International news pertinent to international economics is added here, together with several major newspapers and news magazines. The articles, in general, are held for a month on this main page. You can also access the older archived news articles, with the caveat that there is no guarantee that the links remain live. Current news on international financial markets can be found here. Note: Links to the New York Times require a free registration.
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Chile: Limits to growth
Benedict Mander and John Paul Rathbone (FT) Jul 1, 2014
The country’s economic ‘miracle’ hangs in the balance as President Michelle Bachelet tackles social inequality with controversial reforms.
Bad advice from Basel’s Jeremiah
Martin Wolf (FT) Jul 1, 2014
The Bank for International Settlements’ recommendations for post-crisis policies contain serious flaws.
Moscow must build a nation not an empire
Dmitri Trenin (FT) Jul 1, 2014
Now Russia has Crimea, it needs people not land. It should think of the Eurasian Union not as an EU2 but as a kind of Nafta.
How Government Forces the Poor Into Black Markets
Peter St. Onge (Mises Daily) Jul 1, 2014
From the left we often see tension between those who want to help the poor, and those who want to help the government. Onerecent example of this is the proposal to ban cash forwarded by Harvard’s Ken Rogoff.
A misleading debate
Robert J. Samuelson (WP) Jul 1, 2014
The congressional fuss over the renewal of the Export-Import Bank’s charter is political grandstanding.
Goldman Sachs Got Lost in Its Own Dark Pool
Matt Levine (Bloomberg View) Jul 1, 2014
Maybe I am naive about data analysis, but I feel like (1) lots of people could be checking whether there's latency arbitrage and (2) no one does.
Ex-Im Bank Pays the U.S. Back
Noah Smith (Bloomberg View) Jul 1, 2014
The Export-Import Bank helps U.S. businesses sell overseas, counters subsidies that other government offer their businesses and doesn't cost taxpayer.
Markets, Sprinkled With Fairy Dust
Mohamed A. El-Erian (Bloomberg View) Jul 1, 2014
Mohamed El-Erian is worried that supportive monetary policy has made investors comfortable with high returns, even though he think that financial markets may be sprinkled with the "fairy dust of illusionary riches".
Gouging the Gauchos
Nouriel Roubini (Project Syndicate) Jul 1, 2014
Like individuals and private firms that rely on bankruptcy procedures to reduce an excessive debt burden, countries sometimes need orderly debt restructuring or reduction. But the ongoing legal saga of Argentina’s fight with holdout creditors shows that the international system for orderly sovereign-debt restructuring may be broken.
The tipping over of TPP
Jayant Menon (VoxEU) Jul 1, 2014
The Trans-Pacific Partnership (TPP) is taking a long time to conclude. This column argues that the TPP agenda, unlike the Doha round, is more ambitious and controversial. Many see it as skewed in favour of one country – the US. There are fears that even the US may lose interest in the Partnership without the fast-track authority given by the current Congress. The only useful way forward is for countries to take matters in their own hands.
The Great Recession’s long-term damage
Laurence Ball (VoxEU) Jul 1, 2014
Whereas textbook macroeconomic theory suggests that output should return to potential after a recession, there is mounting evidence that deep recessions have highly persistent effects on output. This column reports estimates of the long-term damage caused by the Great Recession. In most countries in the sample, the loss of potential output – 8.4% on average – has been almost as large as the loss of actual output. In the countries hit hardest by the recession, the growth rate of potential output is much lower today than it was before 2008.
The New Casinos – Emerging Markets
Anthony Rowley (YaleGlobal) Jul 1, 2014
New casinos? Wall Street re-labeled developing nations as emerging markets for investors
Does Innovation Lead to Prosperity for All?
Various (TIE) Jul 1, 2014
The word “innovation” has become the new mythical silver bullet to fix the world economy. But will innovative breakthroughs raise real income for average working families?
Mario the Magician
Wolfgang Münchau (TIE) Jul 1, 2014
He will either succeed or fail spectacularly.
Finding bargains will be tough after QE
Robert Parker (FT) Jul 2, 2014
Approach to asset management will have to change where catalysts that have spurred market rallies are dissipating.
WSJ Jul 2, 2014
Foreign investment in France has dropped 94% over the last decade.
Dollars trump democracy
Harold Meyerson (WP) Jul 2, 2014
For Western companies, the focus on China has just one value.
Piketty with Chinese Characteristics
Andrew Sheng and Xiao Geng (Project Syndicate) Jul 2, 2014
In Capital in the Twenty-First Century, Thomas Piketty argues that capitalism aggravates inequality through several mechanisms, all of which are based on the notion that the return on capital falls less quickly than growth in income. This framework fits China’s recent experience well, and thus merits closer examination.
Productivity and development: Competitive services can help, but can’t do everything
Martin Wermelinger (OECD Insights) Jul 2, 2014
Strong growth over much of the past decade, particularly in China, has substantially boosted developing countries’ share of the global economy. In 2010, the share of global GDP of non-OECD countries overtook that of OECD countries, when measured in terms of purchasing power parity. But will this process of “shifting wealth” allow these countries to eventually converge with advanced country per capita incomes?
Why Europe needs two euros, not one
Jacques Melitz (VoxEU) Jul 2, 2014
As the Eurozone cautiously implements stabilising reforms, Germany is forced to go further with concessions than it would prefer. This column suggests that it would be beneficial for discontented members to consider the formation of a second monetary union. The second euro can be constructed better than the first, bringing the discontented members exchange-rate adjustments relative to Germany, and avoiding competitive devaluations.
Banque de France’s 1889 ‘lifeboat’ bank rescue
Pierre-Cyrille Hautcoeur, Angelo Riva & Eugene N. White (VoxEU) Jul 2, 2014
The key challenge for lenders of last resort is to ameliorate financial crises without encouraging excessive risk-taking. This column discusses the lessons from the Banque de France’s successful handling of the crisis of 1889. Recognising its systemic importance, the Banque provided an emergency loan to the insolvent Comptoir d’Escompte. Banks that shared responsibility for the crisis were forced to guarantee the losses, which were ultimately recouped by large fines – notably on the Comptoir’s board of directors. This appears to have reduced moral hazard – there were no financial crises in France for 25 years.
Africa: On the frontier
Katrina Manson (FT) Jul 2, 2014
Investors chasing high returns are prepared to overlook danger, poor governance and creaking infrastructure in the continent’s more remote markets.
History tells us not to cling on to the past
Philip Stephens (FT) Jul 2, 2014
Leaders unwilling to confront the world as it is becoming must not simply hang on to what they know.
‘Dragon kings’ lurk under market calm
Ralph Atkins (FT) Jul 2, 2014
In market crashes, the trigger can be miscalculations by a financial institution or a change in sentiment towards an asset class.
WTO: Farm Trade Negotiators Confront Gulf in Expectations
Bridges, Volume 18, Number 24 Jul 3, 2014
Negotiators must clarify in the coming months what agricultural concessions they can make if progress is to be achieved on wrapping up the Doha Round talks, the chair of the WTO's farm trade negotiations urged last week.
UN Group Revises Sustainable Development Goals "Zero Draft" Ahead of Final Session
Bridges, Volume 18, Number 24 Jul 3, 2014
The co-chairs of a UN working group charged with drafting recommendations for a set of sustainable development goals (SDGs) have released a revised version of a "zero draft" text to be considered at the group's final session later this month.
From the Unipolar Moment to a Multiplex World
Amitav Acharya (YaleGlobal) Jul 3, 2014
New World order emerges, one that requires cooperation and ability to build regional ties
State of Imbalance
Benjamin Miller (FA) Jul 3, 2014
Why countries break up.
Germany and the future of the euro
Joshua Aizenman (VoxEU) Jul 3, 2014
After a promising first decade, the Eurozone faced a severe crisis. This column looks at the Eurozone’s short history through the lens of an evolutionary approach to forming new institutions. German dominance has allowed the euro to achieve a number of design objectives, and this may continue if Germany does not shirk its responsibilities. Germany’s resilience and dominant size within the EU may explain its ‘muddling through’ approach to the Eurozone crisis. Greater mobility of labour and lower mobility of under-regulated capital may be the costly ‘second best’ adjustment until the arrival of more mature Eurozone institutions.
Benjamin Kunkel (LRB) Jul 3, 2014
Capitalism can dispense with democracy more easily than with profits. A question for the century ahead is how far it will minimise the former in seeking to maximise the latter.
Has GDP outgrown its use?
David Pilling (FT) Jul 4, 2014
Governments and the media obsess about it while statisticians endlessly fiddle – but what is the real point of GDP and can it ever be accurately measured?
The Middle East: The tragedy of the Arabs
Economist Jul 5, 2014
A civilisation that used to lead the world is in ruins—and only the locals can rebuild it.
Unemployment: Labour pains
Sarah Gordon, Claire Jones and Peter Wise (FT) Jul 6, 2014
Despite signs of a eurozone recovery, economists fear the crisis has left a permanent scar on the continent’s job market.
Put US foreign policy back on the pitch
Lawrence Summers (FT) Jul 6, 2014
A failure to engage effectively with global economic issues is a failure to mount a strong forward defence.
‘Unhappy Union’, by John Peet and Anton La Guardia
Ferdinando Giugliano (FT) Jul 6, 2014
A convincing diagnosis of the eurozone’s flaws presents prescriptions that are useful if at times fanciful.
China takes senior role in trade talks
Shawn Donnan (FT) Jul 6, 2014
Country is starting to take a more proactive role in the WTO talks and to put distance between itself and the other big emerging economies.
Fund managers linked to systemic risk
John Authers (FT) Jul 6, 2014
The critical question now is whether fund managers amplify market cycles, or damp them. If it is the former, then they contribute to systemic risk.
Our Mismeasured Economy
Lew Daly (NYT) Jul 6, 2014
Standard G.D.P. doesn’t fully account for the role of government.
Puerto Rico's Borrowing Bubble Pops
Mary O'Grady (WSJ) Jul 6, 2014
Moody's measure of 'expected default' for Puerto Rico is higher than Argentina and Venezuela.
R&D internationalisation during the Global Crisis
Bernhard Dachs & Georg Zahradnik (VoxEU) Jul 6, 2014
The Global Crisis brought a halt to three decades of R&D internationalisation, in which foreign firms’ share of total R&D expenditure had increased in almost all countries where data is available. However, this column argues that the crisis did not lead to a new global distribution of overseas R&D expenditure, despite the erosion of the EU’s share. The persistence of R&D expenditure is attributed to the costs of relocating R&D and to the autonomy of foreign subsidiaries.
Piketty’s two laws
Ton van Schaik (VoxEU) Jul 6, 2014
Piketty’s book “Capital in the 21st century” has gained popularity with its finding of a growing gap between wage earners and capital owners. This column presents a test to the two main laws in Piketty’s book. The attractiveness of these two laws is in their simplicity, but so is their limitation. Piketty neglects investment replacement and depreciation.
Brazil’s brilliance is also a curse
Gideon Rachman (FT) Jul 7, 2014
Footballing genius has sometimes seemed to serve not as an inspiration to genius in other areas of life – but as an alternative.
Argentina has to talk to holdouts
Jay Newman (FT) Jul 7, 2014
A debt settlement would be affordable – and it would attract investment, boosting the country’s economic prospects.
Punishing foreign banks could backfire
Martin Arnold (FT) Jul 7, 2014
Some investors wonder if the US is going too far in using financial regulation to pursue foreign policy aims.
End to China property boom barely begun
George Magnus (FT) Jul 7, 2014
China is probably in the first stage of a denouement of the property- and construction investment-led growth model of the last 15 years.
Europe’s Debt Wish
Kenneth Rogoff (Project Syndicate) Jul 7, 2014
It is difficult to see how Europe can revive economic growth without significant debt restructuring or rescheduling. But Europe’s politicians seem utterly unable to contemplate this scenario, thus placing a huge burden on the ECB.
Revisiting the pain in Spain
Paul De Grauwe (VoxEU) Jul 7, 2014
There has been a stark contrast between the experiences of Spain and the UK since the Global Crisis. This column argues that although the ECB’s Outright Monetary Transactions policy has been instrumental in reducing Spanish government bond yields, it has not made the Spanish fiscal position sustainable. Although the UK has implemented less austerity than Spain since the start of the crisis, a large currency depreciation has helped to reduce its debt-to-GDP ratio
Globalisation, job security, and wages
Kerem Cosar, Nezih Guner & James R Tybout (VoxEU) Jul 7, 2014
Trade liberalisations are often accompanied by labour market reforms, making it difficult to isolate their effects. This column discusses the effects of trade liberalisation, globalisation, and labour-market reforms on the Colombian labour market. Reduced trade frictions increased cross-firm wage inequality and shifted the firm-size distribution rightward, with offsetting effects on overall wage inequality. Average income increased, but the gains were concentrated among employees of large, productive firms with access to export markets. Greater trade openness also increased job turnover.
In Bulgaria, Corruption and Mistrust Turn Promise Into Pain
Jack Ewing and Georgi Kantchev (NYT) Jul 8, 2014
Bank runs and political instability have cast a shadow on the future of the European Union’s poorest member state.
France lacks authority to depose dollar
Barry Eichengreen (FT) Jul 8, 2014
The French government failed to detect the violation of international norms by BNP Paribas, one of its biggest banks – or worse, did not try.
Pimco: Lex in-depth
Oliver Ralph (FT) Jul 8, 2014
Allianz has done well from its acquisition of Bill Gross’s firm. But after 15 years the German insurer should consider spinning it off.
How the Everything Boom Might End: The Good, the Bad and the Ugly
Neil Irwin (NYT) Jul 8, 2014
With nearly every major asset class expensive by historical standards, it's natural to wonder what will happen next.
Shanghai free-trade zone reforms falter
Michael Lelyveld (AT) Jul 8, 2014
Nine months after the launch of Shanghai's free-trade zone to great fanfare, China's showcase economic initiative seems to have landed with a thud.
What Enabled Bretton Woods?
Harold James and Domenico Lombardi (Project Syndicate) Jul 8, 2014
The Bretton Woods conference created a global monetary framework that served as a cornerstone of a peaceful global political order for at least 30 years. What was the key to its effectiveness, and how can its success be replicated to create a new international monetary system?
India is shackled on state sell-offs
Swaminathan Aiyar (FT) Jul 9, 2014
What the country really needs is a right to privatise, but this right is needed not by its citizens but by its government.
Fear factor will return to haunt Yellen
Axel Merk (FT) Jul 9, 2014
Fed’s policies have created a low volatility environment and with it equity price appreciation that Ms Yellen insists is not the Fed’s concern.
Why Piketty's Wealth Data Are Worthless
Alan Reynolds (WSJ) Jul 9, 2014
Private retirement plans rose to $12.4 trillion in 2012 from $875 billion in 1984. None of it is reported on tax returns.
Our Financial Crisis Amnesia
Alex Pollock (WSJ) Jul 9, 2014
Remember the S&L crisis? Nobody else does either. And we'll soon forget about 2008 too.
Only Dummies Ignore Foreign Brainpower
Noah Smith (Bloomberg View) Jul 9, 2014
The U.S. needs to let in more high-skilled foreign workers -- and low-skilled ones too.
The Upside of Brazil's Defeat
Mohamed A. El-Erian (Bloomberg View) Jul 9, 2014
Brazil's devastating defeat in the World Cup could improve the prospects for much-needed economic reform
Is There A Right To Secede?
Peter Singer (Project Syndicate) Jul 9, 2014
The EU has brought 28 countries into a closer political and economic union. Paradoxically, it has also made it more feasible to contemplate the breakup of some of those countries.
Argentina’s Sovereign Bondage
Anne Krueger (Project Syndicate) Jul 9, 2014
Sovereign debt has been back in the news recently, this time because of a US Supreme Court ruling concerning Argentine debt. As a result of the ruling, a complicated issue is likely to become even more so.
A Real Fix for Credit Ratings
Robert E. Litan & Ann Rutledge (Brookings) Jul 9, 2014
An innovative new proposal calls for a single, public structured finance credit scale to fix the broken credit ratings process that contributed to the financial crisis.
China's Challenge in Africa: Avoid Blame of Neo-Colonialism
Gregory Chin (YaleGlobal) Jul 9, 2014
China modifies its south-south narrative for Africa and recognizes the continent as competitor.
An ever closer union?
Bruno Maçães (VoxEU) Jul 9, 2014
The debate on the future of the European Union is in full swing. In this column, Bruno Macaes – the Portuguese Minister for Europe – stresses the importance of policy coordination in achieving better integration. One way to do so is via a fiscal union, but this creates unity at the expense of diversity. A second way involves formal contracts and partnerships. But to make this approach less rigid, the political dialogue does not need to be formalised in actual contracts.
Trade, regional development, and institutions: Lessons from Brazil
André Carlos Martínez, Aldo Musacchio & Martina Viarengo (VoxEU) Jul 9, 2014
Institutions are known to play a powerful and enduring role in countries’ divergent levels of economic development. This column presents evidence that institutions matter for within-country inequality, too. In Brazil, changes in export prices and export tax revenues led to an increase in education spending in states that experienced commodity booms, which increased the number of schools and improved educational outcomes such as literacy rates. However, the effect was limited in states where slavery was predominant in colonial times.
Financial preparations leading up to WWI
Harold James (VoxEU) Jul 9, 2014
The 1907 panic affected the world, demonstrating the fragility of the international financial system. This column discusses the steps the US and Germany took in fortifying their financial systems following 1907. There is a link between the financial crisis and the escalation of diplomatic relations that led to war in 1914. And this link has implications for today as the world is recovering from the 2008 crisis.
Worst threat to euro is a lack of trust
Philip Stephens (FT) Jul 10, 2014
The argument between Italy’s Matteo Renzi and Germany’s Angela Merkel asks a question at the heart of the future of Europe’s single currency.
We risk crisis by indulging China’s banks
Joe Zhang (FT) Jul 10, 2014
The only realistic way in which to contain the Chinese credit bubble is to starve the banks of new capital.
Euro strength defies Draghi’s plans
Ralph Atkins (FT) Jul 10, 2014
The ECB is in a difficult position, and may not see real weakening of the euro until the Fed adopts policies that strengthen the dollar.
The folly of central banks’ tightening
Lorenzo Bini Smaghi (FT) Jul 10, 2014
While euro states implemented a sharper fiscal contraction than other major economies they have not been rewarded by a more accommodating monetary policy.
"Green Goods" Trade Talks Kick Off in Geneva
Bridges, Volume 18, Number 25 Jul 10, 2014
A group of 14 WTO members – including the US, EU, and China – formally launched negotiations on Tuesday for a new agreement aimed at liberalising trade in environmental goods.
WTO Members Work to Bridge TFA Divide Before July Deadline
Bridges, Volume 18, Number 25 Jul 10, 2014
The divide among WTO members over the implementation of the new Trade Facilitation Agreement (TFA) has continued to persist in recent weeks, despite an end-July deadline to agree on a protocol of amendment that would bring the deal into the organisation's overall legal framework.
WTO Appellate Body Issues Mixed Ruling in US-China Trade Remedy Case
Bridges, Volume 18, Number 25 Jul 10, 2014
The WTO Appellate Body released its final ruling on the US' Tariff Act Amendment – known otherwise as the "GPX Legislation" – this week, finding that there was not enough factual analysis in a previous panel decision to determine whether the law violates Washington's international trade obligations.
How to Tame Argentina's Debt Vultures
Mac Margolis (Bloomberg View) Jul 10, 2014
Brazil may be out of the World Cup, but it can teach Argentina something about dealing with debt holders.
Hang On, Portugal, Europe's Crisis Isn't Over
Bloomberg View Jul 10, 2014
With trouble brewing at Espirito Santo International, Europe's leaders must find the political will to recapitalize the financial system and address the flaws in their currency union.
The End of `Made in Japan'?
William Pesek (Bloomberg View) Jul 10, 2014
Economists in Japan are clamoring for another jolt of monetary audacity after Prime Minister Shinzo Abe's ill-advised tax hike in April. They're right -- the Bank of Japan should act.
Central Banks, In a Corner
Mark Gilbert (Bloomberg View) Jul 10, 2014
The Federal Reserve and other central banks are worried that investors are taking too much risk, which is exactly the behavior their policies were designed to encourage.
Currency Headwinds? You Mean Price War
Leonid Bershidsky (Bloomberg View) Jul 10, 2014
Multinationals throughout the developed world are complaining of "currency headwinds" -- possibly because policymakers are engaged in a race-to-the-bottom currency war.
Markets Aren't Immoral
Clive Crook (Bloomberg View) Jul 10, 2014
How to think about morals and markets.
Is the World Bank Losing Asia?
Mohamed A. El-Erian (Bloomberg View) Jul 10, 2014
Feeling underserved by the IMF and the World Bank, Asia is starting to go its own way.
The Three-Track Middle East
Mohamed A. El-Erian (Project Syndicate) Jul 10, 2014
Rather than achieving internal convergence, the Middle East is now following at least three distinct paths, and already-large differences will persist and grow for a number of years to come. The main question is what will become of countries like Egypt, which can end up following the path of Syria or of the UAE.
The Old World’s New Roles
Joseph S. Nye (Project Syndicate) Jul 10, 2014
China’s rise has raised many questions for the West, with some wondering whether it is set to usurp a struggling Europe’s global leadership role. But Europe – which remains the world’s largest economic entity, a leader in multilateral institutions, and a champion of values like human rights – still has a critical role to play.
The Renminbi’s Grand Tour
Barry Eichengreen (Project Syndicate) Jul 10, 2014
By permitting two clearing banks to access renminbi onshore, Chinese officials are effectively subsidizing their London and Frankfurt operations and encouraging direct sterling and euro trades. But London and Frankfurt would be reckless to bank on rapid growth in their renminbi transactions.
A Class of Its Own
Dani Rodrik (Project Syndicate) Jul 10, 2014
If today's super-rich believe that they no longer need to rely on their national governments, they are making a huge mistake. The reality is that the stability and openness of the markets that produce their wealth have never depended more on government action.
Does He Pass the Test?
Paul Krugman (NYRB) Jul 10, 2014
A review of Timothy Geithner’s Stress Test: Reflections on Financial Crises.
How US Investments in Mexico Have Increased Investment and Jobs at Home
Theodore H. Moran and Lindsay Oldenski (PIIE) Jul 11, 2014
Enactment of the North America Free Trade Agreement (NAFTA) 20 years ago was accompanied by dire predictions that an increase in US investment in Mexico would lead to job losses and investment reduction at home. The rhetorical highpoint for this concern was captured by H. Ross Perot's assertion in the 1992 presidential campaign that NAFTA would create a "giant sucking sound" as US jobs and investors rushed south of the border.
The Message of Espirito Santo
Mohamed A. El-Erian (Bloomberg View) Jul 11, 2014
Trouble at the Portuguese bank reflects a deeper economic malaise.
Malthus wrong again says OECD
Patrick Love (OECD) Jul 11, 2014
Even if you know nothing about the French Revolution, you’ve probably heard of Marie-Antoinette’s reaction on being told the people had no bread: “Let them eat cake”.
Another Reason Not to Fear Inflation
Roberto Rigobon (Bloomberg View) Jul 11, 2014
The Fed shouldn't worry too much about the recent surge in consumer prices. It's most likely a catch-up after a tough winter.
External integration and development: Evidence from Argentina
Pablo Fajgelbaum & Stephen Redding (VoxEU) Jul 12, 2014
External integration is often viewed as an important driver of economic development, but most existing studies use aggregate data. This column present evidence from a natural experiment provided by Argentina’s integration into the world markets in the late 19th century. The findings point that proximity to trade centres is associated with employment density, high lands rates relative to wages, and structural transformation away from agriculture.
How central banks can deal with bubbles
Wolfgang Munchau (FT) Jul 13, 2014
It is a mistake to think that macroprudential regulation is a potent independent monetary policy tool. It is simply a useful supplementary tool.
Economic reform is key to a new Japan
Peter Tasker (FT) Jul 13, 2014
At a time when fresh challenges are emerging it becomes all the more important to give the people a bigger say.
Private equity: A fee too far
Anne-Sylvaine Chassany and Henny Sender (FT) Jul 13, 2014
Regulators are probing conflicts of interest and high fees charged by fund managers to the companies they own.
How to Fix the Credit-Rating System
Clive Crook (Bloomberg View) Jul 13, 2014
Credit-rating companies failed spectacularly during the financial crisis. Here's the solution.
Knowledge elites, enlightenment, and industrialisation
Mara Squicciarini & Nico Voigtländer (VoxEU) Jul 13, 2014
Although studies of contemporary economies find robust associations between human capital and growth, past research has found no link between worker skills and the onset of industrialisation. This column resolves the puzzle by focusing on the upper tail of the skill distribution, which is strongly associated with industrial development in 18th-century France.
The failed policy response to the Global Crisis
Richard Wood (VoxEU) Jul 13, 2014
The Global Crisis triggered a series of medium-term policy changes. This column reviews the effectiveness of some of these monetary, fiscal policies, and internal devaluation policies. Policymakers anchored their strategic thinking in paradigms that became inapplicable to the new problems. An alternative set of macroeconomic policies is suggested.
FT series: A world without water
Pilita Clark (FT) Jul 14, 2014
The first instalment of a series on the threat of water scarcity describes how companies are bearing large costs for a resource long considered to be free.
Capital markets can help Europe
Hugo Dixon (FT) Jul 14, 2014
Europe needs a modern financial system to fund jobs and growth, and that such an initiative would help keep Britain in the EU.
It is pensioners who are getting richer
Robert Joyce (FT) Jul 14, 2014
This period will not be defined by inequality between rich and poor but by the differences between old and young.
Investors beware: economists at large
Mohamed El-Erian (FT) Jul 14, 2014
Analytical underpinnings of risk-taking are far from robust.
BRICS: Toward a Rio Consensus
Kevin P. Gallagher (Globalist) Jul 14, 2014
The BRICS countries set out to overcome Western domination and the legacy of the "Washington Consensus."
Eurozone: More Reforms Needed to Strengthen Recovery
IMF Survey Jul 14, 2014
The euro area is recovering, but policymakers must address deep-seated obstacles to growth to ensure a strong and durable recovery, according to the IMF’s latest report on the currency area.
The financial drawbacks of being an emerging economy
Markus Jaeger (DB Research) Jul 14, 2014
The US today, like Britain under the gold standard, acts as the world’s banker. It is the most important source of international liquidity, leading countries to hold USD-denominated assets. Not only does this allow the US and especially the US Treasury to tap into a large investor base ready to finance current account and fiscal deficits at a lower cost. To the extent that the demand for international liquidity and USD assets exceeds the US balance-of-payments deficit, it allows the US to recycle short-term foreign liabilities into long-term assets.
Containing the Resource Crisis
Alejandro Litovsky (Project Syndicate) Jul 14, 2014
Competition for scarce resources is sorely testing global governance and cooperation. But even in the absence of overarching global legal frameworks, it is possible to maintain a sense of common security if the terms of resource investments are founded on long-term political understanding and commercial relationships.
The Euro "recovery" in Real Time (in case you missed it)
John Weeks (Pieria) Jul 14, 2014
Has recovery come to the largest countries of the euro zone? No, because austerity has depressed public sector demand.
How to Spark Another 'Great Moderation'
John Taylor (WSJ) Jul 15, 2014
A new House bill would encourage the Fed to abide by monetary policy rules.
Energy: The indispensable country
Ed Crooks and Anjli Raval (FT) Jul 15, 2014
The US shale revolution has averted the threat of a global oil crisis caused by growing levels of conflict and instability around the world.
Malaysian credibility rests on bank union
Jeremy Grant (FT) Jul 15, 2014
The southeast Asian nation has an opportunity via its planned three-way bank merger to demonstrate disclosure and governance that is world class.
For Proof Wall Street Is Changing, Look at Citigroup's Numbers
Neil Irwin (NYT) Jul 15, 2014
It’s easy to be cynical about Wall Street reform. Nothing ever changes. Well, maybe.
BRICS against Washington consensus
Pepe Escobar (AT) Jul 15, 2014
Brazil, Russia, India, China, and South Africa come together today to play top class geopolitical ball with the launch a development bank for the emerging world. The new institution has the power to leave the World Bank in the dust, never mind challenge the order of the Washington consensus that's been received wisdom since the end of World War II.
Going Hard on China Isn't Easy
William Pesek (Bloomberg View) Jul 15, 2014
Australia's strained relations with China shows the difficulty of being adversarial while being economically dependent.
The End of the World Bank?
Leonid Bershidsky (Bloomberg View) Jul 15, 2014
The BRICS nations are committing more resources to their new financial institutions than to the IMF and World Bank. That is a real threat to the established financial order.
Booming Until It Hurts?
Robert J. Shiller (Project Syndicate) Jul 15, 2014
In recent months, concern has intensified among the world’s financial experts and news media that overheated asset markets – real estate, equities, and long-term bonds – could lead to a major correction and another economic crisis. The general public seems unbothered, but the experts' concern is healthy.
Creative Destruction at Work
Carl Benedikt Frey (Project Syndicate) Jul 15, 2014
Despite the diffusion of big-data-driven technologies, research suggests that labor will continue to have a comparative advantage in social intelligence and creativity. Government development strategies should therefore focus on enhancing these skills, so that they complement, rather than compete with, computer technologies.
The Inverted World of Mobile Capital
Laura Tyson (Project Syndicate) Jul 15, 2014
In recent months, a flurry of American companies have sought to move their legal headquarters abroad by acquiring or merging with foreign companies. Such deals reflect the deep flaws in the US corporate tax system.
The BRICS Don't Need Their Own Bank
Bloomberg View Jul 15, 2014
To win their fight for the status they deserve, the BRICS must choose their targets more shrewdly.
The TARGET2 controversy
Livia Chitu, Barry Eichengreen, Arnaud Mehl & Gary Richardson (VoxEU) Jul 15, 2014
The European debt crisis has triggered debates over the TARGET2 imbalances. This column discusses gold flows across Federal Reserve districts and points to the similarity of such operations to liquidity flows from Eurozone’s ‘core’ to its ‘periphery’. Though the institutional setting in Europe differs, important lessons can be drawn from the US example. Cooperation between regional Reserve Banks was essential for the cohesion of the US monetary union. Such cooperative spirit will be important for the smooth operation of the Eurozone.
Comprehensive gains from trade: Non-price factors
Konstantins Benkovskis & Julia Woerz (VoxEU) Jul 15, 2014
Import price statistics may not be a reliable indicator of welfare gains. They must adequately reflect the fact that consumers value variety, and that consumer tastes and product quality change over time. This column evaluates existing findings, and introduces new results for the four largest EU economies – including evidence of higher consumer welfare gains than suggested by official import prices for the period from 1995 to 2012.
A new paper suggests bond investors need to be careful reaching for yield
Ian Kelly (Pieria) Jul 15, 2014
If the Leibowitz, Bova and Kogelman paper is right, you can only have any sort of certainty over a long – sometimes a very long – time horizon.
The Price of Poverty
Johannes Haushofer (FA) Jul 15, 2014
Psychology and the cycle of need.
Emerging economies: Taking a stand
Robin Harding, Joseph Leahy and Lucy Hornby (FT) Jul 16, 2014
The Brics countries are using their growing economic might to create their own development bank. But critics warn that the group is bound more by frustration than shared ideals.
Renewed crisis stalks E European banks
Neil Buckley (FT) Jul 16, 2014
Greater risk seems to exist for eastern European banks than further west, in particular the problem of lingering bad loans.
Weak US + slowing China = big EU trouble
Edouard Carmignac (FT) Jul 16, 2014
Faced with high debt levels, the EU peripheral countries’ only option is to try to ride the coat-tails of more buoyant economies elsewhere.
Protectionists Steel Washington
WSJ Jul 16, 2014
New tariffs will hurt U.S. manufacturers.
Investors Heed the Fed at Their Peril
Marc Sumerlin and Phillip Swagel (WSJ) Jul 16, 2014
If booming asset prices go bust, the central bank's credibility would be severely damaged.
A Role for the World Bank in Cleaning Up Coal
Nigel Purvis (Brookings) Jul 16, 2014
Can the World Bank help clean up coal power plants in middle-income countries?
China as Greece’s Savior
Robert Hardy (Globalist) Jul 16, 2014
How the upcoming privatization round in the eurozone crisis helps China expand its foothold in Europe.
BRICS new alliance speaks volumes
Brian Caplen (Banker) Jul 16, 2014
By establishing the New Development Bank, the BRICS economies of Brazil, Russia, China, India and South Africa have made their biggest push yet towards redressing the economic world order.
Slow-Growth Forecasts Are Wrong
A. Gary Shilling (Bloomberg View) Jul 16, 2014
When an economic phenomenon, such as today's persistently slow growth, lasts long enough, economists like to develop theories to show that it will last forever. They are often mistaken.
What to Fear If China Crashes
William Pesek (Bloomberg View) Jul 16, 2014
If China has a credit crisis, it might send shock waves around the world.
A Better Way to Fight Inequality
Clive Crook (Bloomberg View) Jul 16, 2014
Pounding the plutocracy won't help the disadvantaged. What will?
Getting Globalization Right
Ian Goldin (Project Syndicate) Jul 16, 2014
Over the last quarter-century, rapid technology-driven globalization has contributed to the fastest increase in incomes and population in history. But globalization has also unleashed a new form of systemic risk – one that threatens to devastate political institutions and national economies.
Members only: Embracing diversity in the WTO
Bernard Hoekman & Petros C. Mavroidis (VoxEU) Jul 16, 2014
The proliferation of trade ‘clubs’ indicates that governments are keen on engaging in trade liberalisation. This column argues that the creation of new trade clubs under the umbrella of the WTO is inevitable. Such issue-specific (plurilateral) agreements keep the cord with the WTO tight, while allowing countries to cooperate on issues outside of WTO’s grounds.
New price adjustments reshape the world, yet again
Bettina Aten & Angus Deaton (VoxEU) Jul 16, 2014
When the international comparison project published its latest estimates of purchasing power parity exchange rates in April there was some consternation. Poor countries became richer overnight, world GDP increased, and global income inequality was revised downwards. Alas, no one stopped being poor. This column digs into the numbers to see if we’ve been consistently underestimating the relative size of poorer economies and overestimating global poverty and inequality.
Spain's Economic Reforms and the IMF
WSJ Jul 17, 2014
Leave it to the austerity scolds to call for tax increases just as Spain begins to grow.
An Unnecessary Fix for the Fed
Alan S. Blinder (WSJ) Jul 17, 2014
Legislation in pursuit of 'transparency and accountability' has little to do with either.
Immigration: Life on the line
FT Jul 17, 2014
As the US grapples with a border crisis, FT reporters speak to the immigrants and the Americans who are torn over their fate.
The darker side of Iceland’s recovery
Gillian Tett (FT) Jul 17, 2014
We should remember that ‘emergency’ policy measures that distort the financial world tend to become addictive.
China’s banking threat is overstated
Yukon Huang (FT) Jul 17, 2014
The exposure of the sector to risky activities is more modest than many imply, the real concerns are more in’ wealth management products.
All this talk of Ficc is making me sick
Gary Silverman (FT) Jul 17, 2014
What constitutes good news these days on Wall Street is Masters of the Universe coming down to Earth, slowly.
Xi’s Latin trip puts trade before ideology
John Paul Rathbone (FT) Jul 17, 2014
Washington fears that Chinese president’s visit is about extending sphere of influence to ideological enemies in the region are overblown.
Capital markets still not safe for Greece
Ralph Atkins (FT) Jul 17, 2014
Contagion is still an issue, as displayed by recent woes in Portugal, which has damped down investor enthusiasm for a Greek bond sale.
BRICS Countries Launch New Development Bank
Bridges, Volume 18, Number 26 Jul 17, 2014
Leaders from the BRICS countries – Brazil, Russia, India, China, and South Africa – formally launched a joint international development bank on Tuesday during their annual summit, held this year in the Brazilian city of Fortaleza. Headquartered in Shanghai, the bank will finance infrastructure and sustainability projects in BRICS and other emerging and developing countries.
West African Leaders Formally Endorse EU Trade Pact
Bridges, Volume 18, Number 26 Jul 17, 2014
After over a decade of negotiations, West African leaders formally approved their Economic Partnership Agreement (EPA) with the EU last week during an ECOWAS Heads of States summit in Accra, Ghana. Regional chief negotiators have now been instructed to take immediate action toward launching the signing and implementation processes.
WTO Finds No Acceleration in New Trade Restrictions
Bridges, Volume 18, Number 26 Jul 17, 2014
The pace at which trade restrictions have been introduced by WTO members has shown no notable increases in recent months, according to the latest monitoring report released by the global trade body on 11 July.
The Neo-Mercantilist Hysteria Over US Trade Deficits
Joseph T. Salerno (Mises Daily) Jul 17, 2014
One of the worst effects of modern Keynesian economics is that its total spending (“aggregate demand”) approach to output and employment provides a pseudo-scientific justification for the central error of mercantilism — an error that dates back to the sixteenth century.
Not the worst of times
Fareed Zakaria (WP) Jul 17, 2014
World turmoil is nothing new. But what is producing so much instability today?
Argentina’s Never Ending Crisis
Globalist Jul 17, 2014
Argentina is on the brink of its third major economic crisis in the last 35 years.
The BRICS Safety Net
Bruce Jones & Thomas Wright (Brookings) Jul 17, 2014
The new BRICS development bank will serve as a safety net for members against the risk of U.S. sanctions.
Debunking Misconceptions About Xi Jinping's Anti-Corruption Campaign
Cheng Li & Ryan McElveen (Brookings) Jul 17, 2014
Chinese President Xi Jinping has investigated 182,000 party officials as part of an unprecedented anti-corruption campaign that could positively impact Chinese society.
Espirito Santo: Complexity, Opacity and Moral Hazard
Frances Coppola (Pieria) Jul 17, 2014
Portugal's Espirito Santo Group shows that complex, opaque corporate structures with embedded banks create moral hazard and the risk of fraud.
The BRICS Bank: Now Comes the Hard Part
Vikram Nehru (CEIP) Jul 17, 2014
The BRICS bank is good news for developing countries. If done right, it could change the landscape for multilateral development financing.
Multipolar Innovation – and Europe
Dan Steinbock (European Business Review) Jul 17, 2014
Emerging markets are no longer just “world factories.” Led by China, several are turning into global innovation hubs. Below, Dan Steinbock discusses how Europe can sustain innovation in the nascent multipolar world.
Brazil's Rousseff Gets BRICS Boost
Mac Margolis (Bloomberg View) Jul 17, 2014
Is Brazil ready to put its days as a chronic global underachiever behind it?
Trade of the Day: Dabble in World's Most Boring Currency
Mark Gilbert (Bloomberg View) Jul 17, 2014
The Trade of the Day is to soothe your blood pressure by dabbling in the world's most boring currency.
The Real Message of the BRICS Summit
Mohamed A. El-Erian (Bloomberg View) Jul 17, 2014
Global financial management must adjust to a new reality.
Sovereign Debt at Square One
Jeffrey Frankel (Project Syndicate) Jul 17, 2014
The US Supreme Court has barred Argentina from making payments to fulfill debt-restructuring agreements with its creditors unless the 7% of creditors who rejected the agreements are paid in full. While it is hard to cry for Argentina, the ruling sets back the evolution of the international regime for restructuring sovereign debt.
Trust and the welfare state: The twin-peaked curve
Yann Algan, Pierre Cahuc & Marc Sangnier (VoxEU) Jul 17, 2014
It is commonly argued that the persistence of large welfare states in Scandinavian countries is due to the trustworthiness of their citizens. This column shows that the relationship between trust and the size of the welfare state is twin peaked. Untrustworthy individuals support generous welfare states because they expect to benefit without bearing the costs, whereas civic-minded individuals only support generous welfare states when surrounded by people they trust.
The Great Income Divide
Kemal Dervis (Project Syndicate) Jul 18, 2014
Thomas Piketty’s bestseller Capital in the Twenty-First Century is fueling heated debate about the relationship between capital accumulation and inequality. But the broader question is whether these debates will produce real solutions to two of the critical problems of our time: income inequality and limited social mobility.
The Trade Delusion
Adair Turner (Project Syndicate) Jul 18, 2014
Many experts fear that rising protectionism is undermining globalization, threatening to impede global economic growth. But slower growth in global trade may be inevitable, and liberalization is decreasingly important.
The Boom Is Coming, and Sooner Than You Think
Gary Shilling (Bloomberg View) Jul 18, 2014
Disagreement with the pessimists who believe that persistently slow growth will be the norm for years to come.
Why Would Anyone Buy Credit Default Swaps on China?
Matt Levine (Bloomberg View) Jul 18, 2014
Or Kazakhstan? Which has no external government debt, but half a billion dollars of net notional CDS outstanding.
Making macroprudential regulation operational
Anil K Kashyap , Dimitri Tsomocos & Alexandros Vardoulakis (VoxEU) Jul 18, 2014
Do the extant workhorse models used in policy analysis support macroprudential and macrofinancial policies? This column argues that this is not the case and describes a new macroprudential model that stresses the special role played by banks. The model also accounts for two, often neglected, key principles of the financial systems. Some of the findings of the model could carry over to other, more general settings that satisfy these two principles.
America’s lost oomph
Economist Jul 19, 2014
The country’s potential growth rate is barely half what it was two decades ago. Here’s how to raise it.
Banks, government bonds, and default
Nicola Gennaioli, Alberto Martin & Stefano Rossi (VoxEU) Jul 19, 2014
There is growing concern – but little systematic evidence – about the relationship between sovereign default and banking crises. This column documents the link between public default, bank bondholdings, and bank loans. Banks hold many public bonds in normal times (on average 9% of their assets), particularly in less financially developed countries. During sovereign defaults, banks increase their exposure to public bonds – especially large banks, and when expected bond returns are high. At the bank level, bondholdings correlate negatively with subsequent lending during sovereign defaults.
Income Inequality Is Not Rising Globally. It's Falling.
Tyler Cowen (NYT) Jul 19, 2014
Though the income gap has widened in many individual nations, it has been shrinking globally for most of the last 20 years.
Europe must hit Russia’s finances
Wolfgang Munchau (FT) Jul 20, 2014
From what we have seen so far, we should not exclude that regarding MH17 we are dealing with a first-order global economic shock.
Indian water is a geopolitical issue
Anjana Ahuja (FT) Jul 20, 2014
The plan to connect rivers with 15,000km of canals and reservoirs to enrich farming prospects and deal with flood water is fraught with difficulties.
A qualified defence of economic complexity
Shawn Donnan (FT) Jul 20, 2014
In ‘The Butterfly Defect’, Ian Goldin and Mike Mariathasan argue that globalisation needs to be made more resilient if it is not to fall prey to systemic risk.
Bets are on equities outperforming bonds
James Mackintosh (FT) Jul 20, 2014
American politicians are paying attention to transatlantic takeovers, although their focus is on revenues the US is losing as groups shift tax base.
Why geopolitics barely trouble investors
Russ Koesterich (FT) Jul 20, 2014
Low market volatility, in spite of events that have in the past caused investors to worry about possible ‘contagion’, is a byproduct of central bank policies.
Africans Open Fuller Wallets to the Future
Nicholas Kulish (NYT) Jul 20, 2014
Across sub-Saharan Africa, consumer demand is fueling the continent’s economies in new ways, driving hopes that Africa will emerge as a success story.
China Is Driving the BRICS Train
Pankaj Mishra (Bloomberg View) Jul 20, 2014
Until China reforms its economy, the BRICS acronym will continue to denote extravagant ambition rather than genuine ability.
The Downside of Efficiency
Mark Buchanan (Bloomberg View) Jul 20, 2014
What looks like efficiency often makes us worse off in ways that are hard for the human mind to grasp.
India: Land-Shackled I
Devesh Kapur, T. V. Somanathan, and Arvind Subramanian (Business Standard/PIIE) Jul 20, 2014
Capital, labor, or land? Which of these is the binding constraint is one diagnostic question India's new government should be asking itself as it seeks to revive the sputtering Indian growth engine.
Asean: Long on optimism
Jeremy Grant (FT) Jul 21, 2014
Eager foreign investors and a growing consumer class are driving the economic rise of the 10-member Association of Southeast Asian Nations Read more >>
Zen and the art of wealth
Bilal Hafeez (FT) Jul 21, 2014
America is the richest civilisation that has ever existed, yet one in which free time is both scarce and difficult to fill.
Fed and markets must try new dance
Henry Kaufman (FT) Jul 21, 2014
Relying on cyclical patterns to judge economic and financial trends may not be as dependable as it once was because of the structural changes in financial markets.
Spain’s export-led recovery loses momentum
Tobias Buck (FT) Jul 21, 2014
Spain’s trade deficit is ballooning once again – rising more than 80 per cent in the first five months of 2014 compared to same period last year.
A dose of rate reality to hit markets
Henny Sender (FT) Jul 21, 2014
Treasury issuance provides the best clues for interest rate direction, although such technicals can be overwhelmed by sentiment.
Did Dodd-Frank Work?
Joe Nocera (NYT) Jul 21, 2014
We really have no way of knowing whether "too big to fail" is still with us until we have another crisis.
Tariffs, Textiles and TTIP
Sabine Muscat (Globalist) Jul 21, 2014
Will the United States and EU turn into one big duty-free zone via TTIP?
Does the World Still Need the World Bank?
Bloomberg View Jul 21, 2014
The World Bank, which fights poverty and income inequality, turns 70 on Tuesday. It needs serious reforms beyond what its president, Jim Yong Kim, is now doing.
The Waste of War
Jeffrey D. Sachs (Project Syndicate) Jul 21, 2014
Organized collective violence in the industrial age is tragedy, disaster, and devastation; it solves no political problems. War has become a continuation not of politics, as Clausewitz thought, but of political failure.
The Transatlantic Growth Gap
Daniel Gros (Project Syndicate) Jul 21, 2014
The key to the economic-performance gap between the US and the EU in the last three years is the resilience of private consumption by American households. How were US households able to reduce their debt burden during a period of high unemployment and almost no wage gains while sustaining consumption growth?
Agglomeration and product innovation in China
Hongyong Zhang (VoxEU) Jul 21, 2014
The Chinese government has been actively promoting innovation via policies such as R&D subsidies, tax relief, and location policies. Since 1995, central and local governments have established more than 100 clusters in over 60 cities. This column presents new evidence on the effect of the concentration of firms on product innovation (new products) in the manufacturing industries.
Corporate governance of banks and financial stability
Luc Laeven & Lev Ratnovski (VoxEU) Jul 21, 2014
Bank distress during the recent crisis caused significant damage to the real economy. Appropriately, the policy response focused on stronger bank supervision and regulation. This column asks if there is a role for improvements in bank corporate governance. Based on the literature the authors suggest that better risk management, regulation of pay, and enhanced market discipline can help make banks safer. However, corporate governance cannot substitute for strong supervision: it can at best provide a helping hand.
The good consumer
Florian Schui (Aeon) Jul 21, 2014
To revive the global economy and make society more equal we should all consume more not less. How is this possible?
John Taylor's Reply to Alan Blinder
John B. Taylor (WSJ) Jul 22, 2014
The Fed's ad hoc departures from rule-based monetary policy has hurt the economy.
Free trade suffers for conservative errors
Adam Posen (FT) Jul 22, 2014
The bogeyman-based approach has failed both the progressive agenda and the US economy as a whole.
Chinese moves trump Fed’s effect on US
Diana Choyleva (FT) Jul 22, 2014
Growth trouble in China may have a much bigger impact on US yields in 2015 and 2016 than the expected pace of US central bank tightening.
Promises of Hope Tarnished by Lack of Change
Damien Cave (NYT) Jul 22, 2014
Even as the president garners international praise for pushing through reforms in energy, education and taxes, voters are less willing to embrace platitudes without true transparency.
A 401(k) for All
Gene B. Sperling (NYT) Jul 22, 2014
Reduce wealth inequality by encouraging saving.
A solution to global corruption
Mark L. Wolf (WP) Jul 22, 2014
The creation of an International Anti-Corruption Court would hold leaders accountable.
Libor Needs More Competition
Darrell Duffie (Bloomberg View) Jul 22, 2014
Fixing Libor will require moving to other benchmarks better tailored to their purposes. This might require a push from regulators.
Michael J. Boskin (Project Syndicate) Jul 22, 2014
The EU has three broad options as it confronts its economic malaise and increasingly frustrated voters. Unfortunately, the most likely option – business as usual, with improvised fixes to mini-crises – is the one least likely to deliver the growth that Europe desperately needs.
The Fed in Denial
Simon Johnson (Project Syndicate) Jul 22, 2014
Senior US Federal Reserve officials seem to have slipped back into their pre-2008 ways, ignoring concerns about dangerous financial-sector behavior. That is not only unfortunate; it is also dangerous, because the Fed’s political position is much more precarious than its leadership seems to realize.
César Gamboa (Project Syndicate) Jul 22, 2014
Peru may be among Latin America’s fastest-growing economies today, but its long-term prosperity is far from certain – not least because its economy is largely dependent on the export of raw materials and hydrocarbons. Worse, though the government recognizes the need to pursue growth-enhancing reform, its approach is all wrong.
The Fertility Conundrum
Karen Buch and Duksoo Kim (Project Syndicate) Jul 22, 2014
It is perhaps inevitable that contraception and population growth are controversial topics, given the many perspectives – economic, social, political, and epidemiological – brought to bear on them. Striking the right balance among these different viewpoints is no easy task – but much depends on getting it right.
The Gallic Heart of Europe
Javier Solana (Project Syndicate) Jul 22, 2014
Perhaps because of its very relevance to the making of Europe, France mistrusts the changes taking place around it – as though the weight of its nationhood were narrowing its horizons. But no country today can remain isolated from globalization, tame it, or lead it alone. So France must look again to Europe and political union.
Partial corporate tax harmonisation in the EU
Agnès Benassy-Quéré, Alain Trannoy & Guntram Wolff (VoxEU) Jul 22, 2014
Tax harmonisation has been controversial since the establishment of the European Economic Community, and corporation tax proposals are currently on the table in the EU. Although tax competition can be beneficial, tax harmonisation could curb tax competition that leads to the under-provision of public goods or to burden-shifting from mobile to immobile tax bases. As yet, no agreement has been reached on any ambitious harmonisation plan for mobile tax bases. This column explores the possibility of implementing partial tax harmonisation for corporate taxation and the taxation of the banking sector.
Long-term damage of the US court’s Argentinian debt ruling
Jeffrey Frankel (VoxEU) Jul 22, 2014
The US court ruling forcing Argentina to pay its hold-out creditors has big implications. This column argues that some of them are particularly worrying. The court ruling undermines the possibility of negotiated re-structuring of unsustainable debt burdens in future crises. In the future, it will not be not enough for the debtor and 92% of creditors to reach an agreement, if holdouts and a New York judge can block it. This will make both debtors and creditors worse-off.
Luxembourg tax regime: Under siege
Vanessa Houlder (FT) Jul 23, 2014
The low-tax system at the heart of the European single market that has brought great prosperity to the Grand Duchy now threatens to become a liability.
China’s hunt for tigers is bound to fail
David Pilling (FT) Jul 23, 2014
The anti-corruption campaign appears to have taken on the characteristics of a Maoist purge, sucking people into its vortex.
Anti-capitalists take too much for granted
Devesh Kapur (FT) Jul 23, 2014
India’s economic growth is finally providing ways for the ‘untouchables’ to liberate themselves from servility and servitude.
The big test: what happens when rates rise
James Mackintosh (FT) Jul 23, 2014
When rates rise, will these investors be shocked – shocked! – to find gambling going on in the markets?
Long-term returns boosted by illiquidity
John Authers (FT) Jul 23, 2014
Joining size, value and momentum is a fourth factor that causes stocks to outperform: the less liquid a stock, the better it will perform over.
Alan Beattie (FT) Jul 23, 2014
Of all the world’s large economies, the country has perhaps the least interest in international economic institutions, particularly those with binding rules.
An Idiot's Guide to Inequality
Nicholas Kristof (NYT) Jul 23, 2014
If you don't have time for Thomas Piketty's comprehensive best seller, here's a quick five-point take on the gap between the rich and poor.
The Lingering, Hidden Costs of the Bank Bailout
Vernon L. Smith (WSJ) Jul 23, 2014
Why is growth so anemic? New economic activity has been discouraged. Here are some ways to change that.
Fighting the Fed
Martin Feldstein (Project Syndicate) Jul 23, 2014
The US Federal Reserve fears that a proposed law requiring it to use a formal rule to guide monetary policy would limit its independence, while the bill’s proponents argue that it would produce more predictable growth with low inflation. Who is right?
Europe’s Surplus of Stagnation
Robert Skidelsky (Project Syndicate) Jul 23, 2014
Earlier this month, the chief executive of Airbus called for drastic action by the European Central Bank to reduce the value of the euro against the dollar by about 10%, from a “crazy” $1.35 to between $1.20 and $1.25. But the euro's strong exchange rate is the result of inaction by Germany, not inaction by the ECB.
Can the BRICS build something new?
Branko Milanovic (Aljazeera) Jul 23, 2014
The potential for the BRICS bank is enormous, but so is its chance of failure
The Case for an International Anti-Corruption Court
Mark L. Wolf (Brookings) Jul 23, 2014
The case for a bold new idea that came out of the 2014 World Forum on Governance: An international court for fighting grand corruption that often leads to the most serious abuses of human rights.
Rethinking African solar power for Europe
Emanuele Massetti & Elena Ricci (VoxEU) Jul 23, 2014
Concentrated solar power generation in Northern African and Middle Eastern deserts could potentially supply up to 20% of European power demand. This column evaluates the technological, economic, and political feasibility of this idea. Although concentrated solar power is a proven technology that can work at scale, it is currently four or five times more expensive than fossil fuels. Concentrated solar power could play an important role in Europe’s energy mix after 2050, but only if geo-political challenges can be overcome.
A ‘crowding out’ theory of the Eurozone crisis
Fernando A Broner, Aitor Erce, Alberto Martin & Jaume Ventura (VoxEU) Jul 23, 2014
By 2010, Eurozone periphery countries had faced severe debt problems and a falling credit to the private sector. This column proposes a theory to interpret these events. Governments can discriminate in favour of domestic creditors and public debts trade in secondary markets. This leads to a shift in the debt holdings from foreign to domestic residents. Finally, private financial frictions crowd out private investment, potentially reducing growth.
Greece: A fragile calm
Ralph Atkins and Kerin Hope (FT) Jul 24, 2014
Two years after the country defaulted, there are signs that the economy has turned a corner. But political and structural problems threaten the incipient recovery.
Corporatism is to blame for inequality
Edmund Phelps (FT) Jul 24, 2014
Values such as solidarity, security and stability contribute to stifling economic policies.
EU’s ‘covered bond’ decline is no loss
Ralph Atkins (FT) Jul 24, 2014
The shift should help Europe move from relying on politically powerful national banking champions towards open, continent-wide capital markets.
The Federal Reserve's Risky Reverse Repurchase Scheme
Sheila Bair (WSJ) Jul 24, 2014
The mere existence of this central bank program could exacerbate liquidity runs in times of market stress.
WTO Members Weigh Options as India Pushes Food Security Link on Trade Facilitation Deal
Bridges, Volume 18, Number 27 Jul 24, 2014
Indian officials indicated late on Wednesday that they would not be able to support the implementation of the WTO's Trade Facilitation Agreement (TFA) unless they see their concerns on food security addressed, according to multiple media reports. The news, coming just ahead of a key WTO meeting, has reignited old tensions among the global trade body's members while leaving the next steps for the TFA unclear.
TTIP Negotiators Advance Technical Work as EU Begins Leadership Transitions
Bridges, Volume 18, Number 27 Jul 24, 2014
Trade negotiators from the US and EU completed their sixth round of talks for a bilateral trade and investment pact last week, focusing mainly on technical discussions which officials say will pave the way for tougher political decisions down the road. The weeklong meetings, hosted in Brussels, come as the EU begins transitioning to new leadership across its institutions, sparking questions over what this will mean for the trans-Atlantic pact.
UN Working Group Agrees to Proposed Sustainable Development Goals
Bridges, Volume 18, Number 27 Jul 24, 2014
The UN working group charged with outlining a proposed set of sustainable development goals (SDGs) adopted an outcome document on Saturday. The recommended goals will now be sent to the UN General Assembly for consideration as part of the discussions around the post-2015 development agenda.
WTO’s Least Developed Countries Submit Collective Request on Services Waiver
Bridges, Volume 18, Number 27 Jul 24, 2014
Earlier this week, the WTO's poorest members, known as the Least Developed Country (LDC) Group, submitted a collective request regarding the preferential treatment they would like to see for their services and service suppliers. The move comes seven months after the global trade body's ministerial conference in Bali, Indonesia, where members agreed to take steps for bringing this "services waiver" into operation.
Australian PM Warns G-20 Members Against Missing Growth Target
Bridges, Volume 18, Number 27 Jul 24, 2014
Members of the Group of 20 major developed and emerging economies need to improve their draft "national growth strategies" if they hope to reach their collective economic growth target, Australian Prime Minister Tony Abbott urged last week. Leaders are set to present these national plans when they meet in Brisbane later this year.
Slow but Steady Global Recovery in Need of Strong Policy Support
IMF Survey Jul 24, 2014
The IMF’s latest World Economic Outlook (WEO) Update says that global recovery continues but at an uneven pace, and that downside risks remain. Continued policy efforts are needed to secure a more robust recovery.
The Paradox of the Argentine Debt Drama
Mohamed A. El-Erian (Bloomberg View) Jul 24, 2014
A win for Argentina's holdout creditors could end up being a loss for investors in emerging markets.
The Other Nigeria
Paul Collier and Acha Leke (Project Syndicate) Jul 24, 2014
Nigeria has been getting a lot of bad press lately. But, while the militant Islamist group Boko Haram’s brutal campaign of kidnappings, bombings, and murder merits international concern, it should not be allowed to obscure Nigeria's considerable achievements – or impede the country's progress toward stable, inclusive economic growth.
Antarctica’s Point of No Return
Anders Levermann (Project Syndicate) Jul 24, 2014
Recent satellite observations have confirmed the accuracy of two independent computer simulations that show that the West Antarctic ice sheet has now entered a state of unstoppable collapse. The planet has entered a new era of irreversible consequences from climate change.
Ángel Gurría (Project Syndicate) Jul 24, 2014
The OECD’s Program for International Student Assessment has elicited considerable criticism. But, though there are significant challenges inherent in comparing schools across countries, PISA remains an invaluable tool for policymakers attempting to improve their national education systems.
India’s Chinese Dream
Lee Jong-Wha (Project Syndicate) Jul 24, 2014
China and India have both emerged as global economic superpowers in recent years, with China leading the way. But, with Chinese growth slowing amid far-reaching structural change, will the economic-reform efforts of India’s new prime minister, Narendra Modi, enable the country to catch up?
The Onshoring Myth
Federico Díez and Gita Gopinath (Project Syndicate) Jul 24, 2014
There has been much talk about the "onshoring" of US manufacturing, fueled by moves by companies like Apple and General Electric to shift production back to the US. But, overall, the data do not back up such claims.
Inequality in big cities
Kristian Behrens & Frédéric Robert-Nicoud (VoxEU) Jul 24, 2014
Large cities are more unequal than the nations that host them. This column argues that this is because large cities disproportionately reward talented superstars and disproportionately ‘fail’ the least talented. Cities should thus be the primary focus of policies to reduce inequality and its adverse consequences for society.
After the Dollar
José Antonio Ocampo (Project Syndicate) Jul 25, 2014
China’s rise has made the world increasingly disinclined to tolerate the instability caused by a US dollar-denominated system. The solution, however, lies not in replacing the dollar with the renminbi, but in strengthening the role of the world’s only truly global currency: the IMF’s Special Drawing Rights.
Bonds of the Diaspora
Mahmoud Mohieldin and Dilip Ratha (Project Syndicate) Jul 25, 2014
With official development assistance insufficient to finance development needs in many poor countries, one resource that merits attention are the remittances and savings sent home by nationals working abroad. The challenge is to channel this income effectively.
The Global Security Deficit
Michael Spence (Project Syndicate) Jul 25, 2014
Summer is normally a time to take a break from the risks and worries of everyday life, and perhaps to take stock of where we are and where we are heading. But this is increasingly difficult, because our everyday lives are becoming so much riskier and more worrying.
Will a robot take your job?
Brian Keeley (OECD Insights) Jul 25, 2014
Back when Amazon mostly sold books, it hired writers and editors to come up with helpful reviews and recommendations. The aim was to create the atmosphere of a friendly local bookshop. But the writers and editors didn’t last. They were replaced by Amabot, an algorithm that picked up on users’ browsing and buying history.
The stocks and flows
Frances Coppola (Pieria) Jul 25, 2014
There have been calls for interest rate rises to discourage risky new lending. But the Resolution Foundation shows that it is the stock of existing debt that is the real problem.
Economist Jul 26, 2014
Bad governments cost investors a fortune.
The Real Raw Material of Wealth
Ricardo Hausmann (Project Syndicate) Jul 26, 2014
Poor countries export raw materials such as cocoa, iron ore, and raw diamonds, while rich countries export – often to those same poor countries – more complex products such as chocolate, cars, and jewels. But this does not mean that poor countries should focus solely on adding value to their raw materials.
New thinking on reserve-currency status
Linda Goldberg, Signe Krogstrup, John Lipsky & Hélène Rey (VoxEU) Jul 26, 2014
The dollar’s dominant role in international trade and finance has proved remarkably resilient. This column argues that financial stability – and the policy and institutional frameworks that underpin it – are important new determinants of currencies’ international roles. While old drivers still matter, progress achieved on financial-stability reforms in major currency areas will greatly influence the future roles of their currencies.
The west risks collateral damage by punishing Russia
Wolfgang Munchau (FT) Jul 27, 2014
If you want to know how sanctions will affect the global economy, it is best to follow the money – not the flow of gas or oil.
A fly on the wall at a fund on the move
Edward Luce (FT) Jul 27, 2014
‘Money and Tough Love’, by Liaquat Ahamed, paints an enjoyable portrait of a institution that can seem impenetrable – and finds a fund softer than it once was.
China’s military and economic fortunes
Robert D. Kaplan (FT) Jul 27, 2014
Beijing gives an air of invincibility in the debate over its might but seems on the brink of implosion in the one about the fragility of its economy.
EU urges US to push power button on trade
Shawn Donnan (FT) Jul 27, 2014
Frustrations are growing over TTIP’s energy component, with discussions around one of the biggest potential prizes proceeding slowly.
High house prices are drowning economies
Adair Turner (FT) Jul 27, 2014
If desirable property is scarce, one answer is to lift planning constraints and build more houses – but construction is not a panacea.
A Sensible Path for Avoiding an Argentine Default
Richard Deitz (WSJ) Jul 27, 2014
With a July 30 deadline looming, Kirchner must tone down the rhetoric and strike a deal with 'holdout' creditors.
Financial stability and monetary policy
Gabriel Chodorow-Reich (VoxEU) Jul 27, 2014
The monetary policies implemented by the Federal Reserve since late 2008 have raised concerns about the risk taking of financial institutions. This column discusses the effect of some of these policies on life insurance companies and market mutual funds. While the effect on life insurance companies has been stabilising, money market funds did not actively reach for yield.
Cambodia: Wave of discontent
David Pilling and Michael Peel (FT) Jul 28, 2014
Hun Sen’s 29-year regime is tottering as a young population, angered by land grabs, corruption and low wages, demands change.
Globe-trotting Abe promotes Japan
David Pilling (FT) Jul 28, 2014
After visiting 47 countries in little more than 18 months it makes the Japanese prime minister peripatetic by almost any national leader’s standards.
‘Three arrows’ to put EU back on target
Andreas Utermann (FT) Jul 28, 2014
Accommodative monetary policy; pension, labour market and tax reforms; and infrastructure investment are necessary for a sustainable eurozone recovery.
India must tackle bad bank debts to grow
Henny Sender (FT) Jul 28, 2014
Further reforms are needed as banks are capable of supplying less than half the $270bn estimated as necessary to support a more robust rate of growth.
The Myth of Bretton Woods
Benn Steil (WSJ) Jul 28, 2014
Much economic good ultimately flowed from the gathering 70 years ago, but its reputation is overstated.
Seoul Fails the Uber Test
WSJ Jul 28, 2014
It joins Miami, St. Louis, Berlin, Brussels and more.
Does financial regulation have to be global?
The Banker Jul 28, 2014
Cross-border regulation of banks is proving increasingly difficult, despite the call for global regulation of the financial system.
Fiscal mismanagement is hurting Africa
The Banker Jul 28, 2014
Countries in Africa, including Ghana, Kenya and Zambia, are battling with wide fiscal deficits brought about by grand spending plans.
Modi's New India Is Off to a Bad Start
Bloomberg View Jul 28, 2014
India's Narendra Modi should reflect on how few countries have rallied to support him.
Lloyds Got Creative to Manipulate Libor
Matt Levine (Bloomberg View) Jul 28, 2014
Finally some Libor manipulation that looks like manipulation, instead of just making up numbers on the phone. Though plenty of that too.
Levine on Wall Street: Sovereign Immunities
Matt Levine (Bloomberg View) Jul 28, 2014
Argentina is nearing the end of one phase of legal wrangling. Russia is at the start of another. And a ten-year-old M&A case is going to trial.
Norton A. Schwartz and John K. Hurley (Project Syndicate) Jul 28, 2014
The creation of a new international development bank by Brazil, Russia, India, China, and South Africa – the so-called BRICS – is just the latest challenge to America’s global leadership. But, from an international business perspective, the US remains in a strong position.
China’s Subprime Risks
Andrew Sheng and Xiao Geng (Project Syndicate) Jul 28, 2014
Chinese financial institutions' rapidly expanding balance sheets – which grew by 92% from 2007 to 2011, alongside 78% nominal GDP growth – have fueled predictions that the country will soon experience its own subprime meltdown. Is there any merit to such forecasts?
Fear of bubbles hides stagnation danger
Robin Harding (FT) Jul 29, 2014
The gloomier economic outlook is that interest rates are low for good reason, and likely to stay that way.
Xi’s risky path in disposing ‘tiger’ Zhou
Minxin Pei (FT) Jul 29, 2014
The president’s anti-corruption campaign has engendered unprecedented fear among Chinese officials, and aired in public the party’s rot and schisms.
EU sanctions fail to be a knockout blow
Christopher Granville (FT) Jul 29, 2014
Placing Russia under a financial interdict will have a more powerful longer-term impact on the Kremlin than other so-called sectoral sanctions.
Flattening curve may be investor message
Jamie Chisholm (FT) Jul 29, 2014
Clearly the danger for investors is a Federal Reserve that has to tighten faster than expected.
The problem of the equity risk premium
Tony Barber (FT) Jul 29, 2014
ERP is far from stable – whether it is defined as a historic relationship or an expected one.
Too early for Greece to claim victory
Andrew Smithers (FT) Jul 29, 2014
The country is just getting better at finding useful projects on which to spend the billions of euros it receives under EU aid programmes.
‘Maybe in America’
Thomas L. Friedman (NYT) Jul 29, 2014
Madagascar is an example of a combination of global pressures coming to the fore.
Liberals Love the 'One Percent'
Ruchir Sharma (WSJ) Jul 29, 2014
The left has a strange affection for Federal Reserve policy that has turbocharged inequality.
Changing Growth Trends Carry New Global Spillovers
IMF Survey Jul 29, 2014
As the global economy shifts from crisis to recovery mode, the changing growth patterns—with advanced economies generally recovering and emerging markets slowing on a broad basis—carry new spillover risks, says the IMF staff.
When U.S. Hedge Funds Abuse the Rule of Law
Uwe Bott (Globalist) Jul 29, 2014
In the battle of New York vs. Argentina, hedge funds plead innocence, while gaming the system.
The “Entrepreneurial” State is Anything But
Tyler Kubik (Mises Daily) Jul 29, 2014
After the empirical failure of socialism in the Soviet Union, and the corresponding unpopularity of state control of the economy, left-leaning economists and politicos have increasingly turned to other justifications for state intervention into the economy, climate change being one particular example. Alternatively, one of the more “trendy” ways of justifying state interventionism has been a “dynamic” theory of the state. This theory might best be represented in Nobel Prize winner Joseph Stiglitz’s attempted revival of industrial policy, or in Mariana Mazzucato’s 2013 book entitled The Entrepreneurial State.
The BRICS and the Bretton Woods Twins
Joseph P. Joyce (EconoMonitor) Jul 29, 2014
The World Cup was not the only event of global significance to take place in Brazil this summer. The leaders of Brazil, Russia, India, China and South Africa met in the city of Fortaleza and announced the formation of two new financial institutions. One is the New Development Bank (NDB), which will finance “sustainable development” projects, with an eventual $100 billion in capital. The second is the Contingent Reserve Arrangement (CRA), which will make $100 billion available to lend to members in financial distress.
How to Quit Oil by 2050
Leonid Bershidsky (Bloomberg View) Jul 29, 2014
A group of Stanford scientists and engineers has worked out a plan for switching California to 100 percent renewable energy by 2050. The project is economically dubious but technologically feasible, putting a dream within reach.
Russia’s Argentine Debt Tango
Mohamed A. El-Erian (Bloomberg View) Jul 29, 2014
Argentina isn't the only creditworthy country that could be forced to default on its debt. Consider Russia.
The Internet’s Next Act
J. Bradford DeLong (Project Syndicate) Jul 29, 2014
In many respects, the ICT revolution has delivered more than it promised – and often in unpredictable ways. And yet most people, though enjoying easy access to technology and low prices, have lost ground, with real wages falling for many years.
The End of the Arab State
Christopher R. Hill (Project Syndicate) Jul 29, 2014
In a region where crises seem to be the norm, the Middle East’s latest cycle of violence suggests something bigger: the beginning of the dissolution of the Arab nation-state, reflected in the fragmentation of Sunni Arabia. And, as state authority weakens, tribal and sectarian allegiances strengthen.
Soccer Lessons for Europe’s Economy
Harold James (Project Syndicate) Jul 29, 2014
Though a solution to the euro crisis continues to elude European leaders, the foundations of one are not difficult to discern. In fact, Europe’s recent soccer experience – in the EURO 2012 tournament and this year’s World Cup – provides insight into how to revive Europe’s economy and address its deeper identity problem.
China’s Bad Dream
Gene Frieda (Project Syndicate) Jul 29, 2014
Since his first address as China’s president last year, Xi Jinping has been espousing his goal of advancing the so-called Chinese Dream. But the imperative of addressing the unprecedented amount of debt that China has accumulated in recent years is testing Xi’s resolve – and his government is blinking.
The Brics bank is a glimpse of the future
David Pilling (FT) Jul 30, 2014
The Brics’ plan is good for the world. If the postwar order is being upended, the right response is ‘hear, hear’.
Preserve gains against market shakeouts
Mohamed El-Erian (FT) Jul 30, 2014
Cost of protecting profits from existing portfolios low considering the tricky handoffs the Fed, global economy and markets face over coming quarters.
Germany: Bank balance
Alice Ross (FT) Jul 30, 2014
Confined by the strictures imposed by a public bailout, five Landesbanks now face European Central Bank stress tests that threaten their existence.
Hedge Funds as Bottom Fishers
Stephan Richter (Globalist) Jul 30, 2014
How America’s rich ruthlessly exploit the dysfunctional U.S. political system.
Understanding Argentina’s Coming Default
Nicolás Cachanosky (Mises Daily) Jul 30, 2014
At the time of this writing, Argentina is a few days away from formally defaulting on its debts.How could this happen three times in just twenty-eight years?
China Would Benefit from Slower but Safer Growth
IMF Survey Jul 30, 2014
After three decades of remarkable growth, China’s economy has been slowing. The country needs to implement the announced reform agenda and address vulnerabilities to secure a safer development path, said the IMF.
China’s Battle Against Corruption Gets Serious
Frank Vogl (Globalist) Jul 30, 2014
China’s Xi follows anti-corruption textbook, but still has a way to go.
More Trade, Less Talk for Latin America
Mac Margolis (Bloomberg View) Jul 30, 2014
While the world trades, Latin America's Mercosur talks, and talks, and talks.
Europe Won't Admit It's Spiraling Into Deflation
Mark Gilbert (Bloomberg View) Jul 30, 2014
It's a long two years since ECB President Mario Draghi's pledge to do "whatever it takes" to safeguard the euro project. The risk of deflation makes it time for action to match those words.
The Sino-American Trust Deficit
Stephen S. Roach (Project Syndicate) Jul 30, 2014
The recently concluded Strategic and Economic Dialogue between the US and China was a major disappointment. Most significant, it failed to address an increasingly corrosive trust deficit that poses the most serious threat to Sino-American relations in 25 years.
Can Investment Save Europe?
Jean Pisani-Ferry (Project Syndicate) Jul 30, 2014
Jean-Claude Juncker, the president-elect of the European Commission, wants to mobilize an additional €100 billion for public and private investment each year for the next three years. But, at a time when private income has shrunk and public resources are scarce, plans to stimulate investment should be carefully scrutinized.
China’s High-Income Hopes
Zhang Jun (Project Syndicate) Jul 30, 2014
It is widely agreed that economic development means more than GDP growth. Unless China’s leaders upgrade the country’s growth strategy to stimulate technological progress and structural transformation, high-income status will continue to elude the world’s second-largest economy.
Can large primary surpluses solve Europe’s debt problem?
Barry Eichengreen & Ugo Panizza (VoxEU) Jul 30, 2014
For the debts of European countries to be sustainable, their governments will have to run large primary budget surpluses. But there are both political and economic reasons to question whether this is possible. The evidence presented in this column is not optimistic about Europe’s crisis countries. Whereas large primary surpluses for extended periods of time did occur in the past, they were always associated with exceptional circumstances.
Drug pricing: Bitter pill
Andrew Ward (FT) Jul 31, 2014
The high price of a new hepatitis treatment is prompting the debate that most alarms the industry: whether to curb the US free market in drugs.
A bubblegum fix will make banks safer
Gillian Tett (FT) Jul 31, 2014
The only pity is it has taken a financial crisis to force financiers and regulators to embrace the idea of barcodes.
Post-Argentine default calm will fade
Ralph Atkins (FT) Jul 31, 2014
Muted market reaction shows a worrying lack of concern over waning strength in emerging market economies.
The Global Religion Crisis
WSJ Jul 31, 2014
The freedom to worship is under siege across the world.
Africa Is Open for Business, Ready for Investment
Tony O. Elumelu (WSJ) Jul 31, 2014
The U.S.-Africa Leaders Summit in Washington next week should be about much more than aid.
WTO Trade Facilitation Deal in Limbo as Deadline Passes Without Resolution
Bridges, Volume 18, Number 28 Jul 31, 2014
The 31 July midnight deadline for adopting the Protocol of Amendment for the WTO's Trade Facilitation Agreement (TFA) has passed without a resolution, as members were unable to bridge a divide that had emerged in recent weeks over whether to link the protocol with progress toward a "permanent solution" on public food stockholding.
US Trade Chief Outlines AGOA Goals Ahead of Leaders' Summit
Bridges, Volume 18, Number 28 Jul 31, 2014
The US' top trade official outlined on Tuesday a series of priorities for updating the African Growth and Opportunity Act (AGOA), a 14-year-old programme aimed at boosting US trade with sub-Saharan African countries that is set to expire in September 2015.
EU Commission Backs 30 Percent Energy Efficiency Target for 2030
Bridges, Volume 18, Number 28 Jul 31, 2014
The European Commission has proposed a 30 percent EU-wide energy savings target for 2030, officials confirmed last week. The proposal is the third and final component of the draft 2030 climate and energy framework, which the bloc's leaders are aiming to finalise this coming October.
The Communist Roots of China's Capitalist Corruption
Adam Minter (Bloomberg View) Jul 31, 2014
Some officials are starting to question the role of the Communist Party in creating the corruption epidemic.
Tariffs Hit Poor Americans Hardest
Tyler Moran (PIIE) Jul 31, 2014
Raising or maintaining tariffs on imports is called protectionism for a reason. The goal is to protect domestic industry and jobs from lower priced foreign goods. But often forgotten is the impact of the US tariff structure on the wallets of American consumers when they visit shopping malls and have to pay a higher price for the goods they purchase. The table below tells the story by income category: Poor households get hit hardest.
Argentina Default Didn't Have to Be This Way
Bloomberg View Jul 31, 2014
Muddled international rules governing sovereign bankruptcy have made Argentina's problem worse.
Argentine Default Creates Many Losers
Mohamed A. El-Erian (Bloomberg View) Jul 31, 2014
There are many more losers than winners from Argentina's failure to reach an agreement with holdout creditors.
If I Was a Russian Company I'd Avoid Dollars, Too
Mark Gilbert (Bloomberg View) Jul 31, 2014
The dollar's status as the world's reserve currency of choice is pretty much a given. There's a chance, though, that recent events might just start to erode the greenback's dominance.
Andrés Velasco (Project Syndicate) Jul 31, 2014
When the leaders of Mercosur met in Caracas this week, the usual bluster about standing up to imperialism filled the air. But so did the unmistakable scent of decay.
Ukraine’s Own Worst Enemy
Tom Keatinge (FA) Jul 31, 2014
Why corruption is more dangerous than Putin.
Questions and Answers on the Argentina default
Barbara Kotschwar (PIIE) Aug 1, 2014
Has Argentina defaulted on its debt for the second time in 13 years? On July 30, negotiations in New York failed to resolve differences with a group of bondholders (some of them in speculative funds derided in Argentina as the "vulture funds") demanding full payment on $1.3 billion in bonds it owns.
The Argentina Problem Can't Be Fixed
Leonid Bershidsky (Bloomberg View) Aug 1, 2014
Governments are the worst possible debtors because their assets can't be tapped to repay creditors. New bankruptcy mechanisms aren't likely to solve the problem.
Ukraine pact may deal blow to dollar
Chris Cook (AT) Aug 1, 2014
A deal between Germany and Russia could help to end the conflict in Ukraine. While recognizing Crimea's annexation by Russia, it could also further erode the importance of the US dollar in the region's energy transactions.
An East-West showdown in Africa
Nick Turse (AT) Aug 1, 2014
China has used aid, trade and infrastructure for much of the past decade as a bulwark to set itself up as the dominant foreign player in Africa, while the United States has deployed the blunt language and hardware of war. Amid starkly different results in the continent, which approach wins will have profound implications for all concerned.
A Tear for Argentina
Kenneth Rogoff (Project Syndicate) Aug 1, 2014
Argentina’s latest default poses unsettling questions for policymakers. Though the country’s periodic debt crises are often the result of self-destructive macroeconomic policies, the default has been triggered this time by a significant shift in the international sovereign-debt regime.
Russia’s Eurasian Vision
Nouriel Roubini (Project Syndicate) Aug 1, 2014
The escalating conflict in Ukraine between the Western-backed government and Russian-backed separatists has focused attention on the Kremlin’s long-term objectives. Though Russian President Vladimir Putin’s immediate goal may have been limited to retaining some influence in Ukrainian affairs, his longer-term ambition is much bolder.
Hunting Tigers in China
Minxin Pei (Project Syndicate) Aug 1, 2014
The news that China has launched a formal investigation into one of the Chinese Communist Party’s most senior figures, Zhou Yongkang, has been met with widespread approval from the Chinese public and international observers. But is President Xi Jinping's anti-corruption campaign really what China needs?
Africa’s Inclusive Growth Potential
Viswanathan Shankar (Project Syndicate) Aug 1, 2014
Euphoria abounds in much of Africa nowadays, and rightly so, as seven of the world’s ten fastest-growing countries are there. But, amid all the good news, there is a risk of overlooking the bad: Growth has not been inclusive; the rising tide has left many boats behind.
Japan's Weak Yen Woes
William Pesek (Bloomberg View) Aug 1, 2014
Japan's weak-yen policy was meant to benefit exporters, but it's proving a crushing burden for some.
Why developing host countries sign increasingly strict investment agreements
Eric Neumayer, Peter Nunnenkamp & Martin Roy (VoxEU) Aug 1, 2014
Hoping to attract more FDI, developing countries are increasingly entering stricter investment agreements. But there is no conclusive evidence that such agreements serve them well. This column argues that contagion may help explain this trend. Competition between developing countries for FDI from developed ones could drive the diffusion of international investment agreements.
The African Dream
Paul Kagame, Uhuru Kenyatta and Yoweri Museveni (Project Syndicate) Aug 2, 2014
The dream that the twenty-first century will be the “African Century” is powerful and intoxicating – and increasingly becoming reality. As African officials gather in Washington, DC, at a summit hosted by US President Barack Obama, it is worth considering the basis – and the limits – of the continent’s progress.
Christopher Sabatini (FA) Aug 2, 2014
In international diplomacy, South America chooses quantity over quality.
A better American strategy for Africa
Joseph Stiglitz (FT) Aug 3, 2014
The big strategic issue facing the US is the right balance between building new drone bases and strengthening business.
Bundesbank has abandoned principle
Wolfgang Munchau (FT) Aug 3, 2014
The eurozone does not need wage or price fixing. It needs further monetary expansion.
‘Getting India Back on Track’, by Bibek Debroy, Ashley Tellis and Reece Trevor
James Crabtree (FT) Aug 3, 2014
Following Modi’s lacklustre start, a group of academics propose often bold and broadly sensible reforms to rebuild the economy.
Modi's Trade Barricade
WSJ Aug 3, 2014
India blocks a global deal, despite America's pleas.
Africa’s next steps
Kofi Annan (WP) Aug 3, 2014
A strong Africa can help solve many of the world’s challenges.
How to rip off a bank, Espí-rito Santo style
Frances Coppola (Pieria) Aug 3, 2014
The half-year results for Banco Espírito Santo are grim reading. It is, in a word, bust. What caused this disaster? And will the bank be rescued?
Argentina and Its Creditors after Default: More Questions and Answers
Anna Gelpern (PIIE) Aug 3, 2014
Argentina and the small group of creditors demanding full payment from the nation's 2001 default failed to resolve their differences on July 30. As a result, creditors did not receive the $539 million interest payment on Argentina's restructured bonds that had to be paid by that date.
'Flash Boys' and the Speed of Lies
Brad Katsuyama (Bloomberg View) Aug 3, 2014
With so many billions of dollars at stake, it is not surprising that people will spin rich fictions about IEX.
First world war: Ripples across the century
Tony Barber (FT) Aug 4, 2014
One hundred years after the opening shots of the conflict, commemorations take very different forms across Europe Read more >>
Digital trade: Data protectionism
Shawn Donnan (FT) Aug 4, 2014
Negotiators are struggling to create rules to govern cross-border commerce in data. But privacy concerns and protectionism could stifle a free flow of goods and services.
Small-scale vision is right for Britain
Janan Ganesh (FT) Aug 4, 2014
The country does have a role in the world, and it is that of host. It is a nexus for global flows of capital and people, and makes its living this way.
Currency lull no fun for forex investors
Beat Siegenthaler (FT) Aug 4, 2014
US dollar is unlikely to recover in a sustained way until central banks accelerate their currently glacial pace towards monetary policy normalisation.
Michael Gerson (WP) Aug 4, 2014
The diverse continent has fast-growing economies and stable nations.
America's Oil Export Policy Is Stuck in the '70s
Thomas Tunstall (WSJ) Aug 4, 2014
The Gulf Coast can't handle the country's bonanza of light oil, but we can't ship to European refineries either.
Can Africa Maintain its Economic Growth?
Arancha González (Globalist) Aug 4, 2014
Smart Industrialization for Africa’s Economic Transformation.
How Far Are Western Sanctions against Russia Going?
Anders Åslund (PIIE/RBC Daily) Aug 4, 2014
The novel Western sanctions against Russia because of Russia's military aggression against Ukraine are usually discussed in immediate policy terms: What will the West do if Russia does this or that? Economic sanctions have however become quite a science. There are many regularities, and inertia is great.
China paying for corruption crackdown
Michael Lelyveld (RFA) Aug 4, 2014
Arab countries, which appear to have started losing confidence in normal food supply chains and are concerned about rising food prices, are turning to acquisitions of farmland around the world.
India rocks WTO with protocol snub
Ravi Kanth Devarakonda (IPS) Aug 4, 2014
India's decisive stand not to adopt the World Trade Organization's protocol of amendment of the trade facilitation agreement was met with "astonishment" by trade diplomats from the North - shocked that any party should have the brass neck to place the interests of its constituents on the negotiating table.
The benefits of attracting high skilled migrants
Anna Rosso (Pieria) Aug 4, 2014
A Special Issue on Migration (NIESR) looks at the social and economic causes and consequences of migration policies.
Why Currencies Are Poised for More Shifts
Mohamed A. El-Erian (Bloomberg View) Aug 4, 2014
Why are once stable currency markets suddenly in flux? Mohamed El-Erian will tell you, and also let you know why more volatility is coming.
Mark Gilbert (Bloomberg View) Aug 4, 2014
Whatever shenanigans killed Banco Espirito Santo, someone got away with additional monetary mischief even after the Portuguese authorities realized something was rotten.
There's No Defense for Today's Income Inequality
Edward D. Kleinbard (Bloomberg View) Aug 4, 2014
Income inequality deniers play numbers games. A neutral look at the numbers shows the U.S. has less economic mobility than do many of its peer countries.
Waking Up to Africa's Opportunity
Bloomberg View Aug 4, 2014
This week's U.S.-Africa Leaders Summit will be a success if it achieves just one thing: alerting businesses and investors to Africa's new economic potential.
Asia's Next Crisis Is a Flood of Debt
William Pesek (Bloomberg View) Aug 4, 2014
As economists survey the scene, Thailand once again tops the worry list. Debt there has risen rapidly, underwriting standards appear loose and nonperforming loans are rising.
The updated deposit insurance database
Asli Demirgüç-Kunt, Edward J Kane & Luc Laeven (VoxEU) Aug 4, 2014
As governments are struggling to construct a global financial safety net, they must take into consideration the lessons from the recent crisis. To help in this task, this column presents findings from an updated database on deposit insurance arrangements from around the world through 2013. The number of countries with explicit deposit insurance programmes has continued to increase but differences across countries are observed. Although it is too early to draw conclusions about the reliability of further insurance deposit expansion as a tool for managing a future crisis, insurance fulfilled its primary purpose – it prevented open runs on bank deposits.
The inadequacies of the inequality debate
Adam Posen (FT) Aug 5, 2014
The idea that someone’s economic fortunes might depend upon race, gender or ethnicity is largely ignored.
Markets fret and rejoice over China
Henny Sender (FT) Aug 5, 2014
The world has come to depend on a high rate of growth in China, which depends in turn on the Chinese banks doing their bit.
Weaker correlations boost diversification
Jamie Chisholm (FT) Aug 5, 2014
The kind of tight correlations witnessed since the financial crisis peaked have weakened, potentially allowing for easier portfolio diversification.
Top One Percent Has One-Third of China’s Wealth
Caixin Aug 5, 2014
A new report explains why inequality has not led to broad resentment.
The Missing Women in the Inequality Discussion
Caroline Freund and Sarah Oliver (PIIE) Aug 5, 2014
Growing inequality of income and wealth has become a major global concern. In many countries inequality has been driven by weak earnings growth not only among the poor but also among groups across much of the income distribution, while earnings of the top 1 percent continue to rise dramatically.
Putting the Trade Facilitation Agreement Back on Track after India's Obstruction
Jeffrey J. Schott and Gary Clyde Hufbauer (PIIE) Aug 5, 2014
India has blocked the implementation of the Trade Facilitation Agreement (TFA) approved by all members of the World Trade Organization (WTO) last December, drawing understandable condemnation from around the world. Bluntly put, with its action on July 31, India is holding the TFA hostage in return for the renegotiation of the Bali accord reached at a ministerial meeting in December 2013.
U.S. Can End Its Losing Streak in Africa
Stephen Mihm (Bloomberg View) Aug 5, 2014
Africa may be at a turning point, given that seven of the 10 fastest-growing economies in the world are on the continent.
Inequality Exists. Ask the Middle Class.
Edward D. Kleinbard (Bloomberg View) Aug 5, 2014
Inequality deniers play numbers games in an attempt to prove there is a buoyant middle class.
A New World of Health Care
Prabhjot Singh (Project Syndicate) Aug 5, 2014
Traditional health-care systems are struggling in the face of cost constraints and public demand for higher quality. The growing gap between the promise and the reality of health care has created room – in developed and developing countries alike – for new players who are concerned more with social behavior than with biology.
Wakeup Call for Europe
Philippe Legrain (YaleGlobal) Aug 5, 2014
Europe fails to deliver opportunity, and a lost generation is in the making
In Argentina, debt default is a solution, not a problem
John Weeks (Pieria) Aug 5, 2014
The problem is not default, the problem is the absence of an international mechanism to bring it about in an orderly manner.
US-led vs. China-led economic architecture
Pradumna B. Rana (VoxEU) Aug 5, 2014
China’s frustration with the slow progress of IMF governance reform has contributed to the evolution of a China-led architecture that locks out the West – the latest examples being the New Development Bank and the Credit Reserve Arrangement established by the BRICS. This column argues that these institutions are not a threat to the IMF and the World Bank, but they complicate global economic governance. It is unlikely that Europe’s ‘troika’ model – where the IMF works jointly with regional financing facilities – will be possible in Asia. We perhaps need a New Bretton Woods.
World’s 13 ‘super-aged’ nations by 2020
Sarah O'Connor (FT) Aug 6, 2014
Number of countries where a fifth of the population is 65 or older is set to reach 13 in 2020 and 34 a decade later, says Moody’s.
Argentina: Unresolved debts
Benedict Mander, Elaine Moore and John Paul Rathbone (FT) Aug 6, 2014
The nation’s bond default creates uncertainty over its economic prospects and the settlement of future sovereign debt cases.
The virus that saps Liberia’s recovery
Amara Konneh (FT) Aug 6, 2014
Ebola was not reflected in our 2010 deal with the IMF. It may need to be. The economic impact is already being felt.
Modi confounds devotees and detractors
Victor Mallet (FT) Aug 6, 2014
It is clear that India’s prime minister will quickly fulfil neither the fervent hopes of his fans nor the worst fears of his foes.
Bridge Asia’s income gap
Juzhong Zhuang (FT) Aug 6, 2014
Better educated and healthier people have a greater chance of finding and keeping work, and of earning higher incomes.
Sell-off reminder of threats to stability
Mohamed El-Erian (FT) Aug 6, 2014
This should worry western policy makers, who have been forced to rely on asset markets as the means of reaching growth and employment objectives.
The economic case for ditching coal
Al Gore and David Blood (FT) Aug 6, 2014
For long-term investors to be properly compensated for the risks of owning coal, they would have to believe coal will deliver sustained outperformance.
ECB must counteract market turbulences
Lorenzo Bini Smaghi (FT) Aug 6, 2014
The central bank needs to step up action aimed at further easing eurozone policy amid the Fed’s tightening of US monetary conditions.
The Tax Dodge Goes On
NYT Aug 6, 2014
The ideal solution would be for all countries to agree to end the advantages.
Wanted: an inclusive TPP trade pact
Harsha Vardhana Singh (IPS) Aug 6, 2014
The focus of the Trans-Pacific Partnership trade pact negotiations suggests a strong possibility for markets and economic opportunities to get fragmented. This can be prevented through steps to create inclusive systems, which are essential in our increasingly inter-dependent world.
Confusing Capitalism with Fractional Reserve Banking
Frank Hollenbeck (Mises Daily) Aug 6, 2014
Today, capitalism is blamed for our current disastrous economic and financial situation and a history of incessant booms and busts. Support for capitalism is eroding worldwide. In a recent global poll, 25 percent (up 2 percent from 2009) of respondents viewed free enterprise as “fatally flawed and needs to be replaced.” The number of Spaniards who hold this view increased from 29 percent in 2009 to 42 percent, the highest amongst those polled. In Indonesia, the percentage went from 17 percent to 32 percent.
India Spurns WTO and That's OK
Chandrahas Choudhury (Bloomberg View) Aug 6, 2014
India has certainly not expressed its position flawlessly at the WTO. But neither has it behaved dishonestly.
Latin America’s Populist Cycles
Roberto Laserna (Project Syndicate) Aug 6, 2014
Populism in Latin America is at a low point. But, though mounting economic problems facing Venezuela and Argentina might presage a return to market-based economic policies in the short term, this will not end the familiar cycle of populism, profligacy, pain, and pragmatism that has long characterized the region.
Aryeh Neier (Project Syndicate) Aug 6, 2014
At its recent summit meeting in Equatorial Guinea, the African Union formalized its decision to grant immunity from prosecution to sitting heads of state and senior officials. This is a transparent attempt to let guilty parties – including those who attended the meeting in Equatorial Guinea – off scot-free.
An American “Reset” for Africa?
Ellis Mnyandu (Globalist) Aug 6, 2014
Africa no longer needs the US as a benefactor. It wants a relationship based on mutual interests.
Regulation must not be an empty threat
Sheila Bair (FT) Aug 7, 2014
Almost six years after the financial crisis, obvious solutions still languish on the drawing board.
Africa shows global growth potential
William Wallis (FT) Aug 7, 2014
Dominant theme at Washington summit was continent’s role as motor for world economy and what US companies can do to mobilise capital and create jobs.
Risk culture in finance must change
William Rhodes (FT) Aug 7, 2014
Before a new financial crisis occurs, it is vital that actions are taken recognising that proper risk behaviour matters to the safety of the system.
The African alliance
David Ignatius (WP) Aug 7, 2014
Can the U.S. help Africa avoid going the way of the Middle East?
Global success stories
Fareed Zakaria (WP) Aug 7, 2014
India, Mexico and Indonesia hold bright futures.
Just How Deeply Ingrained is Corruption in China?
Ken Courtis (Globalist) Aug 7, 2014
China’s anti-corruption fight requires another Cultural Revolution.
A Banker Buys India Too Much Slack
William Pesek (Bloomberg View) Aug 7, 2014
Raghuram Rajan, India's central bank chief, helped stabilize the nation's economy when he took over almost a year ago. The new prime minister, Narendra Modi, hasn't taken advantage of the opportunity.
Draghi Disses the Euro
Mark Gilbert (Bloomberg View) Aug 7, 2014
The ECB's acknowledgment that market prices suggest inflation is undershooting its target by half demands more action than policy makers are contemplating.
China's $343 Billion in the Shadows
William Pesek (Bloomberg View) Aug 7, 2014
China's "trust companies" are a growth industry, notable not for imparting stability to the $9.2 trillion economy, but for the red flags they raise.
Europe's Crisis Puts France and Italy in the Spotlight
Stratfor Aug 7, 2014
As the crisis weighs heavily on their economies, France and Italy are the focus of the debate on the eurozone's future.
Sanctions and Solidarity
Daniel Gros (Project Syndicate) Aug 7, 2014
A common fund to provide compensation for the economic costs of sanctions should be an integral part of the EU’s emerging foreign-policy stance toward Russia. Creating such a fund would provide a potent symbol of solidarity within the EU, while providing an ideal opportunity to show why the sanctions’ costs are likely to be low.
The Global Economy’s Groundhog Day
Ashoka Mody (Project Syndicate) Aug 7, 2014
In the movie "Groundhog Day," a TV weatherman awakes every morning at 6:00 to relive the same day. A similar sense of déjà vu has pervaded economic forecasting since the global economic crisis erupted a half-decade ago, yet policymakers remain convinced that the growth model that prevailed prior to the crisis is still their best guide.
Joseph E. Stiglitz and Martin Guzman (Project Syndicate) Aug 7, 2014
Argentina's recent default was the work of one man: US federal judge Thomas Griesa, who prohibited the country from repaying its creditors until it repaid in full the 7% who refused a restructuring deal. Ultimately, however, it may be America that pays the steepest price.
More Crop for the Drop
Henry I. Miller (Project Syndicate) Aug 7, 2014
The UN has called drought the “world’s costliest natural disaster," with annual costs estimated at $6-8 billion. But a proven technology could go a long way toward reducing the impact of drought: genetic engineering.
Draghi's Dithering Threatens Europe
Bloomberg View Aug 7, 2014
The European Central Bank has led investors to expect no further stimulus for the euro area's economy. Today, ECB President Mario Draghi ought to shift course.
Will the US inflate away its public debt?
Jens Hilscher, Alon Raviv & Ricardo Reis (VoxEU) Aug 7, 2014
Faced with daunting levels of public debt, it may be tempting to inflate away the burden. Some recent research has endorsed such a policy, but this column argues that it is infeasible. The rule of thumb that suggests an inflation rate four percentage points higher would reduce debt by 20% ignores creditor composition and maturity details, even if a 6% inflation rate were achievable. The hard truth is that there is no easy way out of debt.
The Youngest Are Hungriest
Seema Jayachandran and Rohini Pande (NYT) Aug 8, 2014
Why do eldest sons in India overshadow their siblings? Because they're literally taller.
The Tricks of China’s Trade
Zhang Monan (Project Syndicate) Aug 8, 2014
Last year, China ostensibly reached another milestone in its meteoric rise: it surpassed the US to become the world’s largest trading country. But this achievement is largely illusory – and should not be allowed to obscure China's need to transform its trading model.
India’s Homemade Food Crisis
Asit K. Biswas and Cecilia Tortajada (Project Syndicate) Aug 8, 2014
What accounts for India’s chronic food insecurity? The most significant factor – one that policymakers have long ignored – is that a high proportion of the food India that produces never reaches consumers.
How immigration benefits natives
Michele Battisti, Gabriel Felbermayr, Giovanni Peri and Panu Poutvaara (VoxEU) Aug 8, 2014
Immigration continues to be a hotly debated topic in most OECD countries. Economic models emphasising the benefits of immigration for natives have typically neglected unemployment and redistribution – precisely the things voters are most concerned about. This column analyses the effects of immigration in a world with labour market rigidities and income redistribution. In two-thirds of the 20 countries analysed, both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels. The average welfare gains from immigration are 1.25% and 1.00% for high- and low-skilled natives, respectively.
When She Talks, Banks Shudder
Binyamin Appelbaum (NYT) Aug 9, 2014
In a quest for tougher rules on banking, Anat R. Admati, an industry gadfly, is rapidly gaining a broader audience.
Monetary policy transmission via balance sheets: Evidence from Japan
Kaoru Hosono & Daisuke Miyakawa (VoxEU) Aug 9, 2014
In the wake of the Global Crisis, several central banks have adopted unconventional monetary policies. This column presents new evidence from Japan on the transmission of monetary policy through banks’ balance sheets. Overall, the evidence suggests that bank net worth affects loan supply, that the effect depends on monetary policy and economic growth, and that this bank balance sheet channel has a significant impact on firms’ financing and investment. Exiting from unconventional monetary policies when bank balance sheets are weak could thus have a severe adverse impact on investment.
Brazil’s Petrobras: Tarred by corruption
Joe Leahy and Samantha Pearson (FT) Aug 10, 2014
An investigation into the state oil company has tarnished the president’s reputation, thrown open the presidential race and sparked allegations.
The Economics of Ebola
Amara Konneh (WSJ) Aug 10, 2014
U.S. investment and trade will spur employment—and that's essential to ending the poverty that helps spread the disease.
WTO trade disputes, big and small
Chad P Bown & Kara M. Reynolds (VoxEU) Aug 10, 2014
WTO dispute settlement is well-known for its high-profile cases – e.g., US-EU clashes over bananas, hormone-treated beef, genetically modified organisms, subsidies to Boeing and Airbus, etc. – some of which cover annual trade in the billions of dollars. Are the trade stakes from such disputes representative of the WTO caseload? This column presents evidence from a newly available data set and reveals some surprising facts about the prevalence of both large and small WTO disputes.
Unwary yield hunters risk liquidity trap
Alberto Gallo (FT) Aug 11, 2014
Credit inflows could reverse if monetary policy changes direction, and banks are less able to facilitate trading in the secondary market.
The Savings and Loan Debacle: Twenty-Five Years Later
Dale Steinreich (Mises Daily) Aug 11, 2014
August 9, 2014 marks twenty-five years since the signing into law of the US savings and loan (S&L) industry bailout, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. After FIRREA was signed into law by President George H.W. Bush, the federal government took control of 327 failed S&Ls with $147 billion in assets.
Finance: The FICC and the dead
Tracy Alloway and Michael MacKenzie (FT) Aug 11, 2014
Fed policy and a regulatory crackdown have humbled banks’ once-mighty trading businesses. Will a return of volatility to the markets revive them?
Merkel wants a stable world and is willing to pay a price
Quentin Peel (FT) Aug 11, 2014
Russia expected Germany to resist action that would affect its exporters. It was wrong.
Equality lacks relevance if the poor are growing richer
Deirdre McCloskey (FT) Aug 11, 2014
Capital is necessary and so are water, labour, oxygen and pencils.
Markets enter the ‘Great Frustration’ phase
Stephen Foley (FT) Aug 11, 2014
Economic optimism remains, but valuations are too high.
The Fed's Systemic-Risk Balancing Act
Martin Feldstein and Robert Rubin (WSJ) Aug 11, 2014
Using 'macroprudential' tools means recognizing the breadth of the potential trouble in the financial system.
Switzerland, a Country That Works
Richard W. Rahn (Washington Times/Cato) Aug 11, 2014
Switzerland is not perfect, but as countries go, it is hard to find one that is much better.
Sergei Guriev (Project Syndicate) Aug 11, 2014
The West's sanctions on Russia are already having a powerful effect, and the expectation that they will be tightened further is a huge concern for investors and the Russian government. And, though some Russians dream of autarky, the need to maintain living standards – the foundation of Putin’s domestic support – rules it out.
A Great Breakdown?
Kemal Dervis (Project Syndicate) Aug 11, 2014
In the months and years preceding August 1914, the global economy performed relatively well: world trade expanded, financial markets seemed healthy, and the business community shrugged off political problems as either temporary or irrelevant. Is today's world similarly sleepwalking toward catastrophe?
Responding to Ebola
Jeffrey D. Sachs (Project Syndicate) Aug 11, 2014
The horrific Ebola epidemic in at least four West African countries demands not only an emergency response to halt the outbreak, but also re-consideration of some basic assumptions concerning global public health. Fortunately, a better system is within reach if the world invests appropriately.
The Great Recession: Moving Ahead
Stanley Fischer (FRB) Aug 11, 2014
I will discuss three key aspects of the challenges policymakers face as they seek to move ahead.
Corruption with Chinese characteristics
Joe Zhang (FT) Aug 12, 2014
If Buffett had his pick of investments, he would have gone for the lucrative markets the government has chosen.
Indebted corporate Asia is risk this time
Henny Sender (FT) Aug 12, 2014
Many Asian companies have been huge beneficiaries of the inflows set in train by the Federal Reserve’s zero interest rate policies.
Bonds, Not Bailouts, for Too Big to Fail Banks
Steven Gjerstad and Vernon Smith (WSJ) Aug 12, 2014
Call the bonds Class R, for reorganization. Owners might take a haircut, but they'd also become owners of the bank.
Taking on India's Crony Capitalists
William Pesek (Bloomberg View) Aug 12, 2014
After 11 months of battling speculators nipping at India's currency, Raghuram Rajan is going after a more powerful enemy: the nation's own crony capitalists.
Africa's Governments Should Be Cautious Borrowers
Bloomberg View Aug 12, 2014
Sub-Saharan Africa, this year's emerging-market darling, is borrowing furiously in the capital markets. Countries should be careful not to take on too much sovereign debt and become like Greece.
Europe's Crash-and-Burn Economy
Mark Gilbert (Bloomberg View) Aug 12, 2014
The euro economy is a step away from deflation and two slips away from slumping back into recession as Germany loses momentum.
The Underachieving Education Business
John S. Katzman (Project Syndicate) Aug 12, 2014
Capitalism has produced many high-quality products and services, from smart phones to high-speed transport and compelling entertainment. Yet the profit motive, essential in so many fields, seems to have disappointed in one crucial area: education.
Africa’s Necessary Data Revolution
Amanda Glassman (Project Syndicate) Aug 12, 2014
African governments and international donors continue to devote far too few resources to data collection. Only 2% of official development aid is earmarked for improving the quality of statistics – an amount wholly insufficient to assess accurately the impact of the other 98% of aid.
Inequality - a key issue of economic research
Frances Coppola (Pieria) Aug 12, 2014
As Nobel Laureates and young economists gather for the 5th Lindau Meeting on Economic Sciences, 20-23 August 2014, inequality is the subject most on everyone' s minds.
The Successful U.S.-Africa Leaders Summit Exposes the American Media’s Ignorance of Emerging Africa
Mwangi S. Kimenyi (Brookings) Aug 12, 2014
The limited and biased media coverage of last week's U.S.-Africa Leaders Summit demonstrated the American media's ignorance of the opportunities afforded by emerging Africa.
Varying Solutions to Youth Unemployment in Sub-Saharan Africa
Brandon Routman and John McArthur (Brookings) Aug 12, 2014
Roughly 10 to 12 million sub-Saharan African youth enter the labor market every single year. Five countries can provide lessons for tackling the growing problem of youth unemployment.
Disintegrated nations, integrated Europe: Alesina-Spolaore logic applied
Edoardo Campanella (VoxEU) Aug 12, 2014
Separatism is on the rise in Europe. This column argues that, while the Eurozone Crisis is certainly reinforcing regional tensions, the underlying causes are globalisation and the deepening of the European project. Independence campaigners want access to the larger European market, while unfettering their regions from the centralised control of national governments. Renegotiating the terms of the relationship between national and regional governments is preferable to resorting to political threats or the use of force.
Modi Bets the Farm
Surupa Gupta and Sumit Ganguly (FA) Aug 12, 2014
Why Indian agricultural policy might unravel the WTO.
Bad Role Models
Lauren Carasik (FA) Aug 12, 2014
The embattled arrival of Honduras' model cities.
Asset tracing: Follow the money
Cynthia O’Murchu (FT) Aug 13, 2014
Efforts to track and recover funds stolen by former regimes are gaining ground but significant obstacles remain.
ECB would, for now, prefer to do nothing
Claire Jones (FT) Aug 13, 2014
Inaction may appear alarmingly complacent but officials believe the effects of the package of measures they unveiled in June will boost growth.
Renzi promises ‘open door revolution’
Rachel Sanderson (FT) Aug 13, 2014
Italian prime minister’s pledge to welcome foreign investors has big implications for corporate Italy and its fragmented banking industry.
Sanctions must prompt a rethink on Russia
Mohamed El-Erian (FT) Aug 13, 2014
If sanctions and counter sanctions continue it becomes only a matter of time until demand and supply disruptions affect market valuations.
Trade bodies left existentially tested
Jonathan Guthrie (FT) Aug 13, 2014
The defection hurts the Association of British Insurers in two ways: it will lack clout and it exposes the association’s conservativeness.
Corruption with Chinese characteristics
Joe Zhang (FT) Aug 13, 2014
If Buffett had his pick of investments, he would have gone for the lucrative markets the government has chosen.
Case for credit investment still stands
Mark Haefele and Kiran Ganesh (FT) Aug 13, 2014
Investors should not dismiss fixed income because prospective returns are lower, but should treat it as an asset that helps protect against volatility.
Japan Takes a Consumption Tax Dive
WSJ Aug 13, 2014
Shinzo Abe needs to break from Finance Ministry orthodoxy.
The West Against the Rest
Chandran Nair (Globalist) Aug 13, 2014
A short history of the West's geopolitical dominance.
The West: A Minority Club
Chandran Nair (Globalist) Aug 13, 2014
Why not hold the West as well as the Rest accountable for their actions?
Global Policy Divergence - Really??
Axel Merk (Merk Investments) Aug 13, 2014
Last week, European Central Bank (ECB) head Draghi talked about the de-coupling of the ECB and the Fed’s policies, of policy divergence. Lots of pundits have suggested the same. With due respect to their views, my analysis of the data suggests they are wrong. If you own dollars, the euro or gold, you might want to pay attention to this one.
The U.S. Should Help Lower the Euro
Melvyn Krauss (Bloomberg View) Aug 13, 2014
A joint currency intervention to lower the euro would help Europe deal with slow growth and, at the same time, neutralize the impact of sanctions on Europe.
Asia’s Reform Trinity?
Kishore Mahbubani (Project Syndicate) Aug 13, 2014
China's Xi Jinping, India's Narendra Modi, and Indonesia's Joko "Jokowi" Widodo could all end up ranked among their countries' greatest modern leaders. But, to succeed, they must embrace policies that directly challenge their countries' most influential actors.
Banking on the BRICS
Barry Eichengreen (Project Syndicate) Aug 13, 2014
For the leaders of the BRICS countries, the announcement in July of their agreement to establish a “New Development Bank” and a “Contingent Reserve Arrangement” was a public-relations coup. The NDB makes sense for the BRICS, and it has a future, but the CRA is empty symbolism, and that is how it will be remembered.
When Fewer Is Better
Adair Turner (Project Syndicate) Aug 13, 2014
Judging by the lamentations of economists and policymakers in the advanced economies, where people are living longer and birth rates have fallen below replacement levels, one might think that a shrinking population is a bad thing. In fact, the benefits of demographic stability – or even decline – outweigh any adverse effects.
Trouble Amid Plenty in Emerging Africa
David Miliband (Project Syndicate) Aug 13, 2014
Barack Obama’s recent summit with 40 African heads of state and more than 200 US and African business leaders suggests a new, more confident mood. That is encouraging; but as long as parts of Africa continue to struggle with conflict and corruption, the continent’s economic potential will not be fully realized.
China's Credit Slowdown Raises Concerns About Overall Economic Health
Stratfor Aug 13, 2014
New economic data released by China's National Bureau of Statistics on Aug. 13 shows the supply of credit to the Chinese economy expanded by only $44.3 billion in July, the slowest pace in almost six years. To be precise, credit expanded at the slowest pace since October 2008, the month after Lehman Brothers filed for bankruptcy and the month before the Chinese government launched an economic stimulus program that sheltered China's economy from the worst effects of the global financial crisis. That program also locked China into a growth model grounded in the intimate bond between government-led credit expansion and housing and infrastructure construction -- one that the Chinese government is now struggling, against time and at the risk of crisis, to escape.
Despite gloomy data economy has bounce
Martin Sandbu (FT) Aug 14, 2014
The economic news from Germany and Japan is being misinterpreted and growth in Spain, Portugal and Greece ignored.
A beachgoer’s guide to August’s upsets
Ralphd Atkins (FT) Aug 14, 2014
A strengthening US economy will aid Europe, and by September, when everybody is back at their desks, the sands on the beaches could have shifted again.
The Forever Slump
Paul Krugman (NYT) Aug 14, 2014
The United States should learn from Europe's experience of raising interest rates too soon.
In Nepal, a Better Life With a Steep Price
Gardiner Harris (NYT) Aug 14, 2014
Plagued by endemic poverty, many young people in Nepal leave to work abroad. But the backbreaking labor they find there often results in death.
Beijing vs. Foreign Capitalist Roaders
WSJ Aug 14, 2014
China uses antitrust as a tool of economic nationalism.
Argentina Defaulted on Bonds No One Can Even Find
Matt Levine (Bloomberg View) Aug 14, 2014
Two of the weirdest things in finance are sovereign CDS and Argentina's debt negotiations. So it makes sense that sovereign CDS on Argentina's debt would be very weird indeed.
Europe's Economy Is Broken
Bloomberg View Aug 14, 2014
Investors were expecting bad numbers, but not this bad.
Swiss Deflate the Deflation Theory
Leonid Bershidsky (Bloomberg View) Aug 14, 2014
Switzerland's example shows a country can have both extremely low inflation and growth. It's more Swiss common sense that European governments need, not faster price growth.
Can Anyone Give Mario Draghi a Hand?
Mark Gilbert (Bloomberg View) Aug 14, 2014
ECB President Draghi argues that government's have do to the heavy lifting to revive growth. He's right; but the worsening economic backdrop will sap any appetite for structural reform.
Markets Are Making a Sucker's Bet on Europe
Mohamed A. El-Erian (Bloomberg View) Aug 14, 2014
This morning’s shockingly bad economic data out of Europe is being treated as good news by the markets.
The Subsidy Trap
Jeffrey Frankel (Project Syndicate) Aug 14, 2014
Once subsidies for food and energy are in place, they are extraordinarily difficult to remove. But that does not necessarily mean that keeping them is a savvy politician’s best option.
The Perils of Economic Consensus
Dani Rodrik (Project Syndicate) Aug 14, 2014
Disagreements among economists reflect the fact that their discipline comprises a diverse collection of models, and that matching reality to model is an imperfect science. It is better for the public to be exposed to this uncertainty than for it to be lulled into a false sense of security based on the appearance of certain knowledge.
Marcel Fratzscher (Project Syndicate) Aug 14, 2014
With the crisis in Ukraine intensifying, the US and the EU are locked in a battle of wills – and sanctions. The real threat to the West does not lie in Russia's retaliatory sanctions, but rather in the potential impact of a financial crisis sparked by its own restrictions on Russian banks.
Why Central Banks Worry About Ukraine
Mohamed A. El-Erian (Bloomberg View) Aug 14, 2014
Central bankers don't have much reason to share markets' optimism about Ukraine.
Valuations are expensive but history shows they can grow more expensive yet
Andrew Lyddon (Pieria) Aug 14, 2014
US equities are, relative to most of their history, expensive
Ukraine's Oligarchs Are Still Calling the Shots
Sergii Leshchenko (FP) Aug 14, 2014
The revolutionaries of the Maidan wanted to end crony capitalism. But it's back with a vengeance.
How retail drug markets in poor countries develop
Daniel Bennett & Wes Yin (VoxEU) Aug 14, 2014
Many drugs sold in poor countries are counterfeit or substandard, endangering patients’ health and fostering drug resistance. Since drug quality is difficult to observe, pharmacies in weakly regulated markets may have little incentive to improve quality. However, larger markets allow firms to reorganise production and invest in technologies that reduce the marginal cost of quality. This column discusses how the entry of a new pharmacy chain in India led incumbents to both cut prices and raise drug quality.
India's Modi vows to modernise governance
AlJazeera Aug 15, 2014
Prime minister also addresses violence against women and unveils financial initiative in first Independence Day speech.
All Eyes on Africa
J. Peter Pham (YaleGlobal) Aug 15, 2014
Disturbing news out of Africa, whether about extremist Boko Haram or the outbreak of Ebola, are aberrations for a young continent eager to grow and innovate. Like China and Europe, the United States is ready to court Africa as signaled by the first US-Africa Leaders Summit.
China's Radical Transformations: From Middle Kingdom to Global Sea Power
Jean-Pierre Lehmann (Globalist) Aug 15, 2014
China from Mencius to Mahan – through Marx, Mao and Market Leninism.
Has China Lost Its Magic Wand?
William Pesek (Bloomberg View) Aug 15, 2014
A recent plunge in credit expansion has many China watchers wondering if the jig is up for the world's second-largest economy. It may very well be.
The Fragmentation of Bretton Woods
Mohamed A. El-Erian (Project Syndicate) Aug 15, 2014
In recent years, political support for economic multilateralism has eroded, undermining the effectiveness of the Bretton Woods institutions and disrupting the international monetary system. This is not only hampering the global economy’s ability to meet its potential; it is also contributing to geopolitical insecurity.
Secular stagnation: Facts, causes, and cures – a new Vox eBook
Richard Baldwin & Coen Teulings (VoxEU) Aug 15, 2014
Six years after the Crisis and the recovery is still anaemic despite years of zero interest rates. Is ‘secular stagnation’ to blame? This column introduces an eBook that gathers the views of leading economists including Summers, Krugman, Gordon, Blanchard, Koo, Eichengreen, Caballero, Glaeser, and a dozen others. It is too early to tell whether secular stagnation is really secular, but if it is, current policy tools will be obsolete. Policymakers should start thinking about potential solutions.
Are foreign takeovers getting domestic cherries or lemons?
Bruce Blonigen, Lionel Fontagné, Nicholas Sly & Farid Toubal (VoxEU) Aug 15, 2014
The concerns of economic nationalists about cross-border takeovers are rooted in the idea that foreign enterprises extract the most valuable assets from top performing domestic firms. Practical concerns about economic efficiency of cross-border M&A markets hinge on whether takeovers transfer underperforming domestic economic resources toward more productive uses at foreign enterprises. How then to reconcile these concerns when forming policies about cross-border activity? It’s all in the timing.
China's economy is bound up in Xi's anti-corruption campaign
George Magnus (Pieria) Aug 15, 2014
Why has Xi Jinping unleashed this major anti-corruption campaign, and how does it tie in with the important economic transformation that China faces?
African growth looking forward
Marco Annunziata (VoxEU) Aug 16, 2014
Africa has generated a lot of enthusiasm lately. The cynical view of the continent as a hopeless basket case has been replaced by the lofty narrative of Africa Rising. This column argues that Africa’s progress is impressive, and there is more to the story than a commodity boom. But Africa is at a crossroads. The opportunities are huge, but the road ahead is long, and will require persistent and patient effort from policymakers as well as business.
Workers of the world, log in
Economist Aug 16, 2014
The social network has already shaken up the way professionals are hired. Its ambitions go far beyond that.
Draghi has few legal ways to fix the euro
Wolfgang Munchau (FT) Aug 17, 2014
By pussyfooting around with liquidity policies instead of acting on inflation, the ECB has signalled that it is safe to bet against the inflation target.
‘The System Worked’, by Daniel W Drezner
Alan Beattie (FT) Aug 17, 2014
Economic governance has a patchy record, but this impressive and cogent book argues that policy makers did well during the crisis.
Unlimited presidential terms threaten Africa
William Wallis (FT) Aug 17, 2014
The US helped secure the inclusion of term limits in African constitutions following the cold war but a reversal is in danger of taking hold.
Morningstar: Force to be reckoned with
Stephen Foley (FT) Aug 17, 2014
The research firm’s five-star rating system gives it unrivalled power to influence the $30tn mutual fund industry but its methodology attracts criticism.
The Draw of the New City-States
Roger Cohen (NYT) Aug 17, 2014
The superrich who trash the West trust the West with their money.
The Panama Canal Celebrates 100 Years
Mary O'Grady (WSJ) Aug 17, 2014
Panamanian ownership has transformed a staid, state-owned utility into a modern business.
Europe’s Recurring Malaise
NYT Aug 17, 2014
Misguided European Union policies are impeding further economic recovery.
Prosperity: No panacea
Robert J. Samuelson (WP) Aug 17, 2014
In this post-euphoric time, let’s be realistic.
Growth escalators and growth convergence
Ejaz Ghani (VoxEU) Aug 17, 2014
Just like the East Asian Tigers, the Lions of Africa are now growing much faster than the developed economies. However, this column shows that the growth escalators in Africa are different than in East Asia. The East Asian Tigers benefitted from a rapidly expanding manufacturing sector. The African Lions are benefitting from increases in productivity in the service sector, while the agricultural sector remains unproductive.
Fed’s regimen will not cure Europe’s ills
Philipp Hildebrand (FT) Aug 18, 2014
The key is to mend the ailing European banking system. There will be no robust European growth without properly capitalised European banks.
The threat to the global ties that bind
John Plender (FT) Aug 18, 2014
Geopolitical tensions are testing the infrastructure of globalisation and jeopardising economic recovery.
Investors buy junk bond recovery more time
Scott Minerd (FT) Aug 18, 2014
Defaults remain low and investors returning from their summer breaks are still seeking high yielding assets.
Don’t fight the US Treasury bond rally
Henny Sender (FT) Aug 18, 2014
It is premature to sell now, but as 10-year Treasury yields approach 2% it should provide an opportunity to rebalance portfolios.
Ukraine's Revolutionaries Surrender to Corruption
Leonid Bershidsky (Bloomberg View) Aug 18, 2014
The heroes of Ukraine's successful winter uprising are quitting the government jobs they took as rewards, now dissatisfied with the pace and radicalism of change.
Why Are Bonds and Stocks Acting Strangely?
Mohamed A. El-Erian (Bloomberg View) Aug 18, 2014
Might bond markets see something that stocks don't?
War Does Nothing for Your Investments
Barry Ritholtz (Bloomberg View) Aug 18, 2014
The reason geopolitical events don't have a large impact on markets is because they do little to alter the underlying fundamentals of the world economy.
In my view: The Structural Gap approach offers a new model for co-operation with middle-income countries
Alicia Bárcena (OECD Insights) Aug 18, 2014
Middle-income countries differ widely in their reliance on official development assistance (ODA). While for some, ODA represents less than 1% of their gross national income, for others it is more than 30%. This divergence reflects countries’ differing capacity to access financial resources and capital markets.
What Stock Markets Tell Us About Russia
Alexei Bayer (Globalist) Aug 18, 2014
If economy is king, then Russia may be weaker than it seems.
India’s East Asian Dream
Sanjeev Sanyal (Project Syndicate) Aug 18, 2014
Since 1991, India has been slowly changing its policy framework away from the socialist vision of its first prime minister, Jawaharlal Nehru. But now, despite significant obstacles and risks, Prime Minister Narendra Modi has articulated an explicit economic-growth model that would enable India to overcome Nehru's legacy.
How Money is Made
Karl-Theodor zu Guttenberg and Richard A. Werner (Project Syndicate) Aug 18, 2014
The unfettered creation of money by private banks has generated overwhelming instability, undermining the fundamental principle that money creation should serve the public good. By implementing safeguards that ensure that credit serves productive purposes, policymakers can achieve debt-free, stable, and sustainable economic growth.
Saving the House
Javier Solana (Project Syndicate) Aug 18, 2014
Top-down governance approaches have been useful in addressing climate change, showing the willingness of some of the historical greenhouse-gas emitters to accept remedial responsibility. But the most recent climate-change summits have revealed the limits of this approach.
Great Depression recovery: The role of capital controls
Kris James Mitchener & Kirsten Wandschneider (VoxEU) Aug 18, 2014
The IMF has recently revised its position on capital controls, acknowledging that they may help prevent financial crises. This column examines the effects of capital controls imposed during the Great Depression. Capital controls appear not to have been successfully used as tools for rescuing banking systems, stimulating domestic output, or for raising prices. Rather they appear to have been maintained as a means for restricting trade and repayment of foreign debts.
Michael W. Clune (CHE) Aug 18, 2014
What the left gets wrong about the French economist.
Home Currency Issuance in Global Debt Markets
Galina B. Hale, Peter Jones, and Mark M. Spiegel (FRBSF Economic Letter) Aug 18, 2014
Historically, businesses in most countries have not been able to sell bonds denominated in their home currencies to foreign investors. In recent decades this trend has been changing. Research shows that bonds denominated in currencies other than the major global currencies have increased, particularly following the global financial crisis. However, not all countries were affected equally. Countries that were able to take advantage of the temporary disruption and near-zero interest rates in global financial markets were the ones with a combination of low government debt and a history of stable inflation.
LatAm swaps populists for apparatchiks
Daniel Lansberg-Rodriguez (FT) Aug 19, 2014
Beijing’s readiness to invest without value judgments facilitates regimes attempting to become more like China.
Microcapitalists lurking in China's midst
Patti Waldmeir (FT) Aug 19, 2014
Gone are the bad old days in China when “landlord” was a dirty word, and squeezing four families into a flat built for one another of Mao’s brilliant ideas.
Japan’s warning to eurozone bond markets
John Plender (FT) Aug 19, 2014
Structural reform, rather than quantitative easing by the European Central Bank, is needed to lift European growth rates.
Modi Revs Up Reform
WSJ Aug 19, 2014
The New PM begins to challenge India's old government ways.
Shared Prosperity Is a Moral Imperative
William A. Galston (WSJ) Aug 19, 2014
Since businesses can't easily raise prices, higher wages will have to be paid out of profits.
Why You Should Care About Jackson Hole
Mohamed A. El-Erian (Bloomberg View) Aug 19, 2014
Central bankers, a group of largely independent technocrats, wield more power over the fates of politicians, investors and regular folk than ever before.
Will the Calm in Global Markets Last?
Jim O'Neill (Bloomberg View) Aug 19, 2014
Tranquil markets present certain challenges: staying awake, justifying your pay and saying when volatility will come back.
European Austerity Is a Myth
Leonid Bershidsky (Bloomberg View) Aug 19, 2014
European governments are spending more as a share of output than they did in 2007. Their talk of stringent austerity measures is disingenuous.
How to Survive a Secular Stagnation
Mohamed A. El-Erian (Bloomberg View) Aug 19, 2014
Are the U.S. and Europe stuck in an unusual and prolonged equilibrium, in which frustratingly slow economic growth is the norm? A new book sheds light.
The Trouble with Universal Education
Bjørn Lomborg (Project Syndicate) Aug 19, 2014
In an ideal world, universal, high-quality education at all levels would be a worthy international development goal. But, amid competing demands for basic necessities like health care and potable water, narrower, more cost-effective education targets are essential.
Ebola Wreaking Havoc on African Economy
David Francis (FP) Aug 19, 2014
The death toll in the worst Ebola outbreak in history topped more than 1,200 as of Tuesday, according to the World Health Organization. The good news is that, for now, new cases appear to be limited to Guinea, Liberia, Sierra Leone, and Nigeria. The bad news is that even if the outbreak doesn't spread beyond West Africa, the economic and political fallout in this fragile part of the world will likely last years, experts said.
Europe's Malaise: The New Normal?
George Friedman (Stratfor) Aug 19, 2014
Russia and Ukraine continue to confront each other along their border. Iraq has splintered, leading to unabated internal warfare. And the situation in Gaza remains dire. These events should be enough to constitute the sum total of our global crises, but they're not. On top of everything, the German economy contracted by 0.2 percent last quarter. Though many will dismiss this contraction outright, the fact that the world's fourth-largest economy (and Europe's largest) has shrunk, even by this small amount, is a matter of global significance.
Mexico is looking to the future
Enrique Peña Nieto (FT) Aug 20, 2014
Our goal is to play a more active role in the global economy and provide our people with a better quality of life.
Draghi must start doing whatever it takes
Richard Portes (FT) Aug 20, 2014
Perceptions matter, but you cannot conjure an economic recovery just by summoning the confidence fairy
What next for M&A now bubble has burst?
Sarah Gordon (FT) Aug 20, 2014
The collapse of high-profile mergers and acquisitions tax inversion deals looks to be prompting legislation change, to the relief of bankers.
Time to dust off euro crisis strategies
Trevor Greetham (FT) Aug 20, 2014
With growth weakening once more it is time to dust off the old euro crisis playbook: short the euro, short the periphery, long Germany.
Russia helps lower crude prices
Dan McCrum (FT) Aug 20, 2014
Despite tensions over Ukraine, refineries in Russia have been boosting the quality of oil to Europe, where there is now a glut.
M&A boom must evolve to create growth
Mohamed El-Erian (FT) Aug 20, 2014
Mergers should encourage expansion in production, labour and investment and not just benefit the M&A lawyers, bankers and sophisticated investors.
Euro’s ‘death cross’ need not spell doom
Jamie Chisholm (FT) Aug 20, 2014
The dollar’s bullish run may be looking stretched, just as euro bearish positioning appears vulnerable to a short squeeze.
Andrew Smithers (FT) Aug 20, 2014
Equities have provided a better insurance than cash or bonds against the risks of unanticipated inflation.
Ukraine’s economy: Broken down
Robin Wigglesworth and Roman Olearchyk (FT) Aug 20, 2014
With the world focused on violence in the east, the country’s finances have worsened, raising pressure on the International Monetary Fund.
Do the SNP really want independence?
Tomas Hirst (Pieria) Aug 20, 2014
Why the currency issue may decide which side of the Scottish independence debate has been swimming in the buff.
Argentina's Last Bond Exchange Went So Well It's Doing Another
Matt Levine (Bloomberg View) Aug 20, 2014
There's a footnote here about using bitcoin to coordinate Argentina's exchange offer so I'm feeling pretty good about myself.
Central Bankers Are Getting Itchy
Mark Gilbert (Bloomberg View) Aug 20, 2014
The Bank of England is inching toward higher rates in a preemptive strike to ensure borrowing costs can stay lower for longer.
In Search of Convergence
Ricardo Hausmann (Project Syndicate) Aug 20, 2014
For 200 years, the world’s rich countries grew faster than poorer countries. Why has that trend reversed during the past three decades, and what does the answer imply for development strategies?
European bank results: Is the glass half-full or half-empty?
Jan Schildbach (DB Research) Aug 20, 2014
The half-year results of large European banks offer ammunition to both optimists and pessimists: loan losses and administrative expenses are shrinking, but so are total revenues. Net interest income, the sickly child of recent years, finally seems to be stabilising; however, net income is down again to poor levels. The state of an industry with two distinct faces.
The economics of density: Evidence from the Berlin Wall
Gabriel M. Ahlfeldt, Stephen Redding, Daniel M. Sturm & Nikolaus Wolf (VoxEU) Aug 20, 2014
Economic activity is highly unevenly distributed across space. Understanding what drives the agglomeration and dispersion is important for many economic and policy questions. This column describes a theoretical model of internal city structure incorporating agglomeration and dispersion and heterogeneity in local fundamentals. The authors use the division and reunification of Berlin as a natural experiment. Their findings show that both heterogeneity in locational fundamentals and agglomeration forces are important in shaping a city’s internal structure.
Inflation is best way to avoid stagnation
Tim Harford (FT) Aug 21, 2014
Interest rates will be very low as a matter of course, and central banks will routinely find themselves nearly helpless.
Dramas to match scenery at Jackson Hole
Ralph Atkins (FT) Aug 21, 2014
‘Re-evaluating labour market dynamics’, the topic of this weekend’s US summit, appears deliberately dull, as if intended to keep markets in a slumber.
‘Fear gauge’ loses its punching power
Michael Mackenzie (FT) Aug 21, 2014
Wall Street’s Vix is a handy ‘buying on the dip’ indicator as spikes within the CBOE index are proving shortlived and less potent.
US’s role as world bank regulator
Jonathan Guthrie (FT) Aug 21, 2014
New York’s Department for Financial Services has fined the UK’s Standard Chartered bank $300m for failings in money laundering compliance.
Crucial test for gold as QE largesse ends
Jamie Chisholm (FT) Aug 21, 2014
Since last summer, the bullion has meandered in a $200 range, twitching on geopolitically induced haven buying and taper tantrum-based selling.
No need for banks in an era of intellectual capital
Felix Salmon (FT) Aug 21, 2014
Silicon Valley deals are not based on factors that bankers can model.
Mining Asteroids and Exploiting the New Space Economy
K. Dean Larson (WSJ) Aug 21, 2014
Once property rights are established, space-based free enterprise can take off.
A Few Things the Fed Has Done Right
John H. Cochrane (WSJ) Aug 21, 2014
The Fed's plan to maintain a large balance sheet and pay interest on bank reserves is good for financial stability.
Oil Subsidies Hold Back Indonesia
William Pesek (Bloomberg View) Aug 21, 2014
Indonesia's outgoing president should do his successor one big favor before leaving office: start lifting unsustainable fuel subsidies now.
Central Bankers Set Stage for Jackson Hole
Mohamed A. El-Erian (Bloomberg View) Aug 21, 2014
There's a lot of disagreement among the world's most powerful economic policy makers as they head for their annual conference in Wyoming.
The Secret Life of the Renminbi
Leonid Bershidsky (Bloomberg View) Aug 21, 2014
The IMF chooses not to track the use of the renminbi as a reserve currency, which isn't stopping central banks from accepting it as such.
Free Money for Germany Is Bad News for Euro
Mark Gilbert (Bloomberg View) Aug 21, 2014
When investors are willing to lend money to Germany for two years for free, at a zero interest rate, you know the euro project is in trouble again.
China’s Fire Next Time
Yu Yongding (Project Syndicate) Aug 21, 2014
The Chinese economy has been stabilizing in recent months, easing fears of a financial crisis. But, with the economy's fundamental problems – particularly a sharp rise in corporate debt – remaining unresolved, the respite may be brief.
Italy’s Downward Spiral
Hans-Werner Sinn (Project Syndicate) Aug 21, 2014
Italy is now in a triple-dip recession. But it didn’t get there by itself: Though the economy’s long slide reflects Italian leaders’ failure to confront the country's loss of competitiveness, it is a failure that is widely shared in Europe.
Nominal GDP targeting for developing nations
Pranjul Bhandari & Jeffrey Frankel (VoxEU) Aug 21, 2014
Central banks, especially in developing countries, still seek transparent and credible communication. Yet signalling intentions through forward guidance or commitment sometimes creates undesirable constraints. This column argues that central bank pronouncements phrased in terms of nominal GDP are less likely to run afoul of the supply and trade shocks so common in developing countries, compared to pronouncements phrased in terms of inflation.
Bruno Biais, Jean-Charles Rochet & Paul Woolley (VoxEU) Aug 21, 2014
The Global Crisis has intensified debates over the merits of financial innovation and the optimal size of the financial sector. This column presents a model in which the growth of finance is driven by the development of a financial innovation. The model can help explain the securitised mortgage debacle that triggered the latest crisis, the tech bubble in the late 1990s, and junk bonds in the 1980s. A striking implication of the model is that regulation should be toughest when finance seems most robust and when innovations are waxing strongly.
How to jumpstart the Eurozone economy
Francesco Giavazzi & Guido Tabellini (VoxEU) Aug 21, 2014
The stagnating Eurozone economy requires policy action. This column argues that EZ leaders should agree a coordinated 5% tax cut, extension of budget deficit targets by 3 or 4 years, and issuance of long-term public debt to be purchased by the ECB without sterilisation.
Recent trends in FDI activity in Europe: Regaining lost ground to accelerate growth
Stefan Vetter (DB Research) Aug 21, 2014
In recent years, the European Union has lost its appeal as the globally most important region for foreign direct investment (FDI). In 2013, China alone received more FDI inflows than all EU countries together. Apart from the rising importance of emerging markets, the economic crisis in Europe has reduced investment incentives for companies from abroad. However, especially in Europe low FDI stocks can also be linked to competitiveness deficits. Some EU countries have not received substantial FDI flows even before the crisis and would benefit substantially by attracting more investments.
You Can’t Run an Economy with Spreadsheets
Nicolás Cachanosky (Mises Daily) Aug 22, 2014
Argentina’s economic minister, Axel Kicillof, has become famous for his assertion that it is possible to centrally manage the economy now because we have spreadsheets such as Microsoft Excel. This assertion comes from the mistaken view that the cost of production determines final prices, and it reveals a profound misunderstanding of the market process.
Lessons Not Learned
Joe Nocera (NYT) Aug 22, 2014
The S.&L. crisis could have helped us avoid the financial crisis.
Larry Summers Is On to Something
Mark Whitehouse (Bloomberg View) Aug 22, 2014
There's a lot of credit being created for each dollar of economic growth, suggesting efforts by central banks to boost growth may be laying the foundation for another crisis.
Yellen Sets Jackson Hole Agenda
Mohamed A. El-Erian (Bloomberg View) Aug 22, 2014
Federal Reserve Chair Janet Yellen set the agenda at the annual Jackson Hole, Wyoming, economics conference by describing the challenges in determining the state of the labor market.
A European Lost Decade?
Michael Heise (Project Syndicate) Aug 22, 2014
Europe's current economic predicament sounds a lot like Japan’s in the 1990s, which culminated in a “lost decade” of stagnant growth and deflation from which the country is still working to recover. How can Europe avoid a similar fate?
Argentina's Exchange Offer May Not Be Clever Enough Yet
Matt Levine (Bloomberg View) Aug 22, 2014
It's fun to think up schemes to help Argentina to complete its bond exchange, though you have to worry a little bit that it's forbidden by a court order.
Measuring Inclusive Growth
Mahmoud Mohieldin (Project Syndicate) Aug 22, 2014
Creating a more sustainable world requires us to redefine “growth” in a way that encompasses a wide range of economic, social, and environmental factors, not just income. This attests to the importance of “natural capital accounting,” which assesses the value of natural resources in development planning and national accounts.
Pricing and EZ membership: Evidence from Latvia
Alberto Cavallo, Brent Neiman & Roberto Rigobon (VoxEU) Aug 22, 2014
What happens to prices when a country joins a currency union, and do prices behave differently in a pegged exchange rate regime? This column sheds lights on these questions by using evidence from Latvia, whose currency was pegged to the euro before the country became a Eurozone member on 1 January 2014. The authors find that clothing retail prices in Latvia completely converged to those in other Eurozone countries.
Eric Maskin and inequality
Economist Aug 23, 2014
Learn, and be less unequal.
Africa’s testing ground
Economist Aug 23, 2014
To make it big in Africa, a business must succeed in Nigeria, the continent’s largest market. No one said it would be easy.
New-breed global investors and financial stability
Gaston Gelos & Hiroko Oura (VoxEU) Aug 23, 2014
The landscape of portfolio investment in emerging markets has evolved considerably over the past 15 years. Financial markets have deepened and become more internationally integrated. The mix of global investors has also changed, with more money intermediated by mutual funds. This column explains that these changes have made capital flows and asset prices in these economies more sensitive to global financial shocks. However, broad-based financial deepening and improved institutions can enhance the resilience of emerging-market economies.
The euro masks the blunders of politicians
Martin Sandbu (FT) Aug 24, 2014
States should spend less time thinking about what others can do for them and more on co-operating for the integration they want.
Notebook: Building blocks of discontent
Henny Sender (FT) Aug 24, 2014
The growing influence of mainland money reminds locals that they have never been in control of their destiny.
Central bank rules are made to be broken
Barry Eichengreen (FT) Aug 24, 2014
The more sophisticated the system becomes, the more difficult it is to for policy makers to make the right judgment.
The role of corporate saving in global rebalancing
Philippe Bacchetta & Kenza Benhima (VoxEU) Aug 24, 2014
Among the various explanations behind global imbalances, the role of corporate saving has received relatively little attention. This column argues that corporate saving is quantitatively relevant, and proposes a theory that is consistent with the stylised facts and useful for understanding the current phase of global rebalancing. The theory implies that, while the economic contraction originating in developed countries has pushed interest rates towards the zero lower bound, the recent growth slowdown in emerging countries could push them out of it.
The World's Youngest Failed State
Madhu Narasimhan (FA) Sep 1, 2014
In the 12 years since gaining independence, East Timor has struggled in almost every facet of economic and political management. As its neighboring economies boom, it is quietly on the path to becoming a failed state. And it is quickly running out of time to change course.
Africa's City on a Hill
Seth Kaplan (FA) Sep 1, 2014
Lessons from Lagos.