I'm delighted to announce the appointment of Isabel Schnabel as IMF Financial Counsellor, effective Jan. 4, 2027. Her distinguished record, including at the ECB, and leadership in research and policymaking will be invaluable to the Fund. imf.org/en/news/articles/202…

Very happy to share that my colleagues at LSE have voted to award me tenure!

My economics-rich Conversation with @GitaGopinath, conversationswithtyler.com/e…

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This looks nice. But I'm a bit nervous about your equation (1): it's not quite true that the task-based model gives you this exactly Cobb-Douglas. Instead, there's an intercept that depends on \alpha. So it's Y=Z(\alpha)K^{\alpha} L^{1-\alpha}. See e.g. benjaminmoll.com/Lecture3_EC… benjaminmoll.com/task_based_… So when you take your d\alpha derivative, you need to take that into account, no?

A simple point that many economists miss (and nearly all non-economists) is that a falling labor share and rising wages are not in tension. In fact, it is what we should expect when the capital share rises, and capital is free to accumulate. The reason is intuitive. In the long run, the supply of capital is perfectly elastic at a gross return determined by depreciation and the discount rate: households accumulate or run down capital until its return is back there. In comparison, the supply of labor is much more inelastic. That means the gains from a technological change that makes capital more important in production (short of making it the only factor) end up with the inelastic factor, not the elastic one. In the long run, capital owners cannot get a rent from a higher capital share of output, only a compensation for their patience. We learned that from David Ricardo over two hundred years ago! To see this, consider the textbook neoclassical growth model with log utility (not needed, but it makes things easy). In the table below, I compute the steady-state wage for different values of the capital share. Increasing the capital share from 0.33 to 0.6 multiplies wages by nearly five. Capital owners receive a much larger slice of output, but the net rate of return stays at 4.7%: all the extra income has gone into more capital. Now, you might not want capital owners to have so much capital for political reasons (rich people have a curious habit of buying newspapers), but that has nothing to do with wages being lower. They are higher. I learned this lesson the hard way many years ago with my paper “Bargaining Shocks and Aggregate Fluctuations” with Thorsten Drautzburg and @pablo_guerron in the JEDC. We gave more bargaining power to capital owners (in our model, wages were not set competitively but through Nash bargaining), and workers ended up with higher wages! The logic is the same: give capital owners more power, and they compete it away. Karl Marx, by the way, already understood this. He was a much better economist than 99.99% of his followers and admirers. Like all results, this one has exceptions: I can think of environments where a technological change that makes capital more important in production does not raise wages. And the transitional dynamics can get tricky. But the basic logic is hard to escape.

I see the point now. In OLG, Blanchard-Yaari or Aiyagari-type economies, the long-run supply of capital slopes upward (that is also the mechanism in my paper with Galo, Rodolfo, and Peter on monetary policy). How steep this slope is determines how much of automation's gain goes to wages versus returns, and that is an empirical question. I re-ran the results with different elasticities. I hope I read your calibration correctly.

🎉 We're proud to announce that @pogourinchas (@UCBerkeley, former @IMFNews Chief Economist) will receive the 2026 Bernhard Harms Prize! Honored for pioneering, field-shaping work on global imbalances, capital flows & the dollar's role in the international monetary system. Award Ceremony at the 5th Kiel-CEPR Conference on Geoeconomics in Berlin, Nov 3-4! 👉 kielinstitut.de/research/pub…

Hi @elonmusk would you perhaps be interested in participating on the fast-growth side of this bet? benjaminmoll.com/growth_bet/