Banxico’s monetary policy dilemma
José De Gregorio (FT) Mar 1, 2017
Mexico’s central bank should overcome fear of free falling and restore credibility.
The closed shop on flotation information is about to end
Paul Murphy (FT) Mar 1, 2017
There is a notion across the financial sector that only ‘experts’ understand stuff.
The private equity party is overcrowded
John Gapper (FT) Mar 1, 2017
An overheated market intoxicated by cheap credit serves as a warning to investors.
US-China race to dominate global governance must be avoided
Yao Yang (FT) Mar 1, 2017
The US retreat from globalisation leaves space for China.
Morocco: China's Gateway to Africa?
Joseph Hammond (Diplomat) Mar 1, 2017
Morocco is actively courting more Chinese investment and closer ties.
Treasuries Are Cheap
Komal S Sri-Kumar (Bloomberg View) Mar 1, 2017
Bond bears are wrong: There is no wolf at the door, just opportunity.
A Step Back from Trump’s Start
Michael J. Boskin (Project Syndicate) Mar 1, 2017
During the first month of Donald Trump’s presidency, the US media has been “all Trump, all the time.” And they’ve had plenty of fuel: as Trump has moved to “shake up” Washington, DC, he has made some serious – and avoidable – mistakes.
“America First” Financial Regulation?
Howard Davies (Project Syndicate) Mar 1, 2017
As US President Donald Trump struggles to fill his administration with sympathizers who can help to transpose tweets into policy, financial regulation has entered a period of high uncertainty – and high anxiety for policymakers. Will Trump maintain international cooperation, or seek to wall off the US from global rules.
GDP-linked bonds: A primer
Stephen Cecchetti and Kim Schoenholtz (VoxEU) Mar 1, 2017
Policymakers and economists have been looking for ways to make it easier to manage increasing debt burdens. This column assesses one possible solution: GDP-linked bonds that tie the size of debt payments to an economy’s wellbeing. There are clear benefits to a government from issuing GDP-linked bonds, but establishing investor confidence in these instruments will require a better approach to the obstacles posed by data revisions and changes in methodology. Policymakers and economists have been looking for ways to make it easier to manage increasing debt burdens. This column assesses one possible solution: GDP-linked bonds that tie the size of debt payments to an economy’s wellbeing. There are clear benefits to a government from issuing GDP-linked bonds, but establishing investor confidence in these instruments will require a better approach to the obstacles posed by data revisions and changes in methodology.
Prices, protectionism and politics threaten global outlook
Angela Bouzanis (Focus Economics) Mar 1, 2017
Global growth is likely to accelerate this year supported by both the emerging and developed economies. This month analysts left the 2017 global growth outlook unchanged from last month’s forecast as they wait to see how global developments over commodity prices, protectionism and politics playout. For 2017, the panel sees growth strengthening to...
Quo Vadis? Identity, policy and the future of the European Union
Thorsten Beck and Geoffrey Underhill (VoxEU) Mar 1, 2017
The institutions and even the very idea of the EU are under fire, with feelings of disenfranchisement among large parts of the population driving support for populist movements across the continent. This column introduces a new eBook that brings together analyses of this multidimensional crisis and of the way out - the future of the European Union. A worryingly common message is that muddling through will not be enough to save the EU as a political project. The institutions and even the very idea of the EU are under fire, with feelings of disenfranchisement among large parts of the population driving support for populist movements across the continent. This column introduces a new eBook that brings together analyses of this multidimensional crisis and of the way out - the future of the European Union. A worryingly common message is that muddling through will not be enough to save the EU as a political project.
The contemporary shadow of the Scramble for Africa
Stelios Michalopoulos and Elias Papaioannou (VoxEU) Mar 1, 2017
The Scramble for Africa has contributed to economic, social, and political underdevelopment by spurring ethnic-tainted civil conflict and discrimination and by shaping the ethnic composition, size, shape and landlocked status of the newly independent states. This column, taken from a recent VoxEU eBook, summarises the key findings of studies that use high-resolution geo-referenced data and econometric methods to estimate the long-lasting impact of the various aspects of the Scramble for Africa. The Scramble for Africa has contributed to economic, social, and political underdevelopment by spurring ethnic-tainted civil conflict and discrimination and by shaping the ethnic composition, size, shape and landlocked status of the newly independent states. This column, taken from a recent VoxEU eBook, summarises the key findings of studies that use high-resolution geo-referenced data and econometric methods to estimate the long-lasting impact of the various aspects of the Scramble for Africa.
How to Build an Autocracy
David Frum (Atlantic) Mar 1, 2017
The preconditions are present in the U.S. today. Here’s the playbook Donald Trump could use to set the country down a path toward illiberalism.
Wall Street Diversifies Itself
Bethany McLean (Atlantic) Mar 1, 2017
Exchange-traded funds are challenging the status quo in investment management—including who’s in charge.
Whither Economic Growth?
Nicholas Crafts (F&D) Mar 1, 2017
The global optimism at the turn of the century has been replaced by fear of long-term stagnation.
Getting It Right
Ruud De Mooij (F&D) Mar 1, 2017
Well-designed fiscal incentives can help spur innovation and ultimately growth.
Rethinking GDP
Diane Coyle (F&D) Mar 1, 2017
It may be time to devise a new measure of economic welfare with fewer flaws.
Point-Counterpoint on Secular Stagnation
J. Bradford DeLong vs. John B. Taylor (F&D) Mar 1, 2017
Should we adopt appropriate fiscal policies that provide for expansionary investment, or is productivity growth is depressingly low now but there is nothing secular about this?
Straight Talk: The Case for Inclusive Growth
Tao Zhang (F&D) Mar 1, 2017
Emerging economies should share the fruits of their growth more equitably.
A Middle Ground
Eswar Prasad (F&D) Mar 1, 2017
The renminbi is rising, but will not rule.
Unburnable Wealth of Nations
James Cust, David Manley, and Giorgia Cecchinato (F&D) Mar 1, 2017
Slowing climate change would lower fossil fuel resource values in many of the world's poorest countries
How Trump Views Trade
James Pethokoukis (TIE) Mar 1, 2017
It’s more than economics.
Border Tax Adjustments
Jason J. Fichtner, Veronique de Rugy, and Adam N. Michel (Mercatus) Mar 1, 2017
Republicans in the House of Representatives recently proposed a type of border-adjusted tax called a destination based cash flow tax (DBCFT) as a full replacement to the current corporate income tax. The proposed cash flow tax allows businesses to immediately deduct all expenses from revenue, including capital investments and labor. To keep the US tax from being levied on consumption in other countries, the tax is “border adjusted,” or removed from exports and added to imports. A new policy briefing lays out the unnecessary risks such a tax would pose to the US economy.
The roles of nature and history in world development
Vernon Henderson, Tim Squires, Adam Storeygard & David Weil (LSE) Mar 2017
Vernon Henderson and colleagues explore fundamental determinants of the location of economic activity.
Trump’s stealthy deregulation delights business
Gillian Tett (FT) Mar 2, 2017
Investors are optimistic because Congress is not the only game in town.
Emerging markets assets defy fears with third month of inflows
Jonathan Wheatley (FT) Mar 2, 2017
Investors take big bets on EM bonds and equities in further sign of confidence.
What Trump Gets Right on Trade
Alan Tonelson (NYT) Mar 2, 2017
And what his critics don't understand about manufacturing.
What Booming Markets Are Telling Us About the Global Economy
Neil Irwin (NYT) Mar 2, 2017
Shedding pessimism after seeming to be hopelessly trapped in a cycle of low growth and inflation.
Trump Calls for Free, "Fair Trade," Highlights Job Losses in Addressing US Congress
Bridges, Volume 21, Number 7 Mar 2, 2017
US President Donald Trump called for a bipartisan approach in efforts to increase American economic competitiveness during his first address to both chambers of the country’s Congress on Tuesday 28 February, in a speech that called for free, “fair trade” but otherwise offered few trade-related policy details.
WTO Director-General Roberto Azevêdo Gears Up for Second Term
Bridges, Volume 21, Number 7 Mar 2, 2017
WTO members formally reappointed Director-General Roberto Azevêdo for a second term on Tuesday 28 February, with the global trade chief outlining to members the day before his vision for the organisation’s next four years.
EU’s Malmström Makes Global Investment Court Pitch to Stakeholders
Bridges, Volume 21, Number 7 Mar 2, 2017
EU Trade Commissioner Cecilia Malmström reiterated calls for a multilateral investment court earlier this week, holding a meeting with stakeholders in Brussels on Monday on the subject. A public consultation on the court is currently underway, having been launched in December 2016, and is due to close on 15 March.
Herbert Spencer: Protectionism Is "Aggressionism"
Gary Galles (Mises Daily) Mar 2, 2017
One of the ways Donald Trump has been an outlier in Presidential annals is the speed with which he has started living up to campaign promises. His pace is so far beyond that of recent history that one political wag suggested Americans will need to switch to dog years to keep up.
What the IMF Doesn't Know About Ukraine
Leonid Bershidsky (Bloomberg View) Mar 2, 2017
Rebel regions in the country are nationalizing assets; Ukraine's GDP will take a hit.
A Battle Plan for Mexico's U.S. Trade War
Alejandro Silva and Alejandro Urbina (Bloomberg View) Mar 2, 2017
How to hit President Donald Trump where it hurts.
Rewriting the Monetary-Policy Script
Michael Heise (Project Syndicate) Mar 2, 2017
Many central bankers, intoxicated by rigid neo-Keynesian models of the effects of interest rates on demand and inflation, are ignoring a major lesson from decades of experimentation: the impact of monetary policy cannot be predicted with a high degree of certainty or accuracy. To manage risk, flexibility is key.
Addicted to Dollars
Carmen Reinhart (Project Syndicate) Mar 2, 2017
Since the end of World War II, America’s share of global output has fallen from nearly 30% to about 18%, yet the US dollar retains its dominant position as the world’s reserve currency – and by a solid margin. When – and how – will that change?
Apprenticeship and the rise of Europe
David de la Croix, Matthias Doepke and Joel Mokyr (VoxEU) Mar 2, 2017
The role of specific institutions was important in giving Europe a technological advantage well before the Industrial Revolution. This column argues that apprenticeships were crucial to Europe’s rise. Unlike in the extended families or clans in other parts of the world, apprentices in Europe’s guild systems could learn from any master. New techniques and innovations could thus spread rapidly across the continent, without being constrained by family lines. The role of specific institutions was important in giving Europe a technological advantage well before the Industrial Revolution. This column argues that apprenticeships were crucial to Europe’s rise. Unlike in the extended families or clans in other parts of the world, apprentices in Europe’s guild systems could learn from any master. New techniques and innovations could thus spread rapidly across the continent, without being constrained by family lines.
How colonial railroads defined Africa’s economic geography
Rémi Jedwab, Edward Kerby and Alexander Moradi (VoxEU) Mar 2, 2017
At the turn of the 19th century, sub-Saharan Africa was the least urbanised region in the world, with only about 50 cities of more than 10,000 inhabitants. By 2010, the number of cities had increased to almost 3,000. This column, taken from a recent VoxEU eBook, explores how colonial railroad investments transformed Africa’s economic geography, and asks whether economic outcomes would have been different and development delayed without the railroads. At the turn of the 19th century, sub-Saharan Africa was the least urbanised region in the world, with only about 50 cities of more than 10,000 inhabitants. By 2010, the number of cities had increased to almost 3,000. This column, taken from a recent VoxEU eBook, explores how colonial railroad investments transformed Africa’s economic geography, and asks whether economic outcomes would have been different and development delayed without the railroads.
What is global history now?
Jeremy Adelman (Aeon) Mar 2, 2017
Historians cheered globalism with work about cosmopolitans and border-crossing, but the power of place never went away
On Inequality, Redistribution, and Wishful Thinking
Maya Forstater (CGD) Mar 2, 2017
A key goal of tax-and-spending policies is to alleviate poverty by redistributing income from the haves to the have-nots. The extent that this is possible depends on the balance between the number of higher earners and the number of poor people, and the efficiency of the mechanisms used.
Chinese Firms Enter the Ranks of Global Superstars
Caroline Freund and Dario Sidhu (PIIE) Mar 3, 2017
Western corporations that dominated global industries until quite recently are increasingly facing competition from emerging-market economies, especially China. The last decade witnessed astonishing growth in China, with real GDP more than doubling between 2004 and 2014.
The Booming Global Arms Trade
Markus Heinrich (Globalist) Mar 3, 2017
Remember the “peace dividend”? The world, it seems, can never have enough weapons.
Greece Should Be Added to ECB's Bond-Buying List
Mark Gilbert (Bloomberg View) Mar 3, 2017
Greece needs to regain access to the capital markets. Mario Draghi can help.
There's No Separating Wealth and Power in Russia
Leonid Bershidsky (Bloomberg View) Mar 3, 2017
Crusading investigator Alexei Navalny explains why.
Trump’s Trade Revanchism
Joakim Reiter and Guillermo Valles (Project Syndicate) Mar 3, 2017
US President Donald Trump believes that the global economic system is rigged against America, and he wants to change it fundamentally. Short of reneging on trade deals, imposing tariffs, and engaging in full-scale protectionism, his administration has four other options for pursuing its goals.
The World That Made Trump
Michael Burleigh (Project Syndicate) Mar 3, 2017
A quarter-century ago, the West was riding high: Communism was passé, Europe was uniting, and US global leadership faced no serious challenge. Four new books examine how it all came apart – and what comes next.
Rethinking Productivity Growth
J. Bradford DeLong (Project Syndicate) Mar 3, 2017
According to conventional measurements, the world’s population is about 20 times richer than it was during the long Agrarian Age. But conventional measurements underestimate economic progress, because consumer choices now extend far beyond the goods and services that were broadly available back then.
America’s Bad Border Tax
Nouriel Roubini (Project Syndicate) Mar 3, 2017
US Republican leaders claim that a border-adjustment tax – which would effectively subsidize US exporters and penalize importers – would improve the US trade balance and boost domestic production, investment, and employment. They are wrong.
Exchange rate forecasting with DSGE models
Michele Ca' Zorzi and Marcin Kolasa (VoxEU) Mar 3, 2017
Macroeconomic models have been criticised for their inability to forecast exchange rates better than the random walk model. This column argues that open-economy DGSE models are useful in forecasting the real exchange rate but not the nominal exchange rate, owing to their failure to capture adequately the international co-movement of prices. They correctly predict, however, that the bulk of the real exchange rate adjustment occurs through the nominal rate. The central role of the nominal rate in restoring price competitiveness in flexible exchange rate regimes can be exploited from a forecasting perspective. Macroeconomic models have been criticised for their inability to forecast exchange rates better than the random walk model. This column argues that open-economy DGSE models are useful in forecasting the real exchange rate but not the nominal exchange rate, owing to their failure to capture adequately the international co-movement of prices. They correctly predict, however, that the bulk of the real exchange rate adjustment occurs through the nominal rate. The central role of the nominal rate in restoring price competitiveness in flexible exchange rate regimes can be exploited from a forecasting perspective.
US elections, interest rates, and Europe’s monetary sovereignty
Benoit Mojon (VoxEU) Mar 4, 2017
In the last two decades, there has been substantial co-movement of US and Eurozone interest rates. This column shows that the ECB’s unconventional monetary policy has largely succeeded in decoupling nominal interest rates in the Eurozone from those in the US since 2014. This has been especially true for rates of up to five years’ maturity since the rise in US interest rates following the election of Donald Trump. In the last two decades, there has been substantial co-movement of US and Eurozone interest rates. This column shows that the ECB’s unconventional monetary policy has largely succeeded in decoupling nominal interest rates in the Eurozone from those in the US since 2014. This has been especially true for rates of up to five years’ maturity since the rise in US interest rates following the election of Donald Trump.
Christian missions and development in sub-Saharan Africa
Julia Cagé and Valeria Rueda (VoxEU) Mar 4, 2017
Throughout history, religious change is known to have brought about significant economic change in many countries. This column, taken from a recent Vox eBook, looks at the effects of the Christian missionary activity that expanded throughout African countries from the middle of the 19th century. It shows how the diversity of investments brought by Christian missionaries to the region had different, and sometimes conflicting, effects on long-term development. Throughout history, religious change is known to have brought about significant economic change in many countries. This column, taken from a recent Vox eBook, looks at the effects of the Christian missionary activity that expanded throughout African countries from the middle of the 19th century. It shows how the diversity of investments brought by Christian missionaries to the region had different, and sometimes conflicting, effects on long-term development.
Narendra Modi must work harder to fulfil India’s potential
FT View Mar 5, 2017
If he is bold enough to try demonetisation, there are bigger challenges.
Trump’s trade policies won’t help my town
Rana Foroohar (FT) Mar 5, 2017
Outsourcing may have peaked but tech’s job disruption has just begun.
Robots are wealth creators and taxing them is illogical
Lawrence Summers (FT) Mar 5, 2017
Governments can offset lost jobs by investing in education and retraining.
Electric cars: China’s battle for the battery market
Henry Sanderson, Tom Hancock and Leo Lewis (FT) Mar 5, 2017
Beijing invests billions to try to squeeze out Japanese and South Korean rivals.
Why the White House Worries About Trade Deficits
Peter Navarro (WSJ) Mar 5, 2017
An imbalance imperils economic growth—and could put U.S. national security in jeopardy.
Trumping Europe’s Taxes
Joseph C. Sternberg (WSJ) Mar 5, 2017
Nations competing by lowering rates? The idea is making the Continent nervous.
The institutions behind East Asia’s transformation
Ponciano Intal Jr (EAF) Mar 5, 2017
One remarkable development in East Asia over the past three decades is the emergence of a regional architecture — a coherent network of institutions that work together for prosperity and stability — that has revolved around small and middleweight countries with support from the Pacific's big powers. What is equally important is that this architecture has been characterised by open regionalism — the removal of trade barriers within the region without discriminating against outsiders — and a cooperative multilateral perspective on security.
France's Farmers Are More Productive Than You Might Think
Justin Fox (Bloomberg View) Mar 5, 2017
All that wine and decadent cheese is driven by the industry's dedication to variety.
Emerging-Market Investors Take a Shine to Egypt
John Sfakianakis (Bloomberg View) Mar 5, 2017
The country got an IMF loan and allowed its pound to float freely.
China's Hidden Risks Rise
Christopher Balding (Bloomberg View) Mar 5, 2017
The government must start imposing losses on investors.
Exchange rates and utilisation of free trade agreements
Kazunobu Hayakawa, HanSung Kim and Taiyo Yoshimi (VoxEU) Mar 5, 2017
Some exporters prefer to use most-favoured nation rates even when exporting to a fellow member of a free trade agreement. This column analyses the effect of exchange rates on the utilisation of free trade agreements, focusing on the ASEAN-Korea agreement. A depreciation of an (ASEAN) exporter’s currency against the (Korean) importer’s currency enhances utilisation rates of the trade agreement’s tariffs, with implications for the design of rules of origin. Some exporters prefer to use most-favoured nation rates even when exporting to a fellow member of a free trade agreement. This column analyses the effect of exchange rates on the utilisation of free trade agreements, focusing on the ASEAN-Korea agreement. A depreciation of an (ASEAN) exporter’s currency against the (Korean) importer’s currency enhances utilisation rates of the trade agreement’s tariffs, with implications for the design of rules of origin.
There is more to industrial strategy than picking winners
Kate Barker (FT) Mar 6, 2017
Government has a role to play in correcting market failure.
Investors spy clouds on the bond market horizon
Danielle DiMartino Booth (FT) Mar 6, 2017
A long era of calm is coming to an end.
Everything the Market Thinks About Inflation Might Be Wrong
Jon Sindreu (WSJ) Mar 6, 2017
How much money a central bank prints may be less important to inflation than commodity prices
A 'Bad Bank' Could Be Good for Europe
Bloomberg View Mar 6, 2017
If only Germany would agree.
Forget the Border Levy. Here's the Really Big GOP Tax Idea.
Noah Smith (Bloomberg View) Mar 6, 2017
Ending deductibility of corporate debt would shake up markets -- and eventually help stabilize the economy.
Specter of No Brexit Deal Haunts U.K. Automakers
Mark Gilbert (Bloomberg View) Mar 6, 2017
Any trade deal looks better than no deal for Britain's car industry.
If Trump Wants Growth, He'll Need Immigrants
Mark Whitehouse (Bloomberg View) Mar 6, 2017
The labor force needs foreign-born workers to keep expanding.
How to Survive the Robocalypse
Jason M Schenker (Bloomberg View) Mar 6, 2017
All you need are skills or education.
Election Campaigns Are Going Global
Leonid Bershidsky (Bloomberg View) Mar 6, 2017
Turkish President Recep Tayyip Erdogan is fighting for votes in Germany because that could be the difference between victory and defeat.
Trade Truths for Trumpians and Brexiteers
Jim O'Neill (Project Syndicate) Mar 6, 2017
Recent data indicate that Germany's largest trading partner is now China, rather than France. This news should serve as a reality check for protectionist policymakers in the UK and the US, and for the many pundits who frequently comment on world trade without understanding its realities.
Trump’s Revolutionary Dilemma
Harold James (Project Syndicate) Mar 6, 2017
Like the Bolsheviks in 1917, the political movements behind Trump and Brexit consider themselves to be the vanguard of an international revolt. But the states they seek to dismantle are far more extensive and capable than they were a century ago – and the costs of radicalization would be far higher as well.
Is Liberal Internationalism Dead?
Tony Smith (Project Syndicate) Mar 6, 2017
Donald Trump’s “America first” approach contradicts virtually every principle that Woodrow Wilson established as the basis for American liberal internationalism. But Wilson’s vision has survived rejection before.
Assessing the effects of regulatory bank levies
Claudia Buch, Lena Tonzer and Benjamin Weigert (VoxEU) Mar 6, 2017
In response to the Global Crisis, governments have implemented restructuring and resolution regimes backed by funds financed by bank levies. Bank levies aim to internalise system risk externalities and to provide funding for bank recovery and resolution. This column explores bank levy design by considering the German and European cases. The discussion points to the importance of structured policy evaluations to determine the effects of levies. In response to the Global Crisis, governments have implemented restructuring and resolution regimes backed by funds financed by bank levies. Bank levies aim to internalise system risk externalities and to provide funding for bank recovery and resolution. This column explores bank levy design by considering the German and European cases. The discussion points to the importance of structured policy evaluations to determine the effects of levies.
International Financial Cooperation Benefits the United States
Edwin M. Truman (PIIE) Mar 6, 2017
The financial crisis of 2007–09 wreaked worldwide havoc because of the interconnectedness of many countries’ economies and financial systems. To contain and stabilize these interwoven global financial systems and avert future crises thus requires international cooperation, preferably with American leadership. The Trump administration’s policies on these matters are unclear. But early indications are cause for concern over future US commitment to international regulations to prevent and manage the inevitable occurrence of future crises.
A word of caution on the bond-stock decoupling
Mohamed El-Erian (FT) Mar 7, 2017
Equity market optimism is not reflected in bonds. How significant is this divergence?
Container shipping: volatility, uncertainty and disruption
Jonathan Wheatley (FT) Mar 7, 2017
Customers have got the price rises they asked for but stability may not last.
Post-Brexit delusions about Empire 2.0
James Blitz (FT) Mar 7, 2017
Trading with the Commonwealth will be a poor substitute for the EU.
Britain plays with fire over Brexit
Martin Wolf (FT) Mar 7, 2017
It holds a weak hand – without a deal, trade and relationships will be damaged.
Donald Trump is suffering from trade deficit disorder
Stephen Roach (FT) Mar 7, 2017
The temptation to punish China with tariffs is an example of a misguided approach.
Trump, Trade and American Sovereignty
John Bolton (WSJ) Mar 7, 2017
The WTO’s process for settling disputes fails to deter violators and leaches national power.
Will risks derail the economy?
Catherine L. Mann (OECD) Mar 7, 2017
Global GDP growth in this Interim Economic Outlook is projected to pick up modestly to around 3½ per cent in 2018, from just under 3% in 2016, boosted by fiscal initiatives in the major economies. The forecast is broadly unchanged since November 2016. Confidence has improved, but consumption, investment, trade and productivity are far from strong, with growth slow by past norms and higher inequality. Disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties could, however, derail the modest recovery.
Is stress testing good for you?
Brian Caplen (Banker) Mar 7, 2017
Banks should stop complaining about stress testing and start using it to better understand their business models – although, surprisingly, there does not seem to be an off-the-shelf platform to do the job.
The Big Reform India Needs Most
Bloomberg View Mar 7, 2017
Bad debts are dragging down the banking sector -- and the economy.
Europe's Populists Aren't the Threat You Think
Leonid Bershidsky (Bloomberg View) Mar 7, 2017
Euroskeptic, anti-immigrant parties are slipping in polls and may not win any major victories this year.
'Border Adjustment Tax' Just Means New Loopholes
Tyler Cowen (Bloomberg View) Mar 7, 2017
Good news for tax lawyers and lobbyists!
Trump's Industrial Rebirth Is a Dead End
Noah Smith (Bloomberg View) Mar 7, 2017
There's no future in the U.S. for old-line manufacturers that dominated the mid-20th century economy.
The Pie-in-the-Sky UBI
Laura Tyson and Lenny Mendonca (Project Syndicate) Mar 7, 2017
According to the conventional wisdom in Silicon Valley, robots will soon eat everyone’s job, and a universal basic income will become necessary. But this hypothetical future has not yet arrived, and proposals for a UBI in the US risk diverting policymakers' attention from the many more pressing challenges confronting workers today.
Germany’s Misunderstood Trade Surplus
Marcel Fratzscher (Project Syndicate) Mar 7, 2017
The ongoing debate about Germany’s current-account surplus – which has now set a new record – has been counterproductive, and is based on three common fallacies. Criticism of Germany’s export prowess, and accusations of currency manipulation, are just as wrong-headed as Germany’s own defense of its bloated surplus.
China’s Belt and Road Initiative: Can Europe Expect Trade Gains?
Alicia García-Herrero (Brink) Mar 7, 2017
China’s Belt and Road Initiative seeks to improve trade by upgrading transport infrastructure across much of Eurasia. The undertaking spans a massive geographic area covering as many as 63 countries. While the idea that improved transport infrastructure fosters trade is intuitive, which countries win or lose depends on their distance from the improved infrastructure.
The benefits of GDP-indexed bonds
Bruno Cabrillac, Ludovic Gauvin and Jean-Baptiste Gossé (VoxEU) Mar 7, 2017
Interest in nominal GDP-indexed bonds has grown in the context of the debate on how to prevent future sovereign debt crises. This column uses simulations up to 2040 to identify which countries would benefit from using such bonds instead of conventional debt. By issuing GDP-indexed bonds, these countries would protect their debt ratios against deflation and recession, and investors could benefit from the catching-up of emerging economies, could partially hedge their currency risk, and could diversify their portfolio compared to equity. The contribution of GDP-indexed bonds to international financial stability would justify international coordination to promote their use. Interest in nominal GDP-indexed bonds has grown in the context of the debate on how to prevent future sovereign debt crises. This column uses simulations up to 2040 to identify which countries would benefit from using such bonds instead of conventional debt. By issuing GDP-indexed bonds, these countries would protect their debt ratios against deflation and recession, and investors could benefit from the catching-up of emerging economies, could partially hedge their currency risk, and could diversify their portfolio compared to equity. The contribution of GDP-indexed bonds to international financial stability would justify international coordination to promote their use.
Joined-up thinking is key to delivering productivity growth
Stephanie Flanders (FT) Mar 8, 2017
The chancellor rightly put a focus on social capital.
Leave the econometrics and tackle the social divisions
Kitty Ussher (FT) Mar 8, 2017
Brexit’s economic effects will emerge long-term — focus instead on social divisions
Who knew the engines of the economy were dirty tax dodgers?
Robert Shrimsley (FT) Mar 8, 2017
And you thought a Tory government rather smiled on this wicked bunch.
Brexit Writ Small
WSJ Mar 8, 2017
Britain’s new budget is too cautious to boost growth outside the EU.
SWIFT Gets Caught
Marcus Noland (PIIE) Mar 8, 2017
But does it get punished?
Who Pays for Border Adjustment? Sooner or Later, Americans Do
Olivier Blanchard and Jason Furman (PIIE) Mar 8, 2017
Former Senator Russell Long famously quipped that what everyone wanted was, “Don’t tax you, don’t tax me, tax that fellow behind the tree!” Some supporters of the border adjustment to the cash flow tax being considered by Congress maintain that they have finally found a way to tax the fellow behind...
The Time Is Right for Expanding the Use of the IMF’s Precautionary Credit Lines
Nancy Birdsall, Liliana Rojas-Suarez and Anna Diofasi (CGD) Mar 8, 2017
Many emerging economies could benefit from insurance against this backdrop of volatility. Fortunately, cheap and no-strings-attached liquidity insurance exists, in the form of the IMF’s Flexible Credit Line (FCL) for countries with very strong policy fundamentals; for countries with somewhat weaker, but still sound fundamentals, the Precautionary and Liquidity Line (PLL) offers a similarly good deal. But these precautionary instruments remain underutilized. We have some suggestions on how the IMF could fix this.
India's GDP numbers are likely to be an overestimation
Abhijit Banerjee (Hindustan Times) Mar 8, 2017
The answer to why the GDP numbers came out the way they did was already anticipated and nicely explained in the excellent Economic Survey that came out last month.
Strengthening the International Monetary System
Mitsuhiro Furusawa (IMF) Mar 8, 2017
I would like to provide an overview to some of the key issues related to the International Monetary System that we will examine. I will focus on three in particular—all of which are of central importance to Asian policymakers: the reduction of global imbalances; the strengthening of the global financial safety net; and the internationalization of currencies.
Business Protections Need an Expiration Date
Noah Smith (Bloomberg View) Mar 8, 2017
The Luddites can save jobs in the short term. But they cause harm in the long run.
Prepare for Market Beliefs to Be Challenged
Mohamed Aly El-Erian (Bloomberg View) Mar 8, 2017
A long list of developments should have resulted in higher volatility.
Border Tax Fans Fail to Consider Stronger Dollar
Gary Shilling (Bloomberg View) Mar 8, 2017
The surging greenback will make it more expensive for foreign borrowers to service debt.
Trump’s Virtual Wall
Kenneth Rogoff (Project Syndicate) Mar 8, 2017
The proposed border adjustment tax in the US has not seeped into public consciousness in nearly the same way as Trump’s physical wall has. But the tax-and-subsidy scheme could end up affecting the average American a lot more – and not necessarily in a good way.
What’s Better Than a Border Adjustment Tax?
Michael Heise (Project Syndicate) Mar 8, 2017
US President Donald Trump wants not only to lower the overall tax burden, but also to “rebalance” the tax system to encourage domestic production and exports, possibly with a border-adjustment tax. But the economic, political, and legal risks of such a radical reform would likely overwhelm any rewards.
The Long Economic and Political Shadow of History - Volume III. Europe and the Americas
Stelios Michalopoulos and Elias Papaioannou (VoxEU) Mar 8, 2017
Over the past decades, economists working on growth have ‘rediscovered’ the importance of history, leading to the emergence of a vibrant, far-reaching inter-disciplinary stream of work. This column introduces the third and final eBook in our three-part series which examines key themes in this emergent literature and discusses the impact they have on our understanding of the long-run influence of historical events on current economics. This volume focuses on the Americas and Europe and examines how events from history have helped shape their post-war economic identities. Over the past decades, economists working on growth have ‘rediscovered’ the importance of history, leading to the emergence of a vibrant, far-reaching inter-disciplinary stream of work. This column introduces the third and final eBook in our three-part series which examines key themes in this emergent literature and discusses the impact they have on our understanding of the long-run influence of historical events on current economics. This volume focuses on the Americas and Europe and examines how events from history have helped shape their post-war economic identities.
Designing mega-regional trade agreements
Kazunobu Hayakawa, Shujiro Urata and Taiyo Yoshimi (VoxEU) Mar 8, 2017
The emergence of mega-regional trade agreements is likely to complicate the trading environment as the ‘noodle bowl’ of overlapping trade agreements gets bigger. This column argues that when multiple preferential tariff schemes are available, exporters' choice of scheme depends on the coverage of products, the extent of tariff reduction, and the ease of complying with rules of origin. These dimensions should all be taken into account when designing mega-regional trade agreements to encourage their utilisation. The emergence of mega-regional trade agreements is likely to complicate the trading environment as the ‘noodle bowl’ of overlapping trade agreements gets bigger. This column argues that when multiple preferential tariff schemes are available, exporters' choice of scheme depends on the coverage of products, the extent of tariff reduction, and the ease of complying with rules of origin. These dimensions should all be taken into account when designing mega-regional trade agreements to encourage their utilisation.
Donald Trump Is the Opportunity Mexico Has Been Waiting for
Sam Quinones (FP) Mar 8, 2017
There’s nothing like a parody of a Yankee president to put an end to years of political in-fighting.
Why Is China So... Uncool?
George Gao (FP) Mar 8, 2017
The country's got all the right stuff to be a soft-power giant. But Beijing won't get out of its own way.
Three reasons why globalisation will survive protectionist rebellions
Martin Sandbu (FT) Mar 9, 2017
The open world economy can withstand the populist assault.
How not to negotiate Brexit — the essential guide
Philip Stephens (FT) Mar 9, 2017
The risk is that mutual interest in an agreed outcome is lost to emotion.
It will be easy but short-sighted for Trump to punish China
Yao Yang (FT) Mar 9, 2017
Punitive trade tariffs would backfire and hurt US consumers, workers and companies.
The fantasy of Commonwealth bonds hinders trade progress
Geoff Raby (FT) Mar 9, 2017
Britain lacks the resources to strike more than a few bilateral deals at a time.
How to Think About the Trade Deficit
WSJ Mar 9, 2017
Peter Navarro is wrong about the U.S. balance of payments.
America Can’t Escape the Debt Vortex
George Melloan (WSJ) Mar 9, 2017
Total obligations in the U.S. have hit 370% of GDP—and Trump seems intent on making matters worse.
EU’s Malmström Pushes for Deeper Trade Ties in Asia-Pacific Region
Bridges, Volume 21, Number 8 Mar 9, 2017
Boosting economic ties with the Asia-Pacific region is one of the main items on the EU trade docket this week, as the bloc’s top trade official travels to Singapore and the Philippines for talks on advancing various initiatives.
E-Commerce Proposals in Focus at WTO's TRIPS Council
Bridges, Volume 21, Number 8 Mar 9, 2017
World Trade Organization (WTO) members met last week to discuss a series of communications involving the intellectual property (IP) aspects of electronic commerce, along with continuing their past discussions on a UN report regarding access to medicines and health technologies.
Canada, China Moving Closer to Potential Trade Talks
Bridges, Volume 21, Number 8 Mar 9, 2017
Efforts to lay the groundwork for possible negotiations on a bilateral Canada-China trade deal continue underway, with Canadian officials launching a three-month domestic consultations period last week.
Statistical Insights: Large inequalities in longevity by gender and education in OECD countries
OECD Statistics Directorate (OECD Insights) Mar 9, 2017
While differences in average longevity, or life expectancy, between countries are well-documented, inequalities in longevity within countries are less well-understood and are not fully comparable beyond a handful of European countries.
Fake Goods Syphon $461 Billion Out of World Economy
Brink Mar 9, 2017
Counterfeit and pirated goods cost the global economy as much as $461 billion a year: that’s roughly the entire annual economic output of Austria.
The ECB Faces a Balance Sheet Dilemma
Danielle DiMartino Booth (Bloomberg View) Mar 9, 2017
The central bank may not be able to end its QE program until 2019.
Draghi Tiptoes Toward the QE Exit
Mark Gilbert (Bloomberg View) Mar 9, 2017
The ECB president is right to resist German pressure to change course.
Trump's Plan to Bring Back Manufacturing Isn't Crazy
Noah Smith (Bloomberg View) Mar 9, 2017
Reshoring production would be good for the economy. Just don't expect a boom in blue-collar jobs.
Navigating America’s Economic-Policy Shocks
Shang-Jin Wei (Project Syndicate) Mar 9, 2017
The changes to tax and trade policies under consideration in the US amount to a perfect storm of uncertainty that emerging-market countries must somehow navigate. Inadequate preparation will only aggravate the damage.
Populism Versus Prosperity
Bill Emmott (Project Syndicate) Mar 9, 2017
The far-right French presidential candidate Marine Le Pen thinks that this century’s defining battle will be fought between patriotism and globalism. But the battle that really matters is between long-term and short-term thinking.
Trump’s Gift to China
Kaushik Basu (Project Syndicate) Mar 9, 2017
If US President Donald Trump follows through on his protectionist threats against China, the short-run consequences – including a trade war – could be serious. But, in the longer term, US protectionism could be a blessing in disguise for all emerging economies as they seek to boost their international clout.
What’s a President to Do?
Barry Eichengreen (Project Syndicate) Mar 9, 2017
Donald Trump took office promising a raft of sweeping economic-policy changes. He has quickly discovered, like previous US presidents, that America’s political system is designed to prevent rapid, large-scale change, by interposing formidable institutional obstacles.
Democracy in the UK?
Anatole Kaletsky (Project Syndicate) Mar 9, 2017
The unelected House of Lords has defended popular sovereignty in its vote on the Brexit bill. Requiring parliamentary approval could reopen the debate on Britain’s EU membership.
Trading Places: Smuggling and Revolution
Rebecca Simon (History Today) Mar 9, 2017
American history has always been decided by its people, as England learned when it attempted to impose harsh trade restrictions in the 17th century.
Four Contradictions of US Trade Policy
Chris Miller (YaleGlobal) Mar 9, 2017
Tax cuts and boosted spending to create jobs hike the value of the US dollar, reducing US exports and competitiveness.
Revisiting the paradox of capital
Emine Boz, Luis Cubeddu and Maurice Obstfeld (VoxEU) Mar 9, 2017
After intensifying through the 2000s until the Global Crisis, the ‘uphill’ flow of capital from poor to rich countries decelerated and has recently reversed. This column documents that saving shifts by China, commodity-exporting emerging and developing economies, and advanced economies played key roles in accounting for the apparently puzzling pattern in the pre-crisis decade. Ongoing policy uncertainties in advanced economies mean large and persistent downhill flows of capital are unlikely in the near term. Going forward, capital flows to emerging and developing economies will need to be supported by policies that enhance the benefits of inflows, temper capital flow volatility, and improve the resilience and depth of domestic financial markets. After intensifying through the 2000s until the Global Crisis, the ‘uphill’ flow of capital from poor to rich countries decelerated and has recently reversed. This column documents that saving shifts by China, commodity-exporting emerging and developing economies, and advanced economies played key roles in accounting for the apparently puzzling pattern in the pre-crisis decade. Ongoing policy uncertainties in advanced economies mean large and persistent downhill flows of capital are unlikely in the near term. Going forward, capital flows to emerging and developing economies will need to be supported by policies that enhance the benefits of inflows, temper capital flow volatility, and improve the resilience and depth of domestic financial markets.
Better Capitalised Banks Lend More and Lend Better
Stephen G. Cecchetti & Kermit L. Schoenholtz (EFR) Mar 9, 2017
Are higher capital requirements really a drag on economic growth?
Currency and QE: Ramifications of Questioning the Euro
Andrew Bosomworth (PIMCO) Mar 9, 2017
Some political parties in the eurozone actively embrace a return to legacy currencies. Though the probability of a country leaving the euro is very low, for investors it creates a disincentive to commit to long-term, cross-border investments and may hamper the formation of a capital markets union. We think the political sentiment could tilt the European Central Bank (ECB) toward winding down its quantitative easing (QE) programme before inflation convincingly reaches 2%. We don’t believe the euro is facing an existential threat. Indeed, we think voters will not elect anti-euro parties to government at this year’s elections. However, their positions and voters’ dissatisfaction with the euro could strengthen in the future.
Nigeria to lose crown as Africa’s largest economy
Steve Johnson (FT) Mar 10, 2017
Recession and plunging currency allow South Africa to reclaim top billing.
Trump and Germany: On Trade Imbalances and Exchange Rates
Robert Bischof (Globalist) Mar 10, 2017
Germany should point out to Trump that it is his own irresponsible macroeconomic policies that make the dollar strong and the euro weak.
Income Inequality, Robots and a Path to a Fairer Society
Robert Shiller and Jeremy Siegel (K@W) Mar 10, 2017
On wealth disparity.
How EEC membership drove Margaret Thatcher’s reforms
Nauro Campos and Fabrizio Coricelli (VoxEU) Mar 10, 2017
After 1945, the economies of the six founding members of the European Union grew faster than the UK's economy. Margaret Thatcher’s reforms in the mid-1980s have been credited with reversing this relative decline. This column argues that there is little empirical support for this explanation, and that a more credible turning point was around 1970 when the UK finally began the process of joining the European Economic Community. After 1945, the economies of the six founding members of the European Union grew faster than the UK's economy. Margaret Thatcher’s reforms in the mid-1980s have been credited with reversing this relative decline. This column argues that there is little empirical support for this explanation, and that a more credible turning point was around 1970 when the UK finally began the process of joining the European Economic Community.
Housing Bubble Déjà Vu
Mark Roe (Project Syndicate) Mar 10, 2017
The 2008 crisis exposed a serious weakness in the global financial system’s architecture: the overnight market for mortgage-backed securities. Some nine years later, that weakness has not been addressed adequately.
The Macro-Promise and the Micro-Peril: The Global Economy of 2017
Christopher Smart (EFR) Mar 10, 2017
While financial markets have taken recent political turmoil in stride, the questions continue to mount for anyone trying to make plans for a global business. If political leaders cannot provide more clarity soon on the policy framework ahead, it’s not just the stocks and bond markets that will suffer. The entire global recovery will be at risk.
Markets Struck by Moonlight
PIMCO Mar 10, 2017
Political drama set the tone in February as investor attention turned toward Washington for glimpses of further policy detail. Amid the uncertainty, anticipation grew of a possible U.S. rate hike as soon as March. Neither the spate of political noise nor the shift in rate hike expectations over the month did much to dampen investor confidence or risk appetite.
Long-run money demand redux
Luca Benati, Robert Lucas, Juan Pablo Nicolini and Warren E. Weber (VoxEU) Mar 11, 2017
Most economists and central bankers no longer consider money supply measures to be useful for conducting monetary policy. One reason is the alleged instability of the relationship between monetary aggregates. This column uses data from 32 countries and spanning up to 100 years to argue that the long-run demand for money is alive and well. Results show a remarkable stability in long run money demand, both within and across countries. Nonetheless, short-run departures can be large and persistent, and further research is needed. Most economists and central bankers no longer consider money supply measures to be useful for conducting monetary policy. One reason is the alleged instability of the relationship between monetary aggregates. This column uses data from 32 countries and spanning up to 100 years to argue that the long-run demand for money is alive and well. Results show a remarkable stability in long run money demand, both within and across countries. Nonetheless, short-run departures can be large and persistent, and further research is needed.
South Korea’s democracy shines through in a crisis
FT View Mar 12, 2017
Seoul has a chance to push economic reform and diplomatic ties.
US Treasuries: On the cusp of a reversal
Joe Rennison and John Authers (FT) Mar 12, 2017
Some see the end of the bond bull run amid signs of growth, inflation and a rate rise.
China’s fixation on stability creates economic risks
Eswar Prasad (FT) Mar 12, 2017
President Xi would increase control over the economy by letting markets operate.
A multi-speed formula will shape Europe’s future
Wolfgang Münchau (FT) Mar 12, 2017
The best option is a structure with an integrated core and a looser outer layer.
The Economic Winds Are at Europe’s Back
Ruchir Sharma (WSJ) Mar 12, 2017
A continent in crisis? Far from it. Unemployment is down; growth is up; even Greek banks are healthier.
Trickle-Down Corruption in Brazil
Mary Anastasia O’Grady (WSJ) Mar 12, 2017
The rot starts with Petrobras and with the opaque national development bank.
Benefits of importing: Evidence from US firms
Pol Antràs, Teresa Fort and Felix Tintelnot (VoxEU) Mar 12, 2017
A growing body of economic research documents the potential negative effects of increased trade integration, often with a focus on increased Chinese import penetration. This column argues that some US firms benefit significantly from increased import opportunities as they lower their costs and expand. Protectionism in the form of higher domestic tariffs would decrease these domestic firms’ competitiveness both at home and abroad. A growing body of economic research documents the potential negative effects of increased trade integration, often with a focus on increased Chinese import penetration. This column argues that some US firms benefit significantly from increased import opportunities as they lower their costs and expand. Protectionism in the form of higher domestic tariffs would decrease these domestic firms’ competitiveness both at home and abroad.
Central banks can see a path back to normality
FT View Mar 13, 2017
The need for extraordinary loose money measures is diminishing.
Brexit pushes the Union towards the cliff edge
FT View Mar 13, 2017
Scots have the right to vote again but deserve an informed choice
China Crisis? Not if Xi can help it
Timothy Ash and Graham Stock (FT) Mar 13, 2017
China has too much to lose from confrontation with the Trump White House.
The folly of Donald Trump’s bilateralism in global trade
Martin Wolf (FT) Mar 13, 2017
Economic nationalists prefer the exercise of US power to co-operation.
More Bank Capital Could Kill the Economy
Tim Congdon and Steve H. Hanke (WSJ) Mar 13, 2017
Regulators sparked the Great Recession with a credit crunch. Now they want to do it again.
The Geopolitical Impact of China’s Economic Diplomacy
BRINK Mar 13, 2017
The prevailing conventional wisdom of a singularly powerful, hegemonic China is too simplistic; the interconnected geo-economics of today’s world, though often stark and abrupt, are woven from a set of complex and nuanced political realities surrounding the execution of China’s economic diplomacy.
Trump’s Top China Expert Isn’t a China Expert
Melissa Chan (FP) Mar 13, 2017
National Trade Council Director Peter Navarro doesn't speak Chinese and has scant in-country experience. Should that matter?
Saudi Arabia's Failed Oil War
Nicholas Borroz and Brendan Meighan (FA) Mar 13, 2017
Why its days of market dominance are over.
Germany, the G20, and Inclusive Globalization
Wolfgang Schäuble (Project Syndicate) Mar 13, 2017
The populist agenda is based on the deeply flawed premise that international cooperation and international trade are zero-sum games, producing only winners and losers. In fact, cooperation and trade can deliver benefits to all countries, and, during its G20 presidency, Germany intends to show how.
Monetary policy credibility and exchange rate pass-through
Yan Carrière-Swallow, Bertrand Gruss, Nicolas Magud and Fabian Valencia (VoxEU) Mar 13, 2017
The rate at which consumer prices rise following a depreciation of the currency, known as the exchange rate pass-through, has been declining. The column uses a decomposition of exchange rate pass-through into the component that can be attributed to pricing of imported goods at the dock, and the second-round effects on domestically produced goods and services, to show that reductions in second-round effects are largely responsible for the decline in pass-through. Enhanced monetary policy credibility is strongly associated with this reduction. The rate at which consumer prices rise following a depreciation of the currency, known as the exchange rate pass-through, has been declining. The column uses a decomposition of exchange rate pass-through into the component that can be attributed to pricing of imported goods at the dock, and the second-round effects on domestically produced goods and services, to show that reductions in second-round effects are largely responsible for the decline in pass-through. Enhanced monetary policy credibility is strongly associated with this reduction.
Will the Proposed US Border Tax Provoke WTO Retaliation from Trading Partners?
Chad P. Bown (PIIE) Mar 13, 2017
A major economic concern with the border tax adjustment blueprint, which House Speaker Paul Ryan and House Ways and Means Committee chair Kevin Brady support, is its potential to reduce US imports and promote US exports in a way that could violate international trade rules. Because of the size of the US economy, the trade distortions resulting from the tax would punish US trading partners, putting pressure on them to retaliate immediately. World Trade Organization (WTO) rules establish a framework for understanding how trading partners' policy response to a US tax reform would proceed. The potential retaliatory costs to US exporters associated with elements of the Ryan-Brady blueprint could be large. If the reform is found to violate WTO rules by restricting US imports, trading partners could be authorized to retaliate by an estimated $220 billion annually. If the new US tax is found to implicitly subsidize exports, partners could be authorized to retaliate by an additional $165 billion annually. The United States would face some of this combined $385 billion in retaliation almost immediately upon implementing the tax, through the imposition of countervailing duties by trading partners. Any durable overhaul of the US tax system requires a frank airing and honest empirical assessment of the international implications of the policy. It is best to tackle the issue with a strong US commitment to international engagement and cooperation with trading partners.
An emerging market toolkit is essential for investors in the west
Huw van Steenis (FT) Mar 14, 2017
Economic nationalism has led to a boom in political risk analysis.
Dollar strength has ‘little’ impact on EM equities’ relative returns
Steve Johnson (FT) Mar 14, 2017
Credit spreads, commodity prices and growth differentials found to be more important.
Iceland, Symbol of Financial Crisis, Finally Lifts Capital Controls
Liz Alderman (NYT) Mar 14, 2017
The move closes a fraught chapter in the country’s economic history, but Iceland faces new challenges as growth rebounds — some say too quickly for its own good.
The Fed’s Era of Easy Money Is Ending
Neil Irwin (NYT) Mar 14, 2017
For the first time in almost a decade, Fed officials are signaling a greater collective confidence and unanimity that the economy can handle tighter money.
Is the Era of Ultralow Interest Rates Coming to a Close?
C. Jay Engel (Mises Daily) Mar 14, 2017
The Wall Street Journal writes on tomorrow's FOMC rate announcement that "[a] long era of ultralow interest rates and bond-buying programs may be drawing to a close." This is remarkable. The minuscule uptick from the .5-.75% range to a .75-1% range is hardly leaving behind ultralow interest rates. As can be seen in the chart below, a quarter percent rise in the federal funds rate will barely show up, when looking at rates from a longer-term perspective.
Banks must prepare for a hard Brexit
Brian Caplen (Banker) Mar 14, 2017
With the triggering of Article 50 coming shortly, the countdown to the UK’s departure from the EU will begin. Banks need to assume the worst outcome in their planning.
Renegotiating NAFTA: What Happens Next?
Gary Clyde Hufbauer and Euijin Jung (PIIE) Mar 14, 2017
President Donald Trump is expected to notify Congress in the next few weeks that the administration intends to renegotiate the North America Free Trade Agreement (NAFTA), and to disclose its priorities.
Addressing the imbalance between investment protection and people protection: Making globalisation work for all
Roel Nieuwenkamp (OECD Insights) Mar 14, 2017
We are facing a backlash against globalisation. This has gone hand in hand with a push back against investment treaties and trade agreements: just watch the election campaigns and the downfall of TTIP and TPP negotiations.
Day of Reckoning Looms for Republicans, Long Opposed to Raising US Debt Ceiling
David Dapice (YaleGlobal) Mar 14, 2017
The US debt approaches $20 trillion and the Republican-controlled US Congress must agree to lift debt ceiling to avoid default
The Great Eurozone Bounceback
Anatole Kaletsky (Project Syndicate) Mar 14, 2017
The eurozone could surprise everyone with a dramatic recovery this year, says Gavekal Dragonomics’ Anatole Kaletsky, so long as populists stay out of power.
Democracy Over Sovereignty in Europe
Lucrezia Reichlin (Project Syndicate) Mar 14, 2017
The EU's future may not be officially on the ballot in the upcoming Dutch, French, German, and Italian elections, but the results will certainly go a long way toward determining Europe’s fate. A victory for pro-European forces would provide perhaps the last opportunity to fix the central problem of the EU's Maastricht framework.
How Much Europe Can Europe Tolerate?
Dani Rodrik (Project Syndicate) Mar 14, 2017
The EU is celebrating the 60th anniversary of its founding treaty, the Treaty of Rome, which established the European Economic Community. There is indeed much to celebrate, and yet the Union is mired in a deep existential crisis, and appears unable to close the gap between political and economic integration.
Iceland’s capital solution to a dire banking crisis
FT View Mar 15, 2017
Controls on capital flows have worked — so now they can be removed.
Brexit means the end of single market access for London
Christian Noyer (FT) Mar 15, 2017
There will be no back door into the EU for financial institutions in the City
Europe’s fight to prove union has staying power after Brexit
Philip Stephens (FT) Mar 15, 2017
Sixty years after the Treaty of Rome, there is still a case for integration even as the UK prepares to leave.
China’s premier seeks to cool trade tensions with US
Tom Mitchell in Beijing and Tom Hancock (FT) Mar 15, 2017
Li Keqiang strikes conciliatory tone after combative comments from Trump trade pick.
A 21st-Century Federal Reserve
Todd G. Buchholz (WSJ) Mar 15, 2017
Redraw the map, measure new currencies, and pay attention to how politics distorts the economy.
America may miss out on the next industrial revolution
Nick Statt (Verge) Mar 15, 2017
Preparing for automation means investing in robotics.
The Fed Raises a Rate—But Faster Tightening Depends on Congress
Joseph E. Gagnon (PIIE) Mar 15, 2017
The US Federal Reserve raised its target interest rate today by one-quarter of a percentage point to just under 1 percent. The rise indicates that the Fed feels confident that the US economic recovery will continue. However, the forecasts of meeting participants do not show any increase in the median projection of the federal funds rate at year-end 2017 or 2018.
It's Time to Hit Pause on China Panic
Tom Orlik (Bloomberg View) Mar 15, 2017
Credit is still expanding, but on a more sustainable trajectory.
The United Europe of Tomorrow?
Noëlle Lenoir (Project Syndicate) Mar 15, 2017
From Brexit to a hostile US administration, the EU faces serious challenges to its survival. But these challenges could end up helping the EU, by showing its members just how badly they need one another, particularly to ensure their defense and security.
The Return of Industrial Strategy
Paola Subacchi (Project Syndicate) Mar 15, 2017
Industrial policy was dismissed out of hand in the go-go 1980s, owing to their perceived role in the previous decade's stagnation. But now they are being embraced once more in advanced economies, not least because, if done right, they may be able to stem working-class voters' defection to populist parties.
Trump’s Imaginary Enemy
Zhang Jun (Project Syndicate) Mar 15, 2017
It seems clear that, in the coming years, the US will be economically tougher on China, potentially even triggering a trade war. But a closer look at Chinese economic policy reveals that US President Donald Trump's portrayal of China as America's economic enemy is both inaccurate and illogical.
Poland Will Take Revenge on Europe
Slawomir Sierakowski (Project Syndicate) Mar 15, 2017
The bid by Poland's de facto leader, Jaroslaw Kaczynski, to derail Donald Tusk's reelection as European Council President has ended in a humiliating defeat. We can now expect the Polish government to lash out at the EU, heedless of the geopolitical or economic consequences.
Latin America’s Barriers to Growth
Adriana Arreaza (Project Syndicate) Mar 15, 2017
Although Latin America is expected to emerge from its recession this year, it is not out of the woods yet. To sustain strong growth over the long term, most countries in the region will need to undergo structural reforms and train their workers for employment in the formal economy.
The great Chinese inequality turnaround
Ravi Kanbur, Yue Wang and Xiaobo Zhang (VoxEU) Mar 15, 2017
Sharply increasing inequality became an integral part of the narrative on Chinese development since the beginning of the reform process in 1978. Over the past decade, however, many studies have argued that inequality has been plateauing, or even declining. This column uses several datasets, including household surveys and regional-level government statistics, to show evidence of a mitigation of inequality in the early 21st century, and indeed, declining rates over recent years. Possible drivers of this turnaround are urbanisation, transfer and regulation regimes, and tightening rural labour markets. Sharply increasing inequality became an integral part of the narrative on Chinese development since the beginning of the reform process in 1978. Over the past decade, however, many studies have argued that inequality has been plateauing, or even declining. This column uses several datasets, including household surveys and regional-level government statistics, to show evidence of a mitigation of inequality in the early 21st century, and indeed, declining rates over recent years. Possible drivers of this turnaround are urbanisation, transfer and regulation regimes, and tightening rural labour markets.
Germany’s economy has little to fear from Martin Schulz
Sebastian Dullien (FT) Mar 16, 2017
Under his proposals, most labour market reforms would remain in place.
A blind spot masks the danger signs in finance
Gillian Tett (FT) Mar 16, 2017
Low interest rates have created perverse market incentives.
Brexit maps the path to Scottish independence
Philip Stephens (FT) Mar 16, 2017
The break-up of Britain may not be inevitable but the wind is blowing that way.
The Fed finds the plot as investors join the dots
John Authers (FT) Mar 16, 2017
This may be one of the most happily received rate increases on record.
Dutch election result holds back populist tide
Tony Barber (FT) Mar 15, 2017
Mark Rutte secures victory but the radical right have not gone away.
Iran remains almost entirely off limits for American investors
Jacopo Dettoni (FT) Mar 15, 2017
Non-US foreign spending is soaring but normal relations with the west are far away.
IMF's Christine Lagarde Calls on G-20 Members to Keep Growth "Momentum"
Bridges, Volume 21, Number 9 Mar 16, 2017
Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), called on G-20 officials preparing to meet in the German city of Baden-Baden later this week to keep the "momentum" in supporting global growth.
Economic Integration Efforts Press Onward in Asia-Pacific Region
Bridges, Volume 21, Number 9 Mar 16, 2017
The past week has seen a series of regional integration efforts continue among Asia-Pacific economies, including a two-day summit among the signatories of the Trans-Pacific Partnership (TPP) and select other countries in the Chilean city of Viña del Mar, as well as meetings of other groupings on expanding trade and financial ties.
EU, UK Look to Trade Future As Brexit Process Prepares for Launch
Bridges, Volume 21, Number 9 Mar 16, 2017
As the expected launch of the formal Brexit negotiations approaches, EU and UK leaders are looking both to the next steps for their own bilateral relationship, as well as the implications for the European Union and what these developments could herald for their foreign trade future with external partners.
USTR Nominee Lighthizer Outlines Trade Stance in Senate Hearing
Bridges, Volume 21, Number 9 Mar 16, 2017
Robert Lighthizer, the nominee for the post of US Trade Representative (USTR), testified during a Senate confirmation hearing on Tuesday 14 March that he would work to implement President Donald Trump’s "America first" vision on trade, while fielding questions from lawmakers on topics ranging from the renegotiation of the North American Free Trade Agreement (NAFTA) to his planned stance on China.
Japan Trade Policy Review: Structural Reforms, Abenomics in Focus
Bridges, Volume 21, Number 9 Mar 16, 2017
Japan's trade policies and larger economic context came under the spotlight last week at the WTO's Geneva headquarters during its biennial trade policy review, as members reviewed the latest developments in the Asian trading giant in areas ranging from agricultural policy reform to automobile market access.
EU, ASEAN Ministers Agree to Consider Trade Talks Reboot
Bridges, Volume 21, Number 9 Mar 16, 2017
The EU and the Association of Southeast Asian Nations (ASEAN) are preparing to examine the prospect of re-launching talks for a region-to-region trade accord, nearly eight years after the original plans for such a project were put on hold.
Institutional Investors Will ‘Double Down’ on Risk in 2017
BRINK Mar 16, 2017
In an environment of political, geopolitical and regulatory uncertainty, it’s not clear if taking on more risk is sensible. Despite this, institutional investors are set to make bigger bets on riskier assets in 2017, according to a new report. We examine the data.
Chinese Private Investment Growth Decelerates Sharply in 2016
Nicholas R. Lardy and Zixuan Huang (PIIE) Mar 16, 2017
Recently released official 2016 data from China place private investment growth at 3.2 percent compared to 18.7 percent for state investment growth. However, when properly defined to include both registered private companies and limited liability companies that are privately controlled, private...
Does the US Interest Rate Rise Mean Trouble for Emerging Markets? Depends on Your Timeframe
Liliana Rojas-Suarez (CGD) Mar 16, 2017
The rate is still very low at 0.75% in the US, and, in addition, there is no perception or expectation that rates are about to rise in other advanced economies such as Japan or the EU. Taken together then, interest rates in advanced economies look set to stay extremely low. So, for now at least, emerging markets may not need to worry too much about capital inflows drying up. But in the medium to long term a problem may loom for emerging markets.
The Man Who Made Us See That Trade Isn't Always Free
Noah Smith (Bloomberg View) Mar 16, 2017
David Autor upended the assumption that everyone benefits when countries swap goods without restrictions.
Migrant Dollars Today Can Stop Migrants Tomorrow
Mac Margolis (Bloomberg View) Mar 16, 2017
How remittances can kick-start development and productivity in Central America.
Oil Traders Have Lots of Reasons to Be Bullish
Shelley Goldberg (Bloomberg View) Mar 16, 2017
The current mismatch between rising U.S. production and OPEC cuts will prove to be brief.
Shorting the Euro Is an Outdated Strategy
Leonid Bershidsky (Bloomberg View) Mar 16, 2017
The euro zone isn’t as fragile as commentators suggest.
China's Worst Trade Abuses Are Hidden
Christopher Balding (Bloomberg View) Mar 16, 2017
Some barriers are more damaging than tariffs.
Mixed Signals from the Eurozone
Daniel Gros (Project Syndicate) Mar 16, 2017
Predictions of the eurozone's collapse are becoming increasingly urgent, not least because of the rising influence of anti-EU political parties in some countries. But the reasons to fear the eurozone’s impending breakup are not as compelling as many believe.
Trump, Trade, and the Middle Powers
Oonagh Fitzgerald and Hector R. Torres (Project Syndicate) Mar 16, 2017
Donald Trump’s presidency is posing fundamental challenges to the rule-based international trading system that has buttressed global growth for decades. But while America’s protectionist maneuverings threaten a global trading regime based on legal norms, they may also, paradoxically, help to reform it.
America First, But Germany Second
Marcel Fratzscher (FP) Mar 16, 2017
If Trump wants a Europe that takes care of its own needs, he needs a strong partner in Berlin.
Theresa May Proves Irony Is Dead, Says It’s Not the Time for a Scottish Referendum
Emily Tamkin (FP) Mar 16, 2017
British Prime Minister Theresa May slapped down Scottish leader Nicola Sturgeon’s proposal to hold a second referendum on Scottish independence, proving irony is dead.
Saudi Arabia, China Sign Deals Worth Up to $65 Billion
Robbie Gramer (FP) Mar 16, 2017
Saudi Arabia and China are deepening economic ties as Riyadh tries to pull itself out of a rut.
Super-easy monetary policy and reflating Japan’s economy
Sayuri Shirai (VoxEU) Mar 16, 2017
The Bank of Japan has been pursuing quantitative and qualitative monetary easing since 2013, but has failed to achieve its target of a stable 2% inflation rate. This column explores the Bank’s recent practices and performance, and identifies four structural factors that have contributed to the limited impact of unconventional monetary easing on aggregate demand and inflation. The Bank now needs to come up with more objective projections for the timing of achieving its price stability target. The Bank of Japan has been pursuing quantitative and qualitative monetary easing since 2013, but has failed to achieve its target of a stable 2% inflation rate. This column explores the Bank’s recent practices and performance, and identifies four structural factors that have contributed to the limited impact of unconventional monetary easing on aggregate demand and inflation. The Bank now needs to come up with more objective projections for the timing of achieving its price stability target.
Sovereign spreads in the Eurozone: Redenomination versus political risk
Roberto De Santis (VoxEU) Mar 16, 2017
French sovereign spreads have risen in recent months, coinciding with debate over the euro ahead of the country’s presidential elections in May. Italian sovereign spreads have been rising since the beginning of 2016. This column argues that investors are not pricing a break-up of France from the Eurozone. Most likely, they are pricing the possibility that the newly elected French government will not have enough supremacy to undertake important economic reforms. Market perception of redenomination risk in Italy, on the other hand, is rising slowly. French sovereign spreads have risen in recent months, coinciding with debate over the euro ahead of the country’s presidential elections in May. Italian sovereign spreads have been rising since the beginning of 2016. This column argues that investors are not pricing a break-up of France from the Eurozone. Most likely, they are pricing the possibility that the newly elected French government will not have enough supremacy to undertake important economic reforms. Market perception of redenomination risk in Italy, on the other hand, is rising slowly.
Broken Europe is down but not out
Timothy Garton Ash (FT) Mar 17, 2017
Politicians should not blame bad things on Brussels while taking all the credit.
The Fed Acts. Workers in Mexico and Merchants in Malaysia Suffer.
Peter S. Goodman, Keith Bradsher and Neil Gough (NYT) Mar 17, 2017
Rising interest rates in the United States are driving money out of many developing countries, straining governments and pinching consumers around the globe.
How 'Consumer Relief' After Mortgage Crisis Can Enrich Big Banks
Matthew Goldstein (NYT) Mar 17, 2017
In their settlements with the government, large financial institutions can actually earn money while also helping homeowners.
The Case for a British-American Trade Deal
Daniel Hannan (WSJ) Mar 17, 2017
As Britain leaves the European Union, a comprehensive trade deal between the U.S. and the U.K. could benefit consumers
Why does Donald Trump demonize cities?
Will Wilkinson (WP) Mar 17, 2017
Because they show that the liberal experiment works.
The inflation basket case
Silvia Merler (Bruegel) Mar 17, 2017
Inflation in the euro area has finally reached 2%. But Draghi is right to warn that the underlying dynamics do not point to this being a self-sustaining trend. Breaking down the numbers shows that many inflation basket items are still showing weak price growth or even deflation.
A $2 Trillion Object Lesson in Sustainability from Saudi Arabia
Patrick Doherty (BRINK) Mar 17, 2017
The world will, sooner than expected, stop using Saudi Arabia’s primary product and source of revenue.
Six Things to Know About the Market Reaction to the Fed
Mohamed Aly El-Erian (Bloomberg View) Mar 17, 2017
The central bank get a confidence boost as it gradually moves beyond data dependency.
What the Markets Are Teaching the Trump Administration
Komal S Sri-Kumar (Bloomberg View) Mar 17, 2017
Emphasize stimulus and have a positive impact on equities and economic growth.
A Strong Dollar Isn't That Great for America
Noah Smith (Bloomberg View) Mar 17, 2017
When the currency gains, U.S. exports become less competitive and imports become cheaper.
Common Euro Bonds Can Smoothe ECB's Market Exit
Mark Gilbert (Bloomberg View) Mar 17, 2017
Centralizing bond sales would send a powerful signal about the euro's longevity.
Think Global to Avoid Shrinking U.S. Stock Market
Ben Carlson (Bloomberg View) Mar 17, 2017
As America has grown relative to the rest of the world, it is actually getting smaller in other ways.
Industry by Design?
Christopher Smart (Project Syndicate) Mar 17, 2017
Industrial policies come in many shapes and sizes, but some strategies to nurture domestic firms and industries have clearly worked better than others. Understanding why may hold the key to creating the conditions for contemporary growth and development.
Lessons From an Age of Progress
John W. McArthur (Project Syndicate) Mar 17, 2017
Despite how disordered the world feels in 2017, the potential for renewed progress at any given moment is greater than most people think possible. With committed political leadership and innovations in science and business, the world can replicate the unprecedented gains in global health and development made between 2000 and 2015.
The more we mix, the better
Klaus Desmet, Joseph Flavian Gomes and Ignacio Ortuño-Ortin (VoxEU) Mar 17, 2017
Diverse countries tend to have more conflict, lower development, and worse public goods, possibly due to antagonism between groups. Based on recent research mapping local linguistic diversity across the entire globe, this column argues that local interaction with people of other ethnolinguistic groups can mitigate the negative effect of overall diversity on a country’s outcomes in health, education and public goods. This finding lends support to policies that influence the local mixing of ethnolinguistic groups. Diverse countries tend to have more conflict, lower development, and worse public goods, possibly due to antagonism between groups. Based on recent research mapping local linguistic diversity across the entire globe, this column argues that local interaction with people of other ethnolinguistic groups can mitigate the negative effect of overall diversity on a country’s outcomes in health, education and public goods. This finding lends support to policies that influence the local mixing of ethnolinguistic groups.
The global economy enjoys a synchronised upswing
Economist Mar 18, 2017
The past decade has been marked by a series of false economic dawns. This time really does feel different.
The world economy is picking up
Economist Mar 18, 2017
Despite anxieties, the green shoots of global recovery are real.
Greece – Open Letter to the People of Greece: You are Being Slaughtered before the World’s Eyes
Peter Koenig (EFR) Mar 18, 2017
The voices of those who did dare to speak the truth were muffled. The people of Europe were lied to, including the Greek, as usual by the presstitute media. To the people of Greece: get your sovereignity back.
How globalisation affected manufacturing around the world
Adrian Wood (VoxEU) Mar 18, 2017
In defending trade from misguided protectionism, economists argue that the main killer of manufacturing employment around the world has been technology, not trade. This column explores how globalisation has caused the sectoral structures of countries to conform more closely to their factor endowments. In the skill-abundant developed regions, manufacturing became more skill-intensive, while in skill-scarce and land-scarce Asia, labour-intensive manufacturing expanded. In land-abundant developing Africa, Latin America, and the Middle East, by contrast, manufacturing contracted. In defending trade from misguided protectionism, economists argue that the main killer of manufacturing employment around the world has been technology, not trade. This column explores how globalisation has caused the sectoral structures of countries to conform more closely to their factor endowments. In the skill-abundant developed regions, manufacturing became more skill-intensive, while in skill-scarce and land-scarce Asia, labour-intensive manufacturing expanded. In land-abundant developing Africa, Latin America, and the Middle East, by contrast, manufacturing contracted.
The Fed's Global Dollar Problem
Mark Whitehouse (Bloomberg View) Mar 19, 2017
Borrowers around the world have gone on a dollar binge. This makes them vulnerable when interest rates rise.
Meeting the standard for trade
Marion Jansen, Valentina Rollo and Olga Solleder (VoxEU) Mar 19, 2017
Standards and regulations form an inherent part of international trade. This column presents evidence – based on two novel datasets – that suggests that for firms the distinction between voluntary standards and government regulations is blurred, that export revenues of small firms are hit twice as hard by burdensome regulations as those of large firms, and that firms active in larger markets have access to a higher number of voluntary standards. Standards and regulations form an inherent part of international trade. This column presents evidence – based on two novel datasets – that suggests that for firms the distinction between voluntary standards and government regulations is blurred, that export revenues of small firms are hit twice as hard by burdensome regulations as those of large firms, and that firms active in larger markets have access to a higher number of voluntary standards.
Russia cannot live with the west – or without it
Lilia Shevtsova (FT) Mar 19, 2017
Technological backwardness increases its dependence on liberal democracies.
Tentative steps on the path to interest rate normalisation
John Plender (FT) Mar 19, 2017
As the threat of deflation recedes, central bankers have changed their language.
Nafta Has Made Mexico a Better Place
Mary Anastasia O’Grady (WSJ) Mar 19, 2017
Civil society, long neutralized during the PRI autarky, has awakened.
USAID Should Further U.S. Interests, Not ‘Safe Spaces’
Mark Moyar (WSJ) Mar 19, 2017
The foreign-aid budget is vital. But it includes plenty that’s wasteful and counterproductive.
Australia–China ties need to make globalisation work
He Fan (EAF) Mar 19, 2017
The best option now for Australia is to further develop its economic relationship with China while at the same time maintaining its traditional political and economic ties with the United States. China has no interest in changing the US–Australia political and defence alliance, since it sees no potential threats from Australia. Neither Australia nor China wants drastic change.
America Is Hardly a Bastion of Free Trade
Andrew N. Smith (Mises Daily) Mar 19, 2017
It has become a misconceived bit of common “knowledge” that the United States of America is a bastion of free trade.
Watching and waiting for Donald Trump’s protectionism
FT View Mar 20, 2017
America’s trading partners would do well to pick their battles.
Asset management: Passive resistance
Robin Wigglesworth and Stephen Foley (FT) Mar 20, 2017
Capital Group is at the forefront of the fightback against the index trackers.
How ‘Price Discrimination’ Helps Less-Affluent Countries
Daniel Hemel and Lisa Larrimore Ouellette (WSJ) Mar 20, 2017
The Supreme Court takes up a patent-law case with repercussions far beyond U.S. borders.
Defending Development in a Time of Cuts—My Conversation with UNDP’s Helen Clark
Masood Ahmed (CGD) Mar 20, 2017
On the day the Trump Administration proposed considerable cuts to the US international affairs budget, including US funding for the UN, CGD hosted the outgoing head of the UN’s largest agency, UNDP Administrator Helen Clark. As she prepares to step down after eight years in the post, she will leave behind a UN system facing serious questions about its future capabilities and financing. That idea, in fact, informed the title of our event Facing Future Challenges on Uncertain Ground, the video of which you can watch here.
Germany: Black Box of Executive Compensation
Philipp Immenkötter (Globalist) Mar 20, 2017
German companies need to do much more to live up to the transparency standards required by democracy in the age of globalization.
U.S. Prevails in an Unusual G-20 Communique
Mohamed Aly El-Erian (Bloomberg View) Mar 20, 2017
Other countries line up behind a protectionist stance.
U.K. Investors Have Too Much Faith in Their Government
George A Magnus (Bloomberg View) Mar 20, 2017
The benign state of affairs in markets only works in a best-case outcome.
What a Macron Presidency Would Mean for France
Therese Raphael (Bloomberg View) Mar 20, 2017
The front-runner may be a charmed candidate, but he'll have a hard time delivering.
Happy Nations Don't Focus on Growth
Leonid Bershidsky (Bloomberg View) Mar 20, 2017
Policymakers should care more about happiness inequality rather than mere income inequality.
Can China Save the Global Order?
Yong Deng (Project Syndicate) Mar 20, 2017
At the World Economic Forum’s Annual Meeting in Davos in January, Chinese President Xi Jinping spoke in defense of globalization and offered a vision of inclusive, sustainable development. But can China really provide the leadership and solutions needed to keep the engines of globalization running?
America’s Confidence Economy
Mohamed A. El-Erian (Project Syndicate) Mar 20, 2017
While financial markets seem convinced that the recent surge in business and consumer confidence in the US economy will soon be reflected in hard data, such as GDP growth, economists and policymakers remain unsure. Whether their doubts are vindicated will matter for both the US and the world economy.
Why Economists Missed the Arab Spring
Hassan Hakimian (Project Syndicate) Mar 20, 2017
The sixth anniversary of the Arab Spring uprisings this year came and went without the usual torrent of commentary. But there are still plenty of lessons to learn from that revolutionary wave – beginning with why it happened when it did.
The EU’s Road to Rome
Ana Palacio (Project Syndicate) Mar 20, 2017
At the end of this month, EU leaders will gather in Italy to celebrate the 60th anniversary of the Treaty of Rome. The leaders should seize the opportunity to reflect deeply about the project they are celebrating.
Competition from China reduced innovation in the US
David Autor, David Dorn, Gary P. Pisano and Pian Shu (VoxEU) Mar 20, 2017
The discussion of the decline in US manufacturing during the 2016 presidential election campaign largely focused on job losses. This column examines the effects of Chinese import competition on another metric for the health of the US manufacturing sector – innovation. Firms whose industries were exposed to a greater surge of Chinese import competition from 1991 to 2007 experienced a significant decline in their patent output as well as their R&D expenditures. While politicians’ ‘obsession’ with manufacturing is primarily due to job losses, an accompanying reduction in innovation may well affect economic growth in the longer term. The discussion of the decline in US manufacturing during the 2016 presidential election campaign largely focused on job losses. This column examines the effects of Chinese import competition on another metric for the health of the US manufacturing sector – innovation. Firms whose industries were exposed to a greater surge of Chinese import competition from 1991 to 2007 experienced a significant decline in their patent output as well as their R&D expenditures. While politicians’ ‘obsession’ with manufacturing is primarily due to job losses, an accompanying reduction in innovation may well affect economic growth in the longer term.
Britain faces a squeeze on living standards
FT View Mar 21, 2017
The devaluation may boost domestic industry, but this is less clear.
China will struggle to follow the Fed
FT Confidential Research Mar 21, 2017
Raising rates may staunch outflows but will hurt economic growth.
Stoicism is having a moment in the robot revolution
Miranda Green (FT) Mar 21, 2017
Can the ancient philosophy of endurance save a human workforce?
China and the US: an odd couple doomed to co-operation
Martin Wolf (FT) Mar 21, 2017
It might take a communist leader to convince Donald Trump of the merits of free trade.
Value anomaly returns to emerging markets
Steve Johnson (FT) Mar 21, 2017
Cheap stocks once again outperform their supposedly higher quality peers.
Banks must still act global and think smart
Brian Caplen (Banker) Mar 21, 2017
Banks must not be derailed by anti-globalisation forces. The long-term trend is for interconnected smart cities, many of which are located in Asia.
Why US Growth of 2 Percent Is Plausible—And Unlikely to Get Much Higher
Jason Furman (PIIE) Mar 22, 2017
The US economy will likely grow at a rate of around 2 percent a year over the next decade. While this estimate seems low relative to the average annual growth rate of 3.5 percent from 1950 to 2000, it is not reflective of some newly found pessimism.
Is Italy Europe’s Next Big Worry?
Jacob Funk Kirkegaard (PIIE) Mar 21, 2017
Despite the prospects of a good year economically and politically for the euro area in 2017, uncertainty hangs on the horizon over Italy. Once the French election in May is over, investors' attention will likely turn to Italy, where an election is due no later than May 2018.
Trump's Move Away From Globalization: Europe's Perspective
Stephan Richter (Globalist) Mar 21, 2017
On the latest G20 summit in Germany and signs of the U.S. under Trump backing away from globalization.
Trump's Reckless Threat to World Trade
Bloomberg View Mar 21, 2017
If the president leads governments toward a new protectionist era, he'll do untold damage both to the U.S. and the global economy.
The Good Idea in the Republican Tax Plan
Bloomberg View Mar 21, 2017
Excessive debt is bad for the economy. Let’s stop encouraging it.
Is Modi Too Powerful for His Own Good?
Mihir Sharma (Bloomberg View) Mar 21, 2017
India's in danger of becoming a one-party state.
Trump or No Trump?
Anatole Kaletsky (Project Syndicate) Mar 21, 2017
Ongoing congressional gridlock will be the key to continued buoyancy in US equity markets, says Gavekal Dragonomics’ Anatole Kaletsky. It’s when Trump’s agenda starts to be implemented that the euphoria will wane.
Getting Basic Income Right
Kemal Dervis (Project Syndicate) Mar 21, 2017
Universal basic income schemes are receiving more attention these days, because they are seen as a solution to technology-driven economic disruptions. They certainly have their benefits, but making them work will require countries to strike the right balance between individual choice and social-policy guidance.
Keeping the Balkan Ghosts at Bay
Carl Bildt (Project Syndicate) Mar 21, 2017
European leaders, having suddenly awoken to new realities in the Balkans, are calling for increased engagement in the region to maintain stability and push back against Russian influence. But it is now clear that the only way forward for the EU is to accelerate the remaining Balkan countries' integration into the bloc.
Who’s Really Threatening Europe?
Simplice A. Asongu (Project Syndicate) Mar 21, 2017
Opponents of immigration into the EU typically make one or more of four arguments: immigrants are weakening Christian values, undermining liberal democratic institutions, bringing terrorism, and burdening public budgets. But none of these claims withstands scrutiny.
Europe’s Dutch Turning Point?
Sylvester Eijffinger (Project Syndicate) Mar 21, 2017
Last week, Dutch voters dealt a blow to far-right populism in their country’s general election. With the Euroskeptic, anti-immigration Party for Freedom, led by Geert Wilders, having managed to secure substantially fewer seats than anticipated, the Dutch outcome is a promising start to a year of critical elections in Europe.
Scaling It Back
Joachim Fels and Andrew Balls (PIMCO) Mar 21, 2017
As the global economy improves, central banks are reducing extraordinary monetary policy support.
Time to embrace emerging markets as Fed signals slow rate rises
Henny Sender (FT) Mar 22, 2017
US shares look expensive after Trump trade and asset inflation driven by central bank.
How uncertainty became the ‘new normal’ for Mexico
Jude Webber (FT) Mar 22, 2017
Despite the White House’s protectionist rhetoric, there is rising confidence south of the border — why?
Trumponomics is unlikely to sustain the bull market
Edward Luce (FT) Mar 22, 2017
Washington will slow or stop measures that could boost US growth.
As democracy retreats, famine makes a comeback
David Pilling (FT) Mar 22, 2017
Every starving nation is different but all need economic help — and to stop fighting.
Does Manufacturing Have the Largest Employment "Multiplier" for the Domestic Economy?
Robert Z. Lawrence (PIIE) Mar 22, 2017
A common argument in favor of promoting manufacturing is that jobs in that sector are among the most valuable to American economic health—certainly more valuable than jobs in the service sector because they are associated with more jobs elsewhere.
China's 'One Belt, One Road' Initiative
K@W Mar 22, 2017
A grand vision -- but where will it lead?
Look Past Oil to China for Clues to Commodities
Jason M Schenker (Bloomberg View) Mar 22, 2017
China manufacturing turned a corner in 2016 and has dragged prices of many raw material prices higher.
Why Cut an Agency That Makes Money?
Daniel R Mintz (Bloomberg View) Mar 22, 2017
OPIC helps poor countries, projects American values and reduces the deficit. Don't kill it.
Europe's Murky Path to Normal Monetary Policy
Ferdinando Giugliano (Bloomberg View) Mar 22, 2017
Investors want clear guidance on Europe's monetary policy. That isn't easy.
The Eurozone is Still Vulnerable
Benedicta Marzinotto (Project Syndicate) Mar 22, 2017
The eurozone remains fragile and uninsured against the risk of another crisis, not least because it is still vulnerable to asymmetric boom-and-bust cycles. Although reforms that were implemented in response to the last crisis have improved the situation at the aggregate level, efforts to achieve fiscal convergence have failed.
Mnuchin’s Mission
Jeffrey Frankel (Project Syndicate) Mar 22, 2017
US Treasury Secretary Steven Mnuchin has so far avoided fulfilling one of Trump’s irrational promises: to label China a currency manipulator. Mnuchin should kill that promise once and for all, by acquainting his boss with reality.
The Sino-Korean Trade War Must End
Lee Jong-Wha (Project Syndicate) Mar 22, 2017
Since South Korea decided to deploy a US missile-defense system, China has been attempting to use economic pressure to compel the South to reverse course. But, as long as North Korea poses such an acute threat, China’s opposition to it is pointless – and highly destructive.
Robotization Without Taxation?
Robert J. Shiller (Project Syndicate) Mar 22, 2017
The public reaction to recent proposals that robots be taxed when they replace human labor has been largely negative. But a moderate tax on robots – even a temporary levy that merely slows the adoption of disruptive technology – seems like a natural and obvious component of any policy to address rising inequality.
Exchange rate implications of border tax adjustment neutrality
Willem Buiter (VoxEU) Mar 22, 2017
A border tax adjustment from origin-based taxation to destination-based taxation is under consideration for corporate profit tax in the US. This column investigates the implications of such an adjustment for the nominal exchange rate, assuming the real equilibrium of the economy is unchanged. While conventional wisdom is that the currency of the country implementing the adjustment will appreciate by a percentage equal to the VAT or corporate profit tax rate, a depreciation of the same magnitude is just as likely. A border tax adjustment from origin-based taxation to destination-based taxation is under consideration for corporate profit tax in the US. This column investigates the implications of such an adjustment for the nominal exchange rate, assuming the real equilibrium of the economy is unchanged. While conventional wisdom is that the currency of the country implementing the adjustment will appreciate by a percentage equal to the VAT or corporate profit tax rate, a depreciation of the same magnitude is just as likely.
New ICMB/CEPR Report: Bail-ins and Bank Resolution in Europe
Thomas Philippon and Aude Salord (VoxEU) Mar 22, 2017
Failed financial firms should not be bailed out by the taxpayers. Europe, unfortunately, has a weak track record of following this principle of good governance and sound economic policy. The banking union, with its new approach to supervision and resolution, is meant to improve this matter. This column introduces a new Geneva Special Report on the World Economy which reviews the resolution side of the banking union. Failed financial firms should not be bailed out by the taxpayers. Europe, unfortunately, has a weak track record of following this principle of good governance and sound economic policy. The banking union, with its new approach to supervision and resolution, is meant to improve this matter. This column introduces a new Geneva Special Report on the World Economy which reviews the resolution side of the banking union.
A Franco-German bargain to save Europe
Philip Stephens (FT) Mar 23, 2017
After a deluge of crises the next few years will confound the doubters.
There is more than one explanation for the fall in sterling
Martin Wolf (FT) Mar 23, 2017
The link between devaluation and the EU referendum cannot be doubted.
Populism emerges as key economic influence
Gillian Tett (FT) Mar 23, 2017
Hedge fund study signals shift from monetary and fiscal outlook to political risk.
Alarm sounded on African debt
Adrienne Klasa (FT) Mar 23, 2017
Debt service is taking an unsustainable share of government revenues, campaigners warn.
Trump, Merkel Discuss Trade Prospects in Washington Meeting
Bridges, Volume 21, Number 10 Mar 23, 2017
US President Donald Trump and German Chancellor Angela Merkel met last week in Washington for discussions on trade, the G20, and other areas for international cooperation, in their first such meeting since the new American leader took office in late January.
G20 Finance Officials Call for Making Trade More Inclusive
Bridges, Volume 21, Number 10 Mar 23, 2017
Finance ministers and central bank governors from the Group of 20 (G20) coalition of major economies wrapped up a two-day meeting in Baden-Baden this weekend, with their debate on issues ranging from trade and exchange rate policy to climate change setting the stage for future discussions ahead of this year's leaders’ summit in Hamburg, Germany.
Japanese, European Leaders Push for Swift Conclusion to Trade Talks
Bridges, Volume 21, Number 10 Mar 23, 2017
Japanese Prime Minister Shinzo Abe met with German Chancellor Angela Merkel on Sunday 20 March in Hanover, renewing calls to finalise negotiations on a EU-Japan free trade accord and defending open and fair trade.
EU, Mercosur Countries Work to Speed Up Trade Talks
Bridges, Volume 21, Number 10 Mar 23, 2017
Talks on a potential trade deal between the EU and Mercosur have reportedly been gaining renewed traction, with diplomats from both trading partners affirming their commitment to bringing the long-running negotiations closer to a successful conclusion.
The multilateral kingdom: China’s growing clout in international economic affairs
Economist Mar 23, 2017
As America retreats, China advances.
Results Measurement and the Case for Aid
Nancy Lee (CGD) Mar 23, 2017
Many in the development community lament that we have failed on two counts: broad audiences don’t know about unprecedented progress in poverty reduction and human development indicators in recent decades, and, if they do know, they don’t see the connection between aid programs and such progress. Despite strongs efforts on the part of development institutions to measure results, it remains hard to articulate them in a way that is compelling to nontechnical audiences—taxpayers who absolutely deserve to understand why and how development dollars are making a difference.
Really, Global Poverty *Is* Falling. Honest.
Charles Kenny (CGD) Mar 23, 2017
Martin Kirk and Jason Hickel published a piece earlier this week on the annual Gates Letter. The core critique is that the letter is too rosy. In particular, Kirk and Hickel say of the Gates' letter: "some of their examples are just wrong." The case they provide in illustration is the idea that poverty has been cut by half since 1990. The Gates "use figures based on a $1.25 a day poverty line, but there is a strong scholarly consensus that this line is far too low." Use other poverty lines, and global poverty "hasn’t been falling. In fact, it has been increasing—dramatically.” (See related pieces by Jason here and here). I don't think this critique holds up.
After Brexit: Pouring Cold Water on Scotland’s Dreams
Martin Hutchinson (Globalist) Mar 23, 2017
An independent Scotland within the EU risks becoming Greece, but without the handouts. Its living standards would rapidly descend.
Capitalism Will Shrink Inequality. In Fact, It's Happening.
Noah Smith (Bloomberg View) Mar 23, 2017
Rising prosperity widened income gaps in Latin America and China, but the trend is reversing.
This Gold Rally Has Recent History on Its Side
Shelley Goldberg (Bloomberg View) Mar 23, 2017
It's advisable to trade in and out of gold during the Fed's cat-and-mouse game.
How Corruption Fuels Climate Change
Lili Fuhr and Simon Taylor (Project Syndicate) Mar 23, 2017
After the Paris climate agreement, efforts to combat corruption and global warming must go hand in hand. Corruption ensures that moneyed and powerful interests are free from rules that hold them in check, and it explains why governments have so far fallen short of upholding their commitments to reduce greenhouse-gas emissions.
Nationalists and Globalists
Anne-Marie Slaughter (Project Syndicate) Mar 23, 2017
Populism means a politics of the people, juxtaposed against a politics of the elites. But, at least in the US, President Donald Trump’s ideology – which has little to do with traditional Republican conservatism – frames the axis of division not as the many versus the few, but as nationalists versus globalists.
A Turkish Thorn in the EU’s Side
Javier Solana (Project Syndicate) Mar 23, 2017
While the EU tries to weather a populist, nationalist storm that threatens its core institutions, some of its most important strategic allies have injected more uncertainty into the current political climate. Chief among them is Turkey, which has now taken an alarming turn away from democratic norms.
A More Dangerous Globalism
Jeremy Adelman and Anne-Laure Delatte (Project Syndicate) Mar 23, 2017
Today's most important political struggle is not between globalists and anti-globalists, but rather between two models of integration: one is multilateral and internationalist; the other is bilateral and imperialist. Throughout the modern age, the world has seesawed between them.
Using Data to Find the Middle Ground
Bjørn Lomborg (Project Syndicate) Mar 23, 2017
Today, many policy proposals are immediately identified as either “left-wing” or “right-wing," leaving little room for discussion. But there is a way to bypass such divisiveness: trusting cost-benefit analysis to identify the policies and investments that would have the biggest positive impact on society.
Cyclical forces in the global trade slowdown
Alessandro Borin, Virginia Di Nino, Michele Mancini and Massimo Sbracia (VoxEU) Mar 23, 2017
Recent global trade growth is even more disappointing than global GDP growth. This column argues that this unexpected weakness of trade relative to GDP is related to the high volatility and pro-cyclicality of real trade flows, and that cyclical forces are the main drivers. It also shows that the accuracy of existing trade forecasts can be improved using real-time data on business conditions. Recent global trade growth is even more disappointing than global GDP growth. This column argues that this unexpected weakness of trade relative to GDP is related to the high volatility and pro-cyclicality of real trade flows, and that cyclical forces are the main drivers. It also shows that the accuracy of existing trade forecasts can be improved using real-time data on business conditions.
Economic growth and reductions in carbon emissions
Gregory Casey and Oded Galor (VoxEU) Mar 23, 2017
Most policies that target climate change – such as carbon taxes and cap-and-trade programmes – have long-term benefits but short-term economic costs. This column argues that population policies may not be subject to this trade-off. In particular, policies that reduce population growth can have a direct positive effect on income per capita as well as lowering growth of carbon emissions. Such policies could play an important role in the portfolio of actions aimed at mitigating climate change. Most policies that target climate change – such as carbon taxes and cap-and-trade programmes – have long-term benefits but short-term economic costs. This column argues that population policies may not be subject to this trade-off. In particular, policies that reduce population growth can have a direct positive effect on income per capita as well as lowering growth of carbon emissions. Such policies could play an important role in the portfolio of actions aimed at mitigating climate change.
What do slaveholders think?
Austin Choi-Fitzpatrick (Aeon) Mar 23, 2017
It is everywhere illegal yet slavery persists in many corners of the global economy. How do its beneficiaries justify it?
Who is afraid of populists?
Barbara Böttcher and Patricia Wruuck (DB Research) Mar 23, 2017
With developments in the UK and the US, populism was a key theme in 2016. But does the perception of 2016 as “the year of the populists” really fit for Europe? A closer look suggests that while populism was an omnipresent theme in public discourse, support for populist parties in polls rather remained stable and elections did not translate into outright populist wins. The rise of populist parties has however been a multi-year trend. Populists can affect national politics in various ways. One possible effect is that forming a government (coalition) often gets more complicated and time-consuming and results in more fragile governments. Another is populists’ potential impact on policy discussions’ style and content. Pursuing policies with long-term benefits but which are often not instantly popular becomes more difficult---both at the national and the European level.
Marginal gains matter but gamechangers transform
Tim Harford (FT) Mar 24, 2017
In the hunt for productivity, the revolutionary long shot is worth the cost and risk.
Chile heads for first recession since 2009
Steve Johnson (FT) Mar 24, 2017
Poster child for orthodoxy falters even as other emerging markets return to growth.
Immigrants Are Making the U.S. Economy Stronger
Noah Smith (Bloomberg View) Mar 24, 2017
More and more newcomers are arriving with education and skills. They raise wages for everybody.
The End-To-End Autonomous Supply Chain … Is Here
Wolfgang Lehmacher (BRINK) Mar 24, 2017
From Amazon’s delivery drones to self-driving cars, autonomous factory equipment to Elon Musk’s vacuum tubes that will transport items at 760 miles per hour—automated vehicles are on the rise.
Fighting for Life at 60
Philippe Legrain (Project Syndicate) Mar 24, 2017
European Union heads of state just gathered to celebrate the 60th anniversary of the signing of the Treaty of Rome, while right-wing populists are threatening to destroy Europe’s open liberal societies. Although the Dutch election showed that such forces can be defeated, the risk of another populist upset remains real.
Problems from Hell
Project Syndicate Mar 24, 2017
The political crises now brewing in Europe, the Middle East, and Asia do not just threaten to unleash enormous violence and fuel chronic instability. In the absence of effective international actors and institutions, they could also prove to be irresolvable.
When Britain turned inward
Alan de Bromhead, Alan Fernihough, Markus Lampe and Kevin O'Rourke (VoxEU) Mar 24, 2017
With Brexit looming, and protectionist pressures mounting elsewhere in the developed world, the question of whether trade policy matters is taking on more significance. This column looks at the extent to which trade policy was responsible for the shift towards intra-imperial trade in the interwar period. Both tariffs and quotas increased the Empire’s share of British trade, suggesting that trade policy mattered more for interwar trade patterns than the cliometric literature has suggested. With Brexit looming, and protectionist pressures mounting elsewhere in the developed world, the question of whether trade policy matters is taking on more significance. This column looks at the extent to which trade policy was responsible for the shift towards intra-imperial trade in the interwar period. Both tariffs and quotas increased the Empire’s share of British trade, suggesting that trade policy mattered more for interwar trade patterns than the cliometric literature has suggested.
Engineering growth: Innovative capacity and development
William Maloney and Felipe Valencia Caicedo (VoxEU) Mar 24, 2017
The generation and diffusion of scientific knowledge and technology are assumed to be drivers of modern economic growth, but there is a lack of firm empirical evidence of this. This column uses the first detailed data on the density of engineers in the western hemisphere to argue that historical differences in innovative capacity, as captured by the density of engineers in 1880, explain a significant fraction of the Great Divergence. The results confirm the imperative of developing higher-order human capital. The generation and diffusion of scientific knowledge and technology are assumed to be drivers of modern economic growth, but there is a lack of firm empirical evidence of this. This column uses the first detailed data on the density of engineers in the western hemisphere to argue that historical differences in innovative capacity, as captured by the density of engineers in 1880, explain a significant fraction of the Great Divergence. The results confirm the imperative of developing higher-order human capital.
Europe at 60: Can Europe be saved?
Economist Mar 25, 2017
If it is to survive, the European Union must become a lot more flexible.
Muslim Anxieties and India’s Future
Devesh Kapur (Project Syndicate) Mar 25, 2017
The recent election in Uttar Pradesh, India's largest state, gave Prime Minister Narendra Modi and his Bharatiya Janata Party a strong mandate, providing the government with a golden opportunity to advance economic development there, while reaching out to the Muslim population. But Modi seems intent on fueling Hindu chauvinism.
How exporters grow
Doireann Fitzgerald, Stefanie Haller and Yaniv Yedid-Levi (VoxEU) Mar 25, 2017
Tariffs across the world may be set to increase for the first time in generations, but the impact of this on trade will depend on the way in which exporters and potential exporters make decisions. Using data on Ireland's manufacturing exports, this column describes how the evolution of quantities and prices for export entrants suggests an important role for the customer base in explaining exporter behaviour. Tariffs across the world may be set to increase for the first time in generations, but the impact of this on trade will depend on the way in which exporters and potential exporters make decisions. Using data on Ireland's manufacturing exports, this column describes how the evolution of quantities and prices for export entrants suggests an important role for the customer base in explaining exporter behaviour.
After Article 50, use common sense and find common ground
FT View Mar 26, 2017
Leaving the EU without a deal would cause the UK significant harm.
Renegotiate Nafta? Mexicans Say Get On With It
Azam Ahmed (NYT) Mar 25, 2017
Uncertainty over the trade deal is hitting the country hard, pinching off foreign investment and lowering growth expectations.
Why the debate over financial reform is bogus
Rana Foroohar (FT) Mar 26, 2017
Rich US corporations, not banks, are in need of new scrutiny.
Europe will be transparent in Brexit talks
Michel Barnier (FT) Mar 26, 2017
An orderly UK withdrawal has to be agreed before any trade deals are struck.
Why EU control is no fix for financial safety
Jonathan Ford (FT) Mar 26, 2017
Global banks should not kid themselves that life will be more stable inside the union.
Martin Schulz and Emmanuel Macron could save Europe
Wolfgang Münchau (FT) Mar 26, 2017
The next leaders will have to resolve the historic mess of the eurozone crisis.
International inflation gap hits decades-long low
Steve Johnson (FT) Mar 26, 2017
Convergence with richer countries may give emerging markets room to manoeuvre.
Brexit talks to be toughest test for May
George Parker and Alex Barker (FT) Mar 26, 2017
Prime minister deals in facts not relationships but she will also need ingenuity.
Bill Gates vs. the Robots
Andy Kessler (WSJ) Mar 26, 2017
Sure, they’ll kill jobs. Like Microsoft Excel, they’ll also create new ones.
The Great Firewall Is a Trade Barrier
Adam Minter (Bloomberg View) Mar 26, 2017
And the U.S. should be thinking about saying so at the WTO.
Accounting for the new gains from trade liberalisation
Chang-Tai Hsieh, Nicholas Li, Ralph Ossa and Mu-Jeung Yang (VoxEU) Mar 26, 2017
Trade economists typically believe that in addition to lower prices for imported goods, trade liberalisation also brings import variety and domestic productivity gains. This column accounts for these ‘new’ gains in a careful reconsideration of the Canada-US Free Trade Agreement. Although the agreement did see improvements in Canadian income associated with import variety and domestic productivity, these were far outweighed by the welfare loss associated with the reduction in domestic variety. Nonetheless, Canadian welfare did improve overall when one takes into account the ‘traditional’ gains associated with lower import prices. Trade economists typically believe that in addition to lower prices for imported goods, trade liberalisation also brings import variety and domestic productivity gains. This column accounts for these ‘new’ gains in a careful reconsideration of the Canada-US Free Trade Agreement. Although the agreement did see improvements in Canadian income associated with import variety and domestic productivity, these were far outweighed by the welfare loss associated with the reduction in domestic variety. Nonetheless, Canadian welfare did improve overall when one takes into account the ‘traditional’ gains associated with lower import prices.
A Revolution Undone by HA Hellyer – life after protest
Siona Jenkins (FT) Mar 27, 2017
A meticulous and surprisingly optimistic analysis of Egypt’s future.
A US-China trade war would cause huge damage and benefit nobody
Wang Wen (FT) Mar 26, 2017
Trump needs to see that automation, not China, is main reason for loss of US jobs.
The menace of populism has made the tribal left think again
Janan Ganesh (FT) Mar 27, 2017
Enemies of capitalism and the US are now seeing the virtue of the liberal order.
Investors have overlooked Europe’s brightening prospects
Philipp Hildebrand (FT) Mar 27, 2017
Reduced political concerns could easily spur a rally across the region’s assets.
It makes sense to keep Brexit talks transparent
Alan Beattie (FT) Mar 27, 2017
The culture of secrecy around trade negotiations is outdated.
Saudi Arabia Puts U.S. Energy Producers to a Test—and They Ace It
Mark P. Mills (WSJ) Mar 27, 2017
It’s entirely feasible for America to become a far bigger oil exporter, even one of the biggest.
How to Engineer a Trump Boom
Robert J. Barro (WSJ) Mar 27, 2017
Cut taxes, deregulate, build roads, bridges and airports—and don’t start a 1930-style trade war.
Can Europe “Be Open But Not Stupid” on Foreign Acquisitions by China?
Theodore H. Moran (PIIE) Mar 27, 2017
Like the United States, the European Union (EU) and its member states are concerned about potential security threats posed by foreign acquisition of firms, especially by Chinese investors, in sensitive sectors of the economy.
How a British Bid on Immigration Can Facilitate Brexit
Jacob Funk Kirkegaard (PIIE) Mar 27, 2017
British Prime Minister Theresa May will soon launch divorce proceedings from the European Union under the so-called Article 50 process. Her objective is to leave the Internal Market and the EU customs union, take back control over immigration, and be free of the jurisdiction of the European Court of Justice while maintaining as free a future trading relationship with the EU-27 as possible.
Will the KORUS FTA Have an Encore?
Jeffrey J. Schott (PIIE) Mar 27, 2017
Five years have passed since the Korea–US Free Trade Agreement or KORUS FTA took effect. Both countries promised that the KORUS FTA would propel a big boost in bilateral trade and investment, but so far the results have not matched expectations.
Striking a Balance in Oil and Gas
Bill Heath and Robert Peterson (BRINK) Mar 27, 2017
Oil and gas companies are making major strategic moves designed to provide stable cash flows in an era in which oil prices are likely to fluctuate between $50 and $60 a barrel.
Central America Pays the Price for Fiscal Failure
Bloomberg View Mar 27, 2017
El Salvador, Guatemala and Honduras owe more to their citizens than they provide.
Saudis Thinking Beyond Oil in Asia Courtship
John Sfakianakis (Bloomberg View) Mar 27, 2017
The partnership between Saudi Arabia and Asia has been gaining in importance over the last decade.
The Temptations of a Resilient China
Stephen S. Roach (Project Syndicate) Mar 27, 2017
Another growth scare has come and gone for the Chinese economy, with export growth up strongly in the first two months of 2017. For the country's policymakers, the challenge now is to stay focused on executing their domestic strategy, rather than seeking to replace the US at the center of the global system.
Britain’s Messy Divorce
Chris Patten (Project Syndicate) Mar 27, 2017
As Britain formally triggers the doleful negotiations to exclude itself from the mainstream of European politics and economics, Prime Minister Theresa May refuses to call what is happening by its correct name. But the UK is certain to emerge from the proceedings poorer – and probably less democratic.
The Arab Spring and the Western Winter
Ishac Diwan (Project Syndicate) Mar 27, 2017
There are many striking parallels between the 2010-2011 “Arab Spring” and the Brexit referendum, Donald Trump’s election, and the far-right resurgence across Europe. In each case, an old order fell, and progressive parties have been too weak to counter the emergence of authoritarian and xenophobic forms of governance.
The Apprentice, But for Real: How Some Companies Close the Skills Gap
David Francis (FP) Mar 27, 2017
Facing a shortfall of skilled labor for advanced manufacturing, some U.S. companies are stealing a page from the European playbook.
Immigrants and innovation in US history
Ufuk Akcigit, John Grigsby and Tom Nicholas (VoxEU) Mar 27, 2017
The impact of immigration on US economic development has become a controversial issue in recent policy debates. This column, arising from a study linking Federal Census data with patent records, examines the historical role of immigrant inventors in the process of US technological innovation. Immigrant inventors appear to have been of central importance to American innovation during the 19th and 20th centuries, both through their own inventive activity and through their influence on domestic inventors. The impact of immigration on US economic development has become a controversial issue in recent policy debates. This column, arising from a study linking Federal Census data with patent records, examines the historical role of immigrant inventors in the process of US technological innovation. Immigrant inventors appear to have been of central importance to American innovation during the 19th and 20th centuries, both through their own inventive activity and through their influence on domestic inventors.
The productivity slowdown’s dirty secret: A growing performance gap
Dan Andrews, Chiara Criscuolo and Peter Gal (VoxEU) Mar 27, 2017
Even before the Global Crisis, productivity growth had slowed in many OECD countries. This column argues that the global slowdown at the aggregate level masks a deterioration in both productivity growth within firms and a process of creative destruction. Using a cross-country firm-level database for 24 countries, the authors reveal an increasing productivity gap between the global frontier and laggard firms, fewer exits by weak firms, and a decline in entry. These problems have been compounded by the failure of policy to encourage the diffusion of best practices in OECD countries. Even before the Global Crisis, productivity growth had slowed in many OECD countries. This column argues that the global slowdown at the aggregate level masks a deterioration in both productivity growth within firms and a process of creative destruction. Using a cross-country firm-level database for 24 countries, the authors reveal an increasing productivity gap between the global frontier and laggard firms, fewer exits by weak firms, and a decline in entry. These problems have been compounded by the failure of policy to encourage the diffusion of best practices in OECD countries.
Aftershocks of monetary unification: Hysteresis with a financial twist
Tamim Bayoumi and Barry Eichengreen (VoxEU) Mar 27, 2017
Asymmetric aggregate supply and demand disturbances across its regions prevent the smooth functioning of a currency union. This column argues that the disturbances in peripheral regions of the US show more symmetry with those in the anchor region than is the case for the Eurozone. Moreover, disturbances to the GIPPS, which previously were in Europe’s periphery, have become more correlated with disturbances to the anchor (Germany) compared to other Eurozone countries. Hysteresis operating via the financial sector may provide an explanation for this development. Asymmetric aggregate supply and demand disturbances across its regions prevent the smooth functioning of a currency union. This column argues that the disturbances in peripheral regions of the US show more symmetry with those in the anchor region than is the case for the Eurozone. Moreover, disturbances to the GIPPS, which previously were in Europe’s periphery, have become more correlated with disturbances to the anchor (Germany) compared to other Eurozone countries. Hysteresis operating via the financial sector may provide an explanation for this development.
Three puzzles of the financial markets’ tug of war
Dambisa Moyo (FT) Mar 28, 2017
How the mix of bullish and bearish sentiments is muddying the picture.
Brexit Reality Begins
WSJ Mar 28, 2017
Britain has two years to decide what its independence is for.
We’re about to find out exactly how populist Britain really is
Sebastian Mallaby (WP) Mar 28, 2017
As exit negotiations finally begin, Theresa May will no longer be able to kick the can down the road.
Getting Kinky with Chickens
Lant Pritchett (CGD) Mar 28, 2017
“Chickens versus cash” might be the “best investment” for a very narrow question, but I argue it probably isn’t in the top 100 value for money research questions in development economics.
Who is minding the model?
Brian Caplen (Banker) Mar 28, 2017
Banks have models for everything these days but, says Brian Caplen, they should not be fooled into thinking their problems are over.
Emerging Markets: The Clouds Lift
Yacov Arnopolin (PIMCO) Mar 28, 2017
As 2017 progresses and the priorities of the Trump administration take shape, the outlook for emerging markets has evolved from uncertain to promising.
The PBOC’s New Tightening Tool: Measured but Meaningful
Isaac Meng (PIMCO) Mar 28, 2017
The People’s Bank of China is adopting a new approach to raising rates. What are the broader implications for China’s economy and global markets?
Corruption and Controversy in Brazil
James N. Green and Renan H. Quinalha (NACLA) Mar 28, 2017
As corruption charges plague both sides of the political spectrum, a slew of controversial austerity proposals from the Temer government exacerbate polarization in Brazil.
Shadow Banking Is Getting Bigger Without Getting Better
Leonid Bershidsky (Bloomberg View) Mar 28, 2017
The sector's success against traditional banks is about regulatory arbitrage, according to a new story.
Staying Rich Without Manufacturing Will Be Hard
Noah Smith (Bloomberg View) Mar 28, 2017
Exchanging cheap U.S. crops for expensive foreign cars and computers doesn't look like a winning trade.
China Should Learn the Golden Rule
Christopher Balding (Bloomberg View) Mar 28, 2017
If it wants better treatment abroad, it should start at home.
Euro-Zone Growth Pessimists Will Be Proved Wrong (Again)
Mark Gilbert (Bloomberg View) Mar 28, 2017
Economists are still playing catch-up with the bloc's improved economic outlook.
Second-Order Effects Are the Real Risks to Trump Trade
Ben Emons (Bloomberg View) Mar 28, 2017
Emerging markets may determine how bad the fallout gets.
Unlocking the Potential of Chinese Cities
Andrew Sheng and Xiao Geng (Project Syndicate) Mar 28, 2017
Letting some of the air out of China's housing bubble, before too much pressure builds up, will require improved management of China’s rapid urbanization. As the city of Foshan has proved, cities have a critical role to play in this process.
The End of Poverty in China?
Hannah Ryder (Project Syndicate) Mar 28, 2017
Over the last 35 years, China has lifted more than 800 million people out of poverty, and is now committed to doing the same for the remaining 45 million living in rural poverty by 2020. But that will be more difficult and costly than ever, and even when it's done, China will face a growing number of urban poor.
President Trump’s Necessary German Lessons
Hans-Werner Sinn (Project Syndicate) Mar 28, 2017
Donald Trump has criticized Germany’s enormous current-account surplus, which he considers the result of German currency manipulation. But Trump is wrong: while Germany’s external surplus, at 8% of GDP, is big – too big – currency manipulation has nothing to do with it.
A Dramatic Comeback for Europe
Anatole Kaletsky (Project Syndicate) Mar 28, 2017
The Dutch are famous for building dykes that hold back the tides and storms sweeping across the Atlantic. Have the Dutch now done it again, stopping the wave of populist politics that has been threatening to engulf Europe?
France’s Extraordinary Election
Dominique Moisi (Project Syndicate) Mar 28, 2017
With the EU’s survival on the line, the stakes are higher than in any election in the history of the Fifth Republic. So, does France’s nationalist, xenophobic right have a real chance of coming to power?
Trade is Slowing Down: What Does This Imply for Globalisation and Public Policy?
Danny Leipziger (WFR) Mar 28, 2017
The phenomenon of slower world trade growth coincides with new protectionist sentiment and challenges to the view that globalisation is welfare-enhancing, fair, and consistent with national economic objectives. Public policy will need to adjust to these changes in the global economy and in the global dialogue.
Currency Depreciation Can Save an Economy in Crisis
Ivan Illán (WFR) Mar 28, 2017
Amongst political and business leadership, there’s a popular bias that domestic currency depreciation and/or devaluation is negative for a nation’s economy. Instead, downward currency movements present a positive GDP benefit due to relatively favourable goods pricing offered to global consumers. Such a currency event will frequently act as a support to challenged economies during recessionary or transitionary periods.
Economic resilience: The growth and economic fragility trade-off
Aida Caldera, Alain de Serres, Filippo Gori and Oliver Röhn (VoxEU) Mar 28, 2017
Severe recessions have been frequent among OECD countries over the past four decades. This column explores the implications of various broad types of policy to minimise the risk and frequency of such episodes for the trade-off for the growth-fragility nexus. Product and labour market policies improve growth but are essentially neutral with regards to economic risks, while better quality institutions increase both growth and economic stability. Macroprudential and financial market policies, on the other hand, entail a trade-off between growth and risk. Severe recessions have been frequent among OECD countries over the past four decades. This column explores the implications of various broad types of policy to minimise the risk and frequency of such episodes for the trade-off for the growth-fragility nexus. Product and labour market policies improve growth but are essentially neutral with regards to economic risks, while better quality institutions increase both growth and economic stability. Macroprudential and financial market policies, on the other hand, entail a trade-off between growth and risk.
The Fed’s price stability achievement
Stephen Cecchetti and Kim Schoenholtz (VoxEU) Mar 28, 2017
US monetary policy has been the target of substantial criticism over the years. This column outlines one key area where the Federal Reserve has done remarkably well – managing price stability. Its ability to control inflation is a key reason that, for the sake of the US and global economies, the Fed’s independence should be preserved. US monetary policy has been the target of substantial criticism over the years. This column outlines one key area where the Federal Reserve has done remarkably well – managing price stability. Its ability to control inflation is a key reason that, for the sake of the US and global economies, the Fed’s independence should be preserved.
Healthy global trade flow belies the pitfalls ahead
FT View Mar 29, 2017
American businesses should stand up and defend open borders.
Global trade growth hits seven-year high
Steve Johnson (FT) Mar 29, 2017
Rise in merchandise volumes driven by buoyant emerging markets.
Brexit will force Europe to look to its own future
Alexander Stubb (FT) Mar 29, 2017
The EU has a history of integration and co-operation and the case for them remains.
At last we can embrace the business of building up prosperity
Paul Marshall (FT) Mar 29, 2017
Industry has the chance to innovate and expand in ways not previously possible.
An island nation chooses non-splendid isolation
Josef Joffe (FT) Mar 29, 2017
After Brexit, Britain and Europe will both be less than the sum of their parts.
Emerging markets still in positive upturn
Luis Costa (FT) Mar 30, 2017
Growth is about more than commodities and will push up interest rates and currencies.
Pillars of the West Shaken by 'Brexit,' but They're Not Crumbling Yet
Steven Erlanger (NYT) Mar 29, 2017
Britain's withdrawal from the E.U. and Donald J. Trump's election are blows to multilateralism, but many European nations seem to be shying away from going it alone.
Why I Support a Border-Adjustment Tax
William J. Jones (NYT) Mar 29, 2017
My company needs relief, but I don't want to see huge budget deficits.
Does ‘Too Big to Fail’ Mean Too Big for the Rule of Law?
Adam J. White (WSJ) Mar 29, 2017
Blame Congress for the arbitrary nature of the ‘systemically important’ label under Dodd-Frank.
Removing Accommodation
Richard Clarida (PIMCO) Mar 29, 2017
Think of the increases in the fed funds rate not as the beginning of an interest rate tightening cycle, but as the beginning of a process to remove a substantial amount of monetary policy accommodation. This “removal of accommodation” cycle still has a ways to go. The real (inflation-adjusted) effective fed funds rate is still negative, and accommodative, and likely will remain so until the nominal rate reaches 2%. The Fed’s latest dot plot suggests that won’t happen until year-end 2018. At least three challenges could complicate the Fed’s efforts to remove accommodation. First, crucial details on how the Fed will shrink its $4.5 trillion balance sheet remain unresolved. Second, policymakers face the ever-present threat of a financial, political or geopolitical event somewhere in the world that disrupts trade flows, risk appetite, financial markets and exchange rates. Third, the composition of the Fed Board of Governors is likely to change significantly by next year.
The Unsustainable Trajectory of US International Debt
Joseph E. Gagnon (PIIE) Mar 29, 2017
On March 29 the Bureau of Economic Analysis (BEA) released its estimate of the US net international investment position (NIIP) as of year-end 2016. Foreign financial claims on US residents and institutions exceeded US claims on foreign residents and institutions by $8.4 trillion, implying a negative NIIP of -45 percent of GDP. Never in history has one country owed so much to the rest of the world.
Curbing the Growth of US International Debt
Joseph E. Gagnon (PIIE) Mar 29, 2017
A companion post discusses the problem of the declining US net international investment position (NIIP). This post explores possible solutions.United States should...
Who would bet on currency unions after EMU crisis?
Alicia García-Herrero and David Martínez Turégano (Bruegel) Mar 29, 2017
The European Monetary Union (EMU) was founded with the idea that nominal convergence would bring real convergence, but structural differences between members have proven wide enough to generate lasting asymmetric negative shocks across the euro area.
How entrepreneurship can thrive in the Arab world
Bessma Momani (Brookings) Mar 29, 2017
Recommendations for eliminating regulatory and cultural barriers to entrepreneurship in the Arab world as a way to foster more inclusive growth.
Make Brexit About Mending, Not Destroying
Bloomberg View Mar 29, 2017
The task now is not demolition but construction -- of the closest possible future relationship between the U.K. and the EU.
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Brexit Doesn't Have to Be a Disaster
Clive Crook (Bloomberg View) Mar 29, 2017
The U.K. and the EU have clear opportunities to advance their most important goals.
From Great Britain to Little England?
Michael O’Sullivan and David Skilling (Project Syndicate) Mar 29, 2017
According to British Prime Minister Theresa May, Brexit will transform the UK into what she calls “Global Britain.” And yet, far from being a great power, a UK outside of the EU will have to follow a small-country economic model like that of Norway or Switzerland.
The Risks to America’s Booming Economy
Martin Feldstein (Martin Feldstein) Mar 29, 2017
After a long and slow recovery from the recession that began a decade ago, the US economy is poised for robust growth this year. But, although the economy currently is healthy, it is also fragile, owing to a decade of excessively low interest rates, which have caused investors and lenders to bid up asset prices and make risky loans.
Pulling the Trigger on Brexit
Matthias Matthijs (FA) Mar 29, 2017
And passing the point of no return.
Economic Snapshot for the Major Economies
Ricard Torné (Focus Ecoomics) Mar 29, 2017
Political uncertainties threaten nascent global economic recovery
Theresa May’s Empty Brexit Promises
John Cassidy (New Yorker) Mar 29, 2017
The Prime Minister said she would get a great deal for everyone in Britain, but she and her party have no viable plan.
Information changes attitudes towards immigrants
Alexis Grigorieff, Chris Roth and Diego Ubfal (VoxEU) Mar 29, 2017
There has been a surge of anti-immigrant sentiment in the US and many European countries. This column uses survey results to show that accurate information about numbers of immigrants changes opinions on whether there are too many immigrants, but not on policy towards them. More detailed information on the characteristics of immigrants, however, can increase support for pro-immigrant policies, particularly among those who start off with the most negative views on immigration. There has been a surge of anti-immigrant sentiment in the US and many European countries. This column uses survey results to show that accurate information about numbers of immigrants changes opinions on whether there are too many immigrants, but not on policy towards them. More detailed information on the characteristics of immigrants, however, can increase support for pro-immigrant policies, particularly among those who start off with the most negative views on immigration.
Economic growth in the US: A tale of two countries
Thomas Piketty, Emmanuel Saez and Gabriel Zucman (VoxEU) Mar 29, 2017
The rise of economic inequality is one of today’s most hotly debated issues. But a disconnect between the different data sets used to measure and understand inequality makes it hard to address important economic and policy questions. In this column, the authors highlight the findings from their attempt to create inequality statistics for the US that overcome the limitations of existing data by creating distributional national accounts. The rise of economic inequality is one of today’s most hotly debated issues. But a disconnect between the different data sets used to measure and understand inequality makes it hard to address important economic and policy questions. In this column, the authors highlight the findings from their attempt to create inequality statistics for the US that overcome the limitations of existing data by creating distributional national accounts.
Post-Brexit trade and development policy
Richard Baldwin, Paul Collier and Anthony Venables (VoxEU) Mar 29, 2017
Regardless of what one may think of the decision, the British people have voted to leave the EU – a result that throws up historic challenges as well as historic opportunities. This column introduces CEPR's latest Policy Insight, which suggests that Brexit should be viewed as an important opportunity for fresh thinking. Regardless of what one may think of the decision, the British people have voted to leave the EU – a result that throws up historic challenges as well as historic opportunities. This column introduces CEPR's latest Policy Insight, which suggests that Brexit should be viewed as an important opportunity for fresh thinking.
Brussels takes back control of Brexit
Philip Stephens (FT) Mar 30, 2017
All the power lies with Europe and Britain holds no cards in the coming negotiations.
Article 50: You hold all the cards but we can kick over the table
Robert Shrimsley (FT) Mar 30, 2017
Friends do not threaten; but screw us on trade and you’ll all be eating borscht.
EM currencies on track for stellar quarter
Michael Hunter and Roger Blitz (FT) Mar 30, 2017
Economic resilience in China and doubts over Trump’s agenda have provided support.
Brexit: EU, UK Prepare for New Chapter in Bilateral Relationship
Bridges, Volume 21, Number 11 Mar 30, 2017
UK Prime Minister Theresa May officially triggered "Article 50" – the legal provision necessary to begin the Brexit negotiations – on Wednesday 29 March, kicking off the next phase in the EU-UK relationship.
Uncertainty Over WTO Negotiating Chair Overshadows Farm Trade Talks
Bridges, Volume 21, Number 11 Mar 30, 2017
A continued disagreement among governments over who should chair the WTO's farm trade negotiations overshadowed talks in the global trade body’s regular committee on agriculture this week, sources said.
Brexit Begins: Implications for Investors
Mike Amey (PIMCO) Mar 30, 2017
We caution investors on sterling and UK gilts as Brexit negotiations commence and the likelihood of a “hard Brexit” remains high.
The Trump Administration’s Potentially Constructive Objectives for NAFTA
Jeffrey J. Schott (PIIE) Mar 30, 2017
After a campaign in which presidential candidate Donald Trump vilified the North America Free Trade Agreement (NAFTA) as one of the worst trade deals in history, the Trump administration has come forward with a welcome signal that it intends to update and improve NAFTA but not torpedo it.
Two Views on Fighting World Poverty
Chris Blattman (CGD) Mar 30, 2017
Yesterday, Lant Pritchett expressed his bewilderment at my open letter to Bill Gates advocating cash for the poor rather than chickens. I think Lant’s right and he’s wrong. We have to focus on the big picture and economic growth as a society, but I think there’s a strong argument for directly tackling the worst poverty now.
Beyond Brexit: End of EU-UK ‘Free Movement’ Should Reset Debate on UK Migration Policy
Ian Mitchell and Anita Käppeli (CGD) Mar 30, 2017
By triggering Article 50, the UK Government has started the process of leaving the EU and will end ‘free movement’ between the EU and UK. But what then on migration? Free movement and EU expansion were behind substantial increases in migration to the UK in the last decade, and likely led to policies which reduced non-EU migration. Our new analysis also suggests the UK now accepts hardly any migrants from the poorest countries.
Putin’s no populist, but he can gain from populist movements worldwide
Yulia Netesova and Torrey Taussig (Brookings) May 30, 2017
Many populist forces across the West view Putin as an ally in their rebellion against the liberal world order, while Putin sees them as an opportunity to gain leverage abroad.
Britain’s Big Brexit Gamble
Holger Schmieding and Kallum Pickering (Globalist) Mar 30, 2017
This is the worst setback ever for the process of European integration that started with a six-nation coal and steel community in 1952 – but for whom precisely?
Making the Most of India's Big Tax Reform
Bloomberg View Mar 30, 2017
A nationwide goods-and-services tax is a promising start (but could stand some improvements).
How to Handle an Oil Shock
Carmen Reinhart (Project Syndicate) Mar 30, 2017
The global oil market is a volatile place, and the fate of countries that have treated adverse shocks as temporary and reversible, and were then proven wrong, has seldom been encouraging. Gulf producers, by going on a borrowing binge, could be setting themselves up for future pain.
The Crisis of Democracy
Joanna Korey (YaleGlobal) Mar 30, 2017
The protection of rights for all under the rule of law, an essential pillar of democracy, is under threat
Informational constraints on antipoverty programmes
Caitlin Brown, Dominique van de Walle and Martin Ravallion (VoxEU) Mar 30, 2017
Policymakers face challenges when trying to identify the right targets for antipoverty programmes. This column assesses whether the data typically available to policymakers in sub-Saharan Africa are up to the task. Commonly used proxy means tests are found to perform worse than simpler methods in identifying poor households. Moreover, analyses of nutritional status reveal substantial inequality within households, suggesting that household-based measures are not very effective in identifying disadvantaged individuals. Policymakers face challenges when trying to identify the right targets for antipoverty programmes. This column assesses whether the data typically available to policymakers in sub-Saharan Africa are up to the task. Commonly used proxy means tests are found to perform worse than simpler methods in identifying poor households. Moreover, analyses of nutritional status reveal substantial inequality within households, suggesting that household-based measures are not very effective in identifying disadvantaged individuals.
Views on happiness and wellbeing as objectives of macroeconomic policy
Wouter den Haan, Martin Ellison, Ethan Ilzetzki, Michael McMahon and Ricardo Reis (VoxEU) Mar 30, 2017
Are quantitative measures of subjective wellbeing reliable enough to provide insights into empirical macroeconomic analysis, and should they influence the objectives of macroeconomic policy? The latest Centre for Macroeconomics and CEPR expert survey finds a reasonable amount of openness to wellbeing measures among European macroeconomists. On balance, though, there remains a strong sense that while these measures merit further research, we are a long way off reaching a point where they are widely accepted and sufficiently reliable for macroeconomic analysis and policymaking. Are quantitative measures of subjective wellbeing reliable enough to provide insights into empirical macroeconomic analysis, and should they influence the objectives of macroeconomic policy? The latest Centre for Macroeconomics and CEPR expert survey finds a reasonable amount of openness to wellbeing measures among European macroeconomists. On balance, though, there remains a strong sense that while these measures merit further research, we are a long way off reaching a point where they are widely accepted and sufficiently reliable for macroeconomic analysis and policymaking.
Africa’s trade deficit falls to near three-year low
Steve Johnson (FT) Mar 31, 2017
Narrowing driven by pick-up in commodity prices and collapse in imports.
Beware the ostriches pursuing a Brexit deal
Tim Harford (FT) Mar 31, 2017
There is certainly a deal to be done, but wishful thinking will not deliver it.
This common argument for U.S. foreign aid is actually quite xenophobic
William Easterly (WP) Mar 31, 2017
The problem with the "aid as counter-terror strategy" argument.
A Nod to NAFTA
Monica de Bolle (PIIE) Mar 31, 2017
After months of charged rhetoric on the North American Free Trade Agreement (NAFTA), a draft letter to Congress from the Trump administration appears to signal a willingness for constructive engagement in renegotiating the agreement.
12 Rules on How NOT to Negotiate for a Successful Brexit
Stephan Richter (Globalist) Mar 31, 2017
A concise compilation of the delusions shaping the surreal mindset of Britain’s Brexiteer brigades.
Forget Foreign Aid — Adopt Free Trade Instead
Ben Ramanauskas (Mises Daily) Mar 31, 2017
I would like to argue for a better way in which the UK can help less developed countries and also advance its own interests: free trade.
Seeking the Cure for American Economic Sclerosis
Noah Smith (Bloomberg View) Mar 31, 2017
Great technology isn't enough. A country also needs great institutions, and many of the U.S.'s are in trouble.
How the EU Can Avoid Fracturing Further After Brexit
Mark Gilbert (Bloomberg View) Mar 31, 2017
David Cameron's two-tier vision wasn't actually a bad idea.
Long-Awaited 'Asian Century' Might Never Come
Gary Shilling (Bloomberg View) Mar 31, 2017
There isn’t much manufacturing in North America and Europe left to be moved to lower-cost developing economies.
The Trump Trade Policies That Can Benefit Financial Markets
Komal S Sri-Kumar (Bloomberg View) Mar 31, 2017
Trump can achieve his campaign promise and have a positive impact on equity and bond markets if he shifts the emphasis to obtaining greater access to other countries’ domestic markets.
The Temptation of Theresa May
Robert Harvey (Project Syndicate) Mar 31, 2017
British Prime Minister Theresa May’s current Brexit strategy seems to be geared toward appeasing right-wing Euroskeptics. But if she concedes too much to the political fringe, she could make it impossible to reach an agreement with Europe that both fulfills her promise to "Leave" voters and ensures Britain's future economic prospects.
Sacrificing consumption to mitigate catastrophic risks
Tim Besley and Avinash Dixit (VoxEU) Mar 31, 2017
Many scientists agree that the probability of a rare environmental disaster increases as the stock of greenhouse gases accumulate in the atmosphere. This column asks how much consumption current generations should be willing to sacrifice to reduce the risk of such a future catastrophe. If there were a way of immediately eliminating the risk of all future catastrophes, society should be willing to sacrifice 16% of its consumption in perpetuity to achieve this. A sacrifice of 5.8% of annual consumption could bring about a 30% reduction in emissions, in line with the reductions contemplated in agreements such as the Kyoto Protocol. Many scientists agree that the probability of a rare environmental disaster increases as the stock of greenhouse gases accumulate in the atmosphere. This column asks how much consumption current generations should be willing to sacrifice to reduce the risk of such a future catastrophe. If there were a way of immediately eliminating the risk of all future catastrophes, society should be willing to sacrifice 16% of its consumption in perpetuity to achieve this. A sacrifice of 5.8% of annual consumption could bring about a 30% reduction in emissions, in line with the reductions contemplated in agreements such as the Kyoto Protocol.
Egypt’s Coming Revolt of the Poor
Zeinab Abul-Magd (FP) Mar 31, 2017
Egyptian President Abdel Fattah al-Sisi's regime has exploited an IMF agreement to squeeze the lower classes and enrich a small clique of former generals.
Trump Could Improve NAFTA but Likely Won’t
Jeffrey Rothfeder (New Yorker) Mar 31, 2017
Rather than rummage through the intricacies of global economic interests and incentives, Trump has chosen to look only at the balance of trade.
The Facts About Immigration
John Cassidy (New Yorker) Mar 31, 2017
Three economists argue that the political discussion about building a wall across the U.S.-Mexico border is at least a decade out of date.