News & Commentary:

Articles/Commentary

Markets and Omicron: more questions than answers
FT View Dec 1, 2021
Eventual impact of the new strain on inflation is still uncertain.

Corporate Italy must enter the 21st century
Luigi Zingales (FT) Dec 1, 2021
For too long Italian companies have not been competing in the global economy.

London is becoming the Jurassic Park of stock exchanges
Paul Marshall (FT) Dec 1, 2021
UK is falling behind as fund managers obsess on dividends over growth.

What South Africa and Omicron tell us about inequality
David Pilling (FT) Dec 1, 2021
For months, scientists have warned about the folly of leaving huge swaths of the world's population unvaccinated.

'No' on Fed Chairman Jerome Powell
Tom Cotton (WSJ) Dec 1, 2021
He's failed in his main mission, to keep the currency sound.

Powell gives markets the rest of a selloff excuse
David P. Goldman (AT) Dec 1, 2021
Stock markets plunged about 1.5% half an hour after the US opening Tuesday after Fed Chairman Jerome Powell hinted at tighter monetary policy. That drop added to Friday's 2% decline in response to concerns over the Omicron variant of Covid-19. The market had been waiting for an excuse to sell off, and has both a medical and monetary one.

A balancing act
Laurence Boone (OECD Ecoscope) Dec 1, 2021
The global economy continues to recover, along with trade, employment and incomes. But the revival is unbalanced, with countries, businesses and people facing very different economic realities. Recent improvements also conceal structural changes, which mean that some sectors, jobs, technologies and behaviours will not return to their pre-pandemic trends. The situation is extraordinary yet our economic outlook is cautiously optimistic. It focusses on the policies needed to balance such uncertain circumstances with the unusual appearance of rising inflation pressures at an early stage of the recovery. Health, supply constraints, inflation and potential policy missteps are all key concerns.

Development Agencies and the "New Normal"
Rachael Calleja and Mikaela Gavas (CGD) Dec 1, 2021
Development agencies are facing a period of profound change. Upheaval from the global pandemic and urgent calls to tackle the climate crisis are happening against a backdrop of sustained demand for traditional development programming and squeezed development budgets.

Controlling the Virus Is the Key to Reducing Inflation
William B. English (Yale Insights) Dec 1, 2021
Demand is surging, supply chains are a mess, and prices are high. In November, the Commerce Department put hard numbers behind consumers' distress: inflation has been rising at its fastest pace since the early 1990s. Yale SOM's William English, a former economist at the Federal Reserve, explains the role of COVID-19 in the spike, considers how policymakers can respond, and confronts the sheer uncertainty of the times.

Sovereign Domestic Debt Restructuring: Handle with Care
Peter Breuer, Anna Ilyina, and Hoang Pham (IMF) Dec 1, 2021
Restructuring domestic debt is a tool that can be used by sovereigns facing fiscal and economic stress.

Algeria at a Crossroads
Mahmoud Harb (IMF) Dec 1, 2021
The Algerian economy is gradually recovering from the initial impact of the pandemic and last year's oil price shock. The health crisis has eased, most containment measures have been lifted, and domestic production of vaccines is supporting immunization efforts. With the rebound in hydrocarbon production and prices, growth has resumed, but the outlook is highly uncertain.

ECB should keep eyes on inflation prize
Agnès Belaisch and Matteo Cominetta (OMFIF) Dec 1, 2021
Should central banks tighten early to combat inflation at the risk of triggering a serious slowdown, or risk higher inflation while propelling growth? This trade-off is easy to face for the European Central Bank. Excluding energy, all components of the euro area inflation basket have grown in line with their 20-year average for the last four months. And the strong tailwind from demand points to a positive outlook for 2022.

Omicron May Be Uncertain, But Inflation Is a Sure Thing
Daniel Moss (Bloomberg Opinion) Dec 1, 2021
Officials can't wait for a moment of clarity in the pandemic to tackle rising prices. Those that acted on the data are now ahead of the Fed.

The Federal Reserve Needs to Accelerate the Taper
William C Dudley (Bloomberg Opinion) Dec 1, 2021
If central bankers don't act at their policy meeting in two weeks, it'll be too late.

Powell's 'Transitory' Retreat Is Just the Beginning
Mohamed A El-Erian (Bloomberg Opinion) Dec 1, 2021
The Fed chair finally retired a phrase that had become increasingly meaningless. Now he has to manage the communication and policy challenges of the late wake-up call on inflation.

Digital Finance Without Cryptocurrencies
Shang-Jin Wei (Project Syndicate) Dec 1, 2021
Digital payments and financial transactions hold the promise of greater convenience, stronger competition, and increased savings to society. But when it comes to digital currencies, central banks – and not free-floating cryptocurrencies or stablecoins – should lead the way.

The Pandemic and Africa's Social Safety Net
Jesse Lastunen, Pia Rattenhuber, and Rodrigo Oliveira (Project Syndicate) Dec 1, 2021
The COVID-19 pandemic has shown that African tax and social-benefit systems are currently ill-equipped to protect households from sudden income losses. Meaningful progress will require policymakers to reduce the size of the informal sector and improve the design and financing of social-protection measures.

Mapping U.S.-China Technology Decoupling, Innovation, and Firm Performance
Pengfei Han, Wei Jiang, and Danqing Mei (VoxChina) Dec 1, 2021
We develop measures for technology decoupling and dependence between the U.S. and China based on combined patent data. The first two decades of the century witnessed a steady increase in technology integration (or less decoupling), but China's dependence on the U.S. increased (decreased) during the first (second) decade. Decoupling in a technology field predicts China's growing dependence on U.S. technology, which, in turn, predicts less decoupling further down the road. Decoupling is associated with more patent outputs in China, but lower firm productivity and valuation. China's innovation-oriented industrial policies trade off the inherent conflict between indigenous innovation and firm competitiveness.

Propagation and amplification of local productivity spillovers
Xavier Giroud, Simone Lenzu, Quinn Maingi, and Holger Mueller (VoxEU) Dec 1, 2021
It is widely believed that the productivity gains from place-based policies are geographically highly localised. This column argues instead that productivity spillovers from local place-based policies may propagate far beyond the initial target region to the entire economy, through the plant-level networks of multi-region firms. But while these productivity spillovers amplify the aggregate welfare gains from local place-based policies, they widen economic disparities between individual workers and regions in the economy.

Rethinking Multilateralism for a Pandemic Era
Ngozi Okonjo-Iweala, Tharman Shanmugaratnam, and Larry Summers (F&D) Dec 1, 2021
Incremental change within existing mechanisms has failed; we need a fundamental reset.

What Are Global Public Goods?
Moya Chin (F&D) Dec 1, 2021
Global institutions must coordinate to preserve the goods that benefit us all.

Pandemic Economics
Ruchir Agarwal and Gita Gopinath (F&D) Dec 1, 2021
A broad-based economic recovery requires an end to the pandemic.

Measuring the Essence of the Good Life
Daniel Benjamin, Kristen Cooper, Ori Heifetz, and Miles Kimball (F&D) Dec 1, 2021
The search continues for a better gauge of prosperity than GDP alone.

Financing Health Systems for the Future
Tedros Adhanom Ghebreyesus (F&D) Dec 1, 2021
We must view universal health coverage as a public policy goal and an investment.

The African Century
Abebe Aemro Selassie (F&D) Dec 1, 2021
The right actions today will ensure that sub-Saharan Africa thrives in a post-COVID world.

Transitioning away from 'transitory' inflation
FT View Dec 2, 2021
Federal Reserve chair Jay Powell is right to retire word that has caused confusion.

China's rising vulnerability to foreign investors
Russell Napier (FT) Dec 2, 2021
Increased holdings of Chinese assets has conferred new power over the economy.

Central banks do not have the luxury of time in tackling inflation
Megan Greene (FT) Dec 2, 2021
New variants are a reminder that the US Fed and others are setting policy for an uncertain world.

Omicron Could Knock a Fragile Economic Recovery Off Track
Patricia Cohen (NYT) Dec 2, 2021
The latest zigzag in the pandemic has already curtailed travel, but its broader impact on growth and inflation isn't likely to be known for several weeks.

Janet Yellen says it's time to stop calling inflation 'transitory.'
Alan Rappeport and Madeleine Ngo (NYT) Dec 2, 2021
The Treasury secretary said the new virus variant could further fuel price increases, but she cautioned it was too soon know.

A Way to Break the Cycle of Poverty
David L. Kirp (NYT) Dec 2, 2021
Intervening in children's lives early can help break the cycle of intergenerational poverty.

Every time I think the inflation discourse can't get dumber, I'm proven wrong
Catherine Rampell (WaPo) Dec 2, 2021
Partisan factions have concocted such unreasonable theories they're basically inflation fan fiction.

Storm warning: Asia unprepared for Fed 'taper tantrum'
William Pesek (AT) Dec 2, 2021
Is Asia being complacent about the risk of assertive Federal Reserve tightening? The answer looks to be "yes." And that is worrisome. December 2021 is beginning to feel a lot like December 2015 as Chairman Jerome Powell prepares world markets for the Fed hitting the brakes – perhaps soon.

Pakistan struggling to pay its debts to China
FM Shakil (AT) Dec 2, 2021
Chinese debts are squeezing Pakistan's pinched finances as external payments are set to balloon to US$14 billion at the end of this financial year. Nearly half is owed to Chinese commercial banks, largely for Belt and Road Initiative (BRI) related projects. The State Bank of Pakistan, whose foreign reserves fell to $17 billion in October, is now trying to avoid default.

Africa's Long History of Trade and Markets
Lipton Matthews (Mises Wire) Dec 2, 2021
Capitalism is not a "legacy of colonialism" in Africa. In fact, markets and interregional trade have long been practiced on the continent. And markets today are still the answer to raising standards of living.

The G20 Common Framework for Debt Treatments Must Be Stepped Up
Kristalina Georgieva and Ceyla Pazarbasioglu (IMF) Dec 2, 2021
With policy space tightening for highly indebted countries, the framework can and must deliver more quickly.

How China's Car Batteries Conquered the World
Anjani Trivedi (Bloomberg Opinion) Dec 2, 2021
Beijing's calculated approach to manufacturing electric-vehicle power packs has the U.S., the European Union and other rivals playing catch-up in the race to lead the electric future.

The World's Banks Risk Becoming 'Dumb Pipes'
Ben Ashby (Bloomberg Opinion) Dec 2, 2021
Just like the telecoms a generation ago, big financial institutions are spending huge sums of money on their core businesses, but the real gains are likely to be made by more nimble entrants.

Turkey Wants the Impossible: Lower Rates and a Stable Lira
Daniel Moss (Bloomberg Opinion) Dec 2, 2021
Cutting borrowing costs amid skyrocketing inflation is a recipe for only one thing. The currency crash on Erdogan's hands is a disaster of his own making.

Can the Fed Overcome Its Transitory Policy Mistake?
Mohamed A. El-Erian (Project Syndicate) Dec 2, 2021
The later the US Federal Reserve is in reacting properly to inflationary developments, the greater the likelihood that it will have to hit the policy brakes hard, causing market turmoil and unnecessary economic pain. The Fed must now do two things quickly.

Multilateralism's Secret Sauce
Harold James (Project Syndicate) Dec 2, 2021
Historically, successes like the 1944 Bretton Woods Conference have been much rarer than international gatherings that produce either inaction or recrimination. The key is to focus on what can be measured, rather than on whom to blame.

The Supply-Chain Mess
Daron Acemoglu (Project Syndicate) Dec 2, 2021
Recent bottlenecks and price surges have underscored the risks that come with sprawling global supply chains supposedly built around the principle of economic efficiency. But beyond these glaring issues, supply chains impose additional social costs that warrant policymakers' attention.

Didi's US exit shows Xi is the ultimate arbiter for China's companies
Tom Mitchell (FT) Dec 3, 2021
Ride-hailing app's pivot to list in Hong Kong seen as a vindication of president's crackdown.

Only a sensible immigration debate will solve our labour shortages
Rocco Forte (FT) Dec 3, 2021
As a Brexit supporter, I wanted proper control over our borders, not their virtual closure.

Interest rate hikes will not dim the allure of property
Stefan Wagstyl (FT) Dec 3, 2021
Whatever the gyrations of the markets, most of us seem to have an innate fondness for real assets.

Powell and the case of the disappearing punchbowl
Urban C. Lehner (AT) Dec 3, 2021
As manager of the supply of the world's reserve currency, the US dollar, the Federal Reserve Board chairman is one of the world's most powerful men. Jerome Powell can feel complimented that a Democratic president picked him, a Republican, over the well-qualified Democrat some Democratic senators were backing.

Turkey's self-inflicted currency meltdown
Alexandra de Cramer (AT) Dec 3, 2021
In less than a year, the Turkish lira has lost up to 45% of its value against the US dollar. The continued meltdown of the currency is one of the worst economic crises Turkey has ever faced. The Erdogan government's risky strategy runs counter to most conventional thinking on how to tackle inflation, and the government refuses to take a step back from its failing economic policy.

Why the rich world is facing a hiring problem
Economist Dec 3, 2021
A disappointing month for jobs growth in America adds to concern about the pace of recovery.

Are central banks independent or almighty?
Otmar Issing (OMFIF) Dec 3, 2021
Most major central banks are endowed with the status of independence. That position appears to be changing, partly because central banks are being overburdened with too many tasks. Central banks' involvement in mitigating climate change is a particular case of potential overreach. It is time for central bankers to show a little more humility and think about returning to clearer and more limited mandates.

Addressing Inflation Pressures Amid an Enduring Pandemic
Tobias Adrian and Gita Gopinath (IMF) Dec 3, 2021
Inflation is likely to be higher for longer than previously thought.

US wages for the lowest earners are growing at the fastest rate since the global financial crisis
Katheryn (Kadee) Russ (PIIE) Dec 3, 2021
Employers are seeing worker shortages, employees have quit their jobs in record numbers, and labor force participation remains below its pre-pandemic level. This tight labor market is putting upward pressure on wages and allowing wage growth, particularly for the lowest earners, to accelerate at a pace not seen since the global financial crisis.

Populism Has Killed Latin America's Once-Powerful 'Technopols'
Shannon K O'Neil (Bloomberg Opinion) Dec 3, 2021
Once able to rely on larger-than-life finance ministers, the region's business leaders now need to make the public case for free markets via retail politics.

Time to Overhaul the Global Financial System
Jeffrey D. Sachs (Project Syndicate) Dec 3, 2021
For low- and lower-middle-income countries to pursue their development goals and do their part in tackling problems like climate change, they need to be able to borrow reliably on decent market terms. Yet the current two-tiered global financial system extends this privilege almost exclusively to rich countries.

Fossil Fuel's Downfall Could Be America's Too
Adam Tooze (FP) Dec 3, 2021
How U.S. polluters might drag the country's economy down with them.

Investors can no longer ignore China-US decoupling threat
John Plender (FT) Dec 4, 2021
Daunting geopolitical risks add to broader concerns to be priced into markets.

Double whammy looms over low-rated corporate bonds
Joe Rennison (FT) Dec 4, 2021
Fed tightening could come as Omicron variant curtails US economic resurgence.

Flagging US consumer demand puts economy on track for slowdown
John Dizard (FT) Dec 4, 2021
Build-up of inventories likely to reverse as supply chain fears ease — with deep discounting to come.

What the Omicron variant means for the world economy
Economist Dec 4, 2021
Look to China for the likeliest source of a growth slowdown. Three threats to the global economic recovery

Three threats to the global economic recovery
Economist Dec 4, 2021
Tightening American monetary policy, slowing China and the Omicron variant.

Bond versus bank financing in the transition to a low carbon economy
Winta Beyene, Manthos Delis, Kathrin de Greiff, and Steven Ongena (VoxEU) Dec 4, 2021
One of the concerns in the debate on climate change is whether financial flows contribute to the reduction of emissions. This column looks at the role bond market-based and bank-based debt plays in the allocation of resources to fossil fuel in the context of the risk of stranded assets. The authors show that banks continue to provide financing to fossil fuel firms that the bond market would not finance as long as they do not price the risk of stranded assets. In this setting, stranded assets risks may have shifted to large banks.

Clear ambition is required if Europe is to rival China's Belt and Road
Martin Sandbu (FT) Dec 5, 2021
The EU's 'Global Gateway' infrastructure plan risks faltering without proper funding and explicit aims.

Berlin airport shows new German government how not to finance growth
Patrick Jenkins (FT) Dec 5, 2021
The coalition agreement is clear that private sector money should be used to support investment.

How the Supply Chain Crisis Unfolded
Lazaro Gamio and Peter S. Goodman (NYT) Dec 5, 2021
The highly intricate and interconnected global supply chain is in upheaval, and in one way or another, much of the crisis can be traced to the outbreak of Covid-19.

Look at Build Back Better's Benefits, Not Its Price Tag
Alan S. Blinder (WSJ) Dec 5, 2021
The media loves to focus on a big number, but the bill is paid for and delivers for the American people.

Tough tests for South Korea's next president
Hyung-A Kim (EAF) Dec 5, 2021
Concerns about economic mobility and an out-of-touch leadership class are foremost on voters' minds.

Seven Risks to Asia's Economic Resilience in 2022
Bart Édes (BRINK) Dec 5, 2021
Across Asia, vaccination rates are rising, e-commerce is soaring, trade has rebounded and supply chain problems are starting to ease, delivering hope for the new year. Yet optimism is tempered by several risks to sustained economic recovery and regional stability. Seven things to watch for in the months ahead.

Omicron Sounds the Death Knell for Globalization 2.0
Niall Ferguson (Bloomberg Opinion) Dec 5, 2021
On top of an intensifying cold war between the U.S. and China and other seismic changes, the rapid spread of Covid-19's newest variant could finish off our most recent phase of global integration.

China's Africa Policy Is Evolving. Can the West Follow?
Clara Ferreira Marques (Bloomberg Opinion) Dec 5, 2021
The West's excessive focus on African debt has blinded it to China's widening engagement in a region of 1.4 billion consumers.

Modernisation and China's 'century of humiliation'
Wolfgang Keller and Carol Shiue (VoxEU) Dec 5, 2021
There is little consensus about the impact that the Western colonialism had on China's economy. This column revisits a period that saw China end centuries of relative isolation and open dozens of 'treaty ports' to Western traders, which shifted the focus of capital markets from inland areas to the coast. Western influence also increased the number of banks, firm investment, as well as the adoption of steam engines and industrial machinery, and significantly lowered local interest rates.

China is faltering, but the world is not feeling the effects
Ruchir Sharma (FT) Dec 6, 2021
The link between the country's growth and other economies started to loosen before the pandemic.

Stablecoin risks spur case for central bank digital currency
Bruce Mizrach (FT) Dec 6, 2021
Explosive growth in tokens raises concerns over broader stability of financial system.

Investors piling on risk are setting themselves up for a fall
Paul Singer (FT) Dec 6, 2021
Central banks' asset-buying spree has created a huge overhang, limiting their ability to support prices in a future downturn.

Xi Jinping Sails China's Economy Into a Shoal
WSJ View Dec 6, 2021
A real-estate correction proves harder to stage-manage than hoped.

Bitcoin Isn't Any More Dangerous than the Euro
Gunther Schnabl (Mises Wire) Dec 6, 2021
It's a bit rich that European central bankers are decrying the alleged risks and dangers of bitcoin. After all, the euro currency poses many destabilizing dangers and risks of its own for the European economy.

Food Inflation in Sub-Saharan Africa
Seung Mo Choi (IMF) Dec 6, 2021
Inflation is rising around the world. In sub-Saharan Africa, one item is driving the trend more than others: food prices. Food accounts for roughly 40 percent of the region's consumption basket—a measure of goods and services used to measure consumer price index (CPI) inflation.

A Massive Yield-Curve Headache Awaits the Federal Reserve
Brian Chappatta (Bloomberg Opinion) Dec 6, 2021
The spread between short- and long-term Treasury yields is rapidly narrowing before rate increases even begin.

Singapore Wants to Lead on Crypto, Not K-Pop Pensions
Andy Mukherjee (Bloomberg Opinion) Dec 6, 2021
A coin to take care of BTS may be a bit too much for the central bank, which has for the first time acknowledged digital assets as an "emerging vulnerability."

In China's World, Growth Worries Trump Inflation Fears
Daniel Moss (Bloomberg Opinion) Dec 6, 2021
The world's economic superpowers are on opposite monetary paths. Only time will tell which one is right, but the slowdown is alarming.

The Cost of Cutting Carbon Is Sure to Shock Investors
Gary Shilling (Bloomberg Opinion) Dec 6, 2021
Like any major economic event, getting to net-zero emissions will bring investment opportunities. But as is often the case, initial enthusiasm may soon give way to disappointment.

The Great Labor Market Shakeup
J. Bradford DeLong (Project Syndicate) Dec 6, 2021
The COVID-19 pandemic has restructured entire industries and changed the way workers think about their jobs, especially in low-paid occupations and sectors. But a full recovery in employment is still possible: policymakers and employers need only offer workers the support they are demanding.

Development Begins at Home
Justin Yifu Lin and Yan Wang (Project Syndicate) Dec 6, 2021
The COVID-19 pandemic has offered two key lessons for developing countries: They must build on their own endowments and tackle infrastructure bottlenecks in sustainable ways. What will it take to ensure that foreign investment – in particular, Chinese investment in Africa – supports these objectives?

Inflation and 'fiscal dominance': Evidence from sub-Saharan Africa
John Hooley and Mika Saito (VoxEU) Dec 6, 2021
During the COVID-19 pandemic, the debate on monetary financing has been reignited and several economists have called for governments to borrow from their central banks to finance larger deficits. This column looks to sub-Saharan Africa, a region where 'fiscal dominance' has long been widespread, for useful insights into this debate. It finds that central bank financing of government does have an inflationary impact through the exchange rate channel. Numerical legal limits on central bank financing can be an effective way to mitigate the risks, even if they are not always binding.

Why the Climate Panic About Africa Is Wrong
Todd Moss and Vijaya Ramachandran (FP) Dec 6, 2021
Once again, the rich world sees Africans as a threat to the planet.

Shadow banks must come out of the shadows
FT View Dec 7, 2021
Market ructions in 2020 show the need for transparency in non-bank finance.

Will China have to loosen policy?
Robert Armstrong and Ethan Wu (FT) Dec 7, 2021
Also, lockdowns vs stimulus cheques.

The Bank of England should beware the lure of digital currency
Oonagh McDonald (FT) Dec 7, 2021
There are serious concerns about the likely effect on privacy and credit.

The Stock Market's Covid Pattern: Faster Recovery From Each Panic
Karl Russell and Mohammed Hadi (NYT) Dec 7, 2021
Pandemic-driven declines don't last as long as before, and are followed by recoveries to new highs. The dip after Omicron is following a similar pattern.

China Will Soon Lead the U.S. in Tech
Graham Allison and Eric Schmidt (WSJ) Dec 7, 2021
Beijing pulls ahead in 5G and artificial intelligence, while catching up in semiconductors.

Landing on the right side of the 'great divergence'
Joy Macknight (Banker) Dec 7, 2021
The 11th edition of McKinsey's annual banking review analyses the global industry's profitability challenges, as well as the widening gap in market-to-book ratio between top and bottom performers.

ESG Defies Wall Street's Efforts to Package It Neatly
Nir Kaissar (Bloomberg Opinion) Dec 7, 2021
The investment strategy is becoming harder to define and explain, which makes it increasingly difficult to deliver in a fund.

The Ugly Truth About Market Bubbles Is That Everyone Loses
Kevin Muir (Bloomberg Opinion) Dec 7, 2021
The bears are always too early and the bulls, who have been conditioned to buy every dip, stay too long at the party.

What 'The Wizard of Oz' Can Teach Us About Inflation
Daniel Moss (Bloomberg Opinion) Dec 7, 2021
The limits of central bankers' powers have been exposed by an upheaval in price increases. Forward guidance may become a casualty of the Covid era.

Cash Is Dying, But We Aren't Ready to Bury It
Andy Mukherjee (Bloomberg Opinion) Dec 7, 2021
Convenience is one thing but consumers are likely to lose government protection if money is suddenly electronic and privatized.

Import competition, labour market regulation, and outsourcing
Pavel Chakraborty, Devashish Mitra, and Asha Sundaram (VoxEU) Dec 7, 2021
The global market size of outsourcing doubled between 2000 and 2019. While most studies look at foreign outsourcing, this column uses new data on Indian firms to analyse the effects of increased competition from Chinese imports on the domestic outsourcing of manufacturing jobs. It finds that greater import competition is associated with a significant increase in domestic outsourcing. Additionally, it shows that this effect is only present in Indian states with pro-worker labour regulations. Thus, it highlights the important role of domestic institutions in how firms adapt to globalisation.

Nigeria's eNaira Is Not an Economic Panacea
Doyin Olagunju (FP) Dec 7, 2021
After trying to ban cryptocurrencies, the country's Central Bank has launched its own digital currency—but it won't end the country's foreign exchange volatility or shore up its reserves.

Covid teaches us you can't separate economics from epidemiology
Chris Giles (FT) Dec 8, 2021
As Omicron looms, it is time for policymakers to take stock of the lessons of the past two years.

The EU has a new weapon in the stock market battle
Brooke Masters (FT) Dec 8, 2021
Homegrown start-ups offer Europe a rare opportunity to make itself more attractive for innovative public companies.

The myth of independent central banks
John Redwood (FT) Dec 8, 2021
Despite inflation it is time for investment caution, not panic.

Joe Biden must build on his dialogue with Xi Jinping
Robert Zoellick (FT) Dec 8, 2021
The US president will have to choose between indulging China hawks or achieving results.

Japanese apprehension over rising prices hangs over the yen
Leo Lewis (FT) Dec 8, 2021
Some forex traders expect the Bank of Japan will eventually have to respond to the public's inflation worries.

Africa is being punished by richer nations in the Covid battle
Ayoade Alakija (FT) Dec 8, 2021
Inequality in vaccine distribution, stringent travel bans and closed decision-making are taking their toll on African countries.

Stupid Inflation Tricks, Round 2
WSJ View Dec 8, 2021
An energy executive instructs Sen. Warren on natural gas prices and CO2 emissions.

About All Those Pandemic Billionaires
WSJ View Dec 8, 2021
Thomas Piketty shows how government stoked wealth inequality.

Metals Demand From Energy Transition May Top Current Global Supply
Nico Valckx, Martin Stuermer, Dulani Seneviratne, and Ananthakrishnan Prasad (IMF) Dec 8, 2021
The needed ramp-up in mining investment and operations could be challenging.

The Next Fed Meeting Will Offer More Surprises
William C Dudley (Bloomberg Opinion) Dec 8, 2021
Beyond the taper, the longer-term outlook for interest rates might come as a shock to markets.

Is the U.S. Treasury Market Too Big to Trade?
Paul J. Davies (Bloomberg Opinion) Dec 8, 2021
With banks and now investment funds dependent on the government securities for liquidity, what happens when everyone wants their money back at once?

The Crypto-Is-Gold Crowd Is Asking the Wrong Questions
Jared Dillian (Bloomberg Opinion) Dec 8, 2021
The issue is more nuanced than whether Bitcoin or some other digital currency will be the only true store of value.

China Is Slamming Shut Its Window of Opportunity
Minxin Pei (Bloomberg Opinion) Dec 8, 2021
Leaders in Beijing have lost the tactical flexibility and risk controls that helped them nurture the country's rise, and it's not clear they are capable of changing course.

U.S. Can Punish Russia Even More in the Bond Market
Marcus Ashworth and Brian Chappatta (Bloomberg Opinion) Dec 8, 2021
America and its allies still have the option to bar investors from trading Russian sovereign debt in the secondary market, which could squeeze Moscow's ruling elite.

Did the US-China Tariff War Affect China's Economy? Evidence from Night Lights
Davin Chor and Bingjing Li (VoxChina) Dec 8, 2021
We infer the impact of the US-China tariff war on China's economy, using high-frequency satellite data on nighttime luminosity. Through a grid-level panel analysis, we find evidence that the US tariffs levied between 2018–2019 on China's exports had a negative impact on income per capita and manufacturing employment that was very skewed across locations within China. By contrast, China's retaliatory tariffs on imports from the United States did not have a discernible impact on economic outcomes at the local level.

Eurozone Monetary Policy to Remain Relatively Accommodative, For Now
Nick Bennenbroek (WF Econ Group) Dec 8, 2021
The European Central Bank's (ECB) December 16 monetary policy announcement looms as a key event for market participants, as the central bank considers whether to bring its emergency asset purchase program to an end. Economic trends are mixed heading into the announcement, with growth slowing and inflation quickening. Still, we expect the recent spike in inflation will be enough for the ECB to end it Pandemic Emergency Purchase Program (PEPP) in March 2022, as scheduled. While we expect the ECB will maintain flexibility over the total size of its PEPP purchases, we believe purchases will ultimately come in slightly below the €1.85 trillion purchase envelope. We also expect the ECB to provide short-term guidance for its asset purchases once the PEPP program ends. Specifically, we expect the ECB to announce that for Q2-2022, purchases under the Asset Purchase Program (APP) will increase from €20B per month to €50B per month. Over time, we believe the longer-term implications of the ECB's announcement will be a softening EUR/USD exchange rate trend. The Fed likely will both taper its bond purchases and raise interest rates more quickly than the European Central Bank, which in turn is likely to make only a gradual shift towards less accommodative monetary policy.

Market volatility could portend a retreat of liquidity
Mohamed El-Erian (FT) Dec 9, 2021
The Omicron variant, inflation and concerns about China and Russia are a recipe for uncertainty.

How's the economy doing? That depends on your perspective
Gillian Tett (FT) Dec 9, 2021
Why we need a new view to supplement more traditional models.

Emerging markets hit by abrupt slowdown in new foreign investment
Kate Duguid and Jonathan Wheatley (FT) Dec 9, 2021
Flows into asset class 'dry up' on worries over US monetary policy and Omicron.

China Evergrande Defaults on Its Debt. Now What?
Alexandra Stevenson and Cao Li (NYT) Dec 9, 2021
A ratings agency's declaration confirmed what investors had already suspected, but they now must wait on a restructuring plan overseen by the firm hand of Beijing.

How Is the U.S. Economy Doing?
Paul Krugman (NYT) Dec 9, 2021
Why do Americans say that the economy is awful but that they're doing fine?

China's growing problems force a whole economy rethink
Kent Matthews (AT) Dec 9, 2021
The People's Bank of China (PBOC) is encouraging Chinese banks to lend more to businesses and consumers by cutting the proportion of deposits that they have to hold as reserves by 0.5 percentage points to an average of 8.4% from December 15. It follows a similar cut in July and is an interesting counterpoint to western central banks.

The role of firms in wage inequality: Policy lessons from a large-scale cross-country study
Chiara Criscuolo, Nathalie Scholl, Cyrille Schwellnus, Antton Haramboure, Alexander Hijzen, and Michael Koelle (OECD Ecoscope) Dec 9, 2021
Firm pay policies account for around one-third of overall wage inequality.

The Economy May Be Finally Peaking, and the Fed Won't Help Matters
Brendan Brown (Mises Wire) Dec 9, 2021
The huge amounts of monetary inflation of 2020 have indeed been translated into price inflation in 2021. Yet with the Fed now poised to slow things down, we might find asset inflation could suddenly go into reverse.

Global Crypto Regulation Should be Comprehensive, Consistent, and Coordinated  
Tobias Adrian, Dong He, and Aditya Narain (IMF) Dec 9, 2021
Uncoordinated regulatory measures may facilitate potentially destabilizing capital flows.

Denser cities could help China reconcile economic and climate goals
Yoonhee Kim, Martin Raiser, and Katherine Stapleton (Brookings) Dec 9, 2021
Denser Chinese cities have lower per capita emissions.

The Conservative Central Banker Returns
Daniel Gros (Project Syndicate) Dec 9, 2021
The European Central Bank and the US Federal Reserve's new monetary-policy strategies now look like a case of adapting the general staff manual to fight the last war. The recent sharp increase in inflation on both sides of the Atlantic means that central bankers must again concentrate on their traditional task.

Green Growth at the End of the Flat World
Ricardo Hausmann (Project Syndicate) Dec 9, 2021
While the losers from decarbonization are relatively obvious, the winners will be those countries that combine geographic luck with smart action. First movers that develop a national consensus to promote the right ecosystem for green growth are bound to come out ahead.

The Big Issues for 2022
Jim O'Neill (Project Syndicate) Dec 9, 2021
Nobody knows what turn the pandemic will take or whether recent price increases will be transitory, which means that economic forecasting has become even more hazardous than usual. Still, some trends should be watched more closely than others, and some policies should change regardless of what happens.

Towards a high-wage, high-productivity economy
Lucile Crumpton and Ethan Ilzetzki (VoxEU) Dec 9, 2021
Many commentators have understood the UK government's proposed 'high-wage, high-productivity' model as suggesting that wage increases will themselves lead to innovation and higher productivity. In the November 2021 CfM survey, the panel of UK experts is nearly unanimous that that wage increases generally do not increase productivity in the long run; the consensus is that productivity drives wage increases. A minority thinks that government intervention in wages could lead to higher productivity, but even this minority argues that such policies should be complemented with investments in skills and other productivity-enhancing measures.

An Optimistic Scenario for Inflation
John Cassidy (New Yorker) Dec 9, 2021
The key thing for the economy, and for Biden's political prospects, is whether rising prices turn out to be temporary or permanent.

2022 Annual Outlook: Restoring Balance in the Post-Pandemic Economy
Jay H. Bryson, Mark Vitner, Nick Bennenbroek, and Tim Quinlan (WF Econ Group) Dec 9, 2021
The global economy continues to be whipsawed by the ups and downs of the pandemic. Economic growth has waxed and waned as new case counts continue to fluctuate, and the imbalances that have arisen have led to an almost-forgotten phenomenon: inflation. Will economies be able to restore some semblance of "balance" in the foreseeable future?

Xi Jinping's New World Order
Elizabeth Economy (FA) Dec 9, 2021
Can China remake the international system?

Xi faces the dilemma of China's imperial rulers
James Kynge (FT) Dec 10, 2021
Western critics need to understand the flaws in the Beijing regime's model and the history of its elites.

Meme mania is reshaping US markets
Gillian Tett (FT) Dec 10, 2021
Investors need to study attention patterns in cyber space as well as economic fundamentals.

Regulator treads a fine line as financial services evolve
Stefan Wagstyl (FT) Dec 10, 2021
Responsibility to raise standards does not rest with the FCA alone.

The sell-off in market silliness
Robin Wigglesworth (FT) Dec 10, 2021
Is the rout in speculative investments a blip, a return of sobriety or an ill omen for broader markets?

US may draw the line at cutting off Russia from Swift
John Dizard (FT) Dec 10, 2021
Economic reprisals if the Kremlin invades Ukraine will not necessarily cover the world payments system.

Can We Trust What's Happening to Money?
Peter Coy (NYT) Dec 10, 2021
It's not just about the demise of coins and dollar bills. It's also about society's faith in the very idea of money.

Relax. Omicron Isn't Going to Take Down the Economy.
Mark Zandi (NYT) Dec 10, 2021
The country is better positioned to absorb the damage of each successive wave of the virus.

Inflation numbers are only going to get worse
Henry Olsen (WaPo) Dec 10, 2021
If the Fed doesn't act soon, we will all face the consequences.

Why high inflation will persist in America well into the new year
Economist Dec 10, 2021
Regardless of policy or the pandemic, price surges have their own remorseless mathematics.

Those Pushing Monetary Stimulus Are Misled by Japan's Low Price Inflation
Mihai Macovei (Mises Wire) Dec 10, 2021
Easy-money advocates who look to Japan as the model have not understood the fundamental reasons why inflation in Japan remained feeble during three decades of dismal economic performance.

U.S. Inflation Data Appears Consistent With Faster Fed Tapering and Interest Rate Hikes
Tiffany Wilding (PIMCO) Dec 10, 2021
The risks of continued elevated inflation likely have the U.S. Federal Reserve considering material changes to its policy path.

Portugal: Policy action for a strong and sustainable recovery
Caroline Klein (OECD Ecoscope) Dec 10, 2021
Like most countries around the world, the COVID-19 pandemic hit Portugal severely, taking a heavy toll on the economy. GDP declined by 8.4% in 2020 compared to 4.7% on average in the OECD. With the lifting of restrictions, activity has rebounded strongly and the latest OECD forecasts project GDP will reach its pre-crisis level in 2022 (Figure 1). Policy support and the impressive success of the vaccination campaign, with Portugal having the highest vaccination rate in the OECD end-2021, has been decisive for the recovery.

How Taxes Can Support Growth and Reduce Inequality in Latin America and the Caribbean
Santiago Acosta Ormaechea and Samuel Pienknagura Loor (IMF) Dec 10, 2021
Public debt ratios in Latin America and the Caribbean (LAC) increased by about 10 percentage points of GDP in 2020. With debt service costs rising, countries in the region are under pressure to cut public spending and/or raise taxes, even in the face of widespread needs to respond to the pandemic. Our recent Regional Economic Outlook shows that well-crafted tax reforms can support growth while helping countries maintain fiscal sustainability. Importantly, these reforms can help reduce income inequality—an important objective in one of the most unequal regions in the world.

We May Be at Peak Inflation. Now How Do We Get Down?
Mark Gongloff (Bloomberg Opinion) Dec 10, 2021
Price increases may not get any worse from here, but we could feel their sting for a while.

What 2021 Has Taught Us About Inflation
John Authers (Bloomberg Opinion) Dec 10, 2021
Earlier in the year, some costs spiked due almost entirely to transitory pressures. Since then, however, overlapping factors have combined to broaden and entrench price rises.

Rising Inventories Are a Bearish Indicator
Gary Shilling (Bloomberg Opinion) Dec 10, 2021
Don't be surprised if retailers are forced into heavy discounting and liquidation sales after enticing consumers to buy early this holiday season.

The Decoupling Prophecy
Yu Yongding (Project Syndicate) Dec 10, 2021
China's current role in the global economy might not be exactly what the United States envisioned when it supported the country's accession to the World Trade Organization 20 years ago. But, in its own way, China is fulfilling the promise of that step, and it will most likely continue to do so, as long as the US lets it.

A Better Deal for the World's Workers
Dani Rodrik (Project Syndicate) Dec 10, 2021
Ultimately, boosting labor earnings and the dignity of work requires both strengthening workers' bargaining power and increasing the supply of good jobs for those who most need them. That would give all workers a better deal and a fair share of future prosperity.

Managing Energy Crises in an Age of Climate Disruption
Jörg Haas and Lili Fuhr (Project Syndicate) Dec 10, 2021
Instead of loosening supply-side carbon policies, as some short-sighted voices advocate, we must keep our eye on the main goal even in periods of high energy prices. That means focusing on the inevitable, well-managed decline of coal, oil, and gas and their substitution by efficient clean energy.

Output gaps, potential output and the Covid-19 crisis
Kieran Mc Morrow , François Blondeau, Francesca D'Auria, Björn Döhring, Atanas Hristov, Christoph Maier, and Anna Thum-Thysen (VoxEU) Dec 10, 2021
Strong policy actions have dampened the impact of Covid-19 on workers and businesses. Amid a rapid recovery, dents to potential output are set to remain limited and transitory. But many uncertainties persist and some economic scarring from the pandemic may only emerge over the coming years. This column summarises the insights from a recent conference on the implications of the Covid-19 recession for the EU's growth potential.

U.N., World Bank Under Pressure to Offer Aid to Afghanistan
Lynne O'Donnell (FP) Dec 10, 2021
The existing sanctions regime on Taliban leaders makes it hard for the world to help the Afghan people.

Joe Manchin's Inflation Vindication
WSJ View Dec 11, 2021
Prices rise 6.8% in a year, ample reason to shelve the Biden tax and spending blowout.

China courts global capital, on its own terms
Economist Dec 11, 2021
It is looking to reduce its dependency on the West, while increasing the West's dependency on it.

Could the Great Resignation Help Workers? Take a Look at History.
Abigail Susik (NYT) Dec 11, 2021
French history offers hopeful lessons.

Misreading China's WTO Record Hurts Global Trade
Shang-Jin Wei (Project Syndicate) Dec 11, 2021
The United States claims that China routinely violates its World Trade Organization obligations, and that the global body is ineffectual at changing Chinese behavior. But the data do not support such assertions, and the perception that the US narrative has created is hurting the global trading system.

Germany must become an ecological social market economy
Sven Giegold (FT) Dec 12, 2021
The new government could set a global standard in tackling the climate crisis.

Biden's trade policy is crafted with political rewards in mind
Alan Beattie (FT) Dec 12, 2021
Measures ostensibly aimed at protecting American workers are also about jobs on Capitol Hill.

The Fed Is the Main Inflation Culprit
Kevin Warsh (WSJ) Dec 12, 2021
The central bank has enabled price increases that may soon pose a risk to financial stability.

China's big moment of choice on trade policy
Tom Westland (EAF) Dec 12, 2021
China's record in the WTO is much better than Western narratives suggest. China implemented its WTO accession protocols not only because it agreed to them but because they propelled the domestic reforms the leadership wanted to put in place.

The EU Will Have to Walk a Tightrope in Its Economic Policies in 2022
Alexander Priviteva (BRINK) Dec 12, 2021
European economies have an uncertain path to recovery heading into 2022. As the EU faces fallout from supply chain disruptions and rising inflation, the European Central Bank has to decide how to support countries, especially since inflation is impacting some more than others.

Doing Nothing Is the Best Oil Producers Can Do Right Now
Julian Lee (Bloomberg Opinion) Dec 12, 2021
OPEC's everlasting meeting is a successful strategy for supporting crude prices in the face of uncertainty.

Fed Needs to Go Beyond Doubling Its Taper Rate
Mohamed A El-Erian (Bloomberg Opinion) Dec 12, 2021
At its policy meeting this week, the central bank can start to regain control of the narrative on inflation and monetary policy.

India's Banking Revolution Has Started Without the Banks
Andy Mukherjee (Bloomberg Opinion) Dec 12, 2021
Traditional financial organizations are falling down on the job while fintech is efficient but hemmed in by old rules.

The US is getting serious about tackling corruption
FT View Dec 13, 2021
Allies should cheer and support the desire to clean up finance.

We Need to Do Hard but Necessary Things to Tackle Inflation
Glenn Hubbard (NYT) Dec 13, 2021
It's better to act more aggressively now than wait and risk sparking a recession later.

Biden Sticks It to . . . Canada
WSJ View Dec 13, 2021
Ottawa says new EV subsidies violate the USMCA trade deal.

Yellen and the Global Tax Stall
WSJ View Dec 13, 2021
Other countries aren't following where Build Back Better would lead.

The Biden Stagflation Is Coming
Phil Gramm and Mike Solon (WSJ) Dec 13, 2021
His approach to the economy is already causing prices to rise. It will soon stifle growth as well.

China walks a tightrope with rapidly rising yuan
William Pesek (AT) Dec 13, 2021
Yi Gang isn't known for his acrobatic skills. Yet these days, the People's Bank of China (PBOC) governor could be excused for feeling like he's trying out for Cirque du Soleil. The balancing act in question concerns a Chinese currency rapidly decoupling from the US dollar – with the yuan rising, rather than doing its usual weakening act.

Global economy set for sturdy if uneven growth in 2022
Dennis Shen (OMFIF) Dec 13, 2021
The global economy remains well on the road to robust recovery from the Covid-19 crisis. That is the good news for 2022. Less comforting, it will be a bumpy ride over the next few months as governments impose fresh restrictions to tackle the emergence of new variants, while higher inflation will lead to monetary policy divergence that could unsettle financial markets.

The Fed Needs to Seize  Back the Inflation Agenda
John Authers (Bloomberg Opinion) Dec 13, 2021
The Fed should be getting very anxious about stickiness in the inflation surge — and show that it's serious. Markets seem far too complacent.

Central Banks Are Redrawing the Map Out of the Crisis Era
Marcus Ashworth (Bloomberg Opinion) Dec 13, 2021
Flashing amber at the BOE for withdrawing stimulus, with a green light at the Fed and red at the ECB.

Lifting the Lid on Global Inequality
Jayati Ghosh (Project Syndicate) Dec 13, 2021
The reality captured by the World Inequality Report 2022 reflects human choices, which means that it can be changed by making other choices. That is why the report is not just a valuable compendium of useful data and analysis but also a guide to action.

Greening Europe's Fiscal Rules
Barry Eichengreen (Project Syndicate) Dec 13, 2021
There was never any economic basis for the limits on government deficits and debt that the European Union adopted in 1992 and has maintained ever since. With huge new investments needed to meet the EU's climate goals, now is an ideal opportunity for an overhaul.

The IMF's Misstep on Climate Finance
Sara Jane Ahmed, Alicia Bárcena, and Daniel Titelman (Project Syndicate) Dec 13, 2021
The IMF's allocation of $650 billion in special drawing rights in August was long encouraged and widely welcomed. But its follow-up proposal for channeling finance to the most climate-vulnerable countries is so flawed that it would exclude many of the neediest.

The Bank of England should wait for clarity
FT View Dec 14, 2021
New coronavirus variant means the outlook is still too confused for first rate rise.

The economic case for migration is clear
Giles Merritt (FT) Dec 14, 2021
Ageing populations in the UK and Europe means workforces will shrink.

Europe's digital targets are bold, but delivery falls short
Nick Read (FT) Dec 14, 2021
Failure to catch up with China and the US could reduce the region to a bystander in global digitalisation.

How Did Turkey's Economy Go So Wrong?
Patricia Cohen (NYT) Dec 14, 2021
Even before the pandemic, Turkey was trying to ward off financial meltdown. The crisis has accelerated as President Recep Tayyip Erdogan has doubled down on his unorthodox policies.

The Price of the Fed's Delay
WSJ View Dec 14, 2021
Powell said he'd wait to see inflation before acting to stop it. He got that, and more.

A Biden Plan for Prices? No Thanks
Michael C. Munger (WSJ) Dec 14, 2021
The Build Back Better plan would make things worse by injecting trillions of dollars into the economy.

China need not win the Fourth Industrial Revolution race
David P. Goldman (AT) Dec 14, 2021
We are currently in the midst of a Fourth Industrial Revolution, defined by metadata and artificial intelligence systems and applications. The Third Industrial Revolution, based on computation and communications, was driven by the United States. China wants to lead the Fourth Industrial Revolution and thereby win the future. It may succeed in doing so.

US inflation is driving dollar-yuan exchange rate
David P. Goldman (AT) Dec 14, 2021
China's monetary policy had little if any impact on the RMB's 11% appreciation against the US dollar since June 2020, an Asia Times study shows. Instead, long-term US inflation expectations drove the dollar down. About 90% of the RMB/USD exchange rate is explained by US inflation expectations.

The great wholesale digital currency race heats up
Joy Macknight (Banker) Dec 14, 2021
In recent weeks, a few central bank experiments with wholesale digital currencies and blockchain have come to fruition, as well as private sector initiatives, all aiming to improve transaction settlement.

ECB heads for end-year tension over higher inflation
David Marsh (OMFIF) Dec 14, 2021
The ECB is heading for end-year tension as it takes difficult decisions about ending its Covid-19 emergency monetary easing and tackling higher than expected inflation. The governing council meeting on 16 December will be one of the most important in the ECB's 23 year history. Further discord is building on whether the ECB should change the sequencing of its plans for raising interest rates.

Making Electronic Money Safer in the Digital Age
José Garrido and Jan Nolte (IMF) Dec 14, 2021
With the growing importance of e-money issuers, a comprehensive, robust framework for regulation and safeguarding customer funds is critical.

We're Haunted by the Ghost of Inflation Past
James Gibney (Bloomberg Opinion) Dec 14, 2021
Putting the current bout of price increases in historical context can be hard.

China's Surging Currency Is a False Signal
Richard Cookson (Bloomberg Opinion) Dec 14, 2021
The renminbi's strength speaks volumes about how deeply troubled the economy is — just like Japan's three decades ago.

Billionaires Battling Bankers Is Not a Good Look for Draghi
Rachel Sanderson (Bloomberg Opinion) Dec 14, 2021
Italy's richest man wants to remake the country's biggest insurers. It's a high-stakes contest for a systemically important institution in Europe.

The Federal Reserve Faces a Troubling 1965 Parallel
Narayana Kocherlakota (Bloomberg Opinion) Dec 14, 2021
The inflationary experience of the 1970s had its roots in the previous decade.

The Stock Market Is Suffering From Bad Breadth
Jared Dillian (Bloomberg Opinion) Dec 14, 2021
The times when a large number of stocks were falling even when the broad indexes were rising usually presaged large corrections or even bear markets.

The real effects of banking the poor
Julia Fonseca and Adrien Matray (VoxEU) Dec 14, 2021
Access to finance is a crucial component of economic development. This column studies the effects of Brazil's 'Banks for All' programme, which targeted underbanked cities not served by government-owned banks. It finds a strong positive effect of the policy on the number of bank branches and on the overall amount of credit and deposits, particularly for cities located in banking 'deserts'. Additionally, treated cities experienced increases in the number of firms, higher demand for labour, and higher wages, confirming the link between financial and economic development.

India's Stalled Rise
Arvind Subramanian and Josh Felman (FA) Dec 14, 2021
How the state has stifled growth.

Emerging Markets in the Age of Transformation
Gene Frieda and Pramol Dhawan (PIMCO) Dec 14, 2021
Global liquidity conditions and commodity prices seem likely to remain supportive for emerging markets (EM) despite slowing trend growth in China. Policy risks appear to be rising within EM due to higher debt levels, increasing social demands, weakened policy anchors, and a slower growing and more fragile Chinese economy. As the world transitions to green energy, we believe capital flows to EM will increasingly support those countries that stand to lose the most economically, and where green benefits may be greatest. EM local markets, in our view, continue to offer attractive risk premiums; by region we favor countries in Asia, as companies reorient supply chains away from China.

Beijing turns inward as US decoupling gathers pace
FT View Dec 15, 2021
SenseTime and Evergrande cases lead to a 'Fortress China' approach.

Shortages, what shortages? Global markets are delivering
Martin Sandbu (FT) Dec 15, 2021
The pandemic put globalisation and capitalism to a test they passed with flying colours.

Bond markets still under threat despite Omicron uncertainty
Karen Ward (FT) Dec 15, 2021
Central banks to start process of normalising interest rates in 2022.

Biden's China Dilemma: How to Enforce Trump's Trade Deal
Ana Swanson (NYT) Dec 15, 2021
The Biden administration must decide whether to enforce a Trump-era trade deal that has not fulfilled its promise.

Why Jerome Powell Pivoted on Inflation
Neil Irwin (NYT) Dec 15, 2021
A surge in wages and benefits got his attention. Other data soon confirmed his concern.

Hawkish Fed Talk, Dovish Action
WSJ View Dec 15, 2021
The central bank signals negative real interest rates throughout 2022.

The Chinese Economy's Tough Transition
WSJ View Dec 15, 2021
Slowing growth isn't helping Xi Jinping's political designs.

The Treasury Has a Bond Bargain for You
Burton G. Malkiel (WSJ) Dec 15, 2021
I bonds, currently paying 7.12%, are a great hedge against inflation.

Why supply-chain snarls still entangle the world
Economist Dec 15, 2021
Shipping delays show little sign of easing.

Global Debt Reaches a Record $226 Trillion
Vitor Gaspar, Paulo Medas, and Roberto Perrelli (IMF) Dec 15, 2021
Policymakers must strike the right balance in the face of high debt and rising inflation.

Inflation with all the trimmings – using trimmed means to compare underlying inflation in major OECD economies
Patrice Ollivaud and Geoff Barnard (OECD Ecoscope) Dec 15, 2021
A major challenge for policy makers is understanding whether, in the absence of a faster tightening of monetary policy, recent consumer price inflation pressures are likely to dissipate or to persist and even intensify. Looking at statistical measures of underlying inflation is one way to help answer that crucial question.

Fed expresses concern about inflation without rattling markets
Joseph E. Gagnon (PIIE) Dec 15, 2021
The Federal Open Market Committee (FOMC or Fed) announced on December 15 that it will taper off its bond purchases faster than it expected just one month ago, with purchases likely ending in mid-March 2022 instead of mid-June. This decision was widely expected, but in a surprising additional move the Fed signaled that it is likely to raise interest rates by 0.75 percentage point in 2022 versus the 0.50 percentage point that markets had expected and the 0.25 percentage point the Fed signaled last September.

The rapid rise of the urban consumer class
Wolfgang Fengler and Max Heinze (Brookings) Dec 15, 2021
By the end of 2021, there will be 4 billion people in the global consumer class, and, in the absence of another major economic crisis, the global consumer class will reach 5.2 billion people by 2030.

The Fed Is Right to Keep Its Options Open
Bloomberg View Dec 15, 2021
Preparing to raise rates amid persistent inflation is prudent risk management, whether or not markets like it.

Finding Your Power in a Higher-Priced World
Allison Schrager (Bloomberg Opinion) Dec 15, 2021
Consumers have a lot more control than the last time the economy was plagued by inflation. On-the-spot comparison shopping is just one way to play defense.

Who Does Inflation Harm More, the Poor or the Rich?
Tyler Cowen (Bloomberg Opinion) Dec 15, 2021
It's not an easy question to answer, but the balance of evidence suggests that lower-income households will take a beating.

Burying the Laissez-Faire Zombie
Luigi Zingales (Project Syndicate) Dec 15, 2021
The long-standing dichotomy between the state and the market is misleading, and poses a major obstacle to understanding and addressing today's policy challenges. We should instead aim to improve both, and to contain each within its respective sphere.

"Golden Ages": A Tale of the Labor Markets in China and the United States
Hanming Fang and Xincheng Qiu (VoxChina) Dec 15, 2021
We examine the Chinese growth experience in the last three decades through the lens of the labor market, focusing on evolving cross-sectional earnings distributions. We contrast the Chinese labor market with that of the United States and provide an interesting tale of the two labor markets over the last 30 years.

Benefits of macroprudential policy in low interest rate environments
Alejandro Van der Ghote (VoxEU) Dec 15, 2021
Short-term interest rates, particularly the natural rate, have been in steady decline in the euro area and the US. This column argues that in economies with low natural rates, such as the euro area today, macroprudential policy can have benefits for the effectiveness of conventional monetary policy, in addition to safeguarding financial stability. Notably, macroprudential policies that curb leverage of financial intermediaries during upturns can also help stimulate aggregate demand during downturns, by containing systemic risk in financial markets.

December FOMC Meeting: An Inflation Inflection
Sarah House and Michael Pugliese (WF Econ Group) Dec 15, 2021
Amid rising angst over inflation, the FOMC decided to double the pace of asset purchasing tapering at today's meeting. Purchases are now on track to be completed in March. The bar for rate hikes now rests squarely on the labor market, with the statement indicating that the inflation threshold even under the Fed's new flexible regime has been met.

Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say
Eshe Nelson (NYT) Dec 16, 2021
Within 24 hours, the Federal Reserve, Bank of England and European Central Bank all stepped forward to deal with price increases.

The Year of Inflation Infamy
Paul Krugman (NYT) Dec 16, 2021
Maybe the real takeaway should be how little we know about where we are in this strange economic episode.

The Great Central Bank Divide
WSJ View Dec 16, 2021
As inflation goes global, monetary maestros go their separate ways.

The Fed's words still don't measure up to the challenge of inflation
Lawrence H. Summers (WaPo) Dec 16, 2021
Wednesday's change in direction was welcome, but we still don't have a monetary policy that fully meets the moment

How a SWIFT ban would and wouldn't hurt Russia
Nikola Mikovic (AT) Dec 16, 2021
Sanctions and countersanctions are the new norm in the escalating Cold War pitting the United States and Russia. Not outside the realm of possibility is a possible block on Russia's access to SWIFT – the vast messaging network used by banks and other financial institutions to make fast money transfer instructions worldwide.

Inflation reaction: US, UK from Mars, Europe from Venus
David Marsh (OMFIF) Dec 16, 2021
The ECB is banking on 'flexibility' in continued monetary easing, confirming divergent approaches on inflationary threats compared with the US Federal Reserve and Bank of England. Amid a flurry of central banking policy announcements, the ECB said it will scale back pandemic-related emergency asset purchases in line with higher inflation. In their respective responses to inflation, the US and UK are from Mars, while Europe appears to hail from Venus.

How the Classical Gold Standard Fueled the Rise of the State
Ryan McMaken (Mises Wire) Dec 16, 2021
The classical gold standard brought the rise of central banks and state-imposed monetary "standardization." This set the stage for later monetary disasters.

Conservatives and the Free Trade Straw Man
William L. Anderson (Mises Wire) Dec 16, 2021
Conservatism is allegedly grounded in a recognition of the natural limits of humanity. But when it comes to free trade, conservatives throw all that out the window.

The World's Top Recipients of Foreign Direct Investment
Carlos Sánchez-Muñoz, Silvia Matei, and Kristy Howell (IMF) Dec 16, 2021
The world's top ten recipients of foreign direct investment by end-2020 were the United States, the Netherlands, Luxembourg, China, the United Kingdom, Hong Kong SAR, Singapore, Switzerland, Ireland, and Germany.

The U.S. Can't Keep Dodging the Trade Issue in Asia
Bloomberg View Dec 16, 2021
Vague talk about an "economic framework" won't satisfy allies who want to see deeper U.S. engagement in the region and greater access to U.S. markets.

Better Late Than Never for the Bank of England
Marcus Ashworth (Bloomberg Opinion) Dec 16, 2021
Attention now turns to a possible follow-up rate increase in February.

India Has a People Problem
Mihir Sharma (Bloomberg Opinion) Dec 16, 2021
Even now the country isn't producing enough workers. With its population set to peak sooner than expected, it could soon face an unfolding demographic disaster.

Erdogan's Dangerous Obsession With Low Rates
Bobby Ghosh (Bloomberg Opinion) Dec 16, 2021
Consumers are struggling to afford basic necessities as prices surge, yet the quixotic president gives no indication that he will change course on economic policy.

Europe and the ECB Keep to the Glide Path of Doves
Marcus Ashworth (Bloomberg Opinion) Dec 16, 2021
The Fed and the Bank of England have taken up falconry but Lagarde is keeping her hawks to the corner.

Federal Reserve Makes a Welcome Pivot But Has More to Do
Mohamed A El-Erian (Bloomberg Opinion) Dec 16, 2021
The central bank needs to boldly reinforce its policy shift in the coming weeks.

The Crypto Market Pullback Is Far From Over
Tae Kim (Bloomberg Opinion) Dec 16, 2021
Lower trading volumes and measures to control inflation add to signals that Bitcoin and other digital assets could be headed for a reckoning.

Imagining a Global Digital Order
Josh Entsminger, Mark Esposito, Terence Tse, and Olaf Groth (Project Syndicate) Dec 16, 2021
In the absence of universal basic standards and rules for how data is used and how digital markets operate, the world risks missing out on potential solutions to global problems that new technologies have to offer. The leading digital powers must recognize that more alignment is in everyone's best interest.

GDP's Days Are Numbered
Diane Coyle (Project Syndicate) Dec 16, 2021
Ditching gross domestic product as the main gauge of prosperity was always impossible in the absence of broad agreement about what the alternative might be. But as economists and statisticians develop wealth and well-being approaches to measuring economic success, the direction of change is clear.

Water As an Asset Class Is Here
Willem H. Buiter (Project Syndicate) Dec 16, 2021
The technology and infrastructure for creating an integrated global market in water and water rights is advancing quickly, with promising new ventures entering the market. Give it another decade, and exchange-traded funds for water and water rights will be part of the new normal for investors.

Italy's Consumer-Blind Trustbusting
Alberto Mingardi (Project Syndicate) Dec 16, 2021
After many decades in which antitrust enforcement adhered to the principle of consumer welfare, regulators have begun to explore new options for reining in Big Tech. But, judging by Italy's recent fine imposed on Amazon, more dominant players may soon find themselves being punished for their success.

Reforming the EU macroeconomic policy system: Economic requirements and legal conditions
Miguel Poiares Maduro, Philippe Martin, Jean-Claude Piris, Jean Pisani-Ferry, Lucrezia Reichlin, Armin Steinbach, and Beatrice Weder di Mauro (VoxEU) Dec 16, 2021
The stability and adequacy of the European monetary and fiscal frameworks are increasingly challenged by enduring changes in the economic environment. This column summarises the findings of a group of economists and lawyers specialised in EU matters who undertook a comprehensive assessment of the economic requirements and legal conditions of a well-functioning macroeconomic policy system for the EU and the euro area. They propose reforms of economic framework in line with economic necessities along three dimensions (coordination of fiscal and monetary policies, fiscal rules, and fiscal capacity at EU level) and assess their legal feasibility. They conclude that meaningful reforms that would bring legal clarity and improve economic performance are feasible within the confines of existing primary law.

Trends and Transformations in the Global Economy
PIMCO View Dec 16, 2021
We will likely see a less integrated global economy in the next five years. Recent policy shifts likely have long-term implications for China, which appears focused on creating a more self-reliant domestic economy. The U.S. has seen a relatively strong economic recovery, but looking ahead, we believe there is uncertainty about growth. In Europe and the U.K., the 2020s may well be a low growth decade. Two significant short-term challenges – supply chain shortages and worker shortages – appear to be accelerating long-term strategic shifts at many corporations.

Bankers quietly mould crypto innovations for their own use
Gillian Tett (FT) Dec 17, 2021
Conservative corporate treasurers are being offered blockchain solutions to legacy problems.

Turkish business reels from lira fallout in Erdogan's economic 'laboratory'
Laura Pitel and Ayla Jean Yackley (FT) Dec 17, 2021
Some exporters benefit from stronger dollar but others crave certainty in face of president's experiments.

A divide in responses to the inflation threat
FT View Dec 17, 2021
US, UK and eurozone central banks adopt varying but reasonable approaches.

The liquidity threat looming over markets in 2022
Michael Howell (FT) Dec 17, 2021
A higher debt burden in the financial system has institutionalised instability.

Investors put 'policy error' at the top of their list of concerns for 2022
Katie Martin (FT) Dec 17, 2021
Market is more worried about rate rises that the potential economic impact of Omicron.

What Economists Think About Immigration Doesn't Really Matter
Peter Coy (NYT) Dec 17, 2021
Public perception of the issue is shaped more by culture than by data.

Climate Change an 'Emerging Threat' to U.S. Financial Stability, Regulators Say
Alan Rappeport (NYT) Dec 17, 2021
The Financial Stability Oversight Council issued a formal warning on the economic damage that global warming could inflict.

China's Belt and Road Initiative: Slowly Imploding?
James M. Dorsey (Globalist) Dec 17, 2021
The Chinese-dominated Pakistani port city of Gwadar — the crown jewel of China's Belt and Road Initiative (BRI) — increasingly looks like a powder keg that has exploded.

Debt tsunami of the pandemic
M. Ayhan Kose, Peter Nagle, Franziska Ohnsorge, and Naotaka Sugawara (Brookings) Dec 17, 2021
Sharp and broad-based increase in debt.

Does government debt increase after global recessions?
M. Ayhan Kose, Peter Nagle, Franziska Ohnsorge, and Naotaka Sugawara (Brookings) Dec 17, 2021
Government debt: often increases after global recessions.

What Should We Expect for Manufacturers in 2022?
Brooke Sutherland (Bloomberg Opinion) Dec 17, 2021
The industrial economy is entering a new stage of the recovery, with implications for everything from capital spending to equity valuations.

Why China Continues to Rise
Zhang Jun (Project Syndicate) Dec 17, 2021
If countries like the United States are imposing high tariffs on Chinese exports, it stands to reason that China should depend less on exports. Likewise, if countries are restricting technology transfer to Chinese companies, China must ensure that it can develop the technologies it needs without outside help.

International Economics 2022 Outlook
Nick Bennenbroek, Brendan McKenna, and Jessica Guo (WF Econ Group) Dec 17, 2021
As we head into 2022, we believe the evolution of COVID could continue to have an important influence over the path of the global economy as well as currency markets. The Omicron variant has yet to reveal its full economic impact and introduces new downside risks to global economic activity. Research on Omicron is still limited; however, should Omicron become the new Delta, the global economic recovery could be disrupted by COVID developments next year. Persistent inflation pressures should also be a significant influence in 2022, posing some downside risk to growth as it weighs on consumer purchasing power and prompts central banks to tighten monetary policy. China's economy came under pressure for most of 2021 amid the government's commitment to COVID-related policies as well as protecting the economy from perceived systemic risks. While risks to China's economy are likely to persist in 2022, we expect the economy to be supported by a shift to more accommodative policy settings. As China's economy stabilizes, the global economy as well as China-dependent economies should find a pillar of support. The political calendar in 2022 is quite heavy, as the United States will host midterm elections. We expect China policy to play a major role in U.S. midterms and for U.S.-China tensions to escalate over the course of next year. Local political developments in China could also be a source of stress, as China's 20th National Congress is likely to result in President Xi breaking tradition and staying in power. Brazil and Colombia will also head to the polls, where we expect developments to weigh on each respective currency, while a contentious constitutional rewrite process should keep depreciation pressure on the Chilean peso going forward.

Investors gird themselves for slowing earnings
Nicholas Megaw (FT) Dec 18, 2021
Decent returns will still be on the cards in 2022 but without valuation multiples soaring to more eye-watering levels.

Assess Asian trade bloc candidates on their merits
FT Viwe Dec 19, 2021
High standards, not geopolitics, should shape the CPTPP.

The lessons for the US from China's 'common prosperity' push
Rana Foroohar (FT) Dec 19, 2021
Beijing's charm offensive to preach equality and fairer growth faces scepticism.

High Inflation Needs a Policy Solution
Mickey D. Levy (WSJ) Dec 19, 2021
It will persist until politicians stop stimulating the economy and the Fed starts raising rates.

Brazil's Lawmakers Embrace Default
Maílson da Nóbrega (WSJ) Dec 19, 2021
By failing to pay debts promptly, the country will risk its standing with global investors.

Turkey Can't Take Much More of Its Currency Crisis
Mohamed A El-Erian (Bloomberg Opinion) Dec 19, 2021
The central bank needs to reverse its rate cuts, for starters, if the country is to avoid a full-blown economic tailspin.

Can You Trust Your Suppliers After a Lousy 2021?
Anjani Trivedi (Bloomberg Opinion) Dec 19, 2021
So long as the supply chain is marred by a trust deficit, the snarls that upended global trade this year will continue.

2021 shows that investors can be right for the wrong reasons
Robin Wigglesworth (FT) Dec 20, 2021
Calling the market correctly in the long run is beyond the ken of most humans.

The dangers of politicising 'independent' central banks
Patrick Jenkins (FT) Dec 20, 2021
Pressure grows on the Fed, BoE and others as governments wrestle with debt, Covid crises and inflation.

Europe has rediscovered the social market economy
Martin Sandbu (FT) Dec 20, 2021
Covid compelled governments to intervene to support livelihoods, spurring a tide of labour reforms.

The Slow Meltdown of the Chinese Economy
Thomas J. Duesterberg (WSJ) Dec 20, 2021
Beijing's troubles are an opportunity for the U.S.—if Washington can recognize it.

How to improve the measurement of housing costs in the CPI
David Wilcox (PIIE) Dec 20, 2021
New data could be used to improve the measurement of housing costs in the consumer price index, or CPI. Ordinarily, the housing-related components of the CPI are among the stodgiest, least-noticed elements of the index. But they constitute an astonishing 31 percent of the overall index and nearly 40 percent of the version of the index that excludes food and energy prices. There are strong indications that the pace of inflation in the housing components is set to roughly double over the next nine months or so. Under current methodology, that acceleration will surface in the CPI later than it should, with important consequences for households, businesses, and decisionmakers throughout the economy.

What Eight Charts Are Telling Us About Markets in 2022
Mark Gilbert and Marcus Ashworth (Bloomberg Opinion) Dec 20, 2021
How central bankers react to faster inflation will drive the financial markets in the coming year.

The Fed's Pivot Is the Opposite of Hawkish
Narayana Kocherlakota (Bloomberg Opinion) Dec 20, 2021
The central bank's policy stance is actually much more dovish than it was a year ago. This doesn't bode well for the economy.

Inflation? There's Another Explanation for Rising Housing Costs
Karl W Smith (Bloomberg Opinion) Dec 20, 2021
The housing market could be on the cusp of a fundamental shift with long-lasting implications for the U.S. economy.

Latin America's New Lost Decade
José Antonio Ocampo (Project Syndicate) Dec 20, 2021
The region's economies, taken together, will be the worst-performing of the developing world as they emerge from the pandemic. Paradoxically, the best way to overcome Latin America's ongoing lost decade may be to focus on issues that go beyond economic growth.

East Asia's Squid Game Economies
Keun Lee (Project Syndicate) Dec 20, 2021
While South Korea and Japan's convergence toward Anglo-Saxon capitalism may appear shocking, the data do not lie. But by adopting the right measures, policymakers can help to ensure that the region's economic future is brighter than recent on-screen portrayals suggest.

Democracy's Vital Tasks
Javier Solana (Project Syndicate) Dec 20, 2021
Rather than emphasizing their ideological differences with other countries, democracies should instead recognize their responsibility to themselves and the world. In particular, free societies must now address two critical, overdue tasks in order to revive their domestic and international legitimacy.

The Danger of Digitalizing Aid
Becky Faith (Project Syndicate) Dec 20, 2021
The humanitarian aid sector faces growing pressure to innovate and adopt digital technologies, reflecting the urgent need to make such assistance more effective. But the world's most vulnerable communities must not be forced to make themselves visible to governments that may not have their best interests at heart.

Trade insurance matters: Evidence from the Covid-19 pandemic
Matthieu Crozet, Banu Demir, and Beata Javorcik (VoxEU) Dec 20, 2021
Global trade fell sharply during the first few months of the Covid-19 pandemic. This column analyses the use of letters of credit to insure trade flows during the crisis. Using product-specific data on reliance on trade insurance, it demonstrates that trade flows insured by letters of credit were more resilient than other flows. In general, the impact of letters of credit are stronger for exports to countries with a high number of Covid-19 cases. The significant effects of trade insurance thus suggest that uncertainty played an important role in driving the trade collapse in 2020.

Why Erdogan's unorthodox Turkish economic experiment is not working
Chris Giles (FT) Dec 29, 2021
President believes that lower interest rates will reduce inflation and boost capital flows.

US needs to lead the way in building a new energy supply chain
Frank Fannon (FT) Dec 21, 2021
We can increase reliance on authoritarian regimes or take bold action to close the supply and demand gap for critical minerals.

Dutch vow to be EU's locomotive rather than brake
Ben Hall (FT) Dec 21, 2021
Pro-European turn by new coalition government reflects shifting consensus about EU's role.

How the 2020s Economy Could Resemble the 1980s
Neil Irwin (NYT) Dec 21, 2021
It depends on whether Jerome Powell at the Fed can pull a reverse Paul Volcker.

What Does 2022 Hold for African Economies?
John Asafu Adaye (BRINK) Dec 21, 2021
In 2021, African economies were hit by lockdowns, even though COVID infection rates were considerably lower than most parts of the Global North. That may not be the case in 2022. And meanwhile, climate is becoming an increasingly urgent issue for the continent.

How the digital transformation can help Japan secure sustainable growth
Kei Oguro, Douglas Sutherland and Vincent Koen (OECD Ecoscope) Dec 21, 2021
Addressing structural weaknesses to boost productivity and labour supply.

John W.H. Denton , Victor K. Fung, Bob Sternfels, and Marcus Wallenberg (Project Syndicate) Dec 21, 2021
The smaller the business, the more difficult it is to navigate the complexity, fragmentation, and opacity of today's trade-finance system. But more digital interconnection would greatly benefit micro, small, and medium-size enterprises and hence the global economy, too.

The Key to the COVID-Powered Challenges of 2022
Ngaire Woods (Project Syndicate) Dec 21, 2021
There will be no return to the status quo ante after COVID-19, because the pandemic has changed too many things. The challenge for the coming year is to move forward by redesigning and reimagining the domains of work, politics, public health, and economic policy.

Pandemic inflation and nonlinear, global Phillips curves
Kristin Forbes, Joseph Gagnon, and Christopher G. Collins (VoxEU) Dec 21, 2021
COVID-19 and the corresponding policy responses have generated uncertainty over inflation around the world. This column shows that when output exceeds potential, the upward pressure on prices (from reductions in slack) is far greater than any equivalent downward pressure (from increases in slack) when output is below potential. This nonlinearity in the Phillips curve, combined with the impact of global factors such as global commodity prices, global slack, exchange rates, and producer price competition, have played an important role in driving the sharp swings in inflation rates during COVID.

China's Investment Drive and Africa's Disjointed Infrastructure
Oluwatosin Adeshokan (Diplomat) Dec 21, 2021
The Lagos-Ibadan train line joins a list of disjointed infrastructure projects taken up on the African continent by Chinese firms.

Ethiopia is a tragedy for the whole of Africa
FT View Dec 22, 2021
War in Tigray unleashed old hatreds and brought low a growth model.

What to make of Turkey's latest unorthodox currency move
Mohamed El-Erian (FT) Dec 22, 2021
Ankara's circuit breaker measures will need to be backed up by a more comprehensive set of policies.

US Treasury market needs to enter modern age
Heath Tarbert (FT) Dec 22, 2021
Series of reforms needed to improve trading in the world's most important asset class.

The old lessons from gold's new existential crisis
Helen Thomas (FT) Dec 22, 2021
A combination of crypto and climate means the industry is left trying to justify its own existence.

It's Time for the Fed to Go Old School
Judy Shelton (WSJ) Dec 22, 2021
No fancy stuff. Raise rates via open-market operations that reduce the size of the balance sheet.

The Fed's Dovish "Tapering" and the ECB
Daniel Lacalle (Mises Wire) Dec 22, 2021
Europe's governments are caught up in a destructive symbiotic relationship with Europe's central bank. If they don't end QE and cut debt, they face some very hard times ahead.

Higher Shipping Costs May Lift Asia's Low Inflation
Yan Carrière-Swallow, Pragyan Deb and Daniel Jiménez (IMF) Dec 22, 2021
New analysis shows how increases in shipping rates have a persistent impact on consumer prices.

The dollar has only a modest effect on trade prices outside the United States
Joseph E. Gagnon and Madi Sarsenbayev (PIIE) Dec 22, 2021
Few economists would dispute the proposition that the value of the dollar affects the US trade balance. But how much does the value of the dollar affect the trade balances of other countries with independent currencies? An influential recent paper by Gita Gopinath, chief economist of the International Monetary Fund, and coauthors (2020) notes that a disproportionate share of global trade is invoiced in US dollars and claims that dollar invoicing causes trade prices to follow movements in the dollar.

The IMF's New Resilience and Sustainability Trust: Demystifying the Debate over Upper Credit Tranche Conditionality
David Andrews and Mark Plant (CGD) Dec 22, 2021
The debate now is about the RST—should it be subject to UCT conditionality? But that's really the wrong debate.

How Erdonomics Sank Turkey
Anne O. Krueger (Project Syndicate) Dec 22, 2021
Following years of mismanagement by an authoritarian president, Turkey's economy is reeling. Without new leadership or a course correction that includes a tighter monetary policy, Turkish households' economic prospects will continue to darken, and the impact on the country's stability will become impossible for others to ignore.

Does Japan Vindicate Modern Monetary Theory?
Takatoshi Ito (Project Syndicate) Dec 22, 2021
For decades, the Japanese government has amassed more and more debt without triggering higher borrowing costs or inflation. But there is no such thing as a free lunch, and in Japan's case, it is future generations who will be left with the bill.

What You Import Matters for Productivity Growth: Experience from Chinese Manufacturing Firms
Jiawei Mo, Larry D. Qiu, Hongsong Zhang, and Xiaoyu Dong (VoxChina) Dec 22, 2021
We find that capital import has a substantially larger productivity effect than intermediates import, by generating significant long-term productivity gains through R&D-capital synergy, R&D-inducing, and direct dynamic productivity effects. Our findings highlight the importance of tariff structure in tariff liberalization: the change in tariff structure explains 18% of the productivity gains following China's WTO accession.

Understanding inflation risks in the US and the euro area
Jasper McMahon, Lucrezia Reichlin, and Giovanni Ricco (VoxEU) Dec 22, 2021
The Federal Reserve has recently changed monetary stance and signalled a faster than anticipated pace of monetary tightening, while the ECB is more dovish. This column applies a statistical model to recent data on oil prices, inflation, expectations, labour markets and output, and finds that the model's forecasts support the difference in stance of the two central banks. Based on an assessment of cyclical inflation being mostly driven by transitory energy price disturbances and a very small Phillips curve contribution in both jurisdictions, it predicts that in a year from now euro area HICP inflation will still be below the 2% target, at 1.75%, while in the US CPI inflation will be above, at 2.75%.

Parliamentary voice on ECB monetary policy
Federico Maria Ferrara, Donato Masciandaro, Manuela Moschella, and Davide Romelli (VoxEU) Dec 22, 2021
What are central banks held accountable for by elected officials? This column employs structural topic models on a new dataset of the Monetary Dialogues between the Members of the European Parliament and the President of the ECB to reveal differences in how MEPs keep the ECB accountable for its primary objective of price stability. It also shows that unemployment is a key explanatory variable for the political voice articulated by individual MEPs in accountability settings. These findings reveal the existence of a 'political' Phillips curve reaction function.

How the Energy Crisis Made 2021 Feel Like the '70s
Keith Johnson (FP) Dec 22, 2021
High power prices. Rolling blackouts. Dwindling supplies. And a cascade of economic and political turmoil felt around the world.

The EU's fiscal rules must be reformed
Mario Draghi and Emmanuel Macron (FT) Dec 23, 2021
We need to bring debt levels down, but not through unsustainable spending cuts or higher taxes.

China merges 3 rare earths miners to strengthen dominance of sector
Sun Yu and Tom Mitchell (FT) Dec 29, 2021
New entity hailed as 'aircraft carrier' of its industry for its market power and strategic importance.

IMF says Argentina bailout programme was 'too fragile' to succeed
Michael Stott (FT) Dec 23, 2021
Record $57bn loan was made on over-optimistic forecasts, internal report finds.

What's wrong with Turkey's economy? 'Erdoganomics.'
Asli Aydintasbas (WaPo) Dec 23, 2021
This meltdown is not the result of an attack by Turkey's enemies nor of a global conspiracy to bring down Erdogan, as the government would like you to believe.

China's post-Covid new trade order
David P. Goldman (AT) Dec 23, 2021
China has become the dominant source of demand for Asian manufactures and the leading supplier of goods to the United States and Western Europe during the past two years, reshaping global trade patterns. The sheer increase in China's export volume is impressive, but just as important is the composition of trade.

How Europe Can Break Its Dependence on Russian Energy
Bloomberg View Dec 23, 2021
Faster adoption of renewables and expanded use of nuclear power would bolster the continent's security and help the climate, too.

How Covid Arbitrage Became the Trade of the Year
Tim Culpan (Bloomberg Opinion) Dec 23, 2021
Those with money and means were able to choose the most convenient places to wait out the pandemic.

Where to Find Cheaper Alternatives to Expensive Stocks
Nir Kaissar (Bloomberg Opinion) Dec 23, 2021
Small companies, value shares and foreign markets have been horrible performers in recent years, which is precisely why they merit another look.

America Would Be More Happy With More People
Tyler Cowen (Bloomberg Opinion) Dec 23, 2021
Stagnant population growth in the U.S. hurts not only national economic growth but also the national mood.

Taxing Economic Credibility
Michael J. Boskin (Project Syndicate) Dec 23, 2021
Although politicians have always had incentives to cast themselves and their policy proposals in the best possible light, they now seem to be going further than ever into the realm of hyperbole. And, increasingly, the public isn't falling for it.

The Ghost of Christmas Inflation
John H. Cochrane (Project Syndicate) Dec 23, 2021
In a pandemic, you can send people all the money in the world and they still won't go out to dinner or book a flight, especially if those services are suspended by government fiat. A pandemic is like a blizzard: If people get a lot of money when the snow is falling, they will fuel inflation once it has been cleared.

Uncovering the role of skills and diversity for firm productivity
Chiara Criscuolo, Peter Gal, Timo Leidecker, and Giuseppe Nicoletti (VoxEU) Dec 23, 2021
Rising dispersion in productivity across firms has focused attention on the drivers of superior performances of a minority of firms at the 'productivity frontier' and disappointing performances of the remaining 'productivity laggards'. This column brings together data from ten countries to explore how differences in productivity outcomes of frontier and laggard firms depend on the composition, diversity, and competencies of their managers and their workers. Overall, this 'human side' explains about a third of the observed differences in productivity across firms, more than is accounted for by differences in capital intensity.

Inflation narratives
Peter Andre, Ingar Haaland, Chris Roth, and Johannes Wohlfart (VoxEU) Dec 23, 2021
Inflation has recently surged in both the US and the EU. This column uses responses from surveys of a representative sample of the US population as well as academic economists and US firm managers to show that households and managers are more likely than experts to think that the current surge in inflation will be persistent. Since the narratives individuals use to explain movements in inflation appear central to whether inflation expectations remain anchored, communication strategies by policymakers could put emphasis on specific narratives that highlight that inflationary pressures are unlikely to persist.

What 'Squid Game' tells us about the changing face of globalisation
Gillian Tett (FT) Dec 24, 2021
A new type of connectivity is emerging, and it's no longer dominated by America.

Investors braced for test of nerves in 2022
Katie Martin (FT) Dec 24, 2021
More volatility ahead is the reasonable expectation for markets.

Fighting Inflation Means Taking On Corporations
Meg Jacobs (NYT) Dec 24, 2021
Easing spiking prices will take more than raising interest rates.

How barriers to trade can be barriers to climate change adaptation
Ishan Nath (VoxEU) Dec 24, 2021
Global warming is expected to dramatically reduce agricultural productivity in hotter parts of the world. This column considers ways to accommodate that change. Hot, poor countries would benefit by shifting away from agriculture into less vulnerable, non-agricultural sectors as temperatures rise, but such a reallocation of resources is unlikely without a major increase in global trade integration. As long as poor countries import little of their food, they are likely to continue specialising in agriculture to meet domestic subsistence needs, even as their farms become increasingly vulnerable to climate change.

O Little Supply Chain Troubles of Bethlehem
FT View Dec 25, 2021
The nativity story offers festive lessons in bottlenecks and shortages.

Africa's population boom doesn't spell a demographic dividend
David Pilling (FT) Dec 26, 2021
The key to prosperity across the continent is to give women more control over their lives.

Which economies have done best and worst during the pandemic?
Economist Dec 26, 2021
We rank 23 rich countries along five measures.

Balancing US–China strategic competition and collaboration
Dong Wang (EAF) Dec 26, 2021
Different visions of the regional order need to be harmonised and a more inclusive vision [of that order] needs to be developed and articulated.

The three questions that dominate investment
Philip Coggan (FT) Dec 27, 2021
If future returns are going to be low, investors face some very difficult decisions.

Covid has demonstrated the power of the 'nudge'
Ravi Gurumurthy (FT) Dec 28, 2021
Policies on everything from public health to climate change would benefit from using behavioural science.

The year's top stories: Don't overplay the dollar's decline
Mark Sobel (OMFIF) Dec 27, 2021
Many commentators predicted a grim year for the dollar. They pointed to surging risk appetite, a twin deficit crash and the end of a strong dollar cycle. But Mark Sobel, writing on 5 January, took a different line. The dollar may indeed fall throughout 2021, he admitted, but his assertion that the arguments for a big slump were overplayed has been borne out by the dollar ending the year strongly.

Shuli Ren's View to 2022: Common vs. Uncommon Prosperity in China
Shuli Ren (Bloomberg Opinion) Dec 27, 2021
Will big capital be able to accommodate itself to Beijing's edicts? That's the big question for the new year. Plus, a selection of the columnist's best work in 2021.

Expect More Turbulent Years Ahead for the Oil Producers
Julian Lee (Bloomberg Opinion) Dec 27, 2021
OPEC+ has negotiated five rocky years with some notable successes alongside its spectacular bust-up. The next five may be just as tough.

Joe Biden in a Multipolar World
Andrew Sheng and Xiao Geng (Project Syndicate) Dec 27, 2021
Upon taking office, US President Joe Biden had an opportunity to engineer a reset in international relations, engaging constructively with China and Russia to figure out how to manage the new multipolar world. His administration has done the opposite, apparently believing that America is still the global hegemon.

5 Reasons to Be Optimistic About 2022
Charles Kenny (FP) Dec 27, 2021
Start the new year on a bright note: Here are five things to be excited about.

Bull market heads into New Year on a shaky foundation
Merryn Somerset Webb (FT) Dec 28, 2021
A lot needs to fall into place for equities to post double-digit return for fourth year in a row.

Year in a word: Common prosperity
James Kynge (FT) Dec 28, 2021
Closing the gulf between the rich and poor is about proving China can succeed where other countries have failed.

The M.I.T. Professor Defining What It Means to Live
Nick Romeo (NYT) Dec 28, 2021
With many companies now inching toward more humane pay, the question of how to define a living wage deserves broader public discussion.

Can tech stocks survive Fed tapering?
David P. Goldman (AT) Dec 28, 2021
The handful of tech giants represented in the "FANG" index (Facebook, Amazon, Netflix, Google and friends) rose in price by nearly 13 times since January 2013, while the S&P 500 rose only 2.8 times. They earn only 0.7% of the S&P 500's total revenue, but account for 12.2% of its market capitalization. This remarkable divergence of valuation might be the biggest bubble in market history.

'Greater Eurasia': Belt & Road expands in Africa
Scott Foster (AT) Dec 28, 2021
Professor David Arase ponders military-civil fusion and the future of China's signature project post-Covid s

Why capital will become scarcer in the 2020s
Economist Dec 28, 2021
Populism, climate change and supply-chain fixes will raise the long-term cost of capital.

The U.S. and China Don't Need a Cold War Over Capital
Bloomberg View Dec 28, 2021
Restricting U.S. investment in Chinese companies, as some in Congress have proposed, would almost certainly backfire. Here's what could work instead.

The Euro at 20
Jean Pisani-Ferry (Project Syndicate) Dec 28, 2021
The euro's advocates hoped that the single currency would deliver economic and financial integration, policy convergence, political amalgamation, and global influence. While these predictions were often wide of the mark, the euro has arguably proven to be a wise investment.

Surge in Japanese IPOs points to lack of venture capital culture
Leo Lewis (FT) Dec 29, 2021
Tokyo sees busiest month ever for new listings but investors say companies look woefully unready.

Why So Many Democracies Are Floundering
Richard H. Pildes (NYT) Dec 29, 2021
The most pervasive and perhaps deepest challenge facing virtually all Western democracies is the political fragmentation of democratic politics.

When It Comes to Inflation, I'm Still on Team Transitory
Alan S. Blinder (WSJ) Dec 29, 2021
Fed Chair Powell may have retired the term, but bottlenecks and shortages should be over soon.

The Religious Roots of Turkey's Currency Crisis
Daniel Pipes (WSJ) Dec 29, 2021
Erdogan's adherence to the Quran's commandment prohibiting paying interest on money is destroying the lira's value.

Belt & Road Phase 2 moves beyond infrastructure
Scott Foster (AT) Dec 29, 2021
Beijing has been aware of the shortcomings of the original physical infrastructure-focused Belt & Road Initiative (BRI) – including credit, environmental and reputational risk – for some time and are dealing with them in a comprehensive, forward-looking manner, says David Arase, an honorary professor at The University of Hong Kong.

RCEP: Between geopolitics and geo-economics
Sanjay Pulipaka and Mohit Musaddi (AT) Dec 29, 2021
The Regional Comprehensive Economic Partnership (RCEP), negotiations for which began in 2013, will come into force this Saturday, January 1, 2022. Given the growing security concerns over deeper economic engagement with China, there was a possibility that RCEP might have been delayed if the member countries held off on ratification.

Financial Stability Report Reads Like a Bad Hollywood Script
Aaron Brown (Bloomberg Opinion) Dec 29, 2021
Warning about climate change, pandemics and cyberattacks is unhelpful because they're too big, uncertain and ill-defined for useful analysis.

The Right Recipe for Reforming Pensions
Elsa Fornero (Project Syndicate) Dec 29, 2021
Even though governments do not provide all pension income in most national systems, they have good reasons to be involved in reform efforts. And one of the best things governments could do is to ensure that workers have the information and financial education they need to make the best decisions about their retirement.

Clouds Over 2022
Nouriel Roubini (Project Syndicate) Dec 29, 2021
Although major economies and markets fared well in 2021 despite all of the uncertainties surrounding new variants of the coronavirus, 2022 will bring new challenges. In addition to central banks shifting toward policy normalization, geopolitical and systemic risks are multiplying.

Is Strategic Cooperation with China Possible?
Michael Spence (Project Syndicate) Dec 29, 2021
From climate change and rising inequality to the pandemic and the digital revolution, there is ample common ground for rival powers to pursue mutually beneficial forms of collaboration. Unfortunately, the opposite has happened, raising doubts about the current recovery and the world's future health and prosperity.

Chinese Infrastructure Projects Help Spread Economic Activity in the Global South
Richard Bluhm, Axel Dreher, Andreas Fuchs, Bradley C. Parks, Austin M. Strange, and Michael J. Tierney (VoxChina) Dec 29, 2021
Using our recently published geolocated dataset on Chinese government-financed transport infrastructure investments from 2000 to 2014, we show that these investments lead to a decentralization of economic activity within the subnational jurisdictions where they are located. Our analysis documents that this decentralization shifts activity toward suburban and peri-urban areas in low-income countries. We find no evidence suggesting that these projects systematically alter the distribution of activity across subnational jurisdictions.

2021: the year of the unbalanced recovery
FT View Dec 30, 2021
Vaccination programmes have brought strong but uneven global growth.

Banking stress tests' halo fades with the crisis
Laura Noonan (FT) Dec 30, 2021
Banks question the resources going into the annual check of their financial resilience.

ESG: will profits become an endangered species? Premium content
Lex (FT) Dec 30, 2021
Stakeholder capitalism and regulatory clampdowns pose a threat to corporate margins.

Cryptocurrencies: ethereum will challenge the hegemony of bitcoin
Lex (FT) Dec 30, 2021
Results of a network upgrade in 2022 will appeal to eco-conscious crypto fans.

Inflation and China Failed to Rattle Markets. 2022 Might Be Different.
Mohamed A El-Erian (Bloomberg Opinion) Dec 30, 2021
Investors were relatively unfazed by the year's two big economic surprises. But the effects of rising prices and Beijing's corporate clampdown could play out in unexpected ways next year.

A Debate About Inflation Will Matter in 2022. But Which One?
Ramesh Ponnuru (Bloomberg Opinion) Dec 30, 2021
Just because the doomsayers were right about the harm caused by rising costs in 2021 doesn't mean they'll still look smart a year from now.

The Never-Ending Brexit
Anand Menon (FA) Dec 30, 2021
The true—and mounting—costs of leaving the EU.

A green ray of hope in surging tech investment
FT View Dec 31, 2021
Technological breakthroughs are needed to counter climate change.

Another stellar year for tech stocks is harder to count on
Richard Waters (FT) Dec 31, 2021
Secular growth trends remain in place but headwinds are likely to hit the sector.

The Fed's Moves Pumped Up Stocks. In 2022, It May Pull the Plug.
Coral Murphy Marcos and Emily Flitter (NYT) Dec 31, 2021
Shares soared as interest rates stayed low and stimulus programs helped the economy. But expected changes could make investors wary.

Dollar's year of living dangerously awaits
William Pesek (AT) Dec 31, 2021
Central banks around the globe are ending 2021 with the highest gold holdings in 31 years. Yet the real story as monetary authorities recalibrate foreign-exchange reserve holdings is how the US dollar is on the losing end of these shifts. And in the year ahead, this trend could become a systemic problem.

Japan pays a high price as it goes down market
Jake Adelstein (AT) Dec 31, 2021
Japan is cheap. Yes, you read that right. This may surprise – or astonish – those familiar with the country's high value-added brands, its "bubble era" or Japanese land prices – touted as among the most expensive in the world. Decades of stagnant wages, deflation and the gut-punch left by Abenomics have left Japan the Daiso of the world.

It's All Uphill From Here for Corporate America
Gary Shilling (Bloomberg Opinion) Dec 30, 2021
Fat profit margins are likely to buckle under the pressure to boost worker compensation.

The Selective Sovietization of American Capitalism
Amar Bhidé (Project Syndicate) Dec 31, 2021
Lax lending standards, cheap credit, and massive injections of liquidity from the central bank have created a toxic level of financial flexibility in the US economy. As financial conditions become increasingly unmoored from the real economy, comparing the US to the countries on the losing side of the Cold War does not seem far-fetched.

The ECB's Savvy Gradualism
Melvyn B. Krauss (Project Syndicate) Dec 31, 2021
Unlike the US Federal Reserve, the European Central Bank has no fiscal backstop and must worry about the cohesion of the eurozone, in addition to the risk of inflation. Given these complex policy conditions, ECB President Christine Lagarde's careful approach appears to be as sound politically as it is economically.