News & Commentary:

Articles/Commentary

China sees EU investment deal as diplomatic coup after US battles
Tom Mitchell and Katrina Manson (FT) Jan 1, 2021
Pact signed in waning days of Trump presidency and despite warnings from Biden team.

The backlash against colonialism holds lessons in guilt and gratitude
Mihir Bose (FT) Jan 1, 2021
Descendants of conquerors and the conquered must move towards a universal account of history.

Rational bubble puts markets on high starting point for 2021
Michael Mackenzie (FT) Jan 2, 2021
While investors appear bullish, some wobbles in equity markets should be expected in year ahead.

With Brexit 'done', Britain must rebuild trust in Europe
Camilla Cavendish (FT) Jan 1, 2021
It would be a grave mistake for UK ministers to continue with the macho English exceptionalist tone.

Why retailers everywhere should look to China
Economist Jan 2, 2021
That is where they will see the future of e-commerce.

Is an infrastructure boom in the works?
Economist Jan 2, 2021
Governments and investors have been terrible at making projects happen. Can this time be different?

Britain has lost the EU. Can it find a role?
Economist Jan 2, 2021
"Global Britain" is a fine idea, but it requires hard choices and re-engagement with Europe.

A Case Against $2,000 Stimulus Checks
Sarah Green Carmichael (Bloomberg View) Jan 2, 2021
Overly generous relief efforts carry risks of their own.

Epidemiological and economic consequences of government responses to COVID-19
Balázs Égert, Yvan Guillemette, Fabrice Murtin, and David Turner (VoxEU) Jan 2, 2021
Policymakers have faced a crucial trade-off between curbing the spread of the Covid-19 pandemic and minimising further damage to economic activity. Employing reduced form econometric estimates of the Covid-19 pandemic, this column seeks to quantify the impact of government interventions on disease progression and mobility. It finds that a wide-ranging package of public health policies – including comprehensive testing, tracing and isolation, mask-wearing, and policies directed at vulnerable people in care homes – are crucial to avoid full lockdowns while also containing the spread of the virus. Such policies may, however, need to be complemented by selective containment measures such as restricting large public events and international travel or localised lockdowns.

Post-Covid-19 potential output in the euro area
Ethan Ilzetski (VoxEU) Jan 2, 2021
Global economic activity took a large hit during the Covid-19 pandemic, and the euro area was no exception. This column reveals how the majority of the CfM-CEPR panel of macroeconomic experts on the European economy predict a 2-5% decline in the level of potential euro area GDP, but no impact on potential the long-run growth rate.

Financial market sensitivity to announcements by the ECB
Jan Willem van den End and Anna Samarina (VoxEU) Jan 2, 2021
Policy announcements by a central bank policy can have a significant impact on financial markets. This column examines the sensitivity of various asset prices and other metrics to the ECB's monetary policy announcements. Bond spreads, stock prices, and the euro-dollar exchange rate became more sensitive to policy announcements over time. But volatility of market 'surprises' was significantly higher after easing compared to after tightening decisions. This suggests that the ECB's monetary policy communication has become an increasingly important market-moving event.

Bold reform for a post-Brexit Britain
FT View Jan 3, 2021
The UK needs to boost productivity growth and narrow regional gaps.

Scrap 2020 GDP data to find a path out of the harm done by coronavirus
Daniel Mügge (FT) Jan 3, 2021
Traditional output estimates will mislead reconstruction efforts so we must focus on the numbers that matter.

America's dangerous reliance on the Fed
Edward Luce (FT) Jan 3, 2021
Easy money and fiscal gridlock in Washington lead to populism.

Welcome to the Era of Nonstop Stimulus
Phil Gramm and Mike Solon (WSJ) Jan 3, 2021
Spending didn't speed the last recovery, but Biden's team is keen to keep the money flowing endlessly.

Argentina's Credibility Crisis
Mary Anastasia O'Grady (WSJ) Jan 3, 2021
After a 2020 debt restructuring there is no reform agenda to avoid another.

New Covid variant will increase stress on global economy and widen inequality
Mohamed El-Erian (FT) Jan 4, 2021
Policymakers need to take more action to tackle rising risk that short-term problems will become embedded.

Stress test looms for financial system in 2021
John Plender (FT) Jan 4, 2021
Volatility rises as shadow banks become a bigger provider of liquidity to markets.

Banking regulation needs a reset
Ana Botin (FT) Jan 4, 2021
Rules should be amended to remove Big Tech's advantages and promote green finance.

Europe has handed China a strategic victory
Gideon Rachman (FT) Jan 4, 2021
This is the wrong time for the EU to agree an investment treaty with Beijing.

China's central bank faces tricky balance to support liquidity
Thomas Hale (FT) Jan 4, 2021
Interbank lending rates pushed uncomfortably high in recent months.

Beijing's Bid for Financial Supremacy
Kevin Warsh (WSJ) Jan 4, 2021
China plans to displace the U.S. as investors' top target, and global crises have sped up its effort.

Iraq, Struggling to Pay Debts and Salaries, Plunges Into Economic Crisis
Jane Arraf (NYT) Jan 4, 2021
Oil-rich Iraq, its economy hobbled by neglect and corruption, has devalued its currency and had its imported electricity cut off for nonpayment.

Even if you judge Trump by his preferred economic measures, he's still a loser
Catherine Rampell (WP) Jan 4, 2021
On trade deficits, stock market gains and deregulation, Trump has fallen short.

Two-faced US trade policy erodes Atlantic alliance
Spengler (AT) Jan 4, 2021
European distrust of American motives was behind EU leaders' signing last week of a Comprehensive Agreement on Investment with China over the urgent objections of the Donald Trump administration and Joe Biden's transition team.

Rising foreign investment in China's onshore stocks and bonds shows accelerating financial integration
Nicholas R. Lardy and Tianlei Huang (PIIE) Jan 4, 2021
China's integration into global financial markets is accelerating. Cross-border portfolio capital flows into China have been rising since 2014. Foreign ownership of onshore (excluding Hong Kong) Chinese stocks and bonds reached RMB5.7 trillion ($837 billion) at the end of September 2020, a nearly eightfold increase from January 2014 levels.

Europe's disappointing investment deal with China
Alicia García-Herrero (Bruegel/Nikkei Asian Review) Jan 4, 2021
Why rush a deal that is so inherently complex?

'Buy American' Won't Make the Country Stronger
Bloomberg View Jan 4, 2021
Instead of rejecting global commerce, the U.S. should focus on resilience.

Europe's New Pact With China Is Terribly Timed
Bloomberg View Jan 4, 2021
In future, the European Union should coordinate its approach to China with the incoming U.S. administration.

Bitcoin's Bulls Should Fear Its Other Scarcity Problem
David Fickling (Bloomberg View) Jan 4, 2021
As the value of this asset class rises, generating price spikes becomes increasingly difficult.

Time for U.K. Stocks to Look Beyond Brexit Relief
Chris Hughes (Bloomberg View) Jan 4, 2021
The "Buy British" trade continued with the anticipated accord between the U.K. and Europe. Now the reality of the deal counts.

A Global Recovery's Leading Variables
Joseph E. Stiglitz (Project Syndicate) Jan 4, 2021
Although new leadership in the United States will not miraculously end the COVID-19 pandemic and recession, it at least enables the global response that is urgently needed. The question now is whether the US and Europe can double down on stimulus and come to the aid of the developing world.

The Pandemic's Big Sort
Harold James (Project Syndicate) Jan 4, 2021
As with every global crisis, the race is on to determine which political systems will emerge stronger from the pandemic, and which will be discredited by their response to it. But if the past is any guide, it is too early to make such judgements, because the real test for competing systems is yet to come.

Optimism for the New Year
Jeffrey D. Sachs (Project Syndicate) Jan 4, 2021
There are at least five reasons for optimism in 2021. In the coming year, we can lay the foundations for a new era of sustainable development, peace, and cooperation, though we must also be vigilant to stop the forces of greed, ignorance, and hatred from hijacking the new technologies for their ulterior purposes.

Turkey's Slow-Motion Economic Crisis
Selva Demiralp and Sebnem Kalemli-Ozcan (Project Syndicate) Jan 4, 2021
Banks cannot engineer a balance between exchange rates and interest rates in a country with free capital flows, where banks' funding conditions are affected by the global economic environment and by country risk. As Turkey has demonstrated, using banks for this purpose destroys both internal and external economic balances.

Globalizing the COVID Vaccine
Ngozi Okonjo-Iweala (Project Syndicate) Jan 4, 2021
In less than a year, the world has come together to develop effective COVID-19 vaccines and a multilateral platform for allocating them most efficiently around the world. But with the risk of vaccine nationalism still looming large, now is the time to finish the job.

Disruption of seaborne trade in South East Asia
Kerem Cosar and Benjamin Thomas (VoxEU) Jan 4, 2021
Open oceans are vital for the transport of a large share of world trade. But they are also frequently at the centre of geopolitical tensions between nation states. This column estimates the economic costs of impeded shipping access in South East Asia. The results of the study suggest that restrictions to shipping due to military sanctions could have large negative effects on economic welfare for countries all over the world, including oil exporters such as the United Arab Emirates and Saudi Arabia.

How UK finance can thrive after Brexit
FT View Jan 5, 2021
City of London needs robust but pragmatic regulation to spur new growth.

Swiss franc shrugs off being put on the naughty step by US
Eva Szalay (FT) Jan 5, 2021
Flood of money unleashed by the Fed has put dollar under pressure against other currencies.

Covid shows how the state can address social inequality
Angus Deaton (FT) Jan 5, 2021
The risk is that critics of big government will return soon, with their usual welfare-cutting policies.

Five risks that could trip the bulls in 2021
William Pesek (AT) Jan 5, 2021
At a moment of extreme dislocation and economic uncertainty in North Asia, investors seem to agree on one thing: the bull markets of 2020 are far from over. Or might this be wishful thinking?

Financial inclusion: challenges in OECD countries
Fozan Fareed, Patrick Lenain, Enes Sunel and Douglas Sutherland (OECD Ecoscope) Jan 5, 2021
Access to financial services is taken for granted by most people. Amenities such as bank accounts, credit cards, cash dispensers, consumer credit and mortgage loans – all essential to our daily lives – are widely available in OECD countries. When individuals face financial hardship, having access to savings set aside in a bank, or obtaining a consumer credit, is particularly useful. Also, digital payments have proved essential during the COVID-19 pandemic to observe safe distancing rules.

The City of London's New Big Bang
Elisa Martinuzzi (Bloomberg View) Jan 5, 2021
Europe's dependence on British finance is no longer a given.

A Tokyo Emergency Will Be a Bad Omen for the World's 2021
Daniel Moss (Bloomberg View) Jan 5, 2021
Forecasts of a strong year for the global economy proliferated in late 2020. That will need to be scrutinized as Japan struggles.

China's Biden Plan Can Be Seen in EU Trade Deal
Henry Brands (Bloomberg View) Jan 5, 2021
The new U.S. administration wants to repair the global alliances Trump ravaged, but Beijing won't make that easy.

China's Dreams of Self-Reliance Still Depend on Japan Inc.
Anjani Trivedi (Bloomberg View) Jan 5, 2021
Rising ambitions on the mainland to compete in high-end manufacturing are creating a boom for machinery companies.

The Inflation Doomsayers Are Wrong Again
Noah Smith (Bloomberg View) Jan 5, 2021
As the debate about stimulus spending rages, you can trust the government when it says inflation really is low.

Saudi Arabia's Double-Edged Gift for U.S. Shale
Liam Denning (Bloomberg View) Jan 5, 2021
The kingdom's voluntary production cuts give U.S. oil producers breathing room to press on with fixing their problems. But such magnanimity isn't sustainable.

Carbon Pricing Now
Edmond Alphandéry (Project Syndicate) Jan 5, 2021
As the world marks both the fifth anniversary of the Paris climate agreement and the arrival of a more climate-aware US administration, the time has come to get serious about taxing or otherwise imposing a price on carbon. Without this critical policy measure, all of the recent carbon-neutrality pledges will amount to hot air.

Electrifying African Transport
Mohamed Hegazy (Project Syndicate) Jan 5, 2021
Transport investments will be crucial in determining whether Africa follows an equitable, zero-carbon development path. Development banks and governments should move away from capital-intensive mass-transit projects, and toward enabling micro-entrepreneurs to build effective, electrified public transport networks.

Debt and Disease
Martín Guzmán (Project Syndicate) Jan 5, 2021
Despite suffering a near-fatal economic blow from COVID-19, Argentina's government has managed to restructure its sovereign debt, setting the stage for an eventual economic recovery. With many more countries heading for debt crises in the near future, now is the time to heed the lessons of Argentina's success story.

Innovation in the global firm
L Kamran Bilir and Eduardo Morales (Micro Insights) Jan 5, 2021
How global are the gains from innovation? When firms operate production plants in multiple countries, technological improvements developed in one location may be shared with foreign affiliates for productivity gains. This column presents analysis of this cross-border transfer of innovation, measuring the private returns to R&D investments for US multinationals over the period 1989-2008. The research finds that such investments boost firms' performance beyond the initial innovation site. The median US multinational realizes approximately 20% of the returns to its US investment from overseas operations, which suggests that estimates based only on domestic operations understate the overall gains from R&D. The study reveals a 'spatial disconnect' between the costs and potential gains of policies that encourage firms to innovate.

China's crackdown on Ant is not without risks
FT View Jan 6, 2021
Beijing must continue to allow private enterprise and innovation to thrive.

How will Joe Biden react to the EU-China deal?
Aime Williams (FT) Jan 6, 2021
Accord will have irked new administration, but they may still co-operate with Brussels.

Pension funds need a radical rethink
Robin Harding (FT) Jan 6, 2021
Fragmented schemes with limited investment horizons are detrimental to savers and the economy.

A Bullish Outlook for Asia in 2021
Bart Édes (BRINK) Jan 6, 2021
There are sound reasons to be upbeat about Asia's prospects for the coming year, with many countries in this region managing to subdue COVID-19. However, while prospects for an accelerating rebound are bright, there are several uncertainties that could tarnish the picture. Seven risks to keep in mind for 2021.

Yield Curve Says the Reflation Trade Is Intact
John Authers (Bloomberg View) Jan 6, 2021
Financial markets are moving on the assumption that Georgia has turned blue.

Has COVID-19 Killed Asia's Growth Miracle?
Hoe Ee Khor (Project Syndicate) Jan 6, 2021
Asian economies must now continue to pursue catch-up growth, deeper regional integration, and further globalization in a much-changed and far tougher environment. Countries with large domestic markets will be especially tempted to localize production, potentially spelling the end of global supply chains.

Who Is Attacking Whom?
Mohamed ElBaradei (Project Syndicate) Jan 6, 2021
The last thing that either Islamic or Western civilization needs today is new reasons for division and conflict. What is needed instead is a wide-ranging intercultural dialogue that puts all contentious issues on the table, with the hope of gaining a sympathetic understanding of the other's perspective and thus narrowing the gap.

Europe After Brexit
Sigmar Gabriel (Project Syndicate) Jan 6, 2021
While remaining wary of geopolitics, Germany has been carrying its weight on internal EU political matters, pointing to a potential division of labor between itself and France in the future. The question, as always, is whether Europe can find ways to preserve both its own autonomy and its close partnership with America.

A Fairer Way to Help Developing Economies Decarbonize
Kenneth Rogoff (Project Syndicate) Jan 6, 2021
Global carbon pricing is an essential part of any long-term solution to the climate crisis. But advanced economies also need to provide the developing world with highly concessional financing and technical expertise to help it decarbonize – all guided by a World Carbon Bank.

Is Biden Up to the Good Jobs Challenge?
Daron Acemoglu (Project Syndicate) Jan 7, 2021
The pre-pandemic US economy may have had a record-low official unemployment rate and sky-high stock-market valuations, but it was hardly serving the majority of Americans. Good jobs for those without a college degree have been disappearing, and this ominous trend will not reverse itself without an overhaul of economic policy.

Industrial Clusters, Networks, and Resilience of Firms to the Covid-19 Shock in China
Ruochen Dai, Dilip Mookherjee, Yingyue Quan, and Xiaobo Zhang (VoxChina) Jan 6, 2021
Both entry of new firms and performance of incumbents were less adversely affected by the Covid-19 shock in Chinese counties with a greater presence of industrial clusters. To explain these results, we find evidence of the role of two specific attributes of clusters: reliance on informal hometown-based entrepreneur networks and spatial proximity to suppliers and customers.

Human capital in OECD countries: A new measure and its policy drivers
Jarmila Botev, Balázs Égert, Zuzana Smidova, and David Turner (VoxEU) Jan 6, 2021
Human capital is widely regarded in the theoretical literature as fundamental for economic growth. Yet, quantifying the macroeconomic effects of human capital on growth has produced only mixed results. This column introduces a new measure of human capital which exhibits a strong and robust positive correlation with economic growth. The measure is built on recent findings on U-shaped returns to years of education and allows for variation across countries and over time. Empirical analysis shows the importance of pre-primary education, teaching resources as well as school autonomy for this measure of human capital.

Inflation is the canary in the coalmine for investors
John Redwood (FT)/I> Jan 7, 2021
Green and tech sectors will continue to expand this year.

Chances are rising for a US economic reset
Gillian Tett (FT) Jan 7, 2021
Capitol Hill unrest, the Democratic victory in Georgia and the pandemic could combine to spur action on inequality.

Corporate Debt 'Relief' Is an Economic Dud
Sheila Bair and Lawrence Goodman (WSJ) Jan 6, 2021
Most companies benefiting from the Fed's bond buys didn't need the cash, and didn't spend it well either.

The SPAC Bubble May Burst—and Not a Day Too Soon
Michael Klausner and Emily Ruan (WSJ Jan 6, 2021
The hot new way to take companies public hurts most investors, and its track record is now clear.

The Real Price of Saudi Arabia's Surprise Oil Cuts
Julian Lee (Bloomberg View) Jan 7, 2021
Higher prices and other savings will help offset the cost of output cuts.

Some Bad Words About the Riskiness of Equities
Richard Cookson (Bloomberg View) Jan 7, 2021
At some stage the bond bull market will crack. There will be trouble if equity and debt prices start moving in the same direction.

The Quiet Financial Crisis
Carmen M. Reinhart (Project Syndicate) Jan 7, 2021
The global COVID-19 pandemic has resulted in soaring infection rates, widespread lockdowns, record-shattering declines in output, and spiking poverty. But, in addition to these trends, a quieter crisis now gaining momentum could jeopardize economic recovery prospects for years to come.

Europe's Watershed Year
Josep Borrell (Project Syndicate) Jan 7, 2021
After struggling through the early days of the COVID-19 pandemic, the European Union ended 2020 on a high note, with a series of historic policy achievements under its belt, and hopes of renewed cooperation with the United States. The task now is to pursue both multilateralism abroad and strategic autonomy at home.

Risk, resilience, and recalibration in global value chains
Adnan Seric, Holger Görg, Wan-Hsin Liu, and Michael Windisch (VoxEU) Jan 7, 2021
The Covid-19 pandemic has exposed the fragility of the global trade network underpinning global value chains. Initial disruptions in the supply chains for key medical goods due to surges in demand and newly erected trade barriers have prompted policymakers around the world to question their country's reliance on foreign suppliers and international production networks. This column takes a closer look at China's post-pandemic recovery and argues that its response may hold clues to the future of global value chains.

Ever Closer Union?
Perry Anderson (LRB) Jan 7, 2021
Can democracy, sovereignty and globalisation be happily combined? What American examples show is that European elites must make a choice, opting either for political union at the cost of national sovereignty, or for national sovereignty at the cost of political union. Intermediate solutions – a little democracy at national level, a little more at EU level – won't work.

Why US rates will continue to remain low for longer
Steven Major (FT) Jan 8, 2021
Despite expected stimulus hopes, bond yields do not rise with bigger deficits.

The Lockdown Jobs Slump
WSJ Jan 8, 2021
The economy is poised for a boom in 2021 after a December setback.

A Narrowly Democratic Congress Could Boost Spending and Growth
Libby Cantrill, Tiffany Wilding, and Allison Boxer (PIMCO) Jan 8, 2021
With a narrowly Democratic Congress, U.S. fiscal spending is likely to increase on economic relief from the pandemic, infrastructure, and healthcare, boosting the economic rebound.

The Big Bounce-Back?
Mohamed A. El-Erian (Project Syndicate) Jan 8, 2021
Following the 2008 financial crisis, many policymakers failed to focus sufficiently on securing robust, inclusive, and sustainable long-term growth. To avoid repeating this mistake in 2021 as the world emerges from the COVID-19 pandemic, governments must act early and decisively in three areas.

The Brexit Boon to Europe and the US
Melvyn Krauss (Project Syndicate) Jan 8, 2021
More than four years after the Brexit referendum, the United Kingdom has finally left the European Union, and the timing could not be better. With Britain gone, Europe has nothing preventing it from adopting a new economic-policy model that is better equipped for contemporary conditions, not least a strengthening euro.

Direct indexing allows investors to pick and mix
Billy Nauman (FT) Jan 9, 2021
Fund management industry bets on new products that allow customisation but also broad market exposure.

How to deal with China
Economist Jan 9, 2021
Arrests in Hong Kong and Europe's trade deal show the West is on the back foot.

What is the economic cost of covid-19?
Economist Jan 9, 2021
The pandemic could amount to $10trn in forgone GDP over 2020-21.

The economic impact of ancient colonisation
Dimitris K. Chronopoulos, Sotiris Kampanelis, Daniel Oto-Peralías, and John O.S. Wilson (VoxEU) Jan 9, 2021
The enduring impact of ancient colonialism can still be felt in the economic geography of the Mediterranean region. This column combines historical data on ancient colonies with current data on economic outcomes to show that areas once colonised by the Phoenicians, Greeks, and Etruscans have higher population densities and enhanced economic activity to this day – effects due more to the colonisation episode than to geographic attributes. The impact of ancient colonialism can thus be traced back more than two millennia, to the origin of the Mediterranean urban system.

Why Immigration Drives Innovation
Joseph Henrich (Evonomics) Jan 9, 2021
Economic history reveals one unmistakable psychological pattern.

UK's post-Brexit trade agenda starts close to home
FT View Jan 10, 2021
Newfound independence should acknowledge commerce with EU remains key.

Brexit can mean London loses even if the EU doesn't gain
Patrick Jenkins (FT) Jan 10, 2021
Perversely, some City trading will be routed through Chicago or New York.

Bitcoin has ambitions for gold's role
Gavyn Davies (FT) Jan 10, 2021
After years of hostility to cryptocurrencies, central banks will permit them a limited role.

U.S. Imports of Saudi Crude Won't Stay Zero for Long
Julian Lee (Bloomberg View) Jan 10, 2021
Shale has made the U.S. far less dependent on foreign oil. But it hasn't weaned itself entirely.

Rising Treasury Yields Flash a Warning Sign
Mohamed Aly El-Erian (Bloomberg View) Jan 10, 2021
The underlying drivers could create headaches for policy makers and stock investors.

Saudi Arabia's Output Cuts Will Protect Its Riches
David Fickling (Bloomberg View) Jan 10, 2021
By holding back on oil production, the kingdom can preserve revenue while sacrificing minimal market share.

Time to stop trading conflicts that cost investors billions
Carl Levin (FT) Jan 11, 2021
The incoming US administration should end payments for routing customer orders.

US climate finance is approaching a leapfrog moment
Sarah Bloom Raskin (FT) Jan 11, 2021
This year will be a chance to take global leadership of the issue with an American approach.

A strong recovery could be bad for asset prices
Michael J. Howell (FT) Jan 11, 2021
Global liquidity will continue to pour into the world economy. But how will that impact asset prices and the recovery?

IEA chief: Net zero by 2050 plan for energy sector is coming
Fatih Birol (FT) Jan 11, 2021
Global tracking and accountability will be required to address climate change.

The Most Important Thing Biden Can Learn From the Trump Economy
Neil Irwin (NYT) Jan 11, 2021
A "hot" economy with high deficits didn't cause runaway inflation.

Chinese internet stocks soar as phony tech war fades
David P.. Goldman (AT) Jan 11, 2021
Inaction against China's largest internet companies with a combined market value of $1.3 trillion follows a recurring pattern in Washington's phony war against China.

Allocating Global Aid to Maximize Utility
Charles Kenny (CGD) Jan 11, 2021
The idea of the declining marginal utility of income and its potential use in allocation decisions is both historied and widely accepted in economics. In short, the idea is that each additional dollar of income makes you happier, but the first dollar increases your happiness more than the second dollar, more again than the third dollar and a *lot* more than the billionth dollar. Jeff Bezos probably wouldn't jump up and down with delight if someone handed him $1,000, the reaction might be a bit more positive from someone living on $2 a day. In a paper released today I ask what declining marginal utility means for aid and its allocation.

What's Behind Value Investing's Long Losing Streak?
Nir Kaissar (Bloomberg View) Jan 11, 2021
The strategy has suffered a devastating drought for more than a decade, sending investors scrambling for answers.

A Post-COVID Labor Revival?
Teresa Ghilarducci (Project Syndicate) Jan 11, 2021
In contrast to the US recession that followed the 2008 global financial crisis, the COVID-19 downturn has elicited strong public support for workers, especially those in essential jobs. Perhaps, at long last, that sentiment will translate into concrete policies that strengthen labor rather than capital.

A Fragile Recovery in 2021
Nouriel Roubini (Project Syndicate) Jan 11, 2021
Although 2020 ended with a flurry of announcements reporting promising results in COVID-19 vaccine trials, there is little reason to expect a robust economic recovery anytime soon. Defeating the virus remains a monumental task, and the wounds inflicted by the pandemic will not heal easily.

Europe's China Gambit
Dani Rodrik (Project Syndicate) Jan 11, 2021
The new EU-China agreement underscores a fundamental question of the post-pandemic world order: How should strategic and economic relations between major powers with very different institutional and political arrangements be managed? Can democracies remain true to their values while engaging in trade and investment with China?

Trade preferences need predictability
Ingo Borchert and Mattia Di Ubaldo (VoxEU) Jan 11, 2021
Uncertainty over the future course of trade policy really matters. Developing countries obtain non-reciprocal tariff reductions from many industrialised countries through Generalised Systems of Preferences, but the uncertainty surrounding the continuation of preferential treatment is likely to undermine the schemes' effectiveness. This column studies the 2014 reform of the EU's Generalised System of Preferences, which removed the uncertainty on preferences for a subset of beneficiary countries. It finds that the removal of uncertainty led to an increase in EU imports from affected countries by about 45% without any changes in other market access conditions. This average trade impact is driven by country-sector pairs that are most exposed to preferences uncertainty prior to the reform, for which trade increased by over 70%.

The Undoing of China's Economic Miracle
Michael Schuman (Atlantic) Jan 11, 2021
The country's paramount leader is turning away from reforms that helped it grow and develop. That will have consequences beyond its borders.

The Asymmetric Costs of Misperceiving R-star
Andrea Ajello, Isabel Cairó, Vasco Cúrdia, and Albert Queralto (FRBSF Econ Letter) Jan 11, 2021
The natural rate of interest, or r-star, is used to evaluate whether monetary policy is restrictive or supportive of economic activity. However, this benchmark rate can only be estimated, and policymakers' misperceptions of the level of the natural rate can carry substantial economic costs in terms of unemployment and inflation. A scenario using mistaken perceptions shows that the costs of overestimating the natural rate are greater than the cost of underestimating it if policy space is limited by the effective lower bound on the nominal federal funds rate.

Why going global has proved so hard for the big banks
Robert Armstrong (FT) Jan 12, 2021
Lenders struggle to reap gains from globalisation in the way that other industries have.

Why investors are looking beyond headline GDP data
James Sweeney (FT) Jan 12, 2021
Pandemic spurs shift away from traditional metrics of economic growth.

EU must act to profit from the UK's Brexit losses
Miriam González Durántez (FT) Jan 12, 2021
European companies need more responsive regulation that will let them compete with Britain.

Jack Ma vs Xi Jinping: the future of private business in China
Tom Mitchell, Yuan Yang, and Ryan McMorrow (FT) Jan 12, 2021
The crackdown on Alibaba and Ant Group amounts to an unprecedented squeeze on a ubiquitous ecommerce empire.

China's Economy Surges, and So Does Its Currency
Alexandra Stevenson (NYT) Jan 12, 2021
The renminbi has reached its strongest level in more than two years, signaling Chinese dominance in manufacturing and giving President-elect Joe Biden breathing room.

The double irony of the new UK-EU trade relationship
André Sapir (Bruegel) Jan 12, 2021
The Trade and Cooperation Agreement signed between the European Union and the United Kingdom goes against six decades of UK efforts to avoid being economically disadvantaged in Europe. Tracking the evolution of the EU-UK relationship over the last 60 years can help in understanding this.

What Does Brexit Mean for the EU?
Alex Privitera (BRINK) Jan 12, 2021
Since 2016, the EU has had two clear priorities when dealing with Brexit, namely: to be able to survive without the U.K. and to protect the single market. To achieve these two, a third priority was necessary: the U.K. had to be stopped from succeeding in its "have your cake and eat it too" strategy.

The U.S. Should Invest in the Jobs of the Future
Bloomberg View Jan 12, 2021
The economy is failing too many people.

Negative Rates Worked Abroad, Now It's Britain's Turn
Ferdinando Giugliano (Bloomberg View) Jan 12, 2021
The Bank of England should look to experience in Europe as it ponders its next step on monetary policy.

Value Investing's Drought Defies Popular Explanation
Nir Kaissar (Bloomberg View) Jan 12, 2021
Conventional wisdom about the strategy's slump doesn't stand up to scrutiny.

Democrats Are Now the Pro-Business Party
Conor Sen (Bloomberg View) Jan 12, 2021
After decades of GOP policy geared toward tax cuts and low inflation, big spending is what's needed to get the economy moving again.

How Not to Tame Global Food Inflation
Clara Ferreira Marques (Bloomberg View) Jan 12, 2021
Prices are at their highest in six years, threatening to slow post-Covid recoveries. A rush to build barriers is not the answer.

A New "Year Zero"
Klaus Schwab (Project Syndicate) Jan 12, 2021
The catastrophic destruction of World War II was followed by an era of unprecedented growth and material prosperity. Now that the COVID-19 crisis has exposed the deficiencies of that era's institutions and governing philosophy, it is time to start rebuilding once again – and, like in 1946, on a new foundation.

America Is the New Center of Global Instability
Nouriel Roubini (Project Syndicate) Jan 12, 2021
Following the storming of the US Capitol, President Donald Trump is desperate for an exit ramp that will preserve both his fragile ego and his future political influence. Unfortunately, that conundrum leaves him with few options other than to foment even more chaos both at home and abroad.

How Companies Should Leverage Digitization
Dambisa Moyo (Project Syndicate) Jan 12, 2021
As the COVID-19 pandemic has underscored the fragility of many business models, it has also intensified the race to adopt cutting-edge technologies. But adoption is only the first step; how these technologies are applied across five key areas will determine who reaches the finish line – and when.

'Leaning against the wind' and the risk of financial crises
Moritz Schularick, Lucas ter Steege, and Felix Ward (VoxEU) Jan 12, 2021
The question of whether monetary policymakers can defuse rising financial stability risks by 'leaning against the wind' and increasing interest rates has sparked considerable disagreement among economists. This column contributes to the debate by studying the state-dependent effects of monetary policy on financial stability, based on the 'near-universe' of advanced economy financial cycles since the 19th century. It shows that deploying discretionary leaning against the wind policies during credit and asset price booms are more likely to trigger crises than prevent them.

Bounded Optimism on the Global Economy
Joachim Fels and Andrew Balls (PIMCO) Jan 12, 2021
Vaccinations and fiscal support should lift the global economy in 2021, but several risks call for careful portfolio positioning.

Could WFH Boost Potential U.S. Output Growth?
Jay H. Bryson, Sarah House, and Shannon Seery (WF Econ Group) Jan 12, 2021
In this report, we examine work from home (WFH) and its ability to have a meaningful effect on U.S. productivity growth and thereby potential U.S. output growth more generally.

Uganda's election shows dangers of a captured state
FT View Jan 13, 2021
Africa's people have not given up on democracy. Nor should others.

Joe Biden must go all out, early, for structural change
Martin Sandbu (FT) Jan 13, 2021
Beyond the current crisis, the president-elect's task is to end US economic insecurity for good.

Why Trump's attempt to delist China from US will backfire
Jesse Fried (FT) Jan 13, 2021
Bans on stock purchases harm the interests of American investors.

Banks Make a Climate Offering
WSJ Jan 13, 2021
The lobby for Big Finance delivers tribute to Team Biden.

China's demographic time bomb quickly ticking down
Frank Chen (AT) Jan 13, 2021
China's declining demographics are gloomier than previously estimated, a life and death challenge for the world's second-largest economy policymakers have so far failed to address.

What Does 2021 Hold for Global Trade?
Nicolas Lamp (BRINK) Jan 13, 2021
How will the economic recovery impact trade? What trends to expect in 2021: whether supply chains can really be brought back on a significant scale, as well as COVID-19's impact on regional trade deals.

City of London Needs Brexit Limbo to End
Marcus Ashworth (Bloomberg View) Jan 13, 2021
The U.K. and Europe busted one Brexit deadline after another hatching a trade deal. March's target for a finance accord can't be the next to slip.

A Dead Soviet Economist Has Bad News for Stocks
John Authers (Bloomberg View) Jan 13, 2021
If we're in the early stages of a Kondratieff wave for commodities, that suggests the outlook is bearish for equities.

Let's Celebrate Inflation When We Can
Ferdinando Giugliano (Bloomberg View) Jan 13, 2021
The ECB must make clear it's willing to tolerate some price pressures without curtailing its aggressive monetary policy.

Latin America's China Strategy Needs an Overhaul
Mac Margolis (Bloomberg View) Jan 13, 2021
Especially in Brazil, savvy local leaders have an opportunity to turn Beijing's Belt and Road Initiative to their advantage.

Biden Must Avoid Obama's Mistake When Setting His Agenda
Noah Smith (Bloomberg View) Jan 13, 2021
Stick to the crisis at hand or risk spurring a backlash that could slow economic reforms and hurt Democrats in 2022.

It's Still a Service Economy, Even in a Pandemic
Justin Fox (Bloomberg View) Jan 13, 2021
This recession will likely be the first to see jobs decline faster in services than in goods production, with an outsized impact on women. But it's a shortlived setback.

Brace Yourself for the Next 11½ Months
Tyler Cowen (Bloomberg View) Jan 13, 2021
2021 will be better than 2020, but the year's defining feature will be volatility.

Inflation Is Coming. That Might Even Be a Problem.
Michael R Strain (Bloomberg View) Jan 13, 2021
Upward pressure on prices is already easy to spot, and that's before the Democrats take over.

Factories Have Fled to Vietnam, But May Not Escape Tariffs
Daniel Moss (Bloomberg View) Jan 13, 2021
Many U.S. companies heeded Trump's call to disentangle their supply chains from China. They may regret that decision.

Recovering Global Leadership
Sri Mulyani Indrawati (Project Syndicate) Jan 13, 2021
Although the COVID-19 pandemic has stricken every country, global leadership in responding to the crisis has remained woefully absent. Multilateral cooperation will be essential, but in the meantime, national governments must orient their domestic policies toward global goals.

An Infrastructure Inoculation for America's Recovery
Barry Eichengreen (Project Syndicate) Jan 13, 2021
In weighing the options for additional stimulus, President-elect Joe Biden's $2 trillion infrastructure investment plan has much to recommend it. If accompanied by a new independent commission to ensure that the money isn't wasted on pork-barrel projects, it is a better approach than sending more checks to every household.

American Capitalism's Poor Prognosis
Angus Deaton (Project Syndicate) Jan 13, 2021
The COVID-19 pandemic has both exposed and accelerated long-term trends that will render the US economy system even more unequal and dysfunctional than it already was. Worse, the Democrats' failure to secure a decisive victory in Congress has dimmed the prospects for badly needed reforms.

The BRICs at 20
Jim O'Neill (Project Syndicate) Jan 13, 2021
Much has happened in the two decades since the BRICs (Brazil, Russia, India, and China) became a group to watch in the twenty-first century. While some of them have surpassed expectations, others have fallen short, as have the relevant global-governance institutions.

Impacts of Housing Policy: China's Experiment
Kaiji Chen, Qing Wang, Tong Xu, and Tao Zha (VoxChina) Jan 13, 2021
China's unprecedented and unexpected loosening of loan-to-value ratio (LTV) policy during 2014Q4–2016Q3 provides an ideal case to study the role of housing policy in housing booms and busts and its impacts on consumption and debt burdens among households. Evidence from three unique micro datasets shows that such a policy change disproportionately increased the share of mortgages to middle-aged and high-income homeowners in the total amount of newly issued mortgages and at the same time reduced their consumption growth persistently. Homeowners traded up their primary homes as their speculative housing investment. This trade-up was a key channel for a change in LTV policy to exert aggregate and distributional impacts on mortgage markets.

Will inflation make a comeback as populations age?
Olli Rehn (VoxEU) Jan 13, 2021
Global population ageing will lead to a trend reversal, with saving rates falling, real wages increasing, and greater inflationary pressures. The change in China's economic model from forced saving towards increased consumption is amplifying this trend. This column reviews a new book by Charles Goodhart and Manoj Pradhan in which the authors examine megatrends reshaping societies and economies. Whether they are proved right or wrong, their arguments should prompt a much-needed reflection on widely held assumptions about future developments.

A fiscal policy for all seasons
FT View Jan 14, 2021
Spending approaches should be ready for a change in circumstances.

Reflation offers salvation as UK stocks come in from the cold
Bryce Elder (FT) Jan 14, 2021
FTSE needs more than Brexit relief to keep outperforming; fewer returns mark a return to a form at Asos.

In uncertain times, certainty is over-rated and over-rewarded
Jemima Kelly (FT) Jan 14, 2021
We should all aim to be more like foxes and less like hedgehogs about what we don't know.

A Rally That Won't Stop or a Bubble About to Pop
Conrad de Aenlle (NYT) Jan 14, 2021
Stock market sentiment and valuations are high, and with bonds expensive, too, there may be few safe places to turn.

Those $2,000 Checks Won't Boost the Economy
John F. Cogan and John B. Taylor (WSJ) Jan 14, 2021
Politicians love direct payments, but people spend more only when long-term income rises.

Upgrading macroeconomic policy institutions to boost the recovery after the COVID-19 shock
Dennis Dlugosch and Rauf Gönenç (OECD Ecoscope) Jan 14, 2021
Past OECD Economic Surveys of Turkey had underscored that Turkey's transition towards more transparent and rule-based macroeconomic - fiscal, monetary and macrofinancial - and structural - product, labour and capital market- policy frameworks would better mobilise the potential of the economy and Turkish people and deliver stronger and more sustainable growth. In the aftermatch of the COVID-19 shock, the 2021 Survey emphasises that the need to strengthen policy institutions and frameworks remains central to facilitate the recovery from the pandemic and to support the transition to a less volatile economy.

Legally Speaking, is Digital Money Really Money?
Catalina Margulis and Arthur Rossi (IMF) Jan 14, 2021
Building a case for digital currencies.

How Trade Tech Is Transforming Global Supply Chains
Alex Capri and Wolfgang Lehmacher (BRINK) Jan 14, 2021
COVID-19 has accelerated previously existing geopolitical trends, especially trade protectionism. This environment, however, creates a demand for new and innovative management tools to address new risks. Trade tech is the emerging solution to manage the challenges of COVID-19 and techno-nationalism.

Just Like Jack Ma, China's AAA Curve Vanishes
Anjani Trivedi (Bloomberg View) Jan 14, 2021
Silence around Alibaba's plans to sell $8 billion of debt undermines a key risk benchmark.

The Alphabet Soup of Recoveries Adds  'R' and 'I'
Jim Bianco (Bloomberg View) Jan 14, 2021
If the 2020 economy was defined by what letter would best describe the rebound, 2021 will be about reflation versus inflation.

Italy Is the Land of Convoluted Crises
Ferdinando Giugliano (Bloomberg View) Jan 14, 2021
Strong leadership is needed to chart the country's path out of the pandemic. Can political upheaval deliver it?

Too Much Biden Stimulus Would Backfire
Michael R Strain (Bloomberg View) Jan 14, 2021
Aid to states and localities is badly needed to support the economy. But not $2,000 checks for people who never lost income or jobs.

China Hitting the Accelerator Will Fire Markets
John Authers (Bloomberg View) Jan 14, 2021
Beijing looks to be easing liquidity. That's great news for emerging stocks and commodity prices.

China's Fateful Year
Minxin Pei (Project Syndicate) Jan 14, 2021
Once again, Chinese political decisions have reset the country's relations with the West. But whereas Deng Xiaoping's reform and opening in 1979 heralded the start of a cooperative and fruitful relationship, President Xi Jinping's policies in 2020 are far more likely to lead to decades of hostile confrontation.

Why Biden Should Abandon Trump's Failed Trade War with China
Zhang Jun and Shi Shuo (Project Syndicate) Jan 14, 2021
US President-elect Joe Biden says he will not make any significant changes to America's China policy until he conducts a full review of the existing "phase one" trade agreement and consults with allies in Asia and Europe. But it should not take a comprehensive review to see that this approach is unworkable.

Latin America's Pandemic of Woe
Mauricio Cárdenas, Eduardo Levy Yeyati, and Andrés Velasco (Project Syndicate) Jan 14, 2021
If Latin America's COVID-19 public-health shock is followed by a protracted economic crisis that leaves many people behind, trust in government and institutions will suffer, and politics will become even more fractured. In that case, the region could yet face a pandemic of instability and hopelessness.

Financial globalisation and inequality: Capital flows as a two-edged sword
Barry Eichengreen, Balazs Csonto, Asmaa El-Ganainy, and Zsoka Koczan (VoxEU) Jan 14, 2021
Global inequality has fallen in recent decades, but within-country inequality has risen in a significant number of national economies during the same period. This column identifies the channels through which financial globalisation accentuates inequality and suggests how these could be mitigated by accompanying policies.

China's coming global investment recovery: How far will it go?
Derek Scissors (AEI) Jan 14, 2021
COVID-19 had the expected impact on China's documented global investment and construction in 2020, forcing deep declines. A powerful recovery will materialize at some point this year and likely continue into 2022. For investment and construction to intensify beyond this recovery requires policy change in Beijing—opening more sectors at home for reciprocity, letting private Chinese firms lead again, and encouraging greenfield investment. These seem unlikely. If so, the Belt and Road will become increasingly important within China's global footprint. Belt and Road activity is not increasing, but it is holding up better than investment in rich countries. American concern with this investment was due to technology loss. But current technology loss is primarily through exports and outbound US capital flow, both of which require immediate policy attention.

Why house prices may dip but will not crash
Merryn Somerset Webb (FT) Jan 15, 2021
In the long run, rising inflation fears will support property market.

The US inflation pressure cooker may be steaming
Gillian Tett (FT) Jan 15, 2021
Investor reappraisal of rising price risks produces some surprising investment results.

India's banks face their biggest test
Benjamin Parkin (FT) Jan 15, 2021
Even before the pandemic, the country had among the highest ratios of bad loans in the world.

A Second Economic Crisis for Biden, but a Different First Response
Jim Tankersley (NYT) Jan 15, 2021
The president-elect's proposed economic rescue package is larger and more targeted to the country's needs than the stimulus plan he helped steer into law as vice president in 2009.

China and the Fed rule markets together
David P. Goldman and Uwe Parpart (AT) Jan 15, 2021
American stocks look bubbly. At nearly 40 times backward-looking earnings, the price-earnings ratio of the S&P 500 was higher only once in history, just before the 2000 tech stock crash.

The United States can return to multilateral economic cooperation. Here's how.
Chad P. Bown and Anabel González (PIIE) Jan 15, 2021
Many countries around the world are hoping that the incoming Biden administration will take the lead in restoring a cooperative multilateral approach to trade. Yet such a return to business-as-usual (pre-Trump) trade policy, focused on the negotiation of market-opening agreements, is unlikely at the start of the administration, with its stated priority of strengthening domestic competitiveness and workers' conditions to compete in the global economy.

Does the dollar have an outsized effect on trade prices?
Madi Sarsenbayev and Joseph E. Gagnon (PIIE) Jan 15, 2021
An influential recent paper notes that a disproportionate share of global trade is invoiced in US dollars and claims that dollar invoicing causes trade prices to follow movements in the dollar. The implication is that when the dollar is overvalued, trade may be suppressed because the prices of traded goods are artificially high. With trade prices fixed in dollars, monetary policy outside the United States is unable to influence the relation between export and import prices and thus loses an important channel of transmission to overall economic activity. This post examines 22 economies to see if the substantial dollar appreciation of 2014–15 raised their export prices. Such an effect occurs in only two economies: Israel and Thailand. In other economies, export prices follow domestic prices or a trade-weighted average of prices in foreign currencies. For a few economies in Europe, export prices appear to follow the euro. The evidence thus indicates that any effect of dollar invoicing on trade prices is very brief and does not create a lasting distortion in global trade.

Education and Training Will Be Crucial for the Recovery
Bloomberg View Jan 15, 2021
The Biden administration must be bold about investing in students and workers.

Expect the Weak Dollar Trend to Return
Marcus Ashworth (Bloomberg View) Jan 15, 2021
The greenback's fall has enjoyed a temporary respite. But the forces against the currency look set to reassert themselves.

Winter Is Still Coming for U.S. Gas Exporters
Liam Denning (Bloomberg View) Jan 15, 2021
An unfamiliar euphoria grips the industry now, but long-term trends haven't changed.

Nobody Wants to Invest in an Unstable Country
Noah Smith (Bloomberg View) Jan 15, 2021
Jobs, exports, infrastructure; the list of economic fallout will be a long one if political violence in the U.S. is prolonged.

China's Debt Grip on Africa
Paola Subacchi (Project Syndicate) Jan 15, 2021
Since the 2008 global financial crisis, China has steadily increased its direct lending to developing countries – often with draconian conditions attached. Debt moratoria during the pandemic, while important, will not solve this problem.

Saving America's Public Pensions
Ben Meng (Project Syndicate) Jan 15, 2021
US public pension schemes are increasingly facing funding gaps that will be difficult to close in today's capital market environment. But with innovative strategies designed to leverage these large investor's inherent advantages, "difficult" need not become synonymous with impossible.

Global liquidity and dollar debts of emerging market corporates
Lorenzo Forni and Philip Turner (VoxEU) Jan 15, 2021
Dollar bond issuance by non-US companies has dominated foreign borrowing since the global crisis. In many emerging markets, higher leverage and currency mismatches have increased the risk of corporate insolvencies and created new threats to the balance sheets of local banks. This column documents the financial risks created by these recent trends and outlines the necessary implications for regulatory policy. In addition to regulation, financial fragilities have added to demands for fiscal stimulus and led some emerging market central banks to ease monetary policy by buying government bonds, creating new links with fiscal policy.

Commodity prices are surging
Economist Jan 16, 2021
Is a new supercycle beginning?

Is Inflation About to Take Off? That's the Wrong Question
Neil Irwin (NYT) Jan 16, 2021
Some analogies can help in assessing the risks: a yo-yo, hungry bears, a sloshing bathtub and a reflating balloon.

Increasing deposit insurance and nationalisation in times of crisis
Sümeyra Atmaca, Karolin Kirschenmann, Steven Ongena, and Koen Schoors (VoxEU) Jan 16, 2021
Deposit insurance has the potential to preserve and even restore financial stability in times of crises. This column uses evidence from more than 300,000 Belgian depositors of a large European bank during 2008 and 2009 to examine whether increasing deposit insurance coverage supported financial stability during the global financial crisis. It finds that the increase in deposit insurance coverage together with the nationalisation of a bank at the height of the financial crisis in the autumn of 2008 was effective in calming depositors. The effect of increased deposit insurance kicks in most strongly once the bank is reprivatised, and close bank-customer relationships and trust in the government reinforce the effect.

Rapid Money Supply Growth Does Not Cause Inflation
Richard Vague (Evonomics) Jan 16, 2021
Neither do rapid growth in government debt, declining interest rates, or rapid Increases in a central bank's balance sheet.

Robot adoption at German plants
Liuchun Deng, Verena Plümpe, and Jens Stegmaier (VoxEU) Jan 16, 2021
Robots will shape the future of labour. This column uses a large-scale, plant-level survey to provide the first microscopic portrait of robotisation in Germany, the country with the highest robot density in Europe. The findings reveal substantial within-industry heterogeneity – robot use remains relatively rare and its distribution highly skewed. Factors that influence a plant's decision to adopt robots include size, skill composition, labour costs, and exporter status. New adopters have contributed substantially to the recent growth in Germany's robotisation.

Why the ECB should go Japanese
Martin Sandbu (FT) Jan 17, 2021
Yield curve control makes monetary policy more effective.

50 Shades of Fear Haunt China's Distressed Developers
Shuli Ren (Bloomberg View) Jan 17, 2021
Calm has not returned to the high-yield marketplace as another big developer runs into investor nervousness.

The triple effect of COVID-19 on Chinese exports
Felix Friedt (VoxEU) Jan 17, 2021
The COVID-19 pandemic has caused one of the most severe contractions in international trade since the Great Trade Collapse, leading to comparisons between the two episodes. While the Great Trade Collapse has been clearly linked to the collapse in international demand, this column argues that the COVID-19 pandemic has the potential to impact trade through multiple transmission channels, highlighting the role of global value chains in the transmission. Commercial policy responses to bolster the global economy must, therefore, deviate from demand centered instruments and consider the dependence on and resilience of global value chains to address the triple pandemic effect.

America's disarray is China's opportunity
Gideon Rachman (FT) Jan 18, 2021
China's economy is growing strongly while the US is mired in a political crisis.

Markets approaching a boiled frog moment
Katie Martin (FT) Jan 18, 2021
Investors are proving adept at overlooking signs of the extraordinary/

Kristalina Georgieva: 'We are in a resilient place but cannot take stability for granted'
Martin Wolf (FT) Jan 18, 2021
The IMF chief calls for global co-operation to support health systems and limit the damage of economic scarring.

About China's Booming* GDP
WSJ Jan 18, 2021
*Good data mask dangerous imbalances that are growing worse.

China Is an Economic Winner, Not an Economic Leader
Daniel Moss (Bloomberg View) Jan 18, 2021
Even as Beijing posts impressive GDP figures, it's a long way from setting the direction for global policy.

The Cure for Demagogic Populism
Michael Lind (Project Syndicate) Jan 18, 2021
Demagogues such as US President Donald Trump emerge when conventional politicians and party establishments ignore large groups of a country's population. The best way to counter them is to incorporate alienated constituencies into mainstream politics and address their legitimate grievances.

Was Brexit Inevitable?
Robert Skidelsky (Project Syndicate) Jan 18, 2021
On one level, Brexit was simply the unintended outcome of the United Kingdom's 2016 referendum on its European Union membership. But in retrospect, there was a whiff of inevitability about the UK's separation – not from Europe, but from a particular institutional expression of it.

Europe's Vaccination Debacle
Hans-Werner Sinn (Project Syndicate) Jan 18, 2021
With under-supplied vaccination facilities and overcrowded COVID-19 wards, the European Union is reaping what it sowed last summer when it decided to put the European Commission in charge of preordering vaccines. There was neither a legal basis nor any economic justification for central planning.

Asia's Climate Optimism
Christine Loh, Pamela Mar, Peter Seligmann, and Lin Xu (Project Syndicate) Jan 18, 2021
East Asia will enter the post-pandemic recovery with excess capacity, substantial liquidity, and a growing consensus on the need for a green transition. The question is how these economies can make the most of this moment to lock in progress toward official decarbonization pledges.

The merits of fire sales and bailouts in light of the COVID-19 pandemic
Jean-Marie Meier and Henri Servaes (VoxEU) Jan 18, 2021
Governments and central banks worldwide have reacted to COVID-19 with unparalleled emergency measures, including bailouts. One key objective of these emergency measures was to prevent fire sales and the externalities associated with them. Based on 31 years of data on fire sales of real assets, this column documents that there is an underappreciated 'bright side to fire sales' in the form of gains to buyers. Furthermore, the negative externalities of fire sales for customers or suppliers, for instance, appear limited. These findings indicate that the welfare losses associated with fire sales are smaller than previously thought, thereby raising doubts about the merits of bailouts to prevent them.

Bond returns in sovereign debt crises: The investors' perspective
Jochen Andritzky and Julian Schumacher (VoxEU) Jan 18, 2021
For countries experiencing a debt crisis, the restructuring of government bonds is a possible resolution tool. For investors, however, the literature highlights the short-term losses of such operations. This column provides evidence on investment returns over the longer run and finds that bond returns over the longer run – capturing both pre- and post-crisis times – do not differ significantly between crises with and without debt restructuring. What matters more is bondholders' investment strategy during crises episodes. Conditional on a debt crisis, debt restructuring can even be financially rewarding for creditors investing in distressed bonds.

The impact of Covid-19 on productivity
Nicholas Bloom, Philip Bunn, Paul Mizen, Pawel Smietanka, and Gregory Thwaites (VoxEU) Jan 18, 2021
The Covid-19 shock has had asymmetric effects across sectors of the economy, with those sectors that involve the most social contact in consumption bearing the brunt. This column uses data from the Decision Maker Panel business survey data to assess how the spread of Covid-19 and measures to contain it are likely to affect productivity. It estimates total factor productivity in the UK private sector is likely to be lower than it would have been, by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in 'within-firm' productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. Since the pandemic disproportionally affected firms in low-productivity sectors, and the least productive firms within these sectors, these become a smaller part of the economy and therefore a positive 'between-firm' reallocation effect partially offsets the negative 'within-firm' effect.

Trade and Covid-19: Lessons from the first wave
Alvaro Espitia, Aaditya Mattoo, Nadia Rocha, Michele Ruta, and Deborah Winkler (VoxEU) Jan 18, 2021
As COVID-19 spread across countries, many saw global value chains as transmitters of shocks. Using disaggregated export data for multiple countries, this column shows that participation in global value chains increased exporters' vulnerability to foreign shocks, but it also reduced vulnerability to domestic shocks. Sourcing inputs from abroad is an example of beneficial diversification through trade when domestic production is disrupted. This evidence corroborates the view that nationalising value chains is not the way to improve resilience

China's rebound masks long-term challenges
FT View Jan 19, 2021
Economic growth still relies too much on exports and investment.

Higher inflation is coming and it will hit bondholders
Jeremy Siegel (FT) Jan 19, 2021
Historic increase in monetary supply to fight Covid crisis will lead to higher consumer prices.

Majority of EM bonds remain off limits to passive investors
Steve Johnson (FT) Jan 19, 2021
Only 13% of emerging market bonds are included in flagship indices tracked by ETFs.

Sorry, but debt forgiveness is not going to happen
Rui Soares (FT) Jan 19, 2021
Cancelling the debt central banks have bought is not a fair way to address the economic challenges we face today.

10 Challenges Biden Faces in Righting the Economy
NYT Jan 19, 2021
The pandemic has damaged the economy and cost millions of people their livelihoods. These are some of the areas that demand Joe Biden's attention.

Biden's Stimulus Hits All the Right Notes
Alan S. Blinder (WSJ) Jan 19, 2021
His American Rescue Plan builds on what worked in the Cares Act and corrects what didn't.

China knocking on CPTPP trade pact's door
Frank Chen (AT) Jan 19, 2021
Beijing is weighing whether to join what is arguably the world's highest-value trade accord, despite the wide-reaching liberalizing requirements that go with membership to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

China's economy shines through fast gathering clouds
William Pesek (AT) Jan 19, 2021
China's 6.5% surge in the last quarter of 2020 epically trolled outgoing US President Donald Trump in the final three days of his presidency. As the US economy slows amid exploding Covid-19 infections, China is surging in the other direction – and leading the globe in the process.

Will Joe Biden's fiscal stimulus overheat the American economy?
Economist Jan 19, 2021
If it does, higher inflation could be the consequence.

Tail Winds Provide Lift for Emerging Markets Investments
Gene Frieda and Pramol Dhawan (PIMCO) Jan 19, 2021
A confluence of dynamics are set to accelerate global capital flows to emerging markets amid attractive valuations.

Italy: No Political Crisis, But an Economic One
Valbona Zeneli (Globalist) Jan 18, 2021
The EU's patience to throw Italy yet another lifeline after the current one is rapidly vanishing.

What the Continued Global Uncertainty Means for You
Hites Ahir, Nicholas Bloom, and Davide Furceri (IMF) Jan 19, 2021
Uncertainty in systemic economies matters for uncertainty around the world.

Germany's Post-COVID-19 Recovery in Five Charts
Mai Chi Dao and Aiko Mineshima (IMF) Jan 19, 2021
According to the IMF's latest economic assessment of Germany, priority should be placed on setting the economy on a sustained recovery path by minimizing labor market scarring, protecting vulnerable people, and ensuring that viable firms remain in business.

An EU – China investment deal: a second look
Maria Demertzis (Bruegel) Jan 19, 2021
For the moment, it does not look like we have the basis for greater and deeper economic relations with China. However, dismissing China and the opportunities that it creates for global cooperation would also be a mistake.

Why We've Gone Back to Storing Cash Under the Mattress
Mark Gilbert (Bloomberg View) Jan 19, 2021
Demand for paper currency continues to grow, with the highest-denomination bills most in vogue.

Don't Let Stocks' Big Dogs Crowd Out the Small Ones
Nir Kaissar (Bloomberg View) Jan 19, 2021
Too many investors are neglecting small-cap shares in their portfolios.

China's Nifty Fifty Is Feeling a Bit Iffy
Shuli Ren (Bloomberg View) Jan 19, 2021
The country's investors are focused on a shortlist of companies — let's call them the Beautiful 20 — but the situation isn't pretty.

The Inevitability of German Stimulus
Melvyn Krauss (Project Syndicate) Jan 19, 2021
The transition to new German leadership after 16 years under Chancellor Angela Merkel will not change the country's core political priorities vis-à-vis Europe. Preserving the eurozone will remain paramount, even if it means suspending Germany's traditional opposition to fiscal stimulus and deficits.

Four Ways Biden Can Boost the Global Economy
Jayati Ghosh (Project Syndicate) Jan 19, 2021
The US is nowhere near as economically dominant as it was even a decade ago. Yet President-elect Joe Biden can take several relatively simple steps that would have far-reaching benefits for the US economy, the American people, and the rest of the world.

The Year of the Renminbi?
Arvind Subramanian and Josh Feldman (Project Syndicate) Jan 19, 2021
After years of poor policy and political tumult in the United States, it is not unreasonable to ask whether China's currency will soon be in a position to challenge the greenback. While neither country has been doing itself any favors in the currency pageant, it is worth remembering that history is not on America's side.

How to Tackle Vulnerable Countries' Triple Crisis
Manish Bapna and Muhamad Musa (Project Syndicate) Jan 19, 2021
The world can emerge stronger from its interconnected health, economic, and climate crises, but success will require bold, urgent, and far-sighted measures. World leaders must act today to ensure a durable, equitable recovery that does not neglect the most vulnerable populations.

India's risky investment climate
FT View Jan 20, 2021
The country has a chance to woo foreign investors but many fear an uneven playing field.

Dear Joe Biden, deficits still matter
Ruchir Sharma (FT) Jan 20, 2021
New president's plans for more stimulus risk exacerbating inequality and low productivity growth.

Time to look again at the financial system's dangerous faultlines
Paul Tucker (FT) Jan 20, 2021
Change is needed after the pandemic stretched markets to the limit in March last year.

The biggest post-Trump job is to restore US institutions
Michael McKinley (FT) Jan 20, 2021
The damage wrought on federal bureaucracies needs to be fixed so the same abuses cannot happen again.

How Trump made China's currency great again
William Pesek (WP) Jan 20, 2021
Trump's most lasting economic legacy might be trashing the dollar in ways that set up China to fill the void. Oh, the irony.

Trump's bluster failed Venezuela. Biden must use diplomatic and economic levers to address the crisis.
David Smilde (WP) Jan 20, 2021
The goal should not be for outside powers to determine the fate of Venezuela.

Beyond Brexit: Outlook and Risks for the U.K. Economy
Peder Beck-Friis and Ketish Pothalingam (PIMCO) Jan 20, 2021
Despite seeing major market swings following the 2016 Brexit referendum, we don't expect Britain's departure from the European Union (EU) to have any major economic effects in our baseline outlook for 2021 and beyond. Far more important are COVID-19, fiscal policy, and bigger questions around future productivity growth.

Italy Has Problems That Money Can't Solve
Ferdinando Giugliano (Bloomberg View) Jan 20, 2021
The country's politicians can avoid tackling their own shortcomings as long as European support keeps flowing in.

Brexit's Troubles Aren't All Teething Problems
Therese Raphael (Bloomberg View) Jan 20, 2021
Boris Johnson will come under pressure to blame the EU for new costs and frictions. Instead, he should seek to reduce trade barriers.

Can Private Equity Make an Exit in Time?
Anjani Trivedi (Bloomberg View) Jan 20, 2021
Hitachi is one case of a conglomerate looking to shed a losing business. But Covid-19 clouds the strategies for potential investors.

US Institutions After Trump
Daron Acemoglu (Project Syndicate) Jan 20, 2021
It would be a mistake for Americans to take comfort in the fact that their democratic institutions survived four years of attacks by Donald Trump, culminating in the January 6 insurrection at the US Capitol. In fact, most of these institutions have been failing and are in desperate need of repair and reform.

Taking oligopoly seriously in macroeconomics
Xavier Vives (VoxEU) Jan 20, 2021
The dominance of Big Tech and other 'superstar' firms' has put market power back on the agenda of politicians, as well as in research. But although oligopoly markets have been introduced in macroeconomic and trade models, this is mostly in the context of a very large 'continuum' of sectors such that a firm has market power in its sector but no influence on the wider economy. This column argues that it is high time that oligopoly is integrated fully into the macroeconomics toolbox.

The interaction between macroprudential and monetary policy through global banks: New cross-country evidence from the International Banking Research Network
Matthieu Bussière, Jakob de Haan, and Robert Hills (VoxEU) Jan 20, 2021
Despite being a central question in international macroeconomic policy debates, there is still only limited empirical evidence on the extent to which macroprudential policy affects the transmission of monetary policy and the propagation of shocks across borders. This column presents findings from the latest project of the International Banking Research Network. The interactions between monetary and macroprudential policies are shown to significantly alter cross-border bank flows across a wide range of countries, though the magnitudes differ appreciably across countries and instruments.

Covid congestion raises the spectre of inflation
FT View Jan 21, 2021
It is still unclear how much the pandemic has reduced economic capacity.

Unequal vaccine access will return to haunt the rich
David Pilling (FT) Jan 21, 2021
As developed countries race to roll out Covid-19 jabs, poorer nations fear they are missing out.

Crises facing Biden threaten to create vicious cycles
Mohamed El-Erian (FT) Jan 21, 2021
New US president must combine agile political manoeuvring with smart economic policy.

The brave new world of 2021
Homi Kharas (Brookings) Jan 21, 2021
Enter 2021. We will have our fill of diseases, uncertainties, and poverty in every country. We almost certainly need collaborative action to avoid traps on the path to sustainable development, but thankfully, we do not have to make all humans behave in the same way to achieve them.

The Brexit agreement: An economic guide for the perplexed
Jacob Funk Kirkegaard (PIIE) Jan 21, 2021
The last-minute Brexit deal at the end of December 2020 between the European Union and the UK government is misleadingly titled a Trade and Cooperation Agreement (TCA) governing their economic relationship. But the TCA's aim is not to deepen trade and commercial ties but to manage an economic divorce that will diminish economic output and efficiency. In this respect, the TCA is probably unique among trade agreements between advanced economies and in some ways akin to the breakup of Czechoslovakia in 1993.

Europe Will Regret Stealing London's Finance Business
Bloomberg View Jan 21, 2021
Negotiators should seek to keep trade as free as possible.

Why Erdogan Can't Resist Railing Against Interest Rates
Bobby Ghosh (Bloomberg View) Jan 21, 2021
Despite a long career of criticizing high rates, Turkey's president had been keeping mum about them. But he's picked up the torch again.

When the Fed Tapers, the Market Will Have a Tantrum
William C Dudley (Bloomberg View) Jan 21, 2021
The best the central bank can do is be prepared to limit the economic fallout.

Biden Has a Once-in-a-Century Chance to Fix Capitalism
Joe Nocera (Bloomberg View) Jan 21, 2021
The U.S. needs to reclaim the kind of economy that existed before Wall Street was the only thing that mattered. The pandemic has already started business down that path.

The trade and welfare benefits of deep trade agreements
Swati Dhingra, Rebecca Freeman, and Hanwei Huang (VoxEU) Jan 21, 2021
Deep trade agreements are widespread and have taken the world beyond tariff liberalisation in goods trade. As the importance of global supply chains and the services sector increased across the world, shallow tariff reductions gave way to deeper commitments that address non-tariff barriers and behind the border barriers to trade. By matching dissagregated trade data to the universe of deep trade agreements, this column examines their impact on trade in goods and services, and quantifies their welfare impacts. Welfare gains from the commitments involved in such agreements have played a crucial role in overall welfare gains since the conclusion of the Uruguay Round.

To Build Back Better, Biden Needs to Fix Trade
Chad P. Bown (FA) Jan 21, 2021
Trump has left a ticking time bomb at the WTO.

Italy's Mediterranean Belt and Road
Michaël Tanchum and Dimitar Bechev (FP) Jan 21, 2021
Taking a page from Beijing, Rome is positioning itself as the center of trade, energy, and transportation in Southern Europe and beyond.

China's currency heads into Biden era on front foot
Hudson Lockett (FT) Jan 22, 2021
Renminbi's future strength depends on cooling of US trade tensions and health of dollar.

Chinese purchases of US exports fall far behind trade deal pledge
Aime Williams and Justin Jacobs (FT) Jan 22, 2021
Beijing's likely failure to meet terms of 'phase one' agreement poses challenge to Biden.

Markets love the colour of Biden's money
Merryn Somerset Webb (FT) Jan 22, 2021
But the trillions of dollars of stimulus packages will surely result in inflation.

Rich Versus Poor, the Global Gap Is Narrowing
Ferdinando Giugliano (Bloomberg View) Jan 22, 2021
Many people worry that Covid has made the world a less equal place, but that hasn't been the case so far — at least at a global level.

Don't Bank On the Glut of Savings Being Spent
Gary Shilling (Bloomberg View) Jan 22, 2021
Consumers finally have a cash cushion that they will be hesitant to deplete as the pandemic lingers.

Insolvency and debt overhang following the COVID-19 outbreak
Lilas Demmou, Sara Calligaris, Guido Franco, Dennis Dlugosch, Müge Adalet McGowan, and Sahra Sakha (VoxEU) Jan 22, 2021
Many countries have now entered a second wave of the Covid crisis, forcing firms to deplete even further their cash and equity buffers and to raise new financing. This column investigates the likelihood of firms' insolvency and the potential implications of debt overhang following the outbreak. It foresees that around 7-9% of otherwise viable companies would become distressed, accompanied by an increase in firms' leverage ratio of about 6.7 to 8 percentage points. In turn, the latter would decrease investments of the median firm by approximately 2 percentage points. The column also outlines some policy options to flatten the curve of crisis-related insolvencies through recapitalisation and to establish efficient insolvency procedures.

Measuring real activity in real time
Francis Diebold (VoxEU) Jan 22, 2021
Measuring real economic activity in real time is crucial for the design and implementation of macroeconomic policies. This column documents the path of the Aruoba-Diebold-Scotti index, which provides a real-time assessment of US business conditions before official data like GDP are officially released, during the pandemic recession entry and relates it to the progress of COVID-19. The index proves a good indicator of the path of real time activity and a strong negative correlation to the rate of new COVID cases.

The dangers of emerging-market competition: Evidence from Rwanda's coffee supply chain
Rocco Macchiavello and Ameet Morjaria (VoxDev) Jan 22, 2021
Increased competition in agriculture markets sustained by informal contracts can diminish performance and value for all players in the supply chain.

Wall Street eyes China despite continued tensions with US
Michael Mackenzie (FT) Jan 23, 2021
Opportunities for investors seen despite economic and technological rivalry.

If Poor Countries Go Unvaccinated, a Study Says, Rich Ones Will Pay
Peter S. Goodman (NYT) Jan 23, 2021
A failure to distribute the Covid-19 vaccine in poor nations will worsen economic damage, with half the costs borne by wealthy countries, new research shows.

U.S. Doesn't Need Europe's Help in China Trade War
Noah Smith (Bloomberg View) Jan 23, 2021
Asian countries such as Vietnam and Indonesia will make better allies in the battle for economic dominance.

Post-Brexit UK will need all its growth engines firing
Martin Wolf (FT) Jan 24, 2021
The development of city-regions should not be at London's expense.

Family businesses are welcome winners in the pandemic
Pilita Clark (FT) Jan 24, 2021
In a crisis, community-minded companies represent a kinder face of capitalism.

Europe's investment initiative with China
Shiro Armstrong and Evgeniia Shannon (EAF) Jan 24, 2021
The Comprehensive Agreement on Investment (CAI) between China and the European Union is a positive development and makes clear that Europe will not sit quietly on the sidelines without pursuing its own strategic interests in the tussle between China and the United States.

It's Biden's Economy Now
Brooke Sample (Bloomberg View) Jan 24, 2021
We're done with the pomp and circumstance, subdued as it was. There's an economy to rescue.

Fed's High-Wire Act Becomes Trickier
Mohamed Aly El-Erian (Bloomberg View) Jan 24, 2021
The central bank must balance a dimmer short-term outlook with a brighter longer-term one fueled by coming fiscal stimulus.

China's Billionaires Aren't As Rich As They Look
Shuli Ren and Howard Chua-Eoan (Bloomberg View) Jan 24, 2021
Is Zhong Shanshan really a bigger tycoon than Warren Buffett? On paper perhaps but the picture is different once liquidity is calculated.

Regulate Cryptocurrencies? Not Yet
Tyler Cowen (Bloomberg View) Jan 24, 2021
Janet Yellen should give digital currencies the time they need to innovate and evolve.

Pandemic pushes Brazil's finances to the brink
FT View Jan 25, 2021
Looming fiscal crisis should be an opportunity to tackle structural problems.

Joe Biden and the 'great rebalancing'
Rana Foroohar (FT) Jan 25, 2021
The share of national income paid to workers may finally rise.

Is value investing back from the dead?
Robin Wigglesworth (FT) Jan 25, 2021
Value stock investor Ted Aronson could be this cycle's Tony Dye.

One way to reform the Chapter 11 bankruptcy process
Sujeet Indap (FT) Jan 25, 2021
Hertz and AMC experiences highlight scope for change in US system.

How Options Trading Could Be Fueling a Stock Market Bubble
Matt Phillips (NYT) Jan 25, 2021
A swell of individual investors are betting that stocks will go up. That enthusiasm is having a growing influence over the regular stock market itself.

Can China's long property boom hold?
Economist Jan 25, 2021
The country is building five times as many houses as America and Europe combined.

Sound Banks for Healthy Economies: A CGD-IDB Report Four Months Later
Alejandro Fiorito (CGD) Jan 25, 2021
Financial systems in the region are sound but threatened.

Deep-sixing poverty in China
Indermit Gill (Brookings) Jan 25, 2021
Making poverty political.

Biden Needs an Innovation Agenda
Bloomberg View Jan 25, 2021
America's traditional leadership in technology is in danger. The government can help.

The Dollar's Crash Is Only Just Beginning
Stephen S Roach (Bloomberg View) Jan 25, 2021
America's net domestic savings rate has fallen by the most on record, making the economy even more reliant on foreign money.

M&A Binge Risks a Painful Debt Hangover
Tara Lachapelle and Brian Chappatta (Bloomberg View) Jan 25, 2021
With borrowing costs low and the Federal Reserve supporting debt markets, avoiding leverage is seen as a fool's game. But a reckoning is coming.

The GOP's Fake Budget Hawks
Jeffrey Frankel (Project Syndicate) Jan 25, 2021
With Donald Trump having departed the White House, many Republicans are suddenly rediscovering the dangers of budget deficits, after four years of conspicuous indifference. This was entirely predictable: for the last 45 years, the GOP has done the same thing every time a Democrat has won the presidency.

Does Pandemic Debt Relief Work?
Anne O. Krueger (Project Syndicate) Jan 25, 2021
Rather than pursue more debt relief to help the developing world weather the COVID-19 crisis, rich countries should provide pandemic-related necessities directly. Debt relief is so imprecise a mechanism that it is as likely to benefit private-sector creditors as it is to help the poor.

England's Lockdown Lessons
Mohamed A. El-Erian (Project Syndicate) Jan 25, 2021
Although some remain inclined to point the finger at the UK government's missteps in tackling the COVID-19 pandemic, the explanation for its evolving approach is more complex. It also holds important lessons for managing future crises.

Coronavirus and banking: Evaluating policy options for avoiding a financial crisis
Arnoud Boot, Elena Carletti, Hans-Helmut Kotz, Jan Pieter Krahnen, Loriana Pelizzon, and Marti Subrahmanyam (VoxEU) Jan 25, 2021
Covid-19 has placed renewed pressure on the European banking sector as firms and households struggle to meet the costs imposed by the pandemic. This column provides a comparative assessment of the various policy responses to strengthen banks in light of the crisis. While the authors do not make a specific final recommendation, they review the different options suggested within current research and provide a criteria-based framework for policymakers to guide them in their decision making.

Retail has a place on the high street of the future
FT View Jan 26, 2021
Fixing business rates is key to helping the industry survive.

Retail investors rush to find the next stock market unicorn
James Bianco (FT) Jan 26, 2021
Traditional valuation benchmarks such as profits have been overlooked as speculation intensifies.

Retail investors rush to find the next stock market unicorn
James Bianco (FT) Jan 26, 2021
Traditional valuation benchmarks such as profits have been overlooked as speculation intensifies.

Xi reads multilateral riot act to virtual Davos
Pepe Escobar (AT) Jan 26, 2021
The virtual Davos Agenda is finally on, from Monday to Friday this week, promoted by the World Economic Forum. No, this is not the Great Reset. At least not yet.

Did the Brexit deal fulfill Boris Johnson's political agenda?
Jacob Funk Kirkegaard (PIIE) Jan 26, 2021
For backers of the British exit from the European Union, the overriding political objective was to reestablish UK "sovereignty" over its own affairs, particularly in supposedly onerous regulations from Brussels along with the writ of the much-reviled European Court of Justice. As previously discussed, the Brexit deal at the end of 2020, known as the EU-UK Trade and Cooperation Agreement (TCA), may have at least symbolically delivered something resembling that goal but at the cost of lost economic growth and efficiency and restricted immigration and mobility of UK citizens to continental Europe.

A Race Between Vaccines and the Virus as Recoveries Diverge
Gita Gopinath (IMF) Jan 26, 2021
In just three months since we released our last forecast in October, recorded COVID-19 deaths have doubled to over 2 million, as new waves have lifted infections past previous peaks in many countries. In these same three months, multiple vaccines have seen unexpectedly strong success and some countries have started ambitious vaccination drives. Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens. There remains tremendous uncertainty and prospects vary greatly across countries.

Klaus Schwab and the World Economic Forum Run Away from Their Past
Stephan Richter and Uwe Bott (Globalist) Jan 26, 2021
We are no fans of neo-liberalism. But look who is now suddenly disavowing it.

India's Modi Should Hold Firm on Farming
Mihir Sharma (Bloomberg View) Jan 26, 2021
Agricultural reforms have been badly mishandled but they're too important to abandon now.

Even Swiss Bankers Are in Bubble Territory
Elisa Martinuzzi (Bloomberg View) Jan 26, 2021
UBS had a stellar 2020 but the asset mania that's made the rich even richer can't last forever.

How Long Will Mainland Money Love the Hang Seng?
Shuli Ren (Bloomberg View) Jan 26, 2021
Hong Kong has seen such investment sweep in and out before. Two factors are in play now: sector allocation and day traders flocking to mutual funds.

A Global Pandemic Alarm Bell
Jean Pisani-Ferry (Project Syndicate) Jan 26, 2021
The appearance of mutant versions of the coronavirus in the United Kingdom, South Africa, and Brazil has given the world no choice but to design and implement a comprehensive global strategy. So, what's stopping that from happening?

Will COVID Accelerate Productivity Growth?
Dalia Marin (Project Syndicate) Jan 26, 2021
The COVID-19 pandemic has prompted an increasing number of rich-country firms to reduce their reliance on global supply chains and invest more in robots at home. But it is probably too soon to tell whether this switch will increase productivity growth in advanced economies.

The Fed Must Step Up Again
Willem H. Buiter (Project Syndicate) Jan 26, 2021
Extraordinary times call for extraordinary measures, which in the context of the COVID-19 pandemic means additional fiscal stimulus of the kind promised by US President Joe Biden. To alleviate sustainability fears, the Federal Reserve must prepare to expand its balance sheet and monetize the deficit.

The Promise and Peril of the Bio-Revolution
Matthias Evers and Michael Chui (Project Syndicate) Jan 26, 2021
Many of today's biological innovations are complex, and we need to understand them fully to gauge their impact on our lives and societies. Only by working together can governments, scientists, businesses, and the public unleash the power of biology for good while effectively managing the risks.

Brexit uncertainty and trade disintegration in Europe and beyond
Alejandro Graziano, Kyle Handley, and Nuno Limão (VoxEU) Jan 26, 2021
Following the Brexit referendum more than five years ago, firms in the UK and also those in the EU and other countries operated in an environment with increased uncertainty over future trade policies. This column presents evidence of the detrimental effects of this uncertainty on trade in the UK before any changes to trade policy had taken place. Studying the period after the Conservative Party won the general election in May 2015 until just after the Brexit referendum in June 2016, it finds that an increasing probability of Brexit significantly reduced UK export values and product entry, while increasing product exit.

The dynamic impact of exporting on firm R&D investment
Florin Maican, Matilda Orth, Mark Roberts, and Van Anh Vuong (VoxEU) Jan 26, 2021
Firms' incentives to undertake innovation investments can be affected by their activities in domestic and international markets. This column uses a structural framework to estimate the returns to innovation investments and analyse the impact of trade on those returns. It shows that a firm's R&D investments raise its future productivity in both domestic and export markets, with a larger impact in the export market. Furthermore, it shows that public efforts to stimulate innovation investments can be offset by trade restrictions limiting access to world markets.

International Economic Outlook: January 2021
Nick Bennenbroek, Brendan McKenna, and Jen Licis (WF) Jan 26, 2021
Given the renewed and broad spread of COVID across Europe, and limited near-term likelihood of an additional monetary or fiscal response, we now see some weakness in the euro and the pound in the near term, and only a modest recovery over time. We have also become somewhat less constructive on the Swedish krona. In contrast, we remain relatively positive on the prospects for the Australian, Canadian and New Zealand dollars. Among the emerging currencies, we have not made any significant adjustments to our outlook this month, although we have become somewhat less negative on the prospects for the Indian rupee over time. In addition, we have turned more bearish on the outlook for the Polish zloty amid potential more accommodative monetary policy and persistent FX intervention from the central bank.

Vaccine protectionism by the EU will backfire
FT View Jan 27, 2021
More transparency on pharmaceutical deals is needed but an export ban is not.

The blunt force of China's mobilisation campaigns
Kristen Looney (FT) Jan 27, 2021
Beijing relies on the extraordinary deployment of people and resources to achieve some of its aims.

Oaktree's setback in India raises doubts over new bankruptcy code
Stephanie Findlay (FT) Jan 27, 2021
Test case auction of shadow lender DHFL draws criticism about revamped process.

Learning from market bubbles past
Robert Buckland (FT) Jan 27, 2021
Equity rallies can run and run before a reckoning, killing careers of sceptical investors.

Biden won't quit Trump's trade war on China
Nile Bowie (AT) Jan 27, 2021
With US-China relations at a historic low, President Joe Biden's new administration is expected to keep the pressure on Beijing as it sets a new multilateral course in a rivalry that erupted into debilitating tech and trade wars during Donald Trump's tenure.

Financial Perils in Check for Now, Eyes Turn to Risk of Market Correction
Tobias Adrian and Fabio Natalucci (IMF) Jan 27, 2021
While there is for now no alternative to continued monetary policy support, there are legitimate concerns around excessive risk-taking and market exuberance.

Yellen should act quickly to assist financially stricken countries
Maurice Obstfeld and Edwin M. Truman (PIIE) Jan 27, 2021
The global economic meltdown caused by the COVID-19 pandemic has plunged many countries into potential external financial crises through no fault of their own. The Trump administration prevented the International Monetary Fund (IMF) from deploying one of its key tools—called special drawing rights (SDR)—to help countries in distress. Fortunately, Treasury Secretary Janet Yellen can act quickly to remove this blockade.

Asia Market Outlook 2021: Attractive Opportunities As Economies Rebound
Stephen Chang, Carol Liao, and Isaac Meng (PIMCO) Jan 27, 2021
We are constructive on the macroeconomic picture in Asia as the global economy gradually recovers.

Is GameStop-Style Risk-Taking a Prelude to Instability?
Mohamed Aly El-Erian (Bloomberg View) Jan 27, 2021
The last thing the economy needs is the dual possibility of large-scale financial volatility and market dysfunction.

Luring Companies Back from China Will Be a Long Fight
Noah Smith (Bloomberg View) Jan 27, 2021
Vast forces -- including geography -- are pushing businesses to China and making reshoring an uphill battle for the U.S. But surrender is not an option.

Biden's Grand Opening
James K. Galbraith (Project Syndicate) Jan 27, 2021
With an economic rescue plan that is both ambitious and well targeted, US President Joe Biden and his team have demonstrated a clear understanding of the scale and range of action that the current situation requires. A broader reconstruction plan can and must come later; but crisis management remains the order of the day.

An Africa Roadmap for Biden
Célestin Monga (Project Syndicate) Jan 27, 2021
For years, the US-Africa relationship has fallen short of what it could be, owing to misaligned priorities and a mix of neglect and contempt on the part of the United States. But the door is open for the US to improve its engagement with the continent; President Joe Biden's administration need only walk through it.

The Impact of Rural-Urban Migration on House Prices in China
Carlos Garriga, Aaron Hedlund, Yang Tang, and Ping Wang (VoxEU) Jan 27, 2021
Rural-urban migration is an integral part of the dynamic process of structural transformation. The interplay between population inflows and house prices depends on various geographical differences in the economic and policy climate. In the case of China, we highlight particularly the roles played by location-specific hukou restrictions and local land supply.

When flexible exchange rates don't insulate economies from external shocks
Giancarlo Corsetti, Keith Kuester, Gernot Müller, and Sebastian Schmidt (VoxEU) Jan 27, 2021
Recent evidence suggests flexible exchange rates do not always insulate economies from external shocks. This column provides novel evidence on how shocks that originate in the euro area spill over to its neighbour countries. In response to euro area shocks economic activity in the neighbour countries contracts as much as in the euro area – not only in countries that peg their currency to the euro, but also in those with a flexible exchange rate. It shows that a standard open economy model predicts this lack of insulation for floating exchange rates, provided the central bank targets CPI inflation.

Scenario analysis, contingency planning, and central bank communications
Michael Bordo, Andrew Levin, Mickey Levy, and Arunima Sinha (VoxEU) Jan 27, 2021
COVID-19 has led to an unprecedented level of economic uncertainty, which remains elevated even to this day. Given the substantial dispersion in forecasts, this column underscores the rationale for central banks to incorporate scenario analysis into their policy deliberations and communications. To show the practicality of this approach, it describes three illustrative scenarios formulated last spring to span the range of plausible outcomes for the US economy at that time.

Emerging markets borrowers sell debt at near-record rate
Tommy Stubbington and Colby Smith (FT) Jan 28, 2021
Issuance 'tsunami' comes as governments and companies seek to lock-in low interest rates.

Contrarians are valuable, even when they're wrong
Jemima Kelly (FT) Jan 28, 2021
But not all are equal. Vexingly, some lockdown sceptics are giving the approach a bad name.

The EU must lift limits on Covid-19 aid to business
Dan Joergensen (FT) Jan 28, 2021
Danish, Austrian and Czech ministers say state aid caps are harming efforts to preserve jobs.

Murphy's law may yet apply to Joe Biden's recovery plan
Megan Greene (FT) Jan 28, 2021
Vaccine rollout, a release of pent-up demand and a resulting market rally could all still go wrong.

The Economy Keeps Growing
WSJ Jan 28, 2021
Biden inherits a decent recovery that should surge as the pandemic eases.

Need Discount Debts? Try 50-Year Bonds
Jon Hartley (WSJ) Jan 28, 2021
Long-term Treasurys could give Biden the room to spend big.

A butterfly flaps its wings in Beijing and the stock market crashes
David P. Goldman (AT) Jan 28, 2021
A 3% plunge in the S&P 500 isn't frequent. We have had just 24 trading days this bad during the past seven years. It's noteworthy that it occurred on a day when the US Federal Reserve took pains to declare that it would support the market with security purchases for the indefinite future, and on which no important data was released.

The Dollar's Reserve Currency Status Won't Last Forever
Doug French (Mises Wire) Jan 28, 2021
Americans have benefited mightily by holding and trading with the world's reserve currency, though most people haven't given it a thought. No one remembers when the pound sterling held this distinction a hundred years ago.

What the US GDP data tell us about 2020
Jason Furman and Wilson Powell III (PIIE) Jan 28, 2021
The US economy contracted 3.5 percent on an annual basis in 2020, the largest contraction for any full year since the demobilization from World War II in 1946. The large decline in annual GDP reflects the very low amount of economic activity that took place in the second quarter. With the relatively rapid rebound in the second half of the year, the economy was down 2.5 percent from the fourth quarter of 2019 to the fourth quarter of 2020, among the worst four-quarter contractions in the postwar period but somewhat smaller than the worst period in the global financial crisis.

Government Support Is Vital as Countries Race to Vaccinate
Vitor Gaspar, Raphael Lam, Paolo Mauro, and Mehdi Raissi (IMF) Jan 28, 2021
Most countries will need to do more with less, considering the increasingly tight budget constraints.

Arab Spring Showed Autocracy is Anything But Stable
Timothy E Kaldas (Bloomberg View) Jan 28, 2021
Ten years later, authoritarian rulers in the region remain vulnerable to people power.

Hey, Energy, We're Kind Of Over You
Justin Fox (Bloomberg View) Jan 28, 2021
It's not just the pandemic. Americans' demand for power has been sliding for decades.

India Must Spend, But Can't Ignore Taper Tantrum
Andy Mukherjee (Bloomberg View) Jan 28, 2021
The emerging-markets tailspin unleashed by the Fed in 2013 should figure into this year's budget.

The Problem with the COVID Convergence
Pinelopi Koujianou Goldberg (Project Syndicate) Jan 28, 2021
One of the most surprising global trends to appear during the COVID-19 pandemic is a reduction of inequality across countries, owing to the disproportionate effects of the virus on richer countries. Unfortunately, there is little to celebrate when convergence reflects losses at the top instead of gains at the bottom.

Monetary policy and productivity: A new transmission channel
David Baqaee, Emmanuel Farhi, and Kunal Sangani (VoxEU) Jan 28, 2021
Monetary policy has 'supply-side' effects – in addition to boosting output by increasing employment, a monetary easing boosts output by increasing aggregate productivity. The link between monetary policy and productivity is absent in standard macro models, but arises if one takes into account realistic firm heterogeneity. This column discusses the supply-side transmission channel and the role it plays in flattening the Phillips curve.

Part III: Supply Constraints Drive Inflation Higher
Jay Bryson and Sarah House (WF Econ Group) Jan 28, 2021
In the third installment in our series of economic risks, we highlight inflation risks emanating from the supplyside of the economy. Supply-side factors likely will contribute to upward pressure on consumer prices this year. However, we believe that many of these factors will abate once the pandemic is in the rearview mirror, which should prevent a significant rise in inflation on an ongoing basis.

The pandemic will not end unless every country gets the vaccine
Fareed Zakaria (WP) Jan 29, 2021
It is in everyone's self-interest to help distribute the vaccine to poor countries.

China is exploiting U.S. capital markets and workers. Here's what Biden should do.
Marco Rubio (WP) Jan 29, 2021
Biden must stand with U.S. workers and national security, not Wall Street and the CCP.

Strong euro risks turning EU Japanese
William Pesek (AT) Jan 29, 2021
On any list of economies that risk "turning Japanese," the Eurozone often places near the very top and deservedly so.

Rising SOE defaults alarm investors but could benefit the Chinese economy
Tianlei Huang (PIIE) Jan 29, 2021
China's money-losing but politically powerful state-owned enterprises (SOEs) have long been identified as a drag on the Chinese economy. The latest signal of their troubles is the dramatic rise last year in the number of SOE defaults in China's onshore bond market. The number of defaulted enterprises included several large SOEs, among them Yongcheng Coal and Electricity and Tsinghua Unigroup. News of these defaults has shocked many investors who long believed distressed state firms would be bailed out by the Chinese government.

Boomers Are Going to Drive a Silver Surge in the Economy
Andrea Felsted (Bloomberg View) Jan 29, 2021
Companies tend to neglect older generations, focusing instead on millennials and Gen Z. Such a strategy will be costly this year.

The Booming Market Strengthens the Case for Stimulus
Karl W Smith (Bloomberg View) Jan 29, 2021
No, the market is not the economy, but it's sending important signals.

Vaccine Trade Wars Have Just One Winner: Covid-19
Lionel Laurent (Bloomberg View) Jan 29, 2021
Europe's export curbs on life-saving medicines are a slippery slope. We need more global supply, not less.

Prevent the Next Food Crisis Now
Mark Lowcock and Axel van Trotsenburg (Project Syndicate) Jan 29, 2021
The number of chronically hungry people increased by an estimated 130 million last year, to more than 800 million – about eight times the number of COVID-19 cases to date. The international community needs to adopt an anticipatory approach to the growing hunger pandemic, by acting before food emergencies turn into full-blown famines.

The effects of 'global systemically important bank' designation on corporate lending
Hans Degryse, Mike Mariathasan, and Thi Hien Tang (VoxEU) Jan 29, 2021
Frequent bailouts during the Global Crisis showed that governments cannot credibly commit not to support large financial institutions. This inability leads to moral hazard and motivated the Financial Stability Board's framework for 'global systemically important banks'. This column explores the net effects of this framework on the real economy, focusing on changes in corporate lending and the availability of credit as the basis to evaluate whether the framework is an effective way in which to reduce moral hazard and promote robust financial markets.

Report: Corruption in U.S. at Worst Levels in Almost a Decade
Cailey Griffin and Amy Mackinnon (FP) Jan 28, 2021
Corruption runs rampant in most countries, and that has big impacts on things like health care.

Biden Should Dump the Trump Playbook on Trade With China
Edward Alden (FP) Jan 28, 2021
Washington should get back in the trade game and use it as leverage against Beijing.

The Folly of Hoarding Knowledge in the COVID-19 Age
Tahir Amin (FA) Jan 29, 2021
Let vaccine producers in poor countries help end the pandemic.

Global co-operation is needed to beat the virus
FT View Jan 30, 2021
Vaccine nationalism will make it harder to revive the world economy.

Short sellers face the rage of an army of small traders
Michael Mackenzie (FT) Jan 30, 2021
Hedge funds have been attacked despite helping to identify overvalued and struggling companies.

Europe needs quicker vaccinations and more stimulus
Economist Jan 30, 2021
Vaccine protectionism is not the answer.

Why you should ignore the siren call of market timing
Economist Jan 30, 2021
Few manage to profitably outwit the herd.

The Three Biggest Lessons of the Coronavirus Economy
John Cassidy (New Yorker) Jan 30, 2021
Nearly a year into the pandemic, solving the economic crisis means defeating the virus.

India's reversal of markets-based policies will hinder recovery
Urjit Patel (FT) Jan 31, 2021
Higher tariffs and looser bankruptcy rules will not help the post-Covid economy.

Europe's digital economy needs analogue wings to fly
Martin Sandbu (FT) Jan 31, 2021
Shallow and fragmented capital markets are holding EU companies back.

Saudi Arabia's Oil Fears Look Well Founded
Julian Lee (Bloomberg View) Jan 31, 2021
The recovery in oil demand is taking a pause.

How financial markets shape social values and political views
Yotam Margalit and Moses Shayo (VoxEU) Jan 31, 2021
The impact of markets on participants' values and political preferences has long been a contested issue. This column uses a large field experiment to evaluate the effects of engagement in financial markets. Participants from a national sample in England were randomly assigned substantial sums they could invest in stocks or non-financial assets over a six-week period. Results show that investment in stocks led to a more right-leaning outlook on society and economics, including issues like personal responsibility, merit, and the role of luck in economic success. It also increased support for market-friendly policies and less regulation.