News & Commentary:

Articles/Commentary

Could 2022 Bring the Collapse of the Euro?
Alasdair Macleod (Mises Wire) Jan 1, 2022
With the Eurozone's global systemically important banks geared up to 30x, rising bond yields of little more than a few percent could collapse the entire euro system.

Why we should expect wobbling in global inflation dynamics
Rana Foroohar (FT) Jan 2, 2022
Modelling on data of past 50 years may be hard with a 'bullwhip' economy.

Ten economic trends that could define 2022
Ruchir Sharma (FT) Jan 3, 2022
From a slowing China to 'greenflation' in commodity prices, investors should take note of these forecasts.

As the ETF world booms, so do the risks
Robin Wigglesworth (FT) Jan 3, 2022
A brilliant financial innovation is being pushed to the extremes.

Erdogan's arbitrary rule is devaluing his nation's currency — both moral and economic
WaPo View Jan 3, 2022
His harebrained economic ideas are sapping the nation's wealth.

Japan's Inflation Is Hidden behind Central Bank–Financed Subsidies
Taiki Murai and Gunther Schnabl (Mises Wire) Jan 3, 2022
Overall, at least 50 percent of the consumer price index in Japan appears to be government controlled, which is reflected in the significant growth of government spending on subsidies.

Which countries are in the CPTPP and RCEP trade agreements and which want in?
Jeffrey J. Schott (PIIE) Jan 3, 2022
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement, signed by 11 Asia-Pacific countries representing 13 percent of global GDP, that lowers barriers to trade in goods and services between member countries. Members pledged to eliminate almost all tariffs and import charges on each other's products and accepted common obligations on food regulations, environmental protections, the digital economy, investment, labor, and financial services, among others.

The Day Is Coming When Germany Runs Current-Account Deficits
Andreas Kluth (Bloomberg Opinion) Jan 3, 2022
All the factors that led to the country's record surpluses — wages, saving, investment and policy — are about to flip.

China's Economic Development Model Shows Some Cracks
Tyler Cowen (Bloomberg Opinion) Jan 3, 2022
The so-called Washington Consensus, which emphasizes market-based reforms, is looking better lately.

Why Interest-Rate Hawks May Not Sweep All Before Them in 2022
Daniel Moss (Bloomberg Opinion) Jan 3, 2022
Living with Covid means ultra-easy money won't be quite so plentiful. That doesn't require the monetary priests to strangle the recovery.

The Stock Market Is Too Narrowly Focused
Gary Shilling (Bloomberg Opinion) Jan 3, 2022
When just a handful of companies lead equities higher, trouble often follows for investors.

Why Is the IMF Trying to Be an Aid Agency?
Kenneth Rogoff (Project Syndicate) Jan 3, 2022
Much like the US Federal Reserve, the International Monetary Fund has subtly expanded its own remit even as it has failed to adjust to changing economic circumstances. And, as with the Fed, higher inflation could deliver a blow to the IMF's reputation – and to the economies the Fund is meant to help.

Turkey's Tough 2021
Liz Cookman (FP) Jan 3, 2022
A dismal economy, climate disasters, and political headaches are likely to persist in 2022 as well.

The 2022 Economy Looks Strong, but Beware the Known Unknowns
John Cassidy (New Yorker) Jan 3, 2022
COVID and policy changes could radically impact growth, inflation, and the midterm elections.

The key to 2022 will be how inflation is brought down
Mohamed El-Erian (FT) Jan 4, 2022
In misjudging the risk of rising prices, the Fed gave markets a profitable 2021 but more difficult year ahead.

Joe Biden's Inflationary Trade Policy
William N. Walker and Stanton D. Anderson (WSJ) Jan 4, 2022
The White House claims its policies are 'worker-centric,' but only a handful of workers benefit.

Xi has incentive to crank up growth in 2022
William Pesek (AT) Jan 4, 2022
The trajectory of China's economy is even more impossible to predict this year than usual. Analysts aren't struggling simply to track risks, headwinds or financial imponderables, but also the whims of one man: Xi Jinping. As markets learned the hard way in 2021, policy schizophrenia is very much on the table in Beijing's halls of power.

Interesting year ahead for the United States
Urban C. Lehner (AT) Jan 4, 2022
My forecast is that US inflation will ease in 2022, enough to avoid a full-scale wage-price spiral, but not enough to wring out the public's inflationary expectations entirely. Whether those expectations strengthen or fade will balance on a knife's edge. The Fed's quarter-point rate increases will be necessary.

The EU should use its trade power strategically
Cecilia Malmström (PIIE) Jan 4, 2022
The European Union's internal debate has involved a lot of navel-gazing lately. Feeling squeezed between the United States and China, yet not fully equipped to take a leading role in the neighborhood, European leaders are pondering the challenge of becoming more autonomous and more geopolitical.

Central Banks Can Shape the Future of Digital Finance
Bloomberg View Jan 4, 2022
Government-issued digital currencies are on the way. Getting this transition right is essential.

The Made in China Plan Is Back, and It's Better
Anjani Trivedi (Bloomberg Opinion) Jan 4, 2022
Beijing's plan to become the factory floor of the future and grow its "little giants" has potential. First, it needs an upgrade. P>Why the Pandemic Might Not Boost Inequality
Daniel Gros (Project Syndicate) Jan 4, 2022
From an economic perspective, the COVID-19 crisis has so far played out much better than feared for more vulnerable segments of society. Initial job and earnings losses were cushioned by generous state support, and the vigorous recovery is leading to much improved employment prospects for many.

Is Climate Finance the Next Bubble?
Arvind Subramanian (Project Syndicate) Jan 4, 2022
While the conventional wisdom is that the next financial crash will come from the collapse of the cryptocurrency bubble, climate finance may pose a more serious risk. Mounting evidence suggests that green lending is displaying all the pathologies associated with financial manias.

Turkey's Risky Inflation Experiment
?ebnem Kalemli-Özcan (Project Syndicate) Jan 4, 2022
Turkish President Recep Tayyip Erdo?an insists that the country's runaway inflation can be controlled by decreasing the nominal interest rate. But, given Turkey's current strategy for financing growth, there are clear reasons why eschewing economic orthodoxy will only wreak further havoc with prices.

Rising inflation is worrisome. But not for the reasons you think
Francesco D'Acunto and Michael Weber (VoxEU) Jan 4, 2022
Commentators and policymakers are deeply divided about the causes, consequences, and persistence of the surge in inflation around the world as the economic activities resume after the COVID-19-induced closures. This column discusses how recent research on the dynamics of inflation and inflation expectations inform the policy debate. Consumers' inflation expectations are an important missing piece in the puzzle policymakers are trying to solve. To avoid the self-fulfilling prophecy of inflation, central bankers might seek to communicate directly also with ordinary consumers, rather than only with financial market experts, and convince them that price increases will only be temporary.

The changing shape of the inflation problem
FT View Jan 5, 2022
Central bankers will need to stick to tapering plans as price pressures fade.

China's Covid policy will be a wild card for markets in 2022
Mansoor Mohi-uddin (FT) Jan 5, 2022
Beijing might keep strict zero-cases approach for longer than investors expect.

Investors should brace for limited gains in 2022
John Redwood (FT) Jan 5, 2022
Inflation, China, Russia and a possible Covid resurgence all pose risks.

China's business crackdown threatens growth and innovation
Jingzhou Tao (FT) Jan 5, 2022
The ferocity of the action taken by Beijing against private companies has shocked observers at home and abroad.

Inflation and the 'Experience Economy'
B. Joseph Pine II (WSJ) Jan 5, 2022
Government statistics don't account for how much consumers value memories and time well spent.

Today's Soaring Energy Prices Are Only the Beginning
Bjorn Lomborg (WSJ) Jan 5, 2022
Current 'net zero' plans will cost many trillions while doing little to slow global warming.

RCEP solidifies China as center of Asia's trade
David P. Goldman (AT) Jan 5, 2022
Asia's recovery from the pandemic recession and its prospects for future growth depend increasingly on China, with the Regional Comprehensive Economic Partnership (RCEP) trade deal ratifying a grand realignment of Asian economies around China's import market. Import tariffs within the 15-nation trading bloc are set to fall by 90 percent.

Why Did the World Choose a Gold Standard Instead of a Silver Standard?
Ryan McMaken (Mises Wire) Jan 5, 2022
The adoption of gold as the preferred commodity money was never inevitable or based on some sort of natural law of money. Many coincidences and political schemes were key factors.

The Global Economy in 2022
James Politi (BRINK) Jan 5, 2022
Global economics are reeling with instability. The world is contending with rising inflation, high energy bills, real estate crises in China, lockdowns, supply chain breakdowns and labor shortages.

Turkey's Economy Is in Big Trouble
Joseph Solis-Mullen (Mises Wire) Jan 5, 2022
Turkey's President Erdo?an faces a series of crises as the lira collapses and the state's central bank steps in to clean up the mess.

Emerging-Market Central Bank Asset Purchases Can Be Effective but Carry Risks
Tobias Adrian, Christopher Erceg, Simon Gray, and Ratna Sahay (IMF) Jan 5, 2022
While asset purchases can help central banks achieve their mandated objectives, they also pose significant risks.

Can Your Portfolio Outsmart the Three Fed Bears?
Aaron Brown (Bloomberg Opinion) Jan 5, 2022
Guessing the future can produce above-average returns, but prudent investors plan for being wrong as well as for being right.

There's No Easing Into the New Year for the ECB
Marcus Ashworth (Bloomberg Opinion) Jan 5, 2022
A flood of new sovereign bond issues this week means the central bank must soak up any slack now or risk losing control of the market.

Why Private Equity Won't Be the Savior of Fossil Fuels
David Fickling (Bloomberg Opinion) Jan 5, 2022
It's already hard to predict the price of commodities, and that's before you factor in a sector in terminal decline.

How Chinese Competition Helps Western Conglomerates
Dalia Marin (Project Syndicate) Jan 5, 2022
Firms like GE and Siemens may well find that their decision to split their businesses into multiple companies leads to increased profits and higher stock prices. But recent research indicates that this is not the only way conglomerates can boost efficiency.

The second sanction wave
Peter A.G. van Bergeijk (VoxEU) Jan 5, 2022
The use of economic sanctions as a foreign policy tool has increased sharply over the past decade. Drawing a comparison with the first sanction decade of the 1990s, this column analyses the drivers of the recent sanction wave and argues that the increased use of economic sanctions will be sustained in the foreseeable future.

Global services value chains: A new path to development
Enrico Nano and Victor Stolzenburg (VoxEU) Jan 5, 2022
The role of global value chains for development is often told from a manufacturing or agriculture perspective. This column discusses how the rise of global services value chains offers developing countries with new opportunities by providing jobs, revenue, and productivity growth. In addition, they do so in a more inclusive way than manufacturing. Policymakers need to invest in human capital and address regulatory barriers to services trade to make the most of this development.

Joe Biden's infrastructure plan rises to China challenge but faces its own
Bernard Schwartz (FT) Jan 6, 2022
The $1.2tn commitment is a great achievement but will require continuing investment and co-ordination between states.

China's economy: the fallout from the Evergrande crisis
Sun Yu and Tom Mitchell (FT) Jan 6, 2022
The crackdown on real estate ordered by Xi Jinping is putting growing pressure on local governments and many companies.

China Takes Lithuania as an Economic Hostage
Elisabeth Braw (WSJ) Jan 6, 2022
Its trade retaliation over Taiwan is wreaking havoc with global supply chains.

India-China trade surge muffles beating war drums
Anil Sharma (AT) Jan 6, 2022
At a time when India-China relations are at new lows, bilateral trade touched new highs in 2021. According to China's General Administration of Customs (GAC) data, bilateral trade between the two neighbors totaled more than US$114 billion, up 46.4% year-on-year from January to November 2021.

World economy: the big factors to watch closely
Muhammad Ali Nasir (AT) Jan 6, 2022
Will 2022 be the year when the world economy recovers from the pandemic? That's the big question as the festive break comes to an end. One complicating factor is that most of the latest major forecasts were published in the weeks before the omicron variant swept the world. At that time, the mood was that recovery was indeed around the corner.

Why the dollar won't be as strong as many think
Mark Sobel (OMFIF) Jan 6, 2022
Many analysts project significant dollar strength in 2022 on the back of a hawkish Federal Reserve stance relative to other major central banks, especially the European Central Bank and the Bank of Japan. These relative stances should indeed underpin the dollar, especially as Fed hikes support the short end of the curve, for which exchange rates are sensitive. But the narrative of a significantly strengthening dollar could well prove overdone.

Latin America's New Economic Model May Emerge in Chile
Shannon K O'Neil (Bloomberg Opinion) Jan 6, 2022
Once the region's no-frills, free-market poster child, Chile needs more government spending, not less, to sustain its growth trajectory.

Will Investors Go Along With a Weaker 'Fed Put'?
Mohamed A El-Erian (Bloomberg Opinion) Jan 6, 2022
The direction of markets will depend largely on whether they truly believe the central bank can follow through effectively on withdrawing liquidity.

Capital Is Not a Strategy
William H. Janeway (Project Syndicate) Jan 6, 2022
After years of central banks keeping interest rates low and pumping liquidity into financial markets, asset valuations are at historic highs. While entrepreneurs and venture-capital founders tell themselves that "capital is a strategy," bubble finance is no substitute for a business plan that can achieve positive cash flow.

Pessimism Amid Progress
J. Bradford DeLong (Project Syndicate) Jan 6, 2022
Within the space of just a few generations, humanity has created the material conditions for establishing the kind of society that our ancestors could hardly imagine. But everything now depends on whether we can figure out the politics of wealth distribution.

Betting on transitory US inflation is still valid
Megan Greene (FT) Jan 7, 2022
Fiscal drag, shrinking savings and weak foreign demand are likely to ease an overheated economy.

Rising energy prices will upset stock markets
Merryn Somerset Webb (FT) Jan 7, 2022
Investors should hedge by backing energy stocks.

Big Oil splits seem just a question of time
Helen Thomas (FT) Jan 7, 2022
BP's former chief joins the call for energy majors to separate fossil fuel and low carbon businesses.

Crypto cannot easily be painted green
Gillian Tett (FT) Jan 7, 2022
A tricky question for mainstream investors in 2022: can you dabble in digital gold without getting your hands dirty?

China's slow motion financial crisis
Robert Armstrong and Ethan Wu (FT) Jan 7, 2022
And a warning from Kazakhstan.

Wonking Out: Through A Price Index, Darkly
Paul Krugman (NYT) Jan 7, 2022
The next few months will be unusually murky.

Tech stock carnage may just be the beginning
David P. Goldman (AT) Jan 7, 2022
The so-called FANG index of top tech companies – Facebook, Amazon, Netflix, Google and others – has fallen by nearly 10% from its early November peak, after so-called real interest rates rose to their highest level in two years. A US interest rate hike to fight inflation will likely give new impetus to the heaviest sell-off of tech shares in a decade.

A weak yen won't beat a strong yuan
William Pesek (AT) Jan 7, 2022
With the yen at five-year lows versus the dollar, Bank of Japan (BOJ) governor Haruhiko Kuroda has finally changed his views. He's realized, at long last, that the costs of devaluation outweigh the benefits and that a weak yen policy is working at cross purposes with Tokyo's desire to remain relevant in the age of China.

The landscape of housing finance in OECD countries: shifts and faultlines
Boris Cournède and Caroline Roulet (OECD Ecoscope) Jan 7, 2022
Mortgages look different across OECD countries.

Can Beijing Tolerate an EV Battery Monopoly?
Anjani Trivedi (Bloomberg Opinion) Jan 7, 2022
China's giant powerpack manufacturer is entering dangerous territory. It may be the next company to feel the wrath of Xi Jinping's big tech crackdown.

Don't Panic, Europe. That's Not Inflation. It's Just Gas.
Marcus Ashworth (Bloomberg Opinion) Jan 7, 2022
Despite the unexpected rise, the ECB will continue its approach even if the 'hump' won't come for a month or two.

The Bitcoin challenge
Ulrich Bindseil, Patrick Papsdorf, and Jürgen Schaaf (VoxEU) Jan 7, 2022
Bitcoin's market capitalisation reached new peaks in November 2021. This column suggests it is hard to find arguments supporting the cryptocurrency's current valuation. Even if the financial stability risks of a Bitcoin collapse could be contained, the burst of the bubble would imply painful losses for many retail investors and society at large. The authors conclude that public authorities should refrain from taking measures supporting additional investment flows into Bitcoin and should treat it as rigorously as the conventional financial industry to combat illicit payments, money laundering, and terrorist financing.

How democracy causes growth: Evidence from Indonesia
Ama Baafra Abeberese, Prabhat Barnwal, Ritam Chaurey, and Priya Mukherjee (VoxChina) Jan 7, 2022
Democratically elected leaders are less likely to impose socially inefficient regulations or engage in rent-seeking and, hence, enhance firm productivity

West needs to step up supply of copper for the energy transition
John Dizard (FT) Jan 8, 2022
The alternative may be buying electric vehicles from China.

How long can the global housing boom last?
Economist Jan 8, 2022
Three fundamental forces mean it could endure for some time yet.

Britain needs immigrants if it is to survive the climate storm
Parag Khanna (FT) Jan 9, 2022
Ministers must develop a grand strategy for green energy, resilient transport and smart immigration.

Security not economics is likely to drive US trade engagement in Asia
Gary Hufbauer and Megan Hogan (EAF) Jan 9, 2022
Like Trump, Biden has struggled to craft an effective approach to deal with China. Multiple WTO cases have prompted China to reform individual aspects of its trade regime, but there has been no action through the WTO that's persuaded Beijing to alter foundational features — namely forced technology transfers and subsidisation of state-owned enterprises. Trade battles have not relaxed US fears over China's military and technology ascent.

Emerging Economies Must Prepare for Fed Policy Tightening
Stephan Danninger, Kenneth Kang and Hélène Poirson (IMF) Jan 10, 2022
New risks to recovery.

2022 Is When Oil Supply Panic Replaces Fears About Demand
Julian Lee (Bloomberg Opinion) Jan 9, 2022
Unless the need for oil slows dramatically, the prospect of inadequate supply and triple-digit prices is real.s

America's Asia Strategy Has Reached a Dead End
Van Jackson (FP) Jan 9, 2022
Washington should prioritize economic statecraft and stop thinking with its missiles.

The flaws in the Fed's approach to inflation
Frederic Mishkin (FT) Jan 10, 2022
The reasons why the US central bank has been behind the curve in tackling rising prices.

Licence to kill: why a 0.007% yield could be dangerous
Patrick Jenkins (FT) Jan 10, 2022
Rising use of a centuries-old trade finance product in China raises concerns.

Yellen's Global-Tax Zombie Lives
WSJ View Jan 10, 2022
Her Gilti tax fix looks like it will bite U.S. companies in Europe.

The $28trn global reach of Asian finance
Economist Jan 10, 2022
As private savings have built up in East and South-East Asia, its financiers now wield heft in far-flung asset markets.

The Federal Reserve Needs to Get a Lot More Hawkish
William C Dudley (Bloomberg Opinion) Jan 10, 2022
It can't remain in the fantasyland of its dovish forecasts indefinitely.

The U.K. Should Let Inflation Rip for a Bit
Marcus Ashworth and Mark Gilbert (Bloomberg Opinion) Jan 10, 2022
The Bank of England can afford a modest response to the increase in consumer prices.

Greenflation Is Very Real and, Sorry, It's Not Transitory
Javier Blas (Bloomberg Opinion) Jan 10, 2022
It's a necessary step in the process of fixing climate change. But central bank monetary policies must deal with higher-for-longer fossil fuel prices.

There Was No Housing Bubble in 2008 and There Isn't One Now
Ramesh Ponnuru (Bloomberg Opinion) Jan 10, 2022
Some smart economists are challenging the conventional wisdom that the Great Recession was triggered by out-of-control home prices.

Mild Omicron and an Aggressive Fed May Hurt Gold
Liam Denning (Bloomberg Opinion) Jan 10, 2022
The popular inflation hedge does better under more chaotic economic conditions.

Fed Forced to Run Triple Option With Time Running Out
Mohamed A El-Erian (Bloomberg Opinion) Jan 10, 2022
Analysts have revised their 2022 expectations to include the end of large-scale asset purchases, four rate increases and the beginning of balance-sheet contraction. It's a risky hurry-up offense.

Argentina's COVID Miracle
Joseph E. Stiglitz (Project Syndicate) Jan 10, 2022
Unlike the United States, which could spend one-quarter of its GDP protecting its economy from the COVID-19 fallout, Argentina entered the pandemic with the deck stacked against it. Yet, thanks to the current government's policies to strengthen the real economy, the country has been enjoying a remarkable recovery.

Technology transfer and early industrial development
Michela Giorcelli and Bo Li (VoxEU) Jan 10, 2022
Understanding which industrial policies work is important to promote the development of poorer countries. This column examines the effects of technology and knowledge transfers on early industrial development, using evidence from the Sino-Soviet Alliance in the 1950s. The authors find that simultaneously receiving technologically advanced capital goods and know-how transfer had large, persistent effects on plant performance, while the effects of receiving capital only were short-lived. The know-how component was essential to generate horizontal and vertical spillovers and production reallocation from state-owned to privately owned companies since the late 1990s.

Average Inflation Targeting in the Financial Crisis Recovery
Vasco Cúrdia (FRBSF Econ Group) Jan 10, 2022
The Federal Reserve adopted average inflation targeting as part of its long-run monetary strategy framework in 2020. This strategy allows inflation to rise and fall such that it averages 2% over time. Analysis shows that a version of average inflation targeting that is partly forward-looking—that is, one that responds in part to expected future inflation—could have improved economic outcomes in the recovery from the financial crisis of 2008, as well as substantially reduced the uncertainty around economic outcomes.

Part I: Are Cryptocurrencies Really "Money"?
Jay H. Bryson and Karl Vesely (WF Econ Group) Jan 10, 2022
The form that money takes has evolved over the centuries, and there are no properties inherent in paper money and bank deposits that necessarily make them the final step in the evolutionary chain of monetary systems. In a series of four reports, we ask whether cryptocurrencies will eventually replace national currencies.

Can China Become The World's Largest Economy?
Brendan McKenna and Nick Bennenbroek (WF Econ Group) Jan 10, 2022
China is likely to be defined by a slower pace of growth going forward; however, despite multiple headwinds and structural imbalances, there is a high likelihood China could overtake the United States as the largest economy in the world. In this report, we use our short-term economic and currency forecasts as well as make longer-term assumptions around the evolution of the Chinese economy to determine when China could ascend to the world's largest economy.

Autocrats Are Exploiting COVID-19 to Weaken Central Bank Independence
Sandra Ahmadi and Aseem Prakash (FP) Jan 10, 2022
The pandemic-induced economic crisis has created the perfect conditions for backtracking.

Minimum wage increases not enough to shield poorest from rising prices
Delphine Strauss (FT) Jan 11, 2022
Contrary to 2008 crisis, governments are not shying away from increasing base pay but there are other tools.

After years of abstraction, things are getting real for markets
Peter Atwater (FT) Jan 11, 2022
History cautions that the end of extreme bubbles does not augur well for those arriving last to the party.

Monetary policy widens the gulf between poor and rich economies
Chris Giles (FT) Jan 11, 2022
Larger and more persistent scars are likely to remain as developing nations face a perfect storm.

The post-pandemic revolution isn't coming
Janan Ganesh (FT) Jan 11, 2022
The left overrates public anger at the US economic model of 2019.

China applies brakes to Africa lending
??Kathrin Hille and David Pilling (FT) Jan 11, 2022
Beijing has signalled a more cautious approach amid warnings that several African countries could struggle to repay debts.

The World Bank warns that the pandemic will slow economic growth in 2022.
Alan Rappeport (NYT) Jan 11, 2022
Global growth is expected to slow to 4.1 percent this year, from 5.5 percent in 2021, a projection underscores the stubborn nature of the public health crisis.

The Greening of the Federal Reserve
WSJ View Jan 11, 2022
Powell endorses bank stress tests to allocate capital for climate policy.

The Market Is Too Serene About Inflation
Thomas J. Sargent and William L. Silber (WSJ) Jan 11, 2022
As in the early 1980s, new realities test the idea that interest rates reflect 'rational expectations.'

Inflation isn't Biden's fault. And he can't solve it, either.
Jennifer Rubin (WaPo) Jan 11, 2022
Let's get real about rising prices.

Study forecasts China investment of $75 trillion in carbon neutrality
David P. Goldman (AT) Jan 11, 2022
China is projected to invest US$75 trillion in carbon neutrality financing over the next 30 years, representing five times its 2020 national output, according to a study by a consortium of government, academic and private-sector experts. The high-tech green overhaul would arguably be the most ambitious investment program in economic history.

South Korea defying global economic doom and gloom
William Pesek (AT) Jan 11, 2022
If any major monetary power is telling the global economy where things are headed in 2022, it's the Bank of Korea (BOK). South Korea often acts as an early-warning system for global inflection points, and at the moment Seoul is signaling that the Omicron variant of Covid-19 is not the economy killer many forecasters are predicting.

Will households' excess savings keep the American economy afloat?
Economist Jan 11, 2022
The "stimmy" boost may linger even as policymakers wind down support.

Crypto Prices Move More in Sync With Stocks, Posing New Risks
Tobias Adrian, Tara Iyer and Mahvash S. Qureshi (IMF) Jan 11, 2022
Crypto assets are no longer on the fringe of the financial system.

4 positive stories about global development prospects in 2022
Homi Kharas (Brookings) Jan 11, 2022
Amid a series of setbacks to global development in 2021—pandemics and lockdowns, hunger and conflict, debt crises and inflation—there were also some positive development victories, which offer some reason to be more optimistic in 2022 and beyond.

What's Ahead for the U.S. Economy in 2022
Jeremy Siegel (K@W) Jan 11, 2022
The Federal Reserve must get more aggressive in 2022 by increasing interest rates and tapering down asset purchases in order to tame inflation

What's Behind the Push to Review Australia's Central Bank?
Daniel Moss (Bloomberg Opinion) Jan 11, 2022
Australia's economic record was the envy of the world. That hasn't stopped calls for the first evaluation of the central bank in decades.

The Euro Is Facing a Make-or-Break Year
Richard Cookson (Bloomberg Opinion) Jan 11, 2022
Italy's bloated debt load may finally doom the experiment with Europe's shared currency.

Supply-Chain Crisis? What Supply-Chain Crisis?
Karl W Smith (Bloomberg Opinion) Jan 11, 2022
Delays in shipping and delivery in the U.S. have more to do with strong demand than with strains in the global system.

Kofi Boa and Roger Thurow (Project Syndicate) Jan 11, 2022
As Africa's farmers work to adapt to climate change, global leaders must do their part by keeping – and extending – the promises they made at COP26. Increased investment in sustainable agriculture, including research and development, is critical to protect vulnerable people from hunger and ensure food security for all.

Inflation Heresies
Dani Rodrik (Project Syndicate) Jan 11, 2022
Experiments that depart from conventional economic policy can be costly. But this does not mean that there are universal rules in economics or that the prevailing view among mainstream economists should determine what policymakers do.

The zero lower bound on inflation expectations
Yuriy Gorodnichenko and Dmitriy Sergeyev (VoxEU) Jan 11, 2022
Inflation expectations affect the decisions of households, firms, and policymakers. Expectations of negative inflation can be particularly harmful and lead to deflationary spirals when nominal interest rates are near zero. This column uses survey evidence to show that households and firms almost never expect deflation, even when it is a clear possibility. This apparent zero lower bound on inflation expectations has important implications for macroeconomic dynamics and the effectiveness of monetary policy. Unconventional policies, such as forward guidance, which aim to increase inflation expectations may be less effective when expectations are stuck at the zero lower bound.

Can the United States Really Decouple From China?
Jeffrey Kucik and Rajan Menon (FP) Jan 11, 2022
Probably not—but that doesn't mean it won't try.

The fight over measuring UK inflation
Paul Lewis (FT) Jan 12, 2022
Three different indices spread confusion and create risks.

Using trade policy for strategic ends will be harder than Macron thinks
Alan Beattie (FT) Jan 12, 2022
France may simply end up using a new anti-coercion tool as a protectionist weapon.

What Inflation Costs Workers
WSJ View Jan 12, 2022
The Biden-Powell price increases reduced real wages by 2.4% in 2021.

The Democrats' Inflation Blame Game
Phil Gramm and Mike Solon (WSJ) Jan 12, 2022
Everyone and everything is responsible except the government spending that's actually fueling it.

The experts are finally grasping the real reason for inflation. Now, it's time to act.
Henry Olsen (WaPo) Jan 12, 2022
Why is inflation is pervasive? Record-high savings boosted by government stimulus.

Irony in the supply chains in 2022
Sarah Schiffling and Nikolaos Valantasis Kanellos (AT) Jan 12, 2022
Covid vaccine shortages at the start of 2021 were replaced by fears that we would struggle to buy turkeys, toys or electronic gizmos to put under the Christmas tree. For most of the year, supermarket shelves, car showrooms and even gasoline stations were emptier than usual. So are we facing another year of shortages or will the supply chain crisis abate in 2022?

Price Inflation Is at the Highest Level since 1982. What Will the Fed Do?
Ryan McMaken (Mises Wire) Jan 12, 2022
Yet again, earnings aren't keeping up with inflation, and the Fed is feeling political pressure. But can the economy survive any serious move toward ending massive stimulus?

China's looming property crisis threatens economic stability
Tianlei Huang (PIIE) Jan 12, 2022
China Evergrande, which has the dubious distinction of being the world's most indebted real estate developer, is gripped by a solvency crisis that began more than a year ago. And the crisis affects not just Evergrande. A growing number of Chinese property developers are facing financial strain, while property sales and home prices in China are falling sharply. The Chinese government, worried that an engine of growth is losing steam, is struggling to keep the property sector afloat. Yet China's rescue measures are mostly short-term solutions to a larger long-term problem. In fact, Evergrande is a leading indication that China's model of property-led growth is unsustainable and needs to change.

Support for Africa's Vaccine Production is Good for the World
Kristalina Georgieva (IMF) Jan 12, 2022
Robust and reliable vaccine capacity in Africa is a global public good, deserving of global support.

The Maturing of Money Markets: The Mechanization of Liquidity Management
Jerome M. Schneider and Jerry Woytash (PIMCO) Jan 12, 2022
Liquidity tiering may provide an attractive alternative as SEC proposals curtail capabilities of money market funds

The Davos Gang's Risk List Makes for Depressing Reading
Mark Gilbert (Bloomberg Opinion) Jan 12, 2022
The World Economic Forum's annual survey shows how little progress we've made in tackling the climate emergency.

Don't Freak Out About the Fed's Big Balance Sheet
William C Dudley (Bloomberg Opinion) Jan 12, 2022
Quantitative tightening probably won't upend money markets like it did in 2019.

The Bond Market Refuses to Accept Economic Reality
Kevin Muir (Bloomberg Opinion) Jan 12, 2022
Traders are working off an outdated playbook that assumes this recovery will resemble the sluggish one coming out of the financial crisis.

Shale Wants to Regain Relevance to Investors in 2022
Liam Denning (Bloomberg Opinion) Jan 12, 2022
Even with oil prices rising, the sector still accounts for only a small share of the S&P.

The Price Increases that Matter for the Poor
Jayati Ghosh (Project Syndicate) Jan 12, 2022
Food-price inflation has more complex causes than other price increases, and addressing it effectively requires a different set of strategies. But rich-country governments are not sufficiently discussing them, and the world's poor are continuing to suffer as a result.

Submerged by COVID
Barry Eichengreen (Project Syndicate) Jan 12, 2022
Major economic forecasters like J.P. Morgan and S&P Global Ratings are painting a rosy picture of emerging markets' growth prospects this year. But there are multiple reasons to believe that the consensus view will soon prove to be unsustainable.

Do Chinese Cultures Spawn Family Businesses?
Joseph P. H. Fan, Qiankun Gu, and Xin Yu (VoxChina) Jan 12, 2022
Using a sample of Chinese private-sector firms that went public, we find that founders from the country's regions with stronger collectivist cultures engage more family members as managers, retain more firm ownership within the family, and share the controlling ownership with more family members. Our study suggests that the collectivist culture boosts the formation of family businesses because the collectivist culture reduces information asymmetry, shirking problems, and associated monitoring costs among family members.

Quantifying the full impact of country-specific policies on trade flows
Rebecca Freeman, Mario Larch, Angelos Theodorakopoulos, and Yoto Yotov (VoxEU) Jan 12, 2022
Most economists rely on the structural gravity model to analyse the impact of trade policies on bilateral trade flows. However, while the gravity model is well suited to examine the impact of bilateral trade costs, it is poorly equipped to estimate the impact of country-specific policies. This is problematic, as in practice many policy-relevant trade costs are country-specific. This column proposes a solution to this problem and discusses new methods to identify the full impact of country-specific characteristics within the structural gravity framework. A useful by-product of the methods is that they deliver disaggregate trade elasticity estimates without the need for price/tariff data.

For services firms, small can be beautiful
Elwyn Davies, Mary Hallward-Driemeier, and Gaurav Nayyar (VoxEU) Jan 12, 2022
Conventional wisdom is pessimistic about the prospects for services-led development, leading to worries about premature deindustrialisation. This column argues that the services sector deserves more credit for helping drive economic transformation than it generally receives. Using firm-level data from 20 developing economies, the authors find that while services establishments are smaller than manufacturing establishments, this matters less for their productivity. Services firms can scale up without sizing up through investments in human and other more intangible forms of capital can leverage the diffusion of digital technologies.

US jobs recovery is sending a hawkish signal
FT View Jan 13, 2022
Deeper reforms are now needed to repair the American labour market.

Kazakhstan turmoil shows double-edged impact of commodity surge
Charlie Robertson (FT) Jan 13, 2022
Rising prices spur political unrest but also investor interest.

Digital services are the new growth model Latin America urgently needs
Pierpaolo Barbieri (FT) Jan 13, 2022
The region can build global businesses on the back of a youthful demographic and better integration.

America's nagging echoes of the 1970s
Edward Luce (FT) Jan 13, 2022
Biden must heed warnings from the era of Carter's 'malaise' lament, as he faces similar challenges.

The Secret Triumph of Economic Policy
Paul Krugman (NYT) Jan 13, 2022
Why Covid-19 cost us fewer jobs than the dot-com bust.

Four Reasons to Keep Worrying About Inflation
Jason Furman (WSJ) Jan 13, 2022
Labor markets are tight, demand remains elevated, and the effects of Covid are highly uncertain.

Worst US inflation since '82 is huge underestimate
David P. Goldman (AT) Jan 13, 2022
Shelter accounts for about a third of American household expenditure, and the cost of buying or renting shelter is up nearly 20% over the past year. Yet the Consumer Price Index (CPI) for shelter showed an increase of just 4.2 over the past year. Who are you going to believe, to paraphrase Groucho Marx – the US government or your own eyes?

Global Shipping Costs Are Moderating, But Pressures Remain
Parisa Kamali (IMF) Jan 13, 2022
Shipping costs soared over the past year as consumers unleashed pent-up savings to buy new merchandise while the pandemic continued to snarl the world's supply chains. Container rates have more than quadrupled since the start of the pandemic, with some of the biggest gains concentrated in the first three quarters of last year.

Tariffs on Chinese imports have only marginally contributed to US inflation
Katheryn (Kadee) Russ (PIIE) Jan 13, 2022
Tariffs on Chinese imports have raised costs for US consumers and firms, but to a modest degree compared to the current rate of inflation. The direct impact of removing lingering tariffs on Chinese products could lower the level of the consumer price index (CPI) by 0.26 percentage point and the personal consumption expenditures price index (PCE) by 0.35 percentage point. But this one-time drop in the price level would put only a small, short-lived dent in overall inflation.

Rise in Treasury Yields May Portend Volatility in the Months Ahead
Rick Chan, Abhishek Nadamani, and Christopher Youssef (PIMCO) Jan 13, 2022
U.S. yields surged to begin 2022 as financial markets gird for central banks to begin tightening monetary policy.

As Inflation Soars, the Fed Needs to Keep Its Head
Bloomberg View Jan 13, 2022
The central bank has pivoted from patience to concern, and rightly so. The key now is to stay flexible.

Omicron May Finally Give Us a Supply-Chain Crisis
David Fickling and Anjani Trivedi (Bloomberg Opinion) Jan 13, 2022
So far, China has been able to keep up with consumer demand. That may be about to change as the highly transmissible variant makes its way across the country.

What Biden Should Do on Trade
Takatoshi Ito (Project Syndicate) Jan 13, 2022
America's rapid accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would enhance US trade with important regional economies, and bolster their efforts to compete with China. US President Joe Biden should make it an urgent priority.

A Bad Year for Markets?
Jim O'Neill (Project Syndicate) Jan 13, 2022
After a remarkably strong performance in 2021, financial markets now seem to be coming to terms with the likelihood that fiscal and monetary policies will tighten in 2022. Though a bearish outlook may not yet be warranted, the possibility that equities could suffer a net-negative year must be taken seriously.

How global risk perceptions affect economic growth
Jon Danielsson, Marcela Valenzuela, and Ilknur Zer (VoxEU) Jan 13, 2022
The relationship between financial risk and economic growth is complex. This column finds that perceptions of high risk unambiguously harm growth, while perceived low risk has an initial positive impact, which eventually turns negative. Global risk has a stronger effect on growth than local risk, via its impact on capital flows, investment, and debt-issuer quality, challenging monetary policy independence.

Trying to account for the decline in the labour share
Gene Grossman and Ezra Oberfield (VoxEU) Jan 13, 2022
After a century of stability, the labour share of national income began to decline around 2000 in the US and many other countries. This column reviews the growing literature examining the potential reasons for the decline of the labour share, which include (1) capital-biased technical change, (2) globalisation and the rise of China, (3) increasing industry concentration and market power, (4) unionisation, and (5) population growth. The column also discusses pitfalls associated with common empirical strategies in the literature and suggests that more work is needed to understand fundamental, rather than proximate, causes of the decline.

Closing the transatlantic corporate divide
FT View Jan 14, 2022
The EU and UK must find the right balance to encourage sustainable growth.

Don't deride the Davos prophets of doom
Gillian Tett (FT) Jan 14, 2022
Investors should note a shift in preoccupations from economic and political issues to environmental and social ones.

US job trends justify Fed moves to normalise rates
Tiffany Wilding (FT) Jan 14, 2022
Monetary policy adjustment is likely to bring more volatility and uncertainty to markets.

Private markets are a hot topic for 2022
Katie Martin (FT) Jan 14, 2022
Asset managers are increasingly looking beyond listed investments in search of decent returns.

Financial fatalism fuels a gambling gold rush
Andrew Edgecliffe-Johnson (FT) Jan 14, 2022
We have never had so many things to bet on, nor so many companies urging us to take a punt.

Critics Say I.M.F. Loan Fees Are Hurting Nations in Desperate Need
Patricia Cohen (NYT) Jan 14, 2022
Democratic lawmakers say the global fund's surcharges for emergency relief siphon away money that countries need to fight the pandemic.

China's Covid fight may sicken global supply chains
William Pesek (AT) Jan 14, 2022
Is it now China's turn to spook the globe with inflation? It's hard not to wonder as Omicron prompts Asia's biggest economy to institute new lockdowns that are sure to upend supply chains and intensify global price pressures. If that happens, it could shift China from an economic hero of the Covid era to its villain.

A sharp slowdown in China's property markets would damp global growth
Nigel Pain and Elena Rusticelli (OECD Ecoscope) Jan 14, 2022
Developments in China have a considerable impact on the global outlook, with China accounting for over one-quarter of projected global GDP growth in 2021-23, and around 12.5% of world trade in goods and services. Among the factors that could significantly pull growth down in China, vulnerabilities in the property sector loom large.

Could 2022 be a year of hope for climate?
Wolfgang Fengler (Brookings) Jan 14, 2022
There are two main reasons for hope in 2022.

Success despite the odds: South Sudan and Bangladesh
Shanta Devarajan (Brookings) Jan 14, 2022
Amid all this pessimism, I share two cases of success despite the odds. One happened last year. The other represents a perspective on long-term development that demonstrates the triumph of the human spirit over seemingly insurmountable obstacles.

Manufacturers Are Embracing DIY Supply Chain
Brooke Sutherland (Bloomberg Opinion) Jan 14, 2022
Industrial companies are making deals and investments to gain more control of raw materials and reduce potential disruptions.

Will Sterling Markets See a Silver Lining If Boris Leaves?
Marcus Ashworth (Bloomberg Opinion) Jan 14, 2022
The prime minister could remain in office but U.K. assets could respond to his departure with a premium.

Iran's Economic Resilience Is Mostly a Mirage
Bobby Ghosh (Bloomberg Opinion) Jan 14, 2022
The government likes to boast about self-reliance in the face of sanctions, but in reality the regime in Tehran is struggling with rampant inflation, joblessness and other miseries.

­Regime Change in the Global Economy
Michael Spence (Project Syndicate) Jan 14, 2022
After helping to drive decades of development and modernization in emerging economies, the twentieth-century economist W. Arthur Lewis's Nobel Prize-winning growth model can now be applied to the entire world. Unfortunately, what it shows is that we are heading into a period of deep uncertainty and supply-constrained growth.

Innovation versus imitation: Where all that Chinese R&D is going
Michael König, Zheng (Michael) Song, Kjetil Storesletten, and Fabrizio Zilibotti (VoxEU) Jan 14, 2022
China is aiming to become a technological innovation powerhouse by 2050, with Premier Li Keqiang recently announcing an increase in R&D investments by 7% for the next five years. But greater R&D investment is no guarantee of success. This column examines the effects of R&D investments by Chinese firms on aggregate productivity and growth. The authors find that while innovation plays an important role in China's growth process, the productivity of innovation could be substantially enhanced by reducing distortions in the economy, and further stimulating R&D expenditure is neither necessary nor sufficient to sustain growth.

Revising the European fiscal framework, part 1: Rules
Leonardo D'Amico, Francesco Giavazzi, Veronica Guerrieri, Guido Lorenzoni, and Charles-Henri Weymuller (VoxEU) Jan 14, 2022
Over the last few years, there has been a growing consensus that the current rules of the Stability and Growth Pact are outdated, too complicated, and not countercyclical enough. The authors of this column present a proposal to strengthen the European fiscal framework based on two elements: a revision of the fiscal rules, and a plan to create a European Debt Agency to absorb the debt accumulated during the pandemic. This first of two parts focuses on the fiscal rules and proposes setting a ceiling on the growth rate of primary spending, to be revised over three-year intervals, targeting debt reduction over a ten-year horizon.

Mario Draghi Doesn't Have 'Whatever It Takes' Anymore
Adam Tooze (FP) Jan 14, 2022
Whether as Italy's prime minister or its president, he may not have the solution to Italy's problems.

Part II: Are Stablecoins Really "Stable"?
Jay H. Bryson and Karl Vesely (WF Econ Group) Jan 14, 2022
In the second installment in our four-part series on digital currencies, we discuss the opportunities and the risks that stablecoins pose for the financial system.

Shift to renewable energy could be a mixed blessing for mineral exporters
Cullen S. Hendrix (PIIE) Jan 14, 2022
The world's transition to sustainable energy systems has suddenly become a boon to countries rich in critical minerals used in clean energy technologies like rechargeable batteries, solar panels, wind turbines, and electric vehicles. Among these critical minerals are aluminum, coltan, copper, aluminum, zinc, tin, rare earths, lithium, tantalum, and cobalt. Given that these minerals are key to building sustainable energy systems, vital for ensuring military might, and often extremely valuable, will countries with large, exportable endowments of these minerals fall prey to the resource curse? Hendrix says these countries may find their newfound wealth to be a mixed blessing. The size of the markets for these resources and their marginal production costs suggest that they do not have the potential to generate massive rents the way that oil and gas production have. Given that these rents are the source of many ills—authoritarianism, reduced investment in human capital, poor human rights records—this is good news. But because several of these minerals can be mined artisanally, they may lead to governance challenges related to armed conflict. Their status as strategic resources will invite major power meddling and interventions—but only if mineral-rich economies are forced to align themselves and access to their resources with a major power, like the United States or China. The 20th century's scramble to secure oil resources led to cursed dynamics in oil-rich societies, but historical precedent is not destiny. Mineral-rich countries may avoid the resource curse, especially if they develop diverse investment and trading relationships to balance major power interests in their mineral wealth and embrace industry- and civil society–led good governance initiatives around mineral resources.

Welcome to the era of the bossy state
Economist Jan 15, 2022
Countries around the world want to bend companies to their will.

Why Russia might appeal for dividend hunters
John Dizard (FT) Jan 15, 2022
Kremlin has a strong interest in companies maintaining big dividend payouts.

Revising the European fiscal framework, part 2: Debt management
Leonardo D'Amico, Francesco Giavazzi, Veronica Guerrieri, Guido Lorenzoni, and Charles-Henri Weymuller (VoxEU) Jan 15, 2022
In January 2023, the escape clause triggered to suspend the rules of the Stability and Growth Pact will expire, possibly forcing painful fiscal adjustments in countries that are already struggling with the impact of the pandemic. In this second column in a two-part series, the authors focus on the debt management aspect of their proposal to strengthen the European fiscal framework. They argue for moving a portion of national debts under the umbrella of a European Debt Management Agency, with the aim of reducing debt costs for the whole Union and helping the operations of the ECB in debt markets.

Don't believe those who say a pan-European public sphere is impossible
Martin Sandbu (FT) Jan 16, 2022
The emergence of new institutions across the continent is a sign of fresh forms of cross-border fellow feeling.

What Biden's competition crusade tells us about globalisation
Rana Foroohar (FT) Jan 16, 2022
The administration has begun making a case about the connection between inflation and corporate power.

China's Economy Is Slowing, a Worrying Sign for the World
Keith Bradsher (NYT) Jan 16, 2022
Economic output climbed 4 percent in the last quarter of 2021, slowing from the previous quarter. Growth has faltered as home buyers and consumers become cautious.

India's Inward Turn Could Stymie Its Rise
Andy Mukherjee (Bloomberg Opinion) Jan 16, 2022
Modi is hoping the country's consumers will constitute a big enough market to power the economy. That could be a major miscalculation.

Bain's cautionary South African tale
FT View Jan 17, 2022
The firm cannot distance itself from its office's alleged role in state capture.

China and Russia test the limits of EU power
Gideon Rachman (FT) Jan 17, 2022
The EU needs to respond to economic coercion or its geopolitical ambitions will be cruelly exposed.

A quiet comeback is starting in emerging markets
Ruchir Sharma (FT) Jan 17, 2022
The drive in commodities, manufacturing, data flows and economic reform could make 2021 the year the tide turned.

What large economies can learn from smaller ones
Nannette Hechler-Fayd'herbe (FT) Jan 17, 2022
Switzerland has benefited from a combination of smart fiscal policy, a resilient energy grid and flexible working.

Biden Plays Capture the Federal Reserve
WSJ View Jan 17, 2022
Sarah Bloom Raskin wants to politicize Fed bank supervision, especially on climate.

Washington Cashes In on Inflation
WSJ View Jan 17, 2022
Individual income tax receipts rose 55% in the first fiscal quarter.

A Politicized Fed Endangers the Economy
Jeb Hensarling (WSJ) Jan 17, 2022
The central bank can't deliver price stability if it's distracted by climate change and social justice.

China's slowdown is cause for concern, not panic
William Pesek (AT) Jan 17, 2022
The year 2022 just became real with news that Chinese growth slowed to 4% in the fourth quarter, triggering the first formal interest rate cut in nearly two years. The important question, of course, is not where the world's No 2 economy was in the last three months of 2021, but where it's headed. The answer is bound to disappoint global investors.

As China's economy slows, policymakers are trying to revive it
Economist Jan 17, 2022
Lockdowns and crackdowns are taking their toll.

China's Got Problems, But Inflation Ain't One
Daniel Moss (Bloomberg Opinion) Jan 17, 2022
A slowing economy means the central bank must be nimble. With prices cooling, that'll be an easier task than what the Fed faces.

Why Did Almost Nobody See Inflation Coming?
Jason Furman (Project Syndicate) Jan 17, 2022
Forecasting inflation is a staple of macroeconomic modeling, yet virtually all economists' predictions for the United States in 2021 were way off the mark. This dismal performance reflected a collective failure to take economic models seriously enough, as well as other analytical shortcomings.

Envisioning Governance 4.0
Klaus Schwab (Project Syndicate) Jan 17, 2022
When the COVID-19 pandemic ends, the world will need a new governance model that differs from its predecessors in several fundamental respects. In particular, while finance, economics, and business remain vitally important, they must serve society and nature – not the other way around.

Italy's Draghi Recovery at Risk
Paola Subacchi (Project Syndicate) Jan 17, 2022
The Next Generation EU pandemic recovery fund has delivered to Italy a once-in-a-generation opportunity to reset its economy. But the risks posed to Prime Minister Mario Draghi's government by the looming presidential election may make the country incapable of seizing this moment.

The Mussa puzzle and the optimal exchange rate policy
Oleg Itskhoki and Dmitry Mukhin (VoxEU) Jan 17, 2022
The Mussa puzzle refers to the existence of a large and sudden jump in the volatility of the real exchange rate after the adoption of a floating exchange rate regime in 1973. It is a central piece of evidence in favour of monetary non-neutrality. In contrast to conventional wisdom, this column argues that the puzzle cannot be explained with sticky prices, and instead provides strong evidence in favour of monetary transmission via the financial market. This has important consequences for the design of optimal monetary and exchange rate policy.

The Animal Spirits Index Ends 2021 on a Positive Note
Azhar Iqbal and Sara Cotsakis (WF Econ Group) Jan 17, 2022
The Animal Spirits Index (ASI) turned positive in December as it jumped to +0.12 from -0.12 in November. However, the fourth quarter showed lost momentum overall, which was solidified by negative prints in two of the last four months. We expect a rocky start to spirits in 2022 as rising COVID cases, hot inflation and increased political uncertainty take their toll, but as we move further into 2022, there are still some encouraging trends that could inspire optimism.

China's slowing growth will have a global impact
FT View Jan 18, 2022
Beijing is unlikely to relax three key policies that are crimping expansion.

China's record trade gap a symptom of struggle to rebalance its economy
Michael Pettis (FT) Jan 18, 2022
Surpluses will continue as Beijing struggles to rein in burgeoning debt and increase domestic consumption.

China rate cut: Winter Olympics helps push economy downhill
Lex (FT) Jan 18, 2022
Beijing's zero-Covid policy trades GDP growth for international prestige ahead of the Games.

Covid-19 widened India's rich-poor divide: Report
KS Kumar (AT) Jan 18, 2022
According to a new report by charity organization Oxfam, India's richest families saw their assets rise to record levels in 2021 when the country was in the grip of the Covid-19 pandemic and faced a sharp economic downturn, while nearly 84% of Indian households saw an income decline as they struggled with the loss of businesses and jobs and rising healthcare costs.

How the IMF Continues to Change To Confront Global Challenges
Sanjaya Panth and Ceyla Pazarbasioglu (IMF) Jan 18, 2022
The challenges facing IMF member countries are constantly evolving.

Chinese Companies Are Leaving Global Stock Markets
Derek Scissors (BRINK) Jan 18, 2022
Recently, several high-profile companies like DiDi, China Mobile, and China Telecom are de-listing from Chinese stock markets.

Breakthrough: The promise of frontier technologies for sustainable development
Homi Kharas, John McArthur, and Izumi Ohno (Brookings) Jan 18, 2022
What breakthrough technologies have the potential soon to affect the human condition at a substantial scale, with special emphasis on the economic, social, and environmental challenges affecting the world's poorest people? This is a question we tackled together over the past couple of years, through an edited volume that brings together the perspectives of more than a dozen remarkable contributors, from science, business, civil society, and policy worlds.

The EA and the US in the COVID-19 crisis: Implications for the 2022-2023 policy stance
Laurence Boone (OECD Ecoscope) Jan 18, 2022
What should be our reference to assess the progress towards a genuine recovery from the pandemic? It should certainly not be the level of activity at the end of 2019. In the two years since then, economic activity and employment should have increased. Our reference should therefore be the pre-pandemic trend for GDP and employment. The crisis is not over. We do not yet know how Covid can continue to evolve and how our economies will adjust structurally to the profound disruptions caused by the epidemic and to its consequences. We are fortunate the euro area policy response was bold and coordinated and still leaves policy space today. Fiscal and supply side policies will need to be mobilised to regain the pre-pandemic trend, and to address the root causes of inflation, too high energy prices and low trend growth.

Turkey Can't Defy the Laws of Economic Gravity
Bloomberg View Jan 18, 2022
Pressure on the central bank to keep cutting rates has fueled inflation and pummeled the lira. It's still not too late to reverse course.

Business Doesn't Need a 'Social Purpose' Revolution
Adrian Wooldridge (Bloomberg Opinion) Jan 18, 2022
The U.K.'s Better Business Act and other similar laws will keep companies from doing their basic job — competing to produce the best services and products at the lowest prices.

How Safe Assets Became Investors' Biggest Risk
Allison Schrager (Bloomberg Opinion) Jan 18, 2022
"Risk-free" is the most important concept in financial markets because it's the baseline for setting the value of pretty much everything. Now the pandemic has drained it of meaning.

When Will Monetary Tightening Hit Financial Conditions?
Mohamed A El-Erian (Bloomberg Opinion) Jan 18, 2022
A disconnect increases the risk of a policy mistake and undue damage to livelihoods.

EV Battery Makers Are Getting Their Hands on Everything
Anjani Trivedi (Bloomberg Opinion) Jan 19, 2022
Shortages are hitting the entire electric vehicle supply chain — and now even easy-to-source elements like graphite are proving costly.

Reducing public debt need not be a punishment
Barbara Baarsma and Roel Beetsma (VoxEU) Jan 18, 2022
An important vulnerability of the EU economy is high public debt levels. This column proposes revisions to the EU fiscal rules to stimulate debt reduction, which would create budgetary room for stabilisation and growth-promoting spending and also support growth convergence among member states. Climate investment should not interfere with the fiscal rules but be financed through an EU fund, in line with the idea of subsidiarity. It should co-exist with uniform pricing of all greenhouse gas emissions.

Don't Expect The Emerging Market FX Rally to Last
Brendan McKenna (WF Econ Group) Jan 18, 2022
In somethng of a surprise, the U.S. dollar has weakened over the first few weeks of this year and emerging market currencies have outperformed. A sharp shift in monetary policy stance from the Fed supported the greenback late last year but has done little to help the dollar so far in 2022; however, once the "buy the rumor, sell the fact" dynamics come to an end and markets focus on underlying fundamentals, the U.S. dollar should strengthen going forward. We also expect emerging market currencies to come under the most pressure in 2022-2023 as tighter Fed policy, higher bond yields and local political developments result in weaker currencies across the emerging markets spectrum.

Growth is Latin America's big challenge
FT View Jan 19, 2022
Region urgently needs pragmatic governments that create shared prosperity.

Central banks must reduce their balance sheets more aggressively
Kristin Forbes (FT) Jan 19, 2022
Putting greater emphasis on quantitative tightening would be an important sign of independence.

Business leaders have to play a better political role
Martin Wolf (FT) Jan 19, 2022
Like it or not, they are potent players in our fragile democratic politics and in global decision-making.

Why do so many investors sell out too early?
Howard Marks (FT) Jan 19, 2022
Simply being invested to benefit from miracle of long-term compounding of returns is the most important thing.

When it comes to protectionism, the restricted EU is better off than the US
Alan Beattie (FT) Jan 19, 2022
A more activist industrial policy has been driven by the pandemic — but so far had little effect.

Inflation Comes to the U.K. and Everywhere
WSJ View Jan 19, 2022
And no one seems eager to raise interest rates to address it.

An Economic Evaluation of Covid Lockdowns
Tomas J. Philipson (WSJ) Jan 19, 2022
The costs of prevention efforts have outweighed those from the direct effects of the virus itself.

The Financial Sector Is Decarbonizing — And It's a Huge Challenge
Kate Levick (BRINK) Jan 19, 2022
Big promises are being made in the financial sector around getting to net zero. After COP26, there's a recognition that it's no longer sufficient for investors simply to divest their carbon-intensive assets. But determining who carries the responsibility and cost of ensuring that investments and insurance are free of carbon is very complicated.

Why Jobs are Plentiful While Workers are Scarce
Carlo Pizzinelli and Ippei Shibata (IMF) Jan 19, 2022
The broader trend of plentiful jobs and not enough workers can have major implications for growth, inequality, and inflation.

Transatlantic Cooperation on Critical Supply Chain Security
Chad P. Bown (PIIE) Jan 19, 2022
COVID-19 vaccine manufacturing supply chains are an incredibly important example for transatlantic cooperation. The speed of scientific advancement and the manufacturing supply chains that emerged across the Atlantic – especially for Pfizer-BioNTech, Moderna, and Johnson & Johnson – were extraordinary.[1] Pfizer's vaccine would not exist without the BioNTech invention in Germany. The Johnson & Johnson vaccine was co-developed at a Janssen lab in the Netherlands, and its Leiden plant provided much of the drug substance for the U.S. market in 2021. Moderna's mRNA vaccine in use across Europe is being bottled in France and Spain, after its drug substance is manufactured at a plant in Switzerland.

The IMF should suspend interest rate surcharges on debt-burdened countries
Patrick Honohan (PIIE) Jan 19, 2022
With interest rates cycling upwards, past experience tells us that emerging markets and other stressed borrowers will face borrowing rates that increase much more than wholesale rates in financially sound advanced economies. Fear of default in emerging markets can also be self-fulfilling if lenders charge high-risk premia.

Build Back Better Would Make It Harder to Fight Inflation
Clive Crook (Bloomberg Opinion) Jan 19, 2022
As the Fed struggles to get monetary policy back on track, the last thing it needs is fiscal policy that pushes the other way.

The Magical Land of Low Inflation and No Rate Hikes
Daniel Moss (Bloomberg Opinion) Jan 19, 2022
The BOJ chief's categorical refusal to raise the cost of borrowing may seem stark. But it reminds us that there are some key outliers to the global trend.

Why Isn't the Fed Doing its Job?
John H. Cochrane (Project Syndicate) Jan 19, 2022
In addressing the economic and financial fallout of the COVID-19 pandemic, the US Federal Reserve has not only failed to ensure price stability, but has also doubled down on the misguided approach of the post-2008 era. The result is a financial system oriented around dangerously misaligned incentives.

Asia's Emissions-Reduction Plan for the World
Masatsugu Asakawa , Sri Mulyani Indrawati, and Carlos Dominguez (Project Syndicate) Jan 19, 2022
By significantly shortening the life of Asia's coal-fired power plants, the new Energy Transition Mechanism will unlock new investment in sustainable and renewable sources of power. This model will help to solve the region's climate challenges, and can potentially be scaled and exported around the world.

The ECB's Existential Dilemma
Jürgen Stark , Thomas Mayer, and Gunther Schnabl (Project Syndicate) Jan 19, 2022
For years, the European Central Bank has been succumbing to political interests and pursuing objectives beyond the scope of its primary mandate: maintaining price stability. But now that inflationary pressures are building, the ECB's credibility is on the line.

Throwing Good Money after Bad: Zombie Lending and the Supply Chain Contagion of Firm Exit
Yun Dai, Xuchao Li, Dinghua Liu, and Jiankun Lu (VoxChina) Jan 19, 2022
Zombie lending to downstream firms does not reduce the exit likelihood of upstream firms. Worse, it distorts efficiency-based firm exit in upstream industries. The exit distortion effect works through the trade credit chain and is more profound in industries with stricter financial constraints and tighter supply chain connections.

Identifying indicators of systemic risk
Benny Hartwig, Christoph Meinerding, and Yves S. Schüler (VoxEU) Jan 19, 2022
In the aftermath of the global financial crisis, a consensus rapidly emerged that systemic risk – a central concept in financial stability – needed to be contained going forward. However, to this day experts cannot agree on how to measure systemic risk in the first place, with researchers having proposed a plethora of indicators. This column proposes an analytical approach designed to lend structure to this universe of indicators for measuring systemic risk.

The populist damage to the trading system
Kent Jones (VoxEU) Jan 19, 2022
Around the world, populism has weaponised anxieties over globalisation and other forms of social change. This column argues that populist trade policies have damaged the global trading system through protectionist policies themselves and by undermining the rules and norms of the WTO. The author suggests that the Trump administration's national security tariffs and Brexit have inflicted the greatest populist damage on trade rules and trade integration so far and that economic and institutional reforms will be necessary to break the populist influence on trade policy.

Biden's picks would change the face of the Fed
Claire Jones (FT) Jan 20, 2022
If approved, women would outnumber men on the policy-setting Federal Open Market Committee.

Post-pandemic trade shows need to be smaller and targeted
Shola Asante (FT) Jan 20, 2022
These events are vital for businesses but they are expensive and need to evolve with our more hybrid world.

Permian Basin: high oil price breathes new life into US shale
Myles McCormick (FT) Jan 20, 2022
The 2020 price drop almost killed the US industry, but oil production is at record levels despite political pressure.

As China slows, Asia gets the shudders
William Pesek (AT) Jan 20, 2022
As President Xi Jinping signals his determination to stick with "zero-Covid" and "common prosperity" strategies, China's economy is plotting a slower course, sending CEOs and investors rushing back to the drawing board to stress-test earlier assumptions about 2022. The good news? Chinese policymakers are signaling an energetic effort to keep gross domestic product north of 5%.

The history of taxes and its role in modern China
Francesco Sisci (AT) Jan 20, 2022
China once had an ineffectual taxation structure and a lack of representation for those who pay for the state

China's economic slowdown is not as severe as it seems
Nicholas R. Lardy (PIIE) Jan 20, 2022
China recently announced that real growth last year was 8.1 percent, which will almost certainly turn out to be the fastest of any major economy. But much of the analysis in news media in the West has focused on the marked slowdown on a quarterly basis, to only 4 percent in the last calendar quarter. However, this approach is misleading. It fails to consider China's highly unusual pattern of growth in 2020, which was marked by a sharp decline in economic output in the first quarter because of COVID-19 lockdowns.

A New Trust to Help Countries Build Resilience and Sustainability
Ceyla Pazarbasioglu and Uma Ramakrishnan (IMF) Jan 20, 2022
It is the shared responsibility of individual countries and the international community to overcome these global public policy challenges.

Central Banks Face a Moment of Truth on Crypto
Lionel Laurent and Marcus Ashworth (Bloomberg Opinion) Jan 20, 2022
Europe and the U.S. might have to pick up the pace if emerging-market digital-currency projects start to bear fruit.

Inflation's Biggest Risk Is Geopolitical Unrest
Henry Brands (Bloomberg Opinion) Jan 20, 2022
The experience of the 1970s shows how skyrocketing prices at home can lead to dwindling U.S. power abroad.

How to Withstand China's Property Meltdown
Shuli Ren (Bloomberg Opinion) Jan 20, 2022
A little luck and a lot of debt reduction helped a pair of once-troubled developers dodge the worst of the turmoil.

Willem H. Buiter and Anne Siebert (Project Syndicate) Jan 20, 2022
Although Argentina benefited somewhat from the pandemic-driven shift in global demand toward physical goods, its recovery has hardly been strong enough to offset other deficiencies. With inflation high and the real interest rate on its debt exceeding its trend real GDP growth, the country is still heading for a cliff.

The Futility of Unconditional Debt Support
Anne O. Krueger (Project Syndicate) Jan 20, 2022
In many low- and middle-income countries, poor policy choices have created financial and economic problems that have only grown worse as a result of the pandemic. Unless these mistakes are corrected, continued financial support will never provide genuine economic relief.

Who Is Winning the Trade War?
Pinelopi Koujianou Goldberg (Project Syndicate) Jan 20, 2022
As the Sino-American trade war approaches its fourth year, there is ample evidence to show that both sides have been harmed by the tit-for-tat exchange of protectionist measures. But, far from spelling an end to globalization, the conflict may have laid the foundation for an even more robust world trading system.

How the Euro Divided Europe
Yanis Varoufakis (Project Syndicate) Jan 20, 2022
When eurozone finance ministers recently issued a joint paean to the single currency on the occasion of the twentieth anniversary of the introduction of euro banknotes and coins, something remarkable happened: Nothing. No one joined in the celebrations, and no one cared enough to dissent.

Autocratic rule and social capital: Evidence from Imperial China
Melanie Meng Xue (VoxChina) Jan 20, 2022
The impact of persecutions in 17th and 18th century China can still be seen today in the form of less political participation and community engagement

What Financial Markets Are Telling Biden About Geopolitics
Christopher Smart (FP) Jan 20, 2022
As Washington crafts its foreign policy, asset prices may offer important guidance.

Why Gains for U.S. Workers Are Good for the World
Edward Alden (FP) Jan 20, 2022
The rising power of labor will have ripple effects far from U.S. shores.

Bund blip shows how fast the market mood is changing
Katie Martin (FT) Jan 21, 2022
Investor expectations of rate rises by the Fed are growing quickly.

Debit cards, electric cars and ghosts of technology past
John Gapper (FT) Jan 21, 2022
Many products outlive their usefulness, but it is strangely difficult for companies to let them go.

China's Economic Downturn Gives Rise to a Winter of Discontent
Kevin Rudd (WSJ) Jan 21, 2022
With Xi likely seeking a third term, his critics may have more leverage than they have had for years.

The Markets Tremble as the Fed's Lifeline Fades
Jeff Sommer (NYT) Jan 21, 2022
Stocks are off to their worst start of a year since 2016 as the central bank pulls back the enormous stimulus programs it began in the early months of the pandemic.

Central Planners Don't Know What's Best for You
Joakim Book (Mises Wire) Jan 21, 2022
Flawed as we are and with limited knowledge about the world and ourselves, we might not know what is objectively "best for us long term." Government planners know even less.

Imagine There's No Crypto. It's Too Easy If You Try
Leonid Bershidsky (Bloomberg Opinion) Jan 21, 2022
Cryptocurrencies won't conquer our wallets until they capture more of our imaginations.

Inflation Forecasting Is a Truly Dismal Science
Stephen Mihm (Bloomberg Opinion) Jan 21, 2022
Once upon a time, sheep entrails were used to predict the future. It might have worked nearly as well as today's sophisticated inflation modeling.

Argentina's Imaginary Miracle
Andrés Velasco and Eduardo Levy-Yeyati (Project Syndicate) Jan 21, 2022
The oldest statistical trick in the book is to label as growth what is really just a rebound after a massive output dip. That is exactly what has happened in Argentina, where the rapid economic rebound in 2021 came as no surprise and does not look especially healthy or sustainable.

How to Prevent COVID's Next Comeback
Abhijit Banerjee and Esther Duflo (FA) Jan 21, 2022
Rich countries must make smarter investments in poorer ones.

International Economic Outlook: January 2022
Nick Bennenbroek, Brendan McKenna, and Jessica Guo (WF Econ Group) Jan 21, 2022
The U.S. dollar has experienced a brief period of consolidation at the start of 2022, reflecting a soft patch in activity data and after the market spent several months adjusting to a more hawkish Fed policy outlook. However, we expect the greenback's strengthening trend to resume once the Fed starts raising rates and eventually begins to reduce the size of its balance sheet. Price pressures remain a key focus for financial markets, with inflation readings globally continuing to firm—and often surprising to the upside. That should see many G10 and emerging market central banks continue to tighten monetary policy this year, and global bond yields trending higher. China's economy finished 2021 on a steady note, though COVID, regulatory concerns, and real estate difficulties continue to weigh on the outlook. As a result, we see slower growth for China in 2022 compared to last year, even as Chinese authorities ease monetary policy to cushion the economy.

A much-needed market correction
FT View Jan 22, 2022
Sell-off led by technology stocks may reflect some encouraging economic news.

Supply chain delays prove more persistent than expected
John Dizard (FT) Jan 22, 2022
Omicron and sudden rise in US tariffs on Chinese truck chassis add to trade pressures.

Rapid Inflation Fuels Debate Over What's to Blame: Pandemic or Policy
Jeanna Smialek and Ana Swanson (NYT) Jan 22, 2022
The White House is emphasizing that inflation is worldwide. Economists say that's true — but stimulus-spurred consumer buying is also to blame.

Solar panels a portrait of China supply chain risks
Jeff Pao (AT) Jan 22, 2022
China currently supplies more than 80% of photovoltaic modules used in solar panels to world markets. But as a result of the country's power consumption limits combined with lockdown measures against the highly contagious Omicron variant of Covid-19, solar panel prices have increased by 50-60% from a year ago.

Economists are revising their views on robots and jobs
Economist Jan 22, 2022
There is little evidence of a pandemic-induced surge in automation.

Russia's Fortress Economy Has Some Cracks
Clara Ferreira Marques (Bloomberg Opinion) Jan 22, 2022
Vladimir Putin has built up fiscal and other defenses that will insulate the country against Western sanctions. But autarky comes at a cost.

Don't write off Hong Kong as a financial centre just yet
Robin Harding (FT) Jan 23, 2022
Despite a political crackdown, people who want to move capital into China will continue to use the territory to do so.

Inflation Has the Radicals Crawling to the Center
Daniel Moss (Bloomberg Opinion) Jan 23, 2022
Indonesia audaciously tested the outer limits of Covid-era easing. Now, it sounds downright hawkish.

Julian Lee (Bloomberg Opinion) Jan 23, 2022
The world's oil stockpiles are looking a lot lower than expected. All those 'missing barrels' might make prices soar further.

India Seeks to Escape an Asian Future Led by China
C. Raja Mohan (FP) Jan 23, 2022
A flurry of trade talks herald an economic realignment toward the West.

Avoiding a two-track economic recovery
FT View Jan 24, 2022
Tighter monetary policy in the rich world spells danger for emerging economies.

Bold policy response needed to restore Fed credibility on inflation
Mohamed El-Erian (FT) Jan 24, 2022
Central bank's policy-setting committee must catch up to realities of rising prices.

China envoy appointment signals deeper ties with Horn of Africa
Andres Schipani (FT) Jan 24, 2022
Beijing seeks to extend influence in order to protect investments in the volatile region.

Getting Puerto Rico's Financial House Back in Order
Natalie Jaresko and David Skeel (WSJ) Jan 24, 2022
The territory's crushing debt load has been lifted.

Cryptocurrency Doesn't Amount to Much
Steve H. Hanke and Matt Sekerke (WSJ) Jan 24, 2022
Blockchain merely mirrors rudimentary parts of the regulated financial system.

How to Direct the Flow of Green Investments Into ASEAN
Peter Reynolds (BRINK) Jan 24, 2022
Countries in Southeast Asia are more susceptible to the effects of climate change, yet, a significant portion of green investment funds are going toward projects in the West.

Labour markets transitions through the looking glass
Nhung Luu, Michael Abendschein and Orsetta Causa (OECD Ecoscope) Jan 24, 2022
Labour market transitions, that is, the mobility of workers between jobs and in and out of employment, matter for growth and inclusiveness, not least to support the ongoing recovery from the COVID-19 crisis. Firm entry and exit, as well as the reallocation of workers allow resources to move from declining to expanding businesses, contributing significantly to productivity and allocative efficiency. From the perspective of workers, in particular young people entering the labour market, labour mobility and reallocation help them in seizing better job opportunities and reducing wage inequalities.

How Venture Capital Created the Modern World
Adrian Wooldridge (Bloomberg Opinion) Jan 24, 2022
A new book explains how venture capitalists put disruptive innovation at the heart of the U.S., and increasingly the global, economy.

China Buys a Little Time for Cash-Strapped Developers
Shuli Ren (Bloomberg Opinion) Jan 24, 2022
Asset sales can offer only temporary relief for an industry drowning in debt.

So Long, QE. I'm Sure We'll See You Again Soon
Daniel Moss (Bloomberg Opinion) Jan 24, 2022
Over the past two recessions, asset purchases went from exotica to ho-hum tools of monetary policy. Don't be surprised to see the practice return.

The Fed's Mad Scramble
Stephen S. Roach (Project Syndicate) Jan 24, 2022
By now, it is passé to warn that the US Federal Reserve is "behind the curve" in fighting inflation. In fact, the Fed is so far behind that it can't even see the curve and may have to slam on the policy brakes to regain control before it is too late.

Green Nuclear Power
Hans-Werner Sinn (Project Syndicate) Jan 24, 2022
By allowing the European Central Bank to intervene directly and deeply in capital markets, the EU's approach to climate change is violating basic principles of sound economic policymaking. Fortunately, its embrace of a once-maligned clean energy source shows that it hasn't abandoned common sense altogether.

Land rights and agricultural productivity: Evidence from China
Tasso Adamopoulos, Loren Brandt, Jessica Leight, and Diego Restuccia (VoxDev) Jan 24, 2022
Weak land rights among farmers reduces agricultural productivity and output, hitting skilled farmers hardest.

A digital dollar is worth consideration
FT View Jan 25, 2022
The US Federal Reserve is a latecomer to the debate about central bank digital currencies.

How to Survive When Stocks Behave Badly
Jeff Sommer (NYT) Jan 25, 2022
The stock market's swings have been startling. Unfortunately, it's wise to prepare for much worse.

Yuan overtakes yen in global transaction volume
William Pesek (AT) Jan 25, 2022
It turns out growing 8.1% in a year when Covid-19 disruptions savaged gross domestic product (GDP) around the globe wasn't the most important 2021 milestone for China's economy. That honor goes to Beijing's currency topping the yen to become the fourth-most used for cross-border payments, signaling that plans to internationalize the yuan are well on course.

New payment system to supercharge cross-border trade in Africa
Joy Macknight (Banker) Jan 25, 2022
Proponents expect the Pan-African Payment and Settlement System to drive intra-continental trade and investment, supporting the aims of the continental free trade agreement.

A Disrupted Global Recovery
Gita Gopinath (IMF) Jan 25, 2022
Growth slows as economies grapple with supply disruptions, higher inflation, record debt and persistent uncertainty.

Singapore Delivers a Surprise Lesson on Inflation
Daniel Moss (Bloomberg Opinion) Jan 25, 2022
The typically staid central bank unexpectedly tightened policy, yet another signal that higher prices have staying power.

Stocks Don't Rise or Fall Because of Interest Rates
Nir Kaissar (Bloomberg Opinion) Jan 25, 2022
The idea that the two move in opposite directions is grounded more in theory than data.

One Crucial Question for Biden's Fed Nominees
Narayana Kocherlakota (Bloomberg Opinion) Jan 25, 2022
Would they be willing to destroy jobs to keep inflation under control?

A Weaker Ruble Alone Isn't Going To Stop Putin
Marcus Ashworth (Bloomberg Opinion) Jan 25, 2022
The Russian currency is at one of its weakest levels against the dollar in years, but the economy is going to have to hurt a lot more to prevent war.

China's Coattails Are Safer Than Houses for Investors
Matthew Brooker (Bloomberg Opinion) Jan 25, 2022
State-owned banks occupy a vital position in the economic food chain — way higher than private developers.

Can Italy Maintain Its Pandemic-Era Transformation?
Alexander Stubb and Fabrizio Tassinari (Project Syndicate) Jan 25, 2022
COVID-19 prompted a dramatic change in behavior that made Italy more stable and predictable. But with a new president and a general election approaching, there is concern that recent gains could be abandoned just as the country must decide how to use its windfall of EU recovery funds.

Looking under the hood: The two faces of inflation
Claudio Borio, Piti Disyatat, Dora Xia, and Egon Zakrajšek (VoxEU) Jan 25, 2022
High and low inflation are two very different animals. This column argues that after remaining low and stable for a prolonged period, what we measure as inflation is in fact largely an average of idiosyncratic (relative) price changes and not inflation in the theoretical sense of a generalised increase in prices. What's more, these idiosyncratic price changes tend to be transitory or stable, so that there is a certain tendency for measured inflation to remain range-bound at a low level. The evidence also indicates that, in such an environment, monetary policy operates through a remarkably narrow set of prices. These findings suggest that, under those conditions, it may be difficult and undesirable to follow very tightly defined inflation targets. Having done the hard job of bringing inflation down, central banks can enjoy the fruits of their labours, although at the same time they need to make sure that those fruits are not ephemeral.

The winding road to global recovery is through a thicket of risks
Martin Wolf (FT) Jan 26, 2022
These hurdles, namely Omicron, supply shortages and unexpectedly high inflation, are all on the downside.

The Fed policy error that should worry investors
John Hussman (FT) Jan 26, 2022
By abandoning a systemic framework for monetary policy, the central bank has spawned an all-asset speculative bubble.

US stocks and the market regime change
Maike Currie (FT) Jan 26, 2022
Investors move out of rapidly expanding businesses to more price-sensitive, beaten-up stocks.

Emerging markets must 'make haste slowly' on CBDCs
Duvvuri Subbarao (FT) Jan 26, 2022
Fear and opportunity combined make a strong case for central bank digital currencies, but there are some ticklish challenges.

The Fed's fears are not those of the market
Claire Jones (FT) Jan 26, 2022
Powell is unlikely to surprise watchers today, but tightening could come at a sharper-than-expected tick later this year.

The Fed's Fledgling Inflation Hawks
WSJ View Jan 26, 2022
The central bank talks tougher on price increases but it still isn't tightening money.

The Next BOE Rate Hike Could Drive Up Borrowing Costs
Marcus Ashworth (Bloomberg Opinion) Jan 26, 2022
Get a mortgage while the deals are good. Other sources of financing are already high and will likely increase.

Bloated Central Bank Balance Sheets Are the Real Risk
Richard Cookson (Bloomberg Opinion) Jan 26, 2022
What would you pay for fixed-income assets now if you knew that the biggest holders will become forced sellers later?

The Economic Costs of Closed Minds
Kaushik Basu (Project Syndicate) Jan 26, 2022
While there are exceptions, hyper-nationalism is usually disastrous for an economy in the long run. At a time when policymakers are confronting an ongoing public-health crisis, and in some cases the threat of violent turmoil, the economies that succeed will be those whose leaders keep a clear head.

The Mismanagement of Inflation Expectations
Howard Davies (Project Syndicate) Jan 26, 2022
The leading central banks appear to have lost control of consumers' inflation expectations, and the costs could be high. If wage increases accelerate over the next quarter, monetary policymakers will be obliged to respond firmly by raising interest rates sharply, or else lose even more credibility.

Economic Sanctions Won't Bring Peace to Ethiopia
Biniam Bedasso and Tilahun Emiru (Project Syndicate) Jan 26, 2022
The exclusion of Ethiopia from the African Growth and Opportunity Act is intended to stop human-rights abuses in Tigray, but there is little evidence that such measures affect the behavior of political elites. Instead, they limit options for low-skilled workers and damage bilateral relationships.

Inflation Will Hurt Both Stocks and Bonds
Nouriel Roubini (Project Syndicate) Jan 26, 2022
The longstanding negative correlation between stock and bond prices is an artifact of the low-inflation environment of the past 30 years. If inflation and inflation expectations continue to rise, investors will have to rethink their portfolio strategies to hedge against the risk of massive future losses.

Is China Becoming an Innovation Powerhouse?
Michael König, Zheng (Michael) Song, Kjetil Storesletten, and Fabrizio Zilibotti (VoxChina) Jan 26, 2022
In March 2021, Premier Li Keqiang announced China's objective to increase R&D investments by 7% per year between 2021 and 2025. This target impacts an already large base. In terms of total R&D spending, China is currently second only to the United States. Even as a share of GDP— 2.4% in 2020—China invests more than do richer economies like the European Union or the UK. China's National Innovation-Driven Development Strategy states as a goal for China to become a technological innovation powerhouse by 2050.

The scramble for semiconductors is our era's industrial Great Game
John Thornhill (FT) Jan 27, 2022
China and the US are battling over tech manufacturing supremacy — capacity as well as innovation will determine who wins.

The old inflation playbook no longer applies
Philipp Hildebrand (FT) Jan 27, 2022
Amid severe supply constraints it is best not to destroy jobs and growth but to allow economies to recover.

Europe should change fiscal rule book and aid ECB
Elga Bartsch (FT) Jan 27, 2022
Reforms needed for Stability and Growth Pact to build on new monetary policy strategy of central bank.

Devil in the detail of planned crypto rules
Ian Taylor (FT) Jan 27, 2022
Regulator right to protect investors but needs to give industry freedom to grow.

The Economy That Might Have Been
WSJ Jan 27, 2022
Growth would be healthier if Biden had done nothing in 2021.

US Fed dilemma puts Asia in a firing line
William Pesek (AT) Jan 27, 2022
Everyone in Asia knew America's epic 2020-21 stock boom couldn't last. It was well understood that the run-up, coming amidst a deadly and growth-killing pandemic, had been driven by ultra-aggressive central bank easing, not conventional corporate earnings potential or game-changing innovation.

Low Real Interest Rates Support Asset Prices, But Risks Are Rising
Nassira Abbas and Tobias Adrian (IMF) Jan 27, 2022
A large and sudden jump in real interest rates could lead to a further selloff in stocks.

Pandemic Tests Resilience and Credibility of Fiscal Rules
W. Raphael Lam and Paulo Medas (IMF) Jan 27, 2022
Deviations from the rules—especially debt limits or anchors—are difficult to reverse.

Time of major economic transformations in the Middle East
Jihad Azour (IMF) Jan 27, 2022 It Takes a Feng Shui Master to Explain China's Markets
Shuli Ren (Bloomberg Opinion) Jan 27, 2022
Chinese stocks are following global declines even as officials in Beijing try to give them a boost.

European Inflation Is Not American Inflation
Jean Pisani-Ferry (Project Syndicate) Jan 27, 2022
While central banks on both sides of the Atlantic can certainly be blamed for not having spotted the current price surge early enough, that is no reason to lump together the United States and the eurozone. The inflation outlook for the US is fundamentally worse, for three reasons.

How Much Has the Pandemic Cost?
Andrew Sheng and Xiao Geng (Project Syndicate) Jan 27, 2022
Economists measure policy options and their consequences in terms of monetary costs or GDP. But the dilemma policymakers have faced since the outset of the pandemic is fundamentally a moral one, rooted not least in the question of when individual preferences should prevail over collective interests.

Investors: beware liquidity holes
Gillian Tett (FT) Jan 28, 2022
Markets could soon see a shortage of buyers for some assets relative to supply.

Why aren't we trying to create a financial sector for all?
Helen Thomas (FT) Jan 28, 2022
Post-Brexit regulation is preoccupied with the sector's concerns and disregards everyone else.

The curious case of rising stocks in the night-time
Robin Wigglesworth (FT) Jan 28, 2022
An ex-hedge fund analyst has a conspiratorial theory why equities do better after the market closes.

Who is more scary for investors: Vladimir Putin or Jay Powell?
Katie Martin (FT) Jan 28, 2022
Markets still seem more focused on the prospect of higher inflation and rising interest rates.

Turkish lira steadies after tumbling 44% in tumultuous 2021
Laura Pitel (FT) Jan 28, 2022
Savings programme has helped slow selling in the currency, but analysts remain sceptical.

Wonking Out: Are We in Another Housing Bubble?
Paul Krugman (NYT) Jan 28, 2022
Or, what's the matter with Dallas?

Why Chinese stocks may have hit the bottom
William Pesek (AT) Jan 28, 2022
Chinese stocks are flirting with "bear market" territory at the worst moment possible for President Xi Jinping's economy. Having just grown a blockbuster 8.1% in 2021 and curbing the spread of Covid-19 like few other nations, one might expect investors to give China the benefit of the doubt. Not so, though, as the CSI 300 Index edges toward an official correction for the first time since 2018.

Global Inflation Pressures Broadened on Food and Energy Price Gains
Jorge Alvarez and Philip Barrett (IMF) Jan 28, 2022
Surging energy costs have boosted inflation, especially in Europe, after fossil-fuel prices nearly doubled in the past year. Rising food prices have also helped to boost.

China's Shift to Consumption-Led Growth Can Aid Green Goals
Chang Yong Rhee, Helge Berger and Wenjie Chen (IMF) Jan 28, 2022
China rebounded strongly from the pandemic, but growth is losing momentum while remaining overly dependent on support from investment and exports. This imperils the nation's long-sought transition to sustained high-quality growth that's balanced, inclusive and green.

Do the Math for India's Budget and You Have a Jobs Crisis
Andy Mukherjee (Bloomberg Opinion) Jan 28, 2022
If Modi's government is going to operate in deficit, it should spend some of that money on creating much needed work.

We're Sloshing Toward Economic Regime Change
John Authers (Bloomberg Opinion) Jan 28, 2022
Markets are shifting toward a world where the U.S. could underperform, steeper inflation accompanies shorter business cycles, and investments trend toward value.

Far From Dying, the Coal Industry Is Actually Booming
Javier Blas (Bloomberg Opinion) Jan 28, 2022
It's losing market share in power generation but not the ability to foul up the planet.

A market crash will depend on which bit of the equation investors got wrong
Merryn Somerset Webb (FT) Jan 29, 2022
Proper bubbles involve people convincing themselves that a high-profit, low-inflation environment will be permanent.

Has the M&A party passed its peak?
James Fontanella-Khan (FT) Jan 29, 2022
After a 2021 boom, conditions for deals are more difficult with stock markets volatile and monetary policy tightening.

Europe Brings a Lawsuit to a Trade Fight
WSJ View Jan 29, 2022
China punishes tiny Lithuania, and the EU sends in the lawyers.

Markets have fallen because the era of free money is coming to an end
Economist Jan 29, 2022
Tighter money means financial volatility and economic uncertainty.

How is Omicron affecting the global economic recovery?
Economist Jan 29, 2022
High-frequency data suggest the effect may be limited—and short-lived.

The reasons behind the current stockmarket turmoil
Economist Jan 29, 2022
From Fed tightening to rising wage costs, investors see gloomy prospects ahead.

The Federal Reserve's New Course Is Good. For Now
Bloomberg View Jan 29, 2022
Fed Chair Jerome Powell said the right things about the outlook. That doesn't make his job any easier.

Ending High Inflation Won't Be Pretty
John Authers and Lisa Abramowicz (Bloomberg Opinion) Jan 29, 2022
An astronomical amount of money has been unleashed in the U.S. economy. It's not realistic to get rid of inflation without something going wrong.

Headline inflation may not tell the full story
FT View Jan 30, 2022
New data will shed light on price pressures for different UK income groups.

Automation exacts a toll in inequality
Rana Foroohar (FT) Jan 30, 2022
The Biden administration wants to mitigate the impact of tech-driven change on vulnerable workers.

The EU should rewrite its fiscal rules
Martin Sandbu (FT) Jan 30, 2022
They reflect outdated economic thinking and, if reimposed, would threaten the recovery.

Japan's immigration experiment under cover of Covid
Leo Lewis (FT) Jan 30, 2022
The country has introduced restrictions on foreigners that risk blunting its soft power.

What May Be in Store as the Fed Cuts Back on the Easy Money
Jeff Sommer (NYT) Jan 30, 2022
People all over the country — indeed, much of the planet — are depending on the central bank to stave off runaway inflation and keep the economy growing. Prepare for trouble, our columnist says.

Maybe the volatility of cryptocurrencies is a feature, not a bug
Megan McArdle (WaPo) Jan 30, 2022
Markets love a gamble, after all.

OPEC+ Is Being Way Too Optimistic About Its Supply Targets
Julian Lee (Bloomberg Opinion) Jan 30, 2022
The group is expected to agree to more production increases at their next meeting. But they've been behind on their goals for a while.

Credit Traders Lack Edge in Fed's New Regime
Lisa Abramowicz (Bloomberg Opinion) Jan 30, 2022
The corporate bond market used to be the economy's early warning signal. That's no longer the case.

China Can't Afford to Decouple from the West
Minxin Pei (Bloomberg Opinion) Jan 30, 2022
While Chinese leaders have reason to worry about exposure to the U.S., the costs of achieving true self-sufficiency would be unsustainably high.

Gravity at 60: A celebration of the workhorse model of trade
Yoto Yotov (VoxEU) Jan 30, 2022
This year marks the 60th anniversary of the workhorse model of trade – the gravity equation. This column celebrates the anniversary by addressing some misconceptions about gravity and by tracing its evolution from an intuitive a-theoretical application to an estimating computable general equilibrium model that can be nested in more complex frameworks.

How to bridge the digital divide in healthcare
Andrew Trister (FT) Jan 31, 2022
With the right tools and governance, we can empower the communities that will benefit most from digital innovation.

Asian economic growth to outstrip Americas and Europe
Chetan Ahya (FT) Jan 31, 2022
As pandemic eases, region will post the largest increase in GDP over the next two years.

Shutting out Russia from Swift system would not be a surgical strike
Jonathan Guthrie (FT) Jan 31, 2022
Ban from payments alliance over Ukraine might not isolate country financially.

Covid losers outnumber the winners among leaders and nations
Ruchir Sharma (FT) Jan 31, 2022
Governments around the world are having to come to terms with the limits of state capacity.

Stemming a Sovereign-Debt Crisis
William R. Rhodes and John Lipsky (WSJ) Jan 31, 2022
Rising interest rates and slow economic growth will spur restructuring, but the procedures are inadequate for borrowers and lenders.

Inflation Drives Wages Down, Not Up
Judge Glock (WSJ) Jan 31, 2022
The 'wage-price spiral' is a myth. It's much easier to raise prices than wages.

How the Pandemic-Induced Labor Shortage Could Spur Automation
Tushar Narsana (BRINK) Jan 31, 2022
The labor shortage will continue to impact industries from aerospace to the automotive sector.

Latin America's Strong Recovery is Losing Momentum, Underscoring Reform Needs
Ilan Goldfajn, Anna Ivanova and Jorge Roldos (IMF) Jan 31, 2022
For 2022, we expect growth to slow to 2.4 percent.

How to Prevent the Coming Sovereign Debt Crisis
William C Dudley (Bloomberg Opinion) Jan 31, 2022
Achieving greater transparency on the size, terms and conditions of obligations is one important place to start.

Bloated Inventories Are Poised to Slow the U.S. Economy
Gary Shilling (Bloomberg Opinion) Jan 31, 2022
Getting rid of those excess stockpiles will have negative effects that are mirror images of the positive effects of building them.

Wall Street Quant Strategies Have Proved Their Worth
Aaron Brown (Bloomberg Opinion) Jan 31, 2022
Some 30 months of strong performance is enough to declare the long quantitative investing winter over.

Stock Market Volatility Will Persist – For Now
Mohamed A El-Erian (Bloomberg Opinion) Jan 31, 2022
It's not just the Fed. Other structural factors are in play that have the strong potential to roil equities.

The Fed's Target Is Workers
James K. Galbraith (Project Syndicate) Jan 31, 2022
By announcing forthcoming interest-rate hikes at a time when total US employment is still below its 2019 level, the Federal Reserve is once again bending to pressure from economists and financiers. Whether or not it understands what it is doing, its war on "inflation" is really a war on American workers.

China's Challenges
George Soros (Project Syndicate) Jan 31, 2022
President Xi Jinping intends to use the Beijing Winter Olympics as an opportunity to tout the superiority of his model of authoritarian rule. But the regime's careful preparations have required covering up problems that can no longer be obscured.

The Fed's Climate Awakening
Simon Johnson (Project Syndicate) Jan 31, 2022
The US Federal Reserve, like other central banks, uses monetary policy to achieve price stability and full employment, but struggles to use it effectively when the stability of the financial system is in jeopardy. Fortunately, when it comes to climate financial risks, a new mindset – supported by new personnel – is emerging.

The End of Free-Lunch Economics
Raghuram G. Rajan (Project Syndicate) Jan 31, 2022
Since the global financial crisis, and particularly during the COVID-19 pandemic, fiscal and monetary policymakers have operated as if there are no tradeoffs to their expansionary policy programs. Now that economic conditions have changed, they may soon have to relearn old lessons the hard way.

Three Economic Scenarios for an Election Year
John Cassidy (New Yorker) Jan 31, 2022
With ten months to the midterms, growth is strong but inflation is hurting the chances of Joe Biden and the Democrats.

Inflation: Same Storm, Different Boats
Sarah House, Shannon Seery, and Karl Vesely (WF Econ Group) Jan 31, 2022
The strongest inflation in nearly 40 years is presenting a significant challenge to all American households, but some consumers are being hit harder than others. The Consumer Price Index calculates the average change in prices across the average consumption basket. Yet spending patterns vary widely, leading to significantly different inflation experiences. To determine which groups have seen the sharpest rise in living costs this year, we construct unique CPIs based on the Consumer Expenditure Survey.