News & Commentary

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January 2013 Archive

February 2013 Archive

Africa is hooked on growth
Sebastian Mallaby (FT) Jan 1, 2013
The shift of economic structure is not a continent-wide story. But the best managed African countries are pulling it off.

The Salafi surge
Roula Khalaf (FT) Jan 1, 2013
The Arab uprisings have allowed a long-suppressed ultraconservative Sunni sect to gain influence, posing a threat to the shift from autocracy across the region.

How Capitalism Can Repair Its Bruised Image
Lynn Forester de Rothschild and Adam S. Posen (WSJ) Jan 1, 2013
With much of the public disaffected, large businesses can take specific steps to show the virtues of the marketplace.

Global imbalances: What role for the WTO?
Juan A. Marchetti, Michele Ruta & Robert Teh (VoxEU) Jan 2, 2013
Globally, large current account imbalances prevail. This column argues that they also continue to represent a systemic risk for the world economy. The WTO has a clear-cut role in the institutional effort to address these imbalances. However, this role has more to do with opening services and government procurement markets than with the often invoked trade sanctions in response to exchange rate misalignments.

The Unstarvable Beast
Kenneth Rogoff (Project Syndicate) Jan 2, 2013
As US President in the 1980’s, the conservative icon Ronald Reagan described his approach to fiscal policy as “starve the beast”: cutting taxes will eventually force people to accept less government spending. So why has the cost of government – not only in the US – continued to rise inexorably?

Europe’s Next Great Mistake
Harold James (Project Syndicate) Jan 2, 2013
In constructing Europe’s monetary union, political leaders did not think through all of the implications, which led to major design flaws. Worse, they do not appear to have learned from that experience, for they are about to take the same approach to the monetary union’s political counterpart.

Can You Fight Poverty With a Five-Star Hotel?
Cheryl Strauss Einhorn (FP) Jan 2, 2013
The story of how the World Bank's investment arm hands out billions in loans to wealthy tycoons and giant multinationals in some of the world's poorest places.

Europe’s Narrative Struggle
Ana Palacio (Project Syndicate) Jan 2, 2013
The euro’s survival in 2012 – if only by the skin of its teeth – confounded skeptics who forecast Greece’s exit from the eurozone and the single currency’s collapse by the end of the summer. Indeed, the EU’s future still seems acutely uncertain, owing mainly to a mismatch between rhetoric and reality.

Europe: Burnt and abandoned
James Fontanella-Khan (FT) Jan 2, 2013
Fears of a fresh chapter in the continent’s protracted crisis heighten as companies slash investment and shut operations.

US has been let down by its leadership
Nouriel Roubini (FT) Jan 2, 2013
A deal that extends unsustainable tax cuts for 98% of Americans is no victory.

The Political Economy of 2013
Mohamed A. El-Erian (Project Syndicate) Jan 3, 2013
Watching America’s national leaders scramble in the closing days of 2012 to avoid a “fiscal cliff” that would plunge the economy into recession was yet another illustration of an inconvenient truth: messy politics remains a major driver of global economic developments. This will become even more evident worldwide in 2013.

Dynastic Asia
Kishore Mahbubani (Project Syndicate) Jan 3, 2013
To the extent that culture matters in politics, the recent spate of leadership changes in East Asia suggests that Asian societies are more tolerant – if not supportive – of dynastic succession. But it is also clear that having distinguished relatives does not guarantee success in office.

Brain drain or brain gain? Evidence from corporate boards
Mariassunta Giannetti, Guanmin Liao & Xiaoyun Yu (VoxEU) Jan 3, 2013
Is the brain drain reversing? This column argues that increasing numbers of foreign-educated and economic emigrants are returning home. Evidence suggests that the best of the bunch bring with them strong corporate governance practises and an appetite for internationalisation. Through this ‘brain gain’, the return of skilled professionals boosts emerging markets’ economies.

The decline of western dominance
Samuel Brittan (FT) Jan 3, 2013
The reversal towards an earlier norm has started. Developing countries now account for about half of total world output.

China’s anti-corruption drive is a sideshow
Henny Sender (FT) Jan 3, 2013
There has always been a disconnect between macro economy and stock market. It seems again hopeful signs in real economy will not translate into gains.

The New Tell-All Fed
The best playbook for the economy right now may not be to stimulate it, but rather to avoid surprising it.

Happy 2013?
Charles Wyplosz (VoxEU) Jan 4, 2013
Financial market quiescence has removed pressure for immediate policy action on the Eurozone crisis. This column argues that while important repairs were made in 2012, the most difficult ones still lie ahead. Much remains to be done by unwilling politicians. Things will have to get worse before they get better. The best hope is that this happens in 2013 rather than in 2014.

China’s pure exporter subsidies: Protectionism by exporting
Fabrice Defever & Alejandro Riaño (VoxEU) Jan 4, 2013
The West perennially complains about China subsidising industry geared towards its domestic market. But what will happen when China enacts its latest Five Year Plan’s emphasis on domestic growth? This column argues that ending ‘pure-exporter subsidies’ – subsidies that boost Chinese exports while simultaneously protecting the least efficient, domestically oriented firms – will benefit Chinese consumers, but will cost the rest of the world.

Will More Integration Save Europe’s Social Model?
Daniel Gros (Project Syndicate) Jan 4, 2013
The claim that Europe needs more integration to save its social model has long lost its credibility. Integration is irrelevant to that question, and, in those areas where deeper integration really would benefit Europe, it appears to be the last thing that national leaders want.

How will advanced and developing countries interact?
Mohamed A. El-Erian (FT) Jan 4, 2013
In the 30 years that I have worked on and with developing countries, I have witnessed an amazing change in how conventional wisdom characterizes their economic relationship with the advanced world. And while conventional wisdom has not always kept pace with changes among this group of nations, it inevitably ended up in the right zip code.

Free exchange: Stoneless rivers
Economist Jan 5, 2013 The great aid mystery
Jonathan Foreman (Spectator) Jan 5, 2013
Our rulers must know that development aid doesn’t work. So why do they throw money at it?

The Real Interest-Rate Risk
Zhang Monan (Project Syndicate) Jan 5, 2013
Since 2007, the financial crisis has pushed the world into an era of low, if not near-zero, interest rates, as most developed countries seek to reduce debt pressure and perpetuate fragile payment cycles. But, despite talk of a “new normal,” there is a strong risk that real interest rates will rise in the next decade.

Looking for a Jump-Start in China
Nicholas D. Kristof (NYT) Jan 5, 2012
China's next top leader has the potential to be a game changer, and to nourish China's rise with sweeping economic and political reforms.

Dealmakers warm to chance of oil tie-ups
Anousha Sakoui (FT) Jan 6, 2013
Despite the slump in M&A in the sector in 2012, talk has been rekindled over potential for takeovers with some majors.

In Defense of the Fed's New Interest-Rate Policy
Frederic S. Mishkin and Michael Woodford (WSJ) Jan 6, 2013
The central bank needs to offset slow domestic demand, but it should clarify its goals on employment and inflation.

US votes on trade and migration
Paola Conconi, Giovanni Facchini, Max Friedrich Steinhardt & Maurizio Zanardi (VoxEU) Jan 7, 2013
As populations in rich nations continue to age and skill shortages begin to emerge, concern over getting immigration policy right is set to intensify. This column discusses new research on US policymaking, showing that many of the determinants of policymakers’ attitudes towards trade are also in operation when it comes to migration. Using the Heckscher-Ohlin model, it finds that US House members from districts where skilled labour is abundant are more likely to support both trade liberalisation and a more open policy for unskilled immigration.

The Post-Crisis Crises
Joseph E. Stiglitz (Project Syndicate) Jan 7, 2013
In the shadow of the euro crisis and America’s fiscal cliff, it is easy to ignore the global economy’s long-term problems. But, while we focus on immediate concerns, they continue to fester, and we overlook them at our peril.

Monetary Regime Transition in the Emerging World
Andres Velasco (Project Syndicate) Jan 7, 2013
Many central banks in the developed world appear set to replace inflation targeting with nominal-GDP targeting as their monetary-policy anchor. But, while central banks in emerging-market economies have had problems with inflation targeting from the outset, moving to nominal-GDP targeting solves none of them.

Brazil: Consumer rhythm
Louise Lucas and Samantha Pearson (FT) Jan 7, 2013
Cracks are appearing in the economy but business leaders’ faith in the country’s spending frenzy remains unshaken.

Beware the ‘central bank put’
Mohamed El-Erian (FT) Jan 7, 2013
How far can central banks divorce prices from fundamentals?

Bank shares buoyed on a sea of scandal
Patrick Jenkins (FT) Jan 7, 2013
The 2012 share price performances of lenders such as Barclays, HSBC and Lloyds seemed driven by some bizarre inverse correlation with their misdeeds.

Chinese 'Currency Manipulation' Is Not the Problem
Edward Lazear (WSJ) Jan 7, 2013
An analysis of trade patterns with the U.S. and Europe shows that the yuan's value has not affected the numbers.

Tribalism, Groupism, Globalism
E.O. Wilson (Globalist) Jan 7, 2013
For all the talk about a world without borders and ever more interconnectedness, one fundamental human trait has not lost any of its power: the penchant of humankind to organize itself in tribes. E.O. Wilson, author of "The Social Conquest of Earth," examines the roots of ethnocentrism.

America going platinum
Economist Jan 7, 2013
America's government is full of oddities, and here's one: it is possible for the government to pass spending and tax bills which lead to an illegal amount of accumulated debt. The government's borrowing results from all the tax and spending choices made by past and present elected officials and leads to annual deficits that add to a stock of public debt. Once the tax and spending choices are made, the resulting debt load is a fait accompli, a residual. Yet said elected officials have also seen fit to pass a law declaring that debt must fall below a specific limit. From time to time, then, Congress has to pass a law raising the limit—essentially, declaring its past choices legal—or face dire fiscal consequences. If the limit is reached and not raised government outlays must be cut immediately and dramatically or the government must default on some of its debt-interest payments. Those are both terrible options, and so until recently the government has simply raised the limit when necessary.

Africa can help feed Africa: Removing barriers to regional trade in food staples
Paul Brenton (VoxEU) Jan 8, 2013
Africa is not achieving its potential in food trade, increasing the risk of widespread hunger and malnutrition. This column argues that the most serious problems for the continent are problems of political economy and barriers along the value chain. The good news is that, despite demand for food throughout Africa predicted to double over the next decade, governments can act now to overcome these problems. With a regional approach to food security, African governments can spur on benefits to farmers and consumers as well as job creation along the value chain of staples.

Meaningful banking reform and why it is so unlikely
Charles W Calomiris (VoxEU) Jan 8, 2013
Over the last few decades, banking regulators and supervisors have failed to do their job. This column argues that a failure of political will enabled stakeholders to pursue bad practices, and suggests a roadmap for reform. Enforcing a reform agenda marked by simplicity is plausible, and would avoid much of the collateral damage that comes from many hundreds of pages of complex, costly and misguided mandates that typically act as substitutes for credible reform. Overcoming the challenge of political will, however, remains a challenge.

Systems at Risk
Lee Howell (Project Syndicate) Jan 8, 2013
This year's World Economic Forum Global Risks Report reminds us of the many ways in which systems inevitably affect one another in our interdependent world. More important, the report warns of the dangers of multiple systems – like the economy and the environment – failing simultaneously.

American industry is on the move
Sebastian Mallaby (FT) Jan 8, 2013
US groups are using ‘big data’ to improve their performance, setting the scene for a revival.

Spain needs tough decisions on debt
Juan Rubio-Ramirez (FT) Jan 8, 2013
Determined action to bring about structural change is needed, not a series of stopgap measures.

Tide of change could engulf Asia’s banks
Henny Sender(FT) Jan 8, 2013
The region’s banks have long been seen as a proxy for growth in their home markets but, as economies weaken, this year is likely to be challenging.

Desperately seeking a line in safe assets
Ralph Atkins (FT) Jan 8, 2013
Risk of a sudden shortage of sufficiently high quality assets triggering a collateral crunch and paralysing credit flows into the real economy.

Companies: The rise of the zombie
Michael Stothard (FT) Jan 8, 2013
Ailing businesses propped up by government-backed loans often spend all their cash servicing debt rather than investing in growth.

The appreciating renminbi
Philippe Bacchetta, Kenza Benhima & Yannick Kalantzis (VoxEU) Jan 9, 2013
China is perennially accused of currency manipulation. Yet, this column argues that a weak currency value doesn’t necessarily reflect currency manipulation. China is a fast growing economy with strong financial frictions and a high saving rate, and such countries naturally have weak currencies. Instead of focussing on accusations of currency manipulation, it might be more helpful for economists to encourage policies that foster Chinese consumption, gradually leading the renminbi to an appreciating path.

The Eurozone’s Agenda in 2013
Edmond Alphandéry (Project Syndicate) Jan 9, 2013
EU leaders concluded 2012 with a landmark agreement that places all eurozone banks under a single supervisor. But they have clearly refused, at least for now, to hold a serious discussion about deeper integration, without which the euro crisis cannot be overcome.

The Empires Strike Back in Europe
Tim Judah (Bloomberg) Jan 9, 2013
A new World View contribution from Europe should begin at the beginning. What is going to happen in 2013? There have been plenty of well-informed predictions for how Europe's debt crisis will unfold this year, most of which, as a simple fact of mathematics, will have to prove wrong.

The New Mercantilist Challenge
Dani Rodrik (Project Syndicate) Jan 9, 2013
Today, mercantilism is typically dismissed as an archaic and blatantly erroneous set of ideas about economic policy. But it is more accurate to think of mercantilism as a different way to organize the relationship between the state and the economy – a vision that holds no less relevance now than it did in the eighteenth century.

The World in 2030
Joseph S. Nye (Project Syndicate) Jan 9, 2013
In December, the US National Intelligence Council released a report detailing its view of the international order in 2030. While much remains uncertain, one thing is not: Whether the future holds benign or malign scenarios depends in part on the policies that the US adopts today.

The New Power Map
Aviezer Tucker (FA) Jan 9, 2013
World politics after the boom in unconventional energy.

Shale will change the US, not the climate
Julio Friedmann and Armond Cohen (FT) Jan 9, 2013
Despite an improving energy mix, the mathematics of greenhouse gas accumulation remain the same.

"Financial coercion" heralds return of M&A
Richard Madigan (FT) Jan 9, 2013
Private Bank predicts that the period of low interest rates will lead to renewed dealmaking among cash-rich corporations.

In Appreciation: James M. Buchanan
Donald Boudreaux (WSJ) Jan 9, 2013
The Nobel-winning economist who understood how politics really works.

EU hopefuls face stark choice on Customs Union
Robert Coalson (AT) Jan 10, 2013
Central Asian countries' desires for closer European Union ties are at odds with securing benefits related to the Russian-led Eurasian Customs Union, ensuring that the likes of Ukraine, Armenia and Moldova will have to make stark decisions in the next year or two amid key elections in all three countries.

Colonialism and development in Africa
Leander Heldring & James A. Robinson (VoxEU) Jan 10, 2013
Most of Africa spent two generations under colonial rule. This column argues that, contrary to some recent commentaries highlighting the benefits of colonialism, it is this intense experience that has significantly retarded economic development across the continent. Relative to any plausible counterfactual, Africa is poorer today than it would have been had colonialism not occurred.

Is China Enough?
Jose L. Machinea (Project Syndicate) Jan 10, 2013
For many countries in Latin America, demand from China has been essential to maintaining high GDP growth rates over the last decade. But will Chinese demand for commodity imports be sufficient to sustain the region in the coming years?

Why No Glass-Steagall II?
Barry Eichengreen (Project Syndicate) Jan 10, 2013
Say what you will about the Dodd-Frank Act of 2010, but it is weak soup by the standards of the US financial reforms enacted in the 1930’s. As a response to what is widely regarded as the most serious financial crisis in 80 years, why does it do so much less to change the structure and regulation of the US financial system?

Energy: Trial by oil
Sylvia Pfeifer, Xan Rice and Andrew England (FT) Jan 10, 2013
A clutch of African nations are trying to avoid the mistakes of Nigeria, where crude wealth has fuelled corruption.

Era of independent central banks is over
Stephen King (FT) Jan 10, 2013
Decisions are being made that do more to redistribute wealth than to stimulate the economy, that are more political than economic.

Economists, Consensus and Healthy Debates
Christia Freeland (NYT) Jan 10, 2013
The University of Chicago has led an effort to figure out what economists agree on, where they diverge and how certain they are about their views. There's more consensus than many would think.

Financial Crisis in the West Bank
NYT Jan 10, 2013
Arab states have a responsibility to make sure the Palestinian Authority remains viable.

Big China Short Shows Downside of Kleptocracy
Jonathan Weil (Bloomberg) Jan 10, 2013
Even by the wacky standards of Chinese accounting scandals, this week’s events at China’s second-biggest maker of construction equipment, Zoomlion Heavy Industry Science & Technology Co. (1157), were awfully strange.

Did China Really Lose $3.75 Trillion in Illicit Financial Flows?
Martin Kessler and Nicholas Borst (PIIE) Jan 11, 2013
A recent report from the think tank Global Financial Integrity (GFI) identifies China as the largest source of illicit financial flows in the developing world. The report, Illicit Financial Flows from China and the Role of Trade Misinvoicing, identifies $3.75 trillion in illicit outflows during between 2000 and 2011. The possibility of trillions of dollars [...]

Europe's Bankrupt Welfare State
WSJ Jan 11, 2013
The vaunted social model has struggled to generate growth or jobs for decades.

The End of Pasta?
Bjørn Lomborg (Project Syndicate) Jan 11, 2013
All of the major grains – rice, corn, and wheat – are already suffering from global warming, but wheat is the most vulnerable to high temperatures. That, however, does not mean that there will be less of it – or of other agricultural crops – as global temperatures rise.

Growth slowdowns redux: Avoiding the middle-income trap
Barry Eichengreen, Donghyun Park & Kwanho Shin (VoxEU) Jan 11, 2013
The rapid economic growth of emerging markets is the leading headline of our age. But growth is slowing. Using new research, this column asks why this might be, and how policymakers might remedy flagging economies. The answer seems to be education. Recent research suggests, for instance, that the rapid expansion of secondary and tertiary education helped Korea’s successful transition from middle- to high-income status, very much unlike Malaysia and Thailand. Whether China can avoid the middle-income trap will depend in part upon developing an education system producing graduates with skills that Chinese employers require.

India Grows at Night
Gurcharan Das (Globalist) Jan 11, 2013
Twenty-five years of high growth have made India one of the world's fastest-growing economies. A majority of Indians will soon emerge from a struggle against want. Yet, faced with corruption, Indians wonder why they need a government at all. India needs a strong liberal state that is tough on corruption and unresponsive bureaucracy.

India: Confessions of a Disillusioned Libertarian
Gurcharan Das (Globalist) Jan 12, 2013
India's growing middle class has achieved economic progress chiefly through individual efforts. India now needs strong governance to rein in a dysfunctional state and self-absorbed political parties. Gurcharan Das asserts that Indians must do the "hard work of politics" and demand reforms — because only then will their government's strength match the strength of India's society.

Global house prices: Home truths
Economist Jan 12, 2013
Our latest round-up shows that many housing markets are still in the dumps.

Innovation pessimism: Has the ideas machine broken down?
Economist Jan 12, 2013
The idea that innovation and new technology have stopped driving growth is getting increasing attention. But it is not well founded

Shadow banking: Economics and policy priorities
Stijn Claessens, Zoltan Pozsar, Lev Ratnovski & Manmohan Singh (VoxEU) Jan 12, 2013
The risks associated with shadow banking are at the forefront of the regulatory debate. Yet, this column argues that there is as yet no established analytical approach to shadow banking. This means that policy priorities are not clearly motivated. But if we analyse securitisation and collateral intermediation – the two shadow banking functions most important for financial stability – a solid framework that includes existing policy recommendations, as well as some alternative ones, begins to emerge.

Too much legitimacy can hurt global trade
Arvind Subramanian (FT) Jan 13, 2013
Smaller and poorer countries have been given too big a role in a process that has gone too far.

A history of hubris and flawed hypotheses
John Plender (FT) Jan 13, 2013
A sweeping study of economists’ repeated failure to predict crashes. reviews ‘Misunderstanding Financial Crises’, by Gary B. Gorton.

Taxation: Unsafe offshore
Vanessa Houlder (FT) Jan 13, 2013
Governments want to close loopholes that help multinationals avoid tax but will have to consider their need to attract big foreign investors.

Why Charity Hasn't Done Much for Haiti
Mary Anastasia O'Grady (WSJ) Jan 13, 2013
Three years after the earthquake, it is 183rd in the world in ease of starting a business.

The Centrists Cannot Hold
Kemal Dervis (Project Syndicate) Jan 14, 2013
By and large, democracy in developed countries is characterized by competition between fairly stable coalitions of the left and right. What, then, are centrists like Mario Monti, Italy’s technocratic prime minister, to do?

Ethics and Agriculture
Peter Singer (Project Syndicate) Jan 14, 2013
Should rich countries – or investors based there – be buying agricultural land in developing countries? While it has been claimed that foreign investors bring idle land into production, thereby increasing food production, much of this land was rich in biodiversity, and the output is typically exported to investors' home countries.

Balance of Payments in the European Periphery
Galina Hale (FRBSF) Jan 14, 2013
The countries of the European periphery are experiencing a balance of payments crisis stemming from persistent current account deficits and sharply lower private capital inflows, a condition known as a sudden stop. In countries with fixed exchange rates, sudden stops typically drain foreign reserves, forcing currency depreciation which eventually shifts the current account from deficit to surplus. However, the sudden stop has not prompted the European periphery countries to move toward devaluation by abandoning the euro, in part because capital transfers from euro-area partners have allowed them to finance current account deficits.

How to Lose $3 Million in 1 Second
Chris Arnade (SciAm) Jan 14, 2013
Losing money is one of the loneliest feelings. It was Oct 22nd, 2008. Lehman Brothers, the investment bank, had filed for bankruptcy the month before. The markets were panicking. A thousand people surrounded me, almost all of us slouched in our seats, staring at computer screens. I had eight, all flashing prices of assets that I couldn’t touch, but, oh, I could feel.

A better way to design global financial regulation
Viral Acharya & T Sabri Öncü (VoxEU) Jan 14, 2013
Internationally prominent economists and politicians have been pushing for effective implementation and better coordination of the new financial regulations currently under construction across the globe. This columns argues that at a time of crisis, financial regulators were forced to act on systemically important assets and liabilities, rather than just on the individual financial institutions holding them. A key turning point towards better regulation will be when we recognise the need for such action ahead of time, building the essential infrastructure that ensures excessive risk-taking is discouraged.

What Happens When China Goes "Gray"?
Mark W. Frazier (Diplomat) Jan 14, 2013
Developed economies are beginning to struggle with aging populations and more retirees. China may soon join them.

Economic Ties Can Save Africa's Arab Spring
Ghazi Ben Ahmed & Ellen Laipson (Bloomberg) Jan 14, 2013
Two years after the fall of Tunisian President Zine El Abidine Ben Ali, the economic imperative for political stability in North Africa requires some bold and fresh thinking. One idea worthy of more attention is promoting regional economic integration.

Rating agencies: Outlook unchanged
Stephen Foley (FT) Jan 14, 2013
Rocked by distaste for their role in the crisis, the sector’s big three were expected to reform – but their efforts have come unstuck.

Chinese shoppers are alive and thriving
Jun Zhang and Tian Zhu (FT) Jan 14, 2013
The belief that China’s consumption is too low is based on a flawed theory and a superficial reading of official data.

Resilience and Dynamism
W. Lee Howell (FA) Jan 15, 2013
In today's world, where risks and their impacts are difficult to predict, the correct responses are uncertain, and no country solve every problem on its own, resilience and dynamism are key. Read

Trade liberalisation and embedded institutional reform: Evidence from Chinese exporters
Amit Khandelwal, Peter K. Schott & Shang-Jin Wei (VoxEU) Jan 15, 2013
The institutions that manage trade barriers are subject to corruption, imposing additional distortions. This column shows that in China, the government misallocated quota licenses permitting firms to export. When the US and EU abolished quotas governing textile exports in 2005, China experienced productivity gains not only from the actual elimination of the quota but also from the termination of the misallocation due to inefficient licensing.

Technology and the Employment Challenge
Michael Spence (Project Syndicate) Jan 15, 2013
New technologies of various kinds, together with globalization, are powerfully affecting the range of employment options for individuals in advanced and developing countries alike. How, then, should policymakers, especially in developed economies, address the new and difficult labor-market challenges that they confront?

The Global Indian
Shashi Tharoor (Project Syndicate) Jan 15, 2013
India is the only country that has an official acronym for its expatriates — NRIs, or “Non-Resident Indians.” It is also the only country whose government organizes an annual celebration aimed at making its expatriates feel welcome to return home.

In China, Slowdown Is a Bigger Danger Than Growth
Peter Orszag (Bloomberg) Jan 15, 2013
A slight acceleration in Chinese economic growth at the end of last year is reinforcing the common narrative that China’s expansion is a threat to other nations, including the U.S.

Thought It Was Safe to Forget Greece? Think Again
Megan Greene (Bloomberg) Jan 15, 2013
Just before Christmas, I met with former Greek Finance Minister George Papaconstantinou, and he talked about how excited he was to spend the holidays abroad, where -- unlike in Greece -- he could roam freely without a security detail. His holiday didn’t go quite as expected.

FT interview: Mariano Rajoy
Tobias Buck and Lionel Barber (FT) Jan 15, 2013
After a year marred by political and economic crisis, the Spanish PM insists his reform programme will begin to bear fruit this year.

Cash wave washes China’s banks off course
Simon Rabinovitch (FT) Jan 15, 2013
Some bank managers, sitting on so much underused cash, are alleged to have provided loans at low rates in return for kickbacks.

Japan should rethink its stimulus
Adam Posen (FT) Jan 15, 2013
The initiative adds to long-term costs without addressing the real problem: a return to deflation and an overvalued exchange rate.

EU must respond to the shale revolution
Alan Riley (FT) Jan 15, 2013
Geostrategically and economically the tectonic plates are already moving against the bloc, and the climate waits for no one.

Central banks continue to call the shots
John Plender (FT) Jan 15, 2013
Looser monetary conditions have perked up global markets but too much depends on government policy and the scope for a reversion to risk-off is clear

Moving to Greenland in the face of global warming
Klaus Desmet & Esteban Rossi-Hansberg (VoxEU) Jan 16, 2013
There are two ways to deal with climate change: mitigation and adaptation. This column argues that in order to adapt, we need to take another look at an age-old coping mechanism: migration. Indeed, if overall hotter temperatures lower productivity in hot regions but raise productivity in what are currently cooler regions, the negative economic effects of climate change are likely to stem from frictions preventing the movement of people and goods. Without these frictions, adapting to climate change becomes that much easier. Climate change policy ought to aim at alleviating mobility frictions.

China’s Antifragile Ambitions
Andrew Sheng and Xiao Geng (Project Syndicate) Jan 16, 2013
In order to secure long-term prosperity, China must enhance its systems' "antifragility" – that is, their ability to benefit from uncertainty and stress. But success will require balancing China's centralized administration with its decentralized family-based traditions – a challenge with which China has struggled for centuries.

A Breach in the Eurozone Dike
Ashoka Mody (Project Syndicate) Jan 16, 2013
Throughout the crisis, it has been widely assumed – at least so far – that the the eurozone core would remain solid, and would continue to write the checks for the periphery’s distressed governments and banks. But, while all eyes have been on the European periphery, has the core been cracking?

Founding Father of the Quants Was Revolutionary Marxist
Colin Read (Bloomberg) Jan 16, 2013
One of the more interesting ironies of history is that the man who laid the foundation for modern quantitative finance began his career as a Marxist revolutionary.

Passionate European’s case for leaving
Simon May (FT) Jan 16, 2013
It is irresponsible to ask, yet again, a country to renew its vows to a marriage whose very purpose it cannot abide.

Biggest growth story is outside the US
Russ Koesterich (FT) Jan 16, 2013
Much of the bad news is already reflected in equity prices. It is ‘haven’ assets that appear most expensive.

A Brief History of U.S. Defaults
Uwe Bott (Globalist) Jan 16, 2013
If the United States defaults on its national debt obligations next month, it won't be for the first time. A recount of the country's deadbeat episodes.

WTO Members Begin Work to Choose New Director-General
Bridges Weekly Trade News Digest, Volume 17, Number 1 Jan 16, 2013
Candidates from nine countries have thrown their hats in the ring as possible contenders to succeed WTO Director-General Pascal Lamy, who has led the Geneva-based trade body since 2005 and who is slated to step down this August. As the year gets underway, WTO members are also in the midst of preparing for this December’s upcoming ministerial conference in Bali, where they have expressed the hope of possibly clinching a small package of deliverables from the long-running Doha Round of trade talks.

EU Leaders Continue Push for US Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 1 Jan 16, 2013
In the early days of the New Year, EU leaders have continued their push for the launch of trade talks with the US, as the trade community awaits news in the coming weeks of whether a bilateral EU-US working group will indeed recommend that the two sides begin negotiating a trans-Atlantic deal.

Eurozone crisis: It ain’t over yet
Paolo Manasse (VoxEU) Jan 17, 2013
All G7 economies are struggling in the post-crisis climate, but US GDP has recovered to pre-crisis levels, while the Eurozone simply hasn’t. This column portrays the global crisis as a transitory shock for the US, but as a quasi-permanent shock for Europe. The policies that are needed get the Eurozone back on track do not seem to be politically feasible. As tension rises with every quarter of stagnation, prospects for the survival of the euro are not only not improving, they are actually getting worse.

Have we solved 'too big to fail'?
Andrew G Haldane (VoxEU) Jan 17, 2013
The Subprime Crisis became the Global Crisis when one too-big-to-fail bank was allowed to fail. This column argues that too-big-to-fail is far from gone despite years of reform efforts. It is important that it not be forgotten. Further analytical work, weighing the costs and benefits of different structural reform proposals, would help keep memories fresh and policies on the right track.

Capital controls: Gates versus walls
Michael W Klein (VoxEU) Jan 17, 2013
Capital controls are back in vogue. This column argues that we should distinguish between episodic controls (gates) and long-standing controls (walls). Research shows that the apparent success of 'walls' in China and India tells us little about the consequences of capital controls imposed or removed in countries like Brazil and South Korea, as circumstances change. Walls and gates are fundamentally distinct, and policy debate needs to take into account these differences.

'Great rotation' to stocks from bonds gains traction
Emerging Markets Jan 17, 2013
Investors' appetite for risk is at its highest in nine years and more funds go into equities, a survey of investors by Bank of America Merrill Lynch shows.

The Wrong Growth Strategy for Japan
Martin Feldstein (Project Syndicate) Jan 17, 2013
Japan’s new government, seeking to boost economic growth, could be about to shoot itself in the foot by destroying its one great advantage: the low rate of interest on government debt and private borrowing. If that happens, Japanese conditions will most likely be worse at the end of Prime Minister Shinzo Abe’s term than they are today.

Taming the Arctic Oil Rush
Arne Jernelov (Project Syndicate) Jan 17, 2013
The rapid shrinkage of Arctic ice cover is one of the most dramatic natural changes currently occurring anywhere on the planet, with profound environmental and economic implications. More immediately, the Arctic’s vast reserves of fossil fuels will become far more accessible than they are today – inviting highly risky exploitation.

Growth Out of Time
William Janeway (Project Syndicate) Jan 17, 2013
The economist Robert Gordon has attracted considerable attention recently by arguing that economic growth in the US is over. But a basic flaw in Gordon’s argument is immediately apparent – and becomes glaringly so on closer examination.

Oil optimism relying on fudged statistics
Nafeez Mosaddeq Ahmed (AT) Jan 18, 2013
The latest World Energy Outlook report from the International Energy Agency would lead you to think we are literally swimming in oil, a view echoed by other oil-industry forecasts. For that, they rely on an optimistic outlook for shale gas and oil sands, industries whose economics doom them from the start.

Reality not politics dictates cash hoarding
Gillian Tett (FT) Jan 18, 2013
‘Changing trade conditions, improvements in technology and responses to market incentives’ are the main reasons why cash holdings are rising.

Return-free risk: why growth plays don’t pay
Terry Smith (FT) Jan 18, 2013
Buy shares that look like bonds.

Fareed Zakaria
Fareed Zakaria (WP) Jan 18, 2013
With development comes protests and rage.

The expansion and convergence of compulsory schooling: Lessons for developing countries
Fabrice Murtin & Martina Viarengo (VoxEU) Jan 18, 2013
A workforce’s cognitive skills and ability to learn are regarded as crucial factors for countries hoping to develop and become competitive in the global knowledge economy. This column argues that many developing countries‘ basic educational attainment and learning outcomes remain wanting. Taking a look at Europe’s historical record can shed light on the developing-country context, and evidence suggests that simply expanding an ill-functioning educational system will be wasteful. It’s advisable for policymakers to pursue institutional reform aimed at cost-efficiency before they begin implementing school reforms.

The real exchange rate and export growth: Are services different?
Barry Eichengreen & Poonam Gupta (VoxEU) Jan 18, 2013
Increasingly, services form a larger and larger share a country’s exports. Do exchange rates matter as much for services and they do for goods exports? This column argues that they do. Distinguishing between traditional services (such as trade and transport, tourism, financial services and insurance) and modern services (such as communications, computers, information services) suggests that the effect of the real exchange rate is especially large for exports of modern services.

The Limits of China’s Consumer Revolution
Zhang Monan (Project Syndicate) Jan 18, 2013
After the global economic crisis weakened the external demand that fueled China’s economic growth over the last three decades, the country’s leaders agreed that domestic consumption must become the new engine of economic growth. But China cannot achieve stable, sustainable growth unless it also upgrades its manufacturing sector.

Can China and Turkey Forge a New Silk Road?
Anna Beth Keim & Sulmaan Khan (YaleGlobal) Jan 18, 2013
Trade, cultural exchanges enrich Sino-Turkish ties, but new Silk Road is a distant dream.

Will Europe’s Fiscal Compact Work?
Jeffrey Frankel (Project Syndicate) Jan 18, 2013
At the start of 2013, the eurozone’s “fiscal compact” entered into force, owing to its ratification on December 21 by a 12th country, Finland, a year after German Chancellor Angela Merkel prodded eurozone leaders into agreement. But will it enforce budget discipline any more effectively than previous agreements?

Outsourcing comes home
Economist Jan 19, 2013
Our special report explains why companies are rethinking their offshoring strategies.

Is the euro zone out of danger?
Economist Jan 19, 2013
Why the bond markets are too optimistic.

Health insurance, innovation, and technology adoption
Joan Costa-i-Font, Alistair McGuire & Victoria Serra-Sastre (VoxEU) Jan 19, 2013
Although healthcare innovation can make treatment cheaper, it can also make policy decisions more difficult by introducing new, better but more expensive technologies. This column argues that, unlike other technologies, healthcare technology is intermediated by insurance mechanisms, both private and public. Although health insurance coverage incentivises expenditure on innovation, it does not seem to heighten technology adoption, a challenge to the idea that innovation increases healthcare costs. Indeed, evidence suggests that technology diffusion is limited by other institutional barriers.

When exchange-rate volatility affects trade
Jérôme Héricourt &l Sandra Poncet (VoxEU) Jan 19, 2013
The increasing volatility of exchange rates after the fall of the Bretton Woods agreements has been a constant source of concern for both policymakers and academics. Does exchange-rate risk dangerously increase transaction costs and reduce gains to international trade? This column uses recent research to argue that there is indeed a negative impact of exchange-rate volatility on firms’ exporting behaviour, magnified for financially vulnerable firms and dampened by financial development. Thus, emerging countries should be careful when relaxing their exchange-rate regime.

How much global trade governance should there be?
Simon Lester (VoxEU) Jan 20, 2013
Trade agreements have become ‘deeper’ over recent years, and there are initiatives in the pipeline to globalise deeper trade governance through mega-regional agreements (such as the Trans-Pacific Partnership). This column argues that trade agreements in general – and the WTO in particular – should focus on what they do best, reducing protectionist barriers. Broader issues such as intellectual property and regulatory expropriation should be left to governments to deal with on their own. Governments that handle these issues most effectively will be the winners in the new world of supply-chain trade.

The union at Europe’s heart is frayed
François Heisbourg (FT) Jan 20, 2013
Having been involved in the Franco-German dialogue for the past 30 years, one is deeply struck by the loss of intimacy.

Europe: An uneven entente
Quentin Peel and Hugh Carnegy (FT) Jan 20, 2013
France must contend with Germany’s growing predominance and its differing vision for European integration,

The Economic Fundamentals of 2013
Nouriel Roubini (Project Syndicate) Jan 21, 2013
The global economy this year will exhibit some similarities with conditions prevailing in 2012 – no surprise there. But there will be some important differences, as fiscal austerity spreads to more advanced economies, the risk of a hard landing in China rises, and the threat of war in the Middle East grows.

Financing the Green Economy
Simon Zadek (Project Syndicate) Jan 21, 2013
According to new estimates that will be presented at this year’s World Economic Forum meeting in Davos, $100 trillion is needed by 2030 to finance infrastructure needs worldwide. Failure to green this investment will reduce economic growth, increase systemic risk, deepen inequality, and fuel social unrest.

'Strong Dollar' Is Lie Told in New Currency War
William Pesek (Bloomberg) Jan 21, 2013
Jack Lew’s first act once he becomes U.S. Treasury secretary will be to tell a lie. On Day One as Timothy Geithner’s successor, Lew is bound to say “I support a strong dollar” to reassure markets that there will be no change in long-standing U.S. policy. Nothing could be further from the truth, though, as the yen trades at 2 1/2-year lows and the world considers a response to Japan’s blitz on money markets.

Globalization’s European Test
Yannos Papantoniou (Project Syndicate) Jan 21, 2013
The eurozone’s sovereign-debt crisis represents a significant challenge for Europe and the global economy. But it is also an opportunity: overcoming the challenge will not only contribute to a sustained global economic recovery, but will also test our capabilities to control the dangers of globalization.

The Politics of Global Recovery in 2013
Barry Eichengreen (Project Syndicate) Jan 21, 2013
Could 2013 be a better year for the global economy than 2012 was? The answer, in principle, is yes; in practice, however, the answer could be more depressing, as policymakers in Europe, the US, and China shoot themselves in the foot.

The Stress Nexus
Peter Voser (Project Syndicate) Jan 21, 2013
In the decades ahead, as the world’s population continues to grow, the middle class continues to expand, and more people choose to live in ever-larger cities, the stresses on global energy, water, and food systems will become critical. Yet, around the world, little has been done to address the coming stresses in a comprehensive way.

China’s Green Drivers
Carlos Ghosn (Project Syndicate) Jan 21, 2013
Car sales in China, at 18 million in 2012, now eclipse those in the US, where consumers bought more than 15 million vehicles. Now the world’s biggest car market has declared a new goal: China wants to have the largest number of electric cars.

Will the Global Economy Add Up?
Lawrence H. Summers (Project Syndicate) Jan 21, 2013
While 2013 will not be a banner year for the global economy, it may nonetheless come to be viewed as the first year of the post-crisis period. The main danger is that around the world there seems to be far more planning for export-led growth than acceptance of reduced competitiveness and increased imports.

National Drift or Global Mastery
Gordon Brown (Project Syndicate) Jan 21, 2013
More than four years into the global financial crisis, the G-20's call in 2009 for a global growth compact remains unmet. Indeed, despite clear signs of change, there is little optimism about growth – and frequent talk of a lost decade – because slow growth requires a global solution, which has not been forthcoming.

The People Chase
Dennis Nally (Project Syndicate) Jan 21, 2013
While there have never been so many educated and mobile people in the world, recruiting the right ones – and getting them to where they are needed most – is more difficult than ever. The reason is that emerging markets' rise is creating chronic skills gaps and labor-market mismatches.

A Roadmap to Global Electrification
Brian Dames (Project Syndicate) Jan 21, 2013
An international initiative, called the “Electrification Roadmap,” is underway to connect 500 million people in developing countries to modern energy services by 2025. Electricity powers not only industrial development, but social and economic progress more broadly, and is crucial for lifting families and communities out of poverty.

Closing the Global Opportunity Gap
Brad Smith (Project Syndicate) Jan 21, 2013
Around the world, new job opportunities offer the promise of prosperity, but hundreds of millions of people are locked out because they lack the necessary education and skills. Unless current trends are reversed, this opportunity gap will deepen, creating even greater income disparities and stifling global economic recovery.

The Global Economy’s New Path
Zhu Min (Project Syndicate) Jan 21, 2013
Whether we like it or not, the world around us is in a state of constant change. But recent economic trends suggest that this change may be shifting its direction in a fundamental way, with external factors coming to play a larger role in output changes in advanced and developing countries alike.

Globalization’s European Test
Yannos Papantoniou (Project Syndicate) Jan 21, 2013
The eurozone’s sovereign-debt crisis represents a significant challenge for Europe and the global economy. But it is also an opportunity: overcoming the challenge will not only contribute to a sustained global economic recovery, but will also test our capabilities to control the dangers of globalization.

Saving the Euro, Dividing the Union
R. Daniel Kelemen (FA) Jan 21, 2013
The collapse of the eurozone no longer seems likely, thanks to its members' decisions to coordinate their fiscal policies more closely. But it is exactly that tighter integration that has made many Euro-skeptic Brits want to opt out of the EU altogether.

Berlin and Paris need a relationship reset
Joachim Bitterlich (FT) Jan 21, 2013
The goal has to be to foster in a pragmatic way a European federation – or community – of nations.

Proactive policing needed for bankers
Patrick Jenkins (FT) Jan 21, 2013
Behavioural controls cannot simply be reactive or standardised. Rogue traders and mis-sellers can game a system.

Economic self-interest won’t aid recovery
Satyajit Das (FT) Jan 21, 2013
Autarky is a natural way to help in the management of competitive pressures but the trend will destroy market forces and create social tensions.

America’s debt dilemma: A looming crisis
Robin Harding (FT) Jan 21, 2013
In the first of a series, an examination of the long-term fiscal challenges that will shape the nature of the US in the 21st century.

Why financial markets are inefficient
Roger E. A. Farmer (VoxEU) Jan 22, 2013
The efficient market hypothesis – in various forms – is at the heart of modern finance and macroeconomics. This column argues that market efficiency is extremely unlikely even without frictions or irrationality. Why? Because there are multiple equilibria, only one of which is Pareto efficient. For all other equilibria, the whims of market participants cause the welfare of the young to vary substantially in a way they would prefer to avoid, if given the choice. This invalidates the first welfare theorem and the idea of financial market efficiency. Central banks should thus dampen excessive market fluctuations.

Putting time and space back into finance
Biagio Bossone (VoxEU) Jan 22, 2013
Has unconsidered use of technology and exasperated market competition carried finance way afar from its original purpose, i.e. to serve the economy? This column offers a set of simple suggestions for complex interventions on the financial regulatory world. It suggests incentives be designed to lead financial institutions to place people’s real economic needs at the core of their mission, thus humanising finance.

Beggar Thy Currency Or Thy Self?
Mohamed A. El-Erian (Project Syndicate) Jan 22, 2013
One need not be an economist to figure out that, while all currencies can depreciate against something else (like gold, land, and other real assets), by definition they cannot all depreciate against each other. Yet, when push comes to shove, country after country is being dragged into a negative dynamic of competitive depreciation.

Why Stimulus Has Failed
Raghuram Rajan (Project Syndicate) Jan 22, 2013
The world suffers from a shortage of aggregate demand relative to supply, but more monetary and fiscal stimulus has done little to revive growth and employment. That is because years of a debt-fueled boom left behind an economy that supplies too much of the wrong kind of good relative to the changed demand.

Searching for Growth in a Low-Growth World
Austin Graff (PIMCO) Jan 22, 2013
We believe corporate profit growth will fall short of sell-side consensus estimates. But companies with inflation-linked revenues and supply side advantages to drive revenue growth, and those with ample cost levers to improve margins, are positioned for sustained earnings growth in the New Normal.

A Free Money Miracle?
Jonathan Goodwin (Mises Daily) Jan 22, 2013
The "Miracle of Wörgl," refers to the story of currency demurrage and the impact it had on the economy of Wörgl, a small town in Austria. For a bill of such currency to retain its face value, the currency holder must pay a regular, periodic payment (a tax) for a stamp or other marking. Wörgl is regularly touted by advocates of demurrage as a successful implementation of such a currency, one designed to encourage velocity due to the incentive to spend it in order to avoid the periodic tax.

A New Year of Global Conflict
Javier Solana and Ian Bremmer (Project Syndicate) Jan 22, 2013
Conflicts are much more likely to arise or persist when those with the means to prevent or end them cannot or will not do so. Unfortunately, this will be borne out in 2013.

Outsourcing tide is not likely to turn
James Crabtree (FT) Jan 22, 2013
Western hopes that activity lost to Asian will return have been boosted by a trickle back, but as eastern economies adapt, a flood looks unlikely Read more >>

Exports Sagging? Try Some Free Trade
Matthew Slaughter (WSJ) Jan 22, 2013
The president did little to open markets during his first term. Here's hoping for the second one.

China's Information Challenge
Ian Bremmer (NYT) Jan 22, 2013
2013 will be about the increasingly free flow of ideas inside China, and the anxiety it creates for its leaders.

Schumpeter's long revenge
Chan Akya (AT) Jan 23, 2013
The recent demise of various high-profile companies, including HMV and Blockbuster, highlights the benefits of creative destruction, while posing uncomfortable parallels where non-market forces interrupt this process. While the French keep their industrial giants like Peugeot alive, capital thus wasted will add inexorably to longer-term liabilities.

Reinvigorating the trade policy agenda: Think supply chain!
Bernard Hoekman & Selina Jackson (VoxEU) Jan 23, 2013
The revolution in manufacturing – increasingly known as ‘global value chains‘ – has changed the world of trade policy as much as it has changed the global industrial landscape. This column discusses new research suggesting that border management and transport and telecommunications infrastructure services matter far more than trade tariffs. Improving infrastructure and management would increase global GDP far more than the complete elimination of tariffs. However, it won’t be easy. Tackling supply chain barriers will require dynamic and responsive national and international trade policymaking procedures that are more in step with industrial practices.

The Unloved Dollar Standard
Ronald McKinnon (Project Syndicate) Jan 23, 2013
The US dollar's role as international anchor is faltering, as emerging markets become frustrated by the Fed’s near-zero interest-rate policy and the US protests other countries' exchange-rate policies, especially China's. But such conflicts are generating ill will, while shrouding the real problem: America's huge fiscal deficit.

Modest Growth Pickup in 2013, Projects IMF
IMF Survey Jan 23, 2013
Global growth will strengthen gradually in 2013, says the IMF in an update to its World Economic Outlook (WEO), as the constraints on economic activity start to ease this year. But the recovery is slow, and the report stressed that policies must address downside risks to bolster growth.

WTO Members Look to Davos for Early Signals on Bali, Director-General's Race
Bridges Weekly Trade News Digest, Volume 17, Number 2 Jan 23, 2013
The annual World Economic Forum officially kicked off today in the Swiss mountain resort of Davos, against the backdrop of a tentative global economic recovery that many warn could still be at risk in the months ahead. Among the various events slated during the five-day gathering is the traditional meeting of trade ministers on the conference sidelines, where officials are expected to discuss possible next steps in preparing for the WTO's December ministerial in Bali, Indonesia. Several candidates for the role of WTO Director-General are also expected to be present at Davos, as the race to run the Geneva-based trade body gets underway.

EU Trade Talks with India, Canada Nearing Finish Line, Officials Say
Bridges Weekly Trade News Digest, Volume 17, Number 2 Jan 23, 2013
The European Union is on the brink of clinching trade deals with both Canada and India, officials have said over the past week. The negotiations for both of these high-profile agreements have faced a series of hurdles and delays in the past, with Brussels launching talks with New Delhi over five years ago and with Ottawa in May 2009.

Dollar to emerge stronger in new policy era
Mansoor Mohi-uddin (FT) Jan 23, 2013
As the world’s central banks change course, foreign exchange investors will need to do so too.

When soft power fails
John Feffer (AT) Jan 24, 2013
China's attempts to expand its influence through soft-power are being undermined in Asia by hard-power posturing. The US, reluctant to reevaluate its own "soft power" when it seems so obviously a fig leaf for the assertion of military dominance, should consider China's failed efforts, while aspiring Japan and South Korea should also take note: you rarely can have it both ways.

The growth effects of democratisation: New evidence
Caroline Freund & Mélise Jaud (VoxEU) Jan 24, 2013
The Arab world is undergoing a major political transition. The final outcomes of the changes are far from certain. Nevertheless, there have been and will continue to be economic consequences from the moves towards democracy. This column looks at 90 attempts at transition and finds that countries with rapid transitions, irrespective of whether they are successful or failed, experience swift recoveries and a long-run growth dividend of about one percentage point relative to pre-transition growth levels.

Climate-Change Misdirection
Bjorn Lomborg (VoxEU) Jan 23, 2013
Fear-mongering exaggeration about effects of global warming distracts us from finding affordable and effective energy alternatives.

Writing the Future
Jeffrey D. Sachs Jan 24, 2013
More than we know (or perhaps care to admit), the future is a matter of human choice. So, will living standards rise worldwide, as today’s poor countries leapfrog technologies to catch up with richer countries, or will greed and corruption lead us to degrade the natural environment on which human well-being depends?

Germany’s Gold Delusion
Simon Johnson (Project Syndicate) Jan 24, 2013
For the first time since official gold transactions became more transparent, the Bundesbank has given notice that a significant portion of its holdings will be transferred home from France and the United States. Ostensibly, this is just a matter of monetary housekeeping, but why now?

Cooling our planet
Jim Yong Kim (WP) Jan 24, 2013
World leaders must work together to avert a climate catastrophe.

World is right to worry about US debt
Kenneth Rogoff (FT) Jan 24, 2013
America is confronted by serious questions that have a direct bearing to its responsibilities at home and abroad.

Information asymmetry raises the cost of capital for corporations
James Choi & Hongjun Yan (VoxEU) Jan 25, 2013
Security-market regulations often seek to ensure that all investors have equal access to information about each company. But what are the actual costs of an unequal information playing field? This column reviews evidence from China, Finland, and the US, suggesting that information asymmetry raises companies’ cost of capital. This inhibits investment and thereby long-run economic growth.

Is the United States Yearning for Systemic Uncertainty?
Stephan Richter (Globalist) Jan 25, 2013
U.S. businesses like to talk about the need for long-term certainty. But when it comes to the long-term challenge of climate change, they insist that the short-term impact on jobs, investment and profits is far too great. Rather than relying on the United States to lead, other countries are now finding their own ways to engineer meaningful change.

Brexit, Voice, and Loyalty
Harold James (Project Syndicate) Jan 25, 2013
Albert Hirschman was a great economist with a gift for producing striking insights that transformed our view of a whole range of particular problems. One of his most far-ranging insights was his framework of “exit, voice, and loyalty,” which helps to explain the dilemma of today's EU.

The Return of the Trading City
Alan Berube (Project Syndicate) Jan 25, 2013
Although cities have enabled trade for more than 2,000 years, policymakers often neglect them when devising national trade policies. But supporting cities that are working to improve their competitive position by investing, organizing, and forging linkages with other cities is the key to long-term prosperity.

My Plan to Fix The World's Biggest Problems
Bill Gates (WSJ) Jan 25, 2013
From the fight against polio to fixing education, what's missing is often good measurement and a commitment to follow the data. We can do better. We have the tools at hand.

Technological extinction: Only the digital dies
Economist Jan 26, 2013
The newest technologies look most likely to vanish; the oldest may always be with us.

The world economy: Semi-rational exuberance
Economist Jan 26, 2013
The world economy is improving. But not as much as some investors seem to think.

China’s population: Peak toil
Economist Jan 26, 2013
In the first of two articles about the impact of China’s one-child policy, we look at the shrinking working-age population.

Unfinished reform threatens Chinese growth
Ligang Song (EAF) Jan 27, 2013
At 7.8 per cent, China’s GDP growth rate in 2012 was slightly higher than the target rate of 7.5 per cent set by the government earlier in the year; its average consumer price index fell to less than 3 per cent, one percentage point lower than the government target; and its industrial value-added output increased by 10 per cent.

Euro and trade will make EU irrelevant
Wolfgang Münchau (FT) Jan 27, 2013
With development of a eurozone economic union and a transatlantic free-trade zone, the benefit of EU membership loses appeal.

The cost of China’s sprawling cities
Simon Rabinovitch (FT) Jan 27, 2013
An analysis of the fast but flawed urbanisation underpinning much of the country’s growth is both cogent and colourful.

How to Break the Tyranny of Oil Wealth
Mary Anastasia O'Grady (WSJ) Jan 27, 2013
If Chavez believes the nation's oil billions belong to the people, why not give it to them directly?

Why Deleveraging Still Rules Markets in 2013
A. Gary Shilling (Bloomberg) Jan 27, 2013
I have structured my investment themes for 2013 in two ways. The first is geared toward the current “risk on” climate, even though I doubt it will endure. The other is a “risk off” scenario that I believe will unfold once investors recognize the unsustainability of what I call the Grand Disconnect between robust securities markets and subdued economic reality.

Government debt in the emerging markets – a comparative view
Markus Jaeger (DB Research) Jan 28, 2013
Governments in the advanced economies are facing sizeable short-, medium- and long-term debt sustainability challenges. By contrast, government debt in the EM has been trending down due to a combination of solid economic growth, low interest rates and, generally speaking, sustainable fiscal policies. More specifically, gross general government debt is set to remain stable or will decline only minimally over the next five years.

Financial Stars Behind Bars?
Luigi Zingales (Project Syndicate) Jan 28, 2013
Hardly a day goes by without a financial settlement between a bank and a US government agency, which invariably brings an end to the investigation. But recent academic research points to widespread, purposeful misrepresentation by banks, highlighting the need to address the industry's culture of deception by prosecuting wrongdoers.

Broader Sources of Growth Can Boost Asian Frontier Economies
IMF Survey Jan 28, 2013
To continue on the path to becoming emerging market countries, Asian frontier economies need to broaden sources of growth beyond natural resource wealth or agriculture, a Bangkok conference hears. Delegates note that Asia is already more diversified than Africa and the Middle East.

The ECB: The Last Central Bank Standing?
Jacob Funk Kirkegaard (PIIE) Jan 28, 2013
In recent months, it has looked as if all the major nominally independent central banks in advanced economies are committed to, or seriously contemplating, intervention in the markets to lower the value of their currencies. Excluding commodity exporters like Canada, Australia, and Norway, everyone is on board—except the European Central Bank (ECB).

The End of Hunger and Malnutrition
José Graciano da Silva (Project Syndicate) Jan 28, 2013
The UN Food and Agricultural Organization has decided that its goal will no longer be merely to reduce hunger, but rather to eradicate hunger, food insecurity, and malnutrition altogether. Achieving it will be a formidable challenge, though not as daunting as it seems.

A conspiracy of reasonable people
Gideon Rachman (FT) Jan 28, 2013
If China stops playing by Davos rules, then the golden years of the World Economic Forum will be over.

Eurozone banking union is deeply flawed
Hans-Werner Sinn and Harald Hau (FT) Jan 28, 2013
The rescue mechanism ignores a very significant danger.

Central banks must not ignore inflation
Gerard Lyons (FT) Jan 28, 2013
In an era of growth targeting, policy makers in emerging and western economies must not take price pressures for granted.

Markets: Back in the zone
Ralph Atkins and Mary Watkins (FT) Jan 28, 2013
There is an increasing belief that the danger of a eurozone break-up has passed but will it last?

The Conscience of a Radical
Bret Stephens (WSJ) Jan 28, 2013
Greece's Alexis Tsipras is right to challenge the European Union's toxic consensus.

Dollar Thrives in Age of Competitive Devaluations
A. Gary Shilling (Bloomberg) Jan 28, 2013
In periods of prolonged economic pain -- notably the 2007-2009 global recession and the ensuing subpar recovery -- international cooperation gives way to an every-nation-for-itself attitude. This manifests itself in protectionist measures, specifically competitive devaluations that are seen as a way to spur exports and to retard imports.

Lower Rates Push Yield Seekers to Higher Risk
A. Gary Shilling (Bloomberg) Jan 29, 2013
In recent years, a grand disconnect has opened between economies around the world, which are growing anemically if at all, and the bullishness of investors who only care that central banks are willing to continue shoveling out liquidity.

Relaunching the European Convergence Machine
Martin Raiser (Globalist) Jan 29, 2013
Over the past several decades, the economic unification of Europe has helped lift 100 million people in Southern Europe and another 100 million in the East nearer to the income levels of the North. With the right structural reforms, this powerful machine can be restarted for the benefit of current and future EU members.

Diversifying Russia
Simon Commander & Alexander Plekhanov (VoxEU) Jan 29, 2013
Russia aims to diversify its economy and reduce its dependence on natural resources. Despite laudable aims, this column argues that progress has been sluggish. Longstanding obstacles of corruption, low business-entry rates and weak competition afflict other countries that, like Russia, are in transition. Yet Russia comes pretty much bottom of the class. Crucially, the fact that economic diversification requires improvements to education and skills acquisition has been somewhat overlooked by the state. What attempts the state has made, such as supporting technology innovation, appear to have been ineffectual and, at times, counterproductive. Going forward, Russia would do well to focus on improving incentives for market-relevant research and development, complemented by private sector-led sources of finance for early-stage firms.

Chronic Europe
Gene Frieda (Project Syndicate) Jan 29, 2013
Europe’s great success in 2012 was to avoid becoming another of history's failed monetary unions. But, having escaped the markets' wrath, have Europe's political leaders again chosen to muddle through, rather than meld a resilient strategy?

China’s Last Soft Landing?
Stephen S. Roach (Project Syndicate) Jan 29, 2013
On the surface, the Chinese economy's resilience has been impressive – the first to recover, as Chinese leaders always want to remind the rest of the world. But, beneath the surface, the economy risks losing its capacity for resilience unless the authorities accelerate the transition to a more consumer-led economy.

The Asian Sleepwalkers
Yoon Young-kwan (Project Syndicate) Jan 29, 2013
Whether East Asia’s leaders like it or not, the region’s international relations are more akin to nineteenth-century European balance-of-power politics than to the stable Europe of today. Will the lack of an adequate regional security structure cause East Asian countries to blunder, like Europe prior to 1914, into a major disaster?

The Transparency Conspiracy
Ivan Krastev (Project Syndicate) Jan 29, 2013
One of the most troubling outcomes of the ongoing financial crisis has been a collapse of trust in democratic institutions and politicians. But those who insist that the solution consists in greater government transparency could end up making the problem worse.

Putting geopolitics back at the trade table
Pascal Lamy (WTO) Jan 29, 2013
While the world is mutipolarising at an unprecedented scale and speed, and production and trade value chains are multilateralising, trade governance seems to be bilateralising. We risk scattering the level playing field.

A perilous journey to full recovery
Martin Wolf (FT) Jan 29, 2013
There are reasons to be optimistic about the future. A key to success everywhere will be timing the exit from exceptional policies.

China’s banks are too big to manage
Yukon Huang (FT) Jan 29, 2013
A radical action would be to break up the big four into three regional banks to foster competition and improve governance.

Central bank hot air pumps up bond bubble
John Plender (FT) Jan 29, 2013
Exuberance in the equity market has raised questions over US Treasury bond yields, but will that put a brake on further appreciation in equities?

Here We Go Again, Underpricing Europe Debt Risk
Nicholas Spiro (Bloomberg) Jan 29, 2013
Over the past six months, market sentiment toward the euro area has swung spectacularly from panic to growing confidence.

‘No gain without pain’: Antidumping protection hurts exports
Jozef Konings & Hylke Vandenbussche (VoxEU) Jan 30, 2013
The rise of international production sharing – ‘global value chains’ – has transformed international commerce and pushed economists into new territory. This column argues that there is evidence to suggest that old-fashioned protection can have an unexpected negative effect on firms that are part of a global value chain. In an increasingly globalised world, exporters’ success seems to positively depend on the free entry of imports rather than the other way round.

Central banks walk inflation’s razor edge
Charles Goodhart (FT) Jan 30, 2013
Those changing the monetary policy regimes risk achieving short-term benefits that are then dwarfed by long-term pain.

Mexico: Aztec tiger
Adam Thomson (FT) Jan 30, 2013
The country has emerged from Brazil’s shadow to become the darling of investors but Enrique Peña Nieto still faces formidable challenges.

The Real, and Simple, Equation That Killed Wall Street
Chris Arnade (SciAm) Jan 30, 2013
“If it weren’t for those meddling kids!” That was the punch line for every Scooby Doo episode. It also is the overly simple narrative that many in the media have spun about the last financial crisis. Smart meddling kids armed with math hoodwinked us all.

Trade Ministers at Davos Press for "Meaningful Results" in Bali
Bridges Weekly Trade News Digest, Volume 17, Number 3 Jan 30, 2013
WTO members should take stock at Easter on whether "meaningful results" at their upcoming December ministerial in Bali are possible, trade ministers from over 20 members said following an informal meeting last week in Davos. The gathering was held on the sidelines of the Annual World Economic Forum, where business leaders and policymakers gathered to review the tentative signs of recovery in the world economy. Trade, in particular, was a recurring topic during the five-day discussions, as speculation continues over the possible launch of US-EU negotiations amid the ramping up of the race for the new WTO head.

WTO Authorises Antigua to Move Forward on Retaliation in US Gambling Dispute
Bridges Weekly Trade News Digest, Volume 17, Number 3 Jan 30, 2013
On Monday, the WTO Dispute Settlement Body (DSB) authorised Antigua and Barbuda to retaliate against US intellectual property (IP), as part of their longstanding dispute regarding internet gambling services (DS285). However, it remains unclear what kind of measures will be put in place by the Caribbean nation, with experts suggesting US music and film industries as possible targets of the future retaliatory sanctions.

Where to Invest While Markets Remain 'Risk-On'
A. Gary Shilling (Bloomberg) Jan 30, 2013
In today’s markets, investors’ zeal for yield and disregard for risk favors the junkiest of the junk.

How Markets Could Shift to 'Risk Off'
A. Gary Shilling (Bloomberg) Jan 31, 2013
The huge deleveraging in private sectors in the U.S. and elsewhere, the unresolved frictions between northern and southern nations in the euro area and the needed shift in China to a domestically driven economy suggest that the current “risk-on” investment environment may collapse.

China and the end of extrapolation
George Magnus (VoxEU) Jan 31, 2013
In 2013, China is at an important crossroads in its economic development. This column argues that we cannot continue to extrapolate from China’s recent economic record. If growth is to remain high and stable, choosing the right course will require nothing less than a significant change in China’s economic model, brought about by what might be the most important political reforms since the 1980s. Whether or not its growth performance tips it into the middle-income trap depends on engaging with and implementing widespread reforms that may be incompatible with the primacy of the Communist Party.

Current-account rebalancing and international transfers (immaculate or not)
Giancarlo Corsetti, Philippe Martin & Paolo Pesenti (VoxEU) Jan 31, 2013
Current-account imbalances in Europe are at the heart of the crisis .This column argues that relative price adjustment need not be as dramatic as some observers claim. In order to foster rebalancing, policy should target obstacles to firms' entry, startup costs, and the incentives for product differentiation, letting relative prices and wages adjust in equilibrium. Setting up firms and new production lines is costly and in the current circumstances, policy should also address tight credit constraints on investment and firms’ activity.

The Millennium Development dilemma: What to target after 2015
Thomas Nah (Al Jazeera) Jan 31, 2013
To end poverty in Liberia, good governance and anti-corruption must be guiding principles.

Corporate bond issuance in Europe: Where do we stand and where are we heading?
Orcun Kaya and Thomas Meyer (DB Research) Jan 31, 2013
High investor demand is fuelling corporate bond issuance in the EU. Deleveraging in some countries and the fact that some banks are paying roughly the same or even higher rates for their refinancing than their customers no doubt has pushed corporate debt markets. But the main driver for the high issuance volumes seems to be investors’ search for yield in a low interest rate environment. As sovereign bonds are offering historically low yields, corporate bonds have turned into a significant investment alternative in the present market conditions. However, in an era of Knightian uncertainty and high liquidity, strong growth in corporate bond market calls for attention to potential overheating.

Greece, Portugal, Spain become more competitive
Antonia Oprita (EM) Jan 31, 2013
The crisis forced the troubled eurozone economies to fire workers and cut salaries and this is boosting their competitiveness, a study shows

China’s Narrowing Policy Horizons
Yu Yongding (Project Syndicate) Jan 31, 2013
China's economic revival since the third quarter of 2012 should come as no surprise: as long as the government has room to wield expansionary monetary and/or fiscal policy, faster growth is always only a matter of time. But China's rapidly rising money supply and weakening fiscal position now threaten to change that for good.

Grand Mal Economics
J. Bradford DeLong (Project Syndicate) Jan 31, 2013
Industrial market economies have been suffering from periodic financial crises, followed by high unemployment, at least since the Panic of 1825, so we have had nearly two centuries since then to figure out how to deal with them. Why, then, have governments and central banks failed this time around?

Be Very Afraid When Fear Disappears From Markets
Dean Curnutt (Bloomberg) Jan 31, 2013
These days, many indicators suggest we are in an extremely low-risk market environment. The Chicago Board Options Exchange Volatility Index, or VIX, sometimes known as the fear index, has reached a five-year low. European sovereign-bond yields, long a source of anxiety, have eased since their uncomfortable march higher in 2011, and the euro has risen 13 percent from its 2010 low.

Markets: The road to redemption
Robin Wigglesworth (FT) Jan 31, 2013
Since the crises of the 1990s, leading emerging markets have done much to combat ‘original sin’ – the inability to raise funds in local currency bonds – but threats to stability still linger.

Gazprom posturing masks Russia’s weakness
Neil Buckley (FT) Jan 31, 2013
Energy group’s spat with Ukraine highlights how Russian energy dominance is under threat from regulatory and competitive challenges

Gloomsters buried the euro too soon
Philip Stephens (FT) Jan 31, 2013
An examination of where the pessimists erred provides pointers to the future of the eurozone and the shape of Europe.

Looking for Mr. Goodpain
Paul Krugman (NYT) Jan 31, 2013
Where are the austerity successes? Britain? Ireland? Keep looking.

The Fall and Rise of the West
Roger C. Altman (FA) Feb 1, 2013
Why America and Europe will emerge stronger from the financial crisis.

Japan's Demographic Disaster
John W. Traphagan (Diplomat) Feb 1, 2013
Japan is faced with an unprecedented population challenge that will have social, economic, and political consequences for years to come.

The Two Rabbits of International Trade
Taeho Bark (Project Syndicate) Feb 1, 2013
If you chase two rabbits at once, the old saying goes, both will escape. This idea matters a lot in trade policy, which must simultaneously seek to harness the economic benefits of greater openness and to ensure that those benefits are distributed fairly.

Europe’s Hidden Stimulus
Eric Labaye (Project Syndicate) Feb 1, 2013
When the European Council next meets, on February 7, it should look at private investment as a means to kick-start Europe’s stagnant economy. With the usual drivers of GDP growth constrained across Europe, the one economic sector able to spend is the non-financial corporate sector.

Is the Euro Crisis Over?
Jean Pisani-Ferry (Project Syndicate) Feb 1, 2013
Three years ago, the euro crisis began when Greece became a cause for concern among policymakers and a cause for excitement among money managers. Does the armistice that has prevailed since the end of 2012 mean that the crisis is over?

Banking and the State
Thorsten Polleit (Mises Daily) Feb 1, 2013
The founder of the Medici banking dynasty, Giovanni di Bicci de' Medici (1360–1429), said to his children on his death bed: “Stay out of the public eye.”[1] His words raise the question, "How much do bankers know about the truth of modern money and banking?" To develop a meaningful answer to this question in the tradition of the Austrian School of economics, one has to start right at the beginning, and that is with the process of civilization.

The Big Mac index: Bunfight
Economist Feb 2, 2013
The burger's verdict on the currency wars.

Northern lights
Adrian Wooldridge (Economist) Feb 2, 2013
The Nordic countries are reinventing their model of capitalism.

World Economy Is Far From Safe, a Canadian Economist
Jeff Sommer (NYT) Feb 2, 2013
A Canadian economist compares the world economy to "a car being driven by a drunk" this is maybe only momentarily staying in the correct lane.

Macroeconomics and the financial cycle: Hamlet without the Prince?
Claudio Borio (VoxEU) Feb 2, 2013
Since the early 1980s, the financial cycle has re-emerged as a major force driving the macroeconomy, but economic analysis has not caught up. This column argues that macroeconomics without the financial cycle is like Hamlet without the Prince. Economic analysis and policies – monetary, fiscal, and prudential – should be adjusted to fully account for the financial cycles, but here more analytic work is needed. The question of how we address the bust and balance-sheet recession that follow the boom deserves special attention.

The eurozone crisis is not finished
Wolfgang Münchau (FT) Feb 3, 2013
The renationalisation of banking means that the monetary union is as unsustainable today as it was in July last year.

How Berlin and Beijing tilted world trade
Stefan Wagstyl (FT) Feb 3, 2013
In pinning the blame on surplus countries’ policies, a bearish analysis of the global economy overlooks the role of history. A review of ‘The Great Rebalancing’ by Michael Pettis.

Emperors of Banking Have No Clothes
Anat Admati and Martin Hellwig (Bloomberg) Feb 3, 2013
There is a pervasive myth that banks are different -- special, somehow -- from all other companies and industries in the economy. n fact, many claims made by leading bankers and banking experts, including academics, have as much substance as the emperor’s new clothes.

Bankers' Arguments on Capital Are Fundamentally Flawed
Anat Admati and Martin Hellwig (Bloomberg) Feb 4, 2013
Wouldn’t it be nice if there was a way to make banks safer, healthier and able to lend more? There is a way, and it’s called equity.

IMF Shows U.S. How to Restrict Foreign Capital
Joseph E. Gagnon (Bloomberg) Feb 4, 2013
The U.S. isn’t expected to return to full employment for at least six more years, and the consensus in Washington seems to be that President Barack Obama’s administration has no options to improve that dreary outlook.

Ethnic inequality
Alberto Alesina, Stelios Michalopoulos & Elias Papaioannou (VoxEU) Feb 4, 2013
A large body of research has shown ethnic diversity to have a negative impact on development. This column suggests that it is the unequal concentration of wealth across ethnic lines that is detrimental for development rather than diversity per se. It shows that ethnic inequality, measured using ethno-linguistic maps and satellite images of light density at night, is associated with lower GDP per capita, worse living conditions, and lower levels of education.

Drugs: the new alternative economy of West Africa
Anne Frintz (La Monde Diplomatique) Feb 4, 2013
West Africa's perfect global positioning between South America and Europe, and its endemic corruption, poverty and disorganisation, have made it the new drug hub. And drugs money is used to fund politics.

The Measurement of Hope
Bill Gates (Project Syndicate) Feb 4, 2013
The lives of the world’s poorest people have improved more rapidly in the last 15 years than ever before, and could improve even more in the next 15 years. The key is innovation in the measurement of governmental and philanthropic performance – setting clear goals, picking the right approach, and then measuring the results.

Blaming the Fed
Kenneth Rogoff (Project Syndicate) Feb 4, 2013
Critics of the Federal Reserve are having a field day with embarrassing revelations of its risk assessments on the eve of the financial crisis. But, while it is legitimate to criticize individual policymakers, their poor judgment does not impugn the entire institution.

Iceland: Under the volcano
Richard Milne (FT) Feb 4, 2013
The economy of the Nordic island is recovering from the financial crisis but its residents bear the scars of four years of hardship.

A crisis needs a firewall not a ringfence
Alistair Darling (FT) Feb 4, 2013
Ringfencing – even with electrification, whereby regulators will have the power to break up a bank – has its limits.

QE takes a toll on emerging economies
Felipe Larrain (FT) Feb 4, 2013
The main burden of quantitative easing is borne by a few developing countries but is globally counterproductive.

Investor appetite for cocos is fragile
Patrick Jenkins (FT) Feb 4, 2013
Barclays’ head start in issuing contingent capital bonds has heightened the keenness of other European banks to follow suit, but problems are brewing.

Brace for a stock market accident
Jamil Baz (FT) Feb 4, 2013
Who can blame the equity bullish consensus? But leverage is the fly in the ointment and the next deleveraging could signal the next major bear market.

Austerity in Small Places
Daniel Gros (Project Syndicate) Feb 5, 2013
Nowadays, Greece, the Baltic states, and Iceland are often invoked to argue for or against austerity. Both sides in these disputes usually omit to mention the key idiosyncratic characteristics and specific starting conditions that can make direct comparisons meaningless.

Euro: Rock Star of the Year?
Axel Merk (Merk Investments) Feb 5, 2013
After we referred to "Draghi's Genius" last August we received pity and ridicule as feedback. It is no longer taboo to be bullish on the euro, but in our 2013 outlook we took it a step further, predicting the euro will be a "rock star." Despite the recent run-up, we may not have seen anything yet. Let me explain.

A Post-Growth World?
Ashoka Mody (Project Syndicate) Feb 5, 2013
Long-term growth considerations, while recognized as crucial, seem distant from the here and now of financial repair and restoration of confidence. But a realistic assessment of growth prospects is precisely what is needed right now to design appropriate and feasible policies.

Must Financial Reform Await Another Crisis?
Anat Admati and Martin Hellwig (Bloomberg) Feb 5, 2013
We have argued that if banks had much more equity, the financial system would be safer, healthier and less distorted. From society’s perspective, the benefits are large and the costs are hard to find; there are virtually no trade-offs.

Japan can put people before profits
Martin Wolf (FT) Feb 5, 2013
The economy will achieve a better balance by taking surplus earnings away from a corporate sector that has proved unable to use them.

Be afraid, very afraid, of the tech crisis
Andre Geim (FT) Feb 5, 2013
Social media make many people very happy and some very rich but will not save the planet from an incoming cosmic rock.

Mining: Andean concessions
Andres Schipani (FT) Feb 5, 2013
As Peru seeks to challenge Chile’s copper dominance, Lima must soothe disputes between indigenous communities and mining companies.

A New U.S. International Economic Strategy
Robert Zoellick (WSJ) Feb 5, 2013
Taking the lead on trade and open markets can enhance global security, opportunity and the prospects for liberty.

Resolve the Real Greek Crisis
Edward P. Joseph and Anna Triandafyllidou (NYT) Feb 5, 2013
Greeks need to face up to the fact that you can't get something for nothing forever.

How free trade with Europe could ignite the economy
Bill Horan (WT) Feb 5, 2013
U.S. Trade Representative Ron Kirk confirmed recently that he's leaving Washington for the private sector. He deserves praise for the Obama administration's major achievement on trade: final approval of free-trade agreements with Colombia, Panama and South Korea that had been negotiated by President Bush and his trade representatives but languished in Washington for years.

Latvia’s Parliament Votes for the Euro
Anders Åslund (PIIE) Feb 5, 2013
On Febuary 31, the Latvian parliament gave final passage to a law applying for adoption of the euro. The vote was 52 to 40. The Latvian government will now submit an application to the European Union in February, and the European Commission will then prepare a report assessing whether Latvia is ready to join the euro area.

Woeful governance for global issues
Hossein Aghaie (AT) Feb 5, 2013
International migration and global environmental change pose formidable challenges for policymakers the world over and the two issues are inextricably intertwined like never before. Yet a well-coordinated and multi-level system of governance to overcome state-centric approaches is sorely lacking.

Complacency in a Leaderless World
Joseph E. Stiglitz (Project Syndicate) Feb 6, 2013
In the last 25 years, we have moved from a world dominated by two superpowers to one dominated by one, and now to a leaderless, multi-polar world. While we may talk about the G-7, or G-8, or G-20, the more apt description is G-0. We will have to learn how to live, and thrive, in this new world.

Latin America’s Unfinished Quest
Andres Velasco (Project Syndicate) Feb 6, 2013
The Latin American countries that have performed the best in recent decades are those that have steered clear of both right-wing zealotry and left-wing populism. So why haven’t countries like Brazil and Chile become modern, center-left development models for the region?

Questions Linger As EU, US Consider Launching Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
Top officials from both the US and EU have been meeting over the past week to discuss the possibility of launching bilateral trade talks, leaving observers and analysts to speculate whether the long-awaited announcement might soon be on the horizon. However, questions remain over whether the two sides will be able to resolve long-standing differences that have blocked such negotiations in the past.

Services Talks Within WTO Member Group Advance, Eyeing Launch of Formal Negotiations
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
Talks regarding a planned services plurilateral agreement have continued advancing, sources have confirmed to Bridges. Participants of the 21 member group met in Geneva last week to address a series of technical issues relating to the planned trade pact, including ways to schedule commitments, a date for discussing possible legal texts for the deal, and a work plan for 2013.

Monrovia Meeting Stresses Poverty Eradication, Equity for Post-2015 Agenda
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
A UN group tasked with defining a new post-2015 development agenda completed their second substantive meeting last week in Monrovia, Liberia focusing on the theme of "National Building Blocks for Sustained Prosperity." Civil society was also actively present, providing their input to the three-day meeting.

WTO Director-General's Race Ramps Up as Candidates Make Their Pitches to Members
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
The nine candidates in the running to become the next WTO Director-General made their cases to members last week on why they are best suited to lead the global trade body, and their visions for the future of the organisation. This Bridges Special Update, originally published on Monday 4 February, is included here in its entirety for your reference.

Laos Joins WTO; Tajikistan Accession Forthcoming
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
The WTO welcomed Laos into its ranks on Saturday, with the landlocked Asian country becoming the 158th member of the Geneva-based trade body. Tajikistan is soon set to follow, with its accession scheduled to take effect on 2 March.

Environment: Frozen frontiers
Pilita Clark (FT) Feb 6, 2013
The melting of Arctic ice has unleashed a surge of diplomatic and commercial activity, and unleashed a scramble to exploit vast oil and gas deposits.

A fine against RBS will not fix Libor
Costas Lapavitsas and Alexis Stenfors (FT) Feb 6, 2013
Guilt has been apportioned and penalties meted out but genuine reform can only come through public scrutiny.

US must avoid shale boom turning to bust
Maria van der Hoeven (FT) Feb 6, 2013
Newly extracted supplies are facing logistical and policy hurdles above ground, something that has to be addressed now.

Commodity prices and growth: A changing relationship?
Lúcio Vinhas de Souza (VoxEU) Feb 7, 2013
Commodity price shocks are frequently considered among the most important potential threats to the global economy. However, since the second half of the 1980s, energy prices have experienced very large changes, with arguably limited effects on global GDP developments. This column presents evidence that oil shocks just aren’t what they used to be when it comes to macroeconomic effects.

The Information Revolution Gets Political
Joseph S. Nye (Project Syndicate) Feb 7, 2013
As computing power has become cheaper and computers have shrunk to the size of a cellphone, the decentralizing effects have been dramatic. But, while the information revolution could, in theory, reduce states’ power and increase that of non-state actors, politics and power are more complex than such technological determinism implies.

The Flight of the European Bumblebee
Indermit Gill and Lúcio V. de Souza (Project Syndicate) Feb 7, 2013
In July 2012, while addressing bankers in London, ECB President Mario Draghi likened the euro to the bumblebee, "a mystery of nature, because it shouldn’t fly but instead it does." In fact, it is well understood how bumblebees fly – and Europe would benefit from applying their method.

Bretton Woods III
Sanjeev Sanyal (Project Syndicate) Feb 7, 2013
Current economic conditions in the US and China imply that the post-crisis global economy will experience a return to large macroeconomic imbalances. Although many economists condemn such imbalances, history shows that they have characterized virtually all periods of global economic expansion.

Egypt’s Economic Siren
Mohamed A. El-Erian (Project Syndicate) Feb 7, 2013
Egypt’s political elite would be well advised to focus on the economic implications of the country's current turmoil. Doing so would lead them to recognize seven compelling reasons why a more collaborative approach to solving Egypt’s problems is in the country’s collective interest, as well as in their own individual interests.

A case to reset basis of monetary policy
Martin Wolf (FT) Feb 7, 2013
The current regime was justified on the basis that it was meant both to stabilise inflation and to help stabilise the economy. It failed.

Finance holds fast to tooth fairy faith
Gary Silverman (FT) Feb 7, 2013
The childhood belief in magical payments in return for discarded teeth appears to linger in financial circles.

African foundations aim for catalytic effect
William Wallis (FT) Feb 7, 2013
It is important to assess whether the work carried out by unaccountable philanthropic groups, and their growing influence, is reliable and effective.

Finance: Buried treasure
Sam Jones (FT) Feb 7, 2013
Frustrated investors are pushing the Cayman Islands, home to most of the world’s hedge funds, for greater transparency but few expect rapid change.

Stop ignoring the online thieves
Richard A. Clarke (WP) Feb 7, 2013
Well-meaning nations should react to cybercriminals who threaten to damage the global economy.

Trade policy and macroeconomic shocks: New evidence from emerging economies
Chad P Bown & Meredith Crowley (VoxEU) Feb 8, 2013
For most of the postwar period, rich nations had much lower average tariffs than developing nations, but they frequently applied variable protection – dumping duties etc. – in reaction to business cycles and exchange-rate movements. Massive, unilateral tariff-cutting by developing nations since the 1990s evened out the averages. This column presents new evidence that emerging economies are now tying variable protection more closely to business cycles and exchange rates – just like the high-income economies.

Making a future for manufacturing in advanced economies
Richard Dobbs (VoxEU) Feb 8, 2013
Surprisingly, manufacturing in some advanced economies is experiencing something of a renaissance. This column argues that the renaissance will unfold in new, unexpected ways. Manufacturing value added will continue to rise, but the impact on jobs will be muted – particularly for the unskilled. A range of innovations has opened a once-in-a-generation opportunity to build new platforms, but better skills and new strategies will be needed.

The Tyranny of Political Economy
Dani Rodrik (Project Syndicate) Feb 8, 2013
An excessive focus on the role of vested interests can easily divert us from the critical contribution that policy analysis and political entrepreneurship can make. The possibilities of economic change are limited not just by the realities of political power, but also by the poverty of our ideas.

Unconventional Policies and Capital Flows
Ben Emons (PIMCO) Feb 8, 2013
Although quantitative easing has grabbed the headlines, a number of central banks around the world have enacted other extraordinary measures in attempts to manage their economies. The Swiss National Bank (SNB), for example, adopted an exchange rate peg versus the euro while increasing its foreign exchange reserves to almost 80% of Swiss GDP. Sweden’s central bank, the Riksbank, established explicit policy rate guidance more than five years ago. The Reserve Bank of New Zealand (RBNZ) has an inflation target range and has applied “flexible inflation targeting”’ for quite some time. And the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) use exchange-rate management to set monetary policy.

India in the Slow Lane
NYT Feb 9, 2013
Reviving the economy requires New Delhi to make hard regulatory reforms.

The economy: Deficit-reduction disorder
Economist Feb 9, 2013
Austerity and economic recovery are bringing down the deficit, but the long-term problem has not been fixed

In India, a Clash of Globalizations Sinks a Litfest
Pankaj Mishra (Bloomberg) Feb 10, 2013
Every Febuary these past few years, some of the world’s leading novelists, historians, philosophers, and sociologists have been drawn to the DSC Jaipur Literature Festival. Quickly outgrowing its modest beginnings in 2006, the event now sets the standard for the many new literary festivals from Brazil to Bali that illustrate what David S. Grewal calls “network power” -- the basic means of emulation and convergence through which cultural and economic globalization proceeds.

Fix Finance by Shedding Light on Its Complexities
Mark Buchanan (Bloomberg) Feb 10, 2013
Economists teach us that a financial market is a powerful technology for processing information. It brings everyone’s knowledge and greed into play, devouring every available scrap of information to achieve optimal risk sharing and put resources to the best possible use.

Arab world: Underfunded renaissance
Roula Khalaf (FT) Feb 10, 2013
Inexperienced Islamist leaders in Egypt and Tunisia are struggling to manage economic grievances that have persisted post-revolution.

What Monte dei Paschi says of banking
Lucrezia Reichlin (FT) Feb 10, 2013
The drama at the Italian lender has broader significance as regards the state of European banking and the financial crisis.

Few bargains to be found in Europe
John Authers (FT) Feb 10, 2013
The cash spent on buybacks and dividends combined comes to much the same yield on either side of the Atlantic.

Our Children’s Economics
Barry Eichengreen (Project Syndicate) Feb 11, 2013
Many analysts today believe that economics will not change significantly in the next 20 years, despite the flaws revealed by the recent financial crisis. This presumption is almost certainly mistaken, for it reflects the same error made by scholars of technology who argue that all of the radical breakthroughs have already been made.

The Battle of the Bond Benchmarks
Jeffrey Frankel (Project Syndicate) Feb 11, 2013
Some prominent institutional bond investors are shifting their focus from traditional benchmark indices, which weight countries’ debt issues by market capitalization, toward GDP-weighted indices. But there is a risk that some investors could lose sight of the purposes of a benchmark index.

The conundrum for the world’s central bankers
Mohamed A. El-Erian (FT) Feb 11, 2013
A simple observation last week by the Bank of England’s Monetary Policy Committee speaks volumes to the historic evolution of modern central banking – a process that is consequential, unprecedented and inadequately covered in traditional “money and banking” texts.

No such thing as a global currency war
Philipp Hildebrand (FT) Feb 11, 2013
Accusations over exchange rates are misplaced because central banks are simply setting monetary policy as per their remits.

Productivity is Europe’s ultimate problem
Nemat Shafik (FT) Feb 11, 2013
Closer integration is needed to build on the often painful progress that has been made.

Fix exchange rates to revive growth
Komal Sri-Kumar (FT) Feb 11, 2013
When currencies are established at realistic values, investors and exporters will see the exchange rates as durable.

Markets: With the volume down
Ralph Atkins (FT) Feb 11, 2013
Jaded traders are hanging back from markets as they seek clues that the world’s biggest economies are returning to solid growth.

Strike a European Trade Agreement
Edward Glaeser (Bloomberg) Feb 11, 2013
President Barack Obama can join the pantheon of free-trade heroes if, in his State of the Union address, he forcefully advocates the cause of a trade union with Europe. The potential benefits for U.S. companies and consumers are enormous.

Strike a Global Trade Agreement
Clive Crook (Bloomberg) Feb 11, 2013
President Barack Obama should renew the U.S.’s historic commitment to a liberal order of global trade by announcing two main priorities in his State of the Union address. First, bring currency manipulation under effective multilateral oversight. Second, promote global (as opposed to regional) trade liberalization by developing a bold post-Doha Round strategy.

Don't Be Afraid of China
Simon Johnson (Bloomberg) Feb 11, 2013
China is rising. Income per capita is climbing steadily, and within 20 years, its share of world income will rival that of the European Union. We shouldn’t be afraid -- or shrink from the economic opportunities this will present.

Tap Into the European Economy
Megan Greene (Bloomberg) Feb 11, 2013
President Barack Obama should make it clear in his speech that wrapping up a new U.S.-European Union trade deal will be a foreign policy priority for his second term.

In Venezuela, Plenty of Oil, Not Enough Food
Otto J. Reich (WSJ) Feb 11, 2013
It's the old story: Socialist government interferes with the marketplace, and the result is scarcity.

An Alternative to the Ratings Agencies
Donald J. Johnston (NYT) Feb 11, 2013
It may be time for an intergovernmental agency to rate sovereign debt.

Misplaced concerns about central-bank independence
Marco Annunziata (VoxEU) Feb 12, 2013
Economists and policymakers are increasingly concerned that central-bank independence is being threatened. This column argues that central banks are not losing their independence, but that their room for manoeuvre is being eroded by a lack of structural reforms and fiscal adjustment. The financial crisis has caused mission creep, pushing central banks well beyond their comfort zones and as the time comes to pull back, independent monetary policy could still be powerless against fiscal dominance.

The case for helicopter money
Martin Wolf (FT) Feb 12, 2013
I fail to see any moral force to the idea that fiat money should only promote private, not public, spending.

India looks to strengthen banking sector
Henny Sender (FT) Feb 12, 2013
The Reserve Bank of India, at the behest of the government, intends to give out new banking licences soon, to inject more competition into the sector

The Economic Windfall of Immigration Reform
Giovanni Peri (WSJ) Feb 12, 2013
From 1990-2010, scientists and engineers admitted by the H-1B visa program added $615 billion to the economy.

Don't Count on China to Bail Out the U.S.
Timothy Beardson (WSJ) Feb 12, 2013
Beijing's net investment in U.S. Treasurys over the past two years is essentially zero.

The world economy: Cliffs avoided, mountains ahead
Olivier Blanchard (VoxEU) Feb 13, 2013
The new year has provided cheer for macroeconomic optimists. This column by Olivier Blanchard, one of the world’s leading economists, argues that important progress has been made in putting the crisis behind us, but that recovery continues to be hampered by the need for fiscal consolidation and a weak financial system.

IEG finds declining impact at Bank, IFC
Bretton Woods Update No. 84 Feb 12, 2013
An annual Independent Evaluation Group (IEG) report on the Results and performance of the World Bank Group 2012 showed declining effectiveness at the Bank Group, with its worst ratings in the areas where its lending is increasing the fastest or it is prioritising work, such as infrastructure and public-private partnerships (PPPs). Read More.

IFC investments "rarely touch the poor"
Bretton Woods Update No. 84 Feb 12, 2013
Criticism of the International Finance Corporation's lack of poverty focus has again caught the spotlight, as the IFC continues to fund projects that stretch the interpretation of development.

IMF accused of anti-China bias
Bretton Woods Update No. 84 Feb 12, 2013
The IMF's Independent Evaluation Office (IEO) published a late December evaluation that was critical of IMF concerns and advice relating to international reserves, especially the accumulation by countries of large quantities of US dollar assets.

Finance: Entangled in Tuscany
Rachel Sanderson (FT) Feb 13, 2013
Repercussions of the Monte dei Paschi bank scandal are resonating far beyond Siena.

Venezuela’s move to devalue is desperate
Moisés Naim (FT) Feb 13, 2013
The decision was driven by a mix of bad policies and ideological necrophilia.

Giants, but Not Hegemons
Zbigniew Brzezinski (NYT) Feb 13, 2013
There is no need for conflict between America and China now that global dominance is no longer achievable.

Preventing a Currency War
NYT Feb 13, 2013
The way to revive stagnant economies is with stimulus, not by manipulating exchange rates.

Rumors of (Currency) War
WSJ Feb 13, 2013
G-7 finance ministers lament the rise of the monetary nationalism they all practice.

Pope Benedict on Globalization
Globalist Feb 13, 2013
What did Pope Benedict view as the responsibilities of the world's rich countries to the poor?

G-7 Currency Confusion
Mohamed A. El-Erian (PIMCO/CNBC) Feb 13, 2013
Within the last 24 hours, G-7 officials issued a currency statement, "clarified" it and then criticized the clarification! Here, in summary terms, are three possible reasons for this muddle, as well as what it may mean for investors.

US, EU Formally Announce Decision to Launch Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 5 Feb 13, 2013
Washington and Brussels have decided to begin negotiations for a trans-Atlantic trade and investment agreement, the two sides announced this week, bringing to a close months of speculation on whether the EU and US would indeed commit to the initiative.

China to Intensify Farm Subsidies in Grain Self-Sufficiency Drive
Bridges Weekly Trade News Digest, Volume 17, Number 5 Feb 13, 2013
China will "intensify" farm subsidy spending in the country's ongoing bid to promote self-sufficiency in grains, Beijing has announced in its flagship annual policy statement, known simply as 'policy document no. 1'.

Root causes of currency wars
Simon J Evenett (VoxEU) Feb 14, 2013
Discussion of currency wars has broken out again in the run-up to this week’s G20 finance ministers' meeting in Moscow. This column points to the underlying policy choices responsible for the recurring currency disputes and the feeble ex-post rationalisations for them.

The technical competence of economic policymakers
Mark Hallerberg & Joachim Wehner (VoxEU) Feb 14, 2013
The appointments of Papademos in Greece and Monti in Italy in 2011 are examples of leadership changes meant to bring more competent people into government. This column aims at understanding why governments sometimes appoint economic policymakers with economics training but often do not. It suggests that levels of economics education among finance ministers are substantially higher in new democracies than in old ones and that the appointment of an economics PhD as a central bank president is 22% more likely during a banking crisis.

Breaking China’s Investment Addiction
Zhang Monan (Project Syndicate) Feb 14, 2013
Faced with sluggish external demand and weak domestic consumption, China depends on investment to drive economic growth – leading to overproduction, inflation, soaring real-estate prices, and rising debt among enterprises and local governments. To reach the next stage of development, China must break its reliance on investment.

Building a Chinese Rechtsstaat
Andrew Sheng and Xiao Geng (Project Syndicate) Feb 14, 2013
A consensus is rapidly emerging within China that the rule of law is the single most important precondition for inclusive, sustainable, and long-term peace and prosperity. But can China establish the rule of law as it is understood and practiced in the West and elsewhere in Asia?

Nuclear energy: Flexible fission
Sylvia Pfeifer (FT) Feb 14, 2013
The atomic industry is shifting its focus to smaller reactors to meet surging demand from emerging economies undeterred by the Fukushima disaster.

Oligarchy at the core of Spain’s scandals
Angel Pascual-Ramsay (FT) Feb 14, 2013
A corporatist establishment is blocking the nation’s creative energy and the EU must act to break its grip.

A Very Greek Depression
Kostas Tsapogas (NYT) Feb 14, 2013
Like an overwhelming number of Greeks, we are fighting to keep our dignity and avoid the despair enveloping our country.

Don't Fear the Migrants
Frank Jacobs (FP) Feb 14, 2013
What America really needs to worry about is when they stop coming.

A Golden Rice Opportunity
Bjørn Lomborg (Project Syndicate) Feb 15, 2013
Finally, after 12 years of delay caused by opponents of genetically modified foods, so-called “golden rice” with vitamin A will be grown in the Philippines. Over those 12 years, about eight million children worldwide died from vitamin A deficiency, but the resistance to GM crops continues unabated.

Impatient South Africa
Ian Bremmer and Mark Y. Rosenberg (Project Syndicate) Feb , 2013
The African National Congress, which has governed South Africa since the end of apartheid, is in serious trouble. Unfortunately, the country may not be far behind.

The Squeeze: Reassessing the Japan/Korea/China Manufacturing Nexus
John Longhurst (PIMCO) Feb 15, 2013
The marked weakening of the yen could benefit Japanese exporters but raise questions about the continued ability of some Korean rivals to thrive. If the yen settles between 95 and 100 to the dollar, it could be a game changer for Japanese companies which have restructured to become profitable at 75 yen to the dollar. Some Korean companies, especially those in heavy industry, may be squeezed by intensified Japanese and Chinese competition. We expect Korean firms to fish in profit pools in businesses related to their core competencies, chiefly to the detriment of Asian and European competitors.

A tantalising prospect
Economist Feb 16, 2013
Exotic but useful metals such as tantalum and titanium are about to become cheap and plentiful.

South Africa: A faded rainbow
William Wallis and Andrew England (FT) Feb 17, 2013
Protests and disaffection threaten the ANC’s hegemony but President Zuma insists the ruling party is not to blame.

Europe’s budget deal is flawed
Martin Schulz (FT) Feb 17, 2013
It is misguided not to shift investment towards the areas where European added value are at their greatest.

Making the European Monetary Union
Harold James (VoxEU) Feb 17, 2013
Recent policy and academic debates have begun to influence Eurozone reform. But how sound is the advice we give out? This column argues that calls for a Eurozone or full-fledged EU superstate are overstated. Yes, developing an adequate system of European banking supervision is a matter of urgency if we hope to tackle the threat posed by an overdeveloped and opaque financial system. But calling for a superstate misunderstands the reasons politicians introduced the euro in the first place.

Designing a federal bank
Harold James (VoxEU) Feb 17, 2013
Do economists and policymakers know how to design a federal bank for Europe? Is there a template? This column explores the history of the US Federal Reserve, gleaning lessons for the future of the European banking system. Getting to grips with the historical and empirical details shows how different the two really are. Overall, evidence suggests that the mechanism of the TARGET system might well create demand for Europe to move further towards fiscal federalism.

Greece May Get Cruel Reward for Its Success
Megan Greene (Bloomberg) Feb 17, 2013
Greece reported recently that it has reached a primary budget surplus, the Holy Grail of austerity, meaning that once you exclude interest payments on the country’s massive debts, the government is finally taking in more revenue than it spends.

A Valuable U.S. Export: Banking Regulations
Simon Johnson (Bloomberg) Feb 17, 2013
By this point in the economic recovery, the biggest U.S. banks had expected the pressure from regulators to abate. In the aftermath of a major financial crisis, there is usually a turn toward tighter rules, and banks naturally build up their equity buffers after near-death experiences.

India’s Growth Crossroads
Haruhiko Kuroda (Project Syndicate) Feb 18, 2013
Unlike China since mid-2012, there is no clear evidence of economic recovery in India yet, as delay in implementing necessary reforms, among other factors, has weakened competitiveness. While recent measures should boost economic revival, an additional challenge is that growth must be made sustainable and more inclusive.

Quest for profit can make banks safer
Tom Braithwaite (FT) Feb 18, 2013
‘The Bankers’ New Clothes’ and its cheerleaders gloss over the transformation that is under way; there is more capital in the system than in 2007.

Abe needs to show he can walk the talk
Peter Tasker (FT) Feb 18, 2013
Mere anticipation of a reflationary regime shift has done the trick for Japan’s equities, but there are reasons for more optimism.

The End of Brand Putin?
Fiona Hill and Clifford G. Gaddy (Globalist) Feb 18, 2013
Can Russia ever become a modern, economically competitive, democratic society as long as Putin is in charge?

Europe’s Green Recovery
Connie Hedegaard (Project Syndicate) Feb 18, 2013
Europe’s major competitors are turning climate change into an opportunity to encourage growth and create high-quality jobs in rapidly innovating economic sectors. If EU leaders hesitate to take action on climate change, they will be sabotaging their own economy’s prospects for sustainable recovery.

The Collateral Damage of Europe’s Rescue
Hans-Werner Sinn (Project Syndicate) Feb 18, 2013
Europe’s rescue policy has stabilized government finances and delivered lower interest rates for the over-indebted economies. But it has also led to currency appreciation, and thus to lower competitiveness for all eurozone countries, which may yet turn into a debacle for the southern eurozone and France – and for the euro itself.

Break Up the Ratings Oligopoly!
Jeffrey Manns (Bloomberg) Feb 18, 2013
The Justice Department’s landmark lawsuit against Standard & Poor’s has captured headlines and broken the facade of rating-company immunity. But the threat to bludgeon, if not bankrupt, S&P through litigation masks the failure of the Securities and Exchange Commission to reform the raters.

The exchange rate disconnect and international supply chains: Firm-level evidence
Mary Amiti, Oleg Itskhoki & Jozef Konings (VoxEU) Feb 19, 2013
Why is it that large movements in exchange rates have small effects on international prices? What does this mean for a crisis-stricken Eurozone? Using firm-level data, this column presents new research that investigates this exchange rate ‘disconnect’. Evidence suggests that the prices of the largest firms – with their disproportionately large share of trade – are insulated from exchange rate movements. The international competitiveness effects of a euro devaluation are therefore likely to be modest, given major exporters’ reliance on global supply chains.

Lords of Finance: The Backroom World of Central Banking
Dan O'Connor (Mises Daily) Feb 19, 2013
The Pulitzer Prize-winning book Lords of Finance: The Bankers Who Broke the World reveals the destructive, surreptitious, incestuous, and highly corrupt nature of central banking. Although the author, Liaquat Ahamed, exposes the current financial system for all of its evils, this book is by no means a critique of central banking. Ahamed’s views are very much representative of status-quo economists of the past 100 years. He references John Maynard Keynes frequently without mentioning Nobel Prize-winner F.A. Hayek once, even though Hayek was Keynes’s greatest intellectual opponent during this period. Despite its mainstream focus the book is interesting and well-written. One of the jewels here is the rare look into the lives of the powerful men, the “lords of finance,” who were behind the solidification of modern central banking in the US and Europe during the years 1910 to 1935.

Why the euro crisis is not yet over
Martin Wolf (FT) Feb 19, 2013
If all eurozone members would rejoin today, they would be extreme masochists. It is debatable whether even Germany is better off inside.

India needs to grab more FDI
James Crabtree (FT) Feb 19, 2013
Investors balk at the country’s unfortunate mix of slowing growth and bureaucratic dithering.

Packaged loans to fill EU banking void
Ralph Atkins (FT) Feb 19, 2013
Businesses in the eurozone are increasingly tapping capital markets for their funding needs as bank loans remain scarce.

Markets: In search of a fast buck
After disrupting the equity markets, high-speed trading is moving rapidly into bonds, currencies and derivatives.

Is Currency War Breaking Out in Tokyo?
Clive Crook (Bloomberg) Feb 19, 2013
The G-20 finance ministers’ meeting ended on Feb. 16 with the obligatory note of amity on exchange rates. “We will not target our exchange rates for competitive purposes, will resist all forms of protectionism and keep our markets open,” read the communiqué.

The Saver’s Dilemma
Michael Pettis (Project Syndicate) Feb 19, 2013
For nearly a decade prior to the eurozone crisis, capital from high-savings countries like Germany flowed to low-savings countries like Spain. If the rebalancing that is now necessary occurs only in Spain and other low-savings countries, the result, as John Maynard Keynes warned 80 years ago, must be much higher unemployment.

Salt: Mineral of Tyrants, Explorers and Revolutionaries
Lesley Jacobs Solmonson (Bloomberg) Feb 19, 2013
Scientifically, salt is an innocuous substance created when a sodium atom bonds with a chloride atom: NaCl. This simple definition belies the influence of a mineral that has substantially affected global economics, exploration and politics for centuries.

The Defense Dividend
Anders Fogh Rasmussen (Project Syndicate) Feb 19, 2013
The fact is that without security and stability, investment withers, employment collapses, and economies shrink. In these tough economic times, we must not forget that the cost of insecurity is unacceptable, and that defense is our essential insurance policy in a complex and unpredictable world.

An Economist Who Made the Science Less Dismal
David Henderson (WSJ) Feb 19, 2013
Armen Alchian never won a Nobel Prize in economics. But no less than Friedrich Hayek said he 'deserved' one.

‘Fight Club’ Is Morphing Into Currency Club
William Pesek (Bloomberg) Feb 20, 2013
If life imitates art, so can the workings of high finance. The foreign-exchange markets are a timely case in point as policy makers and traders alike obsess over a return to the “Currency Wars” that so bewildered markets in 2010.

U.S. to “Win” Currency Wars?
Axel Merk (Merk Investments) Feb 20, 2013
Currency Wars will most importantly play out at the heart of investors’ portfolios rather than in the blogosphere or on TV. While the focus may currently be on Japan’s efforts to weaken the yen, U.S. investors might be particularly vulnerable. Let me explain.

Global "Currency War" Debate Approaches Fever Pitch
Bridges Weekly Trade News Digest, Volume 17, Number 6 Feb 20, 2013
Tensions among the world's major economies over currency values and export competitiveness came to a head last week, with G-20 finance ministers and central bank chiefs meeting in Moscow this past weekend with the hopes of dispelling growing fears of an international "currency war." However, despite the high-level meeting, questions on what effects developed country monetary policy and ensuing exchange rate movements will have on trade are expected to linger.

WTO: Food Stockpiling Talks Begin as Bali Beckons
Bridges Weekly Trade News Digest, Volume 17, Number 6 Feb 20, 2013
Farm trade officials met today in Geneva to exchange information and views on food stockpiling, against the backdrop of a proposal from some developing countries to modify WTO rules on the issue at the organisation's ministerial conference in Bali, Indonesia this December.

EU, India Hoping to Clinch Trade Deal by April, Officials Say
Bridges Weekly Trade News Digest, Volume 17, Number 6 Feb 20, 2013
The European Union and India are hoping to complete their nearly six-year trade talks by April of this year, French and Indian trade officials said last week. The proposed deal, if completed, would cover a market encompassing 1.7 billion people.

Zombie banks must not derail recovery
Gene Frieda (FT) Feb 20, 2013
Disposing of bad assets is the only way for good banks to make a clean start and Europe could pool resources to address a common problem.

Middle East: The strong arm of the law
Borzou Daragahi (FT) Feb 20, 2013
Egypt is becoming more volatile as emboldened people increasingly stand up to security forces.

Panic-driven austerity in the Eurozone and its implications
Paul De Grauwe & Yuemei Ji (VoxEU) Feb 21, 2013
Eurozone policy seems driven by market sentiment. This column argues that fear and panic led to excessive, and possibly self-defeating, austerity in the south while failing to induce offsetting stimulus in the north. The resulting deflation bias produced the double-dip recession and perhaps more dire consequences. As it becomes obvious that austerity produces unnecessary suffering, millions may seek liberation from ‘euro shackles’.

The Coming Atlantic Century
Anne-Marie Slaughter (Project Syndicate) Feb 21, 2013
The pervasive narrative of Western decline and Asia's rise is quickly reversing itself. While the major emerging countries, including those along the Pacific Rim, will continue to grow and prosper, the US will benefit enormously from domestic energy production, and the threat of an EU collapse will be resolved once and for all.

Are Stock Markets Really Becoming More Short Term?
Mark Roe (Project Syndicate) Feb 21, 2013
Investors’ rapid moves from one sector to another, it is argued, press managers to pay too much attention to immediate financial results. But, even if managers focus excessively on quarterly results, and even if median stock-holding periods have decreased, it is difficult to know whether stock-market trading has become more rapid.

The Food Threat to Human Civilization
Paul R. Ehrlich and Anne H. Ehrlich (Project Syndicate) Feb 21, 2013
Humanity faces a growing complex of serious, highly interconnected environmental problems, including much-discussed challenges like climate change, biodiversity loss, and epidemics. But the most serious threat to global sustainability in the next few decades will be the growing difficulty of avoiding large-scale famines.

EU-US free trade deal could be costly
Marcel Fratzscher (FT) Feb 21, 2013
The proponents of a bilateral agreement are sending the world the wrong signal at the wrong time.

The Economic—and Demographic—Case for Immigration Reform
Sol Trujillo and César Melgoza (WSJ) Feb 21, 2013
The challenges of the aging population will be greatly mitigated by an expanding, young, immigrant workforce.

India’s corruption fight
Anne Applebaum (WP) Feb 21, 2013
Can six decades of bad habits be broken?

Demand for Tech-savvy Workers Fuels Inequality
IMF Survey Feb 22, 2013
Over the past several decades, advanced economies have seen a striking rise in inequality. In the United States, the top 0.1 percent of households receive more than 10 percent of national income—more than double the figure of 30 years ago.

Financial Regulators’ Global Variety Show
Howard Davies (Project Syndicate) Feb 22, 2013
In the early phases of the financial crisis, it was fashionable to argue that the US system of regulation needed a fundamental structural overhaul. But there is no clear evidence that one particular model of financial regulation is more effective than others.

Mobility, talent and capital
Reuven Brenner (AT) Feb 22, 2013
Creative sparks ignite wealth when freed from the stifling interventions of big government and linked to financial markets sophisticated enough to match capital with diverse talent. The inevitable dispersion of power in such circumstances is evident in economic history, from the merchants of Venice to Deng Xiaoping's reforms in China.

China’s economy: Served in China
Economist Feb 23, 2013
Services are poised to become the country’s biggest sector.

India’s public finances: A walk on the wild side
Economist Feb 23, 2013
Government borrowing generates inflation, widens the external deficit and crowds out much-needed investment. Can India now overcome its debt addiction?

How Mexico Got Back in the Game
Thomas L. Friedman (NYT) Feb 23, 2013
Who knew our North American neighbor might one day become an economic rival to India and China?

The WTO and global supply chains
Richard Baldwin (EAF) Feb 24, 2013
The cross-border flows of goods, investment, services, know-how and people associated with international production networks — call it ‘supply chain trade’ for short — has transformed the world. But the WTO has not kept pace.

20,000 miles to the plate
Louise Lucas, Patti Waldmeir and Neil Munshi (FT) Feb 24, 2013
The horsemeat scandal in Europe has led to promises of more testing, but monitoring the global supply chain will be harder.

Africa counts the cost of miscalculations
Andrew Jack (FT) Feb 24, 2013
A tendency to issue doubtful data is rooted in colonial days and still creates problems for the continent, according to a study.

Wanted: A Balanced Approach to Shale Gas Exports
Andrew Liveris (WSJ) Feb 24, 2013
Rushing to sell natural gas to Europe and Asia risks damage to the U.S. economy.

Is ASEAN the New BRICS?
Asia Sentinel Feb 25, 2013
On a wide range of economic pointers, Southeast Asia is gaining fast.

IMF lending and banking crises
Luca Papi, Andrea F Presbitero & Alberto Zazzaro (VoxEU) Feb 25, 2013
The IMF’s role in past systemic banking crises has been hotly debated. Indeed, prominent intellectuals have criticised the Fund for creating or exacerbating crises. This column discusses new evidence showing that IMF lending programmes are in fact associated with a lower probability of banking crises occurring in future.

Transatlantic Trade-Offs
Robin Niblett (Project Syndicate) Feb 25, 2013
Many observers have high hopes for the Transatlantic Trade and Investment Partnership, which the US and the EU announced last week. But the High-Level Working Group on Jobs and Growth, which was tasked with identifying the policies and measures that should define the negotiations, has rightly recommended a conservative approach.

Lee Kuan Yew’s China
Graham Allison, Robert D. Blackwill & Ali Wyne (Project Syndicate) Feb 25, 2013
On the question of how the evolving relationship between the US and China will influence the international order, there are few individuals whose observations receive equal attention on both sides of the Pacific. That is why the views of Singapore’s founding father, Lee Kuan Yew, deserve careful consideration.

The Cacophony of the World
Dominique Moisi (Project Syndicate) Feb 25, 2013
Can something like the Concert of Europe, which produced a century of peace between the Napoleonic Wars and World War I, be globalized? Unfortunately, in today's rapidly fragmenting world, global cacophony seems more probable

Currency wars and the paradox of global thrift
John H. Makin (AEI) Feb 25, 2013
Since the beginning of the recent global economic crisis, G20 economies have combined fiscal austerity measures with expansionary monetary policy, and the austerity measures have made quantitative easing (QE)--the printing of money--the only pro-growth policy. The resulting currency weakness amounts to export of deflation pressures, threatening a currency war since every country, by definition, cannot have a weaker currency. Finance ministers and central bankers must reduce debt growth by reforming tax systems, moderating growth of government health and retirement programs, and phasing in binding spending cuts over the next decade while pursuing enough quantitative easing to avoid deflation.

Is There a Shortage of Safe Assets? A Blog Review
Martin Kessler (PIIE) Feb 25, 2013
Safe assets—often called information insensitive assets—are those debt securities that do not suffer from financial frictions characteristic of other financial assets. They play a major role in the strategies of institutional investors. But as we have learned recently, they can quickly lose their safety status at times of financial crises. In the past few months, the Federal Reserve and the Bank of England have raised doubts about the future of monetary easing—the issuing of large volumes of new safe assets—based on the concern that those policies were spurring investors to 'search for yield' and move their money to other assets, creating the danger of an asset bubble. As a result, there has been a renewed discussion in the blogosphere about the role of safe assets and whether there is a dangerous shortage of them.

Equities: A sentimental wager
James Mackintosh (FT) Feb 25, 2013
Investors are starting to think that timing the peaks and troughs of the market depend on spotting when fear or greed are dominant.

West complacent over why nations fail
Gideon Rachman (FT) Feb 25, 2013
Political debate in the US is too often captive to procedures and principles that get in the way of pragmatic solutions.

Fate sealed on pound’s loss of haven status
Mansoor Mohi-uddin (FT) Feb 25, 2013
Tight fiscal policy and sluggish growth will continue to encourage loose monetary policy.

China Has Its Own Debt Bomb
Ruchir Sharma (WSJ) Feb 25, 2013
Not unlike the U.S. in 2008, China is at the end of a credit binge that won't end well.

The Inexorable End of the Africa Story
Jonathan Anderson (Globalist) Feb 25, 2013
Are U.S. sanctions against Iran strengthening the economic and financial position of its competitors, especially China?

Investigating the effect of exchange-rate changes in Japan, China, east Asia, and Europe
Willem Thorbecke (VoxEU) Feb 26, 2013
Policymakers everywhere are concerned about currency wars. Are quantitative easing and managed exchange rates bad for the global economy? This column looks at the hard empirical evidence, arguing that, in fact, Japan is behaving rather responsibly and that other strong economies have themselves benefited from undervalued currencies. That said, it is true that politicians’ short time horizons often lead to stealthy policy and large swings in exchange rates. Economists should therefore aim to promote longer-run cosmopolitan interests rather than shorter-run nationalistic agendas where possible.

Mutualisation and constitutionalisation
Harold James & Hans-Werner Sinn (VoxEU) Feb 26, 2013
Can the euro exist without fiscal or political union? This column draws on the history of the US – especially its assumption of states’ debt after the War of Independence – to investigate which path might best serve the Eurozone. History tells us that unions require a well-constitutionalised system of restraint on fiscal behaviour, both at the federal level and at that of individual states.

The European-American Dream
Javier Solana (Project Syndicate) Feb 26, 2013
If Europe wants to maintain its welfare states, it must generate economic growth in order to pay for them, which means raising productivity and strengthening competitiveness – and asserting its place in the world. Europeans have a new reason for hope as they seek to achieve these goals: a transatlantic free-trade agreement with the US.

Will Programmers Rule?
Raghuram Rajan (Project Syndicate) Feb 26, 2013
Two attributes of software creation allow a few talented programmers to corner the market and take all the associated profits: first, software with a slight edge tends to get a significantly greater share of the available market; and, second, the available market is global. So, will anything prevent inequality from widening?

Italy Votes for Chaos and the Euro Crisis Is Back
Megan Greene (Bloomberg) Feb 26, 2013
Italy’s parliamentary election could not have gone worse for the country or the euro area.

Getting Cities Right
Mahmoud Mohieldin and Zoubida Allaoua (Project Syndicate) Feb 26, 2013
The developing world is experiencing rapid urbanization, with the number of city dwellers set to reach four billion in 2030 – double its 2000 level. By managing urbanization as it occurs, rather than struggling to fix cities later, policymakers can support social and economic development, while minimizing environmental damage.

The sad record of fiscal austerity
Martin Wolf (FT) Feb 26, 2013
The ECB could have prevented the panic that drove the spreads that justified the austerity. Millions are suffering unnecessary hardship.

Gap widens in China’s property market
Simon Rabinovitch (FT) Feb 26, 2013
Smaller cities are falling behind booming metropolises not only in prices but in the amount of development being undertaken.

Why There Will Be No New Bretton Woods
Benn Steil (WSJ) Feb 26, 2013
Unlike the United States in the 1940s, China is in no position to refashion the global monetary architecture.

Is Mexico the Comeback Kid?
Thomas L. Friedman (NYT) Feb 26, 2013
Despite its problems, our neighbor to the south is an unlikely hub of innovation.

For Transatlantic Trade, This Time Is Different
Tyson Barker (FA) Feb 26, 2013
In the past, U.S. and European negotiators have tried and failed to create a unified transatlantic market. But the trade talks that President Obama announced this month have a much better chance of succeeding, thanks to a greater need for economic growth on both sides, the threat of China's illiberal economic behavior, and the desire to give U.S.-European relations a new purpose.

Winners of a European banking union
Dirk Schoenmaker & Arjen Siegmann (VoxEU) Feb 27, 2013
So far, discussions around Europe’s prospective banking union have focused only on the supervision of banks. This column argues that policymakers must also think about the resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority could incorporate domestic and cross-border effects. A cost-benefit analysis of a hypothetical resolution of the top 25 European banks shows that the UK, Spain, Sweden, and the Netherlands would be the main winners.

America’s Strategy Vacuum
Stephen S. Roach (Project Syndicate) Feb 27, 2013
As the quintessential laissez-faire system, the US outsources strategy to the invisible hand of the market, with the government locked into a reactive approach to unexpected problems. Thus, both monetary and fiscal policy have been focused on cleaning up after a crisis rather than on how to avoid another one.

China pushes lending into the shadows
David Pilling (FT) Feb 27, 2013
Capital, like water, is wont to find the path of least resistance. Banks and non-banks are adept at circumventing regulations.

Sell currencies of serial QE offenders
William H. Gross (FT) Feb 27, 2013
Fighting central banks’ determination to devalue currencies and reflate economies is dangerous and investors should sell the most serial offenders.

Debunking the Myths About Central Banks
Gerald O'Driscoll (WSJ) Feb 27, 2013
Does an economy need a lender of last resort? Is the Fed really independent? It's time for some rethinking.

Our Debt, Ourselves
Robert M. Solow (NYT) Feb 27, 2013
Six facts about the federal debt that many Americans need to be aware of.

Interest Rises in Islamic Bonds
Sara Hamdan (NYT/IHT) Feb 27, 2013
As economies in European and other advanced countries struggle, a growing pool of investors is considering alternative investments in emerging markets.

EU-Canada Hurdles Remain, as Brussels Ramps Up for Washington Talks
Bridges Weekly Trade News Digest, Volume 17, Number 7 Feb 27, 2013
Trade talks between the EU and Canada are still struggling to reach resolution, though officials from both sides have insisted that the negotiations remain on track and could soon be completed. The process of building additional buy-in within the EU for another set of trade talks – specifically, those that Brussels has announced with Washington – is meanwhile currently underway.

Lamy: WTO Members Must "Run Faster" to Reach Bali Finish Line
Bridges Weekly Trade News Digest, Volume 17, Number 7 Feb 27, 2013
WTO members must "run faster" if they hope to achieve a set of relevant deliverables in time for December’s ministerial conference in Bali, Director-General Pascal Lamy cautioned on Monday at a meeting of the global trade body's General Council.

Obama-Abe Meeting Sends Signals on Possible Japan TPP Entry
Bridges Weekly Trade News Digest, Volume 17, Number 7 Feb 27, 2013
Tokyo will not be required to unilaterally eliminate all tariffs as a condition of entering the Trans-Pacific Partnership (TPP) talks, Japanese Prime Minister Shinzo Abe and US President Barack Obama said after meeting in Washington last Friday. The affirmation has been widely seen by trade observers as a sign that Japan may soon begin to formally pursue entry into the 11-country negotiations.

America's Consumer Democracy Versus China's Modern Mandarinate
Nicolas Berggruen and Nathan Gardels (Globalist) Feb 27, 2013
Are the consumer democracies of the West becoming ungovernable, while authoritarian China moves into the future?

Putting Finance Back in the Box
Thomas I. Palley (Globalist) Feb 28, 2013
What can be done to make finance serve interests of the real economy?

Another look at Ricardian equivalence: The case of the European Union
Thomas Grennes & Andris Strazds (VoxEU) Feb 28, 2013
Can European countries share their debts? This column argues that higher government indebtedness means larger household net financial assets. Thus, any pooling of European legacy debt would be considered unacceptable by countries with less government debt unless it also involved the pooling of households’ financial assets. Yet, this would be legally and technically insurmountable. The EU must face forced Ricardian equivalence: the countries with the largest legacy-debt burdens must reduce them by increasing the tax burden or, alternatively, reduce their budget expenditure.

A Better Way to Fight Climate Change
Jeffrey D. Sachs (Project Syndicate) Feb 28, 2013
Of all major world regions, Europe has worked the hardest to implement policies aimed at countering human-caused climate change. Yet the cornerstone of Europe’s approach – a continent-wide emissions trading system for the greenhouse gases that cause climate change – is in trouble.

The China challenge
Fareed Zakaria (WP) Feb 28, 2013
The U.S. has no choice but to work with China and all its insecurities.

Two Dollar Fallacies
Martin Feldstein (Project Syndicate) Feb 28, 2013
One frequently hears two key arguments from economists who dismiss the fear of a run on the dollar: the dollar is a reserve currency, and it carries fewer risks than other currencies. Unfortunately, neither argument is persuasive.

Ten QE Questions
Nouriel Roubini (Project Syndicate) Feb 28, 2013
Most observers regard unconventional monetary policies such as quantitative easing as necessary to jump-start growth in today’s anemic economies. But questions about the effectiveness and risks of such policies have begun to multiply as well.

The Pope of Japanese Finance
Yuriko Koike (Project Syndicate) Feb 28, 2013
While the world focuses on the gathering of cardinals in Rome to choose a successor to Pope Benedict XVI, a similar conclave is underway in Tokyo to choose the Bank of Japan’s next governor. And, as with the deliberations at the Vatican, politics, not doctrinal debate, is underpinning the decision-making process in Japan.

Arab Countries in Transition Seek Path to Strong, Inclusive Growth
IMF Survey Feb 28, 2013
Region pursues economic and political stability in aftermath of historic uprising. Comprehensive political, social, and financial reform critical to economic success. Middle-class aspirations to boost inclusive growth

Benjamin Graham’s Clever Idea for Averting Currency Wars
Joe Carlen (Bloomberg) Feb 28, 2013
Benjamin Graham is remembered primarily as the father of value investing, and as the former professor, employer, friend and investing mentor of Warren Buffett. Yet Graham did a lot more than dispense sound investment advice.

No Honeymoon for Japan’s New Central Banker
William Pesek (Bloomberg) Feb 28, 2013
As president of the Manila-based Asian Development Bank, Haruhiko Kuroda spent the past seven years confronting the challenges posed by 48 diverse, dynamic and complex Asia-Pacific economies. If he thought that was hard work, consider what awaits him in Tokyo as he prepares to lead the Bank of Japan.

Emerging Europe airlines head for hangar
Neil Buckley (FT) Feb 28, 2013
Poland’s Lot is among lossmaking carriers that appear to be following Hungary’s Malev into the aviation history books.

A not-so-secret sterling devaluation ploy
Samuel Brittan (FT) Feb 28, 2013
The antics of a rating agency are merely a sideshow to the adventures of the pound.

Finance: An inequitable divide
Anne-Sylvaine Chassany and Henny Sender (FT) Feb 28, 2013
US private equity groups have weathered the financial storm by diversifying, in contrast to European firms.

Return of the euro crisis
Robert J. Samuelson (WP) Feb 28, 2013
Italy’s latest election quashes optimism.

Asia and the Old World Order
Thomas DuBois (History Today) Mar 1, 2013
Some commentators predict that the 21st century will be the ‘Asian century’, marking a significant shift in power from West to East. If so, it will not be so different from the global order of the 19th century, says Thomas DuBois.

Capitalism and Inequality
Jerry Z. Muller (FA) Mar 1, 2013
What the Right and the Left get wrong.

Can Changes in Exchange Rate Valuations Affect Trade Imbalances?
TIE Mar 1, 2013
In his new book, The Unloved Dollar Standard: From Bretton Woods to the Rise of China, Stanford economist Ronald McKinnon argues that the “China bashers” have been captured by a false theory of the U.S. trade balance. A collection of noted experts tackles McKinnon’s thesis.

Adam Posen Takes the Stage
David Smick (TIE) Mar 1, 2013
Just back from his three-year stint on the Monetary Policy Committee of the Bank of England, an interview with the new president of the Peterson Institute for International Economics.

Two Cheers for Christine Lagarde
Desmond Lachman (TIE) Mar 1, 2013
Bringing an era of IMF bumbling to an end.

The End of the Oil Crisis
Philip K. Verleger, Jr. (TIE) Mar 1, 2013
For good and bad the earthquake has occurred; the tsunami is underway.

Did inward capital controls work?
Márcio Garcia (VoxEU) Mar 1, 2013
Did inward capital controls work for Brazil? This column assesses the evidence, concluding that capital controls are desirable if they help avoid excessive debt and asset price bubbles, a risk given the appetite of foreign investors towards Brazilian assets. That said, policymakers needs to complement capital controls with foreign savings in order to enable an investment rate compatible with sustaining GDP growth.

Emerging Markets’ Feminine Future
Shaukat Aziz (Project Syndicate) Mar 1, 2013
Gender discrimination makes women vulnerable to sexual slavery, trafficking, and forced marriage, deprives women of their inalienable rights, and diminishes their quality of life. It is also undermining emerging markets' social and economic progress – on which the rest of the world increasingly relies.

The Euro’s House Divided
Jean Pisani-Ferry (Project Syndicate) Mar 1, 2013
The European Commission’s latest economic outlook paints a disheartening picture of a deep and persistent economic and social divide within the eurozone. Such a gulf within a monetary union cannot be sustained for very long.

Global Volatility
Josh Thimons (PIMCO) Mar 1, 2013
Right or wrong, the Fed has taken the markets one step further down the path of experimental and untested policy. The Fed’s new communication strategy may, in fact, be a more sensible policy prescription than calendar rate guidance. However, the likely unintended consequence of such a move is a heightened level of market volatility. We expect increased market volatility, particularly around economic data releases. Investors with an understanding of the Fed’s now increasingly transparent reaction function will find opportunities to profit in the volatility markets. According to our model of the Fed’s reaction function, presently every ¼ of a percent unexpected change in the unemployment rate is likely to lead to roughly an 11 basis point change in the five-year Treasury yield.

Tobacco: The Opium War of the 21st Century?
César Chelala (Globalist) Mar 2, 2013
Does the Chinese obsession with smoking have its roots in British trade policy?

Sovereign default and the rules of engineering
Ugo Panizza (VoxEU) Mar 2, 2013
Policymakers charged with sovereign debt restructuring would do well to take an engineer’s approach: know what’s broken, and know exactly what your solution aims to fix. This column argues that Europe may yet face several complex sovereign defaults and, like engineers, in dealing with these defaults we must find a way to avoid characteristically panicked policymaking.

Policy-related uncertainty: At the root of the lost resilience of Eurozone labour markets?
Alfonso Arpaia & Alessandro Turrini (VoxEU) Mar 2, 2013
Is policy-related uncertainty at the root of lacklustre Eurozone job creation? This column presents evidence that is consistent with this idea. The main implications for policy are straightforward: credible solutions to the Eurozone debt crisis will alleviate the critical unemployment situation of a number of Eurozone countries. How? Not only by helping to kick start investment and production, but also by an additional, direct boost to job creation that is linked to confidence.

Better out than in
Economist Mar 2, 2013
If Barack Obama wants a cleaner world and a richer America, he should allow natural-gas exports.

Incentives for avoiding delayed sovereign defaults
Ugo Panizza (VoxEU) Mar 3, 2013
Can we avoid delayed sovereign defaults? This column sketches out a flexible mechanism focused on the international lender, and competition between lenders, of last resort to ensure timeliness, transparency and larger sums than are currently available. The threat of competition should provide strong incentives for addressing imbalances in the governance of the main multilateral financial institutions

Japan: Hey, big spender
Jonathan Soble (FT) Mar 3, 2013
Shinzo Abe, the new prime minister, has ambitious plans to shake Tokyo out of its economic torpor but his expansionary agenda carries risks.

Let the market decide our energy sources
Robert McFarlane and George Olah (FT) Mar 3, 2013
Thanks to the discovery of massive quantities of natural gas, we have alternatives to petrol. No subsidies are needed.

Transatlantic trade deal is a US priority
Max Baucus (FT) Mar 3, 2013
After years of stalled trade negotiations, the US and EU must show leadership and make tough choices to boost the world economy.

Eurozone macro orthodoxy: Options for the coming reversal
Richard Wood (VoxEU) Mar 4, 2013
Despite recent calm in the markets, the Eurozone crisis seems far from over. So far, responses have worked little magic. This column argues that at some point soon, Eurozone governments will be forced by voters to reverse austerity and stimulate growth. A number of policy options are available, but it is clear that pro-growth fiscal stimulus policies should take their place. Longer-term fiscal consolidation will nonetheless also be required to reduce excessive levels of public spending relative to GDP.

Winning the Transatlantic Trade Challenge
Ana Palacio (Project Syndicate) Mar 4, 2013
US President Barack Obama’s announcement that negotiations will begin on a comprehensive “Transatlantic Trade and Investment Partnership” has generated excitement on both sides of the Atlantic. But, to prevent negotiations from stalling over sensitive topics, key political actors should first convene to resolve core differences.

What is Italy Saying?
Joseph E. Stiglitz (Project Syndicate) Mar 4, 2013
The outcome of the Italian elections should send a clear message to Europe’s leaders: the austerity policies that they have pursued are being rejected by voters. Indeed, it will take a decade or more to recover the losses that austerity has wrought.

Don’t Believe Spain's Deficit Numbers
Megan Greene (Bloomberg) Mar 4, 2013
Last week, Spanish Prime Minister Mariano Rajoy gave investors and analysts a pleasant surprise, announcing that his country’s budget deficit had fallen to 6.7 percent of gross domestic product in 2012, far below the European Commission’s estimate.

Japan's Kuroda Says He'll Be Cautiously Bold
Clive Crook (Bloomberg) Mar 4, 2013
Haruhiko Kuroda, the Japanese government's nominee to become head of the Bank of Japan, mostly told financial markets what they wanted when he appeared at a parliamentary confirmation hearing today. If he gets the job, monetary policy will change: The "scale and scope" of BOJ asset purchases will increase, he said.

New Products, More Value Can Advance Economic Take-Off
IMF Survey Mar 4, 2013
To reach the next level of development, low-income countries should strive to transform the structure of their economies by diversifying into new sectors and producing new, higher value-added products, speakers told a conference at the IMF.

Welcome the Robot Revolution, but Beware
Bloomberg Mar 4, 2013
Robots are evoking some deep economic anxiety these days. They’re routinely mastering human tasks -- driving cars, trading securities, diagnosing diseases - - that not long ago appeared permanently beyond their capabilities. And as automated technology advances at an exponential rate, more and more jobs, in more and more fields, will be done by intelligent machines in the very near future.

Euro crisis is breeding comics not fascists
Gideon Rachman(FT) Mar 4, 2013
Times may be tough but this is not the 1930s. Modern Europe is a much richer and less traumatised continent.

India’s masters suffer the ‘Downton’ effect
Ranjani Iyer Mohanty (FT) Mar 4, 2013
The Indian domestic labour market is undergoing a quiet but noticeable change: the servants no longer want to serve.

Get technical to fix rating agencies
Arturo Cifuentes (FT) Mar 4, 2013
The three agencies that dominated the market before the subprime crisis still do: fresh thinking is needed to improve the ratings environment.

Wall Street’s latest idea
Tracy Alloway (FT) Mar 4, 2013
The banking industry has high hopes for its new business of ‘collateral transformation’. But regulators are raising concerns.

Natural Gas Exports and the Mythical 'Sweet Spot'
Bennett Johnson (WSJ) Mar 4, 2013
Congressional meddling so warped the market in 1977 that an emergency law was needed to undo the harm.

Basel III: Europe’s interest is to comply
Nicolas Véron (VoxEU) Mar 5, 2013
The EU was once a champion of global financial regulatory convergence. What happened? This column argues that the EU should drop its lacklustre inertia and pursue Basel III because, in the end, it’s in its interests to comply. EU policymakers ought to aim at enabling the adoption of a Capital Requirements Regulation that would be fully compliant with Basel III.

Europe, Unemployment and Instability
George Friedman (Stratfor) Mar 5, 2013
The global financial crisis of 2008 has slowly yielded to a global unemployment crisis. This unemployment crisis will, fairly quickly, give way to a political crisis. The crisis involves all three of the major pillars of the global system -- Europe, China and the United States. The level of intensity differs, the political response differs and the relationship to the financial crisis differs. But there is a common element, which is that unemployment is increasingly replacing finance as the central problem of the financial system.

Europe: A loaded chamber
Joshua Chaffin (FT) Mar 5, 2013
The EU parliament’s capping of bank bonuses shows it has matured as a political force, but its democratic legitimacy is still queried.

The risky task of relaunching Japan
Martin Wolf (FT) Mar 5, 2013
The question is whether the BoJ can raise inflation and lower real interest rates without destabilising domestic or global economies.

A guide to gifting in the new China
Patti Waldmeir (FT) Mar 5, 2013
Tigers and flies and having to change their diet at a time when party bigwigs are talking about austerity and corruption.

ECB battles demons as growth slows
Michael Steen (FT) Mar 5, 2013
Central bank wants eurozone to continue enforcing budgetary discipline and implementing reforms to attain sustainable growth.

The Broadband Engine of Economic Growth
Julius Genachowski (WSJ) Mar 5, 2013
The U.S. has as many 4G subscribers as the rest of the world combined.

How the Central and Eastern European Banking System Managed the Financial Crisis
Anders Åslund (PIIE) Mar 5, 2013
In early 2009, the International Monetary Fund (IMF) and the European Bank of Reconstruction and Development (EBRD) raised a cry of despair. They feared that several of the 15 Western European banks that dominated the banking system of Central and Eastern Europe (CEE) would withdraw from the region because of their problems at home. In fact, the CEE banking sector had many advantages. Leverage was limited, and toxic assets were unknown. The main concern was that the three Baltic states (Estonia, Latvia, and Lithuania) suffered from severe overheating, because their credits expanded far too fast in 2005 and 2006, and they were financed with foreign bank credits, which drove up their inflation.

Europe, Unemployment and Instability
George Friedman (Stratfor) Mar 5, 2013
The global financial crisis of 2008 has slowly yielded to a global unemployment crisis. This unemployment crisis will, fairly quickly, give way to a political crisis. The crisis involves all three of the major pillars of the global system -- Europe, China and the United States. The level of intensity differs, the political response differs and the relationship to the financial crisis differs. But there is a common element, which is that unemployment is increasingly replacing finance as the central problem of the financial system.

China and the End of the End of History
Zhang Weiwei (Globalist) Mar 5, 2013
Could the Western democratic system only a transitory phenomenon in the long history of mankind? P>Why Europe?
Harold James (Project Syndicate) Mar 5, 2013
The threat of an explosive disintegration of the eurozone – and with it of the EU – is receding. But the confused outcome of Italy's parliamentary election, with an upper house dominated by an anti-EU party and a pro-EU majority in the Chamber of Deputies, has revived the fundamental debate about the purpose of European integration.

Learning from Germany
Daniel Gros (Project Syndicate) Mar 5, 2013
In just ten years, Germany has gone from being the sick man of Europe to being a role model that the eurozone's distressed economies are instructed to emulate. But there is much in the German model – particularly its neglect of service-sector reforms – that economies struggling to boost productivity should ignore.

A Rest Stop for Europe
Ashoka Mody (Project Syndicate) Mar 5, 2013
The EU is mired in a crisis of confidence. Rather than continue to stumble toward more unity, EU leaders should restore effective sovereignty to national authorities in eurozone countries, giving Europeans the opportunity to regroup in preparation for future steps toward a more integrated Europe and a more resilient euro.

China's Looming Crisis: Daunting Troubles Mount
Joel Brinkley (World Affairs) Mar 5, 2013
China’s slowing growth, increasing unemployment, legendary corruption, overcrowding, and vast wealth disparity have spiked social unrest and spooked elites, who are leaving with their billions.

Independence Lost
Sylvester Eijffinger and Edin Mujagic (Project Syndicate) Mar 6, 2013
Since 2008, advanced countries' central banks have broken a decades-old commandment: Thou shalt not engage in monetary financing of government spending. While many of these banks have never been truly independent, this shift threatens to end the era of low inflation.

Mexico Breaking Good?
Kenneth Rogoff (Project Syndicate) Mar 6, 2013
Mexico is enjoying a manufacturing boom that has boosted its exports to the US after a long secular decline. With China’s wages soaring and rising oil prices driving up shipping costs, production in Mexico is suddenly looking much more attractive, even taking security concerns into account.

A Global "New Deal"?
Yannos Papantoniou (Project Syndicate) Mar 6, 2013
For domestic demand to act as an engine of growth, policies should shift resources from investment to consumption. While the magnitudes involved are huge, they must be attained if an extended period of low growth, high unemployment, and declining living standards among the world’s poorest is to be avoided.

Transatlantic Trade’s Transformative Potential
Mohamed A. El-Erian (Project Syndicate) Mar 6, 2013
A "Transatlantic Trade and Investment Partnership" between the US and Europe has the potential to transform global trade and multilateral organizations to the benefit of all. But this opportunity could be squandered, owing to the short-term mindset that now encumbers the West and the multilateral organizations that it dominates.

Towards a more procyclical financial system
Jon Danielsson (VoxEU) Mar 6, 2013
Is the fact that different banks have different risk models problematic? Contrary to the Basel Committee and the European Banking Authority, this column argues that heterogeneity is a good thing. It leads to countercyclicality, and thereby reduces instances of procyclical price movements. Both the Basel Committee and the European Banking Authority have indicated that they are troubled by heterogeneity and are seeking to rectify the problem. Their conclusion is plainly wrong.

How Dollar Diplomacy Spelled Doom for the British Empire
Benn Steil (Bloomberg) Mar 6, 2013
“The British Empire seems to be running off almost as fast as the American loan,” Winston Churchill thundered before the House of Commons on Dec. 20, 1946. “The haste is appalling.”

US Trade Policy to Focus on TPP, EU Talks in 2013
Bridges Weekly Trade News Digest, Volume 17, Number 8 Mar 6, 2013
US President Barack Obama will direct his 2013 trade efforts toward moving the Trans-Pacific Partnership (TPP) talks toward a conclusion and launching trans-Atlantic negotiations aimed at establishing a trade and investment partnership with the EU, according to a report that was submitted to Congress last Friday.

WTO: Food Stockholding Talks Intensify as Unofficial Deadline Looms
Bridges Weekly Trade News Digest, Volume 17, Number 8 Mar 6, 2013
Countries have intensified informal consultations on a developing country proposal to ease WTO farm subsidy rules for food stockholding, trade sources say. The talks have shifted gear ahead of an unofficial Easter deadline for reviewing progress on measures to be adopted at the global trade body's ministerial conference in Bali, Indonesia, this December.

WTO Plurilaterals: GPA, ITA Aim for Possible Advances Ahead of Bali
Bridges Weekly Trade News Digest, Volume 17, Number 8 Mar 6, 2013
Parties to the WTO's plurilateral agreement on government procurement could aim to have the revised version of the pact enter into force in time for the Bali ministerial conference this December, sources told Bridges this week. Meanwhile, efforts to expand another plurilateral WTO deal – the Information Technology Agreement – continue underway, with the global trade body's ministerial also being seen as a tentative date for concluding the talks.

TRIPS Council: LDC Extension, Tobacco Plain Packaging Take Centre Stage
Bridges Weekly Trade News Digest, Volume 17, Number 8 Mar 6, 2013
WTO members this week discussed a proposal by least developed countries (LDCs) to extend their transition period for implementing the organisation's intellectual property rules, which is set to expire this July. Members at the 5-6 March meeting of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) also debated a proposed New Zealand law that would require plain packaging for tobacco products; a similar Australian policy is already facing three separate challenges at the WTO's Dispute Settlement Body.

Dow should be consigned to history
John Authers (FT) Mar 6, 2013
The Dow Jones index hit a record high this week, but it is methodologically flawed and the attention it commands is largely attributable to inertia.

Venezuela: To the heir, a poisoned chalice
Benedict Mander (FT) Mar 6, 2013
Many forgave Hugo Chávez for his economic blunders but such generosity is unlikely to be shown towards the next leader.

Hold the Obituary on Manufacturing!
Caroline Baum (Bloomberg) Mar 6, 2013
U.S. manufacturing is well along in its self-help program and is retooling with impressive results.

Where Have China’s Workers Gone?
Yukon Huang and Clare Lynch (Bloomberg) Mar 6, 2013
Xi Jinping and Li Keqiang are taking over China’s leadership at a time when growth has slackened and labor issues have become more complex.

Readying Europe for This Global Age
Carl Bildt (Globalist) Mar 6, 2013
Is Europe ready to do its part to contribute to global prosperity and stability?

Reflections on Doing Business in India and China
Nicolas Berggruen (Globalist) Mar 7, 2013
How do the realities of doing business in India and China reflect centuries-old traditions in governance and attitudes toward embracing change?

The sordid history of Congressional acceptance and rejection of cap-and-trade: Implications for climate policy
Richard Schmalensee & Robert N. Stavins (VoxEU) Mar 7, 2013
Not so long ago, cap-and-trade mechanisms for environmental protection were popular in Congress. Now, such mechanisms are denigrated. What happened? This column tells the sordid tale of how conservatives in Congress who once supported cap and trade now lambast climate change legislation as ‘cap-and-tax’. Ironically, conservatives are choosing to demonise their own market-based creation. The successful conservative campaign that disparaged cap-and-trade means it may now be politically impossible to promote it in the US. The good news? Elsewhere, cap and trade is now a proven, viable option for tackling large-scale environmental problems.

The trend reversal in income inequality and returns to education: How bad is this good news for Latin America?
Augusto de la Torre & Julián Messina (VoxEU) Mar 7, 2013
The last decade has seen unprecedented economic and social achievements in Latin America. This column investigates the relationship between changes in the labour market and the drop in income inequality across the continent. There is certainly room for more research to help us better understand Latin America’s spectacular decline in income inequality, but what is clear is that the good news is tempered by the fact that the specialisation of the region’s economies are relatively low in skill intensity and therefore productivity.

China's rising labour costs: opportunity as well as challenge
Hannah Levinger (DB Research) Mar 7, 2013
Rising wages and slowing productivity, coupled with a declining demographic dividend, have stirred concerns that China’s competitiveness in manufacturing is eroding. Indeed, structural changes are taking place, notably in the cheap labour segment, shifting dynamics along the value chain and across provinces. These changes are actually positive in terms of the strived-for shift in China’s growth model.

The Promise and Peril of India's Youth Bulge
Danielle Rajendram (Diplomat) Mar 7, 2013
India's young population could propel the nation to new economic heights -- or tear it apart from the inside.

The Way They Live Now
Michael Lewis (NYRB) Mar 7, 2013
In London, circa 1980, the American investment banker had going against him not just widespread commercial lassitude but the locals’ near-constant state of irony. Wherever it traveled, American high finance required an irony-free zone, in which otherwise intelligent people might take seriously inherently absurd events: young people with no experience in finance being paid fortunes to give financial advice, bankers who had never run a business orchestrating takeovers of entire industries, and so on.

China must seize rare chance for reform
Zhang Weiying (FT) Mar 7, 2013
Because of rare historical circumstances, the new leadership is more talented, more zealous and more entrepreneurial.

US judges are jeopardising global finance
David Martinez (FT) Mar 7, 2013
A US federal court ruling punishes twice those who contributed to Argentina’s restructuring in favour of the free riders.

Davos Man’s faith in globalisation is shaken
(FT)Gillian Tett Mar 7, 2013
Localisation in financial flows and a greater state involvement in markets are flying in the face of the elite’s expectations.

Why we give foreign aid
Charles Krauthammer (WP) Mar 7, 2013
Despite the unfriendly nature of Egypt’s regime, we should not cut off its aid.

India squeezed by financial repression
Kunal Kumar Kundu (AT) Mar 8, 2013
India's recent budget showed the extent to which the government resorts to financial repression of its citizens, companies and financial corporations, distorting savings and investment and damaging growth. Yet its extortion and profligacy leaves health and education spending trailing that of many poorer countries.

Anti-Poverty 2.0
Jomo Kwame Sundaram (Project Syndicate) Mar 8, 2013
Global leaders have touted the apparent success of achieving in 2010 – well ahead of the 2015 target – the Millennium Development Goal of halving global poverty relative to 1990. But, amid enduring poverty, rising inequality, and weak growth in many developing countries, the success of past anti-poverty policies appears dubious.

The Dow’s new high: Rally drivers
Economist Mar 9, 2013
There’s froth in the equity markets, but not a bubble.

European imbalances
Hans-Werner Sinn & Akos Valentinyi (VoxEU) Mar 9, 2013
Will addressing large internal imbalances lead us out of the Eurozone crisis? This column argues that it might. Periphery countries should devalue in order to regain competitiveness and reduce imbalances. As to whether they should pursue internal or external devaluation, the answer remains unclear. Overall, given that policymakers have excluded the option of exit, economic policymaking must focus on the possibilities for internal devaluations, despite some of the difficulties it may bring.

Foreign-currency returns and systemic risks
Victoria Galsband & Thomas Nitschka (VoxEU) Mar 10, 2013
Violations of the uncovered interest-rate parity – a zero-profit equilibrium condition in foreign-exchange markets – seems to consistently give rise to profitable currency trading. This column highlights the risky nature of this phenomenon, arguing that it is the exposure to stock-market cash flows that is the key secret to making money from global currency portfolio investments. High returns from currency trading compensate investors for taking on severe stock-market risks.

To Understand Finance, Embrace Complexity
Mark Buchanan (Bloomberg) Mar 10, 2013
A highly unusual collaboration between economists and scientists offers an important insight for those who want to fix the world’s crisis-prone financial system: There’s no simple way to understand a complex network.

Theories of financial crises
Itay Goldstein & Assaf Razin (VoxEU) Mar 11, 2013
Broadly speaking, there are three types of economic crisis: banking crises and panics, credit frictions and market freezes, and currency crises. This column argues that features from these types of crises have been at work and interacted with each other to shape the events of the last few years. From an extensive review of literature on these issues, it’s clear that the biggest challenge policymakers and economists face is in developing integrative models that better describing contemporary economic realities.

The Great Disconnect
Kemal Dervis (Project Syndicate) Mar 11, 2013
Since the second half of 2012, financial markets have recovered strongly worldwide. But this financial market buoyancy is at odds with political events and real economic indicators, which augur slow growth at best in Europe and the US, coupled with high unemployment.

Networked Development
Hans Vestberg (Project Syndicate) Mar 11, 2013
Connectivity is a basic enabler of economic growth and improved quality of life. So there is a strong business case for investing in broadband to optimize the delivery of essential services in education, health care, safety, and security, and to redefine urban landscapes through smart electricity grids and more efficient transportation.

‘Asian Century’ means shared prosperity, responsibility and multilateral agreements
Pascal Lamy (WTO) Mar 11, 2013
Asia has enjoyed a surge in trade in proportion to its economic size, is increasingly involved in global supply chains and has turned to free trade agreements to pursue its trade agenda. The time has come to “multilateralize” those agreements.

Shale Oil: A Deep Dive Into Implications for the Global Economy and Commodity Investors
Greg Sharenow and Mihir Worah (PIMCO) Mar 11, 2013
A revolution in shale oil production could have a significant impact on the global economy, oil futures and commodity investing. The shale oil revolution in the U.S. is a classic example of high prices and improving technology spurring methods of commodity production that may have been historically unimaginable. Although growth in U.S. shale production has not yet been sufficient to meaningfully weaken oil prices, it has had a notable impact on long-term price expectations, on both the upside and downside. After acting as a significant brake on economic activity during the run-up in prices during the last decade, greater energy availability will at the very least be a positive for global growth.

Europe’s Accounting Rules Are Destroying Its Banks
Gordon Kerr (Bloomberg) Mar 11, 2013
Late last year, a group of institutional investors sent a letter to officials in Brussels, warning that European Union accounting standards are “destabilizing banks” and “damaging national economies.”

Cut Global Red Tape to Promote Economic Growth
Cass R. Sunstein (Bloomberg) Mar 11, 2013
Imagine that you own a small but rapidly growing company in Vermont, and that your products are starting to sell in Maine, New Hampshire and Massachusetts. You would probably hate it if those states forced you to comply with inconsistent and redundant regulatory requirements.

High vaultage
Alice Ross and Claire Jones (FT) Mar 11, 2013
Central banks have become crucial participants in currency markets but traders say their activities are too opaque.

Africa must get real about Chinese ties
Lamido Sanusi (FT) Mar 11, 2013
A relationship that carries with it a whiff of colonialism amounts to little more than a missed opportunity on both sides.

Applaud central banks ‘soft’ on inflation
Sushil Wadhwani (FT) Mar 11, 2013
Fears that central banks are going soft on inflation are overdone, when history shows rising prices can be consistent with higher stock markets.

Bank leverage cycles
Galo Nuño & Carlos Thomas (VoxEU) Mar 12, 2013
Economists tend to agree that explosive deleveraging in the banking sector was a central element of the 2008 global financial crisis. This column argues that such deleveraging is far from unique. In fact, there is a ‘bank leverage cycle’ in which bank leverage, assets and GDP ramp up and down together; and this is true across financial subsectors. Such procyclicality strengthens the case for macroprudential regulations.

National Governments, Global Citizens
Dani Rodrik (Project Syndicate) Mar 12, 2013
National governments are accountable to their citizens, at least in principle. So the more global these citizens’ sense of their interests becomes, the more globally responsible national policy will be.

Currency War and Peace
Otaviano Canuto (Project Syndicate) Mar 12, 2013
The discussions at last month’s G-20 meeting of finance ministers were dominated by anxiety over so-called “currency wars.” But, to escape the crisis, global leaders must shift their focus to channeling the massive liquidity that advanced countries' controversial monetary policies have generated toward long-term investment financing.

East India Company: The Original Too-Big-to-Fail Firm
Nick Robins (Bloomberg) Mar 12, 2013
For an institution that has been defunct for almost 150 years, the East India Company still evokes powerful reactions across the world.

Trans-Pacific Talks Advance, Amid Speculation over Japan Entry
Bridges Weekly Trade News Digest, Volume 17, Number 9 Mar 13, 2013
Talks for a proposed Trans-Pacific Partnership (TPP) Agreement have "intensified," negotiators announced today after a ten-day session in Singapore, ahead of the impending end-year deadline that members have set for clinching a deal. Japan, meanwhile, is expected to soon state its intention to join the 11-country group, with an announcement possible as early as this Friday.

EU Parliamentarians Approve Farm Policy Reforms
Bridges Weekly Trade News Digest, Volume 17, Number 9 Mar 13, 2013
In a plenary session earlier today, European parliamentarians voted on proposals for reform of the EU's controversial Common Agricultural Policy, in the latest step towards defining the shape of the post-2013 farm subsidy framework.

Preparations Underway for Launching Trans-Atlantic Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 9 Mar 13, 2013
A month after announcing that they would be pursuing a bilateral trade and investment agreement, the EU and US have begun preparations for the formal launch of trade talks, which many expect by summer. While the European Commission announced yesterday that it now has an agreed draft mandate for the negotiations, US officials – including President Barack Obama – have similarly continued working over the past few weeks to shore up domestic support for the trans-Atlantic pact.

The Return of the Tobin Tax?
Edwin M. Truman (PIIE) Mar 12, 2013
Algirdas Semeta, EU Commissioner for Taxation, recently toured Washington touting the decision by eleven of the 17 members of the euro area to adopt a common financial transactions tax (FTT). In his public remarks, Commissioner Semeta invoked the name of Nobel-prize-winning, Yale economist James Tobin, who advocated such a tax in the 1970s to discourage foreign exchange market speculation. The rationale for the EU-proposed FTT is much broader than that for the Tobin tax, and it is an intellectual distortion to suggest otherwise.

Latin America: Mexican stand-off
John Paul Rathbone and Adam Thomson (FT) Mar 12, 2013
Strengthened by an unusual cross-party consensus, Enrique Peña Nieto is challenging the tycoons and duopolies that dominate the corporate landscape.

Growth comes with side effects for Singapore
Jeremy Grant (FT) Mar 12, 2013
Opaque business brings unwanted attention for the Lion City, which has discreetly built itself up as a financial hub to rival Switzerland in wealth management.

East’s ‘transition backlash’ alerts core EU
Neil Buckley (FT) Mar 12, 2013
Taken together with similar problems in Romania and Hungary, Bulgaria’s troubles show something deeper is going on beyond the union’s core

Dollar is the only serious reserve player
John Plender (FT) Mar 12, 2013
With the advantage of deep markets and recovering growth, the dollar’s pre-eminent position as the world’s main reserve currency remains.

Emerging markets: Who is vulnerable to overheating?
Maria Laura Lanzeni and Christian Weistroffer (DB Research) Mar 12, 2013
In an environment of large capital inflows to emerging markets (EMs) we try to provide a framework for detecting possible vulnerabilities in EMs emanating from excess growth in credit-to-GDP, the real effective exchange rate and/or the stock market. We find that for the EMs overall there is little reason for immediate concern. Of the individual regions, Asia seems to be the one to watch for a possible build-up of overheating pressures.

Lee Buchheit, fairy godmother to finance ministers in distress
Josephine Moulds (Guardian) Mar 12, 2013
Go-to expert for debt-ridden nations on why Spain is the euro's biggest problem, and why he prefers working for debtors

The Economist’s Stone
Jeffrey Frankel (Project Syndicate) Mar 13, 2013
This year marks the 100th anniversaries of two distinct institutional innovations in American economic policy: the introduction of the federal income tax and the establishment of the Federal Reserve. They are worth commemorating, if only because we are at risk of forgetting what we have learned since then.

The leaderless global economy: Can economic history suggest lessons?
Peter Temin & David Vines (VoxEU) Mar 13, 2013
Although policymakers want to help foster a global recovery, they are not sure how. Presenting lessons from the last two centuries, this column argues that we need to reduce unemployment first and deal with debt second if we are to see the back of this recession. Ultimately, the problems we face necessitate international cooperation. History shows us that international leadership is possible, and our current circumstances also show us that it is urgently necessary.

China seizes the day for market forces
Francesco Sisci (AT) Mar 13, 2013
A roll-back of the state by restructuring the functions and philosophy of ministries in China and a strong push, ostensibly the opposite direction, to hand control of vital concerns such as energy policy back to the center, are the deep and long-term changes emanating from this month's National People's Congress. Together they suggest real urgency to give space to market forces.

Commodities on the Rise
Dambisa Moyo (Project Syndicate) Mar 13, 2013
The commodity super-cycle – in which commodity prices reach ever-higher highs, but fall only to higher lows – is not over. Despite euphoria around shale gas (indeed, despite weak global growth), commodity prices have risen by as much as 150% since 2008 – a trend that will continue to threaten living standards worldwide.

Blinded by the Light
Bjørn Lomborg (Project Syndicate) Mar 13, 2013
On March 23, a billion or more people will participate in “Earth Hour” by turning off their lights from 8:30-9:30 in the evening. The organizers say that they are providing a way to demonstrate one’s desire to “do something” about global warming, but the stark reality is that Earth Hour will increase carbon emissions.

Singing Them 1% Blues
Robert B. Zoellick (WSJ) Mar 14, 2013
Insurgent political movements, such as the Tea Party, make it easy to disrupt traditional hierarchies in government and business.

The interaction between monetary and macroprudential policies
Stijn Claessens & Fabian Valencia (VoxEU) Mar 14, 2013
Inflation targeting once seemed sufficient, but the Global Crisis showed that maintaining financial stability and price stability requires more than the monetary-policy tool. We are witnessing the rise of macroprudential policy. This column discusses how monetary and macroprudential policies interact and what it means for policy and institutional design. Regardless of whether both policies are assigned to the same authority or to two authorities; separate decision-making, accountability and communication structures are required.

India: Cash in hand
Amy Kazmin (FT) Mar 13, 2013
A bold experiment by New Delhi to crack down on corruption by replacing subsidies with direct cash transfers is struggling.

Beware monetary experimentation
Martin Taylor (FT) Mar 13, 2013
Countries are being enrolled in the economic equivalent of clinical trials, but fiscal relaxation feels less risky.

Long-term battle to drive out short-term risk
Paul Woolley (FT) Mar 13, 2013
Risk metrics should be based on the cash flows of assets, not on their market prices, and the use of derivatives should be limited.

Mexico's Moment
Tim Harcourt (Globalist) Mar 13, 2013
Why is Mexico concerned that Brazil might be stealing its spotlight as a Latin American economic success story?

China must push for economic change
Henry Paulson (FT) Mar 14, 2013
No nation that has competitive capital markets yet does not allow global financial institutions to compete.

Remember lessons of 2007 in rush for junk
Gillian Tett (FT) Mar 14, 2013
While tumbling bond yields have sparked debate, what has received significantly less attention is the issue of maturity transformation.

China’s Billionaire Bubble Stands in Xi Jinping’s Way
William Pesek (Bloomberg) Mar 14, 2013
Now that Xi Jinping officially holds the reins in Beijing, the world is asking this question: Can China’s new leader revamp an economy that may become the world’s largest during his 10-year term? Here’s an even better one: Will Beijing let him?

The Inflation of Hugo Chávez
Jorge G. Castañeda (Project Syndicate) Mar 14, 2013
Hugo Chávez, the recently deceased Venezuelan president, oversaw a sharp drop in poverty and included millions of marginalized citizens in politics for the first time. But poverty has plummeted in almost every country in the region since the start of the century – and at a far lower cost.

Bullying India’s Central Bank Won’t Help Its Economy
Rajrishi Singhal (Bloomberg) Mar 14, 2013
After a brief lull, the strain in the fractious relationship between India’s Finance Ministry and its central bank, the Reserve Bank of India, is back. India’s annual budget ritual last month, in which Finance Minister Palaniappan Chidambaram presented the country’s economic and fiscal policy, provided a brief respite.

For America, Decline is a Choice
William C. Martel (Globalist) Mar 15, 2013
In reality, decline is not a foregone conclusion but a deliberate political choice that builds from a failure to define what matters most to the nation.

Migration Is Development
Peter Sutherland (Project Syndicate) Mar 15, 2013
It is perhaps understandable that the original Millennium Development Goals did not mention either internal or international migration. But migration is the original strategy for people seeking to escape poverty, mitigate risk, and build a better life, and its economic impact today is massive.

Inequality and Democratic Capitalism
Branko Milanovic (Globalist) Mar 15, 2013
Was the second half of the 20th century an unusual interlude, when capitalism became entwined with democracy, the welfare state and liberalism?

The 'Good Global Citizen' remit for the international community: A novel responsibility for the IMF
Biagio Bossone & Roberta Marra (VoxEU) Mar 16, 2013
Since 2008, we have learned that the root causes of global economic instability are more than the sum of domestic instabilities. This column calls for a broad reconsideration of the principles underpinning current global economic governance; arguing that in a globalised world, isolated domestic economic policymaking is not enough. The international community needs to adhere to a ‘Good Global Citizen’ remit – housed by the IMF – if we are to tackle global economic policy under collective responsibility.

Trade costs in the developing world: 1995-2010
Jean-François Arvis, Yann Duval, Ben Shepherd & Chorthip Utoktham (VoxEU) Mar 17, 2013
The world ain’t flat. Distance has massive effects on all manner of international flows, but measuring its empirical impact has been hindered by poor measurement of bilateral trade costs. This column introduces a new global dataset of bilateral trade costs prepared by UNESCAP and the World Bank. The data stress the importance of supply chains and connectivity constraints in explaining the higher costs and lower levels of trade integration observed in developing countries.

The Insupportable Equilibrium of Economic Thought
Mark Buchanan (Bloomberg) Mar 17, 2013
Conjure an image in your mind: a pencil resting on a small table, perhaps next to a notebook. In what position did you imagine the pencil? Lying on its side, right? Why not upright, with either the eraser or the graphite tip touching the table and the rest pointing into the air?

Regulation must not curb innovation
John Authers (FT) Mar 17, 2013
Research reveals that innovation can stoke economic growth, and lead to greater fragility in the financial system – but R&D still has its place.

Why bankers are intellectually naked
Martin Wolf (FT) Mar 17, 2013
‘The Bankers’ New Clothes’ by Anat Admati and Martin Hellwig warns that the causes of the financial crisis will return.

Reforming Europe
Lawrence Summers (WP) Mar 17, 2013
Policymakers shouldn’t relax just yet.

Cyprus: The next blunder
Charles Wyplosz (VoxEU) Mar 18, 2013
The Cyprus bailout package contains a tax on bank deposits. This column argues that the tax is a deeply dangerous policy that creates a new situation, more perilous than ever. It is a radical change that potentially undermines a perfectly reasonable deposit guarantee and the euro itself. Historians will one day explore the dark political motives behind this move. Meanwhile, we can only hope that the bad equilibrium that has just been created will not be chosen by anguished depositors in Spain and Italy.

Delhi needs to sell the idea of the market
Gurcharan Das (FT) Mar 18, 2013
Reflecting on the nation’s poor governance, Indians like to say their country ‘grows at night while the government sleeps’.

Rising dollar marks big investment shift
George Magnus (FT) Mar 18, 2013
US currency should be expected to trend higher, and put industrial commodities and emerging market currencies and local debt under pressure.

Falling Out of Love With China
David Shambaugh (NYT) Mar 18, 2013s
Why Beijing's declining global prestige matters, and how to get it back.

Professor Monti and the bubble
Paolo Manasse, Giulio Trigilia & Luca Zavalloni (VoxEU) Mar 19, 2013
Who saved Italy? This column argues that the crisis began with Silvio Berlusconi and ended with Mario Monti. Evidence suggests that restoring a sense of credibility to Italian policymaking was difficult to earn but may be very easy to lose (as the recent run on Italian debt suggests). New and old Italian politicians cannot afford to underestimate the formidable challenge ahead: getting Italy out of this depression without jeopardising its credibility.

Democratic legitimacy of the Eurozone
Jasper Blom & Geoffrey R D Underhill (VoxEU) Mar 19, 2013
David Cameron’s promise of a referendum on British participation in the EU has re-ignited the debate about the EU’s democratic legitimacy, just as the struggle to overcome the crisis continues. This column argues that in order to both successfully resolve the crisis and maintain states’ ability to sustain liberal finance, a substantial shift in policy is required. Enhancing the democratic legitimacy of crisis resolution measures and wider financial reforms is essential. Without diffuse support for reforms, crisis resolution is likely to collapse under centrifugal populist pressures.

Europe, Italian-Style
Michael Spence (Project Syndicate) Mar 19, 2013
The outcome of Italy’s election will most likely leave the country – the eurozone’s third-largest economy and the world’s third-largest sovereign-debt market – without a stable government. As a result, it will be difficult to sustain a reform program that is vigorous enough to satisfy the ECB and the eurozone core.

Crumbling BRICS
Jaswant Singh (Project Syndicate) Mar 19, 2013
At this month's BRICS summit in Durban, the leaders of Brazil, Russia, India, China, and South Africa will set ambitious goals. But, given the obstacles to cooperation – from mutual distrust to disparate interests – that exist among them, they are more likely to achieve their goals individually.

Europe’s Lost-and-Found Decade
Barry Eichengreen (Project Syndicate) Mar 19, 2013
It is unlikely that Europe’s economy will follow the pattern of emerging-market crises and rise, phoenix-like, from the ashes. But, for better or worse, the fact that the most severe political and social turbulence is yet to come at least means that Europe will be unable to afford the dithering that produced Japan’s lost decade.

Russia’s Cyprus Reaction Smacks of Hypocrisy
Leonid Bershidsky (Bloomberg) Mar 19, 2013
For a country whose government and banks reneged on tens of billions of dollars in foreign obligations during its own financial crisis in 1998, Russia has responded with incongruous fury to the prospect of a similar event in Cyprus.

Yes, Cyprus Is Different
Marc Champion (Bloomberg) Mar 19, 2013
One lesson from the Cyprus bailout debacle is that in the eyes of its fellow European Union members, Cyprus really is different.

Today’s Forecast: Sunny With a Chance of a Housing Bubble
Mark Buchanan (Bloomberg) Mar 19, 2013
At the time of World War I, many meteorologists had all but given up on the idea of accurate and scientific weather forecasting. Then a physicist and ambulance driver by the name of Lewis Richardson, in spare moments between terrifying bouts rescuing the injured, undertook a momentous project.

Markets: The ghosts of ’94
Michael Mackenzie, Robin Wigglesworth and Stephen Foley (FT) Mar 19, 2013
With US interest rates close to zero, veteran bond traders fear the omens point to a repeat of the catastrophic collapse of the mid-nineties.

Cyprus reveals chinks in ECB armour
Ralph Atkins (FT) Mar 19, 2013
European sovereign bond markets have largely shrugged off the threat to financial stability but it is a reminder of the limits of central banks’ powers

Chinese seek change as continuity rules
Henny Sender (FT) Mar 19, 2013
The wave of money finding its way to Silicon Valley is part of a general surge of capital leaving China.

A Cypriot contagion?
Robert J. Samuelson (WP) Mar 19, 2013
Will island’s woes infect the rest of Europe?

The Chávez Way
Robert Skidelsky (Project Syndicate) Mar 20, 2013
The debate over Hugo Chávez’s political legacy is a posthumous re-enactment of the ideological battles that were fought while he was alive. The battle for his economic legacy is more straightforward: it comes down to how he managed Venezuela’s oil wealth.

Debt-Friendly Stimulus
Robert J. Shiller (Project Syndicate) Mar 20, 2013
With much of the global economy apparently trapped in a long and painful austerity-induced slump, it is time to admit that the trap is entirely of our own making. We have constructed it from unfortunate habits of thought about how to handle spiraling public debt.

China’s Hidden Debt Risk
Zhang Monan (Project Syndicate) Mar 20, 2013
China’s national balance sheet, which boasts positive net assets, has garnered significant attention in recent years. But, to assess China’s debt risk accurately, policymakers and economists must consider the risks that lie in the country's asset structure, as well as liabilities that are not included on its balance sheet.

Cyprus’s Four Options to Avoid Banking Collapse
Megan Greene Bloomberg) Mar 20, 2013
The only thing worse than Cyprus accepting the rotten bailout program that European policy makers agreed on late last week was Cyprus rejecting it. Yesterday, the parliament voted decisively against the terms of the bailout, with 36 members opposing it, the ruling party abstaining and not a single vote in favor.

Japan Announces Goal of Joining Trans-Pacific Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 10 Mar 20, 2013
In a highly-anticipated announcement made last Friday, Japanese Prime Minister Shinzo Abe confirmed that his country will seek to join the eleven others that are negotiating the so-called Trans-Pacific Partnership (TPP) Agreement. If successful, Japan would be one of the largest economies involved in the talks, second only to the US.

Trade and Currency in the Spotlight as Chinese President, US Treasury Secretary Meet
Bridges Weekly Trade News Digest, Volume 17, Number 10 Mar 20, 2013
Washington and Beijing's oft-contentious trade relationship came to the fore this Tuesday, as newly-instated Chinese President Xi Jinping met with recently-appointed US Treasury Secretary Jack Lew. The high-profile event – which also addressed issues such as currency and intellectual property – marked both Xi's first meeting as president with a senior foreign official, and the first major trip for the new US Treasury Secretary.

Why Global Economies Face an Age of Deflation
A. Gary Shilling (Bloomberg) Mar 20, 2013
In recent years, monetary and fiscal stimulus across the world have led to the assumption that serious inflation, if not hyperinflation, is on its way. I believe chronic deflation is more likely.

Three steps to stop financial collapse
Howard Davies and Susan Lund (FT) Mar 20, 2013
Closer co-operation, reform and integration are needed to restore capital mobility.

Japan is setting course for hyperinflation
Scott Minerd (FT) Mar 20, 2013
Price increases that result from rapid expansion of money supply can cause insidious cycle that requires creation of ever-larger amounts of new money.

Scandinavia: Model management
Richard Milne (FT) Mar 20, 2013
Swedish business is being cast as a model for long-term stability and growth but critics fear this approach might not work elsewhere. By Richard Milne

The Peru Kids Left Behind by the Boom
Marie Arana (NYT) Mar 20, 2013
Latin America's growth hasn't closed the rift between rich and poor.

Europe's Phony War: Austerians Vs. Deficitarians
Marc De Vos (Globalist) Mar 20, 2013
Are European nations really well-advised to follow the alluring policy prescriptions of U.S.-based deficit boosters?

The transatlantic trade talks and economic policy research: Time to re-tool
Simon J Evenett & Robert M. Stern (VoxEU) Mar 21, 2013
The US and the EU have announced their intentions to launch trade talks – the Transatlantic Trade and Investment Partnership. This column argues that this should not be thought of as a standard tariff-lowering deal with a few extras thrown in for good measure. Rather, we don’t really know what it will do because trade economists have failed to develop the necessary tools for understanding its impact. It is time for policy analysts to re-tool.

Global Markets' Time Factor
Mohamed A. El-Erian (Project Syndicate) Mar 21, 2013
In recent months, the dichotomy between booming financial markets and sluggish economies (and dysfunctional politics) has loomed large. The critical element of time – and who controls it – could well mean the difference between an orderly global resolution of today’s ongoing financial problems and a return to serious trouble.

Rolling the Dice in Cyprus
Ashoka Mody (Project Syndicate) Mar 21, 2013
The task was never going to be an easy one: impose losses worth about €5.8 billion on lenders to the Cypriot government and depositors with the country’s banks. And now the rejection of that effort has led Europe to its latest impasse.

How Franklin Roosevelt Secretly Ended the Gold Standard
Eric Rauchway (Bloomberg) Mar 21, 2013
On March 4, 1933, Franklin D. Roosevelt became president for the first time, promising an “adequate but sound” currency. The next day, a Sunday, he closed the nation’s banks. “We are now off the gold standard,” he privately declared to a group of advisers. Goldbugs in the president’s circle immediately began prophesying doom. One of his aides, Lewis Douglas, proclaimed “the end of Western civilization.”

Berlin is right to say no gain without pain
Josef Joffe (FT) Mar 21, 2013
Insisting on financial discipline in the rescue of profligate countries such as Cyprus puts Germany in a tough position.

A call to reverse urbanisation in Asia
Chandran Nair (FT) Mar 21, 2013
Governments must make the villages and townships that still house most Asians places that offer decently paid work.

Effect of Cyprus Exit From Euro Seen as Limited
Landon Thomas Jr (NYT) Mar 21, 2013
A messy departure from the euro would have a devastating effect on Cyprus's citizens, but Europe's losses from a Cypriot banking collapse would be minimal compared with the havoc that a Greek exit would have created.

Cyprus: What are the alternatives?
Thorsten Beck (VoxEU) Mar 22, 2013
Cypriot banks urgently need restructuring and downsizing, but a functioning financial system is necessary to handle Cyprus’s transformation to an economic model not based on an oversized banking sector. This column argues that splitting the Cypriot banking system into a bad ‘legacy’ part and a good forward-looking part seems the only feasible and effective solution to resolve the current crisis and restore trust. The Eurozone's resources would be most useful in this bank-resolution process.

Public investments for long-term economic growth: the case of health
Michael Stolpe (VoxEU) Mar 22, 2013
The crisis has shot holes in government budgets devoted to pro-growth public goods. This column argues that health-related public goods support long-term economic growth. Governments may be more inclined to focus on spending related directly to jobs, such as education and welfare-to-work programmes, but health should not be forgotten.

Quitting the Quota
Andrew Sheng and Xiao Geng (Project Syndicate) Mar 22, 2013
Rather than rely on unsustainable quotas to curb exorbitant demand for property and cheap credit, China’s leaders must address its root cause – the low cost of capital. This will require China to raise interest rates to market-clearing levels, while maintaining some capital-account control.

BRICS Not That Sturdy
Harsh V. Pant (YaleGlobal) Mar 22, 2013
China dominates BRICS with an economy larger than that of four other members combined

Mario Draghi’s Opiate of the Markets
Luigi Zingales (Project Syndicate) Mar 22, 2013
The “outright monetary transactions” scheme announced by ECB President Mario Draghi last July has served as the proverbial “bazooka” – a gun so powerful that it does not need to be used to deter speculative attacks on the euro. In other words, Draghi’s bazooka has anesthetized markets, impairing their ability to assess risk.

Demographic shift and implicit liabilities in the Big 4
Markus Jaeger (DB Research) Mar 22, 2013
China, Germany, Japan and the US are the world’s four largest economies. Together, they make up 45% of global GDP (at market exchange rates). The world’s third and fourth-largest economies, Germany and Japan, have already entered a phase of demographic stagnation and decline. So, amazingly, has China, whose working-age population peaked in 2011.

Fiscal policy and consumption
Tullio Jappelli & Luigi Pistaferri (VoxEU) Mar 23, 2013
Crisis-stricken governments have enacted large stimulus packages to counteract the recent recession. But how are these financed, and are consumers responding? This column argues that we must understand marginal propensity to consume in order to optimally design fiscal policy, outlining new research on how to get the best measurements. Through several policy simulations, it’s clear how important it is to truly understand the relationship between stimulus packages and marginal propensities to consume.

India’s Five Thoughts on China
Sanjaya Baru (Project Syndicate) Mar 24, 2013
India should welcome Chinese President Xi Jinping's “five-point proposal” for Sino-Indian relations, for it recognizes the two countries’ growing economic relationship and global cooperation. This would be a good starting point for Indian Prime Minister Manmohan Singh’s conversation with Xi at this week’s BRICS summit.

Finance: Cut down to size
Daniel Schäfer (FT) Mar 24, 2013
Since the 1980s, bankers’ pay has dramatically outstripped that of other professionals but experts believe that the days of vast bonuses, particularly in Europe, are numbered.

London Whale is the cost of too big to fail
Mark Roe (FT) Mar 24, 2013
The subsidy from the taxpayer that keeps a badly run, dysfunctional behemoth in business creates much of the value the shareholder enjoys.

Asian currency moves misunderstood
John Authers (FT) Mar 24, 2013
For the longer term, companies that offer some play on the Chinese consumer make eminent sense. And oddly, the same is true for Japan.

Europe’s Cyprus blunder and its consequences
Nicolas Véron (VoxEU) Mar 25, 2013
The Monday morning Eurozone Cyprus bailout is now public, although details are scant. This column argues that this package cancels out some of the mistakes in last week’s package. Last week, the Troika should have vetoed the small-deposit tax and prepared a plan B for the Cypriot parliament’s rejection. Avoiding the risky scenario of a Cyprus exit will require further fiscal commitments from Eurozone partners. One possibility is a temporary, but EZ-wide, 'deposit reinsurance', or backing of national deposit-guarantee schemes by the ESM.

Eurozone: Looking for growth
Laurence Boone, Céline Renucci & Ruben Segura-Cayuela (VoxEU) Mar 25, 2013
What happens after the crisis ends? This column estimates the long-term effects of the current cyclical downturn on Eurozone economies. In the absence of any real impetus for bold reform, estimates show that the damage will indeed be long lasting, permanently impairing growth for an ageing population that requires higher growth capacity more than ever before.

Austerity’s Children
Simon Johnson (Project Syndicate) Mar 25, 2013
Economists typically frame “fiscal adjustment” as an abstract and complex goal, though the issue boils down to deciding who will bear the brunt of measures to reduce the budget deficit. In America, that distributional choice has now been made: poor children must pay.

A New Business Model for Cyprus
Javier Solana (Project Syndicate) Mar , 2013
Today, the small, divided island of Cyprus is facing yet another economic storm. But there is light on the horizon: economic hope in the form of huge offshore gas reserves, which promise not only to transform the island’s economy, but also to improve regional cooperation and revive reunification efforts.

Investing in Latin America’s Future
IMF Survey Mar 25, 2013
Economic growth in Latin America is expected to remain strong in 2013, but the region needs more growth-enhancing and employment-generating policies to reduce poverty and income inequality, said Alejandro Werner, the IMF’s new Director of the Western Hemisphere Department.

On the Reliability of Chinese Output Figures
John Fernald, Israel Malkin, and Mark Spiegel (FRBSF) Mar 25, 2013
Some commentators have questioned whether China’s economy slowed more in 2012 than official gross domestic product figures indicate. However, the 2012 reported output and industrial production figures are consistent both with alternative Chinese indicators of the country’s economic activity, such as electricity production, and trade volume measures reported by non-Chinese sources. These alternative domestic and foreign sources provide no evidence that China’s economic growth was slower than official data indicate.

New Chinese Leader Offers Africa Assurance and Aid
Chris Buckley (NYT) Mar 25, 2013
President Xi Jinping defended China's economic stake in many African countries during a speech on Monday in Tanzania, and promised aid in a bid to counter fears over competitive Chinese companies.

How to Make America a Global Tax Haven
Ramesh Ponnuru (Bloomberg) Mar 25, 2013
“It’s just far-fetched to believe that Congress would lower corporate rates at the expense of small business,” says Representative Devin Nunes, a California Republican.

The Benefits of Chronic Deflation
A. Gary Shilling (Bloomberg) Mar 25, 2013
There is an important distinction between good deflation caused by excess supply and bad deflation created by deficient demand.

BRICS go over the wall
Pepe Escobar (AT) Mar 26, 2013
Atlanticist, Washington-consensus fanatics who say the BRICS grouping is on its deathbed are blind to the reality that its members - while protecting the global economy from casino capitalism - will increasingly take a political role in a multipolar world. As the North is overtaken by the global South at a dizzying speed, all stagnant and bankrupt Western elites can do is cling on for grim life.

Capital controls will put the euro at risk
Guntram Wolff (FT) Mar 25, 2013
With the measures, the currency in Cyprus is no longer worth the same as the currency held by any other bank in the eurozone.

Forget Cyprus and enjoy the risk rally
Erik Nielsen (FT) Mar 25, 2013
The party is far from over for equities and other risk assets, with money leaving havens in pursuit of positive yield.

Why the world needs reckless bankers
Michael Pettis (FT) Mar 25, 2013
Long-term wealth creation accrues to societies in which the financial system willingly funds risk-taking entrepreneurs.

Brazil: Humbled heavyweight
Joe Leahy (FT) Mar 25, 2013
The growth that made the nation Latin America’s economic champion has stalled and the government is searching for revival measures.

Mar 25, 2013

Mar 25, 2013

Brazil and the Global Battle to Eliminate Extreme Poverty
Rogerio Studart (Globalist) Mar 26, 2013
Has Latin America's largest country built a model for how to reduce poverty in lean budgetary times?

Fire-sale FDI: All smoke and no fire?
Ron Alquist, Rahul Mukherjee & Linda Tesar (VoxEU) Mar 26, 2013
Is foreign direct investment different in times of crisis? This column tests the ‘fire-sale foreign direct investment hypothesis’, finding that acquisitions undertaken during crisis periods do not fundamentally differ from those undertaken during non-crisis periods. The fire-sale foreign direct investment notion may well be ‘all smoke, and no fire’.

India must do more to open up banking
James Crabtree (FT) Mar 26, 2013
The problem with the central bank is not that it is mistaken to issue new licences, but that it is likely to issue too few, and to do so too slowly

China’s route to ‘responsibility’
Yukon Huang (FT) Mar 26, 2013
The country’s economic success is raising expectations over its behaviour and granting it more say in the trade system will help.

Cyprus capital controls threaten eurozone
John Plender (FT) Mar 26, 2013
The longer such controls remain, the more uncertain the effects of unwinding them and the more dangerous, politically, it will become to alter course.

Cyprus Bends With the German Wind
Raymond Zhong (WSJ) Mar 26, 2013
It says something about a country when the archbishop is also the most visible financial pundit.

Valuing the United Nations
Gareth Evans (Project Syndicate) Mar 26, 2013
The entire UN system and related entities, together with current peacekeepers, adds up to around 215,000 people worldwide, at an annual cost of around $30 billion. That is less than one-eighth of the 1.8 million staff employed by McDonald's and its franchisees worldwide, and also less than Wall Street employees received in bonuses in 2007.

The Dirge of Cyprus
Harold James (Project Syndicate) Mar 26, 2013
A state, especially in the modern form of the European welfare state, depends on effective mechanisms for arbitrating and resolving social disputes. It is these mechanisms that, as the turmoil surrounding Cyprus has shown, the EU lacks.

Great Depression Hit One Country Hardest of All
Joe Martin (Bloomberg) Mar 26, 2013
The Great Depression devastated many economies. But one country arguably suffered more than any other: Canada. By the time its economy reached bottom in 1932, Canada had suffered a staggering decline of 34.8 percent in per- capita gross domestic product. No other developed nation was as hard-hit.

The Five Ways Deflation Has Already Taken Hold
A. Gary Shilling (Bloomberg) Mar 26, 2013
Of the seven varieties of deflation, five are already at work in the U.S. economy.

Cyprus finds not all nations are equal
Christopher Pissarides (FT) Mar 27, 2013
The treatment of the island shows that the eurozone is a group where the interests of the big nations stand highest.

South Africa should forget the Brics era
Ruchir Sharma (FT) Mar 27, 2013
The ANC’s liberation dividend is running out and the economy needs investment and a more business-friendly environment.

Personal banking, the eurozone way
Robert Shrimsley (FT) Mar 27, 2013
As the Eurozone’s banks deal with the fallout from Cyprus, it is managers as well as customers who are feeling the pressure.

A modern history of fiscal prudence and profligacy
Ariel Binder, Paolo Mauro, Rafael Romeu & Asad Zaman (VoxEU) Mar 27, 2013
How confident are we that major developed countries remain fiscally prudent? Having developed a new dataset, this column gauges the degree of fiscal prudence or profligacy for major economies over the past several decades. From the evidence, it’s clear that the global financial crisis has posed the biggest policy challenge in living memory, with varying responses. How these responses turn out very much depends on whether the slowdown in growth is long-lasting or not.

Love the Bank, Hate the Banker
Raghuram Rajan (Project Syndicate) Mar 27, 2013
Public discourse is rarely nuanced: the public's attention span is short, and subtleties tend to confuse. Nowhere is this more obvious than in current debates about bank regulation, in which bankers and their critics have staked out positions that are sharp, shrill, and almost certainly wrong.

The Temptation of China’s Capital Account
Yu Yongding (Project Syndicate) Mar 27, 2013
The People's Bank of China has been pursuing capital-account liberalization at an increasing rate since 2009. But Chinese policymakers should recognize the significant risks inherent in relaxing capital controls – risks that imply the need for a more cautious approach.

The New Delhi Consensus
Shashi Tharoor (Project Syndicate) Mar 27, 2013
Like many developing countries, “self-reliance” and economic self-sufficiency were India’s national mantras long after independence. Indeed, one of the more remarkable (though largely unremarked) developments in recent Indian politics has been the startling shift in the country’s discourse about capitalist economics.

Escape From the Euro Zone: A Tragedy in Three Acts
Caroline Baum (Bloomberg) Mar 27, 2013
What if Cyprus said no?

Toward a New Consensus on Monetary Policy
Bloomberg Mar 27, 2013
If you’ve ever experienced high inflation, you’re unlikely to forget it. In the decades between the end of World War II and the creation of Europe’s new currency, Germany’s central bank set the global standard for sound finance and monetary conservatism. Germany’s folk-memory tied the hyperinflation of the 1920s to the destruction of German society and the rise of Adolf Hitler. “Never again” was the idea that motivated, and to some degree still motivates, German monetary policy.

Central Banks Must Master Their Fear of Inflation
Bloomberg Mar 27, 2013
Sometimes you can learn the lessons of history too well. Today’s top central bankers formed their ideas about monetary policy from the inflation of the 1970s and the recessions that followed. The slump that began in 2008 is different, and calls those ideas into doubt.

When a Euro Isn't a Euro
WSJ Mar 27, 2013
Capital controls are easier to impose than to remove.

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Donald Luskin and Lorcan Roche Kelly (WSJ) Mar 27, 2013
The banking crisis in Cyprus prompted an overdue financial reckoning that, with luck, will spell the end of 'too big to fail.'

Philippines Gets Investment-Grade Credit Rating
Bettina Wassener and Floyd Whaley (NYT) Mar 27, 2013
The upgrade by Fitch gives the country, for the first time in its history, an investment-grade rating to go along with a fast-growing economy.

But Germans Do Consume
Holger Schmieding (Globalist) Mar 27, 2013
Is there any truth to the idea that German austerity is harming Europe's economic recovery?

India’s Agriculture on the Brink
Deepak Gopinath (YaleGlobal) Mar 27, 2013
Misguided policies boost short-term output, yet may transform India into a food importer.

The Truth About Geoengineering
David G. Victor, M. Granger Morgan, Jay Apt, John Steinbruner & Katharine Ricke (FA) Mar 27, 2013
With predictions about climate change growing direr every week, geoengineering (which includes everything from fertilizing the oceans in an attempt to cajole great blooms of carbon-sucking zooplankton to spraying particles into the upper atmosphere to make the earth more reflective) is starting to look more attractive. But the science still lags behind the ambitions. To understand how such schemes would work in practice -- and what their consequences would be -- it is time to start small-scale field tests.

The capital controls in Cyprus and the Icelandic experience
Jon Danielsson (VoxEU) Mar 28, 2013
Cyprus has imposed temporary capital controls. This column sheds light on how temporary and how damaging they are likely to be, based on Iceland’s experience. The longer controls exist, the harder they are to abolish. Icelandic capital controls, which have been ‘temporary’ for half a decade, deeply damage the economy by discouraging investment. We can only hope the authorities that created the chaos in the first place realise that temporary really needs to mean temporary.

International capital flows during crises: Gross matters
Fernando A Broner, Tatiana Didier, Aitor Erce & Sergio Schmukler (VoxEU) Mar 28, 2013
How much do we really know about net capital flows? Presenting new research, this column lays out a number of new stylised facts on the dynamics of gross capital flows and their implications for policymaking. Interestingly, if we’re to learn from relatively crisis-resilient middle-income countries, policymakers may well need to monitor and perhaps regulate the separate behaviour of domestic and foreign investors to weather future crises.

Europe risks going too far on moral hazard
Nicolas Véron (FT) Mar 28, 2013
A better path must be chartered between an untenable taxpayer backing of lenders and the unrealistic punishing of their creditors.

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Can Income Inequality Destabilize the U.S. Economy?
Uri Dadush, Kemal Dervis, Sarah P. Milsom and Bennett Stancil (Globalist) Mar 28, 2013
Income inequality is doing a lot more damage than just fraying the political culture.

China's Glass Ceiling
Geoff Dyer (FP) Mar 28, 2013
Sure, the Middle Kingdom is becoming a superpower, but it's always going to be No. 2.

Rubles in the Sun
Anna Nemtsova (FP) Mar 28, 2013
Is Vladimir Putin the big winner of the Cypriot banking crisis?

Paths to Sustainable Power
Jeffrey D. Sachs Mar 28, 2013
The surest bet on the future of energy is the need for low-carbon energy supplies. Early movers may pay a slightly higher price today for these strategies, but they and the world will reap long-term economic and environmental benefits.

The BRICS Expose the West’s Hypocrisy
William Pesek (Bloomberg) Mar 28, 2013
Who do they think they are, these upstart economies, Brazil, Russia, India, China and South Africa?

Break Up the BRICS
Bloomberg View Mar 28, 2013
If this week’s BRICS summit in Durban, South Africa, passed you by, we don’t blame you. The leaders of Brazil, Russia, India, China and South Africa met, as they do once a year, to advance their common interests. They found, as they do once a year, that they don’t have many, so not much happened.

The decoupling of the US and European economies: Evidence from nowcasting
Lucrezia Reichlin (VoxEU) Mar 29, 2013
The Eurozone and US business cycles seems to have decoupled, but is Germany on the US or Eurozone side of the divide? This column presents recent results from the Now-Casting model on whether this US-Eurozone decoupling also applies to Germany. If this is right, the German stock market – which seems to predict Germany’s convergence to the US path – is due for a correction.

The Federal Reserve and the Financial Crisis
Jeffrey R. Hummel (WSJ) Mar 28, 2013
he Fed exacerbated the Depression with an inept response and caused the Great Inflation of the 1970s with an expansionary policy.

Cyprus Capital Controls Come Years After They Were Needed
Floyd Norris (NYT) Mar 28, 2013
Cyprus would be better off now had huge amounts of money not flowed into its banks in 2008 and 2009.

China on the Move
Stephen S. Roach (Project Syndicate) Mar 29, 2013
After six years of weighing the options, China is now firmly committed to implementing a new growth strategy. But it will take courage and sheer determination to tackle the biggest obstacle of all – deeply entrenched local and provincial power blocs.

Argentina: What the Pope Left Behind
Tim Harcourt (Globalist) Mar 29, 2013
Now is the time for Argentina to stop gaming its economic statistics and focus on real economic reforms.

Strengthening the I.M.F.
NYT Mar 29, 2013
It is in America's interest that Congress ratify proposed changes to the fund.

Infrastructure: The governance failures
Nicklas Garemo & Jan Mischke (VoxEU) Mar 30, 2013
Investment in infrastructure can bring growth and social benefits. This column highlights the infrastructure opportunities open to depressed economies, stressing that the main obstacles are governance-related. To bring opportunities to life will require an overhaul of infrastructure governance – a root cause of infrastructure projects’ poor productivity.

Strengthening Resilience in Developing Countries
J. Eric Smith (Globalist) Mar 30, 2013
Can giant insurance companies help small customers in developing countries bounce back from environmental catastrophes?

When Interest Rates Rise
Martin Feldstein (Project Syndicate) Mar 30, 2013
Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities. When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them – including banks and other financial institutions – will be hurt.

The Politics of Moral Hazard
Jean Pisani-Ferry (Project Syndicate) Mar 30, 2013
The crisis in Cyprus has shown that the true contest in Europe is less between moral hazard and financial stability than it is between financially sensible and politically acceptable solutions. But politics in Europe is national, so what one parliament regards as the only possible solution another regards as entirely unacceptable.

Why the Euro Is Doomed in 4 Steps
Matthew O'Brien (Atlantic) Mar 30, 2013
It's the gold standard, minus the shiny rocks.

Fiscal consolidation and implications of social spending for long-term fiscal sustainability
Rossana Merola & Douglas Sutherland (VoxEU) Mar 31, 2013
During the economic and financial crisis, fiscal positions across OECD countries deteriorated sharply. This column agues that population ageing and trends in social spending will further challenge the sustainability of fiscal balances. Research suggests that the scale of fiscal consolidation that will be needed to ensure long-term sustainability is large, but policymakers can look at the potential benefits of policy reform in mitigating budget pressures.

Economics will catch up with the euro
Wolfgang Münchau (FT) Mar 31, 2013
With creditor nations refusing a genuine banking union, the hurdle for a case in favour of eurozone exit is shockingly low.

Confessions of a Keynesian heretic
Roger Farmer (FT) Mar 31, 2013
A way to get people back to work is to reflate the asset markets. Central banks and treasuries should intervene to reflate the bubble.

Trade deals show power politics is back
Zaki Laïdi (FT) Mar 31, 2013
The American strategic objective in its negotiations is to contain China’s rise by setting a high regulatory bar.

Bargain basement banks not such a bargain
John Authers (FT) Mar 31, 2013
The Cyprus crisis has produced what optimists might call a nice buying opportunity but it has also set important precedents which cannot be reversed.

America the Innovative?
Eamonn Fingleton (NYT) Mar 31, 2013
As China becomes richer, is it destined to pass the United States as the world's most inventive nation?

Trade’s bad rap
Robert J. Samuelson (WP) Mar 31, 2013
Its virtues are underrated; its vices overstated.

Own the Goals
John W. McArthur (FA) Apr 1, 2013
Since their inception in 2000, The Millennium Development Goals have revolutionized the global aid business, using specific targets to help mobilize and guide development efforts. They have encouraged world leaders to tackle multiple dimensions of poverty simultaneously and provided a standard for judging performance. As their 2015 expiration looms, the time has come to bank those successes and focus on what comes next.

The City and Europe: Ties that bind
John Thornhill and Patrick Jenkins (FT) Apr 1, 2013
Pressure for the City to switch its focus from the eurozone to emerging markets is building but divorce from the EU would harm both parties.

Questions for the world’s next trade chief
Robert Zoellick (FT) Apr 1, 2013
The WTO is at risk of being pushed aside. The action is shifting to other venues, such as the US-EU trade negotiation.

Oil demand is set to fall in the age of gas
Seth Kleinman (FT) Apr 1, 2013
Long-held beliefs about energy demand and prices are being turned on their head by fracking and fuel-efficiency measures.

China left out of Obama free trade party
Geoff Dyer (FT) Apr 1, 2013
Washington is negotiating with the EU and states in the Asia-Pacific region. It hopes to establish standards that Beijing would be obliged to respect.

The Global Economy on the Fly
Nouriel Roubini (Project Syndicate) Apr 1, 2013
In a fragile global environment, has America become a beacon of hope? While the US is experiencing several positive economic trends, Europe continues to stagnate, and China will be vulnerable to a hard landing in 2014 unless its new leaders accelerate the pace of reform.

A Pacific Island Prefers Chinese Investment to U.S. Welfare
Neil Mellen (WSJ) Apr 1, 2013
For decades, American aid did little but promote dependency. Now here comes a Chinese entrepreneur.

Unconventional Monetary Policy and the Dollar
Reuven Glick and Sylvain Leduc (FRBSF) Apr 1, 2013
Although the Federal Reserve does not target the dollar, its announcements about monetary policy changes can affect the dollar's exchange value. Before the 2007-09 financial crisis, the dollar's value generally fell when the Fed lowered its target for the federal funds rate. Since the crisis, the Fed's announcements of monetary policy easing through unconventional means have had similar effects on the dollar's exchange rate.

Survival of the Brokest in Cyprus Bailout
Jonathan Weil (Bloomberg) Apr 1, 2013
Just when it looked like the banking crisis in Cyprus couldn't get any weirder, here's another odd twist: The broke are buying the broke.

Cyprus’s Dangerous, Necessary Capital Controls
Bloomberg View Apr 1, 2013
Picture not being able to cash a check, transfer money electronically or withdraw more than $385 a day from your bank. Or imagine being searched by airport gendarmes making sure you aren’t taking more than $3,800 of your own money out of the country.

The Euro Can’t Afford Dijsselbloem’s Rookie Mistakes
Melyvn Krauss (Bloomberg) Apr 1, 2013
How is it that a man like Jeroen Dijsselbloem, with no knowledge of or experience in financial markets, can get appointed to lead the euro-area group of finance ministers, one of the most influential and sensitive jobs in Europe?

Asia royalty rises provoke investor fury
Jeremy Grant (FT) Apr 2, 2013
Dramatic royalty hikes are causing a lather as they are seen as a disguised attempt to remove funds from emerging markets divisions.

Why China’s economy might topple
Martin Wolf (FT) Apr 2, 2013
As the experience of Japan has shown, managing a shift from a high-growth model to a lower-growth model is very tricky.

Can We Feed the World?
Gordon Conway (Project Syndicate) Apr 2, 2013
Despite recent agricultural advancements, chronic hunger remains pervasive, particularly in developing countries. Only by taking concerted action to bolster innovation, strengthen market linkages, support smallholder farmers, and encourage visionary political leadership, can we guarantee food security for all.

The IMF Shouldn’t Abandon Austerity
Anders Aslund (Bloomberg) Apr 2, 2013
For years, the International Monetary Fund helped to ensure global financial stability. Lately it has changed its mind on what used to be a core principle -- and, strangely enough, it appears to have done so on the basis of a single far-from-convincing working paper.

Algeria: A giant afraid of its shadow
Borzou Daragahi (FT) Apr 3, 2013
The country, a north African powerhouse, has been reluctant to flex its muscle in the region despite the turmoil surrounding it.

New orthodoxy means EM currency gains
Andreas Utermann (FT) Apr 3, 2013
New set of norms at central banks and how they deal with inflation has implications for investors in the bond, equities and currency markets.

Capitalism's Corruptions
Daniel Henninger (WSJ) Apr 3, 2013
On capitalism, Pope Francis, Barack Obama and François Hollande aren't singing from the same hymnal.

So Much for the Libor Gold Rush
WSJ Apr 3, 2013
In addition to huge quantities of high dudgeon, the Libor interest-rate fixing scandal produced a huge legal gold rush: By some estimates, private claims against the banks were set to reach $176 billion.

Crisis averted or crisis created?
Robert J. Samuelson (WP) Apr 3, 2013
Economic policies may lead to future problems.

Save more to improve infrastructure in Latin America and the Caribbean
Eduardo Cavallo (VoxEU) Apr 3, 2013
Latin America and the Caribbean have less infrastructure than the rest of the world. What they have is also of much poorer quality. This column argues that to reap the rewards of good infrastructure, Latin American and Caribbean countries must increase both investment and saving over the long-term by creating institutional capacity, strengthening the rule of law, and building stable macroeconomic-policy frameworks. It won’t be easy.

The Meaning of Cyprus
Daniel Gros (Project Syndicate) Apr 3, 2013
The crisis in Cyprus represents an extreme and special case in many respects. But the way that the problem arose, and the solution that was finally adopted, is likely to have very important consequences for the way that Europe addresses its banking problems.

Asia’s Resource Scramble
Brahma Chellaney (Project Syndicate) Apr 2, 2013
Asia is the world’s most resource-poor continent, and its overexploitation of the resources that it does possess has created an environmental crisis that is contributing to regional climate change. This could have significant implications for Asia’s ostensibly unstoppable rise – and thus for the West’s supposedly inevitable decline.

BRICS Without Mortar
Joseph S. Nye (Project Syndicate) Apr 3, 2013
The recent BRICS summit in South Africa, with its announcement of plans for a new development bank, appeared to herald the group's transformation from a catchy acronym coined by investors into a viable organization. But the five BRICS countries remain too politically and economically diverse to act in a unified manner.

Income and schooling
Markus Brückner & Mark Gradstein (VoxEU) Apr 4, 2013
Average income per capita is strongly correlated with more schooling, but this relationship is more complex than it appears. This column presents new research showing that a large part of the correlation is attributed to the causal effect of economic prosperity on the formation of human capital via schooling.

Asia’s SWFs must shed political shackles
Henny Sender (FT) Apr 4, 2013
Investment considerations rather than political ones should be paramount in running North Asia’s sovereign wealth funds, says Henny Sender

Unfair Trade
Amrita Narlikar and Dan Kim (FA) Apr 4, 2013
Despite the claims of its champions, the fair-trade movement doesn't help alleviate poverty in developing countries. Even worse, it is just another direct farm subsidy of the kind most conscientious consumers despise. In the long term, the world needs free trade, not fair trade.

Where the Yangtze meets the Congo
Brendan P O'Reilly (AT) Apr 4, 2013
Expectations that China is baiting a neo-colonial trap in Africa ignore Beijing's pledges that economic and cultural relations rest on an equal plain, and that burgeoning ties were built on mutual anti-Western contempt. As European diplomats wring hands over no-strings aid and human rights, Africa and China can reflect on a decade that's seen the continent experience its fastest growth in history.

The Long Mystery of Low Interest Rates
Kenneth Rogoff (Project Syndicate) Apr 4, 2013
As policymakers and investors continue to fret over the risks posed by today’s ultra-low global interest rates, academic economists continue to debate the underlying causes. While everyone accepts that a global savings glut is at the root of the problem, no one has provided a convincing explanation of what, exactly, is driving it.

Europe’s Perpetual Crisis
Yannos Papantoniou (Project Syndicate) Apr 4, 2013
The Cyprus bailout deal is a watershed in the unfolding eurozone crisis, but imposing losses on banks’ depositors violates the deposit-insurance guarantee that forms part of the proposed European banking union, while the imposition of capital controls further erodes the monetary union’s foundations. So, is Europe chasing its tail?

A banking union for the Eurozone
Giovanni Dell'Ariccia, Rishi Goyal, Petya Koeva-Brooks & Thierry Tressel (VoxEU) Apr 5, 2013
The crisis has highlighted the need for, and difficulties with, a Eurozone banking union. This column argues that, to make a union, you need three crucial ingredients: common supervision, a single resolution mechanism, and common safety nets. The power to control and the resources to rescue must work in parallel. Eurozone leaders have taken the first critical steps, but further progress is needed to strengthen the financial architecture of the single currency.

Taiwan tries its luck with free-trade zones
Jens Kastner (AT) Apr 5, 2013
Taiwan will soon establish six free-trade zones, a prelude to numerous others, in a bid to boost investment from overseas and compete more effectively with rival South Korea. The move is backed by a raft of reforms that perhaps most crucially will permit mainland Chinese involvement.

Seven Dumb Things Bankers Say
Mark Whitehouse (Bloomberg) Apr 5, 2013
Many of the arguments used to justify the size of the largest U.S. financial institutions simply don’t stand up to scrutiny.

How the South Sea Bubble Created U.K.'s Modern Monarchy
Carolyn Harris (Bloomberg) Apr 5, 2013
The bubble of 1720 precipitated England’s first stock-market crash. In August of that year, shares in the South Sea Company reached a peak of 1,000 pounds and dropped to 150 pounds by the end of September.

A world of cheap money
Economist Apr 6, 2013
The Federal Reserve is making a better job of it than the European Central Bank.

Buttonwood: Where did all the money go?
Economist Apr 6, 2013
As Cypriots are discovering, wealth can prove to be illusory

Financial crises: Questions and lessons
Stijn Claessens & M Ayhan Kose (VoxEU) Apr 7, 2013
Recent financial crises have understandably renewed academic interest in properly understanding their causes and consequences. This column surveys a rapidly growing literature. Although we rudimentarily understand the main types of crisis, their main explanatory factors, and the real and financial sector implications, there remain a number of important open questions for future research.

Beware of Economists Peddling Elegant Models
Mark Buchanan (Bloomberg) Apr 7, 2013
Mathematics can be beguilingly elegant. It can also be dangerous when people mistake its elegance for truth.

Why Rescue Fragile Banks? Outsource Them Instead
Joshua Rosner (Bloomberg) Apr 7, 2013
Executives of the largest U.S. banks warn that efforts to make the financial system safer will harm their global competitiveness. They conjure a world in which foreign institutions, supported by government subsidies, dominate the business of providing banking services to multinational corporations.

Why Making Europe German Won’t Fix the Crisis
Ivan Krastev and Georgi Ganev (Bloomberg) Apr 7, 2013
Most people see Europe’s economic crisis as a cautionary tale of good and bad policy making, in which fiscally prudent countries, such as Germany, remain stable, while reckless ones, such as Greece, unravel.

This is a golden age of global growth
Arvind Subramanian (FT) Apr 7, 2013
What we are seeing, despite the crises, is convergence with a vengeance. An unequal world is becoming less so.

An optimist’s view from the edge of the abyss
Ralph Atkins (FT) Apr 7, 2013
Ian Goldin’s insider’s view depicts a world as endowed as it is endangered by rapid integration.

Post-industrial myths
Robert J. Samuelson (WP) Apr 7, 2013
The U.S. still makes plenty of things.

Europe welcomes Gulf funds
Ardeshir Ommani (AT) Apr 8, 2013
Plans by Qatar to launch a US$100 billion sovereign wealth fund to invest in European construction throw a harsh spotlight on economic prospects of the Arab world, including some of the world's highest income inequality and unemployment rates. European support for the pact at a high level suggests the North Atlantic Treaty Organization has agreed to commit itself to protecting the rule of the emir in return for geopolitical and economic support.

Is more finance better? Disentangling intermediation and size effects of financial systems
Thorsten Beck, Hans Degryse & Christiane Kneer (VoxEU) Apr 8, 2013
Growing the financial sector was viewed as a viable 21st-century competitiveness policy for small, agile nations in the 2000s. Things have changed. This column reviews the empirical literature arguing for a distinction between two roles: finance as intermediation or facilitator, and finance as a growth sector in itself. Evidence suggests that, for rich nations, finance stimulates growth but makes it more volatile, whereas for developing nations its function as a facilitator raises long-term growth and reduces volatility.

Three New Lessons of the Euro Crisis
Arvind Subramanian (Project Syndicate) Apr 8, 2013
While some observers argue that the key lesson of the eurozone’s baptism by fire is that greater fiscal and banking integration are needed to sustain the currency union, many economists pointed this out even before the euro’s introduction. The real lessons of the euro crisis lie elsewhere – and they are genuinely new and surprising.

Abenomics and Asia
Lee Jong-Wha (Project Syndicate) Apr 8, 2013
Japanese Prime Minister Shinzo Abe’s economic agenda seems to be working for his country. The question now is whether Abenomics can achieve its goals without destabilizing the world economy, especially neighboring Asian economies.

India’s Patently Wise Decision
Joseph E. Stiglitz and Arjun Jayadev (Project Syndicate) Apr 8, 2013
The Indian Supreme Court’s refusal to uphold the patent on Gleevec, the blockbuster cancer drug developed by the Swiss pharmaceutical giant Novartis, is good news for many of those in India suffering from cancer. If other developing countries follow India’s example, it will be good news elsewhere, too.

Days of inflation targeting are numbered
Ian Harnett and David Bowers (FT) Apr 8, 2013
The days of inflation targeting are numbered and the great rotation is likely to be less about asset allocation and more about sectors.

Thatcher Policies Still Resisted by Europe
John F. Burns & Alan Cowell (NYT) Apr 8, 2013
Margaret Thatcher's conservative prescriptions for her country's economy have never found fertile soil on the Continent, not even amid a gloom at least as dark as that of '70s Britain.

BRICS challenge IFIs: Out of the frying pan into the fire?
Bretton Woods Update No. 85 Apr 8, 2013
Large middle-income countries jointly initiated alternatives to the World Bank and IMF in March, but advocates are not satisfied with either set of institutions. While challenge to the IMF has been welcomed, civil society actors fear that a new development bank would serve "vested interests" and could lead to "exploitation".

New World Bank strategy accused of being "unambitious" and "cosmetic"
Bretton Woods Update No. 85 Apr 8, 2013
World Bank president Jim Yong Kim's new overarching strategy on ending absolute poverty and creating shared properity elicits criticism for ineffectively tackling inequality and sustainability.

US deadlock stalls IMF governance reform
Bretton Woods Update No. 85 Apr 8, 2013
The IMF governance debate goes beyond the mathematics of voting shares and representation, bringing to the fore critical questions about the Fund's legitimacy.

IFIs on capital flows: new tune, same song?
Bretton Woods Update No. 85 Apr 8, 2013
While the IMF-supported banking sector restructuring in Cyprus includes a strict set of restrictions on capital movements, the World Bank and IMF are failing to embrace a more pragmatic approach to capital account regulation.

G20 working on international financial architecture, while the IMF "to bury its head in the sand"?
Bretton Woods Update No. 85 Apr 8, 2013
The G20's agenda on the international financial architecture looks to tackle sovereign defaults, but not 'currency wars'.

Funny money and super-rich
Martin Hutchinson (AT) Apr 9, 2013
Contrary to the left's fond belief, the increasing inequality and the crass behavior of the super-rich are responses not to inadequate levels of taxation but to two decades of monetary policy that has imposed negative real interest rates on the world economy. High tax rates only cement the current wealth structure in place.

Taiwan: Time to change gear
Sarah Mishkin and David Pilling (FT) Apr 9, 2013
As growth stalls and reliance on China grows, the country must reform to preserve its status as one of Asia’s successes.

Prosperity requires more than rule of law
John Kay (FT) Apr 9, 2013
When China asks how to establish the institutions to support a stable, wealthy economy, it is not enough to reply ‘property rights’.

China is still learning to be a regulator
Simon Rabinovitch (FT) Apr 9, 2013
China’s inexperience and capacity constraints are almost as big a shortcoming as its bias against foreign companies. It is new to corporate regulation.

An Oldie: The 'Offshore' Witch Hunt
Holman Jenkins (WSJ) Apr 9, 2013
What public interest is served by invading the financial privacy of innocent citizens?

Is the Fed Blowing a New Housing Bubble?
Edward Pinto (WSJ) Apr 9, 2013
Stagnant real incomes suggest that rising home prices reflect artificially low interest rates.

Germans Are Poor and Italians Are Frugal. Huh?
Jack Ewing (NYT) Apr 9, 2013
A survey of European household debt and wealth turns up some surprising results but a caveat is in order.

Low-Income Countries Show Comeback in Growth Performance
IMF Survey Apr 9, 2013
Low-income countries have bounced back in the past two decades. Analysis in the IMF’s latest World Economic Outlook (WEO) suggests that dynamic low-income countries are on a stronger economic footing today than before the 1990s, and therefore better placed to stay on course.

Inflation Likely to Remain Stable, IMF Study Concludes
IMF Survey Apr 9, 2013
In contrast to previous recessions, inflation has not fallen sharply during the Great Recession, and it is unlikely to spike as the recovery strengthens, according to a new study by the IMF. There is little risk of monetary policy repeating the mistakes of the 1970s and igniting stagflation.

The Global Growth Quest
Mohamed A. El-Erian (Project Syndicate) Apr 9, 2013
The last few years have highlighted the declining potency of long-standing growth models. Moreover, the search for more robust growth models will take much longer and be more complicated than many recognize – especially as the world economy pivots away from unfettered globalization and high levels of leverage.

Germany’s Choice
George Soros (Project Syndicate) Apr 9, 2013
Contrary to popular opinion in Germany and elsewhere, the euro crisis – for which Germany is disproportionately responsible, owing to its dominant position – is far from over. Despite the complex political and economic origins of Europe’s current malaise, the solution can be summed up in one word: Eurobonds.

Cyprus Can Save Itself by Fleeing the Euro
Megan Greene (Bloomberg) Apr 9, 2013
Cypriots sitting in the cafes here on Nicosia’s Ledra Street are asking one another if there isn’t an alternative to their island’s bailout.

The Swiss Miracle?
Roland Benedikter and Lukas Kaelin (FA) Apr 9, 2013
The whole of Europe seems to be in economic and political crisis. But there is a small area of calm at the continent's core: Switzerland. Although much of what makes the country successful would not translate to the rest of Europe, the parts of its political framework that encourage popular legitimacy would -- and they would go a long way toward solving other European governments' problems.

The Asian Noodle Bowl when preferences are underused
Jayant Menon (VoXEU) Apr 10, 2013
So far, research on the impacts of free trade agreements in east Asia assume the full utilisation of preferences. This column argues that newer evidence suggests that this assumption is made in error: estimated uptake is particularly low in east Asia. If we assume a more realistic utilisation rate in estimating impacts, results suggest that actual utilisation rates significantly diminish the benefits from preferential liberalisation, but in a non-linear way. In the absence of Doha, the multilateralisation of preferences, even without reciprocity, is the practical route that is most likely to deliver the greatest benefits to WTO members.

Measuring the clarity of central-bank communication
Bulír, A., M. Cihák & D-J. Jansen Apr 10, 2013
Quality, clear communication is a very powerful tool for central banks because it influences expectations. This column presents new research on central-bank communications, using a formal measure of clarity – the ‘Flesch-Kincaid grade level’. The picture is varied: there are significant and persistent differences in clarity over time and across countries. However – and worryingly – the financial crisis is associated with unclear communication for some central banks.

How the East Was Won
Daniel Henninger (WSJ) Apr 10, 2013
Because Thatcher and Reagan dissented from the orthodoxies of their time, the world's people are freer.

Scapegoating Germany is easy but wrong
Marcel Fratzscher (FT) Apr 10, 2013
European governments need to convince their citizens that fundamental changes are necessary and will be fruitful.

EMs must respond to US industrial revival
Manoj Pradhan (FT) Apr 10, 2013
The shale gas ‘revolution’, a remarkable story, is already making the US more competitive, forging strong reindustrialisation.

Powers on the Mend
Ian Bremmer and David Gordon (NYT) Apr 10, 2013
Both China and the United States are bouncing back, opening the way for strong long-term relations.

The keys to a knowledge economy
Mark Zuckerberg (WP) Apr 10, 2013
Immigrants can help take our nation to new heights — if we let them.

The Use and Abuse of Monetary History
Barry Eichengreen (Project Syndicate) Apr 10, 2013
The Federal Reserve and the European Central Bank have been invoking specific historical analogies to defend their monetary-policy approaches. But, in appealing to events that are seared into popular consciousness, officials often fail to test their analogies' "fitness" with current conditions, leading to serious policy distortions.

The Two Innovation Economies
William Janeway (Project Syndicate) Apr 10, 2013
For 250 years, technological innovation has driven economic development. But the economics of innovation are very different for those at the frontier and followers who are striving to catch up.

Innovation in Development Finance
Jomo Kwame Sundaram (Project Syndicate) Apr 10, 2013
More than four decades ago, the world’s wealthiest countries pledged that at least 0.7% of their GDPs would be devoted to official development assistance. Although fewer than a half-dozen countries have met this goal, new financing schemes could close the gap between promises and reality.

What the World Needs from the BRICS
Dani Rodrik (Project Syndicate) Apr 10, 2013
It can be cause only for celebration that the world’s largest developing economies are holding regularly meetings and establishing common initiatives. Nonetheless, it is disappointing that Brazil, Russia, India, China, and South Africa have chosen to focus on infrastructure finance as their first major area of collaboration.

Germans Are Poorest in the Euro Area. Really?
Megan Greene (Bloomberg) Apr 10, 2013
With a title like “The Eurosystem Household Finance and Consumption Survey," the European Central Bank’s latest piece in its Statistics Paper Series doesn't sound like a page-turner. It has received a lot of attention, though, because of its conclusion that the poorest households in the euro area are German.

Thatcher, Merkel and the Euro
Holger Schmieding (Globalist) Apr 10, 2013
What legacy did Britain's "Iron Lady" leave for Europe's crisis-stricken countries?

Global Investing in 2013: Policy Dominance, Active Management and a New Paradigm in Currencies
Scott Mather (PIMCO) Apr 10, 2013
With policies and politics driving markets more than fundamentals, active management is critical. We expect that the impact of ongoing global policy experimentalism on real economic growth and financial markets will likely vary substantially from country to country, creating both risks and opportunities. With flexible, active global strategies investors can potentially benefit from a broader opportunity set and the ability to go off benchmark in an effort to both avoid risks and tap opportunities.

Is the Federal Reserve breeding the next financial crisis?
Ambrogio Cesa-Bianchi & Alessandro Rebucci (VoxEU) Apr 11, 2013
Many economists think that the US Federal Reserve’s loose monetary stance in the 2000s fuelled the US housing bubble. Is the Fed thus responsible for the Global Crisis? This column discusses evidence suggesting that monetary policy was, in fact, not to blame. Rather, it was the absence of an effective regulatory function that created the mess we’re in now. It is not fair to blame the Great Recession only on the Fed’s monetary-policy stance nor is the Fed now breeding the next US financial crisis.

Full Article: Distorted beliefs and the financial sector
Ing-Haw Cheng, Sahil Raina & Wei Xiong (VoxEU) Apr 11, 2013
The subprime crisis narrative focuses on incentives: ‘they knew it was risky, but didn’t care’. This column argues in favour of a more nuanced explanation, that distorted beliefs also mattered. An analysis of personal home transactions by mid-level managers in the mortgage-securitisation business shows that they increased their personal housing exposure during the boom. ‘Groupthink’ and distorted beliefs in the financial sector is something to take seriously if we want to prevent future crises.

Bank of Japan Monetary Plans Fuel Currency Debate
Bridges Weekly Trade News Digest, Volume 17, Number 12 Apr 11, 2013
Concerns over developed country monetary policy – including its impact on export competitiveness – have continued to escalate in recent weeks, as the Bank of Japan announced plans last Thursday to double its monetary base over the next two years by pursuing an aggressive strategy of monetary easing. Signs from the US Federal Reserve, meanwhile, have hinted at the possibility that its own controversial easing programme could slow down as early as this summer.

UN Process Inches Forward on Sustainability Goals
Bridges Weekly Trade News Digest, Volume 17, Number 12 Apr 11, 2013
Efforts to develop a global development framework beyond 2015 – the completion date of the Millennium Development Goals (MDGs) – have continued to advance in recent weeks, with the High-Level Panel of Eminent Persons on the Post-2015 Development Agenda holding its final formal meeting in Bali, Indonesia on 25-27 March.

India Court Rejection of Drug Patent Reignites Debate on Health Innovation, Access to Medicines
Bridges Weekly Trade News Digest, Volume 17, Number 12 Apr 11, 2013
The Indian Supreme Court has announced that it will be denying pharmaceutical company Novartis a patent for Glivec, a cancer drug, in a decision that will effectively allow generics producers in the country to continue selling the unbranded equivalent at a fraction of the original’s price. Last week's landmark ruling has since reignited debate among officials and analysts alike over the balance between fostering innovation and ensuring affordable access to medicines.

Director-General Candidates Weigh In on Future of WTO
Bridges Weekly Trade News Digest, Volume 17, Number 12 Apr 11, 2013
As the whittling down of WTO Director-General candidates begins in earnest, ICTSD – the publisher of Bridges – has released a new publication aimed at helping to better understand the future of the World Trade Organization from the perspective of those vying for its leadership. This "living document" – which will be expanded and updated as the Director-General appointment process unfolds – is part of an ongoing process initiated by ICTSD to help gain a better understanding of the key issues influencing the multilateral trading system.

Extended Period of Low Interest Rates Can Rekindle Financial Risks
IMF Survey Apr 11, 2013
Several years of exceptionally low interest rates and bond buying by some advanced economy central banks have improved some indicators of banks’ health while supporting the economy and financial stability, according to new research from the International Monetary Fund.

China’s Unlikely Rival: Japan
William Pesek (Bloomberg) Apr 11, 2013
Of all the nightmares Chinese President Xi Jinping figured he would have to face, a resurgent Japan Inc. surely wasn’t among them.

Lust for Gold
Paul Krugman (NYT) Apr 11, 2013
In modern America, everything is political. And that goes for investments as well as voting.

China Belongs in the Pacific Trade Talks
David Dreier (WSJ) Apr 11, 2013
This is a hinge moment for the global economy. Don't leave Beijing out.

Energy: More buck, less bang
Sylvia Pfeifer and Guy Chazan (FT) Apr 11, 2013
As oil companies venture further into remote areas in search of the world’s remaining reserves, their costs have soared.

Tackling graft should be China’s priority
Roderick MacFarquhar (FT) Apr 11, 2013
To transform so corrupt a system from top to bottom would make cleansing the Augean stables simplicity itself.

Market Insight: Japan should heed lessons of Volcker’s war
Gillian Tett (FT) Apr 11, 2013
The battle that ex-US Federal Reserve chairman Paul Volcker fought 35 years ago left him keenly aware of how limited central bank powers really are.

Hungary a nightmare for foreign groups
Neil Buckley (FT) Apr 11, 2013
Viktor Orbán’s corporate sparring may boost his popularity for now, but at a steep long-term cost to Hungary’s investment image and economic outlook

Do all roads lead to fiscal union? Options for deeper fiscal integration in the eurozone
Stefan Vetter (DB Research) Apr 11, 2013
The current crisis has demonstrated that the eurozone is still a very heterogeneous economic area. As the common monetary policy cannot stabilise a country which experiences an asymmetric shock, there is a growing debate about whether the architecture of the eurozone needs to be complemented by fiscal stabilisation instruments. While the synchronisation of business cycles and an effective absorption of regional shocks would be in the interest of all the euro countries, the main question is how this could be put into practice without creating undesirable incentives. After all, a deeper fiscal integration would hardly be manageable without redistribution components.

Financial Globalization in Reverse?
Martin N. Baily and Susan Lund (Project Syndicate) Apr 12, 2013
For three decades, financial globalization had seemed inevitable, until the 2008 crisis exposed the dangers, with the globalized financial system’s intricate web of connections becoming a conduit for contagion. Cross-border capital flows abruptly collapsed, and, almost five years later, they remain 60% below their pre-crisis peak.

Jose Barroso's Implausibly Upbeat Take on Europe
Clive Crook (Bloomberg) Apr 12, 2013
The president of the European Commission is also optimistic about an EU/U.S. trade agreement.

Ringfencing and consolidated bank stress tests
Eugenio Cerutti & Christian Schmieder (VoxEU) Apr 13, 2013
The bank ‘stress-test’ is now a crucial crisis-fighting tool. This column discusses research into the shortcomings that arise from ‘ringfencing’, that is, the implicit or explicit regulations that hope to favour domestic markets. Notably, ringfencing could significantly increase some banks’ capital needs.

Is inflation targeting dead? Central banking after the Crisis
Richard Baldwin & Lucrezia Reichlin (VoxEU) Apr 14, 2013
Inflation targeting did not prevent financial instability before the Crisis nor did it provide sufficient stimulus after the Crisis. In a new Vox eBook, 14 world-renowned scholars, practitioners and market participants analyse inflation targeting and its future. They argue that inflation targeting should be refined not replaced. Indeed, it is needed now more than ever to keep expectations anchored while the advanced economies work their way through today’s slow growth, rickety banks, and over-indebted public sectors.

Aid for trade: Can it be evaluated?
Olivier Cadot & Jaime de Melo (VoxEU) Apr 14, 2013
Programmes that help developing nations trade are a key part of the global trade and development agenda. But do such policies work? This column summarises lessons from a recent workshop on the issue. One promising way forward is to use benchmarking from existing data sets to identify the aid’s effectiveness.

Japan Trade Deal May Revive Globalization
Bloomberg View Apr 14, 2013
The U.S. and Japan agreed to terms last week allowing Japan to join talks on the Trans-Pacific Partnership, another step toward creating the world’s most important free-trade initiative. The emerging pact has far- reaching implications for domestic policy in Japan and elsewhere, and could offer a new approach to global as well as regional trade liberalization.

The riddle of a currency with many values
Wolfgang Münchau (FT) Apr 14, 2013
The euro is not worth the same amount across the region – Spain and Germany already have different currencies.

Commodities: Tougher times for trading titans
Javier Blas (FT) Apr 14, 2013
China’s growth has led to spectacular profits and influence but the cooling of the supercycle raises questions about whether they are ‘too big to fail’.

The Antisocial Network of Bitcoins
Paul Krugman (NYT) Apr 14, 2013
The fruitless search for dehumanized money.

The President's Free-Trade Path to Prosperity
Tom Donilon (WSJ) Apr 14, 2013
A new accord with the U.S. brings Japan one step closer to joining the game-changing Trans-Pacific Partnership.

Treasury's Yen Confusion
WSJ Apr 14, 2013
The U.S. wants a weaker Japanese currency except when it doesn't.

The Eurozone crisis and EU institutional change: A new CEPR Policy Insight
Stefano Micossi (VoxEU) Apr 15, 2013
The Eurozone crisis has produced rapid institutional change with executive powers over national economic policies shifting to the EU. This column introduces a new CEPR Policy Insight that analyses the changes and shifts of power among the EU’s institutions. What is clear is that further reforms are needed in order to safely and accountably underpin new executive power.

Measuring the credit crunch
Michiel Bijlsma, Andrei Dubovik & Bas Straathof (VoxEU) Apr 15, 2013
The Global Crisis hit firms hard, making the terms of getting credit worse and thus amplifying the recession. This column discusses new research that isolates the ‘credit crunch’ element from other outcomes of recession. Crisis-linked credit drops caused a 5.5 percentage-point reduction in industrial growth in 2008, with a stronger effect in countries with more highly leveraged banks. The evidence clearly suggests that more attention should be paid to credit supplies to firms at the onset of financial crises.

Economic Policy’s Narrative Imperative
Kemal Dervis (Project Syndicate) Apr 15, 2013
The eurozone crisis highlights the need for a narrative that explains public policy and generates political support for it. While central bankers can provide such narratives to financial markets, political leaders must provide the messages that encourage long-term investment, electoral support for reform, and hope for the future.

Battleground Budget
Michael Spence (Project Syndicate) Apr 15, 2013
The world’s developed economies, of which the US is by far the largest and systemically most important, face a range of difficult political and social choices. President Barack Obama’s proposed federal budget acknowledges and addresses those choices and tradeoffs directly and fully for the first time in the post-crisis period.

How to Kill a Banking Union the German Way
Megan Greene (Bloomberg) Apr 15, 2013
Germany's insistence on EU treaty change to create a banking union is an attempt to block banking union, using the oldest trick in the playbook of EU bureaucracy.

Australia Must Wean Itself From China
William Pesek (Bloomberg) Apr 15, 2013
Viewed from afar, even the bad news in Australia looks pretty good. Unemployment reached a three- year high last month and is now all of 5.6 percent. Leaders such as U.S. President Barack Obama and French President Francois Hollande would kill for such a number. Australia has avoided a recession for 21 years, boasts a budget remarkably close to surplus and continues to enjoy low inflation. On any economic report card, the country deserves a string of A’s.

Slovenia Isn't Cyprus, Yet
Tim Judah (Bloomberg) Apr 15, 2013
When I saw him last week, Slovenian Finance Minister Uros Cufer had just sat through a grueling public presentation by officials from the Organization for Economic Co-operation and Development, in which they painted a grim picture of the state of affairs in his country. He was clearly in a foul mood.

Europe is no longer Spain’s solution
Gideon Rachman (FT) Apr 15, 2013
As the country’s economic woes continue, its people are losing faith in national and European institutions.

China needs to set its services free
Xu Qiyuan (FT) Apr 15, 2013
The country is now a factory that is too big for the world market and it must develop its service sector to spark new growth.

We tried a Tobin tax and it didn’t work
Magnus Wiberg (FT) Apr 15, 2013
Europe should learn from Sweden’s experience of a transaction levy, which led to sharp falls in share and bond trading volumes.

The agony and ecstasy of broken markets
Mohamed El-Erian (FT) Apr 15, 2013
Riding wave of liquidity may eventually end in tears if real economies do not respond adequately to central bank policies.

Debating the Tiger's Rise
Sadanand Dhume (WSJ) Apr 15, 2013
India would have had 175 million fewer poor people by 2008 had it embarked upon free-market reforms in 1971 instead of 1991.

Europe Split Over Austerity as a Path to Growth
Annie Lowrey (NYT) Apr 15, 2013
Europe is divided over the road to recovery: Is strict belt-tightening or an easing of monetary policy and some stimulus best?

Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff
Thomas Herndon, Michael Ash and Robert Pollin (PERI) Apr 15, 2013
Herndon, Ash and Pollin replicate Reinhart and Rogoff and find that coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period. They find that when properly calculated, the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0:1 percent as published in Reinhart and Rogoff. That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower. The authors also show how the relationship between public debt and GDP growth varies significantly by time period and country. Overall, the evidence we review contradicts Reinhart and Rogoff's claim to have identified an important stylized fact, that public debt loads greater than 90 percent of GDP consistently reduce GDP growth.

Reinhart-Rogoff Response to Critique
Carmen Reinhart and Kenneth Rogoff (WSJ) Apr 16, 2013
A new paper by Thomas Herndon, Michael Ash and Robert Pollin calls into question research on public debt and its effects on growth by Harvard University economists Carmen Reinhart and Kenneth Rogoff. This is their response.

The Bitcoin Bubble and a Bad Hypothesis
John Quiggin (National Interest) Apr 16, 2013
The sudden drop in the value of Bitcoins, the hot new Internet currency, has added urgency to the question of whether Bitcoin is the way of the future, or just another bubble. Not to keep readers in suspense, the answer is a bubble, but a particularly interesting example of one. In particular, Bitcoin represents what ought to be the final refutation of the efficient-markets hypothesis, which still guides most regulation of financial markets.

Are Germans really poorer than Spaniards, Italians and Greeks?
Paul De Grauwe & Yuemei Ji (VoxEU) Apr 16, 2013
A recent ECB household-wealth survey was interpreted by the media as evidence that poor Germans shouldn’t have to pay for southern Europe. This column takes a look at the numbers. Whilst it’s true that median German households are poor compared to their southern European counterparts, Germany itself is wealthy. Importantly, this wealth is very unequally distributed, but the issue of unequal distribution doesn’t feature much in the press. The debate in Germany creates an inaccurate perception among less wealthy Germans that transfers are unfair.

The much-needed EU pivot to east Asia
Patrick A Messerlin (VoxEU) Apr 16, 2013
Mega-regional trade arrangements are being negotiated in Asia. This column asks how Europe should respond and assesses which Asian trade deals would provide the biggest boost and the best insurance against discriminatory effects. The evidence tentatively suggests Europe’s best bets are Japan and Taiwan.

Accounting: Stalking the Big Four
Adam Jones and Simon Rabinovitch (FT) Apr 16, 2013
Homegrown auditors are already eroding the influence of established western firms in China and could have an impact on international financial markets.

Debt threat to China’s financial system
Jamil Anderlini (FT) Apr 16, 2013
China’s banking system, tightly controlled by the Communist party, is unlikely to undergo calamitous collapse, but slow erosion is probably under way.

How central banks beat deflation
Martin Wolf (FT) Apr 16, 2013
Inflation targeting has revitalised macroeconomic stabilisation, giving policy makers room to risk expansionary measures.

The Immigration Windfall
WSJ Apr 16, 2013
A new study shows the potential economic benefits of reform.

What’s Stopping Europe?
Allan H. Meltzer (Project Syndicate) Apr 16, 2013
After five years of decline in living standards in much of Europe, voters oppose more austerity and further retrenchment without growth. Restoring a sound euro requires policies that revive growth, rein in government spending, and reform heavily regulated labor and product markets.

Fear of Fracking
Jeffrey Frankel (Project Syndicate) Apr 16, 2013
Against all expectations, US emissions of carbon dioxide have fallen back to 1995 levels, owing almost entirely to hydraulic fracturing, the process of extracting natural gas from shale. Why, then, are environmentalists overwhelmingly opposed to the new technology.

Hyperactive Monetary Policy: The Good, the Bad and the Ugly
Lupin Rahman, Mohit Mittal and Josh Thimons (PIMCO) Apr 16, 2013
Hyperactive monetary policy can provide a boost to short-term growth but is unlikely to lead to escape velocity. Hyperactive monetary policy (HMP) is in full force as fiscal policy retreats. The benefits of HMP outweigh the costs for now. Despite cyclical growth, we will likely not achieve escape velocity and eventually the costs will likely overtake the benefits.

Currency Wars, Gangnam-Style
Matthew C. Klein (Bloomberg) Apr 16, 2013
How will South Korea react to currency devaluation in Japan?

Augmented inflation targeting: Le roi est mort, vive le roi
Richard Baldwin & Daniel Gros (VoxEU) Apr 17, 2013
The Bank of Japan has now joined the club of central banks practising a new, post-Crisis form of inflation targeting. This column discusses the new goals, new tools and new challenges of ‘augmented inflation targeting’. Despite economists’ worries and the many unknowns ahead, there really is no alternative in a post-Crisis world. Augmented inflation targeting is here to stay.

The ECB Is the Odd Central Bank Out
Evan Soltas (Bloomberg) Apr 17, 2013
The European Central Bank is the last major central bank without an aggressive monetary easing program.

Central Banks’ Outdated Independence
Mario I. Blejer (Project Syndicate) Apr 17, 2013
In the post-crisis world, advanced-country central banks’ goals are no longer limited to price stability. This shift has inevitably reduced central-bank independence, because the pursuit of GDP growth, job creation, and financial stability are clearly political decisions, which should not be made by unelected officials.

Capitalists for Inclusive Growth
Lynn Forester de Rothschild (Project Syndicate) Apr 17, 2013
The need for inclusive economic growth that can create good jobs and combat rising levels of income inequality has never been more urgent. But today’s debates about how to achieve such growth are too narrowly focused on the role of governments and policymakers, thus neglecting the private sector's role.

How the Falling Yen Can Save the Euro
Melvyn Krauss (Bloomberg) Apr 17, 2013
Japan’s new bond-buying program amounts to a declaration of currency war against its trading partners, no matter how you sugarcoat it. Yet it may also prove constructive for the euro area, jolting Germany to at last adopt more growth-friendly policies. How else is Europe to overcome the deflationary sting of a depreciated yen, if not with a growth boost from the German government?

Why the G-20 Finance Ministers Are Wrong
Bloomberg View Apr 17, 2013
Finance ministers and central-bank governors of the Group of 20 major economies are in Washington for their semi-annual discussion of the world’s dismal economic prospects. The prediction for output and jobs, catalogued in forecasts prepared for their meeting, is unacceptable. It’s also avoidable, if leaders in the U.S. and especially the European Union rethink their policies.

Reinhart-Rogoff on Debt and Growth: Fake but Accurate?
Josh Barro (Bloomberg) Apr 17, 2013
Carmen Reinhart and Ken Rogoff have not given a satisfying defense against the accusation that their blockbuster 2010 paper on growth is built on a data error.

The Rise of China's Reformers?
Evan A. Feigenbaum and Damien Ma (FA) Apr 17, 2013
Most observers are gloomy about the prospects for serious economic reform in China. But they ignore a central lesson of recent Chinese history: reform is possible when the right mix of conditions comes together at the right time. And the very circumstances that facilitated the last major burst of economic reform in the 1990s are largely present today.

Austerity after Reinhart and Rogoff
Robert Pollin and Michael Ash (FT) Apr 17, 2013
A main plank in the case for the strategy adopted in the US and Europe is riddled with faults.

The IMF must quit the troika to survive
Ousmène Mandeng (FT) Apr 17, 2013
The organisation has been unduly influenced by its largest shareholders at the cost of its independence.

A weak yen is not the solution for Japan
Axel Merk (FT) Apr 17, 2013
Investors have become complacent about monetary easing around the world.

US-EU talks: Cuts both ways
James Politi and Joshua Chaffin (FT) Apr 17, 2013
Washington and Brussels hope to forge the world’s largest free-trade agreement but agriculture is contentious.

Nouriel Roubini: eurozone austerity is making things worse
Antonia Oprita (Emerging Markets) Apr 17, 2013
The austerity in the eurozone, in the absence of policies to boost growth, will make the crisis worse rather than fix it, Roubini said

German exports virtually immune to yen depreciation
Eric Heymann and Heiko Peters (DB Research) Apr 18, 2013
In January the Japanese central bank raised its inflation target from 1% to 2%. At his first central bank meeting in April, the new governor surprise BoJ watchers with considerably more aggressive monetary easing than had been expected. This change of monetary regime is seen as a risk for other export nations – notably Germany. However, such concern is only partly justified for Germany.

Why is this global recovery different?
M Ayhan Kose, Prakash Loungani & Marco E Terrones (VoxEU) Apr 18, 2013
The Great Recession has been followed by a ‘Not-So-Great Recovery’. Why the recovery has been weak and protracted remains a matter of debate. This column argues that one specific aspect of the current global recovery makes it different from previous ones. Over the course of past recoveries, both monetary and fiscal policies maintained an accommodative stance. In this global recovery, fiscal and monetary policies in advanced economies are pushing in opposite directions.

Macroprudential rebalancing
Jean-Pierre Landau (VoxEU) Apr 18, 2013
Low interest rates and bank deleveraging combine to produce slow growth and rising financial risks in advanced economies. This column argues that appropriate macroprudential policies could contribute to redirecting risk taking, promoting growth and reducing uncertainty through more orderly deleveraging in the financial sector.

Fighting financial protectionism
Dirk Schoenmaker (VoxEU) Apr 18, 2013
International banking is under threat in the aftermath of the Global Crisis Supervisors across the world are pushing for a split of international banks into national subsidiaries. This column discusses ‘financial protectionism’, offering some governance solutions that may help to international banks. These solutions boil down to burden sharing. In Europe, the first step is banking union.

"Rapid Acceleration" Needed to Ensure Results at WTO Ministerial, Lamy Warns
Bridges Weekly Trade News Digest, Volume 17, Number 13 Apr 18, 2013
With the WTO's ministerial conference in Bali, Indonesia fast approaching, members must adopt a "change in mind-set" if they are to complete their negotiations on a package of Doha Round deliverables in time, Director-General Pascal Lamy warned last week.

Japan Receives US Backing for Entry into Trans-Pacific Talks
Bridges Weekly Trade News Digest, Volume 17, Number 13 Apr 18, 2013
Washington officially signed off on Tokyo's entry into the Trans-Pacific Partnership negotiations last week, bringing the Asian economy one step closer to formally becoming a member of the 11-country group.

Candidate Field Narrows for WTO Director-General's Race
Bridges Weekly Trade News Digest, Volume 17, Number 13 Apr 18, 2013
The first cut in the race for the position of WTO Director-General took place last week, after four candidates were deemed as not having sufficient support to make it to the leadership contest's second stage. The process to whittle down the remaining list of five candidates – which come from either Asia-Pacific or Latin American countries – to three is already underway, with the second round of consultations kicking off on Tuesday.

WTO Reins in 2013 Trade Growth Forecast
Bridges Weekly Trade News Digest, Volume 17, Number 13 Apr 18, 2013
The WTO on 10 April cut its projected trade growth forecast for 2013 by more than one percentage point, based on trade figures and trends seen in 2012. The organisation says that slow economic growth in developed economies, high rates of unemployment, and the eurozone crisis in 2012 will likely result in a growth rate of only 3.3 percent over 2013 – down from an earlier projected rate of 4.5 percent.

The ECB Should Stop Saying Its Hands Are Tied
Evan Soltas (Bloomberg) Apr 18, 2013
The ECB doesn't have a single mandate.

Slovenia Bailout Would Be Spanish-Cypriot Mongrel
Megan Greene (Bloomberg) Apr 18, 2013
The ink on the provisional bailout agreement for Cyprus was hardly dry last month before bond markets shifted their attention to Slovenia, another small euro- area country with a banking problem. The Slovenian government’s borrowing costs subsequently shot up.

Can China Adapt?
Zhang Jun (Project Syndicate) Apr 18, 2013
Many economists are becoming increasingly pessimistic about China's economic prospects, pointing to Japan as evidence that, after three decades, breakneck growth may be coming to an end. China can avoid Japan's fate, but only if its new leadership ensures that the country's economic institutions remain flexible and open to change.

Move From ‘Three-speed’ To ‘Full-speed’ Global Recovery, Urges Lagarde
IMF Survey Apr 18, 2013
The global economy can move beyond an uneven recovery to achieve “full-speed” if countries take customized action on a range of policy fronts, IMF Managing Director Christine Lagarde said at the 2013 IMF-World Bank Spring Meetings.

Wake up to the #Twitter effect on markets
Gillian Tett (FT) Apr 18, 2013
Investors or regulators need to spend more time thinking about the way social media can affect financial markets.

Italy: Lost in stagnation
Guy Dinmore (FT) Apr 18, 2013
The ruined and abandoned city of L’Aquila epitomises the despair of a nation paralysed by political and economic torpor.

Gold's Plunge Is Cause for Optimism
John Tamny (WSJ) Apr 18, 2013
It signals strength in the dollar that could reorient investment away from hedges and toward economic growth.

The Excel Depression
Paul Krugman (NYT) Apr 18, 2013
Did a coding error basically destroy the economies of the Western world? You be the judge.

Distilling the macroeconomic news flow
Alessandro Beber, Michael W Brandt & Maurizio Luisi (VoxEU) Apr 19, 2013
Timely measurement of the state of the economy traditionally relies on low-frequency observations of a few economic aggregates referring to previous weeks, months, or even quarters. This column presents a new method of a real-time approach to timely and more accurate macroeconomic news.

IMF, World Bank spineless with Gulf's dictators
Hossein Askari (AT) Apr 19, 2013
The spineless treatment of the Persian Gulf oil dictatorships by the International Monetary Fund and the World Bank has little impact on their rulers' self-enriching policies. With a bit of backbone, the organizations could recommend, inter alia, full disclosure of offshore accounts exceeding US$1 million of all rulers worldwide.

Europe Needs More Inflation
Evan Soltas (Bloomberg) Apr 19, 2013
By its own reasoning, the European Central Bank has set its inflation target too low.

Banker Steps Into the Role of Superhero
Chrystia Freeland (NYT/Reuters) Apr 19, 2013
In the stagnant world economy today, we have designated central bankers as our superheroes, and we are relying on their magical monetary powers to restart global growth.

A Dose of Reality for the Dismal Science
Adam S. Posen (PIIE/FT) Apr 19, 2013
For a few years, advocates of rapid fiscal austerity have argued as though public debt is like a black hole—once it reaches a certain size, it collapses in on itself under its own weight and pulls the economy down with it. Crisis awaits the spendthrift. A 2010 academic paper by Carmen Reinhart and Kenneth Rogoff, two eminent economics professors, provided many pundits and politicians with the desired evidence for this instinctive view. They seemingly found that economic growth fell off sharply when national debts reached 90 percent of gross domestic product.

Stuck in a Trap? Escape-Artist Korea Has Pointers
William Pesek (Bloomberg) Apr 20, 2013
Five years after the worst economic crisis since the Great Depression, developing nations confront a nasty pair of threats: an excruciatingly slow global recovery, and the tsunami of easy money that rich-world central bankers have unleashed as they try to revive their own economies.

The future of Europe-wide stress testing
Daniel C Hardy & Heiko Hesse (VoxEU) Apr 20, 2013
The IMF has recently argued that Europe’s financial sector has done much to address the recent financial crisis. This column argues that vulnerabilities remain, and calls for intensified efforts. Europe-wide stress tests will play a crucial role: selective asset-quality reviews and a high degree of transparency would add credibility and reduce uncertainty. Europe-wide stress tests will need to focus on structural, cross-border, and funding-related issues.

The economy: Climbing, stretching and stumbling
Economist Apr 20, 2013
China’s disappointing new growth figures are not the end of the world.

IMF Outlines Steps to Energize Global Recovery
IMF Survey Apr 20, 2013
A broad mix of policies is needed to help put the global economy on a sustained and balanced growth path, the IMF said as it wrapped up the 2013 Spring Meetings against a backdrop of an uneven global recovery.

IMF Has Clear Role in Interconnected World
IMF Survey Apr 20, 2013
As economies become increasingly interconnected and interdependent, there is a major role for international organizations such as the IMF, panelists told a seminar at the IMF-World Bank Spring Meetings.

Africa Enjoying Dynamic Growth but Challenges Remain
IMF Survey Apr 20, 2013
African countries are focusing on improving their infrastructure and tackling unemployment to maintain their dynamic growth, said panelists at an IMF conference.

Brazil: The creaking champions
Joe Leahy (FT) Apr 21, 2013
The boom has peaked, putting a strain on companies that had enjoyed political and economic support from the state.

Perils of placing faith in a thin theory
Wolfgang Münchau (FT) Apr 21, 2013
Policy makers loved the Reinhart and Rogoff thesis because two eminent economists were saying their instincts were correct.

Private lives of the monetary superheroes
Claire Jones (FT) Apr 21, 2013
Neil Irwin’s ‘The Alchemists’ praises the central bankers’s boldness but skates over their weak spots.

The end of macro magic
Robert J. Samuelson (WP) Apr 21, 2013
Economists lose faith in once-trusted policies.

Googling systemically important insurers
Mardi Dungey, Matteo Luciani & David Veredas (VoxEU) Apr 22, 2013
An unintended consequence of tighter banking regulation is that businesses are looking beyond banks for their loans. This column argues that this arbitrage opportunity may create systemic risks, including amongst major insurance companies. Using a new methodology, evidence tentatively suggests that insurers are indeed becoming systemic.

Europe in Depression?
Federico Fubini (Project Syndicate) Apr 22, 2013
Today, as southern European countries experience high levels of unemployment, huge savings and potential demand for consumer and capital goods remain locked up in northern Europe. It is time for northern European countries to use their huge excess savings to support growth.

How to Boost Foreign Investment
Ana Palacio (Project Syndicate) Apr 22, 2013
Economic globalization, together with a rebalancing of power between the world’s north and south, has made developing countries, and many companies within them, key global economic actors. This provides a new rationale for strengthening the international framework to protect foreign investment.

Suffer the Children, Suffer the Country
Jeffrey D. Sachs (Project Syndicate) Apr 22, 2013
Investing in the health, education, and skills of children offers the highest economic returns to any country. A new UNICEF study shows which high-income countries are doing well when it comes to making these investments – and which are doing poorly.

Lending in the Dark
Andrew Sheng and Xiao Geng (Project Syndicate) Apr 22, 2013
The proliferation of China’s opaque, loosely regulated (or unregulated) shadow-banking system has been raising fears of possible financial instability. But just how extensive – and how risky – is shadow banking in China?

When Roosevelt Ditched the Gold Standard
Philip Scranton (Bloomberg) Apr 22, 2013
To bring the economy out of the Great Depression, President Franklin D. Roosevelt took the U.S. off the gold standard in 1933.

Asia: ‘The Explosive Transformation’
Pankaj Mishra (NYRB) Apr 25, 2013
“Let some people get rich first,” the Chinese leader Deng Xiaoping proclaimed a generation ago, inaugurating a strange new phase in his country’s—and the world’s—history. It now seems clear that nowhere has capitalism’s promise to create wealth been affirmed more forcefully than in post–World War II Asia.