Economics in the News – Oct. 4-10, 2021

Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.

• Three American economists have been awarded the Nobel Prize in economic studies for their work in observing the cause-and-effect of real-world economic issues. The prize was awarded to David Card of Cal-Berkley, Joshua Angrist of MIT and Guido Imbens of Stanford.
  
  Card was awarded based on his work in labor economics and the impact that wages have on employment. Meanwhile, Angrist and Imbens developed a methodology to analyze economic and social policies by drawing “precise conclusions” from observations, which has been utilized by researchers. [The Washington Post]
  
  
• The United States federal government could default on its payments for the first time in history later this month, unless Congress raises the debt ceiling. The federal government is only allowed to borrow up to a maximum amount set by Congress. The U.S. reached the debt ceiling in August and has relied on financial maneuvers and emergency measures to cover costs.
  
  What payments could be at risk? Social Security benefits scheduled to go out Oct. 20 could be delayed, as could reimbursements to Medicare and Medicaid providers. If the debt ceiling isn’t raised by Nov. 1, interest payment on public debt could also be at risk. [The Washington Post]
  
  
• The student loan forgiveness program aimed for public service employees is getting an overhaul. Passed by Congress in 2007, the program was designed to help those that spent at least a decade in a public service career to erase their student-loan debt. Instead, 98 percent of applicants to get relief were rejected.
  
  When Congress passed the student loan forgiveness program, it limited eligibility to student loans made directly by the federal government. But many borrowers didn’t realize that their loans were made by private lenders and guaranteed by the government. Now, the government is offering a limited waiver to count prior payments towards the 10 years of payments, benefiting more than 500,000 people. [The New York Times]

• Could the United States soon release a digital currency that’s backed by the Federal Reserve? It’s not likely to happen soon. Countries around the world have experimented with digital-based currencies, but Federal Reserve chairman Jerome Powell sees more reason for caution due to the global influence of the United States dollar.
  
  Advocates say that a digital currency could make it cheaper and faster to transfer payments, while keeping up with other countries that have issued a digital currency backed by a central bank. China created its own digital currency earlier this year, while El Salvador became the first country to adopt bitcoin as a national currency along with the US dollar. [The Wall Street Journal]

• What could the future of car buying look like? Look to Norway. According to the Norwegian Information Council for Road Traffic, more than nine in 10 cars sold in September were either electric or hybrids models. And eight in 10 cars sold were electric, led by the Tesla Model Y. Of all new passenger cars sold in 2021, less than five percent are gas powered.
  
  Norway is pushing to be emissions-free by 2025, an initiative backed by the Norwegian government with tax incentives. Electric cars are exempt from Norway’s value-added tax, as well as environmental pollution taxes paid by buyers of gas and diesel vehicles. [NPR]