News & Commentary:

Articles/Commentary

US and China are weaponising global trade networks
Abraham Newman (FT) Sep 1, 2019
Businesses and supply chains have become pawns in a strategic ‘quiet war’.

Investors should beware the smoothness of private capital returns
Robin Wigglesworth (FT) Sep 1, 2019
Shrinking returns in publicly traded assets away from mainstream markets.

Central banks will need new tools in next downturn
Philipp Hildebrand (FT) Sep 1, 2019
Traditional monetary policy has had a number of unpleasant side-effects.

Have we lost our economic dynamism?
Robert Samuelson (WP) Sep 1, 2019
There is a long-term peril that Americans should worry about this Labor Day.

How Much Will the Trade War Cost You by the End of the Year?
Quoctrung Bui and Karl Russell (NYT) Sep 1, 2019
About $460 for the average family, according to a new economic analysis.

Abe’s uncertain legacy in Japan
Tobias Harris (EAF) Sep 1, 2019
While Abe had some important political victories, he is unlikely to achieve perhaps his most-cherished political goal, revising Japan's post war constitution.

The Trade War Is About to Hit Your Pocket. Literally
David Fickling (Bloomberg View) Sep 1, 2019
Goods such as clothing and shoes had been spared from the tariff dispute with China. Not anymore.

How Trump Can Win the Trade War
Anne Stevenson-Yang (Bloomberg View) Sep 1, 2019
It isn’t by cutting rates. That would only give Beijing an economic crutch to support its champions and hurt U.S. companies.

Don’t Blame Economics, Blame Public Policy
Ricardo Hausmann (Project Syndicate) Sep 1, 2019
Engineering and medicine have in many respects become separate from their respective underlying sciences of physics and biology. Public-policy schools, which typically have a strong economics focus, must now rethink the way they teach students – and medical schools could offer a model to follow.

The Old World and the Middle Kingdom
Julianne Smith and Torrey Taussig (FA) Sep 1, 2019
Europe wakes up to China’s rise.

The Dictators’ Last Stand
Yascha Mounk (FA) Sep 1, 2019
Why the new autocrats are weaker than they look.

Shining a Light
David Lipton (F&D) Sep 1, 2019
Bringing money out of the shadows means improving governance.

Privacy vs Transparency
Jay Purcell and Ivana Rossi (F&D) Sep 1, 2019
Countries must strike the right balance as they combat illicit financial flows.

The Cost Of Corruption
Paolo Mauro, Paulo Medas, and Jean-Marc Fournier (F&D) Sep 1, 2019
Graft results in lost tax revenue, but it also takes a social toll.

Tackling Tax Havens
Nicholas Shaxson (F&D) Sep 1, 2019
The billions attracted by tax havens do harm to sending and receiving nations alike.

Argentina: how IMF’s biggest ever bailout crumbled under Macri
Michael Stott and Benedict Mander (FT) Sep 2, 2019
With the Peronists waiting in the wings, the country is struggling to avoid a ninth sovereign default.

The Rules of Geopolitics Are Different in Asia
Walter Russell Mead (WSJ) Sep 2, 2019
Indo-Pacific states care about great-power balance, not promoting democracy.

In Depth: Is the Next Global Recession in Sight?
Wang Liwei, Yu Hairong, Zeng Jia, Zhang Qi and Han Wei (Caixin) Sep 2, 2019
After nearly 10 years of steady expansion, the world economy faces growing concerns of a looming recession.

Argentina’s beleaguered government imposes capital controls
Economist Sep 2, 2019
Fear of a populist government provokes a market crash, forcing the president’s hand.

Moment of truth approaching for Trump’s trade war
Nile Bowie (AT) Sep 2, 2019
New fourth round of tariffs on Chinese goods will hit US consumers and firms especially hard, just as the US enters an election season.

Why Europe needs a change of mind-set to fend off the risks of recession
Guntram B. Wolff (Bruegel) Sep 2, 2019
Recession! This is the new worry in Europe and the US. A simple look at google trends shows that in Germany, France and the US, search interest for recession peaked in the last weeks. In Italy, the peak already occurred end of January. Whether a recession is actually occurring is difficult to gauge in real time. But there can be no doubt that significant risks such as the trade war and no-deal Brexit exist.

Germany’s Obsession With Fiscal Prudence Needs to Go
Bloomberg View Sep 2, 2019
Additional spending will help an economy on the verge of recession, and give a boost to the European Union too.

Bank Mergers Are No Silver Bullet for India
Andy Mukherjee (Bloomberg View) Sep 2, 2019
The benefits won’t be felt for years, while Modi’s government is staring at an economic crisis now.

The Hard Part of Ending Inequality Is Paying for It
Nir Kaissar (Bloomberg View) Sep 2, 2019
Executives and lawmakers agree on the problem. Coming up with the money will be a challenge.

Germany’s Divided Soul
Dalia Marin (Project Syndicate) Sep 2, 2019
Eastern Germans vote, think, and feel differently than western Germans do, as the results of the September 1 regional elections make clear. To help tackle the underlying economic causes of this divide, the federal government should introduce incentives to encourage foreign investment in the east of the country.

The Twilight of the Global Order
Ana Palacio (Project Syndicate) Sep 2, 2019
The recent G7 summit in Biarritz signaled a broader shift in international governance away from constructive cooperation and toward vague discussions and ad hoc solutions. The conclusion of the summit could be a marker of the world order’s future – ending not with a bang, but with a whimper.

Dousing the Sovereignty Wildfire
Jean Pisani-Ferry (Project Syndicate) Sep 2, 2019
In time, the current spat between French President Emmanuel Macron and his Brazilian counterpart Jair Bolsonaro regarding the Amazon rainforest may become a mere footnote. But other rows between collective and national interests are sure to erupt, and the world needs to find a way to manage them.

Capitalism in the Last Chance Saloon
Adair Turner (Project Syndicate) Sep 2, 2019
Believers in a market economy are dismayed by radical voices arguing that capitalism is incompatible with effective climate action. But unless capitalism's defenders start supporting more ambitious targets and policies to achieve net-zero carbon emissions by mid-century, they should not be surprised if an increasing number of people agree.

20 Years of European Economic and Monetary Union: Selected takeaways from the ECB’s Sintra Forum
Philipp Hartmann and Glenn Schepens (VoxEU) Sep 2, 2019
On the occasion of the 20th anniversary of the euro, the experiences with EMU so far and crucial factors for its success going forward were at the core of ECB’s 2019 Sintra Forum on Central Banking. In this column two of the organisers highlight some of the main points from the discussions, including the diverse progress with economic convergence and how it may relate to the geographic agglomeration of industries, the role of fiscal policies relative to monetary policy for macroeconomic stabilisation in the still incomplete monetary union, and selected key determinants of future growth in the euro area.

The preferred creditor puzzle in sovereign debt markets
Tito Cordella and Andrew Powell (VoxEU)/I> Sep 2, 2019
Countries almost always repay loans from the IMF and the World Bank before others, even though this preferred treatment rarely appears in legal contracts. This column presents a framework to investigate this puzzle. It argues that the ability to restrict lending allows international financial institutions to lend at the risk-free rate and creates incentives for repayment. IMF and World Bank loans are thus complementary to commercial lending.

Indian economy needs revolution, not tinkering
FT View Sep 3, 2019
Slowing growth calls for bold reforms which have so far been lacking.

Central bankers may be hurting rather than helping
Huw van Steenis (FT) Sep 3, 2019
Cutting rates below zero distorts the market for banks and for investors.

Corporate Japan remains in cross-shareholding rut
Leo Lewis (FT) Sep 3, 2019
Despite revisions to governance code, companies continue to sit on each others’ shares.

Recessions have become rarer and more scary
Robin Harding (FT) Sep 3, 2019
A hard to predict financial crisis is the most probable source of the next downturn.

China’s renminbi at risk from growing household forex demand
FTCR Sep 3, 2019
System takes currency’s drop in stride but underlying forces threaten renewed turmoil.

Yes, we still have the fiscal capacity to deal with a recession
Douglas Elmendorf (WP) Sep 3, 2019
Given the economic and social costs of recessions, we should undertake such policies.

Trump’s Manufacturing SOS
WSJ Sep 3, 2019
Tariffs and trade uncertainty punish U.S. goods makers.

China Finds It Can Live Without the U.S.
Stephen A. Myrow (WSJ) Sep 3, 2019
Hawks in Washington speak of ‘decoupling.’ Xi Jinping is already busy doing that—his way.

How Bad Can a Trade War Get?
Holman W. Jenkins, Jr. (WSJ) Sep 3, 2019
The Trump China policy has fixed no problem, but the recovery can survive it.

The tricky link between HK dollar and capital flows
Alicia Garcia Herrero (AT) Sep 3, 2019
The Hong Kong economy has been hit by a series of shocks, but it should resist taking drastic measures to keep foreign capital in the city.

Disruption in the Eurozone: Challenges of an Arranged Marriage
Nicola Mai (PIMCO) Sep 3, 2019
Two decades after inception, the eurozone countries’ arranged marriage-type of union looks shaky at best, and now it is even more challenged by ongoing, global disruptive forces.

When the alternative becomes the norm
Brian Caplen (Banker) Sep 3, 2019
Banks are safer but economic conditions are increasingly bizarre. Risk managers are struggling to understand the new dynamics.

Has globalization gone too far—or not far enough?
Shanta Devarajan (Brookings) Sep 3, 2019
For developing countries as a whole, globalization--the process of lowering trade barriers and integrating with the world economy--has been enormously beneficial.

Fed and ECB Bend to Markets Ahead of Economy
Mohamed Aly El-Erian (Bloomberg View) Sep 3, 2019
Central bankers are determined to loosen monetary policy despite questions about effectiveness and risks.

China’s Most Indebted Firm Is Too Big to Fail
Nisha Gopalan (Bloomberg View) Sep 3, 2019
This property developer is borrowing even more to expand into unlikely projects, such as electric vehicles. But there’s a method to the madness.

Negative Interest Rates Threaten the Financial System
Jim Bianco (Bloomberg View) Sep 3, 2019
Markets may need to be rebuilt on a new set of assumptions, but we don’t know what those should be or how they would work.

The Renminbi’s Bid for Freedom
Yu Yongding (Project Syndicate) Sep 3, 2019
The recent decision by the People’s Bank of China to let the renminbi fall below CN¥7 per US dollar has little to do with trade or currency wars. Rather, it represents an important step by the PBOC toward reforming China’s inflexible exchange-rate regime.

Central Banking’s Bankrupt Narrative
Roger E.A. Farmer (Project Syndicate) Sep 3, 2019
The combination of low unemployment and stubbornly low inflation across Western advanced economies has exposed the fundamental flaws of the standard economic theory that have long informed monetary policymaking. What theory should replace it?

America’s Uneven Future of Work
Laura Tyson and Susan Lund (Project Syndicate) Sep 3, 2019
Because automation and artificial intelligence will change the nature of work for everyone, Americans who are vulnerable to technological disruption would appear to have been created equal. In fact, some workers are more equal than others.

The Benefits of a Progressive Consumption Tax
Kenneth Rogoff (Project Syndicate) Sep 3, 2019
Many economists already favor a consumption-based tax system for raising revenue on grounds of efficiency and simplicity. In an environment where wealth inequality is rising inexorably, the case for doing so has become increasingly compelling.

Understanding what works for active labour market policies
Eduardo Levy Yeyati, Martín Montané, and Luca Sartorio (VoxEU) Sep 3, 2019
Governments around the world spend a large portion of their budgets on active labour market policies aimed at improving access to new jobs and higher wages. This column presents the first systematic review of 102 experimental interventions comprising a total of 652 estimated impacts. It finds that programmes are more likely to yield positive results when GDP growth is higher and unemployment lower, and that programmes aimed at building human capital show significant positive impact.

Technology diffusion trajectories: New evidence
Michele Pezzoni, Reinhilde Veugelers, and Fabiana Visentin (VoxEU) Sep 3, 2019
The diffusion of novel technologies plays a crucial role in stimulating economic growth, but when a novel technology appears it is difficult to predict its later diffusion trajectory in terms of follow-on inventions. This column shows how the antecedents of a novel technology characterise its diffusion pattern by identifying the diffusion trajectories for a large sample of novel technologies using large-scale patent information. Riskier types of novel technologies, while having a larger technological impact, are taken up more slowly.

A New Balancing Act: Monetary Policy Tradeoffs in a Changing World
Mary C. Daly (FRBSF Econ Letter) Sep 3, 2019
A new and less familiar economic environment has emerged in the United States and other countries. Our collective futures now include slower potential growth, lower long-term interest rates, and persistently weak inflation. This new landscape demands we think differently about how to balance and achieve price stability and full employment objectives.

Perceptions of Africa lag behind the brightening reality
FT View Sep 4, 2019
Fragile successes should to be nurtured by civil society and politicians.

Argentina’s political uncertainty is stoking financial fears
Andrew Cummins (FT) Sep 4, 2019
Capital controls and debt ‘reprofiling’ can only do so much.

Tinkering with European fiscal rules not enough
Isabelle Mateos y Lago (FT) Sep 4, 2019
Blind adherence to spending limits should be abandoned.

Political blame game prolongs Argentina’s economic agony
Michael Stott (FT) Sep 4, 2019
Macri tries to survive crisis that was mostly not of his making.

Indonesia’s misdirected efforts to shelter from the global herd
FTCR Sep 4, 2019
Encouraging FDI would better stabilise the rupiah than trying to localise the bond market.

The Trade War’s Winners Don’t Include Us
Robert B. Zoellick (WSJ) Sep 4, 2019
Lost foreign markets, retaliation, higher prices, falling investment. Where’s the upside?

Trump taunts China as trade war rattles economy
Douglas Gillison (AT) Sep 4, 2019
"While I am sure they would love to be dealing with a new administration ... think what happens to China when I win."

US foreign aid is worth defending now more than ever
John R. Allen (Brookings) Sep 4, 2019
The U.S. government is giving short shrift to international development goals and American values, China appears poised to eclipse America’s economic dominance, and the climate crisis is now an existential threat to us all.

Back to the Center: Italy's New Governing Coalition Faces Tough Choices
Jacob Funk Kirkegaard (PIIE) Sep 4, 2019
Italy’s new governing coalition, combining the populist Five Star Movement and the center-left Democratic Party, has done more than sideline the right-wing forces of League Party leader Matteo Salvini. The new more centrist alliance is certain to calm nervous financial markets and reassure the European Union that its appointments to the European Commission and the European Central Bank will provide greater stability and cooperation on European matters. But Salvini, leading the opposition, is hardly likely to slink away from the Italian political scene.

The Rise of Economic Nationalism Threatens Global Cooperation
Monica de Bolle (PIIE) Sep 4, 2019
The coordinated policy response of major economic powers to the global financial crisis of 2008 prevented an even bigger catastrophe. Now with the risk of another downturn, caused in part by the US-China trade war, what are the prospects for worldwide policy coordination to avert a disaster?

Elizabeth Warren's Approach to Trade Is Inclusive, Green, and Ineffective
Jeffrey J. Schott (PIIE) Sep 4, 2019
If Senator Elizabeth Warren’s policies on trade have a familiar ring, it may be because they echo the unlikely alliance of economic nationalist, labor, and environmental interests championed by previous presidential candidates Patrick Buchanan, Ross Perot, and Ralph Nader, vintage 1993, in opposition to the North American Free Trade Agreement (NAFTA). A majority of Democrats in Congress also voted against NAFTA.

Italy’s New Coalition Is Already Looking Shaky
Ferdinando Giugliano (Bloomberg View) Sep 4, 2019
Five Star and the Democrats want tax cuts and extra spending, but the two parties are bound to clash on other policies.

Time to Unlock the Brexit Relief Fund
Lionel Laurent (Bloomberg View) Sep 4, 2019
The U.K.’s looming withdrawal from the EU looks like a good reason to turn on the spending taps.

Do Nations Survive Populist Demagogues? Ask Argentina
David Fickling (Bloomberg View) Sep 4, 2019
A century of divergence between the economies of Australia and its Latin American twin is testimony to the importance of democratic institutions.

Here’s a Realistic Plan to Jump-Start U.S. Growth
Noah Smith (Bloomberg View) Sep 4, 2019
Done right, regional research parks might be just what America needs.

Money for Nothing
Harold James (Project Syndicate) Sep 4, 2019
The persistence of low inflation across advanced economies has led central banks into the realm of zero and even negative policy rates, with the result that government borrowing (and thus spending) is now free. Populist politicians find themselves right at home, while those warning that there is no free lunch will be ignored – until it is too late.

China is Committed to Multilateralism
Xizhou Zhou (Project Syndicate) Sep 4, 2019
In China’s view, the failure of existing international institutions to adjust to the growing clout of emerging and developing economies undermines the legitimacy of the entire multilateral system. But, far from trying to upend that system, China is working to strengthen it.

E-Commerce Development and Household Consumption Growth in China
Xubei Luo, Yue Wang, and Xiaobo Zhang (VoxChina) Sep 4, 2019
China has quickly become the largest e-commerce market in the world. E-commerce has reshaped consumption patterns in recent years. This paper examines how e-commerce development has shaped household consumption growth in China. It finds that e-commerce development is associated with higher consumption growth, that the link is stronger for the rural sample, inland regions, and poor households, and that the consumption of durable goods, in-style goods, and goods of high income elasticity have grown faster than the consumption of local services.

The effectiveness of cross-border cooperation in banking supervision
Thorsten Beck, Consuelo Silva-Buston, and Wolf Wagner (VoxEU) Sep 4, 2019
Following the Global Crisis, countries have significantly increased their efforts to cooperate on bank supervision, the prime example being the euro area’s Single Supervisory Mechanism. However, little is known about whether such cooperation helps improve the stability of the financial system. Using panel data for a large sample of cross-border banks, this column examines whether a higher incidence of supervisory cooperation is associated with higher bank stability. It finds that supervisory cooperation is effective, working through asset risk, but not for very large banks, which are the ones that pose the highest risk to financial stability.

The impact of Brexit on UK firms
Nicholas Bloom, Philip Bunn, Scarlet Chen, Paul Mizen, Pawel Smietanka, abd Gregory Thwaites (VoxEU) Sep 4, 2019
The UK’s decision to leave the EU in the June 2016 referendum was a largely unexpected event that has generated a large, broad, and long-lasting increase in uncertainty. It has also affected some firms more than others depending on the strength of their links to Continental Europe. This column exploits these features and uses a major new survey of UK firms to show that the anticipation of Brexit has already made its mark on the UK economy. It has gradually reduced investment by about 11% and decreased productivity by about 2% to 5% over the three years since the referendum.

Trump’s Trade War with China Bites the U.S. Economy
John Cassidy (New Yorker) Sep 4, 2019
The President thought that export-dependent China couldn’t withstand a lengthy trade war, but Beijing has held firm. Now the American manufacturing sector is suffering.

Is There Too Much Debt in the Eurozone?: Part III
Jay H. Bryson, Michael Pugliese, and Hop Mathews (WF) Sep 4, 2019
In this our third installment in a series of reports on debt in the Eurozone, we focus on the debt of the non-financial corporate (NFC) sector. The financial health of the NFC sector has improved in recent years, but it is not as robust as it was at the launch of the European Monetary Union in 1999. While NFC debt is not a likely catalyst for the next recession, such a downturn could potentially reverse the progress of the last few years.

Why the ECB should gear up for a ‘helicopter money’ drop
Moritz Kraemer (FT) Sep 5, 2019
Negative rates are not working. It’s time policymakers tried a more radical approach.

The US should not be doomed to lose the ‘new scramble for Africa’ Premium
Carolyn Campbell (FT) Sep 5, 2019
New initiatives risk falling prey to pointless technicalities and politicking.

A Dollar for Argentina
WSJ Sep 5, 2019
Argentines prefer to hold greenbacks. Why not bury the peso?

Launch a Pre-Emptive Strike Against Recession
Jason Furman (WSJ) Sep 5, 2019
Congress can blunt the effects of the next downturn by tying spending increases to the unemployment rate.

Argentina 2019: The IMF should avoid mistakes repeatedly made in past bailouts
Brian Pinto (Brookings) Sep 5, 2019
On Wednesday, August 28th, the government of Argentina announced it would seek a “voluntary reprofiling” of its debt. The International Monetary Fund’s (IMF) July 2019 report on Argentina shows an increase in public debt-to-GDP from 57 percent at the end of 2017 to 86 percent in 2018 mostly because of currency depreciation. Primary fiscal balances have moved from a surplus of 3.8 percent of GDP during 2008-2016 into significant deficit. Growth projections are anemic and bond spreads rose to over 2000 basis points after the debt reprofiling was announced. Over the weekend, Argentina imposed currency controls to shore up the peso and protect its depleted foreign exchange reserves. This could be bad news if such controls translate into an implicit tax on agricultural and manufacturing exports should a parallel foreign exchange market develop.

A Weaker Dollar Says the World Feels a Little Safer
John Authers (Bloomberg View) Sep 5, 2019
It’s good to have something to celebrate, even if markets are notoriously bad at pricing disaster risks.

Treasury Bond Yields Have Yet to See a Bottom
Gary Shilling (Bloomberg View) Sep 5, 2019
Even with rates this low, it only takes a small drop to generate big returns on longer-dated maturities.

The True Toll of the Trade War
Raghuram G. Rajan (Project Syndicate) Sep 5, 2019
Behind the escalating global conflict over trade and technology is a larger breakdown of the postwar rules-based order, which was based on a belief that any country's growth benefits all. Now that China is threatening to compete directly with the United States, support for the system that made that possible has disappeared.

Pakistan’s Literacy Problem
Zara Kayani (Project Syndicate) Sep 5, 2019
Boosting literacy in challenging circumstances requires planning, resources, and commitment, but is undoubtedly worth the investment. Pakistan must now make literacy a priority and implement a nationwide program that takes into account the country’s multi-ethnic and multilinguistic nature.

Trump’s Mercantilist Mess
Robert J. Barro (Project Syndicate) Sep 5, 2019
When US President Donald Trump boasted that trade wars are "easy to win" in March 2018, it was convenient to dismiss the remark as a rhetorical flourish. Yet it is now clear that Trump meant it, because he genuinely believes the bizarre and anachronistic macroeconomic theories underlying his approach.

Stars Update: Optimal Levels of GDP, UR and Policy Rate
Azhar Iqbal (WF) Sep 5, 2019
Our estimates of the optimal GDP, unemployment rate and policy rate are suggesting that the economy is operating close to its potential level. Trade related tensions, however, are clouding the near-term outlook.

The escalating trade war will deepen global gloom
FT View Sep 6, 2019
Central banks adopt damage limitation mode with looser policy ahead.

Markets reflect too much confidence in US-China trade deal
Mohamed El-Erian (FT) Sep 6, 2019
Investors learn not to rely unduly on central banks, but still show undue optimism.

A recession is already here in US corporate profits
Richard Henderson (FT) Sep 6, 2019
Combination of shrinking earnings and slowing capex has unsettled some analysts.

Closed for business: credible reforms needed for investment in Zimbabwe
James Harmon and Cornelius Queen (FT) Sep 6, 2019
A lack of commitment to political and economic change means it is still too early to invest.

The tripwires threatening long-term market predictions
Michael Mackenzie (FT) Sep 6, 2019
From regulation to high valuations, investors face long list of challenges.

Death of a Dictator
WSJ Sep 6, 2019
Admired on the left, Robert Mugabe led a thriving country to ruin.

The Trade Uncertainty Principle
WSJ Sep 6, 2019
New evidence that tariff shocks have put economic gains at risk.

Inverted Yield Curves, Recessions, and You
Paul F. Cwik (Mises Wire) Sep 5, 2019
To understand what an inverted yield curve means, you must first understand what the yield curve is.

The curse of (uncontested) imports
Rabah Arezki (Brookings) Sep 6, 2019
Raúl Prebisch famously argued that developing countries should replace imports with domestic production because of the potential gains in industrialization that would stem from such import substitution. In the strategy advocated by the late Argentine economist, the state would play a central role by nationalizing companies, subsidizing domestic producers, and setting tariffs.

A Marriage of Development and Demography
Lauren A. Johnston (Globalist) Sep 6, 2019
Why every country needs an economic demography transition strategy.

A Strong U.S. Consumer Is a Lagging Indicator
Komal S Sri-Kumar (Bloomberg View) Sep 6, 2019
Spending is always strong and unemployment low at the onset of a recession.

Christine Lagarde and the Case for More QE
Ferdinando Giugliano (Bloomberg View) Sep 6, 2019
Many economists expect the ECB to announce more bond purchases next week, but wouldn’t it be better to wait for Mario Draghi’s replacement first?

Mugabe Is Dead, But He Has Plenty of Imitators
Leonid Bershidsky (Bloomberg View) Sep 6, 2019
The former Zimbabwean leader’s long life is an unheeded warning to authoritarians and the nations that tolerate them.

The ECB’s Deflation Obsession
Daniel Gros (Project Syndicate) Sep 6, 2019
It is hard to understand why the European Central Bank is currently so anxious to find new ways to make its policy stance even more expansionary. Its hyper-vigilance about falling prices is misplaced, and its ability to increase the rate of inflation is dubious.

Inflation forecasts and the permanent-transitory confusion
Alex Cukierman (VoxEU) Sep 6, 2019
Individuals are never fully certain whether economic developments are persistent or temporary. This column shows that this permanent-transitory confusion has pervasive implications. It argues that the confusion injects the past into even purely forward-looking New-Keynesian frameworks, and shows empirically that inflationary forecasts indeed rely on past inflation.

America’s Silence Helps Autocrats Triumph
Larry Diamond (FP) Sep 6, 2019
Supporting democratic development around the world is a vital way of denying authoritarian adversaries the geopolitical running room they seek.

Risk-free bonds threaten to be return-free, too
Neil Collins (FT) Sep 7, 2019
Investors should target the glaring mismatch between equity and debt pricing.

Trump kicks trade war into high gear
BG Sep 7, 2019
Consumers, farmers, manufacturing all take a hit as this policy-free president continues his quest for a ‘win’ against China.

Government investment and fiscal stimulus
Christoph Boehm (VoxEU) Sep 7, 2019
Fiscal stimulus packages typically feature large investment in infrastructure. The column argues that the fiscal multiplier associated with government investment during the Great Recession was near zero. Meanwhile, the government consumption multiplier was around 0.8. Estimates of the multiplier for total government purchases do not distinguish these two effects, which may affect their validity.

Mario Draghi’s swansong at the ECB
Gavyn Davies (FT) Sep 8, 2019
The governor leaves behind a battery of monetary weapons that are now misfiring.

The exorbitant privilege of private equity firms
Jonathan Ford (FT) Sep 8, 2019
Fee structures encourage excessive debt and transfer too much value to insiders.

Trump’s Trade-Policy Double Fault
Johan Eliasch (WSJ) Sep 8, 2019
My U.S. firm pays tariffs on our tennis balls. Our Chinese competitor doesn’t.

Political pressures rolled back globalization before. It can happen again.
Robert Samuelson (WP) Sep 8, 2019
The U.S.-China trade war will have major consequences.

China’s current account shrinks, but for how long?
Brad Setser (EAF) Sep 8, 2019
Don't let's get ahead of ourselves on the Chinese current account position.

Keep Your Eye on the Road, India Investor
Andy Mukherjee (Bloomberg View) Sep 8, 2019
Bond market signals a bumpy ride for investing in Modi’s much-needed highway upgrade.

Fed and ECB Are Stuck in a Shrinking Corner
Mohamed Aly El-Erian (Bloomberg View) Sep 8, 2019
Everyone’s looking to the central banks for results that monetary policy can’t deliver.

The World’s Oil Glut Is Much Worse Than It Looks
Julian Lee (Bloomberg View) Sep 8, 2019
OPEC and its allies have been using the wrong target for draining excess stockpiles. As a result, they may have to consider longer and deeper cuts.

Puzzling exchange rate dynamics and delayed portfolio adjustment
Philippe Bacchetta and Eric van Wincoop (VoxEU) Sep 8, 2019
The forward premium puzzle is one of many ways in which exchange rate behaviour can contradict economic theory. This column introduces a model in which delayed portfolio adjustment by investors can address six such puzzles of exchange rate movements. The findings show that slowness in the reactions of investors has the potential to influence asset prices.

After Mugabe, only the young can save Zimbabwe
David Pilling (FT) Sep 9, 2019
The country needs nimble technocrats, not the old warhorses of the liberation struggle.

Traders need to keep close eye on Trump tweets
Katie Martin (FT) Sep 9, 2019
‘Volfefe’ index from JPMorgan measures market impact of president’s words on Twitter.

Hype hovers over Japan-US trade deal
William Pesek (AT) Sep 9, 2019
The undue haste, limited scope and unclear lines of a deal Trump wants signed next week inspire no confidence.

New Index Tracks Trade Uncertainty Across the Globe
Hites Ahir, Nicholas Bloom, and Davide Furceri (IMF) Sep 9, 2019
Rising trade uncertainty is cited as a driving factor for “sluggish global growth” in the current issue of the IMF’s World Economic Outlook, which describes the state of the world economy. But how is trade uncertainty measured? How has it evolved over time? Are changes in trade uncertainty confined to specific countries and regions of the world? A new measure of trade uncertainty finds that by this measure of uncertainty it is surging, and not just in the United States and China, where trade tensions are highest, but also in many other countries.

Italy’s New Coalition Faces Tough Choices
Jacob Kirkegaard (Globalist) Sep 9, 2019
Italy has moved—again—in the direction of stability in the short term, while facing long-term fragility of its economic and financial situation.

Hong Kong Stonewalls China's Trillion-Dollar Easing
Shuli Ren (Bloomberg View) Sep 9, 2019
The city’s unrest is a cautionary tale of income inequality. Stimulus dollars only widen the gap between rich and poor.

A Stronger Yuan Is Manna for Emerging Markets
John Authers (Bloomberg View) Sep 9, 2019
Trade-war developments are helping, but don’t expect too much from Beijing’s conflicted monetary easing.

Beware Banks Dipping Into This Murky Trade
Elisa Martinuzzi (Bloomberg View) Sep 9, 2019
Capital-relief trades look all too similar to the toxic derivatives that supercharged the financial crisis.

Mario Draghi Reaches Again for the Bond-Buying Bazooka
Marcus Ashworth (Bloomberg View) Sep 9, 2019
More QE will be largely meaningless in terms of economic impact, but the ECB simply cannot afford to let the euro strengthen.

Draghi’s Dangerous Farewell
Ashoka Mody (Project Syndicate) Sep 9, 2019
The risks of further monetary stimulus measures by the European Central Bank outweigh the benefits. Additional stimulus will either amount to less than anticipated or will not be sustained – yet it could still undermine the eurozone's financial system and public finances in far-reaching ways.

Connecting Central Asia to the world
Wolfgang Fengler and Paul Vallely (Brookings) Sep 9, 2019
After nearly 200 years of isolation can Central Asia once again become a vital link in the global economy?

It’s Time for the ECB to Put QE on Hold
Stefan Gerlach (Project Syndicate) Sep 9, 2019
Now that the European Central Bank has stoked expectations of additional monetary stimulus, there is a risk that interest rates will snap back upward if it doesn’t deliver at its meeting on September 12. But the ECB would be better advised to postpone any significant further policy loosening.

How the IMF can ‘raise its game’ on monetary policy advice
Charles Collyns and Prakash Loungani (VoxEU) Sep 9, 2019
Unconventional monetary policies were used extensively to deal with the Global Crisis. This column presents the results of a study by the IMF’s Independent Evaluation Office which assessed the value provided by the IMF in its advice on unconventional monetary policies over the past decade. While in many ways the IMF’s response to an unprecedented challenge to monetary policymakers was impressive, limited depth of expertise on monetary policy issues and high turnover of country teams were an issue. The IMF could have also done more to explore alternative policy mixes and to support better smaller advanced economics and emerging markets.

Welfare effects of Trump's China tariffs
Daniel Gros (VoxEU) Sep 9, 2019
Traditional analysis of tariffs in a partial equilibrium setting can tell us much about the welfare consequences of the US-China trade war. The column argues that, as tariffs ratchet up, welfare costs for both sides increase disproportionately. The cost of trade diversion in the US to less-efficient suppliers likely overwhelms any terms-of-trade gain the US might enjoy. In all cases, exporters in the rest of the world benefit.

The rise of digital currency
Tobias Adrian and Tommaso Mancini-Griffoli (VoxEU) Sep 9, 2019
New entrants are vying to occupy the space once used by paper bills. This column, part of the VoxEU debate on the future of digital money, proposes a simple framework to make sense of who is attempting to pry our wallets open. It argues that the adoption of new digital means of payment could be rapid and bring significant benefits to customers and society, but that the risks must be tackled with innovative approaches and heightened collaboration across borders and sectors. One approach is for central banks to engage in a public–private partnership with fintech firms to provide a safe, liquid, and digital alternative to cash: synthetic central bank digital currency.

Aggressive monetary easing is pushing on a string
Richard Koo (FT) Sep 10, 2019
Japan’s experience shows that incentives do not work when people are very wary of debt.

What a devil’s advocate would tell ECB hawks
Martin Sandbu (FT) Sep 10, 2019
Their commitment to price stability requires them to back Draghi’s stimulus plans.

A Capital Market Union for Europe: Why It’s Needed and How to Get There
Ashok Vir Bhatia, Srobona Mitra, and Anke Weber (IMF) Sep 10, 2019
When savers and firms invest and borrow beyond their national borders, they enjoy opportunities to diversify their portfolios and lower their funding costs, respectively. In Europe, this idea—of an integrated financial system that offers a richness of financing choice—remains an elusive goal: capital markets are far from integrated.

Are Foreign Companies Really Leaving China in Droves?
Nicholas R. Lardy (PIIE) Sep 10, 2019
President Donald Trump, in defending his trade war with China, has yet again let his Twitter fingers get ahead of reality. He tweeted in late August that “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs. They must stem the flow.” This supposed exodus of foreign firms is another element informing his view that China is under increasing economic pressure and thus anxious to accept US terms for a trade agreement. As is the case with Trump’s claim that the US tariffs are slowing China’s economy and increasing its unemployment, the facts fail to support his view.

Europe's Surpluses Are Funding the US Economy
Patrick Artus (Brink) Sep 10, 2019
The eurozone has financed the United States since 2013 as a result of its dysfunction. If the eurozone’s functionality returned to normal, however, the United States would be in big trouble. How the U.S. could be forced to reduce its external deficit by saving more and investing less, potentially leading to a recession.

Did Dudley Do Right?
Barry Eichengreen (Project Syndicate) Sep 10, 2019
The New York Federal Reserve's immediate past president recently caused controversy by calling on the Fed to make it “abundantly clear" that President Donald Trump will bear "the consequences" of his fiscal and trade policies. But what does "abundantly clear" entail?

Who Lost Argentina, Again?
Mohamed A. El-Erian (Project Syndicate) Sep 10, 2019
With a presidential election approaching next month, Argentina is once again on the cusp of a crisis that could end in depression and default, owing to mistakes made by everyone involved. Should President Mauricio Macri secure another term, he must waste no time in reversing the country's economic deterioration.

Should We Worry About Income Gaps Within or Between Countries?
Dani Rodrik (Project Syndicate) Sep 10, 2019
The rise of populist nationalism throughout the West has been fueled partly by a clash between the objectives of equity in rich countries and higher living standards in poor countries. Yet advanced-economy policies that emphasize domestic equity need not be harmful to the global poor, even in international trade.

The World and the UN Must Reduce Population Growth
Frank Götmark and Robin Maynard (Project Syndicate) Sep 10, 2019
The United Nations' 17 Sustainable Development Goals imply that there is no longer any need to reduce global population growth, even though it is a serious problem that undermines most of the SDG targets. By adding a further SDG aimed at slowing the increase in population, the world could yet save the UN’s 2030 Agenda.

Rules of origin: Largely unnecessary, simply protectionist
Gabriel Felbermayr, Feodora Teti, and Erdal Yalcin (VoxEU) Sep 10, 2019
Rules of origin exist to avoid trade deflection, but they distort global value chains and are costly to abide by. This column shows empirically that in preferential trade agreements, trade deflection is unlikely to be profitable because tariffs are generally low, that countries in a common free trade agreement tend to have similar external tariff levels, and that when tariff levels differ, deflection is profitable at most for one country in the pair. Moreover, transportation costs create a natural counterforce. It appears that rules of origin are primarily used to limit trade, and hence represent an instrument for trade protection.

Bilateral and aggregate trade balances: Finding the right focus
Johannes Eugster, Florence Jaumotte, Margaux MacDonald, and Roberto Piazza (VoxEU) Sep 10, 2019
Bilateral trade balances have come under scrutiny recently, with some policymakers concerned that their large and rising size may reflect asymmetric obstacles to trade. This column argues that macroeconomic factors – rather than bilateral tariffs – have been the key drivers of the evolution of bilateral trade balances. While tariffs have played a modest role in the evolution of bilateral balances, declines in tariffs have lifted productivity by allowing a greater international division of labour, including through participation in global value chains. A sharp increase in tariffs would therefore create significant spillovers, leaving the global economy worse off.

Propagation of economic shocks through supply chains
Hiroyasu Inoue and Yasuyuki Todo (VoxEU) Sep 10, 2019
Natural disasters can have enormous economic consequences that affect firms both directly and indirectly. Using the example of the Great East Japan Earthquake, this column investigates how the propagation of shocks varies with the characteristics of supply chains. It finds that the indirect effects are far larger than the direct effects. Shocks propagate more widely and are more persistent if supply networks have complex cycles and low input substitutability.

Globalization and the Threat to Democracy
Samir Nazareth (YaleGlobal) Sep 10, 2019
Far-right leaders use globalization and the democratic process to destroy institutions that deliver prosperity and justice

Draghi must deliver his parting shot of stimulus
FT View Sep 11, 2019
With external risks continuing to rise, caution could prove costly.

Consumers cannot carry the US economy for ever
Megan Greene (FT) Sep 11, 2019
A recession may be on the way but we lack a clear sense of how it will happen.

Negative yields leave EM investors with nowhere to hide
Steve Johnson (FT) Sep 11, 2019
The sub-zero club has expanded beyond the ‘safer’ sovereign issuers.

More monetary easing will make the world weaker
David Kelly (FT) Sep 11, 2019
Cutting interest rates from already very low levels is likely to suppress demand.

Asia has a crucial role in the development of sustainable finance
Douglas Flint (FT) Sep 11, 2019
Infrastructure investment in the region offers big opportunities to embed ESG principles.

Bolton’s exit raises odds of US-China trade deal
Spengler (AT) Sep 11, 2019
The departure of the China hawk might clear the way for a trade-and-technology deal.

Achieving the SDGs Will Require More than Revenue Increases
Sanjeev Gupta and Magdi Ahmed (CGD) Sep 11, 2019
How much progress is made in achieving the Sustainable Development Goals (SDGs) is likely to depend crucially on resources low and lower-middle income countries (LIC/LMICs) can mobilize domestically.

How Presidents Should Talk About the Fed
Narayana Kocherlakota (Bloomberg View) Sep 11, 2019
They need to know the difference between independence and accountability.

Flawed Process Nominates Right Leader for IMF, But at a Cost
Mohamed Aly El-Erian (Bloomberg View) Sep 11, 2019
Multilateralism is under attack. The IMF and World Bank need to look beyond Europe and the U.S. for leaders to help save it.

Italy Has a Golden Opportunity in the Bond Market
Marcus Ashworth (Bloomberg View) Sep 11, 2019
With a new euro-friendly coalition in place, Rome could issue more long-term debt. That would show Brussels it has the investor stamp of approval.

The Right Industrial Policy for America
Tyler Cowen (Bloomberg View) Sep 11, 2019
The best way for the government to help the economy is to ensure that its existing programs work.

The Left Shouldn’t Shy Away From Being Pro-Growth
Noah Smith (Bloomberg View) Sep 11, 2019
Liberals need to lay claim to the economic ground conservatives have monopolized for years.

Mexico Needs to Change Course
Jorge G. Castañeda (Project Syndicate) Sep 11, 2019
Mexican President Andrés Manuel López Obrador (AMLO) is faced with an economic slowdown, an unsustainable migration policy, the continued threat of US tariffs, and a major trade agreement in limbo. The best – or the least worst – solution is a policy U-turn by AMLO’s government.

Africa is Multilateralism’s Secret Champion
Ottilia Anna Maunganidze (Project Syndicate) Sep 11, 2019
Founded on a strong sense of shared identity and driven by common interests, Africa’s commitment to multilateralism is a force to be reckoned with – or, at least, it can be. With international institutions under unprecedented strain, unlocking Africa’s potential as a champion of multilateralism is in everyone’s interest.

Taxation Trends and Challenges in a Digital Economy — Implications for the People’s Republic of China
Akiko Terada-Hagiwara (VoxChina) Sep 11, 2019
The digital economy is growing rapidly across the globe and, among developing countries, the PRC is a leader. Despite its promise, the global digital economy also poses many challenges, including tax base erosion and profit shifting. Given the initial efforts by the PRC to address these challenges, this post recommends that the country continues to participate in the international taxation forum, adopt unilateral measures, improve its tax registration system, and strengthen its tax administration capacity.

Industrial policy: Lessons from China
Panle Jia Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur (VoxEU) Sep 11, 2019
Despite the prevalence of industrial policies around the world, few empirical studies directly evaluate their welfare consequences. This column reveals that the scale of China’s industrial policy targeting the shipbuilding industry is massive, with the lion’s share going to entry subsidies. The effectiveness of different policy instruments is mixed, and the efficacy of industrial policy is significantly affected by the presence of boom and bust cycles, and by heterogeneity in firm efficiency. The ‘white list’ of firms chosen for government support did not include the most efficient firms.

The two sides of government guarantees for banks
Taneli Mäkinen, Lucio Sarno, and Gabriele Zinna (VoxEU) Sep 11, 2019
During the recent financial crises, government guarantees helped reduce the funding costs of banks by providing them with insurance, thus curbing panic in banking systems and financial markets. This column argues, however, that these beneficial effects can be attenuated when guarantees are risky in the sense that they offer weaker protection in recessions, when the guarantor is more vulnerable, or the guarantees are less certain. Using a large international panel of banks, a significant risk premium is found to be associated with implicit government guarantees.

Germany, the euro and the awkward truth
Philip Stephens (FT) Sep 12, 2019
The benefits of integration carry a price tag. German voters have never been required to understand this bargain.

EU’s banking misfortunes share a common thread
Ignazio Angeloni (FT) Sep 12, 2019
There are weaknesses in the laws and framework for dealing with ailing institutions.

Britain can afford to loosen its fiscal rules
Chris Giles (FT) Sep 12, 2019
Economic theory tells us little about the right level of public debt.

China stimulus feared ‘too little, too late’
Don Weinland (FT) Sep 12, 2019
Economists warn that latest effort to boost bank lending will fail to boost growth.

Draghi Leaves With No Exit
WSJ Sep 12, 2019
His legacy is a eurozone intact—and policies his successor can’t quit.

Why Europe’s single market is at risk
Economist Sep 12, 2019
The continent’s best hope of revival lies in reanimating its great economic project.

The ECB cuts interest rates and restarts quantitative easing
Economist Sep 12, 2019
And Mario Draghi sends governments a parting message.

Governance Vs. Democracy
Lex Rieffel (Globalist) Sep 12, 2019
Why U.S. foreign policy should focus on “good governance” instead of “democracy.”

For Better Learning, Africa Needs Better Data
Barbara Bruns and Maryam Akmal (CGD) Sep 12, 2019
To improve learning, Africa needs comparable data.

Will the IMF Finally Learn From Argentina?
Stephen Grenville (Project Syndicate) Sep 12, 2019
Although evidence of the deficiencies in the International Monetary Fund's standard approach has been piling up for years, old habits evidently die hard. But now that Argentina is once again in trouble under the IMF's watch, the need for institutional self-reflection can no longer be ignored.

Getting Serious About the SDGs
Jayati Ghosh (Project Syndicate) Sep 12, 2019
Since adopting the Sustainable Development Goals in 2015, the “global community” has singularly failed to create the conditions needed to realize them. But by addressing three big problems in the international economic system, world leaders could yet help to put the SDGs back on track.

Libra paves the way for central bank digital currency
Dirk Niepelt (VoxEU) Sep 12, 2019
Plans by Facebook and its partners to launch a global digital currency have the FinTech sphere buzzing with rumours, and regulators, central banks, and ‘old finance’ worried. This column, part of the Vox debate on the future of digital money, argues that while we may be witnessing a seismic shift in the monetary system, Libra’s role in that shift will be an indirect one. By taking the status quo option off the table, Libra or its next best replica will force monetary authorities and regulators to choose between central bank-managed digital currency and riskier private digital tokens.

Replacing LIBOR
Stephen Cecchetti and Kim Schoenholtz (VoxEU) Sep 12, 2019
Most financial experts know that LIBOR will likely cease at the end of 2021. Yet, it remains by far the most important global benchmark interest rate, forming the basis for an estimated $400 trillion of contracts. This column examines the US dollar LIBOR transition process, highlighting both the substantial progress and the major obstacles that still lie ahead. Regulators in the US and elsewhere are well aware of the risks of delay and are now pushing hard for LIBOR users – especially financial institutions and markets under their supervision – to prepare for a world without LIBOR.

Automation and jobs: When technology boosts employment
James Bessen (VoxEU) Sep 12, 2019
Do industries shed or create jobs when they adopt new labour-saving technologies? This column shows that manufacturing employment grew along with productivity for a century or more, and only later decreased. It argues that the changing nature of demand was behind this pattern, which led to market saturation. This implies that the main impact of automation in the near future may be a major reallocation of jobs, not necessarily massive job losses.

Draghi Delivers in Swan Song to Markets
Erik Nelson and Nick Bennenbroek (WF) Sep 12, 2019
The ECB announced a substantial package of easing measures today, including a rate cut, asset purchases, a tiering system for banks and more favorable lending terms for its TLTRO program. The central bank also changed its forward guidance on interest rates to be more open ended, and contingent upon the convergence of inflation to target.

Is There Too Much Debt in the Eurozone?: Part IV
Jay H. Bryson, Michael Pugliese & Hop Mathewss (WF) Sep 12, 2019
Over the past decade, government debt in the Eurozone has been a concern for financial markets. The fiscal situation for most countries has improved in the past few years, but there are a few exceptions, notably Greece and Italy. While extremely low rates should keep financing costs in check for the near term, a substantial rise in interest rates or a sharp break from EU budget rules by one country could spell trouble for Europe.

Why the ECB’s ‘QE infinity’ may not fix the future
Laurence Fletcher (FT) Sep 13, 2019
There is a growing acceptance that monetary policy has reached its limits.

Fed prepares for tough balancing act
Colby Smith (FT) Sep 13, 2019
Central bank under pressure to appease the market without overcommitting.

Europe’s fragmented markets need a tape of record
Philip Stafford (FT) Sep 13, 2019
Grumbles over the price of market data from banks, traders and other customers are common.

Central banks are rethinking their roles
Gillian Tett (FT) Sep 13, 2019
Staunch independence makes less sense in deflationary times.

Recession or Slowdown? Why You Should Care About the Difference
Jeanna Smialek (NYT) Sep 13, 2019
The economy seems to be cooling off. Whether it starts to shrink is the question.

Trump’s trade war is about to make it harder for Americans abroad to vote
Brian Klaas (WP) Sep 13, 2019
The president's assault on the Universal Postal Union could have unwanted side effects.

Asian economies may gain most from ‘Bolton effect’
William Pesek (AT) Sep 13, 2019
Departure of US security hawk lowers the risk of war and has changed the dynamic in energy markets.

Argentina: Heading for Financial and Political Mayhem
Frank Vogl (Globalist) Sep 13, 2019
Argentina’s voters, foreign institutional investors and the International Monetary Fund (IMF) never seem to learn from previous calamities.

De-Dollarization: Europe Joins the Party
Ronald-Peter Stöferle (Mises Wire) Sep 13, 2019
The US dollar continues to enjoy the confidence of markets, governments, and central banks. But faith in the US dollar is weakening, and many are trying to help the process along.

The tricky link between the Hong Kong dollar and capital flows
Alicia García-Herrero (Bruegel) Sep 13, 2019
The Hong Kong economy has been hit by a series of shocks, but it should resist taking drastic measures to keep foreign capital in the city.

Targeted by the United States, a Renewed Trade Response from the European Union
Anabel González and Nicolas Véron (PIIE) Sep 13, 2019
The incoming European Commission led by Ursula von der Leyen faces a dilemma on the transatlantic trade relationship because of the unpredictable policies of the Trump administration. Should the Commission negotiate with the United States to de-escalate sanctions and defuse myriad issues and work through the World Trade Organization (WTO)? Or should the Europeans simply wait the administration out, knowing that making a significant deal is nearly impossible and hoping that President Donald Trump will no longer be in the White House after 2020?

The ECB Just Cut Interest Rates, Here Is Why They Should Have Raised Them
Daniel Lacalle (Mises Wire) Sep 13, 2019
The eurozone economy is slowing down. The solution isn't more fiscal and monetary stimuli.

How Pooling Can Beat Stunting
Philippe Douste-Blazy and Carl Manlan (Project Syndicate) Sep 13, 2019
People are the world’s most important resource, yet stunting in children limits human capabilities and reduces current investment in the future. Fortunately, the rapid growth of digital technologies means that millions of small individual financial donations can help to end this scourge.

Joining the Technological Frontiers
Tej Kohli (Project Syndicate) Sep 13, 2019
Financial analysts recognize the massive growth potential of artificial intelligence and biotechnology. But, if anything, the likely economic impact of these sectors is being underestimated, because few have reckoned with the implications of what will happen when they are combined.

The Meritocracy Muddle
Eric Posner (Project Syndicate) Sep 13, 2019
Populist resentment against "elites" is a recurring feature of modern democracy, owing to the fact that popular sovereignty is at odds with the careful management of increasingly complex economies. But what causes public discontent to explode at some times rather than others?

Managerial quality and productivity dynamics
Achyuta Adhvaryu, Sadish D., Anant Nyshadham, and Jorge Tamayo (VoxDev) Sep 13, 2019
Manager characteristics matter for productivity, but Indian garment manufacturers may not know what constitutes good management or how valuable it is.

Financial constraints and productivity growth
Philippe Aghion, Antonin Bergeaud, Gilbert Cette, Rémy Lecat, and Helene Maghin (VoxEU) Sep 13, 2019
The impact of access to credit on productivity is not as straightforward as it seems.This column introduces a model that emphasises the coexistence of two opposing effects. Tighter access to credit makes it more difficult for entrepreneurs to invest and innovate, with detrimental long-run effects on productivity. But it also drives less efficient incumbent firms out of the market, easing the entry of new and potentially more efficient innovators. Combining these two opposite effects, the overall relationship between credit access and productivity takes the shape of an inverted-U.

The financial origin of the euro area fiscal wound
Alberto Caruso, Lucrezia Reichlin, and Giovanni Ricco (VoxEU) Sep 13, 2019
One of the most cited books written in the aftermath of the 2008 financial crisis, which documents the special characteristics of recessions associated with financial crises over time and across countries, is titled “This time is different”. This column argues that the joint behaviour of the public deficit and public debt in the euro area from 2008 to 2013 – characterised by high and persistent public debt despite a severe fiscal consolidation since 2009 – cannot be explained by the unprecedented collapse in output and the historical relationship between macroeconomic, fiscal and financial variables. Rather, it reflects specific characteristics of the crisis years and the size and nature of the public support to the financial sector.

Mapping economic diversification across the Gulf Cooperation Council
Karen E. Young (AEI) Sep 13, 2019
The economies of the Gulf Cooperation Council (GCC) remain heavily reliant on natural resource revenue as a source of government spending and a driver of growth. Diversification efforts now often include new ways to generate revenue through state investments in energy projects abroad (including refining and petrochemical production) and national oil companies. Since 2015, the GCC countries have become more competitive with each other in altering their policy landscapes to streamline fiscal expenditure and attract foreign investment and resident investors. There is significant variation in policy approaches to foreign labor and tax. Each of these governments faces enormous strains on public finances and challenging economic outlooks, due to depressed oil prices, demographic pressures, high unemployment rates, and a lack of economic diversification. Debt has become a tool of choice, but the capacity to repay and the capacity to grow are both beginning to differentiate the GCC states.

How money can turn electoral results upside down
Yasmine Bekkouche and Julia Cagé (VoxEU) Sep 14, 2019
There is growing concern that money has corrupted politics. The column uses data from French elections since 1993 to show that an increase in spending per voter has consistently increased a candidate’s vote share. Caps on spending may increase this impact, as marginal effects are large. The price of a vote varies widely, and is most expensive for the extreme right.

An Italian-style coalition could stop Brexit
Wolfgang Münchau (FT) Sep 15, 2019
The changes in Rome hold lessons for Remainers — and for Boris Johnson.

How China dodged a trade war recession
Gavyn Davies (FT) Sep 15, 2019
Tariff shock was offset by devaluation and a judicious easing in domestic policy.

Higher education: is Britain’s student housing bubble set to burst?
Thomas Hale and Judith Evans (FT) Sep 15, 2019
An explosion in student numbers triggered a property boom in some post-industrial cities but the market is suffering from oversupply.

Maybe We’re Not All Going to Be Gig Economy Workers After All
Neil Irwin (NYT) Sep 15, 2019
Companies like Uber are hitting the turbulence of government regulation, worker resistance and labor market reality.

Why London Spurned Hong Kong
WSJ Sep 15, 2019
China’s intervention is eroding the city’s economic status.

Time for a World Trade Organization 2.0
Karen J. Alter (WSJ) Sep 15, 2019
Rather than leave the WTO, the U.S. can update the existing one-and threaten to exclude China.

Emerging market central banks most dovish since financial crisis
Steve Johnson (FT) Sep 16, 2019
Monetary authorities are reacting to faltering growth.

Saudi crisis, volatile leaders and the risk of escalation
Gideon Rachman (FT) Sep 16, 2019
All sides have an interest in compromise — but that does not mean it will happen.

The Fed’s Mandate Is Up to Congress and the President
Judy Shelton (WSJ) Sep 16, 2019
Lawmakers in the past have broadened the central bank’s goals, directing it to boost U.S. competitiveness.

A German recession made with American parts
Elizabeth Schumacher (BG) Sep 16, 2019
Trump’s tariffs are helping to push Germany into recession — and into the arms of Beijing.

The Nationalist Case for Free Trade, in the Words of Classical Economists
Joseph T. Salerno (Mises Wire) Sep 16, 2019
The classical economists were also nationalists, and they viewed free trade as one of the most important means for advancing the security, prosperity, and cultural achievements of their own nations.

An EU "Green New Deal" Requires a Far Higher Price on Carbon
Jacob Funk Kirkegaard (PIIE) Sep 16, 2019
Taxing carbon is probably the most effective way of curbing greenhouse gases that cause climate change. But because taxing carbon emissions will raise gasoline and other energy costs for households and industry, it may be the most politically treacherous step any government can take.

Chinese Investment into the US and EU Has Plummeted since 2016
Jacob Funk Kirkegaard (PIIE) Sep 16, 2019
For years, China has been one of the world’s fastest growing sources of outward foreign direct investment (FDI). In 2016, China invested $46 billion into the United States and $41 billion into the European Union. Total outward FDI exceeded $200 billion or nearly 2 percent of the country’s GDP. But by 2018, investment into the United States dropped to less than $5 billion, while the European Union received short of $21 billion. Total outward FDI dropped by more than half.

Saudi Oil Site Attacks Exacerbate Tightening Supply, Add to Price Risk Premium
Greg E. Sharenow (PIMCO) Sep 16, 2019
Attacks and outages could add to the longer-term geopolitical risk premium in oil prices.

European Central Bank Policy: QE Infinity
Andrew Bosomworth (PIMCO) Sep 16, 2019
That fiscal policy is becoming the new monetary policy when it comes to fighting recession was a key conclusion of PIMCO’s Secular Forum, and this was the message ECB President Mario Draghi underlined through both actions and words.

China’s dual banking system: consolidation as the final solution for weak small banks
Alicia García-Herrero and Gary Ng (Bruegel) Sep 16, 2019
There are fundamental solvency and liquidity issues for some small Chinese banks, widely influencing both the bond market as well as the broader financial sector. Given the difficulties in creating a level playing field between small and large banks, there is an expectation that small banks will continue to under-perform.

Will Sudan Break Through to Democracy?
Ishac Diwan (Project Syndicate) Sep 16, 2019
After a rocky few months in which it looked as though the Sudanese military might condemn the country to the same fate as Egypt after the Arab Spring, pro-democracy forces have prevailed in seating a transitional government. But whether the transition to democracy succeeds will depend on what happens next.

An Innovation Agenda for Europe
Manuel Muniz and Marietje Schaake (Project Syndicate) Sep 16, 2019
The European Union has everything it needs to be a global leader in technology and innovation. The EU’s new leadership team should therefore act immediately to create a strong innovation ecosystem, complete the digital single market, and robustly defend free, open, and rules-based competition.

The ECB’s Beggar-thy-Trump Strategy
Hans-Werner Sinn (Project Syndicate) Sep 16, 2019
The European Central Bank's decision to cut interest rates still further and launch another round of quantitative easing raises serious concerns about its internal decision-making process. The ECB is pursuing an exchange-rate policy in all but name, thus putting Europe on a collision course with the Trump administration.

Global trade protection and the role of non-tariff barriers
Luisa Kinzius, Alexander Sandkamp, and Erdal Yalcin (VoxEU) Sep 16, 2019
Since the inauguration of Donald Trump as the president of the US, the world has observed an unprecedented rise in border tariffs. This column shows that trade protection had in fact started much earlier, in the form of non-tariff barriers. An empirical analysis reveals that the average trade dampening effect of such barriers is comparable to that of trade defence instruments such as anti-dumping duties. However, this negative effect can be mitigated by free trade agreements.

Beijing’s South China Sea Aggression Is a Warning to Taiwan
David Santoro (FP) Sep 16, 2019
China has gradually gained economic and military control over the South China Sea by occupying several main islands in an effort to destabilize Taiwan and possibly influence the area’s immense commercial traffic.

Oil Is Back into the Inflation Fold
Sarah House and Shannon Seery (WF) Sep 16, 2019
Outages at Saudi Arabian oil facilities after attacks this weekend have sent oil prices up sharply. The impact to inflation remains small at present, but if persistent it could further challenge real spending as tariffs take hold.

Humility and ambition are needed to lift markets
Luigi Speranza (FT) Sep 17, 2019
Investors are uneasy about the global economy and impact of central bankers.

Saudi attack comes at ill-favoured moment for global economy
Delphine Strauss and Brendan Greeley (FT) Sep 17, 2019
Effect of sustained oil price rise could hit some countries’ growth prospects.

The economic case for fighting pollution
Robin Harding (FT) Sep 17, 2019
Dirty air drags down everything from student test results to football passing.

Trump’s Backfiring Trade Policy
Uri Dadush and Laurence Kotlikoff (Bruegel) Sep 17, 2019
President Trump’s radical trade policy continues, as do trade disputes with China. The president promised to sign far better trade deals, ensure fair treatment of American firms and reduce the United States’ trade deficit. None of these objectives have been met.

Don’t Panic Over the Saudi Attack and the Oil Supply
Donald L. Luskin and Michael Warren (WSJ) Sep 17, 2019
OPEC would have had to cut output anyway, given the dramatic increase in American production.

Labor Shortage May Imperil Growth
Andy Puzder (WSJ) Sep 17, 2019
A lack of qualified workers boosts wages but makes it hard for businesses to expand.

A Drop in Tourism Is Threatening Hong Kong's Economy
Tianlei Huang (PIIE) Sep 17, 2019
Racked by antigovernment protests since June 2019, Hong Kong is on the brink of recession. Its economy contracted by 0.4 percent in real terms in the second quarter of 2019 over the preceding quarter. If this trend has continued in the third quarter, Hong Kong might have already fallen into a technical recession,[1] as the territory’s financial secretary has warned. A leading cause of its economic troubles is the well-publicized plunge in the tourism industry.

Could Ultra-Low Interest Rates Be Contractionary?
Ernest Liu, Atif Mian, and Amir Sufi (Project Syndicate) Sep 17, 2019
Although low interest rates have traditionally been viewed as positive for economic growth because they encourage businesses to invest in enhancing productivity, this may not be the case. Instead, extremely low rates may lead to slower growth by increasing market concentration and thus weakening firms' incentive to boost productivity.

Back to Little England?
Edoardo Campanella (Project Syndicate) Sep 17, 2019
The United Kingdom's bid to withdraw from the European Union is typically characterized as a dramatic manifestation of British nationalism. In fact, it has almost nothing to do with Britain, and everything to do with English national identity, which has been wandering in the wilderness ever since the fall of Pax Britannica.

Brexit House of Cards
Mark Malloch-Brown (Project Syndicate) Sep 17, 2019
Following British Prime Minister Boris Johnson's suspension of Parliament, and an appeals court ruling declaring that act unlawful, the United Kingdom finds itself in a state of political frenzy. With rational decision-making having become all but impossible, any new political agreement that emerges is likely to be both temporary and deeply flawed.

The extraordinary rise in trade policy uncertainty
Scott Baker, Nicholas Bloom, and Steven Davis (VoxEU) Sep 17, 2019
Tariff threats, hikes, and retaliations have become a major source of economic uncertainty and stock market volatility. This column draws on three initiatives to demonstrate that recent rise in trade policy uncertainty, driven by the US withdrawal from the Trans-Pacific Partnership, tariff hikes on US steel and aluminium imports, ongoing Brexit uncertainty, and escalating US-China trade tensions, is extraordinary by several metrics

Money Is the Oxygen on Which the Fire of Global Warming Burns
Bill McKibben (New Yorker) Sep 17, 2019
What if the banking, asset-management, and insurance industries decided to move away from fossil fuels?

Repo Running Wild
Michael Pugliese, Mike Schumacher, Boris Rjavinski, and Zachary Griffiths (WF) Sep 17, 2019
The spike in money market rates this morning resulted in the Fed undertaking the first overnight repurchase operation of meaningful size since 2008. The need for today's operation will spur additional discussion on the need for a standing repurchase facility at the Fed.

Backlash against ECB stimulus is misplaced
FT View Sep 18, 2019
Governing council members must not risk endorsing populist slogans.

Want more investment? Have fewer babies
Steve Johnson (FT) Sep 18, 2019
Lower birthrates may lead to higher savings and lower interest rates, stimulating growth.

What could tip the bond market equilibrium?
John Plender (FT) Sep 18, 2019
There are a lot of buyers standing in the way of a reversal.

HK crisis will widen as long as Beijing calls the shots
Joe Leahy (FT) Sep 18, 2019
China’s tightening grip provokes unrest and hurts the territory’s business reputation.

Braced for aftershocks following momentum sell-off
Robin Wigglesworth (FT) Sep 18, 2019
Drop in hot stocks provided long-needed boost to other investment trends.

why rigged capitalism is damaging democracy
Martin Wolf (FT) Sep 18, 2019
Economies are not delivering for most citizens because of weak competition, feeble productivity growth and tax loopholes.

A new kind of multilateralism is on the horizon
Anne-Marie Slaughter (FT) Sep 18, 2019
Digital space does not recognise the elaborate distinctions of protocol that governments have built.

Wall Street Is Buzzing About Repo Rates. Here’s Why.
Matt Phillip (NYT) Sep 18, 2019
Signs of stress have emerged in a key market that the financial system relies on every day.

Powell Walks the Line
WSJ Sep 18, 2019
A divided Fed cuts rates by 25 points without a clear rationale.

When Presidents Pummel the Fed
Alan S. Blinder (WSJ) Sep 18, 2019
Before Bill Clinton, such browbeating was the norm. Powell has endured Trump’s assaults with dignity.

EU on the horns of a China dilemma
David Hutt (AT) Sep 18, 2019
If EU truly seeks to uphold multilateralism, rule of law and democracy some feel it needs to put its values ahead of business.

Trade war stench hangs over Xi’s rallying cry
Gordon Watts (AT) Sep 18, 2019
Fragrant Hills speech illustrates China’s economic pain as talks restart to ease Sino-US tensions.

A Hawkish Rate Cut? No.
Joseph E. Gagnon (PIIE) Sep 18, 2019
The Federal Open Market Committee (FOMC or Fed) cut the target for the federal funds rate 0.25 percent at its September 18 meeting to a range of 1.75 to 2 percent, as widely expected. However, the newly released median projection of FOMC participants has no further cuts in place this year or next. Financial markets had been hoping for at least one more cut this year and interpreted the median projection as a hawkish sign. The markets have it wrong, however. A correct interpretation of the projection materials shows that at least one more cut this year is likely.

Negative Interest Rates are the Price We Pay for De-Civilization
Jeff Deist (Mises Wire) Sep 18, 2019
The destruction of capital, economic and otherwise, is contrary to every human impulse.

The Positives That Drove the U.S. Economy Are at Risk
Conor Sen (Bloomberg View) Sep 18, 2019
Both political parties are reversing policies that were good for growth.

The Fed Needs to Give the Economy a Booster Shot
Karl Smith (Bloomberg View) Sep 18, 2019
The best way to fend off a recession is to cut rates even more than the market expects.

While the Fed Has No 'Guts,' the PBOC Is on Steroids
Shuli Ren (Bloomberg View) Sep 18, 2019
The U.S. central bank had an embarrassing week, after a liquidity crunch in a key funding market. China, by contrast, has a well-oiled routine.

Can Direct Democracy Defeat Populism?
Jan-Werner Mueller (Project Syndicate) Sep 18, 2019
For three years, we have been told that populist upsets such as Brexit and US President Donald Trump's election are the predictable results of giving too much power to the unwashed masses. In fact, populists owe their recent successes to elite complacency and complicity, and they have as much to fear from referenda as anyone else.

Jerome Powell’s Dilemma
Carmen M. Reinhart and Vincent Reinhart (Project Syndicate) Sep 18, 2019
There is a reason that the US Federal Reserve chair often has a haunted look. Probably to his deep and never-to-be-expressed frustration, the Fed is setting monetary policy in a way that increases the likelihood that President Donald Trump will be reelected next year.

The Return of Fiscal Policy
Jim O'Neill (Project Syndicate) Sep 18, 2019
With interest rates at record lows and global growth set to continue decelerating, there has rarely been a better time for governments to invest in infrastructure and other sources of long-term productivity growth. The only question is whether policymakers in Germany and elsewhere will seize the opportunity now staring them in the face.

The Economic Consequences of Automation
Robert Skidelsky (Project Syndicate) Sep 18, 2019
Economic theory does not provide a clear answer regarding the overall impact of technological progress on jobs. And even if automation has traditionally been beneficial in the long run, policymakers should never ignore its disruptive short-term effects on workers.

Asia’s Multilateral Balancing Act
Myong-Hyun Go, Shafqat Munir, and Ambika Vishwanath (Project Syndicate) Sep 18, 2019
With the United States disengaging from Asia and China threatening to dominate the region, Asia’s democracies must assert their common interests more strongly. Although they have made a good start by liberalizing trade, building a thriving Asian multilateral order will require a much greater economic, political, and social commitment.

Industrial Policy: Lessons from China
Panle Jia Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur (VoxChina) Sep 18, 2019
This paper examines an important industrial policy in China in the 2000s that aims to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness.

Restarting asset purchases in the euro area
Ralph Koijen, Francois Koulischer, Benoit Nguyen, and Motohiro Yogo (VoxEU) Sep 18, 2019
Recent economic performance in the euro area has once again raised the possibility of the ECB conducting asset purchases. This column sorts security-level portfolio holdings data by investor type and across countries in the euro area to study portfolio rebalancing during the ECB purchase programme from 2015-17. There was a material difference in the impact on investors by geography – with foreign investors selling more than half of purchases.

Macroprudential policy could have reduced imbalances in the euro area
Marcin Bielecki, Michal Brzoza-Brzezina, Marcin Kolasa, and Krzysztof Makarski (VoxEU) Sep 18, 2019
The boom-bust cycle in the euro area periphery has almost toppled the euro. This column suggests that region-specific macroprudential policy could have substantially smoothed the credit cycle in the periphery and reduced the build-up of external imbalances. In contrast, common monetary policy could have stabilised output in both the periphery and the core slightly better, but it would have been incapable of significantly influencing either housing markets or the periphery’s trade balance. The column also offers policy guidelines in case internal imbalances should arise again in the euro area.

Bank of England has many reasons to hold interest rates
FT View Sep 19, 2019
Even if Brexit were resolved there is little reason to tighten policy now.

Fed intervention in repo is a step toward more QE
Michael Mackenzie (FT) Sep 19, 2019
Interest rate spike is a sign the central bank needs to resume asset purchases.

Negative interest rates take investors into surreal territory
Gillian Tett (FT) Sep 19, 2019
The markets are vulnerable to potential nasty losses if rates suddenly shoot up.

Bond yields have backed up but the bull run may continue
Katie Martin (FT) Sep 19, 2019
Evidence points to a pause, but not a reversal, in the long rally in fixed income.

Reasons for moderate optimism about Greece
Tony Barber (FT) Sep 19, 2019
The political system has proved resilient but the pace of reform must not slacken.

Repo markets mystery reminds us we are flying blind
Gillian Tett (FT) Sep 19, 2019
Quantitative easing means there is a greater chance of the global financial machine misfiring.

Chinese dream readjusted: why uncertainty dims aspirations
Yuan Yang and Nian Liu (FT) Sep 19, 2019
Middle class grows more insecure as social mobility slows.

How Brexit Could Break Britain’s Food Chain
Amie Tsang (NYT) Sep 19, 2019
Getting a fresh tomato to Britain from Sicily involves dozens of people, transfer stops, several truck trips and two boat rides. Brexit uncertainty could mean days-long border delays — and rotten produce.

The EU is in the US trade war crosshairs. It should further raise its game
Anabel González and Nicolas Véron (Bruegel) Sep 19, 2019
The incoming European Commission faces a dilemma on the transatlantic trade relationship, because of the unpredictable policies of the Trump administration. The EU must rally its citizens; the greater the divides between member states and EU institutions, the lesser the chances are of forging effective policies toward the United States and China.

Repo Rate Spike: A ‘Tail’ Of Low Liquidity
Jerome M. Schneider, William Martinez, and Jerry Woytash (PIMCO) Sep 19, 2019
Markets can prove interesting when the price of liquidity abruptly increases and high yield is no longer the highest-yielding investment.

September Fed Meeting: Divisions Over the Path of Policy
Tiffany Wilding (PIMCO) Sep 19, 2019
Weakness in the U.S. economy leaves it vulnerable to shocks. We think the Fed will respond with additional easing this year.

Foreign Investors Fueled Violence and Corruption in South Sudan, Report Finds
Robbie Gramer (FP) Sep 19, 2019
Elites and warlords in war-torn South Sudan have been propped up by a host of multinational companies, banks, and businessmen.

Norges Bank, the Lone G10 Hawk?
Jen Licis and Erik Nelson (WF) Sep 19, 2019
The Norges Bank caught markets off guard today with its fourth interest rate increase within the last year. While the hike today contrasts sharply with most other central banks globally, the Norges Bank's guidance suggested this may be the end of the tightening cycle for now.

Eurozone banks need to be part of the solution
FT View Sep 20, 2019
If the ECB is serious about stimulus, it must consider lenders’ profits.

The Fed must be ready for trouble not normality
FT View Sep 20, 2019
Economic conditions and market hiccups do not allow complacency.

Fed’s divided views reflect investor confusion
Michael Mackenzie (FT) Sep 20, 2019
Policymakers as well as fund managers are walking a tightrope.

US equity valuations have been too high, too long
Celia Dallas (FT) Sep 20, 2019
The market looks very stretched, but it is hard to predict when a crunch will come.

Repo gyrations bode ill for move away from Libor
Philip Stafford (FT) Sep 20, 2019
This week’s spikes suggest blockages in money flows could cause serious problems.

Can Africa’s continental free trade area overcome its high risks?
Harry Broadman (FT) Sep 20, 2019
A large pool of adjustment funds to offset dislocation costs must be integral to the AfCFTA.

Trump’s trade war pinches New England’s lobster industry
Ann-Margaret Ferrante (BG) Sep 20, 2019
New England lobstermen need the same kind of federal help that Midwestern farmers have received.

Where’s the clamor over our disastrous national debt?
Jeff Jacoby (BG) Sep 20, 2019
No one seems to care: Not the president, not Congress, not the 2020 candidates — and not the voters.

Has the dollar lost ground as the dominant international currency?
Eswar Prasad (Brookings) Sep 20, 2019
Amid recent shifts in the positions of key currencies, the euro has stumbled, the renminbi has stalled, and dollar supremacy remains unchallenged.

Should Profane Contracts Be Sanctified?
Ricardo Hausmann (Project Syndicate) Sep 20, 2019
Contracts are protected and sanctified by the courts, but they can be written in order to violate the law – and to shield the crime itself from the law. Such profanity does not deserve, and should not receive, the legal blessing its authors seek.

Can Capitalist Democracy Survive?
William H. Janeway (Project Syndicate) Sep 20, 2019
The balance between capitalism and democracy has rarely been stable, but in recent decades it has tilted decidedly toward markets and the technocrats charged with regulating them. Against the background of an ascendant China, the question now is whether the eventual counter-movement will veer back toward democracy, or in a new direction entirely.

Global lessons from Euroscepticism
Stephanie Bergbauer, Jean-Francois Jamet, Hanni Schölermann, Livio Stracca, and Carina Stubenrauch (VoxEU) Sep 20, 2019
Recent successes of populist movements in Europe might seem to reflect eroded trust in the EU’s institutions. This column asks what global lessons can be drawn from recent research on Euroscepticism at the ECB and elsewhere. It argues that taking citizens’ concerns seriously and addressing salient issues, building on a sense of togetherness, and caring about public trust should inspire a course of action at the global level. Insufficient progress along these dimensions has played a key role not only in Brexit, but also in the backlash against the multilateral world order underpinning globalisation.

The new supervisory architecture in Europe
Miguel Ampudia, Thorsten Beck, Andreas Beyer, Jean-Edouard Colliard, Agnese Leonello, Angela Maddaloni, David Marques-Ibanez (VoxEU) Sep 20, 2019
The decade since the Global Crisis has seen notable changes in the architecture of supervision, with separation of responsibility for monetary and financial stability having been reversed in many countries on the one hand, and a move towards more cross-border cooperation between supervisors on the other. This column discusses these two trends in Europe, where responsibility for supervision of the largest banks is housed in the same authority with responsibility for monetary policy, the ECB. It argues that the Single Supervisory Mechanism is a good reflection of the subtle economics of supervisory architecture and the many trade-offs that have to be taken into account.

Industrial policy war — capitalism with Chinese characteristics
Hung Tran (FT) Sep 21, 2019
The west is at risk of losing the ideological war.

Dateline South Sudan: Grand Corruption’s Partners
Frank Vogl (Globalist) Sep 21, 2019
World leaders dare not ignore today’s grand corruption.

Everyone Thinks the Economy Is Issue No. 1 for India’s Modi. It’s Not.
Ronojoy Sen (FP) Sep 21, 2019
Little separates various Indian political parties on the economy. That’s why the prime minister’s new government is making its mark by delivering on its social and cultural agenda.

Is the Fed making a mistake on inflation?
Gavyn Davies (FT) Sep 22, 2019
Upside and downside both have risks and the FOMC is split on the way forward.

The EU will never abandon the level playing field
Wolfgang Münchau (FT) Sep 22, 2019
Member states would not countenance a Brexit deal that gave the UK regulatory autonomy.

The dollar shouldn’t be the reserve currency, but neither should the renminbi
Matthew Harrison and Geng Xiao (EAF) Sep 22, 2019
The dollar should no longer be the reserve currency, but neither should the renminbi. Instead, introducing wider systematic use of the SDR would help solve the challenges of the current system.

History, not theory, shows health is the foundation of prosperity
Tedros Adhanom Ghebreyesus (FT) Sep 23, 2019
Good health enables people to learn and earn, to start buinesses and to thrive.

What India’s banks can learn from the ‘sachet revolution’
Viral Acharya (FT) Sep 23, 2019
Technology enables banks to redesign financial products that suit the needs of poorer Indian customers.

Shadows loom over China’s 70th birthday
George Magnus (FT) Sep 23, 2019
Trade tensions, Hong Kong and economic slowdown pose threats to the Communist party.

The ECB may have done too little, too late
Katie Martin (FT) Sep 23, 2019
Policymakers may not have gone far enough in staving off an economic downturn.

Why the index fund ‘bubble’ should be applauded
Robin Wigglesworth (FT) Sep 23, 2019
High profits of active managers are unlikely to survive the rise of passive funds.

Global recession fears grow among asset managers
Philip Georgiadis (FT) Sep 23, 2019
Views of 200 institutions that oversee a combined $4.1tn in assets paint gloomy picture.

For Our Future, the Oil and Gas Industry Must Go Green
Christiana Figueres (NYT) Sep 23, 2019
The global economy has to reach net-zero greenhouse gas emissions by 2050 at the latest.

The Economics of Data
Yan Carrière-Swallow and Vikram Haksar (IMF) Sep 23, 2019
Global cooperation is needed to ward off the risk that the digital economy becomes fragmented, with data access limited by national borders.

Will Trump Throw Oil Sanctions on the Fire of US-China Relations?
Jeffrey J. Schott (PIIE) Sep 23, 2019
The US-China trade roller coaster is in a quiet phase as the world waits and sees if the two countries can reach a deal later in 2019. But a major additional economic flashpoint between the Trump administration and Beijing is hiding in plain sight but with the potential to cause major disruptions in the coming months. It revolves around the US threat of economic retaliation over China’s continuing oil imports from Iran and Venezuela.

Sustainability with Chinese Characteristics
Stephen S. Roach (Project Syndicate) Sep 23, 2019
To its credit, China is focusing on sustainable development at a point when its per capita output is barely more than one-third the level in the so-called advanced economies. A relatively poor country has made a conscious choice to shift its focus from the quantity of economic growth to its quality.

Reconciliation Must Drive Development
Rémy Rioux (Project Syndicate) Sep 23, 2019
Political leaders in Russia, Brazil, the United States, and elsewhere are advancing unabashedly nationalist, nostalgia-tinged agendas in order to oppose any attempts to promote joint global governance. In doing so, they are promoting a subtle theory of withdrawal – including at the very center of development policy.

Zero Lower Bound Risk according to Option Prices
Michael D. Bauer and Thomas M. Mertens (FRBSF Econ Letter) Sep 23, 2019
Interest rate derivatives—financial investments whose value depends on interest rates—provide useful information about the risk of short-term rates falling again to the zero lower bound. According to new market-based estimates, the probability of a return to the lower bound by the end of 2021 is about 24%. This is roughly in line with other survey-based and model-based estimates of zero lower bound risk. In recent months, the market-based measure of lower bound risk has increased markedly.

India and Indonesia can be winners in trade war
Trinh Nguyen (FT) Sep 24, 2019
Both countries can take inspiration from the playbook written by Thailand and Vietnam.

ESG investing throws up dilemmas in emerging markets
Steve Johnson (FT) Sep 24, 2019
‘Ethical’ approach threatens to starve poorest countries of much-needed cash.

Here’s one way to fix Brexit’s Irish border problem
Martin Sandbu (FT) Sep 24, 2019
The government has already conceded that some rules for Northern Ireland will be set by the EU.

When the Night Lights Go On in Asia
Jiaxiong Yao (IMF) Sep 24, 2019
The value of a picture taken from space is a new metric we can use to measure economic growth and activity.

The State of Global Education Finance in Six Charts
Susannah Hares and Jack Rossiter (CGD) Sep 24, 2019
There are just eleven years to go to achieve the many targets under SDG4, the Sustainable Development Goal focused on education, and recent reports suggest things are woefully off-track. The UN General Assembly—taking place in New York this week—will be the platform for the announcement of various new initiatives and big funding pledges hoping to fast-track progress toward that goal.

Is the New Model IFC a Good Deal for IDA Countries?
Charles Kenny (CGD) Sep 24, 2019
For much of the last decade, the World Bank’s private sector arm, the International Finance Corporation (IFC), has delivered a share of its profits as grants to the World Bank Group’s soft lending arm for governments, the International Development Association (IDA). In the last couple of years that pattern has reversed. The IFC now keeps its own profits and over the course of the period 2018-2020 it will be a net recipient of $2 billion of IDA financing to support its investments. This change has been justified on the grounds that IDA countries desperately need more private investment if they are to meet the ambitious targets set by the UN Sustainable Development Goals (SDGs), and the IFC is a powerful tool to deliver this investment.

Food for Sustainable Development
Jeffrey D. Sachs and Angelo Riccaboni (Project Syndicate) Sep 24, 2019
All companies in the food sector, both producers and distributors, should adopt clear guidelines, metrics, and reporting standards to align with the Sustainable Development Goals and the Paris Climate agreement. Specifically, each company must address four critical questions.

The Constitution Won’t Save American Democracy
Daron Acemoglu and James A. Robinson (Project Syndicate) Sep 24, 2019
The US Constitution will not save American democracy from the depredations of President Donald Trump. Only American society, which has always been more democratic than the country's founders, can do that.

Four Collision Courses for the Global Economy
Nouriel Roubini (Project Syndicate) Sep 24, 2019
Between US President Donald Trump's zero-sum disputes with China and Iran, UK Prime Minister Boris Johnson's brinkmanship with Parliament and the European Union, and Argentina's likely return to Peronist populism, the fate of the global economy is balancing on a knife edge. Any of these scenarios could lead to a crisis with rapid spillover effects.

New Weapons for the ECB
Yanis Varoufakis (Project Syndicate) Sep 24, 2019
Continued reliance on European Central Bank President Mario Draghi’s weapons will probably succeed in keeping quasi-insolvent states and banks afloat. But it will do so only at the expense of deeper stagnation and uglier political tensions.

Banking, FinTech, Big Tech: Emerging challenges for financial policymakers
Kathryn Petralia, Thomas Philippon, Tara Rice, and Nicolas Véron (VoxEU) Sep 24, 2019
FinTech and Big Tech firms are both increasingly stepping on banks’ traditional turf. This column introduces the 22nd Geneva Report on the World Economy, which looks at the challenges generated by new technology-enabled entrants to the global banking industry and the public authorities that oversee it. It argues that to respond adequately to the FinTech/Big Tech challenge, authorities will need to raise their game and enter uncharted territories.

Banking Disrupted? Financial Intermediation in an Era of Transformational Technology
Kathryn Petralia, Thomas Philippon, Tara Rice, and Nicolas Véron (VoxEU) Sep 24, 2019
The 22nd Geneva Report on the World Economy reviews the financial services landscape and how it has changed over the last several decades, discusses the competition from FinTech and Big Tech, and considers critical public policy questions surrounding the future of banking.

Why More Rate Cuts Could Help Prevent a U.S. Recession
Jeremy Siegel and James Bullard (K@W) Sep 24, 2019
On monetary policy, economic growth, the inverted yield curve, the repo rate spike and more.

How to get adequate and sustainable finance for health in Africa
Peter Sands, Muhammad Ali Pate and Seth Berkley (FT) Sep 25, 2019
Political leadership and rigorous execution are vital.

Why robots see no logic in betting against central bankers
Laurence Fletcher (FT) Sep 25, 2019
Asset managers are opting to follow trends rather than risk getting left behind.

Asia’s emerging economies are winning US-China trade war
Robin Harding (FT) Sep 25, 2019
Vietnam exports to US jumped 33% while China’s fell 12% year-on-year in first half.

China’s shadow banking industry roars back
Don Weinland (FT) Sep 25, 2019
Regulators have eased deleveraging efforts to help boost economic growth.

Trump’s Japanese Trade Judo
WSJ Sep 25, 2019
Repairing damage after U.S. withdrawal from the Pacific pact.

No Emmys in trade war version of Game of Thrones
Gordon Watts (AT) Sep 25, 2019
China invokes imagery from the hit US series as Washington and Beijing battle it out.

There Are Two Sides to Every Trade. And Both Sides Benefit.
Frank Hollenbeck (Mises Wire) Sep 25, 2019
In a globalized world, nearly every product or service relies on products and services from somewhere else.

No learner left behind: Embracing the leapfrog mindset to achieve the SDGs
Rebecca Winthrop and Lauren Ziegler (Brookings) Sep 25, 2019
The ambitious Sustainable Development Goal (SDG) 4 embraces lifelong learning to enable all young people to thrive today and into the future. Achieving this goal calls for the development of a breadth of skills that combine academic disciplines with 21st century skills such as collaboration, digital literacy, and problem solving. Sadly, SDG 4 is not on track to be achieved by 2030, and the most marginalized and vulnerable segments of society are at risk of being left behind.

Why I'm Worried About the Repo Market
Narayana Kocherlakota (Bloomberg Opinion) Sep 25, 2019
It’s hard to predict how the financial system will handle shocks.

Carbon Taxes Won’t Do Enough to Slow Global Warming
Noah Smith (Bloomberg Opinion) Sep 25, 2019
They can help, but the real solution is a shift to green energy.

The Puzzling Lure of Financial Globalization
Arvind Subramanian and Dani Rodrik (Project Syndicate) Sep 25, 2019
Although most of the intellectual consensus behind neoliberalism has collapsed, the idea that emerging markets should throw their borders open to foreign financial flows is still taken for granted in policymaking circles. Until that changes, the developing world will suffer from unnecessary volatility, periodic crises, and lost dynamism.

The Global Retreat of Free Trade
Hector R. Torres (Project Syndicate) Sep 25, 2019
At last month's G7 summit in Biarritz, leaders again paid lip service to reforming the World Trade Organization. But, given the US-led effort to weaken the WTO, the more likely scenario is the emergence of a new international order in which trade deals replace trade rules, and raw power politics stand in for dispute adjudication.

Internal Capital Markets in Business Groups and the Propagation of Credit Supply Shocks
Yu Shi, Robert Townsend, and Wu Zhu (VoxChina) Sep 25, 2019
Using business registry data from China, we show that internal capital markets in business groups can propagate corporate shareholders' credit supply shocks to their subsidiaries. An average of 16.7% local bank credit growth where corporate shareholders are located would increase subsidiaries investment by 1% of their tangible fixed asset value, which accounts for 71% (7%) of the median (average) investment rate among these firms. We argue that equity-exchange is one channel through which corporate shareholders transmit bank credit supply shocks to the subsidiaries and provide empirical evidence to support the channel. We also find that subsidiaries who are more financially constrained or productive benefit more from such shocks. Finally, the propagation effect becomes much stronger when the corporate shareholders are controlling holders or Non-SOE.

The latest on Brexit from the Decision Maker Panel
Nicholas Bloom, Philip Bunn, Scarlet Chen, Paul Mizen, and Pawel Smietanka (VoxEU) Sep 25, 2019
The Decision Maker Panel, a monthly survey of CFOs from around 3,000 UK businesses, provides data on the uncertainty created by the Brexit process and the effect that is having on British businesses. This column summarises the latest results up until end August 2019, which reveal a broad-based rise in the proportion of respondents reporting that Brexit was one of their top three sources of uncertainty in recent months to close to the highest level since the EU referendum. That uncertainty is also expected to be more persistent than previously thought.

Multinational enterprises in the global economy
Koen De Backer, Sébastien Miroudot, and Davide Rigo (VoxEU) Sep 25, 2019
Clear insights on the role and activities of multinational enterprises are central to understanding global value chains, but empirical evidence on such enterprises is lacking. This column introduces the OECD Analytical AMNE database, which provides unique opportunities to study the activities of multinational enterprises and the effect of global value chains on investment and production patterns. It shows that MNEs and their networks of foreign affiliates are important players in today’s global economy and, contrary to conventional wisdom, greatly interact with domestic companies.

Venezuelan Refugees May Help Liberalize Latin America’s Closed Economies
Gabriela Calderon de Burgos and Alex Nowrasteh (FP) Sep 25, 2019
As the cases of Israel and Jordan show, an influx of migrants can prompt lasting economic reform.

Why Draghi’s policies might work better without him
Melvyn Krauss (FT) Sep 26, 2019
The outgoing ECB head has provided shelter to his successor.

Britain needs another Brexit extension
Philip Stephens (FT) Sep 26, 2019
The country’s fate lies in the hands of the EU27, who could be forgiven for calling time.

China’s struggle to manage economic slowing pains
FTCR Sep 26, 2019
Admirably restrained approach to policy making may not be enough to manage growth slide.

A tax hike threatens the health of Japan’s economy
Economist Sep 26, 2019
The last time the consumption tax rose, the economy was flattened.

Eight Updates on Global Education from UNGA
Maryam Akmal and Lee Crawfurd (CGD) Sep 26, 2019
World leaders and policymakers are in New York this week for the United Nations General Assembly (UNGA) to discuss key global issues, including global education. Here, we round up the big announcements at UNGA related to education.

Recent Market Turmoil Shows that the Fed Needs a More Resilient Monetary Policy Framework
Joseph E. Gagnon and Brian Sack (PIIE) Sep 26, 2019
The Fed should make several changes to help create a more resilient and effective operating system.

An English Economist Forecast Trump’s Trade Policy 200 Years Ago
David Fickling (Bloomberg Opinion) Sep 26, 2019
The theory of competitive advantage, more than politics, helps explain why large, land-rich America has the upper hand in agriculture deals.

Brexit Can Get Much More Toxic From Here
Lionel Laurent (Bloomberg Opinion) Sep 26, 2019
Boris Johnson is on the ropes, and his no-deal bluster has never sounded emptier. But a compromise is far off.

Sanders’s Wealth Tax Is Too Much of a Good Thing
Noah Smith (Bloomberg Opinion) Sep 26, 2019
Lofty rates will drive wealth out of the country and might not raise much revenue.

A Unified Theory of What’s Gumming Up the Financial System
Mark Gongloff (Bloomberg Opinion) Sep 26, 2019
Endless waves of borrowing could be flooding the repo market.

Where You Eat Your Bento Box Now Matters for Japan
Daniel Moss (Bloomberg Opinion) Sep 26, 2019
An increase in the consumption levy is the last thing the economy needs.

America’s Argentina Risk
Kaushik Basu (Project Syndicate) Sep 26, 2019
Argentina was one of the world’s richest economies in the first few decades of the twentieth century, but subsequently became a cautionary tale of how a wealthy country can lose its way. By peddling policies that bring about short-term highs at a huge long-run cost, US President Donald Trump risks taking America down a similar path.

Lagarde’s Edge Is Europe’s Opportunity
Mohamed A. El-Erian (Project Syndicate) Sep 26, 2019
The eurozone economy urgently needs a more comprehensive pro-growth policy approach at both the national and regional levels, or else a second lost decade will be all but assured. Hope for the continent now rests squarely on the shoulders of Christine Lagarde, the highly accomplished incoming president of the European Central Bank.

Driving the superstar economy: Skilled tradable services
Fabian Eckert, Sharat Ganapati, and Conor Walsh (VoxEU) Sep 26, 2019
In recent years, wages for highly skilled workers have grown rapidly. Using US data between 1980 and 2015, this column studies a group of service industries that are skill-intensive, widely traded, and have recently seen explosive wage growth. It shows that, unlike any other sector, the wage growth in these industries was strongly biased toward the densest local labour markets and the highest-paying firms. These developments alone explain 30% of the increase in inequality between the 50th and 90th percentiles of the wage distribution.

Window of Weakness
Joachim Fels and Andrew Balls (PIMCO) Sep 26, 2019
The global economy is about to enter a period of vulnerability. Will it end in recession or recovery? Prepare for the year ahead with our regional growth and inflation forecasts---and implications for investors.

A “big data” view of the U.S. economy: Introducing the Brave-Butters-Kelley Indexes
Scott A. Brave, Ross Cole, and David Kelley (FRB Chicago Fed Letter) Sep 26, 2019
We describe a new set of indexes—the Brave-Butters-Kelley Indexes (BBKI)—constructed from a large panel of monthly macroeconomic time series and quarterly real gross domestic product (GDP) growth. Through August, these indexes suggest that real GDP growth was somewhat below its long-run trend to start the third quarter and that its business cycle component had declined noticeably in recent months despite some indications of improvement in its leading indicators.

Weaponized Globalization: Huawei and the Emerging Battle over 5G Networks
Henry Farrell and Abraham Newman (Global Asia) Sep 26, 2019
Washington’s global campaign against Chinese telecom giant Huawei illustrates an emerging battleground of US-China rivalry.

The repo crisis is a warning signal in the financial system
FT View Sep 27, 2019
Banks need much higher level of reserves to feel secure than pre-crisis.

German scepticism of ECB reveals eurozone paradox
Tony Barber (FT) Sep 27, 2019
Berlin remains wary of being the paymaster for a ‘transfer union’.

Hong Kong’s not so special status as China’s financial centre
Andrew Collier (FT) Sep 27, 2019
Over time, Beijing will be perfectly happy to see it replaced by Shenzhen and Shanghai. https://www.ft.com/content/2c4c56bd-1c40-3261-8ba8-f3ce8c83e8d2

Federal Reserve standing repo facility is coming into view
John Dizard (FT) Sep 27, 2019
Governors are likely to look for a ‘relief valve’ in the money markets early next year.

Emerging market investors wait for time to shine
Michael Mackenzie (FT) Sep 27, 2019
Long grind of trade talks holds back enthusiasm, but broader growth picture also hurts.

Repo turmoil is a symptom of a much bigger problem
Hung Tran (FT) Sep 27, 2019
Liquidity has been pooled at the big banks — not the participants that need it.

Emerging markets ‘have space’ to kick-start growth
Steve Johnson (FT) Sep 27, 2019
All major EMs can ease either fiscal or monetary policy, research claims.

Governance and Statistics Are Both Playing Catch Up in the Global Digital Economy
Diane Coyle (CGD) Sep 27, 2019
New technologies are blurring economic borders.

Reinventing the Wheel: Phase One of the US-Japan Trade Pact
Jeffrey J. Schott (PIIE) Sep 27, 2019
Hailed by President Donald Trump as a major breakthrough, the US-Japan trade deal announced on September 25, 2019, actually does little more than partly restoring the benefits that Trump recklessly threw away when he pulled the United States out of the Trans-Pacific Partnership (TPP) in January 2017. The pact is limited. It provides for a staged reduction of Japanese tariffs on walnuts, almonds, blueberries, wine, cheese, beef, and pork. In return, the United States cuts tariffs on mostly industrial products. Both sides intend to return to the negotiating table in spring 2020 for a second phase of talks on a more extensive agenda of trade and investment reforms in goods and services.

Americans Feel a Little Down About a Decent Economy
Noah Smith (Bloomberg Opinion) Sep 27, 2019
“Soft” measures of sentiment have headed lower. Will “hard” numbers follow?

The Mainstreaming of Corruption
Slawomir Sierakowski (Project Syndicate) Sep 27, 2019
Unethical behavior by populist parties across the West has forced traditional parties to abandon their own moral standards. And the evidence suggests that if mainstream politicians want to try to beat populists at their own corrupt game, their supporters will reward them for it.

Argentina’s Recurring Nightmare
Andrés Velasco (Project Syndicate) Sep 27, 2019
Argentine President Mauricio Macri seems almost certain to lose his country’s presidential election next month, after committing the same kinds of economic-policy mistakes that so many of his Peronist predecessors made. It is a tragic and catastrophically disappointing denouement.

Repo Running Wild: A Deeper Dive
Jay H. Bryson and Michael Pugliese (WF) Sep 27, 2019
In this report, we discuss recent developments in repo markets, what they mean and how the Fed may deal with these issues going forward.

Europe’s manufacturing slowdown shows no sign of letting up
Economist Sep 28, 2019
Germany is worst-hit, and may already be in recession.

Central Bank "Stimulus" is Really a Huge Redistribution Scheme
Alasdair Macleod (Mises Wire) Sep 28, 2019
Central banks pretend all these benefits come at no cost to anyone. Unfortunately, we all ultimately pay the price.

Workplace automation: how AI is coming for your job
Robert Wright (FT) Sep 29, 2019
Advances in machine learning software means some white-collar jobs could be swept away by digital change.

Entrenched uncertainty is a global problem
Gavyn Davies (FT) Sep 29, 2019
It started with Brexit but is now depressing worldwide capital investment.

Are investors ready for the ‘Doomsday Dollar’ scenario?
Rana Foroohar (FT) Sep 30, 2019
What would it mean if the entire paradigm for long-term investing was to change?

The New York Fed Chief Is Facing His Biggest Test. Here’s His Response.
Jeanna Smialek (NYT) Sep 29, 2019
The Federal Reserve Bank of New York president, a top economist, has been criticized for his bank’s response to turmoil in the repo market.

The Worst China Trade Idea
WSJ Sep 29, 2019
Banning investment would hurt the U.S. and reformers in Beijing.

Trump has attacked the Fed nonstop. But now there's dissent in its ranks.
Robert Samuelson (WP) Sep 29, 2019
Belief in the risk of recession is no longer unanimous.

The liberal world order crumbled a year ago. We’re still reeling.
Asli Aydintasbas (WP) Sep 29, 2019
The age of impunity has descended upon us.

China’s rise this time is different
Wang Gungwu (EAF) Sep 29, 2019
The rise of China that these reforms have enabled will not be easily turned back.

After 70 years, it’s time to upgrade China’s economic reforms
Yiping Huang (EAF) Sep 29, 2019
China's experiment with the central planning system largely failed but adoption of the reform and open-door policies delivered an economic miracle of unprecedented scale.

The financial development of London in the 17th century revisited
Nathan Sussman (VoxEU) Sep 28, 2019
Most research on the development of English financial markets begins with the Glorious Revolution of 1688. The column uses the debt contracts of the Corporation of London from the 17th century to show that financial development of London between 1638 and 1683 advanced in step with its rival Amsterdam. The supply of capital came mainly from London's wealthy citizens. During this period there is strong correlation between capital deepening in England, and rising GDP per capita.

Managing shocks to worker productivity
Achyuta Adhvaryu, Sadish D, Namrata Kala, and Anant Nyshadham (VoxEU) Sep 29, 2019
The impact of environmental conditions on worker productivity provides an opportunity to study the effectiveness of management practices in increasing worker efficiency. This column uses evidence from Indian garment factories to show how air pollution reduces the relative productivity of workers in tasks they are otherwise more efficient in. Effective managers can respond by reallocating workers to other tasks in order to bring total productivity losses to near zero.

China’s long march to national rejuvenation
FT View Sep 30, 2019
Xi Jinping appears to be doubling down on authoritarian reflexes.

Markets beset by foolery fit the bubble description
John Plender (FT) Sep 30, 2019
The greater fool theory flourishes when investments become speculative.

Greece’s economy is resurgent but still fragile
Megan Greene (FT) Sep 30, 2019
The reforms made during its crisis failed to address competitiveness issues.

How fortunes reversed for Germany and Greece
Tommy Stubbington (FT) Sep 30, 2019
Economic powerhouse has lost steam, while laggard recovers.

China in Charts: A 70-Year Journey to Economic Prominence
Han Wei and Ding Miao (Caixin) Sep 30, 2019
China is celebrating its 70th anniversary with great pride in its transformation into an economic superpower, even as concerns rage over a deepening trade war with the United State and weakening growth momentum.

World Bank Loans Subsidize Chinese Repression
Paul Wolfowitz (WSJ) Sep 30, 2019
Democracies have the power to stop billions until Beijing stops oppressing Uighurs and other groups.

A Flawed History of Doom
Doug French (Mises Wire) Sep 30, 2019
Richard Vague's new book on financial crises repeats many old myths about economic booms, while failing to understand the role of malinvestment and central banks.

India’s Economic Big Bang Moment
Nguyen Trinh (Brink) Sep 30, 2019
India's government finally answered investors’ calls for bolder reforms by slashing the corporate nominal income tax rate and targeting manufacturing investment. The intended effects of this tax cut, along with the additional potential for the country in reducing other barriers to entry for investors.

A Carbon Tax for the United States?
Monica de Bolle (PIIE) Sep 30, 2019
Any debate about global warming leads inevitably to proposals for a carbon tax as one of the most powerful tools in the arsenal to combat it. In January 2019, a bipartisan group in the US House of Representatives introduced H.R. 763, the Energy Innovation and Carbon Dividend Act of 2019, which would pave the way for a carbon tax on fuels that emit greenhouse gases into the atmosphere.

The IMF and the Greek Crisis: Myths and Realities
Poul Thomsen (IMF) Sep 30, 2019
After many iterations, involving politically difficult decisions by both Greece and its European partners, Greece has achieved a considerable measure of macroeconomic stability. A modest recovery is underway, unemployment is declining, real wages are recovering, sovereign yields are much lower, and capital market access is slowly being restored. But pervasive rigidities still weigh on productivity and—as noted at the outset—Greece still has a very long way to go for incomes merely to catch-up to per-crisis levels. Greece now has the breathing space to implement the fundamental reforms needed for it to prosper within the euro area.

Troubles at the ECB Aren’t Draghi’s Fault
Mohamed Aly El-Erian (Bloomberg Opinion) Sep 30, 2019
Europe’s central bank has been shouldering the euro zone’s policy burdens alone for too long.

An Industrial Crisis Is Brewing in Germany
Chris Bryant (Bloomberg Opinion) Sep 30, 2019
The country’s position as the “engine of Europe” is under genuine threat.

This Tiny Bank Is a Canary in India’s Coalmine
Andy Mukherjee (Bloomberg Opinion) Sep 30, 2019
The PMC scandal risks dragging other institutions into the vortex of a messy real estate shakeout.

Millennials Could Be Ready to Save the Economy
Brian Chappatta and Elaine He (Bloomberg Opinion) Sep 30, 2019
In less than a year, the debt-saddled generation will take over the driver’s seat of the U.S. economy.

U.S. Curbs on China Would Hurt Investors and Markets
Nir Kaissar (Bloomberg Opinion) Sep 30, 2019
The government’s expressed concerns don’t stand up to scrutiny.

Turkey’s Economic Turnaround
Berat Albayrak (Bloomberg Opinion) Sep 30, 2019
The finance minister looks back on a year of recovery.

How to Ward Off the Next Recession
Jean Pisani-Ferry (Project Syndicate) Sep 30, 2019
A decade after the Great Recession, Europe’s economy is still convalescing, and another period of prolonged hardship would cause serious, potentially dangerous economic and political damage. With monetary and fiscal policy unlikely to provide enough stimulus, policymakers should explore alternative options.

How to Put India's Shadow Banks on Firmer Ground
Andy Mukherjee (Bloomberg Opinion) Sep 30, 2019
An institution that uses public funds to buy stalled projects from builders could halt this crisis of confidence.

Japan's Labor Market Is Still Rigged Against Women
Noah Smith (Bloomberg Opinion) Sep 30, 2019
Despite a push from the government, hiring and promotions work in favor of old men and against women.

The EU’s Rule-of-Law Test
Tytti Tuppurainen (Project Syndicate) Sep 30, 2019
Although European Union member states tend to comply with rulings by the European Court of Justice, this is only a partial solution to curtailing threats to the rule of law. Fortunately, the EU has several other tools with which to uphold this fundamental pillar of democratic governance.

China’s 70 Years of Progress
Keyu Jin (Project Syndicate) Sep 30, 2019
Much of the West, as well as Asia, continues to assume the worst about China – a habit of mind that could have catastrophic consequences. As Albert Camus once wrote, “Mistaken ideas always end in bloodshed, but in every case it is someone else’s blood."

Europe Needs a Migration Reset
Claus Sørensen (Project Syndicate) Sep 30, 2019
The new European Commission under President Ursula von der Leyen must regain control over migration while respecting the dignity of those seeking a better life. To do this, it needs to reset the European Union’s approach in four areas, mobilizing member states in the European interest.

Hong Kong in the Balance
Michael Spence (Project Syndicate) Sep 30, 2019
After months of large-scale protests in Hong Kong, the city's future as a bridge between mainland China and the outside world is in serious jeopardy. Fortunately, all sides share an interest in pursuing more inclusive growth within the "one country, two systems" framework that has been critical to Hong Kong's success.

It’s Time for German Fiscal Expansion
Jeffrey Frankel (Project Syndicate) Sep 30, 2019
The United States has made some bad fiscal choices, in particular by cutting taxes for the rich at the peak of the business cycle. German policymakers should not make the symmetric mistake of preserving the country’s budget surplus as the economy risks sliding into recession.

Comparing non-performing asset measures across countries
Patrizia Baudino and Raihan Zamil (VoxEU) Sep 30, 2019
Non-performing assets are a double-edged sword. On the one hand, they often trigger episodes of financial crises. On the other, once a crisis erupts, market participants must have confidence in banks’ reported asset quality metrics in order to regain faith in the financial system. This column shows that accounting standards and prudential frameworks to identify and measure non-performing assets vary widely across countries. This presents a challenge for comparing credit risk across banks and countries, for which the column proposes a range of policy options.

Monetary policy for a bubbly world
Vladimir Asriyan, Luca Fornaro, Alberto Martin, and Jaume Ventura (VoxEU) Sep 30, 2019
We live in a world of low interest rates and volatile asset values. This column argues that in such a bubbly world, we can no longer disregard the role of money as a store of value, and the role of monetary policy as a supplier of stores of value. Indeed, monetary policy plays a key role by expanding and stabilising the supply of unbacked assets at an optimal level.

Technology adoption via machine imports
Gábor Békés and Peter Harasztosi (VoxEU) Sep 30, 2019
In less developed countries, upgrading production technologies by importing machinery is an important source of growth. Using new firm-level data from Hungary for the period 1992-2003, this column finds that firms are more likely to import a particular piece of sector-specific machinery when other local firms previously imported the same machine. A similar pattern holds regarding the choice of the machine’s source country. These benefits are concentrated in large and foreign-owned companies, while small and domestically owned firms may actually be adversely affected.

The upside of unconventional monetary policy for central bank balance sheet risks
Diego Caballero Orduna, and Bernd Schwaab (VoxEU) Sep 30, 2019
A bank’s balance sheet lists its assets, liabilities and shareholder equity, each of which is subject to risk. This column uses the examples of the announcement of the ECB’s Outright Monetary Transactions programme and the first very-long-term refinancing operation allotment to show that, in exceptional circumstances, a central bank can remove illiquidity-related credit risk from parts of its balance sheet by extending the scale of its operations.

Are Workers Losing to Robots?
Sylvain Leduc and Zheng Liu (FRBSF Econ Letter) Sep 30, 2019
The portion of national income that goes to workers, known as the labor share, has fallen substantially over the past 20 years. Even with strong employment growth in recent years, the labor share has remained at historically low levels. Automation has been an important driving factor. While it has increased labor productivity, the threat of automation has also weakened workers’ bargaining power in wage negotiations and led to stagnant wage growth. Analysis suggests that automation contributed substantially to the decline in the labor share.