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Macro Briefing: 15 April 2024

* Israel considers how to respond to Iranian missile attack
* Economists lift US growth forecasts in new Wall Street Journal survey
* German Chancellor Scholz in China to focus on tense economic ties
* US 10-year yield approaching 4.6% in early Monday trading
* Tesla laying off more than 10% of workforce after lackluster sales results
* US consumer sentiment “moved sideways for the fourth straight month” in April:

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Book Bits: 13 April 2024

Slow Burn: The Hidden Costs of a Warming World
Robert Jisung Park
Review via International Monetary Fund
As the world warms, anxiety over the effects continues to rise. A survey conducted by the United Nations found two-thirds of the global population believe that climate change is a global emergency. Fears abound on the risks of triggering tipping points in the climate system, such as the melting of ice sheets or the release of underground methane. But alongside future risks of climate catastrophe, there are also slow-burning effects already being felt around the globe. In Slow Burn: The Hidden Costs of a Warming World, environmental and labor economist R. Jisung Park documents these effects, from the expected, like worsening inequality, to the unexpected, such as declining productivity and economic growth.

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Research Review | 12 April 2024 | Equity Risk Premium

Macroeconomic Announcement Premium
Hengjie Ai (University of Wisconsin-Madison), et al.
November 2023
The paper reviews the evidence on the macroeconomic announcement premium and its implications on equilibrium asset pricing models. Empirically, a large fraction of the equity market risk premium is realized on a small number of trading days with significant macroeconomic announcements. We review the literature that demonstrates that the existence of the macroeconomic announcement premium implies that investors’ preferences must satisfy generalized risk sensitivity. We show how this conclusion generalizes to environments with heterogeneous investors and demonstrate how incorporating generalized risk sensitivity affects economic analysis in dynamic setups with uncertainty.

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