The Conventional Wisdom on Rate Cuts May Be Wrong
A new explanation for what drives the market after a Fed surprise.
The Conventional Wisdom on Rate Cuts May Be WrongThe long debate over how immigrants affect local economies took a turn in late 2015, when German Chancellor Angela Merkel led her government in the adoption of an “Open Door” policy towards refugees from chaotic countries such as Syria, Iraq, and Eritrea, along with other countries in the Middle East and Northern Africa. Immigration has long been a divisive subject both in terms of social welfare and economic development—though there is evidence it is an economic boon over the long run, variables such as the speed of cultural integration and the skill sets of the immigrant populations greatly complicate the question.
Chicago Booth’s Initiative on Global Markets asked its panel of European economic experts to consider whether Germany’s refugee influx will benefit German citizens economically over the course of a decade. The results reflect the broader uncertainty about the issue. Though many of the panelists believe the economic effects will be positive, a plurality of economists are unsure.
Even among those who believe the effects will be beneficial, there are warnings that the dynamism brought to Germany’s economy by such immigrants might also be disruptive and cause social unrest among those who might be left behind. “Losses to some workers [are] possible,” warns Peter Neary of Oxford. “Poor integration could lead to social unrest: safety nets needed.”
The skill set of the migrant population is also the subject of debate, with some panelists describing it as a low-skill workforce, while others maintain that the newcomers are well-suited to meet both the needs of the 21st century economy and the demographic needs of Europe, which has an aging population and low birth rates.
Agnès Bénassy-Quéré, Paris School of Economics
“I think it will take more than a decade for the net economic benefits to appear.”
Response: Uncertain
Richard William Blundell, University College London
“This is a fairly skilled and young group, precisely the right mixture of human capital. Of course, there are some losers and usual frictions.”
Response: Agree
Lubos Pastor, Chicago Booth
“The economy will get bigger but maybe not per capita and there will be redistribution.”
Response: Uncertain
A new explanation for what drives the market after a Fed surprise.
The Conventional Wisdom on Rate Cuts May Be WrongResearch takes a broad view of what happened when Chicago tore down distressed public housing.
Line of Inquiry: Milena Almagro on Public Housing Demolition and Urban InequalityChicago Booth’s Richard Hornbeck discusses research that finds emancipation created huge economic value.
An Economist Debunks ‘Gone with the Wind’The prestigious award from the American Finance Association recognizes top academics whose research has made a lasting impact on the finance field.
Example Article SwissAt the Kilts Center’s annual Case Competition, a student team leveraged LLMs to create innovative product solutions for Microsoft.
Example Article SwissThe Booth dean and professor (1939–2024) was an expert in microeconomics, strategy, and industrial organization and served in the US government.
Example Article SwissYour Privacy
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.