News & Commentary:

Articles/Commentary

Brexit is no way out of Europe in crisis
Gideon Rachman (FT) Feb 1, 2016
In its own interests, Britain must contribute to stability on the European continent.

China’s Economic Hinge Point
Andy Kessler (WSJ) Feb 1, 2016
Look beyond the unsettling news out of Beijing lately and behold the stirring of the Chinese consumer.

Stocks vs. the Economy: Which Ruins Which?
John Carney (WSJ) Feb 1, 2016
Don’t confuse the market for the economy. Markets have overshot fundamentals. There are no signs of contagion into the real economy.

Are US Stocks Overvalued?
Olivier Blanchard and Joseph E. Gagnon (PIIE) Feb 1, 2016
US stock prices rose for seven years in a row through late last year. During that time, the US economy repeatedly underperformed expectations. Popular indicators of stock valuation are above historical norms, even after the declines of the past few weeks.

Bank of Japan Rate Cut Leaves Markets Thinking of More
Tamim Bayoumi (PIIE) Feb 1, 2016
The Bank of Japan (BoJ) surprised markets overnight by announcing it would charge negative interest rates on a proportion of new excess reserves deposited by banks. The object is to reduce the incentive for banks to park funds at the BoJ, since they would now be paying the central bank to hold their funds, thereby boosting bank lending to the economy and supporting inflation and growth.

The Grexit that Could Actually Happen
Jacob Funk Kirkegaard (PIIE) Feb 1, 2016
For years the euro area has labored to successfully prevent a financial exit by Greece from the common currency, a fear commonly known as "Grexit." Following the September 2015 elections, Greece now has a parliament that is overwhelmingly pro-euro and in compliance with the program imposed by the European Commission, the European Central Bank, and the International Monetary Fund (IMF), known as the Troika.

How the Blockchain and Gold Can Work Together
Thorsten Polleit (Mises Daily) Feb 1, 2016
A look into monetary history shows that people, when given freedom of choice, opted for precious metals as money.

Household Debt: Concentrated Risk?
Neal Hudson (Pieria) Feb 1, 2016
Should we be worried about the current levels of household debt?

Structural Policies and Distributional Consequences
Christian Kastrop (OECD Insights) Feb 1, 2016
In a majority of OECD countries, growth over the past three decades has been associated with growing disparities in household income. This suggests that some of the forces driving GDP have also fuelled inequalities. As a result, gains in household disposable incomes generally have not matched those in GDP per capita and the gap has been particularly large among poorer households and the lower-middle class. An important policy question is whether some of the policy changes driving GDP may in addition play a “hidden” role on inequality. New empirical evidence produced by the OECD on the effects of structural policies on households’ incomes across the distribution scale has identified potential policy tradeoffs and complementarities between efficiency and equity.

Central Banks Can't Do Much More
Clive Crook (Bloomberg View) Feb 1, 2016
Surprise stimulus programs can only work so many times.

Market Swings Expose Central Banks' Influence and Limits
Mohamed Aly El-Erian (Bloomberg View) Feb 1, 2016
The Fed was insufficiently dovish, sending stocks on a wild ride.

Japan's Experiment With Rates of Less Than Zero
Noah Smith (Bloomberg View) Feb 1, 2016
It makes sense now to try negative rates.

The Causes and Consequences of Brexit
Ana Palacio (Project Syndicate) Feb 1, 2016
It seems increasingly likely that the upcoming European Council meeting will produce a deal on the conditions of the UK’s EU membership – a deal that will be put before British voters in a referendum, possibly this summer. The referendum is the main threat, because voters rarely focus on the issue at hand when making such decisions.

Welcome to the Twenty-First Century
Joschka Fischer (Project Syndicate) Feb 1, 2016
The international order forged in the fires of the twentieth century seems to be disappearing. For Europe, in particular, will the decline of Pax Americana, which has served for seven decades as a guarantor of the continent’s internal liberal order, unavoidably lead to crisis, if not conflict?

Is the TPP Good for America?
Simon Johnson (Project Syndicate) Feb 1, 2016
The Trans-Pacific Partnership, the far-reaching trade and investment agreement that the US has negotiated with 11 other countries, is now up for debate ahead of a congressional vote on whether to approve the deal. So, what does the TPP mean for US voters now and in the future?

Financial structure and growth revisited
Sam Langfield and Marco Pagano (VoxEU) Feb 1, 2016
Why is growth in Europe so low? Among the contributing factors, this column highlights the role of financial structure. Intermediation in Europe is heavily bank-based, and the authors' novel empirical findings indicate that such a structure exerts a negative effect on long-run economic growth and exacerbates its response to sharp drops in real estate prices. The findings support policymakers’ efforts to rebalance financial structure towards securities markets.

Identifying prisoners of the middle-income trap
Longfeng Ye and Peter E. Robertson (VoxEU) Feb 1, 2016
The World Bank has identified 37 countries as being in a ‘middle-income trap’, but few formal tests of the middle-income trap hypothesis exist. This column presents a new test based on a more nuanced observation that incorporates information on a country’s long-run growth path. Only seven out of 46 middle-income countries are found to be potentially ‘trapped’. Some countries that are usually considered to be trapped may just be growing very slowly.

The $3 Trillion Question
Patrick Chovanec (FP) Feb 1, 2016
Analysts and 'experts' say China needs to devalue its currency. That's a terrible idea.

The West Is Traveling the Road to Economic Ruin
Paul Craig Roberts (GlobalResearch) Feb 1, 2016
Michael Hudson is the best economist in the world. Indeed, I could almost say that he is the only economist in the world. Almost all of the rest are neoliberals, who are not economists but shills for financial interests.

Behind China's woes, myth of competent autocrats
Minxin Pei (Nikkei Asia Review) Feb 1, 2016
Can talented policymakers ever rise to the top in today's China?

Is Currency Devaluation Overrated?
Various (TIE) Feb 1, 2016
A rip-roaring global debate is underway over whether currency devaluations are overrated as a means of enhancing national prosperity.

Cameron’s flimsy deal with the EU
Gideon Rachman (FT) Feb 2, 2016
Renegotiation does not affect the Brexit case one way or the other.

The World Bank Is Turning 70. Do We Still Need It?
Michael Clemens (CGD) Feb 2, 2016
The World Bank opened in 1946 to finance a global economy just emerging from colonization and warfare and just embarking on the Cold War. Today the global development landscape is radically different, and capital circles the globe at volumes unthinkable back then. Why keep the World Bank now?

A New Fiscal Policy for Europe
Angel Ubide (PIIE) Feb 2, 2016
Heading into another discouraging year of weak growth and inflation and rising populism, the euro area needs a dramatic change of course—not only in its current policies but also in the rules holding it back. The European Central Bank (ECB) sees the recovery as "fragile" and with downside risks, projecting the unemployment rate to remain above 10 percent, and inflation below 2 percent, until at least 2018.

The economic consequences of Schengen
Guntram B. Wolff (Bruegel) Feb 2, 2016
First, about 1.7 million people in the Schengen area earn their salary in a different country to where they live. These people would be directly affected by the reintroduction of border controls. Waiting times on the border would make their commute more difficult and increase economic costs.

Closing Africa’s Digital Gap
Bloomberg View Feb 2, 2016
Good governance is essential to getting more of the continent online.

Don't Let Greek Pensions Threaten the Euro
Bloomberg View Feb 2, 2016
European creditors can prevent a new political crisis in Athens.

Dark Pools Turned Out to Be Really Murky
Matthew S Levine (Bloomberg View) Feb 2, 2016
Figuring out who's a "predatory" trader isn't easy.

The End of the New Normal?
Mohamed A. El-Erian (Project Syndicate) Feb 2, 2016
Just when the notion that Western economies are settling into a “new normal” of low growth gained mainstream acceptance, doubts about its continued relevance have begun to emerge. Instead, the world may be headed toward an economic and financial crossroads, with the direction taken depending on key policy decisions.

The Politics of Young and Old
Jean Pisani-Ferry (Project Syndicate) Feb 2, 2016
If one considers the main challenges facing the world today – including climate change, pensions, public debt, and the labor market – a grim conclusion emerges: It is much worse to be young today than it was a quarter-century ago. And the invisibility of this change is bad for the young, for democracy, and for social justice.

The Great Escape from China
Kenneth Rogoff (Project Syndicate) Feb 2, 2016
It might seem odd that a country running a $600 billion trade surplus in 2015 should be worried about currency weakness. But a combination of factors, including slowing economic growth and a gradual relaxation of restrictions on investing abroad, has unleashed a torrent of capital outflows.

Messy aftermath of the Fed’s mistake
Danielle DiMartino Booth (FT) Feb 3, 2016
Few dispute that an opportunity to raise rates was missed in 2014.

Catastrophe is close for Venezuela
Ricardo Hausmann (FT) Feb 3, 2016
A disorderly default on an Argentine scale is almost inevitable.

EU: Sound Deal for Cameron?
Denis MacShane (Globalist) Feb 3, 2016
Brussels delivers some of what Cameron wants. But is it enough to defeat Brexit?

Toxic Loans Around the World Weigh on Global Growth
Peter Eavis (NYT) Feb 3, 2016
Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but the threat appears to be rising, and China is the biggest source of worry.

Europe’s Necessary European
Peter Sutherland (Project Syndicate) Feb 3, 2016
German Chancellor Angela Merkel stands in the tradition of Walter Hallstein, the first president of the European Community, who spoke of a Europe “without military divisions relying on the rule of law.” When she argues that EU governments' response to the refugee crisis threatens Europe, it is Hallstein's vision that she has in mind.

The Death Throes of Oil
Harold James (Project Syndicate) Feb 3, 2016
The price of oil, often used as a sort of thermometer to measure the health of the world economy, is also a barometer, warning of approaching geopolitical storms. And the security challenges implied by falling oil prices are likely to be more significant than the economic risks.

Clubs and the WTO post-Nairobi
Bernard Hoekman and Petros C. Mavroidis (VoxEU) Feb 3, 2016
The 2015 Nairobi WTO Ministerial unshackled governments from the deadlocked Doha Development Agenda and opened the door for new issues and new approaches. The Ministerial Declaration calls on new initiatives to be agreed by consensus. This column argues that WTO procedures permit ‘clubs’ of countries to agree on additional policy disciplines if the benefits extend on a non-discriminatory basis to all WTO members. Consensus is not needed for such clubs.

How Saudi Arabia’s grip on oil prices could bring Russia to its knees
James Henderson (The Conversation) Feb 3, 2016
Only Saudi Arabia appears firm in its resolve to maintain production and brutally test the economic robustness of its major competitors.

Admit it, Europe needs Britain
Philip Stephens (FT) Feb 4, 2016
To suggest that an ‘out’ vote would see Eurosceptics rise up elsewhere is probably an exaggeration.

Prepare for the next recession
Martin Wolf (FT) Feb 4, 2016
It is crucial to recognise that something more unconventional might have to be done.

The Fed’s Mismeasure of Inflation
Robert F. Stauffer (WSJ) Feb 4, 2016
The 2% target rate has been reached in services, but monetary policy will do little to raise goods prices.

Oil: From boom to bailout?
Shawn Donnan (FT) Feb 4, 2016
Cheaper crude means many developing countries will take longer to catch up with advanced economies.

Negative creep
Economist Feb 4, 2016
The negative-rates club is growing. But there is a limit to how low rates can go.

EU, US Clinch Political Deal in "Safe Harbour" Talks
Bridges, Volume 20, Number 4 Feb 4, 2016
Officials from the EU and the US announced that they had concluded a political agreement on a "Privacy Shield" for trans-Atlantic data transfers, days after having missed a 31 January target date for reaching a solution.

Eastern Europe: Freedoms under Pressure
Simeon Djankov and Jan Zilinsky (PIIE) Feb 4, 2016
Poland is the latest Eastern European country to veer away from the rule of law-and the core of Europe. The European Union has been too busy to take sufficient notice of the new Polish government's proposed legislation to severely curb media freedom.

The GDP doesn’t tell the whole story about economic growth
Jeffrey D. Sachs (Boston Globe) Feb 4, 2016
The big mistake of “secular stagnationists” is to treat the slowdown of US growth as inevitable, a consequence of the drying up of technological opportunities for future economic improvement, rather than the fact that the United States has stopped investing adequately in the future.

PiS-sing Away Poland’s Future?
Stephan Richter (Globalist) Feb 4, 2016
Kaczynski’s insistence to look backward is a disservice to a great country that has come a long way.

Why Treasury Hides Its Saudi Investor
Stephen Mihm (Bloomberg View) Feb 4, 2016
A legacy of the oil crisis raises new concerns.

More Bad News in the Shipping Data
Mark Gilbert (Bloomberg View) Feb 4, 2016
A closer look at cargo suggests a recession is ahead.

Rebuilding the Muslim House of Wisdom
Jim Al-Khalili (Project Syndicate) Feb 4, 2016
Although governments across the Muslim world are increasing their science budgets sharply, throwing money at the problem is no panacea. The entire research environment needs to be addressed, particularly the need to nurture the intellectual freedom and skepticism on which scientific progress depends.

Oil Dictator Dominos
Bill Emmott (Project Syndicate) Feb 4, 2016
The dramatic drop in hydrocarbon prices will produce economic winners and losers. But the biggest dangers will be political, especially for rigid authoritarian regimes that have depended on high oil prices to remain in power.

The Global Economy’s New Abnormal
Nouriel Roubini (Project Syndicate) Feb 4, 2016
Since the beginning of the year, the world economy has faced a new bout of severe financial market volatility, marked by sharply falling prices for equities and other risky assets. A variety of factors are at work – and will remain so throughout 2016 and beyond.

China’s growth prospects
Robert Barro (VoxEU) Feb 4, 2016
China’s diminished growth prospects are in the news and seem to spell bad news for just about everybody. This column assesses the evidence, arguing that China’s economic growth will be much slower from now on, reducing international trade. Perhaps the biggest challenge for China will be future political tensions in reconciling economic dreams with economic realities.

Yen and the Art of Political Scandals
Toko Sekiguchi and William Sposato (FP) Feb 4, 2016
The downfall of Japan’s economy minister reveals a surprising amount of corruption in honest Tokyo.

What Liberals and Conservatives Need to Know About the Welfare State
Samuel Hammond (Evonomics) Feb 4, 2016
The relationship between safety nets and social capital.

The SDR Goes the Way of the Renminbi
Owen Hauck (PIIE) Feb 5, 2016
The International Monetary Fund's decision to add the Chinese renminbi to the basket of currencies that compose the Special Drawing Right (SDR) at the end of November 2015 was no small choice. Set to take effect October 1 this year with a weight of 10.92 percent versus the total basket, the inclusion of the renminbi has potential to make the SDR's US dollar value more volatile.

Tapped Out: Azerbaijan Must Diversify Its Economy Away From Oil
Simeon Djankov (PIIE) Feb 5, 2016
Azerbaijan's economy is reeling, after years of extraordinary growth fueled by oil revenues. The latest World Bank figures suggest the economy is going to contract in 2016, and the budget deficit may reach over 5 percent of GDP. The way out is diversification of exports.

Why the Trans-Pacific Partnership Isn't a Bum Deal
Gary Clyde Hufbauer and Cathleen Cimino-Isaacs (PIIE) Feb 5, 2016
With presidential candidates on both extremes denouncing the Trans-Pacific Partnership as a bum deal, and with middle-ground candidates offering tepid support at best, it may be tempting to declare the Trans-Pacific Partnership dead on arrival. That would be a mistake.

The World Bank’s Poverty Statistics Lack Median Income Data, So We Filled In the Gap Ourselves
Anna Diofasi and Nancy Birdsall (CGD) Feb 5, 2016
PovcalNet, the World Bank’s global poverty database, provides all kinds of country statistics, including mean income, the share (and number) of the population living in absolute poverty ($1.90), the poverty gap and several measures of income inequality, such as the Gini coefficient. But one thing it doesn’t provide is median income or consumption. The median is a better measure of “typical” well-being than the mean, which is always skewed to the right. We’ve been waiting for the World Bank to add these medians to its PovcalNet database, but we got impatient and did it ourselves. By manually running a few hundred queries in PovcalNet, we now have (and can share with you) the latest median income/consumption data for 144 countries (using 2011 PPPs — more on our methods below).

The True Measure of Inequality
Clive Crook (Bloomberg View) Feb 5, 2016
It's not income or wealth.

Japan’s Wrong Way Out
Adair Turner (Project Syndicate) Feb 5, 2016
Financial markets were surprised by the Bank of Japan’s recent introduction of negative interest rates on certain commercial bank reserves. The problem is that neither negative interest rates nor further expansion of the BOJ’s already huge program of quantitative easing will be sufficient to offset strong deflationary forces.

The Great Populists
Jacek Rostowski (Project Syndicate) Feb 5, 2016
The rise of a new kind of political leader – as seen in Russia, Turkey, Hungary, and Poland – constitutes a new threat to the global order. If this type, in the form of US presidential candidate Donald Trump and French National Front leader Marine Le Pen, wins in the heart of the West, the risks to stability will rise sharply.

Identifying the risks from corporate currency mismatches in emerging economies
Julián Caballero, Ugo Panizza and Andrew Powell (VoxEU) Feb 5, 2016
The increase in the debt of emerging market non-financial firms has been large. This column argues that to understand the risks, if any, it is important to know the state of corporate balance sheets and what firms have actually been doing. In some cases external debt has been issued to substitute more expensive local debt, in others to finance real investment, and in several countries it has been used to exploit carry trade opportunities. In virtually all cases, however, good information on corporate currency mismatches is hard to obtain. There needs to be better information and better reporting if we are to make headway.

Venezuela Is About to Go Bust
Juan Cristóbal Nagel (FP) Feb 5, 2016
Venezuela is about to go bust.

War Made Humans the Greatest Cooperators on Earth
Cameron K. Murray (Evonomics) Feb 5, 2016
A review of Professor Turchin’s new book Ultrasociety, which identifies the causal mechanisms hidden in the twists and turns of human civilisation by quantifying the rise and fall of empires.

Job characteristics and offshoring: Evidence from Germany
Sascha O. Becker and Marc Muendler (VoxEU) Feb 6, 2016
Offshoring and global value chains have reshaped global trade patterns. This column describes how the German economy has been exposed to significant offshoring for at least three decades. The authors find an increasing importance of high-end tasks in the country. Organising and consulting activities under deadlines, changing business conditions, and tougher performance standards are an increasingly common reality in German workplaces. Labour market institutions in German trade partners are largely unrelated to the changing content of German imports.

Through the past, darkly
Wolfgang Münchau (FT) Feb 7, 2016
Today’s economic situation in Europe has parallels with the 1930s and Hitler’s speedy recovery.

China still has room to move on RMB
Yu Yongding (EAF) Feb 7, 2016
To prevent the formation of a devaluation expectations–devaluation spiral, the PBoC started to intervene vigorously in the foreign exchange market in an unpredictable manner — making it harder for speculators to judge when to short the currency.

World trade, 1800-2015
Giovanni Federico and Antonio Tena-Junguito (VoxEU) Feb 7, 2016
Parallels are often drawn between the Great Recession of the past decade and the economic turmoil of the interwar period. In terms of global trade, these comparisons are based on obsolete and incomplete data. This column re-estimates world trade since the beginning of the 19th century using a new database. The effect of the Great Recession on trade growth is sizeable but fairly small compared with the joint effect of the two world wars and the Great Depression. However, the effects will become more and more comparable if the current trade stagnation continues. Parallels are often drawn between the Great Recession of the past decade and the economic turmoil of the interwar period. In terms of global trade, these comparisons are based on obsolete and incomplete data. This column re-estimates world trade since the beginning of the 19th century using a new database. The effect of the Great Recession on trade growth is sizeable but fairly small compared with the joint effect of the two world wars and the Great Depression. However, the effects will become more and more comparable if the current trade stagnation continues.

Making agglomeration ‘metabolised’ for innovation
Nobuaki Hamaguchi and Keisuke Kondo (VoxEU) Feb 7, 2016
There is no consensus on the effects of agglomeration on innovation. This column presents new evidence on how knowledge turnover impacts the quality of innovation. Agglomerated regions with active knowledge turnover, as measured by interregional migration of university graduates, tend to have a higher number of patent citations, the metric used for quality of innovation. Cluster policy aimed at active innovation may not be effective if interregional migration of knowledge workers is inactive. There is no consensus on the effects of agglomeration on innovation. This column presents new evidence on how knowledge turnover impacts the quality of innovation. Agglomerated regions with active knowledge turnover, as measured by interregional migration of university graduates, tend to have a higher number of patent citations, the metric used for quality of innovation. Cluster policy aimed at active innovation may not be effective if interregional migration of knowledge workers is inactive.

Britain’s premature bet on future of EU
Janan Ganesh (FT) Feb 8, 2016
If the case for membership is the ability to influence laws that affect us, that case could shrivel.

Find refugees work to boost integration
Scott McDonald (FT) Feb 8, 2016
Minimum wages may be good for native workers but are less so for migrants.

Smart beta products risk being misleading
Andreas Utermann (FT) Feb 8, 2016
Investors may be surprised by two fundamentally different approaches under one smart-beta label.

Negative Interest Rates Are a Dead End
William Poole (WSJ) Feb 8, 2016
They won’t spur growth, but will divert attention from reforms that can.

Let’s Get Realistic About a Multilateral Investment Agreement
Shaun Donnelly (OECD Insight) Feb 8, 2016
A call for the OECD investment work focus on concrete investment “deliverables” which can be implemented, rather than idealistic pursuits of some theoretical multilateral panacea.

Worried About Bond Liquidity? Blame the Regulators
Mark Gilbert (Bloomberg View) Feb 8, 2016
The unintended consequence of tighter rules is reduced liquidity.

Mark Wolf: Judge on a Global Mission
Frank Vogl (Globalist) Feb 8, 2016
Campaign grows for an International Anti-Corruption Court.

Argentina's Bond Fight Comes Down to Its Worst Bonds
Matthew S Levine (Bloomberg View) Feb 8, 2016
An offer of 730 cents on the dollar doesn't look like enough.

Why Economists Don’t Know How to Think About Growth
Eric Michael Johnson and Fritjof Capra (Evonomics) Feb 8, 2016
The need to shift from the concept of “quantitative growth,” as economists use it, to that of “qualitative growth” that you say is more akin to evaluating the health of ecological systems.

What’s Holding Back the World Economy?
Joseph E. Stiglitz and Hamid Rashid (Project Syndicate) Feb 8, 2016
The dominant policies pursued by developed countries during the post-crisis period – fiscal retrenchment and quantitative easing – have offered little support for household consumption, investment, and growth. On the contrary, they have tended to make matters worse.

The Social Investment Revolution
Juerg Zeltner (Project Syndicate) Feb 8, 2016
The last months of 2015 are likely to be seen as a watershed for the social investment movement, with luminaries such as Bill Gates, Mark Zuckerberg, and Jack Ma embracing the effort. But other stakeholders – governments and traditional philanthropies – will need to play their part to sustain the movement's progress.

China’s Rule of Fear
Minxin Pei (Project Syndicate) Feb 8, 2016
China is once again gripped by fear. From the inner sanctum of the Chinese Communist Party to university lecture halls and executive suites, the specter of harsh accusations and harsher punishment is stalking China’s political, intellectual, and business elites.

Digitally disrupted GDP
Diane Coyle (VoxEU) Feb 8, 2016
Digital technologies are having dramatic impacts on consumers, businesses, and markets. These developments have reignited the debate over the definition and measurement of common economic statistics such as GDP. This column examines the measurement challenges posed by digital innovation on the economic landscape. It shows how existing approaches are unable to capture certain elements of the consumer surplus created by digital innovation. It further demonstrates how they can misrepresent market-level shifts, leading to false assessments of production and growth. Digital technologies are having dramatic impacts on consumers, businesses, and markets. These developments have reignited the debate over the definition and measurement of common economic statistics such as GDP. This column examines the measurement challenges posed by digital innovation on the economic landscape. It shows how existing approaches are unable to capture certain elements of the consumer surplus created by digital innovation. It further demonstrates how they can misrepresent market-level shifts, leading to false assessments of production and growth.

Expecting the unexpected: Why the oil price keeps surprising us
Christiane Baumeister & Lutz Kilian (VoxEU) Feb 8, 2016
Expectations play a key role in assessing how oil price fluctuations affect the economy. This column explores how consumers, policymakers, financial market participants, and economists form expectations about the price of crude oil, the differences in these expectations, and why future realisations of the price of oil so often differ substantially from these expectations. Differences in oil price expectations are shown to matter for quantifying oil price shocks and their transmission. Expectations play a key role in assessing how oil price fluctuations affect the economy. This column explores how consumers, policymakers, financial market participants, and economists form expectations about the price of crude oil, the differences in these expectations, and why future realisations of the price of oil so often differ substantially from these expectations. Differences in oil price expectations are shown to matter for quantifying oil price shocks and their transmission.

Battle over Brexit matters to the world
Martin Wolf (FT) Feb 9, 2016
UK needs a voice in Europe and the bloc would benefit too.

Hedge funds target a weaker renminbi
Henny Sender (FT) Feb 9, 2016
Timing matters for investors betting against the currency and China’s central bank.

Bank of Japan seeks to change mindsets with negative rates
Seth Fischer and Ethan Devine (FT) Feb 9, 2016
Disregard the naysayers: negative interest rates underline BoJ’s goal of beating deflation.

Iran faces a bumpy road back to global energy markets
Simone Tagliapietra (Bruegel/FT) Feb 9, 2016
President Hassan Rouhani’s attempts to reform the oil sector in Iran are essential for the Iranian economy but are facing steadfast opposition.

When National Cycles Coincide: Tracking Global Recessions and Recoveries
IMF Survey Feb 9, 2016
The world has experienced four global recessions since 1960. In a new multimedia book, two economists track what drives the global economy into and out of a recession.

US Interest Rates: Risky Gradualism
Satyajit Das (RGE Economonitor) Feb 9, 2016
Recent developments suggest that several factors may dictate a more gradual rate of increase than the Fed’s expectations.

Making Trade and Investment Work for People
Ken Ash (OECD Insight) Feb 9, 2016
making trade and investment work for people requires a coherent and well integrated public policy agenda for global value chains.

Who's Afraid of a Falling Yuan?
Christopher Balding (Bloomberg View) Feb 9, 2016
The impact of a cheaper Chinese currency will be more limited and nuanced than many fear.

China’s Exchange-Rate Trap
Barry Eichengreen (Project Syndicate) Feb 9, 2016
For months now, China’s exchange-rate policy has roiled global financial markets, because officials have done a poor job communicating their intentions. But criticizing Chinese policymakers is easier than offering constructive advice: In fact the authorities no longer have any good options.

The Negative Rates Club
Daniel Gros (Project Syndicate) Feb 9, 2016
After years of quantitative easing and negative interest rates, it is becoming clear that these policies work as expected only in debtor economies, but have little effect in creditor economies. The reason is simple: creditors lose when rates go negative, and debtors gain.

Is Oil Becoming Stranded?
Paul Spedding (Project Syndicate) Feb 9, 2016
The sudden plunge in the price of oil is reminiscent of how long-term policies intended to address climate change led to the collapse in the price of coal. Investors expecting a cyclical price recovery for oil may instead find that environmental regulations make their assets uneconomical to develop.

Trade in parts and components across Europe
Richard Frensch, Jan Hanousek and Evžen Kocenda (VoxEU) Feb 9, 2016
With the rise of global value chains, trade in intermediates now accounts for more than two-thirds of total trade. This column provides evidence that trade in parts and components of capital goods between new and old EU countries is driven by wage differences across countries. It further shows that wage differences play an important role in the ex ante investment decision to establish a new production network. With the rise of global value chains, trade in intermediates now accounts for more than two-thirds of total trade. This column provides evidence that trade in parts and components of capital goods between new and old EU countries is driven by wage differences across countries. It further shows that wage differences play an important role in the ex ante investment decision to establish a new production network.

Sun sets on the petrodollar age
Philip Stephens (FT) Feb 10, 2016
Slump in oil price adds a twist to the forces driving fragmentation and conflict.

The two moons pulling the tides of gloom
James Kynge (FT) Feb 10, 2016
The latest reversal is the start of a dismal chapter in global readjustment.

Bank of Japan seeks to bolster Abenomics
Seth Fischer and Ethan Devine (FT) Feb 10, 2016
Disregard the naysayers: negative interest rates underline BoJ’s goal of beating deflation.

The crash of 2016?
Robert J. Samuelson (WP) Feb 10, 2016
Emerging-market countries are now disappointing in ways that damage the world economy.

For Europe, Financial Innovation Is a Better Bet than a Fiscal Transfer Union
Paolo Mauro (PIIE) Feb 10, 2016
The fire started in the basement, almost completely burning down the house. Fortunately, your neighbor was out of town. You had told him to replace his old furnace to save money, but he procrastinated. Many neighbors offered to help, some more than others. The neighborhood's solidarity was touching but ultimately proved insufficient. Your neighbor was financially ruined.

Can the World Adjust to China's "New Normal"?
Douglas A. Rediker, Michael A. Levi, Council on Foreign Relations and Elizabeth Economy (PIIE/CFR) Feb 10, 2016
The rise of China as an economic and trading superpower over the past decade has been striking in its scale and impact, domestically and internationally. In 2015 and early 2016, however, worries over the pace of growth and composition of China's economy and its policymaking skills have led to a significant and rapid change of sentiment.

The crash of 2016?
Robert J. Samuelson (WP) Feb 10, 2016
Emerging-market countries are now disappointing in ways that damage the world economy.

Venezuela Could Learn From Weimar Hyperinflation
Stephen Mihm (Bloomberg View) Feb 10, 2016
Germany showed a path out of crisis.

Why Some Cities Get All the Good Jobs
Justin Fox (Bloomberg View) Feb 10, 2016
But not everyone wants to live in a cluster of innovation.

Hyperinflation Paranoia Guides the Fed
Noah Smith (Bloomberg View) Feb 10, 2016
Fear of Venezuela-style inflation is overblown.

Connecting the Red Sea
Fahd Al Rasheed (Project Syndicate) Feb 10, 2016
The Red Sea is essential to world trade, but little of the wealth generated remains in the region. A coordinated effort to improve infrastructure and logistics would position the countries surrounding the Red Sea as destinations for global investment and international trade.

China’s Crisis of Miscommunication
Zhang Jun (Project Syndicate) Feb 10, 2016
In the run-up to major policy decisions in China, editorials by senior officials in major publications, as well as reports and communiqués from official forums and meetings, almost always provide clues about what will happen. The problem is that markets do not seem to know how to read them.

The Trade Numbers Game
Dani Rodrik (Project Syndicate) Feb 10, 2016
The Trans-Pacific Partnership – a mega trade deal covering 12 countries that together account for more than one-third of global GDP and a quarter of world exports – is the latest battleground in the decades-long confrontation between proponents and opponents of trade agreements. Unfortunately, neither side is offering good evidence.

The Global Crisis special issue of Economic Policy
Thorsten Beck, Nicola Fuchs-Schündeln, Refet S. Gürkaynak and Andrea Ichino (VoxEU) Feb 10, 2016
The Global Crisis was a watershed, not just for economies around the world, but for economics as a discipline. This column introduces a special issue of Economic Policy that collects key papers on the Global Crisis published in its aftermath between 2009 and 2014. The papers chart the evolution of economists’ thinking on the causes of and cures for the Global and EZ Crises. The Global Crisis was a watershed, not just for economies around the world, but for economics as a discipline. This column introduces a special issue of Economic Policy that collects key papers on the Global Crisis published in its aftermath between 2009 and 2014. The papers chart the evolution of economists’ thinking on the causes of and cures for the Global and EZ Crises.

US rate cut speculation
Gillian Tett (FT) Feb 11, 2016
The Federal Reserve will need to play an astonishingly canny hand in the coming weeks.

Fallen angels are debt market’s disgrace
Dan McCrum (FT) Feb 11, 2016
An artificial distinction at the heart of the debt world undermines investment grade bonds.

Hidden Dangers of the Oil-Price Shock
Jason M. Thomas (WSJ) Feb 11, 2016
Trouble in one industry, even if it is small relative to the GDP, may spread through the economy.

TPP Countries Gear Up for Ratification Push After Auckland Signing Ceremony
Bridges, Volume 20, Number 5 Feb 11, 2016
Signatories to the Trans-Pacific Partnership (TPP) trade pact are ramping up their efforts to build domestic support for the agreement, as they prepare to launch their domestic ratification procedures.

European Central Bank Gets Ready for More Easy Money
Frank Shostak (Mises Daily) Feb 11, 2016
On January 21, 2016 European Central Bank (ECB) President Mario Draghi signaled that the governing council may provide more stimulus at its next meeting in March. “There are no limits to how far we're willing to deploy our instruments,” Draghi predicted.

The Bank of Japan Is Moving Too Slowly in the Right Direction
Joseph E. Gagnon (PIIE) Feb 11, 2016
Bank of Japan Governor Haruhiko Kuroda's bold program to get Japan out of deflation has made enormous progress, but it has fallen well short of its goal of 2 percent inflation within two years. Now is the time for a final big push to cross the goal line and prevent a slow slide back into deflation.

What does China really want?
Jeffrey Bader (Brookings) Feb 11, 2016
As President Obama wraps up a summit with Southeast Asian leaders, a comprehensive look at how Chinese President Xi Jinping views the world.

How life sciences are delivering on diversifying Dubai's economy
Natasha Turak (fDi Intelligence) Feb 11, 2016
Having set its sights on economic diversification, Dubai has rapidly established itself as a Middle Eastern hub for R&D, with a particular focus on life sciences.

The Submerging-Market Threat
Anders Åslund (Project Syndicate) Feb 11, 2016
The slump in emerging markets was predictable; the booms that led to their rise were not accompanied by the structural reforms needed to sustain growth when commodity prices fell. Faced with years or even decades of anemic global growth, Western leaders must start thinking about managing the destabilizing effects of stagnation.

Eastern Europe’s Authoritarian Return
Shlomo Ben-Ami (Project Syndicate) Feb 11, 2016
By building on shared values, the EU overcame historical conflicts and created a space of peace, progress, and freedom. But the rise of authoritarianism in Eastern Europe, together with resurgent nationalism throughout the continent, is testing those values – and thus the future of European integration.

Boundless Crises, Reckless Spoilers, and Helpless Guardians
Wolfgang Ischinger (Project Syndicate) Feb 11, 2016
The world is entering a period of growing risk, rising uncertainty, and fundamental transformation – the beginning of a less stable international era. Responsible leaders must work together to reconstruct the international order, strengthen institutional arrangements, and stem spreading chaos.

Overhauling China
Keyu Jin (Project Syndicate) Feb 11, 2016
Pessimism about China has become pervasive in recent months, with fear of a “China meltdown” sending shock waves through stock markets worldwide since the beginning of the year. But with the right mix of reforms – including political reforms – China can continue its march toward high-income status.

From the Industrial Revolution onward, predictions of calamitous technological change keep missing the mark
Joel Mokyr, Chris Vickers and Nicolas Ziebarth (LSE Business Review) Feb 11, 2016
Technology is widely considered the main source of economic progress, but it has generated cultural anxiety throughout history. Here, Joel Mokyr, Chris Vickers and Nicolas Ziebarth place today’s angst about technological change in a historical context. They emphasize that today’s worries are not new to the modern era and that understanding the history provides perspective on whether this time is truly different.

International business cycle transmission: Firm-level evidence
Julian di Giovanni, Andrei Levchenko and Isabelle Méjean (VoxEU) Feb 11, 2016
The business cycles of countries with greater bilateral trade and multinational production linkages are more closely correlated. But the meaning of this empirical relationship is not well understood. Some contend that these linkages allow for the transmission of shocks across countries, while others argue that countries that trade more with each other are similar in other ways and are thus subject to common shocks. Using data from France, this column examines the properties of international co-movement at the firm level. Even after controlling for common shocks, there is still substantial evidence of transmission of shocks through trade and multinational linkages. Furthermore, trade linkages matter more than multinational ones, especially when it comes to the aggregate impact. The business cycles of countries with greater bilateral trade and multinational production linkages are more closely correlated. But the meaning of this empirical relationship is not well understood. Some contend that these linkages allow for the transmission of shocks across countries, while others argue that countries that trade more with each other are similar in other ways and are thus subject to common shocks. Using data from France, this column examines the properties of international co-movement at the firm level. Even after controlling for common shocks, there is still substantial evidence of transmission of shocks through trade and multinational linkages. Furthermore, trade linkages matter more than multinational ones, especially when it comes to the aggregate impact.

Disasters and firm exit: Lessons from the Tohoku earthquake
Hirofumi Uchida and Arito Ono (VoxEU) Feb 11, 2015
It seems like natural disasters should harm the economy by destroying lives and capital. This column investigates the extent to which disasters can lead to creative destruction through ‘natural selection’ of the fittest firms. Surprisingly, the rate of closure due to bankruptcy decreases – perhaps due to aid. Firm exits following the Tohoku earthquake were predominantly voluntary closures, with firms seizing the moment in order to leave an ageing market.

Bail-in Securities and the Current Equity Market Turmoil
Avinash Persaud (PIIE) Feb 12, 2016
The current equity market slide is being led by European banks and stems in large part from market concerns over their newly issued bail-in securities. Bail-in securities begin life as a five-year bond that converts into equity when bank capital falls below a certain threshold.

An Important IMF Reform
Olivier Blanchard (PIIE) Feb 12, 2016
The world became a bit safer last month—at least at one margin. The International Monetary Fund (IMF) adopted a lending reform with important implications for the future stability of the world economy.

The Dark Heart of ASEAN
Joshua Kurlantzick (Project Syndicate) Feb 12, 2016
Next week's meeting between US President Barack Obama and the leaders of the ten ASEAN countries – the first US-ASEAN meeting on American soil – signifies America’s growing interest in Southeast Asia. The question is whether, by engaging with all members of ASEAN, the US is allowing its interests to overwhelm its principles.

It's time for the financial markets to hit the reset button
Brian Caplen |(The Banker) Feb 12, 2016
The current volatility in markets stems from the policies brought in in the immediate aftermath of the financial crisis. These have now served their purpose, says Brian Caplen, and it is the time for the banking world to move on, unencumbered by red tape, QE and low interest rates, much as it could before 2009.

Minimal conditions for the survival of the euro
Barry Eichengreen and Charles Wyplosz (VoxEU) Feb 12, 2016
The Eurozone crisis has shown that monetary union entails more than just sharing monetary policies. This column identifies four minimal conditions for solidifying the monetary union. In the case of fiscal policy, this means a decentralised solution. In the case of financial supervision and monetary policy, centralisation is unambiguously the appropriate response. In the case of a fourth condition, debt restructuring, either approach is possible, but the authors prefer a solution that involves centrally restructuring debts while allocating costs at national level. The Eurozone crisis has shown that monetary union entails more than just sharing monetary policies. This column identifies four minimal conditions for solidifying the monetary union. In the case of fiscal policy, this means a decentralised solution. In the case of financial supervision and monetary policy, centralisation is unambiguously the appropriate response. In the case of a fourth condition, debt restructuring, either approach is possible, but the authors prefer a solution that involves centrally restructuring debts while allocating costs at national level.

The Eurozone’s Zeno paradox – and how to solve it
Jean Pisani-Ferry (VoxEU) Feb 12, 2016
The dramatic episodes in the Eurozone in the past few years called for a number of policy reactions. Yet the response was usually limited to what was deemed indispensable to ensure survival. This column discusses how such half-solutions paved the way for future crises. The author also puts forward a few proposals regarding the Eurozone’s policies. Among them are a European Monetary Fund, an overhaul of surveillance, the completion of banking union, an insolvency procedure for sovereigns, and Eurobonds of some sort. And the sooner such issues are deeply discussed, the faster coherent solutions can be reached. The dramatic episodes in the Eurozone in the past few years called for a number of policy reactions. Yet the response was usually limited to what was deemed indispensable to ensure survival. This column discusses how such half-solutions paved the way for future crises. The author also puts forward a few proposals regarding the Eurozone’s policies. Among them are a European Monetary Fund, an overhaul of surveillance, the completion of banking union, an insolvency procedure for sovereigns, and Eurobonds of some sort. And the sooner such issues are deeply discussed, the faster coherent solutions can be reached.

Building common fiscal policy in the Eurozone
Guido Tabellini (VoxEU) Feb 12, 2016
In order to preserve financial integration and stability, the Eurozone needs to build elements of a common fiscal policy. This column discusses how this could be done. It proposes the creation of a European Fiscal Institute, modelled on principles similar to those used for the ECB. Such an establishment would require treaty and constitutional reforms in member states, which would not be politically feasible in the short term. In order to preserve financial integration and stability, the Eurozone needs to build elements of a common fiscal policy. This column discusses how this could be done. It proposes the creation of a European Fiscal Institute, modelled on principles similar to those used for the ECB. Such an establishment would require treaty and constitutional reforms in member states, which would not be politically feasible in the short term.

Rebooting Europe: Closer fiscal cooperation needed
Christopher Pissarides (VoxEU) Feb 12, 2016
There are certain conditions needed to make a common currency across diverse economies a success and the Eurozone is clearly not satisfying them. This column argues that institutions and policies in place six years after the debt crisis have mitigated the risks of another Great Recession. But they have not done enough to alleviate the need for fiscal transfers in the future. We need ever-closer fiscal cooperation, with some caveats. There are certain conditions needed to make a common currency across diverse economies a success and the Eurozone is clearly not satisfying them. This column argues that institutions and policies in place six years after the debt crisis have mitigated the risks of another Great Recession. But they have not done enough to alleviate the need for fiscal transfers in the future. We need ever-closer fiscal cooperation, with some caveats.

Completing the Banking Union
Daniel Gros (VoxEU) Feb 12, 2016
The Eurozone’s ‘Banking Union’ created a system of banking supervision and a common institution to restructure troubled banks. There remain two issues, however, that need to be addressed: banks are holding too much debt of their own sovereign, and deposit insurance is only backstopped at the national level. This column argues that these issues need to be addressed simultaneously for economic and political reasons. Specifically, periphery and core countries hold opposing positions on remedies to the respective problems. A combination of the two makes economic sense and could represent an acceptable political compromise. The Eurozone’s ‘Banking Union’ created a system of banking supervision and a common institution to restructure troubled banks. There remain two issues, however, that need to be addressed: banks are holding too much debt of their own sovereign, and deposit insurance is only backstopped at the national level. This column argues that these issues need to be addressed simultaneously for economic and political reasons. Specifically, periphery and core countries hold opposing positions on remedies to the respective problems. A combination of the two makes economic sense and could represent an acceptable political compromise.

ECB in Eurozone policymaking: Going forward
Refet S. Gurkaynak (VoxEU) Feb 12, 2016
Since the beginning of the Global Crisis, the ECB has faced a sequence of problems. This column discusses some of these problems. It also highlights the successful first reaction of the ECB to the crisis and its adequate monetary policies. There are still unresolved structural problems in the Eurozone, however. Among them are the lack of a proper banking union and the need for a better fiscal policy coordination. And the job for such a change within the Eurozone cannot be delegated to the ECB. Since the beginning of the Global Crisis, the ECB has faced a sequence of problems. This column discusses some of these problems. It also highlights the successful first reaction of the ECB to the crisis and its adequate monetary policies. There are still unresolved structural problems in the Eurozone, however. Among them are the lack of a proper banking union and the need for a better fiscal policy coordination. And the job for such a change within the Eurozone cannot be delegated to the ECB.

Fixing a sovereignless currency
Agnès Bénassy-Quéré (VoxEU) Feb 12, 2016
The euro is unique in that it is a currency without a sovereign. Since the crisis, there have been major developments towards making the Eurozone more resilient, including the banking union and the European Stability Mechanism (ESM). This column explores whether further normalisation is required to make the Eurozone function properly. It argues that the Eurozone, unlike existing federations, lacks the ability to deliver counter-cyclical fiscal policies while complying with fiscal discipline. Macroeconomic coordination will thus require rules, a strong and independent European Fiscal Board, and the strengthening of the ESM. The euro is unique in that it is a currency without a sovereign. Since the crisis, there have been major developments towards making the Eurozone more resilient, including the banking union and the European Stability Mechanism (ESM). This column explores whether further normalisation is required to make the Eurozone function properly. It argues that the Eurozone, unlike existing federations, lacks the ability to deliver counter-cyclical fiscal policies while complying with fiscal discipline. Macroeconomic coordination will thus require rules, a strong and independent European Fiscal Board, and the strengthening of the ESM.

Balance-of-payments adjustment in the Eurozone
Stefano Micossi (VoxEU) Feb 12, 2016
As a monetary union based on a single currency, the Eurozone is supposed to be immune from problems characteristic to fixed-exchange rate regimes. This column argues that this is not the case. The Eurozone still faces some adjustment problems. It seems unable to generate sufficient growth and inflation to place excessive public debt on a credible reduction path. It does not have a functioning adjustment mechanism to reabsorb existing competitive imbalances. In the long run, the Eurozone should aim to achieve a full integration of labour and capital markets. This is only feasible with budgetary and structural reforms in its member states. As a monetary union based on a single currency, the Eurozone is supposed to be immune from problems characteristic to fixed-exchange rate regimes. This column argues that this is not the case. The Eurozone still faces some adjustment problems. It seems unable to generate sufficient growth and inflation to place excessive public debt on a credible reduction path. It does not have a functioning adjustment mechanism to reabsorb existing competitive imbalances. In the long run, the Eurozone should aim to achieve a full integration of labour and capital markets. This is only feasible with budgetary and structural reforms in its member states.

Safeguarding the euro – balancing market discipline with certainty
Thorsten Beck (VoxEU) Feb 12, 2016
A lot has been achieved in terms of institution building to turn the Eurozone into a sustainable currency union. The Eurozone Crisis, however, has shown that the Eurozone is still not a properly functioning currency union. This column points to three areas of further reform to achieve such a goal. These include the disentanglement of sovereigns and banks, completion of a banking union, and an institutional convergence for a fully integrated financial system. A lot has been achieved in terms of institution building to turn the Eurozone into a sustainable currency union. The Eurozone Crisis, however, has shown that the Eurozone is still not a properly functioning currency union. This column points to three areas of further reform to achieve such a goal. These include the disentanglement of sovereigns and banks, completion of a banking union, and an institutional convergence for a fully integrated financial system.

Asymmetries and Eurozone policymaking
Tommaso Monacelli (VoxEU) Feb 12, 2016
The boom-bust cycle in the Eurozone between 2000 and 2008 is essentially a story of cyclical asymmetries between the Core and the Periphery. While stressing the importance of addressing these asymmetries – especially via fiscal policy – the ECB has failed to take them explicitly into account in its own policy-setting. This essay argues that these asymmetries may persist precisely because they are not a central target of stabilisation policy – both fiscal and monetary. The boom-bust cycle in the Eurozone between 2000 and 2008 is essentially a story of cyclical asymmetries between the Core and the Periphery. While stressing the importance of addressing these asymmetries – especially via fiscal policy – the ECB has failed to take them explicitly into account in its own policy-setting. This essay argues that these asymmetries may persist precisely because they are not a central target of stabilisation policy – both fiscal and monetary.

How to reboot the Eurozone and ensure its long-term survival
Paul De Grauwe and Yuemei Ji (VoxEU) Feb 12, 2016
The Eurozone Crisis has abated but the question about the future of the euro remains on the agenda. This column discusses some of the design failure of the Eurozone and their possible solutions. The Eurozone in its current state is not an optimal currency area and is fragile. Ideally, a stabilisation fund and a budgetary union should be set up. Since this is politically unobtainable right now, small steps should be implemented to create some fiscal space at the level of the Eurozone, and to start with a limited programme of debt consolidation. The Eurozone Crisis has abated but the question about the future of the euro remains on the agenda. This column discusses some of the design failure of the Eurozone and their possible solutions. The Eurozone in its current state is not an optimal currency area and is fragile. Ideally, a stabilisation fund and a budgetary union should be set up. Since this is politically unobtainable right now, small steps should be implemented to create some fiscal space at the level of the Eurozone, and to start with a limited programme of debt consolidation.

How the Euro Crisis was successfully resolved
Barry Eichengreen & Charles Wyplosz (VoxEU) Feb 12, 2016
When the newly elected Greek government of George Papandreou revealed that its predecessor had doctored the books, financial markets reacted violently. This column discusses the steps implemented by policymakers following this episode, which were essential in resolving the Crisis. What is remarkable, in hindsight, is the combination of pragmatism and reasoning based on sound economic principles displayed by European leaders. Instead of finger pointing, they acknowledged that they were collectively responsible for the Crisis.

Europe’s equity markets matter
Christian Krohn (VoxEU) Feb 12, 2016
The role of equities in Europe’s capital markets has diminished since the Global Crisis and is only slowly recovering to its prior level. This column argues that revitalising its equity markets has much to offer Europe in terms of funding business growth, creating jobs, and delivering long-term pension returns for the ageing population. The root causes of Europe’s underutilised equity markets are both cultural and regulatory. Understanding and addressing these barriers are the next necessary steps towards the full utilisation of equities. The role of equities in Europe’s capital markets has diminished since the Global Crisis and is only slowly recovering to its prior level. This column argues that revitalising its equity markets has much to offer Europe in terms of funding business growth, creating jobs, and delivering long-term pension returns for the ageing population. The root causes of Europe’s underutilised equity markets are both cultural and regulatory. Understanding and addressing these barriers are the next necessary steps towards the full utilisation of equities.

Maastricht 2.0: Safeguarding the future of the Eurozone
Lars P Feld, Christoph M Schmidt, Isabel Schnabel and Volker Wieland (VoxEU) Feb 12, 2016
Not everybody agrees that the Greek crisis means the EU needs more integration. This column, from the German Council of Economic Experts, argues that for as long as EZ members are unwilling to transfer national sovereignty over economic and financial policy to the European level, all reform proposals must withstand a critical evaluation of the incentives they set for national economic and financial policy. The institutional framework of the single currency area can only ensure stability if it follows the principle of that liability and control must go hand in hand. Those who decide must bear the consequences of their decisions. Not everybody agrees that the Greek crisis means the EU needs more integration. This column, from the German Council of Economic Experts, argues that for as long as EZ members are unwilling to transfer national sovereignty over economic and financial policy to the European level, all reform proposals must withstand a critical evaluation of the incentives they set for national economic and financial policy. The institutional framework of the single currency area can only ensure stability if it follows the principle of that liability and control must go hand in hand. Those who decide must bear the consequences of their decisions.

Norms of tax compliance
Tim Besley, Anders Jensen and Torsten Persson (VoxEU) Feb 12, 2015
The Eurozone sovereign debt crisis has highlighted the problem of tax evasion. This column examines the effect of social norms on tax compliance using the UK poll tax as a natural experiment. Comparing councils where tax evasion spiked more during the poll-tax period to those where it spiked less, there was no systematic difference before the poll-tax period. However, once the poll tax was abolished, tax evasion remained higher in the former group, suggesting that high poll-tax non-compliance created a persistent norm of non-compliance.

Do derivatives make the world safer?
Guillaume Vuillemey (VoxEU) Feb 12, 2015
The interest rate derivatives market has grown tenfold over the past 15 years. These contracts are mostly held by commercial banks, raising financial stability concerns. This column discusses how hedging using derivatives affects bank lending and the occurrence of bank defaults.

Premature deindustrialisation in the developing world
Dani Rodrik (VoxEU) Feb 12, 2015
As developed economies have substituted away from manufacturing towards services, so too have developing countries – to an even greater extent. Such sectoral change may be premature for economies that never fully industrialised in the first place. This column presents evidence that countries with smaller manufacturing sectors substitute away from manufacturing to a larger extent, suggesting a trade channel through which falling international relative prices of manufacturing lead price-taking developing economies to substitute accordingly.

Europe on the Sidelines
Ana Palacio (Project Syndicate) Feb 13, 2016
America's withdrawal from global leadership and Europe’s drawn-out crisis have put the international liberal order under strain. And while there are signs that the US is ready to reassert itself, the EU seems to have chosen to remain on the sidelines – with grave implications for global stability.

Bank recapitalisation and economic recovery after financial crises
Timotej Homar and Sweder van Wijnbergen (VoxEU) Feb 13, 2016
It has been claimed that recessions as a result of a financial crisis tend to last longer than normal recessions. This column asks whether early intervention to help distressed banks during financial crises is effective in mitigating the consequences of financial distress. The evidence suggests that decisive and early recapitalisation of banks can shorten recessions by several years and help speed up recovery. It has been claimed that recessions as a result of a financial crisis tend to last longer than normal recessions. This column asks whether early intervention to help distressed banks during financial crises is effective in mitigating the consequences of financial distress. The evidence suggests that decisive and early recapitalisation of banks can shorten recessions by several years and help speed up recovery.

This time the random walk loses
Michele Ca'Zorzi, Jakub Muck, Michal Rubaszek (VoxEU) Feb 13, 2015
Notwithstanding the progress made in the field of exchange rate economics, we still know very little of what drives major currencies. This column argues that the best that one can do is to assume that currencies move to gradually restore (relative) purchasing power parity. Contrary to widely held beliefs, this is in general a much better strategy than to just assume that the exchange rate behaves like a random walk.

BoE must think again on systemic risk
John Vickers (FT) Feb 14, 2016
Volatility in bank stocks underlines the importance of strong capital buffers.

‘Lehman Brothers’ by Oonagh McDonald
John Plender (FT) Feb 14, 2016
Hubris at the heart of the chaos on Wall Street.

The importance of ASEAN centrality in Sunnylands
Mari Pangestu (EAF) Feb 14, 2016
The discussion around the TPP this week should not be about urging ASEAN members to join the TPP. Instead, ASEAN should address the potential diversion of trade and investment away from those ASEAN members not in the TPP.

Back to background risk
Andreas Fagereng, Luigi Guiso and Luigi Pistaferri (VoxEU) Feb 14, 2016
There are some risks that households cannot insure against or avoid. These are often called ‘background risks’, with the most prominent being labour income risk. In this column, the authors revisit the importance of background risk for portfolio allocation. Addressing some limitations in the current literature, they find that the marginal effect of background risk is much larger than previously thought. Overall, the economic importance of human capital risk crucially hinges on the insurance role of the firm and the amount of assets available to the individual to buffer labour income shocks. There are some risks that households cannot insure against or avoid. These are often called ‘background risks’, with the most prominent being labour income risk. In this column, the authors revisit the importance of background risk for portfolio allocation. Addressing some limitations in the current literature, they find that the marginal effect of background risk is much larger than previously thought. Overall, the economic importance of human capital risk crucially hinges on the insurance role of the firm and the amount of assets available to the individual to buffer labour income shocks.

Averting a Greek train wreck
Michael Burda and Holger Schmieding (VoxEU) Feb 14, 2015
Greece and Europe as a whole are approaching a moment of truth on Greek debt. Posturing by both sides still gives the impression of a slow-moving train wreck that is only weeks away. This column proposes a ‘New Deal for Greece’ that might just avert the train wreck.

Financial development and output growth: Evidence from East Asia and Latin America
Joshua Aizenman, Yothin Jinjarak and Donghyun Park (VoxEU) Feb 14, 2015
The Global Crisis put to the fore the possibility that the relationship between financial development and output growth may be non-linear. This column presents new evidence on the issue using data on output growth of ten sectors from Latin America and East Asia. The authors find large differences between the two regions in terms of the impact of financial depth on sectoral growth, and validate the negative impact of financial deepening on output growth in several sectors. The results confirm that the impact of financial development on sectoral growth may indeed be non-linear – i.e. it may promote growth only up to a point.

Eurosceptics must pick party or country
Sebastian Payne (FT) Feb 15, 2016
Many Tories are torn between their leader’s position and their principles.

Renzi’s luck runs out at home and abroad
James Politi (FT) Feb 15, 2016
Slowing economy and Isis threat provide gloomy backdrop to pivotal year for Italian PM.

Toxic twins of European finance return
Wolfgang Munchau (FT) Feb 15, 2016
The markets are saying they are losing faith in Draghi’s pledge to do ‘whatever it takes’.

European banks face array of challenges
Gene Frieda (FT) Feb 15, 2016
Negative rates and regulatory uncertainty hurt industry.

Part I: Dismantle the Central Banks!
Daniel Stelter (Globalist) Feb 15, 2016
Central banks have served as a low-risk road to fortune for those with already ample financial assets.

The Rise of the Platform Economy
Irving Wladawsky-Berger (Pieria) Feb 15, 2016
There is clearly a rising platform economy shaping our global business landscape and affecting the lives of citizens worldwide.

India Should Put Fiscal Discipline First
Bloomberg View Feb 15, 2016
Prudence is exactly what the country needs.

Time for a Carbon Tax
Kemal Dervis and Karim Foda (Project Syndicate) Feb 15, 2016
Over the last few decades, oil prices have fluctuated widely. For policymakers, these fluctuations present a golden opportunity to advance the key global goals of mitigating climate change and building a more sustainable economy, all while boosting revenues and stabilizing consumer prices.

What’s Ailing Brazil?
Otaviano Canuto (Project Syndicate) Feb 15, 2016
After decades of rapid economic growth and per capita income gains, Brazil is struggling, with IMF forecasts indicating that the country’s GDP will decline by more than 7% in 2015-2016. This reversal of fortune can be explained by four key factors, some of which will be easier to address than others.

When is Fighting Corruption Worth It?
Bjørn Lomborg (Project Syndicate) Feb 15, 2016
Despite years of effort, there is no clear path to achieving corruption-free institutions. If the UN's new Sustainable Development Goals are to make a difference in the quality of governance, policymakers must focus on proven, measurable approaches, not broad slogans.

Brexit and the Special Relationship
Richard N. Haass (Project Syndicate) Feb 15, 2016
The decision whether to remain part of the EU is obviously one for the British people and their elected representatives to make. But more than British and European interests will be affected by the outcome, so it is both legitimate and appropriate for other parties to weigh in.

The evasive predictive ability of core inflation
Pablo Pincheira, Jorge Selaive and Jose Luis Nolazco (VoxEU) Feb 15, 2016
One thing economists can agree on is that inflation is hard to forecast. This column argues that in this context, the idea that ‘core inflation’ may be a useful predictor is very appealing, especially for central banks that need to know where inflation is heading. Evaluating the ability of core to forecast headline inflation for OECD and some non-OECD countries, it seems that sizable predictability emerges for a very small subset of countries, but it is either subtle or undetectable for most other economies.

Testimony: The Economics of Analyzing the TPP
Peter A. Petri and Michael G. Plummer (PIIE) Feb 15, 2016
The Trans-Pacific Partnership (TPP) is a landmark agreement for the United States and the global trading system. In a paper included in the Peterson Institute's submission for these hearings (Petri and Plummer 2016), we estimated that the TPP will increase US real incomes substantially and establish new, market-oriented rules in a host of rapidly changing areas of international commerce.

The Age of Secular Stagnation
Lawrence H. Summers (FA) Feb 15, 2016
What it is and what to do about it.

Can Central Banks Goose Growth?
J. Tomilson Hill and Ian Morris (FA) Feb 15, 2016
Bold Action Is Needed to Fight the Next Downturn

The Demographics of Stagnation
Ruchir Sharma (FA) Feb 15, 2016
Why people matter for economic growth

Middle-Class Heroes
Nancy Birdsall (FA) Feb 15, 2016
The best guarantee of good governance.

Learning to Love Stagnation
Zachary Karabell (FA) Feb 15, 2016
Growth isn’t everything---just ask Japan.

Is Innovation Over?
Tyler Cowen (FA) Feb 15, 2016
The case against pessimism.

Banks are still the weak links
Martin Wolf (FT) Feb 16, 2016
A slowdown is more likely than a crisis but the sector is exposed.

Don’t always believe a balance sheet
John Kay (FT) Feb 16, 2016
Derivative exposures sound alarming until you realise that they’re largely netted out Read more >>

Germany must cut migrant numbers fast
Jens Spahn (FT) Feb 16, 2016
Every European society is in danger of becoming a battleground of competing interests.

Sebastian Payne (FT) Feb 16, 2016
Brexit campaign may be lost to infighting Crucial philosophical and strategy differences are undermining movement

Central banks face credibility test
John Plender (FT) Feb 16, 2016
The retreat from unconventional monetary policy was always going to be tricky.

Digital dilemma: a tale of two coasts
John Thornhill (FT) Feb 16, 2016
It would be a tragedy if the promise of technology was sideswiped by a neo-Luddite backlash Read more >>

Time for a Central Bankers Strike
Holman W. Jenkins (WSJ) Feb 16, 2016
Deutsche Bank’s travails show we have bigger problems than too big to fail.

A Prosperous China Benefits the World
Cui Tiankai (WSJ) Feb 16, 2016
My country is working to improve growth. Accusations of currency manipulation are false.

Should Brazil Dance to the Tune of a Fiscal Band?
Monica de Bolle (PIIE) Feb 16, 2016
Brazil's government, much of which is already under investigation for widespread, endemic corruption, is trying to pull another fast one on its taxpayers and creditors. As talk of a need for fiscal adjustment fails to translate into action, officials have been shifting the public discussion away from fixing the country's fiscal problems by introducing novel—and ill-advised—ideas for fiscal management.

Russia's Economy Slides into Long-Term Stagnation
Simeon Djankov (PIIE) Feb 16, 2016
Russia is entering a period of long-term stagnation with little relief in sight. A report by the Russian Ministry of Finance calculates that without structural reforms the economy will expand at a measly 0.8 percent annual growth rate in 2016-30.

Increased Competitiveness in Eastern Europe
Simeon Djankov (PIIE) Feb 16, 2016
Falling oil and gas prices have wreaked havoc in currency and stock markets around the world. The declines are welcome news, however, for energy-dependent economies, particularly importers. Eastern Europe stands to benefit the most as a region in terms of increased competitiveness for its products.

Why Negative Interest Rates Will Fail
Frank Hollenbeck (Mises Daily) Feb 16, 2016
It is now just a matter of time before the US central bank follows the central banks of Japan, the EU, Denmark, Sweden and Switzerland in setting negative rates on reserve deposits.

Part II: Central Banks as Relentless Boosters of the Rich
Daniel Stelter (Globalist) Feb 16, 2016
The US Fed doesn’t care about the real economy. It is just keen on stopping asset price deflation.

The Next Big Idea in Economic Growth
Noah Smith (Bloomberg View) Feb 16, 2016
Short-term gains are sexy, but if businesses want to win, it's about the long game.

Learning the Lessons of the Argentine Debt Crisis
Bloomberg View Feb 16, 2016
The international community needs new rules for when governments go bust.

China's Thirst for Wine Has Chile Raising a Glass
Mac Margolis (Bloomberg View) Feb 16, 2016
It's a lesson for other Latin American countries dreaming of moving up the value chain.

Another Reason to Worry About Banks
Mark Whitehouse (Bloomberg View) Feb 16, 2016
Borrowers in countries with weakening currencies will struggle to repay debts.

The Trouble With Banks Is Contained, for Now
Mohamed Aly El-Erian (Bloomberg View) Feb 16, 2016
Continued stock volatility could have serious consequences for the global economy.

What Beats Corruption?
Lucy P. Marcus (Project Syndicate) Feb 16, 2016
Corruption is a global scourge, sometimes becoming so deeply ingrained in countries that combating it seems impossible. But change is possible, as we have seen in the world of corporate governance in the last couple of years.

The China Delusion
Rob Johnson (Project Syndicate) Feb 16, 2016
China’s revised exchange-rate peg continues to rattle global financial markets. And no return to stability is in sight, because the downward pressure on the renminbi reflects growing fear that Chinese policymakers have no coherent solution.

The case for growth-indexed bonds
Olivier Blanchard, Paolo Mauro and Julien Acalin (VoxEU) Feb 16, 2016
One of the legacies of the Global Crisis is a high ratio of public debt to GDP. While current levels may be sustainable, another series of bad shocks could easily tip the balance and lead to unsustainable debt ratios. This column argues that against this background, growth-indexed bonds can help. By decreasing payments when growth is low, they can substantially reduce the upper tail of the distribution of the debt ratio and lessen the risk of a debt explosion. One of the legacies of the Global Crisis is a high ratio of public debt to GDP. While current levels may be sustainable, another series of bad shocks could easily tip the balance and lead to unsustainable debt ratios. This column argues that against this background, growth-indexed bonds can help. By decreasing payments when growth is low, they can substantially reduce the upper tail of the distribution of the debt ratio and lessen the risk of a debt explosion.

A requiem for the octopus of South Africa
John Gapper (FT) Feb 17, 2016
A corporate culture skilled at dominating apartheid nation was outmatched by global capital markets.

Even good leaders must know when to quit
David Pilling (FT) Feb 17, 2016
Holding on means hollowing out the institutions on which the future must be built.

Europe likes the UK but is that enough?
Sebastian Payne (FT) Feb 17, 2016
Many associate the union with freedom but for Britons it represents red tape.

Brexit deal: the new special relationship
Alex Barker (FT) Feb 17, 2016
Promised shake-up of the whole bloc boils down to declaration of British exceptionalism.

The upside of ‘lower for longer’ oil
Michael Heise (FT) Feb 17, 2016
It’s time to remember the fundamentals — low oil prices will boost the global economy.

The Case for Surge Funding
George Soros (Project Syndicate) Feb 17, 2016
Epidemiologists know that spending a large amount of money up front can be far more effective than spending the same amount over several years. The same approach must be applied to the migrant crisis, where large investments are needed to avert an epidemic of fear, hatred, and radicalization.

Painful spillovers from slowing BRICS growth
Raju Huidrom, M Ayhan Kose and Franziska Ohnsorge (VoxEU) Feb 17, 2016
A synchronous growth slowdown has hit emerging markets, especially the BRICS, since 2010, with the potential for significant adverse spillovers to the rest of the world. This column estimates that a 1 percentage point decline in BRICS growth could reduce global growth by 0.4 percentage points, and growth in other emerging markets by 0.8 percentage points, over the following two years. A synchronous growth slowdown has hit emerging markets, especially the BRICS, since 2010, with the potential for significant adverse spillovers to the rest of the world. This column estimates that a 1 percentage point decline in BRICS growth could reduce global growth by 0.4 percentage points, and growth in other emerging markets by 0.8 percentage points, over the following two years.

How to resolve a systemic sovereign debt crisis
Damiano Sandri (VoxEU) Feb 17, 2016
How should the international community deal with the solvency crisis of a systemic country? This column argues that the presence of spillovers calls for reducing bail-ins, while requiring somewhat greater fiscal adjustment by the crisis country. To avoid excessive fiscal consolidation, the international community should also provide highly systemic countries with official transfers. To contain moral hazard, it is important to use transfers only when spillovers are particularly severe. How should the international community deal with the solvency crisis of a systemic country? This column argues that the presence of spillovers calls for reducing bail-ins, while requiring somewhat greater fiscal adjustment by the crisis country. To avoid excessive fiscal consolidation, the international community should also provide highly systemic countries with official transfers. To contain moral hazard, it is important to use transfers only when spillovers are particularly severe.

Asia markets set for a year of exceptions
Jennifer Hughes (FT) Feb 18, 2016
It will pay to follow individual stories at country or company level.

Japan needs new stimulus to save Abenomics
Robin Harding (FT) Feb 18, 2016
Without a fiscal boost, BoJ will have to dive deeper into negative rate territory.

China’s Foreign Exchange Reserves Dwindling Rapidly
Keith Bradsher (NYT) Feb 18, 2016
China’s foreign-exchange reserves have shrunk by nearly a fifth since the summer of 2014, as Beijing has moved to shore up the value of its currency.

Trade, Economic Ties in Focus as US, ASEAN Leaders Meet
Bridges, Volume 20, Number 6 Feb 18, 2016
Regional trade and economic ties were high on the agenda during a two-day summit of US and Southeast Asian leaders in the California resort of Sunnylands, held from 15-16 February.

EU Launches Anti-Dumping Probes into Chinese Steel Products
Bridges, Volume 20, Number 6 Feb 18, 2016
The European Commission has launched investigations into whether various types of Chinese-made steel are being sold at prices below their normal value – a practice known as "dumping" – on the European market.

WTO Members Eye New Negotiating Landscape
Bridges, Volume 20, Number 6 Feb 18, 2016
The head of the WTO told ambassadors last week that they need to "acknowledge their differences," during the first informal meeting of top Geneva-based negotiators since the global trade body's ministerial conference last December.

Interim Economic Outlook: Elusive global growth outlook requires urgent policy response
OECD Insights Feb 18, 2016
Global GDP growth in 2016 is projected to be no higher than in 2015, itself the slowest pace in the past five years, according to the latest OECD Interim Economic Outlook.

Ukraine Resists Its Own Revolution
Marc Champion (Bloomberg View) Feb 18, 2016
A corrupt political system is proving indestructible.

Candidates Ignore Europe at Their Peril
Leonid Bershidsky (Bloomberg View) Feb 18, 2016
If the EU falls apart, the U.S. economy will suffer.

Central Banking Goes Negative
Stephen S. Roach (Project Syndicate) Feb 18, 2016
In what could well be a final act of desperation, central banks are abdicating effective control of the economies they have been entrusted to manage. Indeed, the shift to negative rates will only compound the risks of financial instability and set the stage for the next crisis.

Closing Developing Countries’ Capital Drain
Joseph E. Stiglitz and Hamid Rashid (Project Syndicate) Feb 18, 2016
Developing countries are bracing for a major slowdown this year. And what is important to bear in mind is that the slowdown in China and the deep recessions in the Russian Federation and Brazil only explain part of the broad falloff in growth.

The Inequality Puzzle
Dambisa Moyo (Project Syndicate) Feb 18, 2016
Over the last decade, income inequality has come to be seen as one of the most urgent issues on the international policy agenda. And yet, despite all the attention, few potentially effective solutions have been proposed.

The China Delusion
Robert Johnson (INET) Feb 18, 2016
The current bout of exchange rate anxiety is really just a symptom of the fact that China’s transition from an export-led growth strategy to one propelled by domestic consumption is proceeding far less smoothly than hoped.

Will Democracy Follow Capitalism Into Cuba?
Steven Rattner (NYT) Feb 19, 2016
President Obama will encounter a different, more enterprising country in his visit next month. But freedom remains a distant goal.

China's true economic growth rate
Salvatore Babones (Aljazeera) Feb 19, 2016
The Chinese government should come clean about its economic record.

Investing in South Africa's Economic Gloom
Matthew A Winkler (Bloomberg View) Feb 19, 2016
These bonds go up when the country goes down.

Renewable Energy and Middle East Economic Renewal
Moha Ennaji (Project Syndicate) Feb 19, 2016
The global oil-price bust has devastated economies across the Middle East and North Africa, and prices are unlikely to rebound anytime soon. Morocco’s drive to become a regional renewable-energy powerhouse offers a real option for economic development in other Arab countries.

Africa’s Economic Reality Check
Kingsley Chiedu Moghalu (Project Syndicate) Feb 19, 2016
The global commodity slump and China’s economic slowdown have pummeled several African economies, making clear that the continent’s “rise” was a myth. Now is the time to re-examine the basis of Africa’s recent “boom” and move from feel-good rhetoric to action that will drive genuine economic transformation.

ECB’s original sin and Franco Modigliani’s long view
Biagio Bossone and Stefano Sylos Labini (VoxEU) Feb 19, 2016
The ECB’s response to the Crisis – not providing stimulus to the Eurozone economy when it needed it, and allowing it to slip into a low inflation trap – is a reflection of the monetary union’s faulty architecture. This column recalls a 1998 manifesto from several distinguished scholars that warned EZ policymakers of the potential consequences of a misguided policy framework. Two sets of issues need to be critically addressed by current EZ policymakers: its objectives and instruments. The ECB’s response to the Crisis – not providing stimulus to the Eurozone economy when it needed it, and allowing it to slip into a low inflation trap – is a reflection of the monetary union’s faulty architecture. This column recalls a 1998 manifesto from several distinguished scholars that warned EZ policymakers of the potential consequences of a misguided policy framework. Two sets of issues need to be critically addressed by current EZ policymakers: its objectives and instruments.

The world economy: Out of ammo?
Economist Feb 20, 2016
Central bankers are running down their arsenal. But other options exist to stimulate the economy

Hedge funds: Not dead, just resting
Economist Feb 20, 2016
A bunch of hedge funds have closed. Has the industry reached its peak?

No Brexit
Anatole Kaletsky (Project Syndicate) Feb 20, 2016
Among the multiple existential challenges facing the European Union this year – refugees, populist politics, German-inspired austerity, government bankruptcy in Greece and perhaps Portugal – one crisis is well on its way to resolution. Britain will not vote in June's referendum to leave the EU.

The U.K. Wasn't a Real EU Member Anyway
Leonid Bershidsky (Bloomberg View) Feb 20, 2016
The European Union's deal with David Cameron is a public-relations charade.

Schooling and balanced growth
Gene M. Grossman, Elhanan Helpman, Ezra Oberfield and Thomas Sampson (VoxEU) Feb 20, 2016
For the past few decades, the growth of industrialised economies has been remarkably balanced. This column suggests that such balanced growth results from schooling levels increasing over time. When capital and schooling are sufficiently complementary, increases in schooling offset the effect of capital deepening on the capital share and ensure that growth remains balanced. For the past few decades, the growth of industrialised economies has been remarkably balanced. This column suggests that such balanced growth results from schooling levels increasing over time. When capital and schooling are sufficiently complementary, increases in schooling offset the effect of capital deepening on the capital share and ensure that growth remains balanced.

Concessions to Britain create two-tier EU
Wolfgang Münchau (FT) Feb 21, 2016
If you divide a union you end up with disunion. You cannot have it both ways.

The British Brawl Over Europe
WSJ Feb 21, 2016
The case for EU membership isn’t as clear as it once was.

IMF reform agenda good news for Asia
Adam Triggs (EAF) Feb 21, 2016
The global financial safety net is too fragmented because of the significant growth in regional, bilateral and domestic arrangements that are increasingly decoupled from the IMF.

How did globalisation affect the job biographies of German manufacturing workers?
Wolfgang Dauth, Sebastian Findeisen and Jens Südekum (VoxEU) Feb 21, 2016
A common theme of recent trade theory models is that globalisation-related shocks induce worker sorting across industries, labour markets, and plants. However, there is little empirical evidence of shocks causing such endogenous mobility responses. This column explores how rising international trade exposure affected the job biographies and earnings profiles of German manufacturing workers since the fall of the Berlin Wall. Individuals are found to systematically adjust to globalisation, with a notable asymmetry in the individual labour market responses to positive and negative shocks. Critically, the push effects out of import-competing manufacturing industries are not mirrored by comparable pull effects into export-oriented branches.

China is vulnerable to more shocks
George Magnus (FT) Feb 22, 2016
The point at which Beijing has to choose its trade-off is approaching fast.

Brexit looms as shock for UK financial markets
David Page (FT) Feb 22, 2016
Growth could be up to 7% lower, sterling and equities would fall.

Latin America’s neoliberal bashing loses its lustre
John Paul Rathbone (FT) Feb 22, 2016
Neoliberalism has degenerated into a catch-all Latin pejorative for anything deemed reactionary. http://www.ft.com/intl/cms/s/0/d02a519e-d689-11e5-969e-9d801cf5e15b.html#axzz415byvnDo

The Big-Data Future Has Arrived
Michael S. Malone (WSJ) Feb 22, 2016
It is now possible to measure everything, from the movement of billions of stars to each heartbeat.

Coloring Outside the Lines: How CGD Helped the Asian Development Bank Unlock Billions More in Development Funds
Scott Morris (CGD) Feb 22, 2016
When officials at the Asian Development Bank reached out to CGD for help in the spring of 2014, it wasn’t because they needed a big new idea for their development agenda.

Improving investment asset allocation decisions
Markus Schuller (OECD Insight) Feb 22, 2016
If professional managers of other people´s money want to position themselves as leaders in an investment management niche via innovation-driven competitive edge, the optimization goals have to be targeted to establish and manage high performance investment teams.

Cameron's Most Worthy Campaign Yet
Bloomberg View Feb 22, 2016
For the sake of the U.K. and the EU both, the prime minister needs to succeed.

Getting Europe and the U.S. to Yes
Bloomberg View Feb 22, 2016
Reaching a deal on the Transatlantic Trade and Investment Partnership would be a boon for everyone.

Market Calm May Be Short-Lived
Mohamed Aly El-Erian (Bloomberg View) Feb 22, 2016
Volatility isn't gone, it just took a breather.

How Putin Is Surviving Lost Oil Revenue
Mark Whitehouse (Bloomberg View) Feb 22, 2016
A cheap ruble and spending curbs are helping, for now.

The U.K. Is Fracturing Europe in Pursuit of Ghosts
Marc Champion (Bloomberg View) Feb 22, 2016
Europe's fragmentation risks a more dangerous world for Britain.

Argentina's New Attitude Pays Off in Bond Fight
Matthew S Levine (Bloomberg View) Feb 22, 2016
A judge delivers a strong message to the hedge-fund holdouts.

Why Brexit is Unpatriotic
Dominique Moisi (Project Syndicate) Feb 22, 2016
With the British referendum on EU membership now likely to take place in June, the pro-EU camp should learn from the campaign opposing Scottish independence in 2014. While fear, based on credible risks, has a role to play, so does hope, especially if EU membership is framed as reinforcing national patriotism.

Democracy or Bust in Europe
Yanis Varoufakis (Project Syndicate) Feb 22, 2016
“Europe will be democratized or it will disintegrate!” That maxim is more than a catchphrase from the manifesto of the Democracy in Europe Movement-DiEM25, which was recently launched in Berlin; it is a simple, if under-acknowledged fact.

The Last Days of Nicolás Maduro
Peter Wilson (FP) Feb 22, 2016
Venezuela faces a slow-moving economic disaster that could spell political doom for the embattled president.

How the Eurozone has been infected by the US slowdown
Alberto Caruso, Thomas Hasenzagl, Filippo Pellegrino and Lucrezia Reichlin (VoxEU) Feb 22, 2016
Recent data releases related to the Eurozone have been disappointing. This column argues that momentum from the long-delayed 2014-15 recovery is faltering because the Eurozone economy is affected, with a lag, by the US slowdown. The traditional, lagged relationship between the EZ and US business cycles – which disappeared in the aftermath of the Global Crisis – is now reasserting itself. Recent data releases related to the Eurozone have been disappointing. This column argues that momentum from the long-delayed 2014-15 recovery is faltering because the Eurozone economy is affected, with a lag, by the US slowdown. The traditional, lagged relationship between the EZ and US business cycles – which disappeared in the aftermath of the Global Crisis – is now reasserting itself.

Oil prices and costs in the upstream industry
Alexander Naumov and Gerhard Toews (VoxEU) Feb 22, 2016
The recent dramatic decline in the price of oil runs counter to the argument that oil prices should be high because of the high costs. This column presents new evidence on this relationship. Using a representative global dataset, the authors find that upstream costs follow oil prices with a time lag. In particular, a sustained 10% increase in the price of oil leads to an increase in upstream activity of about 4%, and in this way triggers a sustained 3% increase in global upstream costs after a lag of one to two years. The recent dramatic decline in the price of oil runs counter to the argument that oil prices should be high because of the high costs. This column presents new evidence on this relationship. Using a representative global dataset, the authors find that upstream costs follow oil prices with a time lag. In particular, a sustained 10% increase in the price of oil leads to an increase in upstream activity of about 4%, and in this way triggers a sustained 3% increase in global upstream costs after a lag of one to two years.

Outbound investments show faith in China
Henny Sender (FT) Feb 23, 2016
Deals to take companies private also amount to bets on brighter future.

Is the era of bank bailouts over?
Simon Samuels (FT) Feb 23, 2016
There are few signs of banks tearing up business plans and starting afresh.

The Odds Remain against a Brexit
Jacob Funk Kirkegaard (PIIE) Feb 23, 2016
The last-minute deal between Prime Minister David Cameron of Britain and the leaders of the European Union on February 19 was aimed at persuading Cameron, his government, and the Conservative Party leadership to support staying in the European Union in the referendum scheduled for June 23. Will it do the trick?

Benefiting from the Next Production Revolution
Alistair Nolan and Dirk Pilat (OECD Insight) Feb 23, 2016
The production of goods and services has been transformed in many ways over recent years.

China's Credit Conundrum
Christopher Balding (Bloomberg View) Feb 23, 2016
A flood of new financing is deepening the chances of a crisis.

The Brexit of UK Banking
Howard Davies (Project Syndicate) Feb 23, 2016
One of Prime Minister David Cameron’s four major demands of the EU is a national derogation from elements of the uniform rule book which the ECB is seeking to introduce in the eurozone to ensure a consistent approach across countries. Differences in financial structure between the UK and Europe make that an understandable choice.

Saudi Oil Minister: Production Cut ‘is Not Going to Happen’
Keith Johnson (FP) Feb 23, 2016
Cheap oil will last a while longer, as Saudi Arabia makes clear it’s not going to take it on the chin to save beleaguered U.S. producers.

Big Banks and the White House Are Teaming Up to Fleece Poor People
Pedro Nicolaci da Costa (FP) Feb 23, 2016
From JPMorgan Chase to the U.S. Treasury, the call is out to save the “unbanked.” It’s just another way to rip off the less fortunate.

Russia’s Demographic Problems Started Before the Collapse of the Soviet Union
Guillaume Vandenbroucke (FRBSL Econ Synopses) Feb 23, 2016
Death rates declined in the 20th century for most countries—but not Russia.

Euro-area financial sector: growing and changing
Heike Mai (DB Research) Feb 23, 2016
Despite a small dip in Q3 2015, the assets of financial institutions in the euro area are still broadly at a record level of about EUR 66 trillion. The financial sector – composed of banks, insurance companies & pension funds, and “shadow banks” – more than doubled its size over the past 15 years. Shadow banks have grown the most and now represent 40% of the financial sector with assets estimated at EUR 26 trillion.

Pension funds and systemic risk
Roel Beetsma and Siert Vos (VoxEU) Feb 23, 2016
There is a broad consensus that banks and insurance companies may contribute to systemic risk in the financial system. For other financial market institutions, it is less clear-cut. This column examines the resilience of pension funds to severe shocks. While the evidence indicates that they are of low systematic importance, policy trends that apply to all financial players may undermine this. Specifically, risk-based solvency requirements carry the risk of homogenising the behaviour of all players, potentially amplifying shocks and destabilising markets. There is a broad consensus that banks and insurance companies may contribute to systemic risk in the financial system. For other financial market institutions, it is less clear-cut. This column examines the resilience of pension funds to severe shocks. While the evidence indicates that they are of low systematic importance, policy trends that apply to all financial players may undermine this. Specifically, risk-based solvency requirements carry the risk of homogenising the behaviour of all players, potentially amplifying shocks and destabilising markets.

Can Mauricio Macri Make Argentina a Market Darling Again?
Jonathan Kandell (II) Feb 23, 2016
The president has lifted exchange controls and adopted a growth agenda, but he needs to reach a debt deal and contain deficit to sustain progress

Christine Lagarde deserves her second term
FT Feb 24, 2016
The French politician has proved a successful principal at the International Monetary Fund.

Argentina’s Macri offers investors a ‘nice alignment of stars’
Lucinda Elliott (FT) Feb 24, 2016
Fund managers increase allocations as new president delivers on campaign promises.

The Chinese chronicle of a crash foretold
Jamil Anderlini (FT) Feb 24, 2016
Some see its real estate market as the biggest risk in the global economy.

Why sterling’s fall is good news for Cameron
James Blitz (FT) Feb 24, 2016
The PM will hope that voters will heed the market.

Deutsche Bank Isn’t Deutsch Anymore
Harold James (FP) Feb 24, 2016
While no one was looking, Deutsche Bank became a globalized risk-taking behemoth that might take the country’s economy down with it.

TTIP and “Free Trade”: Myth peddled by corporate interests
John Weeks (Pieria) Feb 24, 2016
The new generation of treaties seek to make the final leap – global privatization of the public sector and an end to accountability to democratic processes.

Can India Handle Bad Times Better Than China?
Michael Schuman (Bloomberg View) Feb 24, 2016
Democracy may be better at dealing with structural weaknesses than autocratic systems.

Binding the Fed Won't Help the Economy
Frederic S Mishkin (Bloomberg View) Feb 24, 2016
Tying rate decisions to certain metrics would be misguided.

Venezuela's Maduro Dooms Himself With Tepid Reforms
Mac Margolis (Bloomberg View) Feb 24, 2016
Replacing the president may be the only way to fix the economy.

Infrastructure for a Sustainable Future
Zia Qureshi (Project Syndicate) Feb 24, 2016
Infrastructure is a powerful driver of economic growth and inclusive development, capable of boosting aggregate demand today and laying the foundations for future growth. But it must be done right, so that it helps to mitigate climate change, rather than exacerbating it.

Saying Yes to Europe
Carl Bildt (Project Syndicate) Feb 24, 2016
For more than 40 years, the UK has played a major role in shaping the course of European integration, while transforming itself into one of the world's most competitive economies. A vote in June to leave the EU risks rapidly undoing both successes.

Who’s Right on US Financial Reform?
Jeffrey Frankel (Project Syndicate) Feb 24, 2016
To get financial regulation right, the US needs leaders with the experience and perseverance to identify the proper measures, push for their enactment, and implement them effectively. If voters are seduced by bumper-sticker slogans in November's presidential election, another financial crisis would become more likely, not less.

The Economy Isn’t A Machine. It’s Organic and Constantly Evolving.
W. Brian Arthur (Evonomics) Feb 24, 2016
The origins of complexity economics.

Introducing ‘Kuznets waves’ in income inequality
Branko Milanovic (VoxEU) Feb 24, 2016
The Kuznets curve was widely used to describe the relationship between growth and inequality over the second half of the 20th century, but it has fallen out of favour in recent decades. This column suggests that the current upswing in inequality can be viewed as a second Kuznets curve. It is driven, like the first, by technological progress, inter-sectoral reallocation of labour, globalisation, and policy. The author argues that the US has still not reached the peak of inequality in this second Kuznets wave of the modern era. The Kuznets curve was widely used to describe the relationship between growth and inequality over the second half of the 20th century, but it has fallen out of favour in recent decades. This column suggests that the current upswing in inequality can be viewed as a second Kuznets curve. It is driven, like the first, by technological progress, inter-sectoral reallocation of labour, globalisation, and policy. The author argues that the US has still not reached the peak of inequality in this second Kuznets wave of the modern era.

Obama Sets Sights on 2016 TPP Approval, Despite Political Landscape
Bridges, Volume 20, Number 7 Feb 25, 2016
US President Barack Obama said on Monday that he was "cautiously optimistic" that Congress will be able to pass the Trans-Pacific Partnership (TPP) Agreement, pledging to submit the necessary legislation for lawmakers' approval this year.

TTIP Twelfth Round Gets Underway, Amid Protests and Timing Questions
Bridges, Volume 20, Number 7 Feb 25, 2016
The twelfth round of US-EU trade and investment talks is well underway in Brussels, Belgium, after a tumultuous start that saw protests disrupt the beginning of the meet.

Oil price collapse: is it different this time?
Noe van Hulst (OECD Insight) Feb 25, 2016
With oil prices unexpectedly dropping to $30 and their lowest level in dollar terms since 2003, many people are asking what the impact will be on the global economy and on energy markets.

Five Reasons to Fear a Brexit
Pedro Nicolaci da Costa (PIIE) Feb 25, 2016
The fight over a potential British exit from the European Union is gaining momentum and so are warnings against it from economists and business leaders about the potential damage to trade, confidence, and growth.

The Fourth Industrial Revolution
Irving Wladawsky-Berger (Pieria) Feb 25, 2016
This digital revolution could significantly improve the quality of life of billions around the world. But, it will be accompanied by serious challenges.

After EU Deal, British Voters Weigh Costs and Benefits of Brexit
David R. Cameron (YaleGlobal) Feb 25, 2016
Like other nations, the United Kingdom faces ongoing pressures from debt, demographics, and refugees fleeing the Middle East. Some politicians use the European Union as a convenient scapegoat for their own troubles. In 2013, British Prime Minister David Cameron pledged to renegotiate terms of Britain’s membership in the EU. A referendum on whether the country should remain a member is set for June. Cameron presides over a Conservative Party divided on Europe, explains David R. Cameron, professor of politics at Yale, and “the pledge was motivated, above all, by his desire to secure a Tory majority in 2015.”

Britain's Unsolvable Problem With Europe
Clive Crook (Bloomberg View) Feb 25, 2016
It won't end with the June 23 referendum.

Leaving Europe Would Be a Terrible Investment
David Winton Harding (Bloomberg View) Feb 25, 2016
The opportunities are undervalued; the obstacles overblown.

The Problem With Evidence-Based Policies
Ricardo Hausmann (Project Syndicate) Feb 25, 2016
Many organizations, from government agencies to philanthropic institutions and aid organizations, now demand that programs and policies be “evidence-based.” But the way this idea is being implemented may be doing a lot of harm, impairing our ability to learn and improve on what we do.

The US Election and the Global Economy
Michael J. Boskin (Project Syndicate) Feb 25, 2016
Big changes are underway in the US, as the country gears up to elect a new president, one-third of the Senate, and the entire House of Representatives this November. The outcome will have profound consequences for US economic policy, and thus for the global economy.

You Can’t Have a Prosperous Economy Without an Entrepreneurial Government
Mariana Mazzucato (Evonomics) Feb 25, 2016
Ending the state vs market myth.

Why Are Some Countries Poor and Others Rich?
Louis Putterman (Evonomics) Feb 25, 2016
Social norms and the need for inclusive economies.

Peering Through the Haze of China’s Economic Data
Edward Wong (NYT) Feb 26, 2016
Economists and academics comment on the quality and official control of economic data coming out of China.

How Much Global Fiscal Stimulus?
Caroline Freund, Paolo Mauro, and Jan Zilinsky (PIIE) Feb 26, 2016
In the run-up to the G-20 deputies meeting in Shanghai this weekend, several calls have been made--including by the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), and the US Treasury--for coordinated stimulus to aggregate demand through measures such as more muscular fiscal policies by countries that have "space" to undertake them (that is, countries whose government debts and deficits are not perceived as excessive and that can borrow at low interest rates). Although additional fiscal stimulus--especially through public investment--in the few countries that can afford it would be appropriate, a major coordinated fiscal stimulus is neither likely nor desirable at this time.

Capital Flows and Deleveraging in Emerging Markets
Otaviano Canuto and Aleksandr V. Gevorkyan (RGE Economonitor) Feb 26, 2016
Capital outflows from emerging market economies have substantially accelerated since last year. 2015 was also a fifth consecutive year of growth deceleration in emerging markets. Some analysts have taken those features as pointing to a high likelihood of a “third wave” of the global financial crisis, this time centered on emerging markets.

Stuff Keeps Getting Cheaper
Justin Fox (Bloomberg View) Feb 26, 2016
Why have durable-goods prices followed such a different trajectory than other prices?

Whose QE Was it, Anyway?
Carmen Reinhart (Project Syndicate) Feb 26, 2016
Years before the 2008 financial crisis, foreign central banks’ ownership of US Treasuries began to catch up with – and then overtake – the Federal Reserve’s share. Indeed, tighter liquidity conditions and increased volatility in financial markets are the byproduct of the reversal in this long cycle of foreign purchases.

Less than Zero in Japan
Koichi Hamada (Project Syndicate) Feb 26, 2016
On February 16, the Bank of Japan joined the ECB, the Swiss National Bank, and others in adopting negative interest rates on deposits. Though the move immediately pushed the interest-rate structure lower, as expected, its effects on the yen and stock market have been an unpleasant surprise.

CFM Survey February 2016: Brexit and market volatility
Michael McMahon, Martin Ellison, Ethan Ilzetzki, Ricardo Reis and Wouter den Haan (VoxEU) Feb 26, 2016
Sterling fell dramatically following the announcement of a date for the UK’s referendum on whether to remain an EU member. This column reports the views of leading experts on whether the possibility of ‘Brexit’ would lead to further volatility in financial markets and the broader economy. There is near unanimity in the monthly Centre for Macroeconomics survey that the Brexit question will increase financial volatility and will pose economic costs in the medium term. Financial volatility can be expected to be especially high if polls remain close. Lack of clarity about the UK’s economic arrangements with the EU following Brexit are the main concern for the medium term. Sterling fell dramatically following the announcement of a date for the UK’s referendum on whether to remain an EU member. This column reports the views of leading experts on whether the possibility of ‘Brexit’ would lead to further volatility in financial markets and the broader economy. There is near unanimity in the monthly Centre for Macroeconomics survey that the Brexit question will increase financial volatility and will pose economic costs in the medium term. Financial volatility can be expected to be especially high if polls remain close. Lack of clarity about the UK’s economic arrangements with the EU following Brexit are the main concern for the medium term.

Why China Isn’t Hosting Syrian Refugees
Liang Pan (FP) Feb 26, 2016
China’s economy would ultimately benefit from an influx of refugees, but the government’s reluctance to admit them has nothing to do with economics.

Negative rates, negative reactions
Mark Cliffe (VoxEU) Feb 26, 2016
As doubts grow about the effectiveness of quantitative easing, monetary policymakers are leaning towards cutting interest rates further into negative territory as their preferred mode of easing. But this begs crucial and untested questions of whether banks will be willing to pass on the cost to their retail depositors, and of how depositors might react if they did so. This column notes a recently published survey in which a large majority of respondents said that they would withdraw their savings, and yet few would spend more. Although it could be argued that savers might react less negatively when confronted with the reality of negative rates, their powerful aversion to the prospect raises troubling questions about the potential effectiveness of this policy tool. As doubts grow about the effectiveness of quantitative easing, monetary policymakers are leaning towards cutting interest rates further into negative territory as their preferred mode of easing. But this begs crucial and untested questions of whether banks will be willing to pass on the cost to their retail depositors, and of how depositors might react if they did so. This column notes a recently published survey in which a large majority of respondents said that they would withdraw their savings, and yet few would spend more. Although it could be argued that savers might react less negatively when confronted with the reality of negative rates, their powerful aversion to the prospect raises troubling questions about the potential effectiveness of this policy tool.

Banking crisis yet again and how to fix it
Stefano Micossi (VoxEU) Feb 26, 2016
A combination of shocks has led to the spectre of a renewed systemic bank crisis within the EU. This column argues that what is needed is a regulatory policy response in the form of joint action by European governments to convince financial investors that bank liabilities are secure. A combination of shocks has led to the spectre of a renewed systemic bank crisis within the EU. This column argues that what is needed is a regulatory policy response in the form of joint action by European governments to convince financial investors that bank liabilities are secure.

History-bound re-elections
Hans Gersbach (VoxEU) Feb 27, 2016
Current office-holders often seem to be re-elected quite easily, irrespective of their performance. This ‘incumbency advantage’ make it harder for first-time candidates and undermines democratic competition. This column proposes a new rule for re-election – the score-replication rule. In its simplest form, such a rule would require incumbents to obtain a percentage of votes at least as high as their highest historical election performance. This would restrain the negative incumbency advantage and potentially reduce policy polarisation. Current office-holders often seem to be re-elected quite easily, irrespective of their performance. This ‘incumbency advantage’ make it harder for first-time candidates and undermines democratic competition. This column proposes a new rule for re-election – the score-replication rule. In its simplest form, such a rule would require incumbents to obtain a percentage of votes at least as high as their highest historical election performance. This would restrain the negative incumbency advantage and potentially reduce policy polarisation.

Managers and productivity differences
Nezih Guner, Andrii Parkhomenko and Gustavo Ventura (VoxEU) Feb 27, 2016
Cross-country differences in productivity have been of long-standing interest to economists. This column digs a little deeper, looking into differing managerial quality between different nations. In high-income countries, the mean earnings of managers tend to grow faster than for non-managers and the earnings growth of managers relative to non-managers corresponds to output per worker. To understand why countries like Italy lag behind the US in terms of output per worker, we should take into account that there are more incentives to invest in managerial skills in the US. Cross-country differences in productivity have been of long-standing interest to economists. This column digs a little deeper, looking into differing managerial quality between different nations. In high-income countries, the mean earnings of managers tend to grow faster than for non-managers and the earnings growth of managers relative to non-managers corresponds to output per worker. To understand why countries like Italy lag behind the US in terms of output per worker, we should take into account that there are more incentives to invest in managerial skills in the US.

An American Cure for Poverty: Remittances
Mary Anastasia O'Grady (WSJ) Feb 28, 2016
Thanks to earnings in ‘El Norte,’ children in a remote village get a better education.

The G-20 Misses Its Sputnik Moment
Mohamed Aly El-Erian (Bloomberg View) Feb 28, 2016
Meeting in Shanghai sidesteps serious challenges to the global economy.

China’s Volatile Growth
Michael Spence and Fred Hu (Project Syndicate) Feb 28, 2016
Uncertainty about China’s economic prospects is roiling global markets – not least because so many questions are so difficult to answer. In fact, China’s trajectory has become almost impossible to anticipate, owing to the confusing – if not conflicting – signals being sent by policymakers.

The World Economy Needs Action, Not Words
Bloomberg View Feb 29, 2016
Governments have to assert themselves to keep G-20 promises.

Don't Dismiss Deflation
A Gary Shilling (Bloomberg View) Feb 29, 2016
Rental costs are artificially boosting the inflation numbers.

Capital Flight Delivers a Verdict on China
Noah Smith (Bloomberg View) Feb 29, 2016
The question is whether a normal slowdown follows or an emerging-market bust.

Vietnam’s Corruption Problem
Dien Luong (Diplomat) Feb 29, 2016
The country struggles to fight corruption as the public is kept in the dark about officials’ wealth.

Economic and Geopolitical Fallout From China’s Slowing Growth
CFR Feb 29, 2016
The prospects for future Chinese growth, the implications of a Chinese slowdown for financial and commodity markets, and the potential effects on the country’s territorial ambitions.

Closing the Investment Gap
Laura Tyson (Project Syndicate) Feb 29, 2016
Business investment depends on expected future demand and output growth, not on current returns or retained earnings. This “accelerator” theory of investment explains most – but not all – of the weakness of business investment in the developed economies since the 2008 financial crisis.

The End of Big Banks
Simon Johnson (Project Syndicate) Feb 29, 2016
Both before the 2008 global financial crisis and today, just over a dozen big banks dominate the world’s financial landscape. And yet the ground is shifting beneath the financial sector, and big banks could soon become a thing of the past.

The World’s Reluctant Central Banker
Andrés Velasco (Project Syndicate) Feb 29, 2016
In a largely dollarized world economy, the only certain tool for avoiding liquidity crises is a lender of last resort in dollars, and that lender is the US Federal Reserve. The sooner the US and the rest of the world fully recognize this, the safer the world economy will be.

China’s Lonely Fight Against Deflation
Andrew Sheng and Xiao Geng (Project Syndicate) Feb 29, 2016
The current battle over the renminbi’s exchange rate reflects growing tension between the interests of the “financial engineers” (such as the managers of dollar-based hedge funds) and the “real engineers” (Chinese policymakers). Only if the latter win can currency stability be ensured.

Misreading China's Economy
Edoardo Campanella (FA) Feb 29, 2016
Why the old measures of growth don't work.

Global imbalance risk and exchange rates
Pasquale Della Corte, Steven Riddiough and Lucio Sarno (VoxEU) Feb 29, 2016
The world’s savings and investments are imbalanced. While some countries persistently borrow over time, others act like bankers to the world – lending year in and year out. This column argues that these imbalances matter for asset pricing in financial markets, and are key to understanding excess returns in currency markets. The world’s savings and investments are imbalanced. While some countries persistently borrow over time, others act like bankers to the world – lending year in and year out. This column argues that these imbalances matter for asset pricing in financial markets, and are key to understanding excess returns in currency markets.