper.
Interpretative Paper: This type of economic research paper needs your knowledge of any case study topic.
Survey research paper: This kind of research paper needs the conclusion of any survey, including asking questions to the respondents. The survey conductor collects all the required information from the survey to analyze it and present it to the research paper.
Experimental research paper: This research paper usually describes any experiment elaborately. This experiment can be anything like physics, chemistry, biology, etc. Here it would help if you elaborated and inferred the experiments very well for proper analysis.

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How to Write Informative Economics Research Paper Topics?

Title: This is the header part and needs to be precise. You must also add the author’s name, contact details, address, degrees, academics, etc. Your heading part should be a manageable part.

Introduction: In this part, you need to outline the objectives you need to write the paper on the given subject. Your main objective in writing this paper is to inspire your audiences.

Approach: Here, you need to write about the strategy to write the college research paper properly.

Results: It needs to be written in a tabular form to elaborate on the results.

Discussion: Here, you need to interpret all the information collected from the results section of the paragraph and explain your foundations.

Data overview : In this section, you need to outline the data that you are using with its time span, strength, weakness, sources, etc.

Conclusion: This part is the shortest part of your informative research paper. Here you should not write any new points and organize the points already mentioned in a precise manner.

Literature review: Here, you need to deal with the problem or question. In this section, you need to accumulate and write a small review of the works of various writers and scientists. Here you can represent the key points of the research with the help of a table.

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How to Find a Superior Economics Research Paper Topic to Write About?

Review your course material
Look for the recent issues in your study field
Refresh your mind
Discuss with your friends and family
Write on the topic ideas that interest you
Go through the background information that you like

Top 110+ Informative Ideas for Economics Research Paper Topics 2023

Economics research paper on technology.

What is CRISPR, and what’s its importance?
Is genetically modified food dangerous?
How do technologies affect the food industry?
How Elon mask rocket technology is an evolutionary one?
What are the utilities of alternative energy sources?
Is Intergalactic civilization myth or reality?
How do violent video games affect children’s minds?
How to avoid computer viruses?
What are the pro and cons of 3D printing?
How to compare various operating systems of PC?
What are the effects of social media on our daily life?
How to create a good LinkedIn profile?
How to use your social network profile securely?
How does Facebook die data operation?

Economic Research Topics on the Environment

Effect of waste plastics on the environment
How to implement zero waste consumption?
How to recycle waste properly?
How Elon mask got clean water from rubbish?
What is the importance of environmental studies?
How can meat production affect the environment?
What type of industrial fields is really harmful to the environment?
How can the fashion industry affect our environment?
How are politics making people tough to resolve climatic issues?
How can oil spills adversely affect our environment?

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Informative Research Topics on Education

How do the virtual classes work?
How to improve youth sports?
How to deal with divorces?
Are online essay writing assignments helpful or harmful?
How to use information in a funny way?
Should programming languages be made mandatory in high school?
How do high school study programs differ from countries?
How to teach students goal setting?
How to develop students’ creative abilities?
Should using mobile phones be restricted in educational institutions?

Informative Topics for University

How can 3d printers change industries?
Why can dogs be best friends?
Explain the process of chocolate production
How can we colonize mars?
Can more practical skills be included in education
How do credit cards work, and how to use them wisely?
Why are higher studies important?
How to do a part-time job while studying?
Why can some classes be shorter than 45 minutes?
Traits of good students

Informative Topics on Macro-Economic Research

Effect of income on consumer produces
Effect of the labour force on an economic budget
Impact of marital status on the labour economy
The link between salary levels and economic convergence
What is economic inequality?
Evolution of national consumption in the past 10 years
Impact of cashless economy on various enterprises

Research Topics on Microeconomics

Relationship between economic growth with unemployment
Global recession factors
Impact of government expenses on national economic growth
Impact of corporate tax revenue
The link between common stock prices and inflation
Relationship between government spending and inflation
The effect of currency value on various firms
Evolution of the stock market with consequences
Unemployment vs. national labour mobility
USA unemployment vs. global unemployment

Research Topics on International Trade

Relation between international trade and economic growth
Effect of currency value on any country
Effect on foreign direct investment (FDI) in any country
What are the losses and gains of trade in developing countries
Effects of the banana crisis on British and Jamaican economics
Importance of Brexit in the UK economy
The link between foreign direct investment and international trade
Roles of exchange rate and regime in the USA
Effect of international trade in medium and small-scale industries

Research Topics on Behavior Economics

How the retailers give customers many options
A case study of the behavioural economy of discounting
Pricing and destroying the effect
The implication of big data on behavioral economics
A case study of how behavioral economics has affected the USA market
How behavioral economics influence online purchase behavior of the consumers
Use of incentives in weight management via behavioral economics
What are the consumer motives from the point view of behavioral economics
How can behavioral economics be used in controlling substance abuse?
How to address lifestyle management for diabetes via behavioral analysis in the healthcare sector?

Informative Research Papers on Development Economics

What is the impact of globalization on the distribution of economies in emerging economies?
How to investigate the relationship between the development and migration of economies
What is the budgeting and decision-making procedure by the low-income sections in developing nations?
The link between family planning, income fluctuations and labour force
Effect of natural calamities in the development of emerging economies
What are the effects of population growth on economic development in India?
What are the determinants of the top-performing institutes in emerging economies?
Compare the different economic patterns across the villages in Virginia
A review of the aid as well as economic growth of the economy

Controversial Economic Essay Topics

Drugs are not good for mental and physical health
Why is the world moving towards the way further democracy?
Police corruption and brutality all over the world
Are we paying too much tax to the government?
Education should be a basic human right
Science is not objective and mixed with politics
Many people are talking about climatic charges because of politics
Why do professional athletes use steroids?
Pros and cons of video games

Informative Research Paper Topics on General Economics and Finance

Comparison of retirement policies in different nations
Why are doctors given different salaries in various countries?
Comparison of average salaries in different countries
How to give financial aid to various organizations
How to fund education?
Which counties offer free education, and how it affects the economy?
How does the economic crisis take place?
Causes, reasons and Effects of the great depression on history
How to recognize the main trends in the international stock market
What is the safety of internet banking?

Informative Research Paper Topics on Society

Which societies are incomparable and why?
Why does social discrimination take place?
How does patriotism work today?
What are the differences between nationalism and patriotism?
Why society needs actors, political figures, etc.?
Why are easier professionals overpaid?
Do racial discrimination common among police officers?
Why do many governments support homeless people?
What ate the future of the millennial?
Is a military career right for women?

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Development Economics Research Topics. The relation between development and incentive for migration. The economic consequences of population growth in developing countries. The determinants of high-performing institutions in emerging economies. The impact of globalization on income distribution in emerging economies.
Best Economics Research Topics and Ideas for Student in 2023
The major economics student is given a lot of economics research paper assignments to be completed at home. Getting good grades in these research papers is essential for the students since it will affect their academic and professional life in the future. This blog will discuss the best Economics Research Topics for the year 2023.