News & Commentary:

Articles/Commentary

Only a clean break for Britain from the EU will suffice
Sabine Eberenz (FT) Feb 1, 2017
Businesses need confidence to adapt to today’s economic reality.

Playing fast and loose with imports hurts consumers
Chris Giles (FT) Feb 1, 2017
Despite rising prices, Brits will want to keep buying iPhones and German cars.

American currency confusions
Martin Sandbu (FT) Feb 1, 2017
Navarro’s mercantilism spells out implicit US view, and what is wrong with it.

Is Germany a Currency Manipulator?
Jeromin Zettelmeyer (PIIE) Feb 1, 2017
Peter Navarro, the head of the Trump administration’s newly created National Trade Council, touched off a controversy on January 31 by telling the Financial Times that Germany is using a “grossly undervalued” euro to “exploit” the United States and its European Union partners.

Three Truths about Trade Agreements
K@W Feb 1, 2017
Winners, losers and the impact of technological change.

Debt and Deficits Are About to Matter Again for Investors
Danielle DiMartino Booth (Bloomberg View) Feb 1, 2017
The U.S.'s fiscal position is poised to worsen at the wrong time.

Actually, Germany Hates the Undervalued Euro
Leonid Bershidsky (Bloomberg View) Feb 1, 2017
Germany may benefit from the weak euro, but it really wants a stronger one.

What Trump's 20% Border Tax Would Mean
Shelley Goldberg (Shelley Goldberg) Feb 1, 2017
Higher costs and reduced profits for U.S. companies.

Economic Snapshot for the Major Economies
Ricard Torné (Focus Economics) Feb 1, 2017
The world ends 2016 on a strong footing.

Environmental economic history
James Fenske and Namrata Kala (VoxEU) Feb 1, 2017
A global literature has developed that illuminates the reciprocal and dynamic relationship between humans and their environment in other regions across the world This column, which first appeared as a chapter in a recent Vox eBook, surveys on two topics in the literature: the impact of geographic endowments and the impact of environmental shocks on historical and long-run development. A global literature has developed that illuminates the reciprocal and dynamic relationship between humans and their environment in other regions across the world This column, which first appeared as a chapter in a recent Vox eBook, surveys on two topics in the literature: the impact of geographic endowments and the impact of environmental shocks on historical and long-run development.

France could turn the populist tide
Philip Stephens (FT) Feb 2, 2017
A critical mass of voters has decided that the country needs reform.

Permit Europe’s parliament to defend the four freedoms
Xavier Van Hove (FT) Feb 2, 2017
Only if goods, services, capital or people move across borders should its laws apply.

Stepping into the breach
Martin Sandbu (FT) Feb 2, 2017
How can free trade be sustained without US support?

Slow growth in Mexico casts doubt on merits of Nafta
Steve Johnson (FT) Feb 2, 2017
Output per worker has ‘astonishingly’ remained flat for 35 years.

Theresa May: UK, US Setting Stage for Possible Trade Talks
Bridges, Volume 21, Number 3 Feb 2, 2017
The United Kingdom and the United States are examining how to move ahead with preliminary trade negotiations, according to UK Prime Minister Theresa May, who met with her American counterpart last week.

Least Developed Countries Propose New Caps on Trade-Distorting Farm Subsidies at WTO
Bridges, Volume 21, Number 3 Feb 2, 2017
WTO members must agree to cuts and new ceilings for trade-distorting farm subsidies, says a proposal from a group of dozens of the world’s poorest countries at the global trade body.

Trump, Abe to Discuss Potential Bilateral Deal and TPP at Washington Summit
Bridges, Volume 21, Number 3 Feb 2, 2017
US President Donald Trump has announced plans to meet with Japanese Prime Minister Shinzo Abe in Washington to discuss trade and security matters in what will be the first face-to-face talks between the leaders since Trump took office last month.

Beyond Brexit: Time for a “British Trade Promise” on Free Trade Access for Poor Countries
Ian Mitchell and Owen Barder (CGD) Feb 2, 2017
The UK Government has today published a white paper on its broad approach to Brexit—what ’s missing though is a commitment to developing countries on the UK’s trade policy. Having emphasised trade at the heart of its economic strategy on international development, it now needs to commit to providing “duty free quota free” access for developing countries, or risk damaging investment and trade over the next two years and beyond.

Trumped Up? The Mexican Economy in 2017 and Beyond
Monica de Bolle (PIIE) Feb 2, 2017
A little more than a year ago, the economic outlook for Mexico was looking up. In October 2015, economists at the International Monetary Fund (IMF) projected growth as likely to improve in 2017, following three years of subpar performance.

Bank of England Is Right to Ignore Inflation
Mark Gilbert (Bloomberg View) Feb 2, 2017
With wages still stagnant, higher borrowing costs are the last thing British consumers need.

The U.S. and the New “BR Index”
Jean-Francois Boittin (Globalist) Feb 2, 2017
A close-up examination of whether the US is becoming a banana republic.

The End of Trump’s Market Honeymoon
Nouriel Roubini (Project Syndicate) Feb 2, 2017
Expectations of stimulus, lower taxes, and deregulation might boost the US economy and the stock market’s performance in the short term. But US President Donald Trump's inconsistent, erratic, and destructive policies will take a heavy toll on domestic and global economic growth in the long run.

Trading in Trump’s Lies
J. Bradford DeLong (Project Syndicate) Feb 2, 2017
The loss of US manufacturing employment over the past three decades is undoubtedly a significant problem; but anyone who blames this trend on “bad” trade deals is playing the fool. NAFTA, for example, accounts for only a vanishingly small share of the decline.

Africa’s Decade of Industrialization
Li Yong (Project Syndicate) Feb 2, 2017
In today’s interdependent global economy, Africa remains a weak link. If the world is to achieve the Sustainable Development Goals, it must help Africa to strengthen its development substantially by promoting rapid and responsible industrialization.

Real Leadership Requires True Globalization
Dan Steinbock (EFR) Feb 2, 2017
After 2008, world trade, investment and migration have come to a standstill. What the world requires is responsible leadership, which rests on inclusive globalization.

Innovation and inventors during the rise of American ingenuity
Ufuk Akcigit, John Grigsby and Tom Nicholas (VoxEU) Feb 2, 2017
A pressing issue facing policymakers around the globe today is how to generate long-term economic growth through technological innovation. Using a new dataset that matches 19th and 20th century patent records with census data, this column attempts to shed some light on the ‘golden age’ of US innovation. Population density and financial development are found to be important determinants of state innovativeness, while education appears to be the critical input at the individual level. These findings have important implications for innovation policy today. A pressing issue facing policymakers around the globe today is how to generate long-term economic growth through technological innovation. Using a new dataset that matches 19th and 20th century patent records with census data, this column attempts to shed some light on the ‘golden age’ of US innovation. Population density and financial development are found to be important determinants of state innovativeness, while education appears to be the critical input at the individual level. These findings have important implications for innovation policy today.

Technological creativity and the Great Enrichment: Reflections on the 'Rise of Europe'
Joel Mokyr (VoxEU) Feb 2, 2017
Much has been written on why the process of modern economic growth, or ‘the Great Enrichment’, started in western Europe in the 18th century. This column, which first appeared as a chapter in a recent Vox eBook, argues that political fragmentation, coupled with an intellectual and cultural unity, a more or less integrated market for ideas, allowed Europe to benefit from the increasing return associated with intellectual activity. Much has been written on why the process of modern economic growth, or ‘the Great Enrichment’, started in western Europe in the 18th century. This column, which first appeared as a chapter in a recent Vox eBook, argues that political fragmentation, coupled with an intellectual and cultural unity, a more or less integrated market for ideas, allowed Europe to benefit from the increasing return associated with intellectual activity.

In Search of the Elusive Victims of Globalization
Ed Dolan (RGE Economonitor) Feb 3, 2017
The 2016 US Presidential election has placed trade policy high on the national agenda. Both Bernie Sanders, on the left, and Donald Trump, on the right, campaigned on overtly protectionist platforms.

Why Angela Merkel Should Be Grateful to Donald Trump
Daniel Stelter (Globalist) Feb 3, 2017
With Merkel lacking both an agenda and a vision, the US push to deal with Germany’s export surplus is a welcome impetus for long overdue domestic reforms.

Trump’s Currency War Against Germany Could Destroy the EU
Harold James (FP) Feb 2, 2017
Trump’s currency war against Germany could destroy the EU — and that might be the point.

Want to reduce inequality? Try the Black Death.
George F. Will (WP) Feb 3, 2017
A new book says that drastic measures historically have been necessary to reduce inequality.

More private capital for infrastructure investment in Asia?
Georg Inderst (OECD Insights) Feb 3, 2017
Since the financial crisis, infrastructure investment has moved up the political agenda in most countries – now also including the USA. Asia is often seen as the world’s infrastructure laboratory, with massive construction of transport and energy projects.

The IMF Should Get Out of Greece
Ashoka Mody (Bloomberg View) Feb 3, 2017
The fund's involvement has been an unmitigated disaster.

Fed's Influence Wanes as Markets Take a Cue From Policies
Mohamed Aly El-Erian (Bloomberg View) Feb 3, 2017
Domestic measures and the U.S.'s relationships with other countries will matter more.

Mexico Blowback Should Dissuade Trump From Taking On China
Komal S Sri-Kumar (Bloomberg View) Feb 3, 2017
Cost of border tax dwarfs damage of a spat with the world's second-biggest economy.

Recovering the Promise of Technocracy
Parag Khanna (Project Syndicate) Feb 3, 2017
Instead of obsessing about the degeneration of democracy at the hands of demagogues, we must define a form of government that can address the grievances that have fueled populism's rise. Such a system should combine the virtues of democracy – that is, voter input – with the utilitarianism and realism of genuine expertise.

Refugees Are a Great Investment
Philippe Legrain (FP) Feb 3, 2017
By banning refugees from the United States, Donald Trump isn’t just denying them an opportunity. He’s harming the American economy.

The European origins of economic development
William Easterly and Ross Levine (VoxEU) Feb 3, 2017
Countries have followed widely divergent paths of economic development since European colonisation, with some going on to be among the richest countries in the world today, and others having experienced little economic development over the last few centuries. This column, taken from a recent Vox eBook, uses a new database on the European share of the population during colonisation to examine the historical determinants of colonial European settlement and its relationship with current economic development.

Bank competition and financial stability: The role of financial innovation
David Marques-Ibanez and Michiel van Leuvensteijn (VoxEU) Feb 3, 2017
An unprecedented process of deregulation took place in the banking sector in the three decades prior to the Global Crisis. This column argues that during periods of intense bank competition, financial innovation can compound the adverse effects of competition on stability. Coupled with strong competition, the significant use of one such innovation – securitisation – in the run-up to the crisis was related to high levels of bank risk.

Is the U.S. Economy Too Dynamic, or Not Dynamic Enough?
Neil Irwin (NYT) Feb 4, 2017
Some economists say volatility has left workers feeling unmoored. Others point to stagnation as a cause.

Reducing uncertainty around exchange rate forecasts
Massimiliano Marcellino and Angela Abbate (VoxEU) Feb 4, 2017
Exchange rates are important contributors to business cycle fluctuations in open economies. Forecasting exchange rates is not an easy task, however, perhaps due to the instability of their relationship with economic drivers. This column introduces a model that also allows for changing volatility when forecasting exchange rates. Modelling time variation in the cross-rate relationships, and in the volatilities of the shocks hitting the economic system, significantly improves forecasts.

A bleak outlook for UK living standards
FT View Feb 5, 2017
This is hardly the time to actively engineer a rise in inequality.

Virtual sovereignty can help govern our data
Andrew Burt (FT) Feb 5, 2017
The idea is to bind the laws of each country to the location of the users.

Revoking trade deals will not help American middle classes
Lawrence Summers (FT) Feb 5, 2017
The advent of global supply chains has changed production patterns in the US.

Peter Navarro has a point when it comes to Germany and the euro
Wolfgang Münchau (FT) Feb 5, 2017
Merkel’s government sees the current account surplus as a sign of economic strength.

Daily gravity in the carrot trade in Japan
Kazutaka Takechi (VoxEU) Feb 5, 2017
The trade patterns of agricultural products, which are traded inter-regionally on a daily basis, are quite volatile, with trade often not taking place at all. Using daily data on the carrot trade in Japan, this column shows how supply and demand shocks and trade costs can cause frequent changes in supply patterns. Policies to reduce fixed trade costs, such as improving inventory management or traffic control, are needed even in a country with sufficient transport infrastructure such as Japan. The trade patterns of agricultural products, which are traded inter-regionally on a daily basis, are quite volatile, with trade often not taking place at all. Using daily data on the carrot trade in Japan, this column shows how supply and demand shocks and trade costs can cause frequent changes in supply patterns. Policies to reduce fixed trade costs, such as improving inventory management or traffic control, are needed even in a country with sufficient transport infrastructure such as Japan.

Le Pen’s siren call to the French people
FT View Feb 6, 2017
An unworkable economic plan is mixed with unvarnished xenophobia.

Turkey: caught between dollar strength and domestic weakness
Dan Bogler (FT) Feb 6, 2017
Central bank governor Cetinkaya is relying on unorthodox policies to stabilise lira.

Randgold manages political risks as US strong man moves market
Matthew Vincent (FT) Feb 6, 2017
There appears to be a correlation between Trump’s tweets and the gold price.

Uncertainty is sweeping the globe. That’s very bad for business.
Catherine Rampell (WP) Feb 6, 2017
The world desperately needs the United States to be a beacon of stability.

Weathering the Commodities Storm
Thomas Mcgregor (RGE Economonitor) Feb 6, 2017
Are natural resources a curse or a blessing? History has taught us that for every story of economic success in exploiting natural resources there is one of failure.

How the US Immigration Ban Hurts Students, Universities, and the US Economy
Gaurav Khanna (CGD) Feb 6, 2017
Several recent articles about President Trump’s executive order on immigration from seven Muslim-majority countries have looked at how it affects thousands of international students all across the US. At stake here is not only their ability to benefit from a US education, but also how the US benefits from having students from those countries at American institutions, in terms of revenue, future productivity, and jobs. My own research, using both administrative and survey data, shows that the costs of this ban to the US will include costs to public universities and lost global talent from abroad. The US is the largest "exporter" of higher education services, and the ban could hit universities with a revenue loss of around $200 million a year, with larger impacts on the local economies around campuses.

China banks in 2017: No rebound in sight, rising risks for smaller banks
Alicia García-Herrero (ABF/Bruegel) Feb 6, 2017
It is unlikely that risk in the Chinese banking sector will abate any time soon. And the worries are strongest for smaller institutions. However, the chances of a total crisis are low, and proactive decisions now could pay dividends in the medium term.

Statistical Insights: Inclusive Globalisation, does firm size matter?
OECD Statistics Directorate (OECD Insights) Feb 6, 2017
The rapid increase in global value chains (GVCs) in the last two decades, in response to falling communication costs and reductions in trade barriers, has in large part been fuelled by large and multinational enterprises. But across the OECD, 99.8% of enterprises are classified as SMEs, very few of which engage in international trade. Yet collectively, SMEs are responsible for two-thirds of employment and over half of economic activity in the OECD. This has raised policy concerns about the inclusive nature of globalisation and more specifically whether SMEs, and their employees, are less able to benefit from GVCs.

Deutsche Bank’s Culture Wars
Frank Vogl (Globalist) Feb 6, 2017
Deutsche Bank has become the poster boy for money laundering.

China's Factories Don't Fear Trump
Bloomberg View Feb 6, 2017
Tariffs hurt everyone.

Trump Isn't All Wrong About Currency Manipulation
Noah Smith (Bloomberg View) Feb 6, 2017
China and Japan used to game foreign-exchange markets to boost exports, but that’s mostly in the past.

Pakistan's Economy Is a Pleasant Surprise
Tyler Cowen (Bloomberg View) Feb 6, 2017
Stocks are up, growth is rising, and poverty is falling.

Greening Digital Finance
Simon Zadek (Project Syndicate) Feb 6, 2017
Digital finance has turned out to be an unexpected revolutionary, simply by enabling low-cost financial inclusion. But if fintech is to reach its potential to advance the global public good, another factor must be accounted for: the environment.

The Art of European Integration
Sergei Guriev (Project Syndicate) Feb 6, 2017
Some European leaders argue that Brexit will make it easier to advance EU integration, as the remaining member states are more likely to agree on steps that Britain might have resisted. But the UK, it turns out, is far from the only source of political resistance to the goal of "ever closer union."

The Private Sector and the SDGs
Mahmoud Mohieldin and Svetlana Klimenko (Project Syndicate) Feb 6, 2017
Achieving the global Sustainable Development Goals (SDGs) will cost a lot more than $132 billion per year – the total amount of official development assistance currently on offer. To bridge the financing gap, the private sector – with the help of updated financial markets – will have to step up.

The Global Economy’s Surprising Resilience
Jim O'Neill (Project Syndicate) Feb 6, 2017
Disconcerting political developments in the US and the UK might lead one to conclude that an already challenged world economy will struggle even more in the near term. But the cyclical evidence – based on six key indicators – actually suggests otherwise.

Double diversification
Thorvaldur Gylfason and Per Wijkman (VoxEU) Feb 6, 2017
There is a cross-country relationship between economic performance and both economic and political diversification. This column presents global evidence that between 1962 and 2012, both types of diversification were closely related to economic performance. This period included the spread of democracy, the global liberalisation of trade, and the termination of the Cold War. The recent retreat of democracy, the popular reaction to trade liberalisation in key countries, and a new cold war appear likely to reduce economic efficiency and growth. There is a cross-country relationship between economic performance and both economic and political diversification. This column presents global evidence that between 1962 and 2012, both types of diversification were closely related to economic performance. This period included the spread of democracy, the global liberalisation of trade, and the termination of the Cold War. The recent retreat of democracy, the popular reaction to trade liberalisation in key countries, and a new cold war appear likely to reduce economic efficiency and growth.

Five Brexit challenges as Britain leaps into the unknown
Martin Wolf (FT) Feb 7, 2017
In all, UK trade may shrink by up to a quarter in both services and goods.

Global economic growth: what could possibly go wrong?
Martin Sandbu (FT) Feb 7, 2017
Policymakers should not get in the way of an economy’s ability to self-heal.

Eastern European rate rises hove into view
Steve Johnson (FT) Feb 7, 2017
Tight labour markets expected to push inflation, interest rates higher.

Business bets on Brazil economic rally
Joe Leahy (FT) Feb 7, 2017
Foreign direct investment hits $15.4bn record high for month amid reform hopes.

How China Lost $1 Trillion
Keith Bradsher (NYT) Feb 7, 2017
The central bank said its foreign-exchange holdings slipped to $3 trillion last month from a high of nearly $4 trillion. Here’s what it means for China and the world.

The right way to preserve financial stability
WP Feb 7, 2017
Dodd-Frank needs repairs, but heightened capital requirements should stay.

The US-Mexico relationship is dangerously on the edge
Arturo Sarukhan (Brookings) Feb 7, 2017
"Alternative facts" about cross-border trade and immigration threaten to undo the past two decades of collaboration and relationship-building between the two countries.

The Trials of the Egyptian Pound
Brendan Meighan (CEIP) Feb 7, 2017
Egypt’s suddenly depreciated pound will likely rebound in the long run, but in the meantime will suffer from pent-up demand for U.S. dollars.

The Truth about Mexico
Monica de Bolle (PIIE) Feb 7, 2017
As depicted by the Trump administration, the Mexican economy has flourished under the North American Free Trade Agreement (NAFTA) at the expense of its neighbors, particularly the United States.

Markets Digest Trump Trade With Side of Protectionism
Robert Burgess (Bloomberg View) Feb 7, 2017
Investors are realizing that fiscal stimulus is still a long ways away.

China's Currency Policy Approaches Breaking Point
Junheng Li (Bloomberg View) Feb 7, 2017
A slowdown means less ammunition in a trade war.

Leaving Greece in Limbo Helps No One
Mark Gilbert (Bloomberg View) Feb 7, 2017
Looming debt payments should motivate Greece's creditors to find a solution.

What Trump Needs to Learn About Planes, Trains and Automobiles
Peter R Orszag (Bloomberg View) Feb 7, 2017
Splashy new projects get the attention, but the real problem is with boring upkeep and operations.

Don't Sell the Euro Short. It's Here to Stay.
Barry Eichengreen (Bloomberg View) Feb 7, 2017
The single currency's opponents underestimate the risks and costs of a euro zone break-up.

Trump's Trade Rejection Is a Blight for U.S. Cotton
Shelley Goldberg (Bloomberg View) Feb 7, 2017
Rising demand has fueled two straight years of rallies, and America could miss out.

Russia’s Bad Equilibrium
Anders Åslund (Project Syndicate) Feb 7, 2017
The fear of economic destabilization that has permeated Russia since its 2014 invasion of Ukraine, which was met with crippling Western sanctions, has all but evaporated. For many Russians, the mix of nationalist euphoria, creature comforts, and domestic repression seems to be a potent elixir.

Brexit in a Brave New World
Daniel Gros (Project Syndicate) Feb 7, 2017
When it comes to bilateral trade, gains and losses are distributed asymmetrically between the larger and the smaller economy. In the best of times, that would be bad news for the United Kingdom as it seeks new trade deals with the European Union and others – and these are not the best of times.

How Economic Populism Works
Andrés Velasco (Project Syndicate) Feb 7, 2017
Anti-populists in the US, the UK, and elsewhere must grasp the reality that bad policies pay off, both economically and politically, long before they become toxic. If critics do not understand that and act accordingly, populists will have as long (and destructive) a run in the rich countries as they once had in Latin America.

Talking trade in the post-truth era
Lucian Cernat and Marion Jansen (VoxEU) Feb 7, 2017
For some time, it was possible to win over trade sceptics by providing explicit numbers reflecting the losses from protectionism. Now it seems that the larger public has become indifferent to evidence-based debates. This column argues for increased use of micro-evidence and firm-level data in policy debates to make the case for trade. By linking trade to personal well-being, an increased focus on micro-economic evidence can generate stronger narratives and greater credibility among voters. For some time, it was possible to win over trade sceptics by providing explicit numbers reflecting the losses from protectionism. Now it seems that the larger public has become indifferent to evidence-based debates. This column argues for increased use of micro-evidence and firm-level data in policy debates to make the case for trade. By linking trade to personal well-being, an increased focus on micro-economic evidence can generate stronger narratives and greater credibility among voters.

Short-Run Effects of Lower Productivity Growth: A Twist on the Secular Stagnation Hypothesis
Olivier Blanchard, Guido Lorenzoni, Jean-Paul L'Huillier (PIIE) Feb 7, 2017
Despite interest rates being close to zero, US GDP growth has been anemic in the last four years largely due to lower optimism about the future, more specifically to downward revisions in growth forecasts, rather than legacies of the past.

Donald Trump’s divisive delusions on trade
FT View Feb 8, 2017
The new administration is trying to sow discord among other nations.

Brazil’s recession in charts
Jonathan Wheatley (FT) Feb 8, 2017
Contraction has been sharp and deep, and the country’s recovery will be long and slow.

Obsessing Over the Yen
WSJ Feb 8, 2017
Currencies are the wrong focus for the Trump-Abe talks.

The IMF Comes Clean on Greece
WSJ Feb 8, 2017
Years too late, the fund tells the truth about Athens and bailouts.

Tougher Visa Policies Could Carry Heavy US Economic Cost
Charles Kenny and Dev Patel (CGD) Feb 8, 2017
The Trump administration has imposed a number of entry restrictions through executive order, justifying them on national security grounds. But one additional set of concerns regards the economic costs of tightening visa restrictions, which can be considerable even when looking solely at temporary visitors. While the current bans would likely have a limited economic impact on the US through reduced tourist and business travel, the extension of restrictions could carry increasingly heavy economic costs.

Work Visas as Aid: Fight Poverty Abroad with Economic Growth at Home
Michael Clemens and Hannah Postel (CGD) Feb 8, 2017
A small pilot project between the US and Haiti showed that the US could directly and effectively assist Haitian families to earn dignified livelihoods—at negative cost to US taxpayers. That is, the two countries could cooperate for development in a way that actually adds value to the US economy. It did this with short-term work visas.

Will America’s trade partners embrace deals on Trump’s terms?
Geoffrey Gertz (Brookings) Feb 8, 2017
President Trump has stated his preference for one-on-one trade negotiations, but Geoffrey Gertz argues this approach poses certain risks to America’s trade partners.

People Power Rise Up Against Corruption in Romania
Hannah Thoburn (Eurasia Uncovered/WA) Feb 8, 2017
Massive crowds gathered in cities across Romania to protest official corruption, forcing Prime Minister Grindeanu to back off a law that would sanction bribes.

How Turkey and China Undermine Their Future Prosperity
Stephan Richter (Nikkei Asian Review/Globalist) Feb 8, 2017
Ruling by oppression stunts human development and significantly reduces an economy’s ability to advance economically.

Russia’s Asian Trade Game
Anton Tsvetov (Diplomat) Feb 8, 2017
With the Trans-Pacific Partnership on pause, the Asian free trade landscape has changed. What does that mean for Russia?

The IMF Staff Has It Right on Greece
Mohamed Aly El-Erian (Bloomberg View) Feb 8, 2017
Management shouldn’t have deviated from the institution’s own guidelines and practices.

What India's Central Bank Is Really Saying
Mihir Sharma (Bloomberg View) Feb 8, 2017
The outlook is cloudier and more uncertain than the government seems to think.

What Brazil's Populist Bust Could Teach Trump
Mac Margolis (Bloomberg View) Feb 8, 2017
Latin America's biggest economy provides an object lesson in the dangers of sweetheart deals and naked protectionism.

Trade Deficit With Mexico Is Good for America
Michael Pettis (Bloomberg View) Feb 8, 2017
Punishing its southern neighbor would make the U.S. worse off.

Adapting to the New Globalization
Laura Tyson and Susan Lund (Project Syndicate) Feb 8, 2017
Acknowledgement of globalization's disruptive effects on millions of advanced-economy workers is long overdue. But new trade policies must be based on a clear-eyed understanding of how globalization is evolving, not on a backward-looking vision based on the last 30 years.

Macron the Maverick
Kemal Dervis (Project Syndicate) Feb 8, 2017
French presidential candidate Emmanuel Macron has positioned himself against the old left and the old right, but he is neither a left- or right-wing populist, nor a traditional centrist. If he wins, he could give hope to those around the world who are anxious about the rising tide of populism and hyper-nationalism.

Managing Big Data’s Big Risks
Ernest Davis (Project Syndicate) Feb 8, 2017
In the last 15 years, we have witnessed an explosion in the amount of digital data available – and in the computer technologies used to process it. But while Big Data will undoubtedly deliver important scientific, technological, and medical advances, we must not lose sight of four major risks.

Steve Bannon’s War on India’s High-Tech Economy
James Crabtree (FP) Feb 8, 2017
The Trump administration's protectionism isn't just focused on foreign manufacturers but competition from foreign services.

Unequal opportunities, unequal growth
Gustavo A. Marrero, Juan Gabriel Rodríguez and Roy Van der Weide (VoxEU) Feb 8, 2017
Inequality can be both good and bad for growth. Unequal societies may be holding back one segment of the population while helping another. This column exploits US data to argue that inequality affects negatively the future income growth of the poor and positively that of the rich. This relationship is largely driven by inequality of opportunity, which limits the growth prospects at the bottom of the income distribution. Inequality can be both good and bad for growth. Unequal societies may be holding back one segment of the population while helping another. This column exploits US data to argue that inequality affects negatively the future income growth of the poor and positively that of the rich. This relationship is largely driven by inequality of opportunity, which limits the growth prospects at the bottom of the income distribution.

Misallocation in Europe during the Global Crisis
Biswajit Banerjee and Fabrizio Coricelli (VoxEU) Feb 8, 2017
Financial markets and the banking sectors in several European countries are still struggling to recover from the Global crisis, with many instances of unresolved problems involving bad loans and fragility of banks. This column introduces a new CEPR eBook, drawing on research presented at the first conference of the European Central Banking Network, which examines the relationship between credit booms and busts and the potential misallocation of resources. Improving the functioning of credit markets and their ability to improve the allocation of resources is crucial to lift Europe out of the phase of low growth that has followed the Global Crisis. Financial markets and the banking sectors in several European countries are still struggling to recover from the Global crisis, with many instances of unresolved problems involving bad loans and fragility of banks. This column introduces a new CEPR eBook, drawing on research presented at the first conference of the European Central Banking Network, which examines the relationship between credit booms and busts and the potential misallocation of resources. Improving the functioning of credit markets and their ability to improve the allocation of resources is crucial to lift Europe out of the phase of low growth that has followed the Global Crisis.

Crisis, Credit and Resource Misallocation: Evidence from Europe during the Great Recession
Biswajit Banerjee, Fabrizio Coricelli (VoxEU) Feb 8, 2017
1st Policy Research Conference of the European Central Banking NetworkThe chapters in this eBook analyse the behaviour of bank credit in Europe during the Great Recession and the subsequent recovery, drawing on research presented at the first conference of the European Central Banking Network (ECBN) held in Ljubljana in September 2015. 1st Policy Research Conference of the European Central Banking NetworkThe chapters in this eBook analyse the behaviour of bank credit in Europe during the Great Recession and the subsequent recovery, drawing on research presented at the first conference of the European Central Banking Network (ECBN) held in Ljubljana in September 2015.

Recent declines in the Fed’s longer-run economic projections
Jonas D. M. Fisher and Christopher Russo (FRB Chicago Fed Letter) Feb 8, 2017
This Letter investigates the evolution of longer-run economic projections made by participants of the Federal Reserve’s monetary policy committee, the Federal Open Market Committee (FOMC), in its Summary of Economic Projections (SEP), and by the private sector. Over the past few years, the FOMC’s longer-run projections for economic growth, unemployment, and the federal funds rate have fallen quite dramatically. We verify that these views are shared by the private sector and show that the declines are not unprecedented in magnitude, but the projections have reached historical lows. We point to some reasons for these developments and touch on some implications for monetary policy.

Conflict over Athens’ surplus needles the IMF
FT View Feb 9, 2017
The fund must overrule the self-interest of its European members.

Peace and prosperity: it is worth saving the liberal order
Philip Stephens (FT) Feb 9, 2017
For all its faults, the existing system is better than the alternatives.

Solidarity with Greece will render its debt sustainable
Klaus Regling (FT) Feb 9, 2017
IMF analysis ignores what sets eurozone members apart from other countries.

China’s stable stock markets open door for deleveraging push
FT Confidential Research Feb 9, 2017
Expect fewer private placements and more IPOs as regulatory winds shift

Globalisation Debate Continues in Europe as Election Season Gets Underway
Bridges, Volume 21, Number 4 Feb 9, 2017
The debate over the merits of globalisation continues to hold centre stage in Europe, as leaders prepare for a wave of elections across key economies, while also working to advance the EU's goals of increased trade ties abroad and a strengthened union within.

TPP Signatories Consider Next Steps Following US Withdrawal
Bridges, Volume 21, Number 4 Feb 9, 2017
Various meetings between ministers from the Trans-Pacific Partnership (TPP) countries are on the docket in the coming weeks, as the remaining signatories of the Pacific Rim accord weigh their next steps after the US' withdrawal from the pact.

How the Euro Became Decoupled From the Price of Assets
Ben Emons (Bloomberg View) Feb 9, 2017
In recent weeks, rhetoric seems to have politicized currencies.

Don't Let the U.K.'s Bar Tab Stall Brexit Talks
Mark Gilbert (Bloomberg View) Feb 9, 2017
Britain should acknowledge there's a cost to Brexit; the EU shouldn't make footing the bill a precondition to talks.

The EU should not retaliate against Trump’s protectionism
Marek Dabrowski (Bruegel) Feb 9, 2017
If the US moves ahead with Republican plans to introduce a border adjustment tax, the EU will need to decide on its response. Marek Dabrowski argues that the EU would be unwise to retaliate with its own anti-import policies: the border adjustment tax would be difficult to implement and damaging to the global trade order. Instead the EU should build a broad coalition of allies to defend free trade.

TPP: How Trump Abandoned a Great Deal for Corporate America
Jean-Francois Boittin (Globalist) Feb 9, 2017
Just what is the new U.S. President so afraid about with regard to his country’s middling trade partners in Asia?

The Enlightenment of President Trump?
Ngaire Woods (Project Syndicate) Feb 9, 2017
The past three weeks have given the world a stunning role reversal in global governance, with the US eschewing multilateralism and China promoting it. But it is too early to assume that Pax Americana is giving way to a Pax Sinica.

Trump’s Anachronistic Trade Strategy
Richard Baldwin (Project Syndicate) Feb 9, 2017
Donald Trump and his team of trade advisers are approaching a twenty-first-century problem with twentieth-century solutions that will only worsen the plight of the US working and middle classes. Over the past two decades, the information revolution has changed the world in ways that tariffs cannot reverse.

China Needs a New Grand Strategy
Minxin Pei (Project Syndicate) Feb 9, 2017
Donald Trump’s US presidency has already upended the key assumptions underpinning China’s post-Cold War grand strategy. While the ideological threat to China has now all but dissipated, the economic and security risks it faces have grown more acute.

Why Trump Can’t Bully China
Kenneth Rogoff (Project Syndicate) Feb 9, 2017
As US President Donald Trump proceeds to destabilize the post-war global economic order, much of the world is collectively holding its breath. While Trump's supporters defend the economic rationale of his actions, most economists view abdication of US global leadership as a historic mistake.

In Increasingly Authoritarian World, Can People Embrace Enlightenment 2.0?
Marc Grossman (YaleGlobal) Feb 9, 2017
Former US President Obama lauded Enlightenment values – democracy, enterprise, human rights – now under assault in the US and around the world

The Rise of Drawbridge Capitalism
Gene Frieda (PIMCO) Feb 9, 2017
The retreat from globalization has been relatively passive to date, but drawbridge capitalism actively accelerates the withdrawal. The trend toward drawbridge policies reflects a nationalistic desire to regain control of borders, regulation and economic policy, and by extension to reap the benefits of sharing less. The market consequences are likely to be a more explicit link between geopolitical and commercial relationships; the return of pronounced currency volatility; and greater tension at all levels between China, the world’s largest producer, and the U.S., the largest consumer.

The losers from credit crunches
Fabio Berton, Sauro Mocetti, Andrea Presbitero and Matteo Richiardi (VoxEU) Feb 9, 2017
Understanding the real effects of financial shocks is essential for the design of effective growth-restoring policies. This column uses data on job contracts matched with the universe of firms and their banks from a region of Italy to analyse the employment effects of financial shocks. Financially constrained firms – especially the least productive ones – significantly reduced employment, mostly of less-educated and lower-skilled workers with temporary contracts. While these results suggest possible distributional effects across workers, they could also reflect a productivity-enhancing reallocation function of financial shocks. Understanding the real effects of financial shocks is essential for the design of effective growth-restoring policies. This column uses data on job contracts matched with the universe of firms and their banks from a region of Italy to analyse the employment effects of financial shocks. Financially constrained firms – especially the least productive ones – significantly reduced employment, mostly of less-educated and lower-skilled workers with temporary contracts. While these results suggest possible distributional effects across workers, they could also reflect a productivity-enhancing reallocation function of financial shocks.

Trump leaves emerging markets in wait-and-see mode
Cat Rutter Pooley (FT) Feb 10, 2017
Investors are optimistic but worried about US president’s trade and immigration stance.

Trade Punishment for Trump Voters
WSJ Feb 10, 2017
Protectionism is already hurting the Farm Belt.

New Leadership at the IFC Aims to Get Us from Billions to Trillions
Scott Morris (CGD) Feb 10, 2017
This week, CGD hosted a discussion with Philippe Le Houérou, the CEO of IFC, the private sector arm of the World Bank. He was enthusiastic about his institution’s role in leveraging private capital and getting from billions to trillions of dollars for development, but he also presented a nuanced and critical judgment about the limitations of the IFC model to date, pointing to a number of ways it needs to change.

Japan and Trump Trade Policy
John West (Globalist) Feb 10, 2017
How will the Trump Administration shift economic and security ties with Japan?

Brexit Means Markets Turn Bearish on U.K.
Matthew A Winkler (Bloomberg View) Feb 10, 2017
Go ahead and argue about Britain's economic prospects once it leaves Europe. But first, look at these ugly numbers.

Global Citizens, National Shirkers
Dani Rodrik (Project Syndicate) Feb 10, 2017
Cosmopolitans often come across like the character from Dostoyevsky’s The Brothers Karamazov who discovers that the more he loves humanity in general, the less he likes people in particular. Global citizens should be wary that their lofty goals do not turn into an excuse for shirking their duties toward their compatriots.

Protectionist threats jeopardise international trade
Meredith Crowley, Huasheng Song and Ning Meng (VoxEU) Feb 10, 2017
The Trump administration’s announcement of its intention to impose a 20% tax on goods imported from Mexico and its calls for a 45% import tariff on goods from China have alarmed businesses and consumers alike. This column uses data on the foreign market entry decisions of Chinese firms to assess the impact that tariff scares and trade policy uncertainty have on trade flows. The evidence suggests that Trump's threats to raise tariffs can reduce US imports even if the administration doesn't follow through with the threatened tax increases. The Trump administration’s announcement of its intention to impose a 20% tax on goods imported from Mexico and its calls for a 45% import tariff on goods from China have alarmed businesses and consumers alike. This column uses data on the foreign market entry decisions of Chinese firms to assess the impact that tariff scares and trade policy uncertainty have on trade flows. The evidence suggests that Trump's threats to raise tariffs can reduce US imports even if the administration doesn't follow through with the threatened tax increases.

Barriers to the spread of prosperity
Enrico Spolaore and Romain Wacziarg (VoxEU) Feb 10, 2017
Since the Industrial Revolution, modern prosperity has spread from its European birthplace to many corners of the world. Yet the diffusion of technologies, institutions and behaviours associated with this process of economic modernisation has been unequal both over space and time. This column, taken from a recent Vox eBook, argues that the divergent historical paths followed by distinct populations led to barriers between them. Although these barriers are deeply rooted, their effect is not permanent and immutable. Since the Industrial Revolution, modern prosperity has spread from its European birthplace to many corners of the world. Yet the diffusion of technologies, institutions and behaviours associated with this process of economic modernisation has been unequal both over space and time. This column, taken from a recent Vox eBook, argues that the divergent historical paths followed by distinct populations led to barriers between them. Although these barriers are deeply rooted, their effect is not permanent and immutable.

The litter of the law: The right way to redo Dodd-Frank
Economist Feb 11, 2017
Make the rules simpler, by all means. But not at the expense of safety.

Effects of the backhaul problem on global trade
Jota Ishikawa and Nori Tarui (VoxEU) Feb 11, 2017
For models of international trade to accurately represent the real-world costs, transport costs cannot be ignored. This column argues that, additionally, we cannot assume that transport costs are symmetrical, because of a backhaul capacity problem that constrains international shipping. Domestic tariffs, which benefit the domestic import sector and harm the foreign export sector in standard models of international trade, can also harm the domestic export sector and benefit the foreign import sector. For models of international trade to accurately represent the real-world costs, transport costs cannot be ignored. This column argues that, additionally, we cannot assume that transport costs are symmetrical, because of a backhaul capacity problem that constrains international shipping. Domestic tariffs, which benefit the domestic import sector and harm the foreign export sector in standard models of international trade, can also harm the domestic export sector and benefit the foreign import sector.

Drop the Volcker rule and keep what works
FT View Feb 12, 2017
Proprietary trading is hard to identify and did not cause the crisis.

A carbon border tax is the best answer on climate change
Lakshmi Mittal (FT) Feb 12, 2017
The aim should be both to reduce emissions from Europe’s production and consumption.

America’s monetiser-in-chief
Edward Luce (FT) Feb 12, 2017
Even without overt lawbreaking by Donald Trump and his family, US reputational damage is likely to be severe.

A failure to tell the truth imperils Greece and Europe
Wolfgang Munchau (FT) Feb 12, 2017
If the IMF pulls out, Europe will be free to mismanage the crisis on its own.

Donald Trump’s anger at Asian currency manipulators misses target
Robin Harding (FT) Feb 12, 2017
Evidence suggests Taiwan and South Korea, not China and Japan, are the worst offenders.

China, the Party-Corporate Complex
Yi-Zheng Lian (NYT) Feb 12, 2017
The Chinese Communist Party has infiltrated the expanding private sector, and now operates from inside more than half of all nonstate firms.

Trump’s stoush with Japan over autos
Shujiro Urata (EAF) Feb 12, 2017
Last year Japan exported 1.75 million autos to the US, while Japan imported just under 20,000. Boosting exports of American cars to Japan will give the impression to Trump's supporters that he has created jobs.

How Brazil Destroys Itself
Mark S. Langevin (Globalist) Feb 12, 2017
The mutineers that brought down Dilma will soon be cut down by the same sword.

How the World's Fastest-Growing Economy Went Bust
Bloomberg View Feb 12, 2017
On the steppe, a cautionary tale for the ages.

How Saudi Arabia Fixed Its Cash Crunch
John Sfakianakis (Bloomberg View) Feb 12, 2017
The central bank has done its job by intervening twice in 2016.

Why shocks to large banks cause big GDP swings
Mary Amiti and David Weinstein (VoxEU) Feb 12, 2017
We are living in a world in which banks are large relative to the economies they serve. This column uses comprehensive data on Japanese banks from 1990 to 2010 to examine how the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries. We are living in a world in which banks are large relative to the economies they serve. This column uses comprehensive data on Japanese banks from 1990 to 2010 to examine how the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries.

Argentina’s credit revival offers glimpse of economic stability
Benedict Mander (FT) Feb 13, 2017
Signs of pick-up in bank lending will help underpin recovery, say analysts.

Thailand: starting to motor again
Dan Bogler (FT) Feb 13, 2017
A recovering economy and steady policy make for a positive outlook.

Of Debt and Detriment
Benn Steil and Emma Smith (Weekly Standard) Feb 13, 2017
China's currency games have been helping, not harming, the dollar.

Generating Public Revenue to Build Resilient Economies
Christine Lagarde (IMF) Feb 13, 2017
How can countries build tax capacity to sow the seeds of a healthy and inclusive economy, for the benefit of all citizens?

Pan-African Banking Finding its Stride
IMF News Feb 13, 2017
In the years since the global financial crisis, Africa has witnessed a rapid expansion of cross-border banking, led by banking groups based in Africa that are spurring financial and economic integration and transforming the continent’s financial landscape.

Is Social Capital the Secret Ingredient for Entrepreneurial Success?
Dora Moscoso (RGE Economonitor) Feb 13, 2017
Resilient entrepreneurs are relying on social capital to find better ways to do business and resolve problems. Perhaps this is the common denominator that innovative economies possess, and that we should support to spark innovation worldwide.

The IMF is showing some hypocrisy on inequality
Christopher Sheil and Frank Stilwell (Conversation) Feb 13, 2017
The IMF has been expressing public concern about inequality since 2010, but this has not translated into concrete action within the IMF’s own policies and programs.

Switching Debt to Francs Would Cost France Dearly
Mark Gilbert (Bloomberg View) Feb 13, 2017
Marine Le Pen says she'll redenominate her country's debt. That would be expensive.

How to Solve the Riddle of Venezuela's Economy
Mac Margolis (Bloomberg View) Feb 13, 2017
Reliable economic data is as rare as toilet paper and insulin in the Bolivarian Republic.

How to Raise Oil Prices Without Really Cutting
Leonid Bershidsky (Bloomberg View) Feb 13, 2017
Weaving a narrative about deep supply cuts has been quite lucrative for OPEC and Russia.

World's Biggest Debt Market Faces Huge Test From Trump
Tracy Alloway (Bloomberg View) Feb 13, 2017
Treasuries are the U.S.'s top export, and foreign demand is slipping.

Feisty, Protectionist Populism? New Zealand Tried That
Tyler Cowen (Bloomberg View) Feb 13, 2017
Spoiler alert: It didn't end well.

America’s Dangerous Neo-Protectionism
Kaushik Basu (Project Syndicate) Feb 13, 2017
Donald Trump has promised to save US jobs by slapping import tariffs on foreign goods, influencing exchange rates, restricting inflows of foreign workers, and creating disincentives for outsourcing. But, while the US working class is undoubtedly facing major challenges today, protectionism is not the way to help them.

The Promise of Middle East Sovereign Wealth Funds
Alissa Amico (Project Syndicate) Feb 13, 2017
A decade ago, Middle Eastern sovereign wealth funds burst onto the global financial scene, raising eyebrows as they gobbled up assets in Europe and North America. But the world in which SWFs invest has changed, and they must change with it.

Powering Africa’s Future
Alpha Condé (Project Syndicate) Feb 13, 2017
Greater international investment in Africa’s struggling electricity sector could be among the best ways to empower Africa’s youth and keep talent at home. That is why Africa’s energy needs will rank high on the agenda when G20 leaders meet later this year in Germany.

The European Unraveling?
Ana Palacio (Project Syndicate) Feb 13, 2017
After years of intensifying fragmentation and tension, the EU could lose its most precious assets: peace, prosperity, freedom of movement, and values such as tolerance, openness, and unity. Will Europeans unite in time to save them?

Does Growing Mismeasurement Explain Disappointing Growth
David Byrne, John G. Fernald, and Marshall Reinsdorf (FRBSF Econ Letter) Feb 13, 2017
Slowing growth in U.S. productivity after 2004 is sometimes blamed on measurement problems, particularly in assessing the gains from innovation in IT-related goods and services. However, mismeasurement also occurred before the slowdown and, on balance, there is no evidence that it has worsened. Some innovations—such as free Internet services—have grown increasingly important, but they mainly affect leisure time. Moreover, the non-market benefits do not appear large enough to offset the effects of the business-sector slowdown.

Global trade: Drivers behind the slowdown
Aqib Aslam, Eugenio Cerutti, Marcos Poplawski-Ribeiro and Petia Topalova (VoxEU) Feb 13, 2017
A growing literature aims to understand the remarkable slowdown in global trade growth in recent years. This column discusses a chapter in the IMF’s October 2016 World Economic Outlook on the drivers of the trade slowdown, and compares the findings to those of other recent studies. It argues that a variety of factors have contributed to weak trade growth, with widespread anaemic economic activity and the change in its composition being among the key drivers. A growing literature aims to understand the remarkable slowdown in global trade growth in recent years. This column discusses a chapter in the IMF’s October 2016 World Economic Outlook on the drivers of the trade slowdown, and compares the findings to those of other recent studies. It argues that a variety of factors have contributed to weak trade growth, with widespread anaemic economic activity and the change in its composition being among the key drivers.

Greece is as sick as ever and its agony goes on and on
Tony Barber (FT) Feb 14, 2017
Medical metaphors are all too appropriate when summing up the years in the eurozone.

Asian pensioners set to outnumber western elderly
Steve Johnson (FT) Feb 14, 2017
China and Thailand forecast to have higher ratio of over-65s than the west by 2050.

Europe explores Asia pivot to fend off protectionism
Arthur Beesley, Paul McClean in Brussels and Stefan Wagstyl (FT) Feb 14, 2017
Closer engagement at time of upheaval will bring threats as well as opportunities.

Donald Trump’s love of manufacturing is misguided
Martin Sandbu (FT) Feb 14, 2017
All the big industrial economies have chosen to internationalise their supply chains.

Emerging markets return to favour
Elaine Moore (FT) Feb 14, 2017
After removing billions of dollars in 2016, investors are flocking back.

Matteo Renzi is hungry for another spell as Italy’s premier
Tony Barber (FT) Feb 14, 2017
Ex-prime minister believes he can revive the country’s economy.

Make Big Banks Put 20% Down—Just Like Home Buyers Do
Neel Kashkari (WSJ) Feb 14, 2017
Financial CEOs say capital requirements are already too high, but the facts suggest otherwise.

The UK’s Brexit bill: could EU assets partially offset liabilities?
Zsolt Darvas, Konstantinos Efstathiou and Inês Goncalves Raposo (Bruegel) Feb 14, 2017
The ‘Brexit bill’ is likely to be one of the most contentious aspects of the upcoming negotiations. But estimates so far focus largely on the EU costs and liabilities that the UK will have to buy its way out of. What about the EU’s assets? The UK will surely get a share of those, and they could total €153.7bn.

Trump, the Dollar, and Trade--What's Ahead
Franklin Allen (K@W) Feb 14, 2017
While President Trump appears to have softened some of his contentious stances on trade and currency levels regarding China and Japan, plenty of policy uncertainty remains.

Learning from Bill Gates
Bjørn Lomborg (Project Syndicate) Feb 14, 2017
The Bill & Melinda Gates Foundation spends more each year on development than most rich governments do. Everyone – from elected officials and bureaucrats to voters and taxpayers – can learn from the world’s largest charitable foundation about effective development spending.

The Financial Education of the Eurozone
Christopher Smart (Project Syndicate) Feb 14, 2017
Europe’s leaders will confront many challenges this year, but they will also have an opportunity to strengthen their battered union. If they can restore the banking sector's credibility, and further integrate the banking union and capital markets, 2017 might turn out to be a better year than anyone expected.

A rationale for the Tobin tax
Xavier Vives (VoxEU) Feb 14, 2017
Tobin taxes on financial markets, such as the EU Financial Transactions Tax, are regularly under consideration. This column argues that a rationale for a Tobin tax exists even in competitive and informationally efficient markets when traders have private information and they condition on prices. In this situation traders overreact to private information, and a transactions tax may offset this externality. Tobin taxes on financial markets, such as the EU Financial Transactions Tax, are regularly under consideration. This column argues that a rationale for a Tobin tax exists even in competitive and informationally efficient markets when traders have private information and they condition on prices. In this situation traders overreact to private information, and a transactions tax may offset this externality.

The Long Economic and Political Shadow of History - Africa and Asia
Stelios Michalopoulos and Elias Papaioannou (VoxEU) Feb 14, 2017
Over the past decades, economists working on growth have ‘rediscovered’ the importance of history, leading to the emergence of a vibrant, far-reaching inter-disciplinary stream of work. This column introduces the second eBook in a new three-part series which examines key themes in this emergent literature and discusses the impact they have on our understanding of the long-run influence of historical events on current economics. This volume focuses on attempts by economists to shed light on the effects of European colonisers on development and culture across Africa and Asia. Over the past decades, economists working on growth have ‘rediscovered’ the importance of history, leading to the emergence of a vibrant, far-reaching inter-disciplinary stream of work. This column introduces the second eBook in a new three-part series which examines key themes in this emergent literature and discusses the impact they have on our understanding of the long-run influence of historical events on current economics. This volume focuses on attempts by economists to shed light on the effects of European colonisers on development and culture across Africa and Asia.

The great cryptocurrency heist
EJ Spode (Aeon) Feb 14, 2017
Blockchain enthusiasts crave a world without bankers, lawyers or fat-cat executives. There's just one problem: trust.

Emerging market debt investors brace for ‘Trump slump’
Steve Johnson (FT) Feb 15, 2017
President’s actions will have knock-on effect for corporate borrowers globally.

EM growth picks up sharply in January
Jonathan Wheatley (FT) Feb 15, 2017
Trade and industry help deliver sharpest monthly rise since 2011, says IIF.

Counting the cost of a Trump trade war on Asia
James Kynge (FT) Feb 15, 2017
Vietnam, Philippines and China stand to lose most in Asia if US wages trade war.

The TPP lives — maybe
Robert J. Samuelson (WP) Feb 15, 2017
Could it rise from the dead with a new name and slightly altered provisions?

Stop Dithering Over Greece
Bloomberg View Feb 15, 2017
No one benefits from this endless cycle of crisis, confusion and short-term fixes.

Greece's Euro Membership Looks Vulnerable Again
Mark Gilbert (Bloomberg View) Feb 15, 2017
There's a growing risk of a default in Athens.

No Need to Fear the Border-Adjustment Tax
Stuart E Leblang and Amy S Elliott (Bloomberg View) Feb 15, 2017
A radical reform of business taxes is the best chance we have for boosting U.S. productivity and long-term growth.

Trump the Reluctant Multilateralist
Barry Eichengreen (Project Syndicate) Feb 15, 2017
US President Donald Trump did not take office as a committed multilateralist. But even a president committed to putting “America first” now seems to recognize – at least with respect to NATO – that a framework through which countries can pursue shared goals is not a bad thing.

How Europe became so rich
Joel Mokyr (Aeon) Feb 15, 2017
In a time of great powers and empires, just one region of the world experienced extraordinary economic growth. How?

America's Interest in a Global Rule of Law
Will Hutton (TAP) Feb 15, 2017
The United States may no longer be the hegemonic world power that it was in 1945, but it remains unambiguously the world’s leader. America’s willingness to lead in multiple forums—the United Nations, climate change conventions, NATO, trade agreements—sets the tone for global rule of law. Yes, America has its blemishes and so does the global system, among them tensions over the unequal gains from globalization and double standards on human rights. But U.S. leadership of the international treaty system, with multilateral rules and shared processes of mutual respect, is still the first and last line of defense against worldwide forces that insist on brute assertion of self-interest justified by appeals to each nation’s special culture.

Beijing’s strategy to avoid a currency war
FT View Feb 16, 2017
A strong renminbi helps keep Washington sweet and capital in China.

France’s economy needs reform not revolution
FT View Feb 16, 2017
Most presidential candidates share a very dark view of the country.

Reasons to be cheerful about emerging markets
Timothy Ash (FT) Feb 16, 2017
Trump, protectionism and populism have not delivered the blow to EMs that many expected.

China makes record cuts to US Treasuries holdings
Eric Platt and Joe Rennison (FT) Feb 16, 2017
Selling comes at a delicate time for bond market facing higher inflation.

Complacent investors should heed the political risks
Gillian Tett (FT) Feb 16, 2017
Ratios between stock market valuations and GDP is at levels only seen in previous bubbles.

Investor expectations for growth help stimulate stock funds
Eric Platt and Joe Rennison (FT) Feb 16, 2017
Nearly $18bn in inflows concentrated in US and emerging markets boost indices.

Trump Outlines Intent to "Tweak" NAFTA in Bilateral Meeting with Trudeau
Bridges, Volume 21, Number 5 Feb 16, 2017
Canadian Prime Minister Justin Trudeau and US President Donald Trump held their first official meeting in Washington on Monday 13 February, highlighting in a joint press conference the close ties between their two economies and pledging a mutual commitment to continued cooperation.

European Parliament Endorses EU-Canada Trade Agreement
Bridges, Volume 21, Number 5 Feb 16, 2017
EU lawmakers voted on Wednesday 15 February to approve the Comprehensive Economic and Trade Agreement (CETA), a sweeping trade and investment accord with Canada. The trade deal passed the European Parliament by a sizeable majority, with 408 votes in favour, 254 against, and 33 abstentions.

Trump, Abe Pledge to Deepen Trade, Investment Relationship
Bridges, Volume 21, Number 5 Feb 16, 2017
Japanese Prime Minister Shinzo Abe completed a two-day visit to the United States last weekend, holding talks with US President Donald Trump on how to deepen their countries’ economic relationship under the new leadership in Washington.

Russia: Stagnant Stability
Yacov Arnopolin (PIMCO) Feb 16, 2017
A recent trip to Moscow on the 100th anniversary of the 1917 revolution revealed not a whiff of revolutionary change in the economy, but rather stagnant growth mixed with structural stability. We could simply call it “stagnant stability.”

As Romania Battles Corruption
Valbona Zeneli and Joseph Vann (Globalist) Feb 16, 2017
Corruption is the most underrated international security threat of our time.

New Reforms Could Make Banks More Vulnerable
Erik Thedeen (Bloomberg View) Feb 16, 2017
Basel reforms are supposed to strengthen financial stability. The wrong reforms won't.

Summer Is Looking Bright for Oil Prices
Jason M Schenker (Bloomberg View) Feb 16, 2017
The prospects for natural gas aren't so good.

Industrial Revolution Comparisons Aren't Comforting
Tyler Cowen (Bloomberg View) Feb 16, 2017
More automation may be good in the long run, but history tells us there'll be turmoil along the way.

India Needs a Nudge, Not a Shove
Mihir Sharma (Bloomberg View) Feb 16, 2017
The government should be aiming to change its policies, not its people.

Restoring Faith in Globalization
Carl Bildt (Project Syndicate) Feb 16, 2017
Attacks on globalization do not follow from past economic performance or current facts. World leaders should not be shy about defending a process that has delivered more prosperity to more people than anyone could have dreamed of just a few decades ago.

Can China Become a Leader of Innovation?
Jost Wübbeke, Yu Zhou, Cong Cao & Yutao Sun (ChinaFile) Feb 16, 2017
China’s ambitious high-tech strategy is raising alarm in industrialized nations. From American and South Korean chipmakers to German car and machine manufacturers, some industry leaders expect the imminent arrival of strong Chinese competitors. Does China’s industrial policy undermine Western technological leadership?

Crackign the Arab World's Development Puzzle: Oil or Politics?
Ibrahim Elbadawi and Hoda Selim (WFR) Feb 16, 2017
Is the Arab World cursed by its own institutions rather than by oil wealth? These institutions, which have predated oil discoveries, have shaped economic incentives that affect how oil revenue is collected and used, and in turn influenced economic outcomes. Over time, the interaction between oil and politics became intertwined, preventing economic development in Arab countries. As low oil prices risk becoming a new normal, political reforms with checks and balances can turn the curse into a blessing.

Japan must form a bulwark to protect globalisation
Yasuyuki Todo (VoxEU) Feb 16, 2017
From the US withdrawal from the TPP to the Brexit negotiations, the tide of trade policy is turning towards protectionism. This column outlines how this could create a vicious cycle of lower productivity and closed economies, and what Japan, as the world’s third largest economy, can do to prevent it. A combination of trade and investment liberalisation and inclusive policies will enable all citizens to enjoy the fruits of growth under globalisation. From the US withdrawal from the TPP to the Brexit negotiations, the tide of trade policy is turning towards protectionism. This column outlines how this could create a vicious cycle of lower productivity and closed economies, and what Japan, as the world’s third largest economy, can do to prevent it. A combination of trade and investment liberalisation and inclusive policies will enable all citizens to enjoy the fruits of growth under globalisation.

Economic risk sharing revisited
Tessa Bold and Tobias Broer (VoxEU) Feb 16, 2017
The substantial literature examining risk-sharing practices in rural villages in developing countries has typically taken the social institutions in these communities as given. Using data from India, this column challenges this assumption by showing how the costs and benefits of risk-sharing arrangements can shape these social institutions. The results suggest that the size and nature of these risk-sharing groups may evolve over time as their environment changes. Public policy to reduce consumption fluctuations can be counterproductive in the standard model because of a strong crowding-out effect. The substantial literature examining risk-sharing practices in rural villages in developing countries has typically taken the social institutions in these communities as given. Using data from India, this column challenges this assumption by showing how the costs and benefits of risk-sharing arrangements can shape these social institutions. The results suggest that the size and nature of these risk-sharing groups may evolve over time as their environment changes. Public policy to reduce consumption fluctuations can be counterproductive in the standard model because of a strong crowding-out effect.

Emerging market ETFs and the jaws of death
Terry Smith (FT) Feb 17, 2017
Huge inflows have gone into the largest companies — but they are not good companies.

Money, Power, Family: Inside South Korea’s Chaebol
Carlos Tejada (NYT) Feb 17, 2017
The arrest of Samsung’s de facto top executive intensifies the spotlight on a group of families that enjoy immense economic and political power.

Sorry, Trump, but America’s economy is already pretty great
Sebastian Mallaby (WP) Feb 17, 2017
There are four reasons for slow growth, but they aren’t reasons to worry.

What’s Behind the Border Tax Kabuki?
Holman W. Jenkins, Jr. (WSJ) Feb 17, 2017
And as negotiations proceed, could a carbon tax get a miraculous resurrection?

After TPP: RCEP as China’s Magic Bullet?
John West (Globalist) Feb 17, 2017
China will not lead free trade in Asia, contrary to many forecasts.

How much do we really know about inequality within countries around the world?
Laurence Chandy and Brina Seidel (Brookings) Feb 17, 2017
Standard measures of inequality are derived from household surveys that often fail to capture top incomes. Taking this into account, Laurence Chandy and Brina Seidel gauge the scale of this missing income and share new findings in the rankings of country inequality.

Look to Stocks for Clues to the Strong Dollar's Impact
Ben Carlson (Bloomberg View) Feb 17, 2017
The economy isn't initially the best gauge of fallout from the greenback's appreciation.

Only Germans Love the Euro These Days
Jean-Michel Paul (Bloomberg View) Feb 17, 2017
They weren't expecting to like it. Others weren't expecting to hate it.

The Shipping News Suggests Reflation Is Real
Mark Gilbert (Bloomberg View) Feb 17, 2017
Evidence from the logistics industry reinforces a brighter economic outlook.

How to Explain the Divergence of Global Interest Rates
Ben Emons (Bloomberg View) Feb 17, 2017
The big question is what happens when this system goes into reverse.

China’s Growth Odyssey
Wing Thye Woo (Project Syndicate) Feb 17, 2017
China’s steadily declining rate of economic growth is a problem for both China and the world economy. Now that US President Donald Trump is set to wreak havoc on global stability, can China still hope to achieve the widely shared prosperity it has long sought?

When the IMF evaluates the IMF
Charles Wyplosz (VoxEU) Feb 17, 2017
The IMF has just released its self-evaluation of its Greek lending, in which it admits to many mistakes. This column and argues that the report misses one important error – reliance on the Debt Sustainability Analysis – but notes that the IMF’s candour should be a model for the other participants in the lending, namely, the European Commission and the ECB. The IMF has just released its self-evaluation of its Greek lending, in which it admits to many mistakes. This column and argues that the report misses one important error – reliance on the Debt Sustainability Analysis – but notes that the IMF’s candour should be a model for the other participants in the lending, namely, the European Commission and the ECB.

The king of funny moneyZimbabwe’s new “bond notes” are falling fast
Economist Feb 18, 2017
Robert Mugabe prints banknotes and insists they are worth as much as US dollars. No one is fooled

Which Asian Country Will Replace China as the 'World's Factory'?
Matthias Lomas (Diplomat) Feb 18, 2017
Analyzing the “Mighty Five,” countries set to replace China as the workshops of the world.

The European Union First
Javier Solana (Project Syndicate) Feb 18, 2017
The world needs the European Union now more than ever. Despite recent crises and the hard blow dealt by the UK's Brexit vote, the EU may well be the world’s best line of defense against today’s most serious threats: isolationism, nationalism, xenophobia, and extremism.

Asian manufacturing growth hits four-year high
Steve Johnson (FT) Feb 19, 2017
Improving growth picture also drives spike in capex.

The trouble with ‘free’ banking for challenger lenders
Philip Augar (FT) Feb 19, 2017
Until new players find a compelling customer offer the sector’s oligopoly will persist.

New capitalism nurtures people, not products
Anne-Marie Slaughter (FT) Feb 19, 2017
Future prosperity may hinge on creativity and caring and the desire to share skills.

Central bank independence is losing its lustre
Wolfgang Münchau (FT) Feb 19, 2017
Monetary policy involves trade-offs that are fundamentally political in nature.

East Asia’s economic agreement
Shiro Armstrong and Amy King (EAP) Feb 19, 2017
Trump's executive order to withdraw the United States from the TPP agreement in the Asia Pacific 'is a strategic turning point in the open economic order.

Asia's Strongmen Aren't Strong Enough
Michael Schuman (Bloomberg View) Feb 19, 2017
Compared to their predecessors, today's leaders have flinched from bold reforms.

Robot tax, odd as it sounds, has some logic
FT View Feb 20, 2017
The real question is how to ensure growth is more evenly shared.

Bold claims for AI are hard to compute for economists
John Thornhill (FT) Feb 20, 2017
A new ‘virtual workforce’ is enhancing the productivity of human intelligence.

Resetting Nigeria’s economy
Kemi Adeosun (FT) Feb 20, 2017
Country should never again be exposed to the volatility of commodity prices.

Towards an empowering state: turning inclusive growth into a global reality
Gabriela Ramos (OECD Insights) Feb 20, 2017
We live in turbulent times. Nine years on from the eruption of the financial crisis, we remain stuck in a low growth trap. To make matters worse, the great upheaval in our economies has now transmuted into a profound political crisis in many countries.

A Contrarian Take on the Foreign Flight from U.S. Assets
David A Ader (Bloomberg View) Feb 20, 2017
Sales of dollar-denominated assets by central banks is offset by private investors.

Where Crony Capitalism Rose and Prosperity Fell (and Vice Versa)
Matthew A Winkler (Bloomberg View) Feb 20, 2017
Malaysia and Indonesia are having a reversal of fortune. Good government matters.

Achieving an African Industrial Revolution
Justin Yifu Lin and Andrea Goldstein (Project Syndicate) Feb 20, 2017
After decades in the slow lane, Africa's economy has had its foot on the accelerator, with impressive growth since the mid-2000s solidifying its potential as the global economy's next new growth engine. But sustaining rapid development will take work – and help from countries like China and Italy.

Globalisation and economic nationalism
Italo Colantone and Piero Stanig (VoxEU) Feb 20, 2017
The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not. The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not.

Schulz’s return to roots of Europe’s centre left
FT View Feb 21, 2017
German growth is enviable but low pay and job security are real fears.

There is a silver lining for emerging markets
Arnab Das (FT) Feb 21, 2017
Sweeping political change in developed economies will put onus on active EM management.

India’s bold experiment with cash
Martin Wolf (FT) Feb 21, 2017
The banknote ban is a shock for an economy with so many outside the formal system.

For clues to the productivity puzzle, go shopping
Sarah O'Connor (FT) Feb 21, 2017
The bulge of jobs at the bottom makes it harder for people to climb up.

Save Greece by Saving Its Economy First
NYT Feb 21, 2017
After a decade of failing to rescue the country, Greece's creditors ought to try a different approach.

Brazilian Misery: A Cautionary Tale for the US?
Monica de Bolle (PIIE) Feb 21, 2017
Former President Luiz Inácio Lula da Silva of Brazil has been rising steadily in the polls for Brazil’s 2018 presidential elections, despite facing several corruption charges. Why? Because some Brazilians perceive increasingly that he can make Brazil great again.

A Walk Through an Open World Economy in Crisis
Jeffry Frieden (Brink) Feb 21, 2017
A backlash against globalization has been building for over a decade, and now we have a good idea of what its politics look like.

How Political Risk Is Shifting to Developed Markets
Mohamed Aly El-Erian (Bloomberg View) Feb 21, 2017
Feeble and insufficiently inclusive growth has fueled political anger and distrust of institutions.

A Conservative Plan to Combat Global Warming
Martin Feldstein (Project Syndicate) Feb 21, 2017
A carbon tax is the simplest and economically most efficient way to limit carbon dioxide emissions. Ideally, the tax would be imposed on businesses and households at the same time that cumbersome environmental regulations are eliminated.

Making Crises Great Again
Jeffrey Frankel (Project Syndicate) Feb 21, 2017
Although debates about financial regulation tend to focus on quantity, not quality, “more versus less” isn’t the issue; the details are. And when it comes to financial reform in the US, President Donald Trump is unlikely to get the details right.

Putting Asia’s Savings to Work in Asia
Andrew Sheng and Xiao Geng (Project Syndicate) Feb 21, 2017
For more than three decades, Asia has been exporting its savings, through a trade surplus with the US, and re-importing them, in the form of foreign-direct and portfolio investment via New York and London. That process makes little sense, especially at a time when higher returns on investment are available within Asia itself.

Border Walls and Taxes: Bad Medicine for the Wrong Diagnosis
David Dapice (YaleGlobal) Feb 21, 2017
Republicans pause on border walls and tariffs – as realization sets in about reduced profits, higher prices for US consumers.

In search of a European solution for non-performing loans
Marco Onado (VoxEU) Feb 21, 2017
European banks have not recovered from the Global Crisis, in part due to heavy provisions for non-performing loans. This column argues that a comprehensive approach to the issue in Europe could address market inefficiencies and reduce bad loans to bearable levels. The establishment of a European scheme to securitise non-performing loans should form one of the next steps towards recovery. European banks have not recovered from the Global Crisis, in part due to heavy provisions for non-performing loans. This column argues that a comprehensive approach to the issue in Europe could address market inefficiencies and reduce bad loans to bearable levels. The establishment of a European scheme to securitise non-performing loans should form one of the next steps towards recovery.

Three Questions on R-star
John C. Williams (FRBSF Econ Letter) Feb 21, 2017
The decline in the natural rate of interest, or r-star, over the past decade raises three important questions. First, is this low level for the real short-term interest rate unique to the U.S. economy? Second, is the natural rate likely to remain low in the future? And third, is this low level confined to “safe” assets? In answer to these questions, evidence suggests that low r-star is a global phenomenon, is likely to be very persistent, and is not confined only to safe assets.

Border adjustment and the dollar
Alan J. Auerbach (AEI) Feb 21, 2017
A key element of the destination-based cash-flow tax included in the House Blueprint is a border adjustment, which would relieve tax on exports and impose tax on imports and thereby shift the locus of US business taxation from where products are made to where they are consumed. There are strong tax policy arguments for a shift to destination-based taxation, but an important issue, especially during a transition to this new tax system, is the response of the dollar exchange rate to border adjustment. This paper explains the prediction that the dollar will rise significantly in reaction to border adjustment and reviews criticisms of this prediction.

Making the Best of Brexit for the EU-27 Financial System
André Sapir, Dirk Schoenmaker and Nicolas Véron (Bruegel/PIIE) Feb 21, 2017
As a consequence of Britain’s exit from the European Union, UK-based financial firms are expected to lose their regulatory passport to do direct business with their clients in the EU-27. Brexit will lead to a partial migration of financial services activities from London to locations in the EU-27...

A solid UK economy is showing a few cracks
FT View Feb 22, 2017
There is little case for the Bank of England to raise interest rates.

The season of famine looms across Africa
FT View Feb 22, 2017
The making of disasters in four countries was there for all to see.

China will navigate its debt challenge and avoid a financial shock
Chetan Ahya (FT) Feb 22, 2017
The central bank has better control of monetary conditions.

How ‘Border Adjustment’ Poisons Tax Reform
Phil Gramm (WSJ) Feb 22, 2017
The House’s 20% import fee is political industrial policy that will convulse the economy. Better to follow the 1986 model.

For India, Strong Growth Persists Despite New Challenges
IMF News Feb 22, 2017
India remains one of the fastest growing emerging market economies. Due to recent cash shortages, growth is projected to slow temporarily this fiscal year. Maintaining the reform momentum is key to stronger growth.

The OECD as the cradle of the Club of Rome
Matthias Schmelzer (OECD Insights) Feb 22, 2017
The Club of Rome’s first report, The limits to growth, appeared in 1972 and was ultimately published in thirty languages and sold over thirty million copies worldwide

What Is Pushing the Oil Prices Down?
Kirill Rodionov (RGE Economonitor) Feb 22, 2017
A new pricing consensus has emerged on the global oil market, spurred by financial and intrinsic factors.

How the Fed Could Unwind Its Balance Sheet
Ben Emons (Bloomberg View) Feb 22, 2017
The reduction must be gradual and natural, and there must be a communication plan.

The Opening for Investors in Europe's Political Turmoil
Komal S Sri-Kumar (Bloomberg View) Feb 22, 2017
Three elections -- in the Netherlands, France and Germany -- are feeding uncertainty in currency, bond and equity markets.

Boosting South Africa’s Diversity Dividend
Mohamed A. El-Erian (Project Syndicate) Feb 22, 2017
South Africa will need much more than improved economic governance if it is to reduce inequality and achieve strong growth. In particular, the private sector must deepen its efforts to improve economic inclusion, and capitalize on the well-known benefits of greater diversity in the workforce and the boardroom.

China’s Weapons of Trade War
Keyu Jin (Project Syndicate) Feb 22, 2017
China exports more to the US than the US exports to China, and that makes Donald Trump furious. But with the Communist Party’s 19th Congress set to take place in Beijing this year, Chinese leaders are unlikely to yield to US pressure.

The WTO Reborn?
Arvind Subramanian (Project Syndicate) Feb 22, 2017
Recent rebukes of globalization, such as the UK's Brexit vote and the election of Donald Trump as US president, suggest that the marginalization of the World Trade Organization will continue. But these outcomes may actually have the opposite effect, owing to three key developments.

Macroprudential stress tests: A new analytical tool
Vítor Constâncio (VoxEU) Feb 22, 2017
The Global Crisis and its aftermath led to greater use of stress tests and to the establishment of macroprudential policy as a new policy area. In this column, ECB Vice-President Vítor Constâncio introduces new suite of analytical tools that support the design and calibration of macroprudential policy. The tools go well beyond the requirements of the traditional solvency stress tests applied to banks, and include a broader set of institutions than just banks, an analysis of the financial cycle, as well as an assessment of systemic risk levels associated with the economic and financial shocks considered in adverse scenarios. The Global Crisis and its aftermath led to greater use of stress tests and to the establishment of macroprudential policy as a new policy area. In this column, ECB Vice-President Vítor Constâncio introduces new suite of analytical tools that support the design and calibration of macroprudential policy. The tools go well beyond the requirements of the traditional solvency stress tests applied to banks, and include a broader set of institutions than just banks, an analysis of the financial cycle, as well as an assessment of systemic risk levels associated with the economic and financial shocks considered in adverse scenarios.

What Trump Means for Global Poverty
Steve Coll (New Yorker) Feb 22, 2017
It seems likely that humanitarian aid to countries like Haiti will decline during this Administration. But by how much?

Economists to Trump: It’s Not the Trade Deficit, Stupid
Jessica Holzer (FP) Feb 22, 2017
Economists say President Donald Trump’s obsession with trade balances could end up seriously skewing trade policy.

Democratic development lowers the cost of credit
Manthos Delis, Iftekhar Hasan and Steven Ongena (VoxEU) Feb 22, 2017
The positive relationship between democratic development and economic outcomes is well established. Using three decades of international data, this column identifies a new channel for this effect – the cost of credit to corporations. It also analyses loan pricing in Turkey to reveal a substantial rise in the average cost of lending after the attempted coup d’etat in July 2016. Together, these results highlight how efficiency in loan pricing results in a comparative advantage for firms in democratic countries over those in less democratic or authoritarian countries. The positive relationship between democratic development and economic outcomes is well established. Using three decades of international data, this column identifies a new channel for this effect – the cost of credit to corporations. It also analyses loan pricing in Turkey to reveal a substantial rise in the average cost of lending after the attempted coup d’etat in July 2016. Together, these results highlight how efficiency in loan pricing results in a comparative advantage for firms in democratic countries over those in less democratic or authoritarian countries.

European integration and populism: Addressing Dahrendorf's quandary
Marco Buti and Karl Pichelmann (VoxEU) Feb 22, 2017
With its current competences lacking the ability to address distribution effects, the EU is seen as an agent of globalisation rather than a response to it. At the same time, it is charged with undermining national autonomy, identity, and control. This column sets out five guiding principles for policy articulation at the EU level for a new positive EU narrative. With its current competences lacking the ability to address distribution effects, the EU is seen as an agent of globalisation rather than a response to it. At the same time, it is charged with undermining national autonomy, identity, and control. This column sets out five guiding principles for policy articulation at the EU level for a new positive EU narrative.

End of a golden age
Marc Levinson (Aeon) Feb 22, 2017
Unprecedented growth marked the era from 1948 to 1973. Economists might study it forever, but it can never be repeated. Why?

The European migrants that Britain depends on
FT View Feb 23, 2017
Even after Brexit, the UK must keep its doors open to EU workers.

Cheap valuations bolster re-emergence of emerging markets
John Authers (FT) Feb 23, 2017
China is spending again and helping exporting nations, particularly in Latin America.

Chinese manufacturing jobs vanish as robots take over
FT Confidential Research Feb 23, 2017
Migrant workers vulnerable to companies chasing productivity gains through automation.

Confessions of a Free-Trade Lobbyist
Bill Lane (WSJ) Feb 23, 2017
Business leaders politely clap as the president puts exports at risk. Yet they know ‘Fortress America’ would be a disaster.

WTO's Trade Facilitation Agreement Takes Effect
Bridges, Volume 21, Number 6 Feb 23, 2017
The World Trade Organization announced on Wednesday 22 February that the Trade Facilitation Agreement (TFA) has now entered into force, having surpassed the minimum requirement of 110 ratifications from members.

New Zealand, Australia Leaders Press for TPP to Move Forward
Bridges, Volume 21, Number 6 Feb 23, 2017
The future of the Trans-Pacific Partnership (TPP) Agreement was high on the agenda last week as Australian Prime Minister Malcom Turnbull and New Zealand Prime Minister Bill English met in Queenstown, New Zealand, for discussions on trade and other subjects.

As Brexit Preparations Continue, May Highlights UK’s Trade Future and Europe Ties
Bridges, Volume 21, Number 6 Feb 23, 2017
The UK’s House of Lords is discussing this week legislation that, if approved, will give Prime Minister Theresa May the formal sign-off to invoke Article 50 of the Lisbon Treaty, allowing the official launch of Brexit negotiations for the island nation to leave the European Union.

Turkey's Economy Hit By Declining Tourism
IMF News Feb 23, 2017
Turkey’s previously booming tourism sector was gravely hit in the wake of a series of terrorist attacks and domestic political turmoil. The dwindling number of visitors has hurt connecting sectors, chopping off about one percentage point of GDP from the country’s growth in 2016, according to a recent IMF study.

Weighing the Impact of a U.S. Border Adjustment Tax
Ann Harrison and Michael Knoll(K@W) Feb 23, 2017
The border adjustment tax proposed by Republicans would have significant impacts throughout the economy, according to two Penn experts.

Demonetization Ushers in New Era of Digital Finance in India
Michael Pisa, Divyanshi Wadhwa and Anit Mukherjee (CGD) Feb 23, 2017
It has been more than 100 days since the Modi government declared that the two largest denomination notes in India—the 500 and 1000 rupee notes—would no longer be accepted as legal tender. The announcement of “demonetization” had an immediate and sweeping effect on Indian households, which were no longer allowed to use the notes (outside of a few narrow exceptions) and were given less than eight weeks to deposit or exchange them.

NAFTA under Trump—the myths and the possibilities
Joshua P. Meltzer and Dany Bahar (Brookings) Feb 23, 2017
While President Trump has vowed to renegotiate the North American Free Trade Agreement, Joshua Meltzer and Dany Bahar argue that a reduction of opportunities for international trade will not reduce the trade deficit or bring manufacturing jobs back to the U.S.

Political Risk Hampers the ECB
Mohamed Aly El-Erian (Bloomberg View) Feb 23, 2017
A pickup in euro-zone economic activity should have allowed the central bank to declare victory. It hasn’t.

The Europhile's Case for Europe
Justin Fox (Bloomberg View) Feb 23, 2017
Even critics say they could come around if the European Union solved its identity crisis.

Trump Needs a Strong-Dollar Policy -- and Fast
David M Smick (Bloomberg View) Feb 23, 2017
A soaring greenback could affect the value of global debt, the cost of energy and even the stability of the banking system.

The myths and realities of NAFTA
Joshua P. Meltzer and Dany Bahar (Brookings) Feb 23, 2017
President Trump has blamed manufacturing job losses and the U.S. trade deficit on the North American Free Trade Agreement, but the realities of these issues show that simply renegotiating a trade deal won’t address them.

What's Holding Back U.S. Economic Growth?
Edward Conard (K@W) Feb 23, 2017
How good intentions may be leading us astray.

The liquidity squeeze on SMEs
Fabrizio Coricelli and Marco Frigerio (VoxEU) Feb 23, 2017
A main source of alternative financing during credit crunches is trade credit. This column argues that small and medium-sized enterprises in Europe suffered a liquidity squeeze during the Great Recession due to the increase of their net lending to large firms. This squeeze was induced by their weak bargaining power in trade credit relationships, and had significant adverse effects on their levels of investment and employment. A main source of alternative financing during credit crunches is trade credit. This column argues that small and medium-sized enterprises in Europe suffered a liquidity squeeze during the Great Recession due to the increase of their net lending to large firms. This squeeze was induced by their weak bargaining power in trade credit relationships, and had significant adverse effects on their levels of investment and employment.

The global dimension of banking crises
Ambrogio Cesa-Bianchi, Fernando Eguren Martin and Gregory Thwaites (VoxEU) Feb 23, 2017
Banking crises tend to happen in ‘waves’ across countries. In examining why this occurs, this column shows how foreign financial developments in general, and global credit growth in particular, are powerful predictors of domestic banking crises. The channels seem to be financial rather than related to trade, and include transmission of market sentiment, cross-border portfolio flows, and direct crisis contagion. Banking crises tend to happen in ‘waves’ across countries. In examining why this occurs, this column shows how foreign financial developments in general, and global credit growth in particular, are powerful predictors of domestic banking crises. The channels seem to be financial rather than related to trade, and include transmission of market sentiment, cross-border portfolio flows, and direct crisis contagion.

Mapping the Future of AI
Margaret A. Boden (Project Syndicate) Feb 23, 2017
Given the possibility of "deep learning" by artificial systems, it is not surprising that some people foresee a point known as the “Singularity,” when artificial intelligence will exceed human intelligence, by intelligently improving itself. But artificial general intelligence is not in our foreseeable future.

How Poor Countries Foot the Refugee Bill
Jorge Moreira da Silva (Project Syndicate) Feb 23, 2017
As the number of refugees from war- and crisis-torn countries continues to climb, rich countries are increasingly diverting their OECD foreign aid to cover the domestic costs of hosting the displaced. These legal but ethically dubious accounting tricks need to stop, now.

Maastricht's Flaws Still Plague Europe, 25 Years Later
Mark Gilbert (Bloomberg View) Feb 24, 2017
The EU treaty promised economic convergence. It hasn't happened.

5 Reasons Germany Isn't Suffering in the 21st Century
Justin Fox (Bloomberg View) Feb 24, 2017
Things aren't going nearly so swimmingly in the U.S.

Checks and Balances Before Roads and Bridges
Paolo Mauro (Project Syndicate) Feb 24, 2017
In the 2016 American presidential election, Hillary Clinton and Donald Trump agreed that the US economy is suffering from dilapidated infrastructure, and both called for greater investment in renovating and upgrading the country’s public capital stock. But infrastructure gaps are an even more urgent problem in the rest of the world.

The Anatomy of Populist Economics
Brigitte Granville (Brigitte Granville) Feb 24, 2017
Today’s populist movements are all following a similar economic prescription, and governments in Hungary, Poland, and the US are giving the world an early dose of what the future may hold. Will voters swallow the medicine, or will they soon start seeking a second opinion?

On the fickleness of capital flows
Barry Eichengreen, Poonam Gupta and Oliver Masetti (VoxEU) Feb 24, 2017
According to conventional wisdom, capital flows are fickle. Focusing on emerging markets, this column argues that despite recent structural and regulatory changes, much of this wisdom still holds today. Foreign direct investment inflows are more stable than non-FDI inflows. Within non-FDI inflows, portfolio debt and bank-intermediated flows are most volatile. Meanwhile, FDI and bank-related outflows from emerging markets have grown and become increasingly volatile. This finding underscores the need for greater attention from analysts and policymakers to the capital outflow side. According to conventional wisdom, capital flows are fickle. Focusing on emerging markets, this column argues that despite recent structural and regulatory changes, much of this wisdom still holds today. Foreign direct investment inflows are more stable than non-FDI inflows. Within non-FDI inflows, portfolio debt and bank-intermediated flows are most volatile. Meanwhile, FDI and bank-related outflows from emerging markets have grown and become increasingly volatile. This finding underscores the need for greater attention from analysts and policymakers to the capital outflow side.

Gross capital inflows to banks, corporates, and sovereigns
Stefan Avdjiev, Bryan Hardy, Sebnem Kalemli-Ozcan and Luis Servén (VoxEU) Feb 24, 2017
Capital flows play a key role in the transmission of real and financial shocks across countries, but empirical work on flows by sector is scarce. This column uses a newly constructed dataset of capital inflows for 85 countries, broken down by borrowing sector, to show that private debt flows are negatively correlated with global risk appetite, while borrowing by sovereigns is positively correlated with risk appetite. This and other results discussed show the importance of splitting capital inflows into their borrowing sectors when designing policy to manage macrofinancial risk. Capital flows play a key role in the transmission of real and financial shocks across countries, but empirical work on flows by sector is scarce. This column uses a newly constructed dataset of capital inflows for 85 countries, broken down by borrowing sector, to show that private debt flows are negatively correlated with global risk appetite, while borrowing by sovereigns is positively correlated with risk appetite. This and other results discussed show the importance of splitting capital inflows into their borrowing sectors when designing policy to manage macrofinancial risk.

Why taxing robots is not a good idea
Economist Feb 25, 2017
Bill Gates’s proposal is revealing about the challenge automation poses.

How Imports Boost Employment
Anne Krueger (Project Syndicate) Feb 25, 2017
According to today’s populists, “good jobs” in US manufacturing have been “lost” to competition from imports and preferential trading arrangements. But this narrative does not fit the facts: imports actually create jobs, and trade agreements bear little blame for the decline in manufacturing employment.

Global value chains in developing economies
Victor Kummritz and Bastiaan Quast (VoxEU) Feb 25, 2017
Global value chains offer a new way for developing countries to industrialise. This column provides a deep examination of the pattern of developing countries’ integration in these chains and shows that changes in integration are increasingly driven by low- and middle-income countries, while the integration of high-income countries has begun to even out. It also shows that low- and middle-income countries are still more specialised in downstream activities and typically export less domestic value added. Global value chains offer a new way for developing countries to industrialise. This column provides a deep examination of the pattern of developing countries’ integration in these chains and shows that changes in integration are increasingly driven by low- and middle-income countries, while the integration of high-income countries has begun to even out. It also shows that low- and middle-income countries are still more specialised in downstream activities and typically export less domestic value added.

Our stable financial system benefits everyone
Sam Woods (FT) Feb 26, 2017
Jeopardising the repairs carried out by regulators would be misguided.

Zimbabwe is staring at currency chaos again
Tony Hawkins (FT) Feb 26, 2017
A decade on from hyperinflation, signs grow of another economic meltdown.

Chinese wages now higher than in Brazil, Argentina and Mexico
Steve Johnson (FT) Feb 26, 2017
Hourly rates close in on pay levels in western laggards Greece and Portugal.

The Illusory Flaws of ‘Border Adjustment’
Martin Feldstein (WSJ) Feb 26, 2017
Foreign exporters would pay for the Republicans’ proposed trillion-dollar corporate tax cut.

Mexico’s Trade Reply to Trump
Mary Anastasia O’Grady (WSJ) Feb 28, 2017
Its economy minister says fixes to Nafta are possible but restoring tariffs is a nonstarter.

Economic Globalization Is Not Political Globalization
Thorsten Polleit (Mises Daily) Feb 26, 2017
Globalization has fallen into disrepute. More and more people are rejecting it outright as unfair and as a source of all sorts of evil — including economic crises and migration.

The China Dream Hits Reality
James M. Dorsey (Globalist) Feb 26, 2017
Asian ports: Pitfalls of China’s One Belt, One Road Initiative.

How will Xi shake up the CCP?
Dong Dong Zhang (EAF) Feb 26, 2017
For most of Xi's first term, the focus internally has been on overhauling the party-state: riding off corruption, centralising political power, imposing party self-discipline and applying strict codes of conduct for party leaders at all levels. Xi's anti-corruption campaign has been central to achieving these objectives.

Impact of natural resource windfalls on the financial sector
Thorsten Beck and Steven Poelhekke (VoxEU) Feb 26, 2017
The financial sector plays a critical role in intermediating domestic savings into domestic investment, so it should serve as an important absorption tool for natural resource windfalls. Using a panel dataset of over 150 developed and developing countries, this column argues that unexpected exogenous windfalls from natural resource rents are not intermediated. The findings are consistent with the negative long-term relationship between the reliance of a country on natural resources and financial sector development. The financial sector plays a critical role in intermediating domestic savings into domestic investment, so it should serve as an important absorption tool for natural resource windfalls. Using a panel dataset of over 150 developed and developing countries, this column argues that unexpected exogenous windfalls from natural resource rents are not intermediated. The findings are consistent with the negative long-term relationship between the reliance of a country on natural resources and financial sector development.

Trump threatens to tear up the trade rule book
FT View Feb 27, 2017
Bypassing the World Trade Organisation would be a serious error.

The End of the Asian Century by Michael Auslin – strategic games
Lucy Hornby (FT) Feb 27, 2017
An examination of the rise of China and the future role of the US in the region.

Egypt returns to form after Arab uprising turmoil
Dan Bogler (FT) Feb 27, 2017
Painful reforms are starting to pay off and investors are noticing.

The Fallacy of Trump’s Alternative Trade Calculation
Caroline Freund (PIIE) Feb 27, 2017
The Trump administration is reportedly considering a change in the way it calculates bilateral trade deficits. The stated goal is to end an alleged distortion that understates the US trade deficit, and thereby help the administration make better trade deals, defined as ones that reduce the deficit...

The Alchemy of Geoeconomics
Bob Kopech (Brink) Feb 27, 2017
Geoeconomics—the study of how economic policies, decisions and actions affect broader relations between nations and/or groups of states—is the subject of increasing study among academic and strategic policy circles.

Trump's Fed Can Start a Central Bank Revolution
Mark Gilbert (Bloomberg View) Feb 27, 2017
It's time business executives were given a say in monetary policy.

A Nation of Immigrants Needs More Immigrants
Noah Smith (Bloomberg View) Feb 27, 2017
Because of falling birthrates, the U.S. requires newcomers to ensure population -- and economic -- growth.

India's Slow-Motion Bank Crisis
Mihir Sharma (Bloomberg View) Feb 27, 2017
The solutions are obvious, the will lacking.

‘If Money is Not Distributed, You Are Finished’
Milan Vaishnav (FP) Feb 27, 2017
In India's contentious politics, it's hard to avoid the smell of money.

Trump Team Quietly Probes Ways To Bypass, Undermine WTO
Robbie Gramer and Emily Tamkin (FP) Feb 27, 2017
The Trump administration is quietly probing ways to bypass and undermine the World Trade Organization.

Don’t Cry for Corporate America
Stephen S. Roach (Project Syndicate) Feb 27, 2017
In an ideal world, it would be nice to streamline, simplify, and even reduce tax and regulatory burdens on US businesses. But business is not the weak link in the US economic chain; workers are, because economic returns have shifted dramatically from the providers of labor to the owners of capital over the past 25 years.

A Tax on Robots?
Yanis Varoufakis (Project Syndicate) Feb 27, 2017
Bill Gates thinks that, to ease the social costs implied by automation’s displacement effects, robots should be required to pay taxes. But why make life under capitalism more complicated than it already is, when there is an alternative to a robot tax that is easy to implement and simple to justify?

Understanding the long-run effects of Africa’s slave trades
Nathan Nunn (VoxEU) Feb 27, 2017
Evidence suggests that Africa's slave trades played an important part in the shaping of the continent not only in terms of economic outcomes, but cultural and social outcomes as well. This column, taken from a recently published VoxEU eBook, summarises studies that reveal the lasting toxic effects of Africa’s four waves of slave trades on contemporary development. Evidence suggests that Africa's slave trades played an important part in the shaping of the continent not only in terms of economic outcomes, but cultural and social outcomes as well. This column, taken from a recently published VoxEU eBook, summarises studies that reveal the lasting toxic effects of Africa’s four waves of slave trades on contemporary development.

Inequality and economics: Tony Atkinson’s enduring lessons
Andrea Brandolini (VoxEU) Feb 27, 2017
Sir Tony Atkinson, the doyen of inequality economics, passed away in January. This column, by a longstanding friend and co-author, outlines his contributions to the analysis and measurement of inequality – and many other areas of economics, including taxation, social protection, and the welfare state. The ultimate goal of Atkinson’s research was to translate economic analysis into policy actions: economics is a tool for understanding the world and taking informed decisions on policies, but economists must strive to communicate their results beyond the narrow circles of decision-makers, making them accessible for public discussion. Sir Tony Atkinson, the doyen of inequality economics, passed away in January. This column, by a longstanding friend and co-author, outlines his contributions to the analysis and measurement of inequality – and many other areas of economics, including taxation, social protection, and the welfare state. The ultimate goal of Atkinson’s research was to translate economic analysis into policy actions: economics is a tool for understanding the world and taking informed decisions on policies, but economists must strive to communicate their results beyond the narrow circles of decision-makers, making them accessible for public discussion.

Understanding the global role of the US economy
M. Ayhan Kose, Csilla Lakatos, Franziska Ohnsorge and Marc Stocker (VoxEU) Feb 27, 2017
A growth surge in the world’s largest economy could provide a significant boost to global activity. In contrast, uncertainty about the direction of US policies could have the opposite effect. This column investigates spillover channels linking the US and the global economy. An acceleration in US growth would have positive effects for the rest of the world if not counterbalanced by increased trade barriers. However, policy uncertainty could hamper global growth, and could have particularly bad effects on investment growth in emerging and developing economies. A growth surge in the world’s largest economy could provide a significant boost to global activity. In contrast, uncertainty about the direction of US policies could have the opposite effect. This column investigates spillover channels linking the US and the global economy. An acceleration in US growth would have positive effects for the rest of the world if not counterbalanced by increased trade barriers. However, policy uncertainty could hamper global growth, and could have particularly bad effects on investment growth in emerging and developing economies.

The Economics of Dependency
Sami J. Karam (FA) Feb 27, 2017
How countries hit the demographic sweet spot.

Zombie companies still threaten China’s living
FT View Feb 28, 2017
Last year’s increase in bankruptcy cases falls short of proper reform.

India faces another tryst with destiny
Martin Wolf (FT) Feb 28, 2017
The country has a good chance of enduring as the world’s fastest-growing large economy.

Are emerging markets entering a new virtuous cycle?
Jonathan Wheatley (FT) Feb 28, 2017
Optimism over growth and returning investment on the back of Chinese demand is offset by fears of problems ahead

Betting on Faster Growth
WSJ Feb 28, 2017
Investors bidding up share prices show that better policies matter.

Have Americans gone complacent?
Robert J. Samuelson (WP) Feb 28, 2017
Here’s one provocative — but unproven — explanation for the economic slowdown.

Global Concentration Is Declining
Caroline Freund and Dario Sidhu (PIIE) Feb 28, 2017
Much research on industry concentration has focused on concerns over the growing monopoly power of large firms in the United States, but few have examined competition and concentration at the global level. Contrary to the trend in the United States, concentration ratios globally have been declining...

The unprecedented expansion of the global middle class
Homi Kharas (Brookings) Feb 28, 2017
The world’s middle class is growing at a never-before-seen rate, with major implications for the global economy and environment.

Making Trade More Inclusive
Roberto Azevêdo (WTO) Feb 28, 2017
While trade promotes growth and development through job creation, its benefits must be spread more widely.

What's Wrong With Bill Gates' Robot Tax
Noah Smith (Bloomberg View) Feb 28, 2017
Imposing added costs on new technology will slow growth and won't help people displaced by automation.

Buckle Up for Rapid Growth
Gary Shilling (Bloomberg View) Feb 28, 2017
Huge infrastructure outlays and large increases in military spending ought to do the trick.

Europe or Anti-Europe?
Michael Spence (Project Syndicate) Feb 28, 2017
Since the 2008 financial crisis, the conventional wisdom has been that a long, difficult recovery for eurozone economies will eventually lead to strong growth. But this narrative is losing credibility, as various trends suggest that Europe is trapped in a semi-permanent low-growth equilibrium.

What Liberal World Order?
Mark Leonard (Project Syndicate) Feb 28, 2017
After the annus horribilis that was 2016, most political observers believe that the liberal world order is in serious trouble. While the world can do without some elements of that order, its wholesale collapse would mean a new kind of globalization that combines the technologies of the future with the enmities of the past.

The Financial Fire Next Time
Simon Johnson (Project Syndicate) Feb 28, 2017
Powerful people do well from booms and busts, and the Goldman Sachs alumni serving in top US government posts are determined to see that they do. The rest of us can expect deeper inequality and more crisis-induced poverty.

Free Trade Without the US
Andrés Velasco (Project Syndicate) Feb 28, 2017
How should Latin America respond to US President Donald Trump’s America-first approach to the global economy? Here’s one possible answer: build a free-trade area of the Americas – and leave the US out of it.

From Bad to Worse for Puerto Rico
Joseph E. Stiglitz and Martin Guzman (Project Syndicate) Feb 28, 2017
The island's deep and long-lasting recession has made its debt position unsustainable. But the latest fiscal plan imposed by the US commonwealth's federal overseers openly assumes that a Venezuela-scale depression will somehow bring about recovery.

Cat’s Cradle: Scrapping NAFTA Will Wreak Havoc on Auto Industry Supply Chains
David Francis (FP) Feb 28, 2017
A generation after NAFTA was signed, automakers aren’t even sure how they could start to unravel cross-border manufacturing of thousands of components.

Is The Trump Era Really The Xi Era?
Paul Haenle, Shen Dingli, Chen Weihua, Jean-Pierre Cabestan, & Björn Jerdén (ChinaFile) Feb 28, 2017
In the most assertive public statements Xi has made so far about China’s role in shaping the international system, on February 17 he said in an important national security meeting that Beijing should now “guide the international community to jointly build a more just and reasonably new world order.” As Trump declares that Washington’s new strategy is an isolationist “America First,” is Beijing moving away from a reactive foreign policy strategy? If so, how will—and how should—Beijing try to shape the new world order?

A World Without Borders
Nathan Smith (FA) Feb 28, 2017
Richer, fairer, and more free.

Disrupting US-China Relations Will Incur High Costs
Farok J. Contractor (YaleGlobal) Feb 28, 2017
Efficient production lines, millions of jobs and affordable consumer products of all types depend on stable US-Chinese relations