Macro Roundup

Core findings, "...We evaluate two variants of a school-based, intensive learning camp for pupils who are assessed `not ready’ for further education after compulsory school, using a stratified cluster randomized trial involving 15,559 pupils in 264 schools in Denmark. Next to training pupils in Danish and mathematics, the main variant targets non-cognitive skills, while the alternative variant instead uses this time for more training in Danish and math. In the short-run, in the academic areas that are targeted in the camp, we find small positive effects in math and weak evidence for positive effects in Danish. Yet, we find no evidence of lasting effects and we do not find short-run effects on non-targeted areas in math and Danish or on non-cognitive skills. Further, we find no evidence that training of noncognitive skills affects academic outcomes. These results provide a perspective on recent evidence regarding the effects of training non-cognitive skills in schools - by running such an intervention with older pupils and in a comparatively high-resource school system...."

The exercise, "...Accordingly, we ran two variants of a two-week camp, conducted at the school of a participating pupil during the regular teaching hours, targeting grade 8 pupils in Denmark, who are assessed as ‘not ready for further education’.3 After the camp, pupils participated in followup program where they met once a week for eight weeks. In addition to math and Danish, the main learning camp variant devoted roughly 30 percent of the time to strengthen the non-cognitive skills of pupils. For example, pupils (and teachers) learned about self-regulation strategies - such as goal setting (Locke and Latham, 1990) and mental contrasting with implementation intentions (Gollwitzer et al., 2011); and they were introduced to the concept of “growth mindsets” (Dweck, 2006), which reflects a view that ability is malleable and that success is driven by effort. In the alternative variant of the camp, the time spent on training non-cognitive skills in the main variant was instead used for extra training in math and Danish. The motivation for testing two variants of the camp stems from the uncertainty as to whether non-cognitive skills can be manipulated during an intervention as short as the one studied here and which is aimed at 8th graders rather than younger pupils. The two variants allow us to investigate if the time spent training non-cognitive skills makes a difference relative to using it for additional training of academic skills...."

Outcome, "... We observe small, positive short-run effects on the targeted area in mathematics (numbers and algebra). In Danish, the evidence for positive effects is weaker as only one out of the two targeted areas (namely, text comprehension) is positively affected by the camp. In terms of long-run effects, we do not find any effects that are statistically significant at conventional levels. There is some weak indication of the camp having a positive impact on math performance in the final exams in grade 9 and on being enrolled in post-compulsory education three years after the camp. We also examine the effects on non-cognitive skills. Next to self-administered pre- and post- surveys that included several psychological scales, we observe in the register data how school counselors evaluated a pupil's readiness for further education, and use here specifically the evaluation of the personal and social skills. We do not observe any positive effects on any of these outcome measures for the main learning camp that trained non-cognitive skills. The measurement of non-cognitive skills with surveys and the evaluation of the pupil's readiness for further education has some disadvantages. However, there is some evidence to support the lacking effects on non-cognitive skills as not merely a measurement problem. Firstly, we do not observe any spillover effects to non-targeted academic areas in the standardized national tests. If the intervention at the camps affected non-cognitive skills such as self-control, one could expect the improved non-cognitive skills to broadly enhance academic performance both in targeted and non-targeted areas. This, however, is not the case. Secondly, when comparing the two camps, we primarily find non-significant differences in outcomes between the two, once again underlining the lacking effect of non-cognitive skills. Overall, the results thus suggest that the main camp did not affect non-cognitive skills….”

Charlotte Hvidman Alexander Koch Julia Nafziger Søren Albeck Nielsen Michael Rosholm, "An Intensive, School-Based Learning Camp Targeting Academic and Non-Cognitive Skills Evaluated in a Randomized Trial," Institute For Labor Economics, October 2020, https://ftp.iza.org/dp13771.pdf

"...after a buying spree over the past decade or so, the region’s [East Asia} ten biggest economies now hold nearly $28trn in foreign financial assets, more than three times the amount in 2005 and equivalent to a fifth of global assets held by foreigners. Once-staid institutions that are little-known in the West—from obscure Japanese banks and Taiwanese insurers to South Korean pension funds—now wield heft in markets for assets ranging from collateralised-loan obligations (CLOs) in America to high-speed rail lines in Britain.... The Economist has looked at figures for the gross foreign financial assets for ten East and South-East Asian economies. We define these as total gross foreign assets excluding foreign direct investment by multinationals; our measure captures investment portfolios and bank lending, among other things. The combined foreign financial assets of our ten countries rose from around $8trn in 2005 to nearly $28trn in 2020, increasing the region’s share in global foreign-held financial assets by five percentage points (see chart 1).The composition of Asia’s savings hoard has also changed, strikingly so in some places. When Mr Bernanke conducted his analysis foreign-exchange reserves held by governments and central banks in our set of ten economies accounted for about half of a country’s foreign financial assets, on average. These had been stockpiled after the Asian financial crisis of 1997-98 as a bulwark against future currency collapse, and were held in safe, liquid assets. The average share of reserves has now fallen to nearer a third. Meanwhile, two-thirds of the stockpile now reflects an explosion in portfolio and other financial flows, as institutional investors in the region have hunted for yield (see chart 2)....But understanding what’s going on could become more important, if China follows the path of East Asian economies. Its reserves of more than $3trn dwarf its other financial holdings. A shifting composition of foreign assets is not a matter of destiny, and would require some loosening of China’s capital controls. But even a marginal move towards more portfolio investment could produce huge flows of capital. “Chinese insurers have a lot of interest in investing overseas,” says Rick Wei of JPMorgan Asset Management. “They want to diversify their holdings, increase returns and match their liabilities with longer-term assets.” Even after more than a decade of rampant growth in Asia’s private foreign assets, more may be yet to come...."

Economist Staff, "The $28trn global reach of Asian finance,"The Economist, January 10, 2022, https://www.economist.com/finance-and-economics/the-28trn-global-reach-of-asian-finance/21807121

The $28trn global reach of Asian finance

THE COUNTRIES of East and South-East Asia are renowned, even envied, for reshaping global supply chains. Less well appreciated is the extent to which they have redrawn the map of global capital flows. After a buying spree over the past decade or so, the region’s ten biggest economies now hold nearly $28trn in foreign financial assets, more than three times the amount in 2005 and equivalent to a fifth of global assets held by foreigners. Once-staid institutions that are little-known in the West—from obscure Japanese banks and Taiwanese insurers to South Korean pension funds—now wield heft in markets for assets ranging from collateralised-loan obligations (CLOs) in America to high-speed rail lines in Britain.

The shift is drawing the attention of financial watchdogs. In December the Bank for International Settlements (BIS), a club of central banks, concluded that Asian institutional investors had contributed to dollar funding stress in March 2020, as covid-19 first began to spread and markets panicked. Yet much about these financial interlinkages, and the risks associated with them, is still poorly understood.

Our sample of countries can be split into three camps. The wealthiest handful—Hong Kong, Japan and Singapore—hold significant foreign-exchange reserves, but their hoards of other financial assets are between five and eight times larger. Their holdings are now mature, and slower-growing by regional standards.

A bigger shift has taken place in South Korea and Taiwan. In 2005 almost half of Taiwan’s foreign financial assets, and two-thirds of South Korea’s, took the form of reserves. Although reserve holdings have since more than doubled for both countries, portfolio and other assets have expanded at a far more rapid clip. South Korea and Taiwan now own $1.5trn and $2.1trn in foreign financial assets, respectively, less than a third of which is held in reserves. In Malaysia, too, non-reserve financial assets now outweigh reserves two-to-one. By contrast, for a third set of countries, which includes China, Indonesia, the Philippines and Thailand, reserves still retain a large share.

The growth in foreign financial holdings has gone hand-in-hand with the transformation of conservative institutional investors into big players in distant corners of financial markets. A prime example is Norinchukin Bank, an agricultural co-operative based in Japan. It holds some ¥4.8trn ($42bn) in CLOs, securities made up of a portfolio of loans, most of which are denominated in dollars. Before it slowed purchases in 2019, it was widely considered the largest buyer of CLOs in America.

Taiwan’s insurers, such as Cathay Life Insurance and Fubon Life Insurance, have become influential institutions in a number of international markets. Their total assets have nearly tripled over the past decade. And more of them are now held overseas. By the end of 2020 almost 60% of their assets comprised foreign investments, up from 30% in 2010.

Such institutional investment is now so widespread that Formosa bonds, foreign-currency bonds issued in Taiwan by a range of global firms and governments, have exploded since the securities were designated as domestic rather than foreign debt, allowing insurers to skirt regulatory limits on foreign-security ownership. By the end of 2021 the outstanding value of dollar Formosa bonds alone was $195bn, compared with $84bn six years earlier.

South Korea’s National Pension Service has also sought more overseas exposure, announcing a flurry of global ventures. Foreign assets made up 37% of the pension fund last year, nearly double the share in 2013, and the firm aims to increase that to 50% by 2024. The strategy is to chase returns not only abroad but also in less-liquid asset classes, before the fund’s benefit payouts start to increase in the early 2040s and its revenue surplus turns to a deficit.

Malaysia’s Employees Provident Fund (EPF), which manages mandatory pension investments for the country’s private-sector employees, provides another illustration of Asian institutions’ foreign reach. Last year it launched what it called the world’s largest sharia private-equity fund, with BlackRock, HarbourVest Partners and Partners Group each managing a third of the allotted $600m. The EPF’s foreign assets have also climbed from 29% of the total in mid-2017 to 37% in mid-2021.

The result of all this activity is that Asian institutional investors have become enormous swing buyers in certain markets. “They’re disproportionately large in Australia,” says Martin Whetton of Commonwealth Bank of Australia. The country, he says, is the third-largest location of assets for Japanese life insurers, and tends to make up about 10-15% of their portfolios. Mr Whetton points out that purchases of Australian dollar assets in North Asia are large enough to shift the country’s cross-currency basis (the premium traders pay to temporarily exchange currencies).

Some institutions have made promises of guaranteed payouts to clients and, as interest rates have sunk to rock-bottom levels, have had little option but to hunt for yield in less highly rated or more illiquid asset classes. Industry insiders note that insurers in the region have moved increasingly into emerging-market debt and higher-yielding Asian bonds. Private, illiquid assets have also become more popular. Asian investors have long been drawn to private equity and property, says Anish Butani of bfinance, an investment consultancy. Now “we’re really seeing a surge of activity in infrastructure and private debt”.

To observers such as the BIS and the IMF, all this signifies greater financial risks than when more holdings took the form of safe, highly liquid reserve assets. Cross-border financial flows can be volatile and flighty, transmitting stress from one part of the world to another, and posing risks both to the buyers and the markets in which they participate. Although many institutions must pay clients in their domestic currencies, few appear to hedge their entire foreign-currency exposure. Private assets are harder to sell quickly at reliable prices, potentially posing liquidity problems should investors need to pull out. Precise, coherent figures on the composition, riskiness and liquidity of holdings are still hard to get hold of, making it difficult to gauge the overall picture.

But understanding what’s going on could become more important, if China follows the path of East Asian economies. Its reserves of more than $3trn dwarf its other financial holdings. A shifting composition of foreign assets is not a matter of destiny, and would require some loosening of China’s capital controls. But even a marginal move towards more portfolio investment could produce huge flows of capital. “Chinese insurers have a lot of interest in investing overseas,” says Rick Wei of JPMorgan Asset Management. “They want to diversify their holdings, increase returns and match their liabilities with longer-term assets.” Even after more than a decade of rampant growth in Asia’s private foreign assets, more may be yet to come.

"... U.S. adults who fall on either end of the ideological spectrum are more active than other Americans across several measures of political engagement, from voting to posting about politics on social media to donating to campaigns. Americans who hold less consistently liberal or conservative views, by contrast, tend to be less engaged on these topics, as Pew Research Center studies have long found....About 85% of adults in the two groups at the ends of the political spectrum voted in 2020 (85% of Faith and Flag Conservatives and 86% of Progressive Left). Moving from either end of the typology toward more ideologically mixed groups shows a gradual decrease in turnout.Faith and Flag Conservatives and those categorized as Progressive Left were also the most likely to report having contributed money to candidates and political organizations in 2020, to have posted support for a candidate or campaign on social media, and to have attended political rallies in person or virtually....The typology groups at the ends of the spectrum register much higher levels of general interest in politics as well. More than half of Faith and Flag Conservatives (55%) say they follow what is going on in government most of the time, followed by Progressive Left (44%), Establishment Liberals (41%) and Committed Conservatives (42%). By comparison, only 19% of Stressed Sideliners say they keep such close tabs on politics and government. Those categorized as Progressive Left or Faith and Flag Conservatives are also generally more likely than other groups to say they talk about politics frequently...."

Carrie Blazina, "Americans at the ends of the ideological spectrum are the most active in national politics," Pew Research Center, January 5, 2022, https://www.pewresearch.org/fact-tank/2022/01/05/americans-at-the-ends-of-the-ideological-spectrum-are-the-most-active-in-national-politics/

Americans at the ends of the ideological spectrum are the most active in national politics

U.S. adults who fall on either end of the ideological spectrum are more active than other Americans across several measures of political engagement, from voting to posting about politics on social media to donating to campaigns. Americans who hold less consistently liberal or conservative views, by contrast, tend to be less engaged on these topics, as Pew Research Center studies have long found. Here are some recent findings that illustrate this dynamic.

In a major 2021 study, the Center sorted Americans into nine political typology groups, based on an analysis of their political attitudes and values. The typology groups at either end of the political spectrum - Faith and Flag Conservatives on the right and Progressive Left on the left - are also the most politically engaged by several measures. The groups toward the middle of the ideological spectrum, those deemed Stressed Sideliners, Ambivalent Right or Outsider Left, have much lower levels of political engagement.

Among social media users, Republicans who identified as moderate or liberal were 15 percentage points more likely than conservative Republicans to say they never or rarely post or share about political or social issues (83% vs. 68%). Similarly, roughly eight-in-ten conservative or moderate Democrats who use social media (77%) said they never or rarely post this type of content, compared with a smaller share of liberal Democrats (56%).

In addition to being at the ends of the political spectrum, prolific political tweeters were especially likely to report engaging in political activities. In the year prior to the survey (a time period that included the 2018 midterm election), 34% of this group reported attending a political rally or event, while 57% said they contacted an elected official and 38% said they contributed money to a political campaign.