News & Commentary:

Articles/Commentary

We must clean up global finance to 'build back better'
Martin Sandbu (FT) Mar 1, 2021
The post-pandemic economic recovery will be healthier if world leaders crack down on illicit flows of money.

Post-Brexit UK should craft itself as a services trading hub
Linda Yueh (FT) Mar 1, 2021
Britain can flourish as a bridge between countries that lack mutual FTAs.

How Can Biden Bring Back Manufacturing Jobs? Weaken the Dollar
Noam Scheiber (NYT) Mar 1, 2021
Critics of a strong currency say it hurts American factory workers by making imports cheap.

Covid-19 seeds of Asia's next financial crisis
William Pesek (AT) Mar 1, 2021
After a year of scrambling to avoid another Great Recession, central bankers are now faced with a "be careful what you wish for" dilemma. Monetary officials may get the strong economic growth rebound for which they hoped. They may not like, however, how debt markets respond.

Ngozi Okonjo-Iweala's Long and Winding Road
Arthur E. Appleton (Globalist) Mar 1, 2021
Ngozi Okonjo-Iweala is the first African and the first woman to serve in the WTO's top post. But she faces formidable challenges.

Are We Entering a Commodity Supercycle?
Paul Ekins (BRINK) Mar 1, 2021
Since the beginning of the year, prices of commodities of all kinds have been rising significantly. Experts are speculating that we are entering a commodity supercycle — the first since 2008.

The U.S. Must Step Up to Help the WTO Succeed
Bloomberg View Mar 1, 2021
The organization has a promising new leader, but Ngozi Okonjo-Iweala can't defend the future of the liberal trading order alone.

The Looming Test for Central Bank Independence
Mervyn Allister King (Bloomberg View) Mar 1, 2021
Imagine "Yellen," the musical.

Bond Tumult Complicates Life for the Fed
Mohamed Aly El-Erian (Bloomberg View) Mar 1, 2021
A reduction in unconventional measures is long overdue, but weaning markets off liquidity without volatility will be difficult.

Why China Can't Fix the Global Microchip Shortage
Anjani Trivedi (Bloomberg View) Mar 1, 2021
The country has been the world's vaunted factory floor but semiconductors require years of hard-won know-how and incredible amounts of money to design and create.

Tax Havens Are Sabotaging the SDGs
Yu Yongding (Project Syndicate) Mar 1, 2021
Several international initiatives, programs, agreements, conventions, and treaties have been created in recent years to reduce illicit financial flows, and yet the flows continue to increase. Without more aggressive and concerted action, countries will lack the resources needed to achieve the Sustainable Development Goals.

Are Inflation Fears Justified?
Kenneth Rogoff (Project Syndicate) Mar 1, 2021
In the near term, markets should not be too worried about a possible spike in demand driving up inflation and interest rates, causing asset prices to fall across the board. But longer-term inflation risks are skewed much more to the upside than many investors and policymakers seem to realize.

Who's Right on Inflation?
Harold Jame, Markus Brunnermeier, and Jean-Pierre Landau (Project Syndicate) Mar 1, 2021
As in the 1970s, a severe economic shock has forced governments to pursue massive fiscal and monetary expansion, thereby sowing fears of future inflation. But not all shocks are the same, and the key question now is whether we can be confident that the current state of exception will end.

When Special Drawing Rights Aren't So Special
Hannah Wanjie Ryder and Gyude Moore (Project Syndicate) Mar 1, 2021
Since the International Monetary Fund already has the ability to inject liquidity into the global economy through its reserve asset, special drawing rights, it is understandable that many would advocate the use of this mechanism to help struggling developing economies. But in their current form, SDR allocations leave much to be desired.

Realizing the Great Realization
Simon Johnson (Project Syndicate) Mar 1, 2021
In few countries has the COVID-19 crisis fueled political polarization as much as it has in the United States. Yet the US is also a country where policymaking in at least three areas may be headed in a less confrontational and more positive direction – precisely because the pandemic is so awful that it forces us to rethink everything.

Africa's manufacturing puzzle: Evidence from Tanzanian and Ethiopian firms
Xinshen Diao, Mia Ellis, Margaret McMillan, and Dani Rodrik (VoxEU) Mar 1, 2021
Countries in sub-Saharan Africa had achieved some success in industrialising before the COVID-19 pandemic. However, some economists question the primacy of manufacturing as a path to development. This column explores the correlation between growth-promoting economy-wide structural change and labour-productivity growth within non-agricultural sectors in 18 African countries. In Ethiopia and Tanzania, it was the share of employment in small and informal firms – rather than in the formal sector – that expanded during periods of growth acceleration. For such countries, competing in world markets may only be possible by adopting technologies that make it virtually impossible for significant amounts of employment to be generated.

Oil markets, fracking, and the global economy
Gideon Bornstein, Per Krusell, and Sérgio Rebelo (VoxEU) Mar 1, 2021
Oil markets have long been central to discussions of the global economy, and fluctuations in oil prices frequently gain widespread attention. This column explores the impact of the rising use of fracking on how oil markets are best conceived within modern macroeconomic theory. The author's model predicts that as fracking accounts for an increasingly sizeable fraction of the world oil supply, it may herald a new era of lower, more stable oil prices.

US 'excess savings' are not excessive
Florin Bilbiie, Gauti Eggertsson, and Giorgio Primiceri (VoxEU) Mar 1, 2021
How the US economy will emerge from the COVID-19 pandemic hinges in part on what will happen to the large amount of 'excess savings' that US households have accumulated since last March. This column argues that, in fact, these savings are not that excessive when considered against the backdrop of the unprecedented government interventions adopted over the past year in support of households, and that they are unlikely to generate a surge in demand post-pandemic.

Development Depends on More Than Aid
Gayle E. Smith (FA) Mar 1, 2021
A new U.S. agency promises to harness the power of private investment.

The Haves and Have-nots
Gita Bhatt (F&D) Mar 1, 2021
The digital future is coming at us faster than ever before. In this issue of F&D, we explore the possible consequences—the good, the bad, and the gray.

Remaking the Post-COVID World
Daron Acemoglu (F&D) Mar 1, 2021
To reverse widening inequality, keep a tight rein on automation.

From Financial Innovation to Inclusion
Jon Frost, Leonardo Gambacorta, and Hyun Song Shin (F&D) Mar 3, 2021
For technology to benefit everyone, private sector innovation needs to be supported by public goods

Let's Build a Better Data Economy
Yan Carrière-Swallow and Vikram Haksar (F&D) Mar 1, 2021
Our digital footprint generates enormous value, but too much of it ends up in Big Tech silos.

Decoupling in the Digital Era
Daniel Garcia-Macia and Rishi Goyal (F&D) Mar 1, 2021
Absent multilateral cooperation, the global digital economy could splinter, and everyone would pay.

The New Morality of Debt
Nikita Aggarwal (F&D) Mar 1, 2021
Increased datafication of debt raises ethical questions and calls for a new approach to regulating lending.

Resilience of Community Banks in the Time of COVID-19
Simon Kwan (FRBSF Econ Letter) Mar 1, 2021
Stress tests in December 2020 showed that the largest U.S. banks had strong capital levels and could continue to lend to households and businesses under hypothetical severe recessions. Assessing thousands of small community banks against similar criteria suggests that, while about one-fifth could fall below adequate capitalization, only a handful of those risk becoming insolvent. Overall, this is a reassuring view for small banks and their communities, suggesting that the risk of widespread bank failures leading to financial instability appears to be small.

Expect a Steady Rather Than Spectacular Eurozone Recovery
Nick Bennenbroek and Jen Licis (WF Econ Group) Mar 1, 2021
The Eurozone economy showed some resilience in late 2020, with the decline in Q4 GDP less than generally expected. That said, the economy still faces near-term challenges with lockdowns restricting activity and the distribution of vaccines gradual so far. As a result, we expect Eurozone GDP to contract further in Q1-2020. The medium-term prospects for the economy are somewhat mixed. Household finances remain sound, meaning the Eurozone economy should be well-positioned for a consumer recovery once the economy fully reopens. However, the gradual rollout of vaccines as well as gradual implementation of further fiscal support measures suggest the pace of a medium-term recovery will not be especially robust. A moderate Eurozone recovery suggests the European Central Bank will maintain an accommodative monetary policy stance for an extended period and that its rhetoric will generally tilt more dovish than hawkish. At this time, however, we do not anticipate any further monetary easing from the central bank. Overall, we do not view the economic growth and policy mix as especially favorable for the euro. As a result, we recently revised our forecast for the EUR/USD exchange rate modestly lower and still view risks to that forecast as tilted to the downside.

Poorer countries need more global assistance
FT View Mar 2, 2021
IMF should issue special drawing rights and rich countries should reallocate them.

WTO members must intensify co-operation
Ngozi Okonjo-Iweala (FT) Mar 2, 2021
If we are to restore the organisation's credibility, countries must set aside their differences.

Tax Reforms in Developing Countries in an Era of COVID-19
Sanjeev Gupta and João Tovar Jalles (CGD) Mar 2, 2021
Does the budgetary impact vary across advanced and developing countries and depending on which budget component is affected more? And if the budget impact is significant, what is the possibility of developing countries implementing tax reforms to mitigate the negative effect of the pandemic?

Staying Afloat: New Measures to Support European Businesses
Alfred Kammer and Laura Papi (IMF) Mar 2, 2021
Europe now needs to gradually change the support to firms from providing liquidity toward strengthening their equity.

A K-shaped recovery and the role of fiscal policy
Maria Demertzis (Kathimerini/Bruegel) Mar 2, 2021
The spine of the letter represents the fall in activity at the start of the pandemic. Then there is a split, which leads to the two 'arms' that capture the different directions taken by economic activity in different sectors.

Big Oil Is Unwilling to Bet on the Future of Crude
David Fickling (Bloomberg View) Mar 2, 2021
The reserves-to-production ratio, which gauges long-term prospects across the industry, has fallen below critical levels.

Policy Credibility Is Hard to Earn and Easy to Lose
Daniel Moss (Bloomberg View) Mar 2, 2021
Why are some emerging market central banks able to experiment with unorthodox economic tools, while others make investors queasy? It all comes down to one word.

Carbon Emissions Made a Rapid Recovery From Covid
Liam Denning and Mark Gongloff (Bloomberg View) Mar 2, 2021
But a structural change, driven by the power sector's embrace of renewables, will last.

The COVID Bubble
Nouriel Roubini (Project Syndicate) Mar 2, 2021
With equity markets reaching new heights at a time of rising income and wealth inequality, it should be obvious that today's market mania will end in tears, reproducing the economic injustices of the 2008 crash. For all of the talk of supporting households, it is Main Street that will suffer most when the music stops.

The Goldilocks Stimulus Myth
Yanis Varoufakis (Project Syndicate) Mar 2, 2021
Both supporters and critics of US President Joe Biden's $1.9 trillion stimulus plan assume that there is a dollar amount that is just right. In fact, no such figure exists: every possible stimulus size is simultaneously too little and too big.

Central Banks' Green Goals Are Raising Red Flags
Howard Davies (Project Syndicate) Mar 2, 2021
There is growing concern that central banks' balance sheets, which have ballooned after a decade of asset-purchase programs, are skewed toward holdings that impede the transition to a green economy. But there is also deep disagreement about how policymakers should respond.

What central banks ought to target
Martin Wolf (FT) Mar 3, 2021
Amid a wide range of options, inflation targeting remains the simplest and least bad.

Will 'copycat economics' in emerging markets have to end?
David Lubin (FT) Mar 3, 2021
Some countries will find it difficult to match the fiscal expansion and central bank support in developed economies.

Property and the pandemic: the great reckoning that never seems to arrive
Joshua Chaffin (FT) Mar 3, 2021
US creditors are wary of calling in commercial real estate loans because many do not want to be saddled with undesirable assets

Property and the pandemic: the great reckoning that never seems to arrive
Joshua Chaffin (FT) Mar 3, 2021
US creditors are wary of calling in commercial real estate loans because many do not want to be saddled with undesirable assets.

Jittery Stocks, Jumpy Bonds: Why Investors Are Troubled by Signs of Growth
Matt Phillips (NYT) Mar 3, 2021
The markets are stressed at the prospect of an economic rebound, which is forcing investors to reassess their holdings.

Nikkei's stock surge proves world has gone mad
William Pesek (AT) Mar 3, 2021
In June 2015, Governor Haruhiko Kuroda turned heads everywhere by suggesting investors start thinking of the Bank of Japan as the Bank of Peter Pan.

Putin and Erdogan: Two Men Race to the Bottom
Aykan Erdemir (Globalist) Mar 3, 2021
Russia's and Turkey's lack of a solid economic performance is what motivates their two leaders' steady resorting to domestic oppression.

How Asia Can Unleash Private Investment for Its Infrastructure
Bart Edes (BRINK) Mar 3, 2021
Asian governments are scrambling to reboot their battered economies, following the COVID-19 pandemic. The key to recovery is a substantial increase in infrastructure investment: The private sector can invest in developing Asia to ensure connectivity and the physical foundations essential for a modern economy to create jobs and prosperity.

Hitting 0.7 For 0.7's Sake: The Perils of the Global Aid Funding Target
Ranil Dissanayake (CGD) Mar 3, 2021
Three possible perverse effects of adopting 0.7.

The Evidence Is in on Negative Interest Rate Policies
Luis Brandao-Marques and Gaston Gelos (IMF) Mar 3, 2021
The evidence so far indicates negative interest rate policies have succeeded in easing financial conditions without raising significant financial stability concerns.

Indonesia Has an Opportunity to Boost Growth
Minsuk Kim and Robin Koepke (IMF) Mar 3, 2021
After several years of strong growth, Indonesia's GDP fell 2.1 percent in 2020. While large, this downturn was smaller than other countries in the Asia-Pacific region, reflecting less stringent containment measures and lower dependence on highly impacted sectors like tourism.

The Threats to Recovery
William R. Rhodes and Stuart P.M. Mackintosh (Project Syndicate) Mar 3, 2021
Many of the monetary and fiscal measures in advanced economies over the past 12 months were necessary and unavoidable. But as policymakers eye a possible recovery in 2021-22, they must be vigilant about the side effects of prolonged stimulus.

AI and jobs: Evidence from US vacancies
Daron Acemoglu, David Autor, Jonathon Hazell, and Pascual Restrepo (VoxEU) Mar 3, 2021
As artificial intelligence technologies improve rapidly, there is increasing interest in the effects on workers. This column uses data on skill requirements in US vacancies posted since 2010 to examine the impact of artificial intelligence on the US labour market. While the estimates suggest that AI has started to replace workers in certain tasks, it does not yet seem to be having effects on the aggregate labour market.

Information sharing and the geography of banking
Shusen Qi, Ralph De Haas, Steven Ongena, and Stefan Straetmans (VoxEU) Mar 3, 2021
Digitalisation, FinTech, and the expansion of mobile banking have changed the way in which many banks operate on a day-to-day basis, including where they choose to have physical branches. This column explores the effect of digitalisation on the geography of banks, testing the effects of digital information-sharing on branch locations in Europe. findings suggest that information sharing has a strong positive effect on branch clustering, with banks more likely to open new branches in areas where they do not yet operate but where other banks are already present.

US business dynamism rises
Simeon Djankov and Eva (Yiwen) Zhang (VoxEU) Mar 3, 2021
Steep falls in entrepreneurial activity were recorded in early 2020 across G7 economies. In the US, however, the creation of US startups shot up by 24% relative to the previous year. This column uses data on new company applications in the US since 2004 to show that firm birth generally accelerates in the aftermath of economic crises and that this pattern was particularly pronounced in 2020, fuelled by the government assistance provided to small businesses. It also shows that US firm births are estimated to have surpassed firm deaths in 2020, unlike in the aftermath of the previous financial crisis.

FDI and Firm Productivity in Host Countries: The Role of Financial Constraints
Wontae Han, Jian Wang, and Xiao Wang (VoxChina) Mar 3, 2021
Using the Chinese firm-level data, we find that FDI firms may have even lower cutoff productivity than local firms, although FDI firms are still, on average, more productive than their local counterparts. In addition, these findings are more pronounced in financially more vulnerable sectors. We argue that easy access to international financial markets by FDI firms has played an important role in driving our empirical findings. We show in a two-country model that policies that do not properly recognize FDI firms' financial advantages can be counterproductive.

Is This Time Different for the Economic Recovery?
Azhar Iqbal and Hop Mathews (WF Econ Group) Mar 3, 2021
Increasing optimism about vaccines and healthy household balance sheets have set the stage for strong recovery in 2021. If our most recent economic forecast is realized, the ongoing recovery has the chance to be the fastest in decades.

Has Covid-19 been a "reallocation recession"?
Joel M. David (FRB Chicago Fed Letter) Mar 3, 2021
The Covid recession thus far has not been characterized by unusually high levels of worker movement across sectors (reallocation), although there has been a large impact on the leisure and hospitality sector relative to other sectors. Excluding leisure and hospitality, this recession had a lower rate of net worker movement across sectors in the ten months ending December 2020 than other post-1945 recessions.

The first task of democracies is to put their own house in order
Tony Barber (FT) Mar 4, 2021
Joe Biden's planned summit and Boris Johnson's 'D10' must not turn into anti-Chinese fronts.

Dollar defies the doubters as hopes for economic rebound rise
Eva Szalay (FT) Mar 4, 2021
US currency advances against the euro as traders price in rising interest rates.

Financial bubbles also lead to golden ages of productive growth
John Thornhill (FT) Mar 4, 2021
The ESG stock frenzy of today, however egregious, may yet translate into a better tomorrow.

Donating vaccines to poorer countries is in the national interest
Michael Gerson (WP) Mar 4, 2021
An America First vaccine policy would backfire.

China eyes great welfare leap forward
Francesco Sisci (AT) Mar 4, 2021
In February, China's President Xi Jinping announced a large and bold plan for a nationwide basically all-encompassing welfare system, arguing it is a crucial issue for state stability.

There Are Early Signs of a Value-at-Risk Shock
Richard Cookson (Bloomberg View) Mar 4, 2021
There's increasing evidence of a change in correlation between bonds and equities. Risk-management models mean this is likely to be bad for both.

Ireland Sees $2.4 Billion Hit From a 4-Letter Word
Lionel Laurent (Bloomberg View) Mar 4, 2021
A global crackdown on low-tax countries, known as BEPS, is a challenge Dublin should accept.

The Inflation Regime Change Is Already Upon Us
John Authers (Bloomberg View) Mar 4, 2021
Epochal shifts can be difficult to spot in real time, but the signs are there.

What Are the New Inflation Hawks Thinking?
J. Bradford DeLong (Project Syndicate) Mar 4, 2021
After so many years of hand-wringing over disappointing US economic growth, it is odd to hear prominent economists sounding the alarm about the mere possibility of inflation. If anything, we should want an economy in which a higher federal funds rate is warranted.

How institutional investment funds' reach for yield intensifies asset price volatility
Alexandru Barbu, Christoph Fricke, and Emanuel Moench (VoxEU) Mar 4, 2021
Institutional funds manage the majority of the assets under management of all German investment funds. This column documents that institutional funds act in a strongly procyclical manner, by actively investing in higher-yielding, longer-duration and lower-rated assets as yield spreads compress. The authors show that this intensifies asset price volatility and highlight reasons behind this procyclical investment behaviour.

Lessons from History, Policy for Today
Mary C. Daly (FRBSF Econ Letter) Mar 4, 2021
Today's economic challenges are different from the past, and it's important to learn from history to achieve a better economic future for everyone. As the economy recovers from the effects of COVID-19, the Fed's new policy framework retains vigilance against inflation while committing to not pull back the reins on the economy in response to a strong labor market.

The Fed must avoid a repeat of the March Treasuries mystery
Gillian Tett (FT) Mar 5, 2021
Emergency measures unblocked the bond markets in 2020, but there is a risk of another crisis.

Making Sense of Elevated Stock Market Prices
Robert J. Shiller (NYT) Mar 5, 2021
Shares are very expensive, but so are bonds. Even at current prices, the economist Robert J. Shiller says, it is reasonable to keep some wealth in stocks.

China's looming population slide could make it an even more dangerous global threat
Henry Olsen (WP) Mar 5, 2021
The demographic damage from the now-abandoned one-child policy may play into Xi Jinping's hand. The United States must prepare accordingly.

China aims to regain momentum with GDP target
Frank Chen (AT) Mar 5, 2021
Leaders of the world's only major economy that has regained the momentum lost to the Covid-19 pandemic have demonstrated a strong desire to lead the world out of the economic malaise.

Implications of China's Credit Curtail
Gene Frieda and Carol Liao (PIMCO) Mar 5, 2021
China's economy should see a soft landing as stimulus is reduced, but the drag on global growth may place a burden on developed economies to keep stimulus taps open for longer.

Lessons from East Asia and Pacific on taming the pandemic
Martin Chorzempa and Tianlei Huang (PIIE) Mar 5, 2021
The East Asia and Pacific region is one of the few global bright spots in the fight against the COVID-19 pandemic. Its success provides many lessons on containing infectious diseases at a low cost to the economy in an era of chronic pandemics. The experience in East Asia and Pacific varies among countries with diverse cultures, geographies, and political systems, but one thing is clear: rigorous masking requirements, testing, contact tracing, selective quarantines, border closings, and clear public health communication all helped to avoid the overwhelming economic dislocations that occurred in the West. The ability and readiness to deploy these tools, and to secure political support and compliance with public health measures, allowed both democratic and authoritarian countries in East Asia and Pacific to emerge from the pandemic with some of the lowest COVID-19 mortality rates in the world.

Powell Can Roil Markets Now With Just a Word
Mohamed Aly El-Erian (Bloomberg View) Mar 5, 2021
Remarks by the Fed chair starkly illustrate the central bank's dilemma.

What You Don't Remember About the Taper Tantrum
Daniel Moss (Bloomberg View) Mar 5, 2021
Comparisons to the 2013 rout have been popping up amid the recent bond-market tumult. But there are some critical differences that investors should consider.

Even Central Bankers Can't Agree on Reflation
Mark Gilbert (Bloomberg View) Mar 5, 2021
A difference of opinion among Bank of England policy makers should give gilt investors pause.

Building a Better SDR
José Antonio Ocampo (Project Syndicate) Mar 5, 2021
As the International Monetary Fund prepares for its next large-scale issue of special drawing rights, its reserve asset, the time is ripe for reform. At the top of the list of priorities should be eliminating dual IMF accounting and implementing a more equitable system for determining SDR allocations.

Fiscal Follies in the COVID Recovery
Daniel Gros (Project Syndicate) Mar 5, 2021
With governments in advanced economies continuing to keep the fiscal taps open, it is worth considering whether additional stimulus is really what the situation demands. Unlike the aftermath of the 2008 crisis, the problem today is not a lack of purchasing power, but rather circumstances unique to a viral pandemic.

Build Back Equal
María Fernanda Espinosa (Project Syndicate) Mar 5, 2021
Creating an economy that works for everyone is not just a matter of empowering those who have been "left behind" by globalization. Instead, it requires a comprehensive and critical assessment of the systemic forces that are fueling inequality.

Firms' exporting behaviour to countries under sanctions
Matthieu Crozet, Julian Hinz, Amrei Stammann, and Joschka Wanner (VoxEU) Mar 5, 2021
Sanctions are imposed on a target country to exert political and economic pressure. But there is little evidence on how exporting firms regard trade with the sanctioned country. This column uses detailed monthly customs data from French firms to investigate the extensive margin of trade in episodes of sanctions-use against Iran, Russia, Cuba, and Myanmar. It finds the impact of sanctions is heterogeneous along firm dimensions and advises caution in the use of a policy tool with imprecise and unpredictable results.

Informality and the effects of trade in developing countries
Rafael Dix-Carneiro, Pinelopi Goldberg, Costas Meghir, and Gabriel Ulyssea (VoxEU) Mar 5, 2021
Shifts into and out of the informal sector are important margins of labour market adjustment to economic shocks, particularly in developing countries. This column develops a structural equilibrium model of trade and informality to study the effects of trade openness on unemployment, welfare, productivity, and wage inequality. Higher trade openness leads to strong positive effects on aggregate welfare and productivity, decreases in overall wage inequality, and moderate increases in unemployment. Modelling the informal and non-tradable sectors is crucial to reaching a comprehensive understanding of the effects of trade in developing countries.

Biden's Stimulus Is the Dawn of a New Economic Era
Adam Tooze (FP) Mar 5, 2021
The United States' massive relief package is more than a technocratic policy. It's a democratic triumph.

Britain Shouldn't Put Its Money on a Post-Brexit Rapprochement With Africa
Oluwatosin Adeshokan (FP) Mar 5, 2021
Boris Johnson is looking to old U.K. colonies for trade deals, but his government can't compete with China and won't get far until it abandons its neocolonial attitudes.

How Sensitive Are Emerging Markets to Rising Yields?
Brendan McKenna (WF Econ Group) Mar 5, 2021
In recent weeks, the theme of reflation has dominated global financial markets. With inflation expectations firming, U.S. Treasury yields have spiked. While the rise in Treasury yields should be interpreted as market participants becoming more confident in the recovery prospects of the global economy, higher yields have also resulted in elevated financial market volatility over the past few weeks, particularly within the emerging markets. The rise in yields has drawn comparisons to the 2013 Taper Tantrum, an episode where emerging market assets sold off significantly amid a sudden push higher in U.S. Treasury yields. There are some key differences between the recent rise in yields and the Taper Tantrum episode, however, and while Fed monetary tightening is likely still far off, current developments raise the question of which emerging market countries could experience funding pressure and sharp currency deprecations if yields continue to rise and financial market volatility stays elevated. While we do not believe we are entering a new Taper Tantrum scenario just yet, we see value in providing early guidance on where sovereign yields could rise the most, and which emerging market currencies could be vulnerable. In that context, we offer a sensitivity framework and incorporate key variables we believe help determine sensitivity to the current reflation theme. Countries in emerging Asia and emerging Europe, Middle East and Africa (EMEA) have become less sensitive relative to the Taper Tantrum episode, while Latin America remains stable, leading us to believe the emerging markets in general are less sensitive to the current period of rising yields. However, there are some countries that could be vulnerable from both a yield and currency perspective, most notably South Africa and Mexico. In addition, sovereign debt has become more sensitive in Peru and Russia compared to the 2013 Taper Tantrum, while Hungarian yields could rise less significantly today relative to a decade ago. As for currency vulnerability, the Indian rupee has become a less sensitive currency in 2021 relative to 2013 as underlying economic fundamentals and politics in India have improved significantly. In the event of another interest rate shock and large selloff in the emerging markets, we would expect rupee depreciation to be much more contained.

'I've Never Seen Anything Like This': Chaos Strikes Global Shipping
Peter S. Goodman, Alexandra Stevenson, Niraj Chokshi and Michael Corkery (NYT) Mar 6, 2021
The pandemic has disrupted international trade, driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery.

How to make a social safety net for the post-covid world
Economist Mar 6, 2021
Governments must remake the social contract for the 21st century.

What academics think of central banks' current inflation targets and other objectives
Gene Ambrocio, Andrea Ferrero, Esa Jokivuolle, and Kim Ristolainen (VoxEU) Mar 6, 2021
Central banks often have inflation targets at the centre of their monetary policy regimes. This column presents survey data from 613 leading economists to explore their views on these inflation targets and wider policies within their countries of residence. The results suggest that maintaining the prevailing inflation target (for central banks that have one) has more support than changing it does. But more respondents are pessimistic about central banks' ability to meet these targets, particularly in the euro area.

Japan's innovators seek their lost mojo
Leo Lewis (FT) Mar 7, 2021
Once a world leader in new technology, the country has become an R&D laggard.

Legacy of the Fukushima nuclear disaster
Tatsujiro Suzuki (EAF) Mar 7, 2021
The Suga government's Green Growth Strategy, which aims to achieve carbon neutrality by 2050, envisions the use of small modular reactors and nuclear power for hydrogen production. But before Japan can realistically consider the future of nuclear power, it must first address three unresolved legacies.

The Fed Doesn't Fear Inflation. Its Critics Have Longer Memories
Niall Ferguson (Bloomberg View) Mar 7, 2021
Milton Friedman saw the great uptick of the 1970s coming, and Larry Summers has similar warnings today. Jerome Powell would do well to listen.

Going Down the Inflation Rabbit Hole
Brooke Sample (Bloomberg View) Mar 7, 2021
Should we be freaking out about inflation, or is everything a sign that economies are truly on the mend?

Key to Resolving Covid's Global Debt Crunch: Transparency
Ceyla Pazarbasioglu and Carmen M Reinhart (Bloomberg View) Mar 7, 2021
The number of low-income countries eligible for debt-service relief has doubled in the last decade. Here's how to help them.

The inflation risk from Joe Biden's stimulus plan is exaggerated
Chen Zhao (FT) Mar 8, 2021
The challenge is to fight the economic crisis by raising demand.

Are markets really rigged?
Robin Wigglesworth (FT) Mar 8, 2021
The fairness of the US financial system has gone on trial in the wake of the GameStop saga.

ECB faces headache from 'unwelcome' rise in yields
Martin Sandbu (FT) Mar 8, 2021
Doves in Frankfurt echo lessons drawn by Fed and urge central bank to keep foot on accelerator.

Will Stagnation Follow the Biden Boom?
Paul Krugman (NYT) Mar 8, 2021
The relief bill is done; infrastructure may be harder.

Oil markets prepare for lofty prices and restrained supply
Economist Mar 8, 2021
A failed attack on a Saudi refinery is only the latest event pushing prices up.

Surge in Rates May Be Overstating the Case for Inflation
Marc P. Seidner (PIMCO) Mar 8, 2021
Longer-dated Treasury yields have climbed as markets consider whether economic growth and inflation expectations might accelerate more rapidly. We believe inflation pressures will remain in check and bond yields will be range-bound.

Technology or Labor Costs? Why Has Africa Missed Out on a Manufacturing Takeoff? And Is Manufacturing Still a Viable Path to Development?
Christian Meyer, Alan Gelb and Vijaya Ramachandran (CGD) Mar 8, 2021
Debates on Sub-Saharan Africa's development path and prospects often focus on two questions. Looking back, why have countries not experienced the structural transformation towards labor-intensive manufactures that has played such an important a role in the rapid development of Asian countries? And, looking forward, can poor countries still jump onto the escalator of manufactured exports development?

Managing developing countries' sovereign debt
José Antonio Ocampo (Brookings) Mar 8, 2021
Before the COVID-19 crisis, several low-income countries and some emerging economies were already facing sovereign debt problems, but this issue has become increasingly severe with the current crisis, limiting the capacity of these nations to manage the economic and social effects of the pandemic.

Inflation Numbers Rise in Europe, But Expectations Remain Low
Lorenzo Pagani and Yi Qiao (PIMCO) Mar 8, 2021
A recent report showed an uptick in inflation in Europe, but markets are pricing in low inflation over the long term. We see opportunity for investors to hedge inflation risk.

The Real Taper Tantrum Should Be Happening in China
Daniel Moss (Bloomberg View) Mar 8, 2021
For all the worries about rising yields in the U.S., Beijing's policy makers are sending a strong signal that stimulus has its limits.

Value's Long-Awaited Dawn May Finally Be Here
John Authers (Bloomberg View) Mar 8, 2021
The speed of the recovery is unlike anything seen in the past decade.

Saudi Oil Attack Is Nothing Like the Last One
Liam Denning (Bloomberg View) Mar 8, 2021
The kingdom isn't rushing to soothe oil prices this time. It's a risky bet on U.S. shale producers ignoring higher prices.

The World May Need A Bad Bank For Coal
Clara Ferreira Marques (Bloomberg View) Mar 8, 2021
The world's biggest diggers are still cleaning up carbon-smudged portfolios. One solution is to pool the dirty stuff.

A Greentech Bubble?
William H. Janeway (Project Syndicate) Mar 8, 2021
Surging greentech stocks have led to a debate about whether we are on the cusp of a Green Revolution, or yet another asset-price bubble. In fact, both interpretations are provisionally correct, because all now depends on whether governments will step in to provide the necessary rules, infrastructure, and markets.

The Bitcoin Lottery
Jim O'Neill (Project Syndicate) Mar 8, 2021
The sudden rise of "special purpose acquisitions companies" and cryptocurrencies speaks less to the virtues of these vehicles than to the excesses of the current bull market. In the long term, these assets will mostly fall into the same category as speculative "growth stocks" today.

The US Recovery's Promising Moment
Mohamed A. El-Erian (Project Syndicate) Mar 8, 2021
Recent macroeconomic figures and the accelerating pace of COVID-19 vaccination suggest that optimism about the US economy's prospects is justified. But to avoid snatching defeat from the jaws of victory, policymakers must press ahead with measures to lock in robust, sustainable, and inclusive long-term growth.

A historic moment in US stimulus
FT View Mar 9, 2021
The $1.9tn bill both reveals and reinforces a new enthusiasm for the state.

Bond sell-off is a foretaste of things to come
Thushka Maharaj (FT) Mar 9, 2021
Government debt simply cannot provide the kind of safe harbour it once did.

India tests the business model for delivery of anything, anytime
Benjamin Parkin (FT) Mar 9, 2021
Low labour costs help spur development of industry serving country's upper middle class.

There are good reasons for business leaders to invest in bitcoin
Dambisa Moyo (FT) Mar 10, 2021
Cryptocurrencies can be a store of value, like digital gold.

Move Over, Nerds. It's the Politicians' Economy Now.
Neil Irwin (NYT) Mar 9, 2021
Leaders of both parties have become willing to act directly to extract the nation from economic crisis, taking that role back from the central bank.

The world's consumers are sitting on a pile of cash. Will they spend it?
Economist Mar 9, 2021
Households look set to power the economic recovery—especially in America.

Focusing on Inflation May Miss the Bigger Risk
Tiffany Wilding (PIMCO) Mar 9, 2021
The COVID-19 relief bill has spurred talk of inflation, but financial stability may be a more relevant risk.

Developing countries need greater financing and debt relief for COVID-19 and future pandemics
Adnan Mazarei (PIIE) Mar 9, 2021
Many advanced economies are now racing to vaccinate a sizeable share of their populations against the COVID-19 pandemic. The progress in low- and middle-income countries, however, has been frustratingly slow because of a shortage of vaccines and the infrastructure for administering them. Unless these challenges are overcome quickly, not only will people living in less affluent countries suffer but so will those in rich nations. Epidemics anywhere pose a threat to people everywhere.

How to Make an SDR Reallocation Work for Countries in Need
Mark Plant (CGD) Mar 9, 2021
It now appears very likely that the membership of the IMF will approve a special drawing rights (SDR) allocation equivalent to as much as $675 billion. This is good news. It will provide some immediate relief to countries that are liquidity constrained because of the health and economic crises resulting from the COVID-19 pandemic.

Superstar Companies Know How to Deploy Digital Capital
Peter R Orszag (Bloomberg View) Mar 9, 2021
It's not enough to develop new computer systems; they need to be put to good use.

In Hong Kong, Beijing Sacrifices Credibility for Control
Clara Ferreira Marques (Bloomberg View) Mar 9, 2021
An overhaul of the territory's electoral system tears off a democratic fig leaf. An even more unpredictable era begins.

Read India's Tea Leaves in Bonds, Not Stocks
Andy Mukherjee (Bloomberg View) Mar 9, 2021
Gas prices and the higher yield curve are better indicators of rising discontent than shares floating on government-injected liquidity.

Unleashing the Climate Market
Nancy Birdsall and Brian Webster (Project Syndicate) Mar 9, 2021
Owing to years of grassroots mobilization and the rise of renewables and low-carbon assets, financial markets are finally shifting gears to account for the inevitable decline of fossil fuels. But to make the most of the current moment, policymakers must heed the financial industry's call for clear standards.

Who Needs a Digital Dollar?
Barry Eichengreen (Project Syndicate) Mar 9, 2021
Recently, the idea of a digital greenback elicited support from US Treasury Secretary Janet Yellen and Federal Reserve Chair Jay Powell. Ultimately, the advantages of a digital dollar will need to be weighed against the potentially high costs and significant risks to the financial system that come with it.

Supply chains and trade flows volatility in the face of global shocks
Mariarosaria Comunale, Justas Dainauskas and Povilas Lastauskas (VoxEU) Mar 9, 2021
International trade flows are volatile, imbalanced, and fragmented across offshored supply chains. But there is still a lack of understanding about why global trade shocks, such as the Covid-19 pandemic, result in synchronised, but remarkably unequal trade flow responses across countries. This column argues that less-integrated countries focusing on arm's-length trade experience the greatest trade flow disruptions in response to global trade shocks, while trade flows between more integrated countries relying on intermediate imports tend to dip less and bounce back more rapidly.

The health toll of import competition
Jérôme Adda and Yarine Fawaz (VoxEU) Mar 9, 2021
Globalisation has affected workers and firms in developed countries over the last decades, leading to loss of employment and worker displacement. This column exploits data on over 40 million Americans to evaluate the many diverse health effects of such an economic shock. It shows that import competition has affected both health and health behaviour, increasing hospital admissions for conditions ranging from infectious diseases to cancer, as well as for mental health issues and substance abuse. However, these effects are only present in areas where jobs tend to involve a high level of routine tasks.

Lessons from all democracies
David Stasavage (Aeon) Mar 9, 2021
Democracy is not a torch passed from ancient Athens but a globally common form of government with much to teach us today

Why inflation is at risk of overshooting the Fed's comfort zone
Chetan Ahya (FT) Mar 10, 2021
Regime shift is under way with US economy set to recover much more than expected.

There is a way to keep the UK at the top of global finance
Andrew Large (FT) Mar 10, 2021
The City should focus on wholesale markets, a historic strength, and bow to the inevitable elsewhere.

Don't let intellectual property rights get in the way of global vaccination
Matthew Kavanagh and Madhavi Sunder (WP) Mar 10, 2021
The United States is blocking a proposal at the WTO to waive patents for covid-19 vaccines. It should drop its objection. s

Inflation Fear Lurks, Even as Officials Say Not to Worry
Nelson D. Schwartz and Jeanna Smialek (NYT) Mar 10, 2021
Prices have yet to show much movement, but the prospect of an unbridled economy's surging back from the pandemic has unsettled the markets

Why Won't Libor Die? It's Complicated
Mark Gilbert (Bloomberg View) Mar 10, 2021
The broken interest rate benchmark still dominates derivatives trading. Regulators may need to be more forceful in persuading banks to drop it.

Soaring Yields Oust the Euro as the ECB's Biggest Problem
Marcus Ashworth (Bloomberg View) Mar 10, 2021
The last thing the central bank needs right now is a taper tantrum.

The Coming Economic Boom Will Be Just a Mirage
Gary Shilling (Bloomberg View) Mar 10, 2021
Forecasts of 6% to 8% growth in real gross domestic product this year are common, but where will it come from?

Reflation, Rotation, Hot Money, Cold Feet, Let's Call the Whole Thing Off
Shuli Ren (Bloomberg View) Mar 10, 2021
Foreign investors were behind a $408 billion flood of investment into China's stocks and bonds last year. Now they're having buyer's remorse.

Janet Yellen's New Financial Multilateralism
Paola Subacchi (Project Syndicate) Mar 10, 2021
In a recent letter to her G20 colleagues, US Treasury Secretary Janet Yellen called for stronger multilateralism in responding to the COVID-19 crisis. By emphasizing governance, flexibility, and accessibility, Yellen offers reason to hope for broader action to address the many gaping holes in the current global financial system.

Rural Women Can Drive Green Recoveries
Parimita Mohanty and Annette Wallgren (Project Syndicate) Mar 10, 2021
The post-pandemic recovery packages so far proposed by Asia-Pacific governments invariably omit a key demographic: rural women. Unless policymakers quickly apply a gender perspective to their spending priorities, this large and vital group will be left behind, and the economic impact of official programs will fall short of potential.

The ECB's green agenda
Ethan Ilzetzki and Jason Jia (VoxEU) Mar 10, 2021
Debates have emerged recently on central banks' role in mitigating climate change, or at least on increasing their awareness of their environmental impact. The February 2021 CfM-CEPR survey asked members of its European panel of experts about measures the ECB could take to address the environmental impact of its bond-purchasing policies. The majority of the panel supports active measures to use the ECB's bond-purchasing programme to either exclude industries with negative environmental impact or bias its portfolio towards green investments. An additional 30% of the panel believes that the ECB should rebalance its portfolio to correct its current bias in favour of polluting industries. However, a majority also believes it would be inappropriate to change the ECB's mandate to reflect green objectives.

Biden's stimulus will affect the whole world
FT View Mar 11, 2021
Poorer countries will find it hardest to adjust to higher interest rates and strong dollar.

Squandering trust is no route to a 'Global Britain'
Philip Stephens (FT) Mar 11, 2021
By seeking to renege on his Brexit commitments, Boris Johnson has made the UK an unreliable ally.

The national debt is high and growing. Congress's infrastructure bill must keep that in mind.
WP Mar 11, 2021
The right answer is not to pivot to deficit reduction immediately.

Financial services: The Brexit dust begins to settle
Nicolas Véron (Bruegel) Mar 11, 2021
The phase of greatest Brexit-related uncertainty for the European financial sector ended on 1 January. Although too early to discern more than the broadest contours of the future landscape, it is increasingly apparent that London will be less dominant than before.

Canada: Ensuring sustainable economic recovery
Philip Hemmings (OECD Ecoscope) Mar 11, 2021
Economic recovery is in sight, but substantial risks and uncertainties surround the economic outlook, and the economy still needs macroeconomic support.

Want to Reduce Gulf Arab Reliance on Oil? Try Universal Income
Ziad Daoud (Bloomberg View) Mar 11, 2021
Instead of paying for low-productive government jobs, the GCC states should give all citizens a monthly stipend.

The Inflation Scare Is Missing Some Inflation
John Authers (Bloomberg View) Mar 11, 2021
Stocks are more concerned about a rise in yields, though a repeat of the taper tantrum looks to have been avoided.

Why Should Biden Ditch Trump's China Tariffs?
Shang-Jin Wei (Project Syndicate) Mar 11, 2021
US President Joe Biden will not rescind Donald Trump's tariffs on imported Chinese goods for China's benefit. But he has three stronger reasons to do so: The measures have hurt American workers and firms, failed to reduce the overall US trade deficit, and arguably further weakened respect for global economic rules.

India's Smart Vaccine Diplomacy
Shashi Tharoor (Project Syndicate) Mar 11, 2021
As countries scramble to secure supplies in the face of "vaccine apartheid," India has enhanced its global standing by making vaccines that are readily available in the world's poorest countries. This effort may one day help India secure recognition as a global power – with a permanent UN Security Council seat to go with it.

Vaccine Nationalists Are Not Immune
Daron Acemoglu (Project Syndicate) Mar 11, 2021
Rich countries' failure to lead a coordinated global response to the pandemic has been regarded as a moral failure. But now that the continued spread of the virus elsewhere is producing new variants, it has turned out to be a practical failure, too.

Bank performance in the time of COVID-19
Thorsten Beck and Jan Keil (VoxEU) Mar 11, 2021
Across the globe, economies have been hit hard and fast by COVID-19. This column explores the effect of the pandemic on US banks' health and their ability to support the economy with lending, using a novel measure to gauge banks' exposure to COVID-19 and lockdown measures. The findings suggest that banks are catching coronavirus, although the effect is not so obvious from bank balance sheets given the easing of regulatory requirements on loan classification and provisioning. Exposure to COVID has led to an increase in lending to support the economy, but driven by government support programmes, as well as a tightening in loan conditionality.

China's New Five-Year Plan Is a Disappointment
Alice Han and Eyck Freymann (FP) Mar 11, 2021
As domestic problems mount, Beijing's planners are lowering expectations.

European Central Bank Leans Against Rising Yields
Nick Bennenbroek and Brendan McKenna (WF Econ Group) Mar 11, 2021
The European Central Bank (ECB) announced its latest monetary policy decision today. While policy interest rates and the total size of its Pandemic Emergency Purchase Program (PEPP) were left unchanged, the ECB did make one notable policy tweak. In an effort to offset rising bond yields and boost inflation prospects, the ECB said it will speed up PEPP asset purchases "at a significantly higher pace than during the first months of the year." In our view, this tweak in policy is a dovish shift in monetary policy sentiment and signals the ECB's commitment to keeping monetary policy ultra-accommodative for the foreseeable future. Updated ECB economic projections were also released this morning; however, forecast changes were less notable. Growth forecasts were essentially unchanged, while the 2021 inflation outlook was boosted to 1.5% from 1.0% previously. Seperately, we also received earlier this week a more detailed breakdown of Eurozone Q4 GDP data. Underlying details of the Eurozone economy reveal sluggish economic activity and it is likely the economy will contract again in Q1-2021. On the other hand, household balance sheets improved toward the end of last year, which suggests when COVID-related restrictions are lifted, the medium-term economic outlook could be supported by consumer spending. Given today's dovish language from the ECB, we continue to believe the euro will be restrained in the short-term, and experience only modest gains over the longer-term. Today's message is consistent with our recent downward revisions to our EUR/USD forecasts, and we continue to believe downside risks to our euro forecasts remain prevalent.

Is day trading ever a winning investment strategy?
Claer Barrett (FT) Mar 12, 2021
High-risk investments have a powerful allure for young investors.

Mood and emotion are driving market swings
Gillian Tett (FT) Mar 12, 2021
Behavioural finance helps explain why young investors act in unexpected ways.

Keeping it Local: A Secure and Stable Way to Access Financing
Tobias Adrian, Thor Jonasson, Ayhan Kose, and Anderson Silva (IMF) Mar 12, 2021
A local-currency bond market can make an economy more resilient to sudden movements in foreign capital flows.

Persistent COVID-19: Exploring potential economic implications
Olivier Blanchard and Jean Pisani-Ferry (PIIE) Mar 12, 2021
When the COVID-19 crisis spread in early 2020, many economists who stepped forward with projections of its impact assumed that a one-time shock would be followed eventually by a return close to the status quo. Views have differed since then regarding both the time it would take to produce vaccines and the extent of potential economic scarring, but, until the last few months, few outside the public health community seriously contemplated the possibility that the pandemic could persist on a significant scale.

Gulf Arab States Should Make the Most of Oil's Last Boom
Karen E Young (Bloomberg View) Mar 12, 2021
A spike in prices promises one final windfall before the inevitable long-term decline.

Will the Stimulus Work? Watch These 3 Metrics
Michael R Strain (Bloomberg View) Mar 12, 2021
Focus on inflation expectations, monthly payrolls and core CPE to tell whether the U.S. economy is recovering from the pandemic safely.

The Struggle for Technology Sovereignty in Europe
Hermann Hauser (Project Syndicate) Mar 12, 2021
From now on, every country or group of countries must ask itself whether it produces the technologies it needs or has guaranteed, unfettered, long-term access to them. A country that answers no is vulnerable to technological coercion that is no less severe than the military coercion of yesteryear.

Why the Social Market Economy Succeeds
Lars P. Feld, Peter Jungen, and Ludger Schuknecht (Project Syndicate) Mar 12, 2021
Since World War II, Germany has served as Europe's economic anchor and managed to weather global and regional storms better than most other countries. The reason is not that it has been lucky, but that it has remained committed to a tried-and-tested policymaking approach anchored in classical economics.

Sustaining India's growth miracle requires increased attention to inequality of opportunity
Sriram Balasubramanian, Rishabh Kumar, and Prakash Loungani (VoxEU) Mar 12, 2021
India has seen a four-fold increase in average incomes since 1990, which has lowered the share of the population living in absolute poverty from 45% to 20% and improved the lot of 130 million people. But while most segments of society have shared in this remarkable performance, inequality in incomes within India remains large. This column argues that increased attention to mitigating urban–rural and inter-state income and opportunity differentials – leveraging the digital technology in which the country excels – would be a prudent investment to help sustain growth.

Technology, labour market institutions, and early retirement
Naomitsu Yashiro, Tomi Kyyrä, Hyunjeong Hwang, and Juha Tuomala (VoxEU) Mar 12, 2021
Across OECD countries, promoting longer working lives is an important policy objective for mitigating fiscal pressures from population ageing. This column uses data from Finland to examine how technological change and access to early retirement pathways reinforce each other in pushing older workers out of employment. It finds that the probability of leaving employment is higher for individuals in occupations with higher automation risks and increases faster for individuals closer to the eligible age for early retirement pathways.Reforms that tighten access to such pathways substantially extend the working lives of older workers exposed to high automation risks, but have little effect on old workers exposed to low automation risks.

Inflating India
Brendan McKenna (WF Econ Group) Mar 12, 2021
Today's release of February inflation data in India revealed a sharp move higher in prices. Firmer inflation can largely be attributed to the rise in commodity prices, particularly food and oil prices, as these commodities make up a sizeable percentage of India's CPI basket. While inflation remains within the Reserve Bank of India's (RBI) target range, the jump in CPI could challenge the central bank's accommodative monetary policy stance going forward. To that point, we do not expect interest rate hikes any time soon; however, prior to the release of February inflation data we had expected an additional 25 basis point rate cut from the RBI. Given the move higher in inflation, we now believe policy rates in India will remain on hold for the foreseeable future. A less dovish monetary policy outlook is also consistent with our recent revisions to our USD/INR forecast in a stronger direction. Over the last few months, we revised our path for the currency to show a more gradual pace of rupee depreciation; however, with policy rates on hold, risks around our forecast could be starting to shift toward outright rupee strength.For now however, we are not quite ready to make that dramatic change to our outlook on the rupee as persistent FX intervention and rising commodity prices should weigh on the currency going forward.

Oil sector revival has producers eyeing boom times
Derek Brower (FT) Mar 13, 2021
Rebound shows that the coronavirus pandemic has not weaned the world off fossil fuels.

The value proposition for markets
Michael Mackenzie (FT) Mar 13, 2021
Improving economic prospects boost more cyclical companies.

17 Reasons to Let the Economic Optimism Begin
Neil Irwin (NYT) Mar 13, 2021
A reporter who has tracked decades of gloomy trends sees things lining up for roaring growth.

Joe Biden's stimulus is a high-stakes gamble for America and the world
Economist Mar 13, 2021
It is part of a three-pronged economic experiment.

How the Fed's Inflation Is Driving Stock Buybacks
Brian Carus (Mises Wire) Mar 13, 2021
An explosion in the money supply has driven many corporate managers to turn to stock buybacks as a safe alternative to holding onto depreciating cash. This means many companies are decapitalizing.

To Tackle Inequality, We Need to Start Talking About Where Wealth Comes From
Laurie Macfarlane (Evonomics) Mar 13, 2021
Thatcherite narrative on wealth creation has gone unchallenged for decades.

The Stimulus Bill Is the Most Economically Liberal Legislation in Decades
Nicholas Lemann (New Yorker) Mar 13, 2021
Biden's bill is a sign that our democracy isn't completely broken, and may convince Americans that government can solve problems.

By targeting house prices, New Zealand shows the way
Ruchir Sharma (FT) Mar 14, 2021
Just as it led on inflation, the country has launched a novel attack on rising asset prices.

US stimulus package leaves Europe standing in the dust
Martin Sandbu (FT) Mar 14, 2021
This will hasten Europe's and the UK's relative economic decline, especially compared with China.

OPEC Is Holed Below the Waterline, It Just Doesn't Know It Yet
Julian Lee (Bloomberg View) Mar 14, 2021
Plans by Abu Dhabi to let its crude oil buyers resell on the open market are a threat to the cartel's newfound cohesion.

Hungry Fund Managers Are Angry With India
Andy Mukherjee (Bloomberg View) Mar 14, 2021
Regulators need to step up and implement a better way of block trading than the current free-for-all.

Emerging markets need support to avoid a 'lost decade'
Megan Greene (FT) Mar 15, 2021
The IMF must use its firepower to stave off a debt crisis in poorer nations.

Fiscal policy should be freed of political tinkering
Nicholas Gruen (FT) Mar 15, 2021
The pandemic response has shown again that, as with monetary policy, a trusted independent body is needed.

Feeble growth and chunky debt piles hold back emerging economies
Jonathan Wheatley (FT) Mar 15, 2021
Financing costs eat up growing share of government revenues in many developing nations.

How the U.S. Got It (Mostly) Right in the Economy's Rescue
Ben Casselman (NYT) Mar 15, 2021
Though the recession has been painful, policymakers cushioned the pandemic's blow and opened the way to recovery.

Chinese bonds a better bet than US Treasuries
William Pesek (AT) Mar 15, 2021
As Joe Biden grows into the US presidency, he faces a growing math problem. Since a bad US inflation report last month, Treasury bond yields have moved higher amid fears the Federal Reserve might pull back on support for the economy.

Rising Market Power—A Threat to the Recovery?
Kristalina Georgieva, Federico J. Díez, Romain Duval, and Daniel Schwarz (IMF) Mar 15, 2021
We see growing signs in many industries that market power is becoming entrenched.

Central banks' uneasy embrace of digital currencies
Patrick Honohan (PIIE) Mar 15, 2021
Move over bitcoin, the big players are here. Volatile and energy intensive, this faddish digital asset was never going to make it as fully-fledged money. Meanwhile, banks and financial technology companies have been gradually bringing their more practical payments services into the digital age. In 2020 Facebook raised the stakes with its Libra (now renamed Diem) proposal for a multi-currency-based "stablecoin." And now most central banks around the world are thinking about creating some form of central bank digital currency (CBDC) that would be widely used by the general public.

Crypto's Rising. So Are the Stakes for Governments Everywhere
Bloomberg View Mar 15, 2021
Competition in the global market for cash is heating up.

Public Debt Isn't the Problem, Soaring Deficits Are
Lena Komileva (Bloomberg View) Mar 15, 2021
For markets, it is not debt levels, but fear of uncontrolled debt growth, where crises are born.

Inflation Obsession Is About to Pick Up Velocity
John Authers (Bloomberg View) Mar 15, 2021
Central banks meeting this week won't be able to avoid talking about the startling shift in price expectations.

Why Bond Investors (and Wise Men) Got Inflation Wrong
Matthew A Winkler (Bloomberg View) Mar 15, 2021
Recent history has tended to mock the financial worrywarts, and for understandable reasons.

Don't Let Covid's Economic Surprise Eclipse Inequality
Mohamed Aly El-Erian (Bloomberg View) Mar 15, 2021
The shock hasn't been as great as expected, but not everyone is recovering equally.

Sit Back, Relax and Let the U.S. Economy Run Hot
Daniel Moss (Bloomberg View) Mar 15, 2021
The flood of stimulus from Washington is driving up growth projections for the rest of the world. But is that a good thing for emerging markets?

Scarred consumption
Ulrike Malmendier and Leslie Sheng Shen (VoxEU) Mar 15, 2021
Economic crises have prolonged consequences on consumer behaviour, beyond effects captured by standard economic variables. Standard life-cycle consumption channels often fail to explain these lasting effects. This column argues that economic downturns 'scar' consumers in the long run. Consumers who have lived through times of high unemployment remain pessimistic about the future financial situation, spend less in future years, and accumulate more savings, controlling for income, wealth, and employment. These results suggest a novel micro-foundation of fluctuations in aggregate demand and imply long-run effects of macroeconomic shocks

Is Gas About to Get Much More Expensive?
Edoardo Campanella (FP) Mar 15, 2021
Oil prices are rising as observers debate whether it's a blip or the start of a new supercycle.

Historical Lessons About U.S. Inflation: Is Meaningfully Higher Inflation Looming?
Jay Bryson, Sarah House, and Sara Cotsakis (WF Econ Group) Mar 15, 2021
The outlook for inflation in the United States is currently receiving more attention than it has for quite some time. In this report, we look at episodes of rising inflation over the past 60 years to see if the past can tell us anything about the outlook for U.S. inflation in the next few years.

America's progressive revolution is not here yet
Janan Ganesh (FT) Mar 16, 2021
Voters will have to pay higher taxes to make a transient stimulus permanent.

The Financial Crisis the World Forgot
Jeanna Smialek (NYT) Mar 16, 2021
The Federal Reserve crossed red lines to rescue markets in March 2020. Is there enough momentum to fix the weaknesses the episode exposed?

COVID accelerates evolution of Gulf economies
Karen Young (Al-Monitor) Mar 16, 2021
The economic policy response to COVID-19 is an acceleration of specific trends already underway across the Gulf Cooperation Council members, variously affecting tax policy, labor market regulation and immigration policy.

Industrial production and investment surge in China
Economist Mar 16, 2021
But the pandemic makes it even harder than usual to gauge how fast the economy is growing.

America's banks have too much cash
Economist Mar 16, 2021
Abundant liquidity is meant to help markets. It might soon cause trouble.

There's Not a Lot of Bull in China's Markets and Investors Are Frustrated
Shuli Ren (Bloomberg View) Mar 16, 2021
The boom times are shorter and shorter as Beijing restrains the credit impulse that might sustain enthusiasm.

Sequencing the Post-COVID Recovery
Robert Skidelsky (Project Syndicate) Mar 16, 2021
As countries emerge from the COVID-19 pandemic, John Maynard Keynes's emphasis on the need to implement post-crisis economic policies in the right order is highly relevant. But sustainability considerations mean that the distinction between recovery and reform is less clear cut than it seemed in the 1930s.

Credit-Rating Agencies Could Derail Economic Recovery
Jayati Ghosh (Project Syndicate) Mar 16, 2021
The world's three major private credit-rating agencies are using their power to prevent low-income countries from restructuring their debts and stimulating their economies. The case for an independent public ratings agency has never been stronger.

Land is back – it should be taxed, it can be taxed
Odran Bonnet, Guillaume Chapelle, Alain Trannoy, and Étienne Wasmer (VoxEU) Mar 16, 2021
Housing wealth is now between two and four times as large as GDP in many Western economies. This column reintroduces land and housing structures to the theory of optimal taxation, and finds that first-best taxation is achieved through a property tax on land and requires no tax on capital. Even absent land taxes, one can tax land indirectly and reach a Ramsey second best still with no tax on capital and positive housing rent taxes in the steady state.

Building 'Global Britain' will require hard choices
FT View Mar 17, 2021
Image of UK as a mini-superpower does not match funds and capabilities.

Economies can survive a stock market crash
Martin Wolf (FT) Mar 17, 2021
If a correction is due to higher rates and stronger growth, it would not matter much — except to investors.

Why UK value stocks may be the trade of the decade
Rob Arnott (FT) Mar 17, 2021
Covid and Brexit have created bargain prices that are compelling even after a rebound.

The Fed is reluctant to project good times
Joseph E. Gagnon (PIIE) Mar 17, 2021
In its meeting on March 17, the Federal Open Market Committee (FOMC or Fed) made no change to its policy stance, but it did release the first revision to its economic projections since the passage of two major fiscal stimulus packages in December and March. The Fed raised its outlook for growth and inflation this year and next, as have most private forecasters. But the Fed's upward revision is notably muted in relation to the massive fiscal packages, and it made no change to the projection of its future policy stance. The Fed is determined to keep monetary policy, and projections of monetary policy, very supportive of growth until it judges that maximum employment and price stability have been achieved.

The Future of Asia: What a Difference a Year Can Make
Chang Yong Rhee and Katsiaryna Svirydzenka (IMF) Mar 17, 2021
Asia must remain agile and innovative to exit the crisis in a durable, greener, and more equitable way.

The American Rescue Plan is set to boost global growth
Nigel Pain and Patrice Ollivaud (OECD Ecoscope) Mar 17, 2021
Global economic prospects have improved markedly in recent months, helped by the gradual deployment of effective vaccines against Covid-19, announcements of additional policy support in several countries, and signs that economies are coping better with measures to supress the virus. This is reflected in the stronger recovery shown in the new OECD Interim Economic Outlook, with global GDP growth now projected to be 5½ per cent in 2021 and 4% in 2022.

The need for speed: Putting the World Economy on the Fast Track out of the COVID-19 crisis
Laurence Boone (OECD Ecoscope) Mar 17, 2021
This is no ordinary economic crisis. When you walk down the street of a big city like Paris, its hard not to miss the usually lively restaurants, bars and museums. Travel and activity restrictions – completely unfamiliar to most of us just one year ago, have now become a part of our daily lives. In early March 2020, the OECD warned that COVID-19 could have devasting effects on the world economy. One year later, amid high uncertainty, a global recovery is in sight.

Central Bankers Have Lost the Plot on Messaging
Marcus Ashworth (Bloomberg View) Mar 17, 2021
Why can't the ECB, the Fed and the BoJ just give it to us straight?

Inflation Is Just a Monster Under the Bed for Investors
Nir Kaissar (Bloomberg View) Mar 17, 2021
Despite all the fuss about expectations for higher prices, there's little indication that a worrisome jump is coming.

The Conventional Wisdom on Margin Debt Is Wrong
Stephen Mihm (Bloomberg View) Mar 17, 2021
Doomsayers are citing an incomplete history of the crash of 1929. Here's what they are missing.

Fed Threads a Needle That's Only Going to Get Smaller
Mohamed Aly El-Erian (Bloomberg View) Mar 17, 2021
Jerome Powell pulled off a nearly impossible balancing act with the markets. It's going to be increasingly difficult to repeat.

How to Spend $12 Trillion
Olivia White and Anu Madgavkar (Project Syndicate) Mar 17, 2021
Although some government pandemic-support programs have combined ambitious design with effective delivery, many fall short in one or both areas. Those that designed programs optimally and delivered them quickly have financial infrastructure that includes three key features.

The Shape of Global Recovery
Michael Spence (Project Syndicate) Mar 17, 2021
The accelerating rollout of COVID-19 vaccines in many advanced economies has set the stage for rapid recovery in the second half of this year and into 2022. Although growth in digital and digitally enabled sectors will level out somewhat, high-employment service industries will ride a wave of pent-up demand.

The Post-Pandemic Labor Market's Long-Term Scars
Laura Tyson and Susan Lund (Project Syndicate) Mar 17, 2021
Even before the COVID-19 crisis, African-Americans, Hispanics, women, and workers without a post-secondary education faced dimming prospects as a result of automation and other trends. Now, these forces have been strengthened, creating an even bigger mismatch between worker qualifications and available jobs.

Debt, natural disasters, and special drawing rights
Avinash Persaud (VoxEU) Mar 17, 2021
For the countries on the frontline in the war against climate change, there is a nasty nexus between climate change and debt. The cost of environmental damage, the loss of revenues from a natural disaster, and the high price of building back better all contribute to higher debt. This column proposes three ways to break this climate–debt nexus: (1) redistribute special drawing rights using a new classification of vulnerability; (2) incorporate natural disaster clauses into multilateral development banks' lending arrangements; and (3) use the unused special drawing rights of the world's strongest countries to recapitalise regional development banks to finance resilience in the vulnerable countries without adding to their debt.

Boris Johnson Unveils His Post-Brexit 'Tilt' to Asia
James Crabtree (FP) Mar 17, 2021
But Britain's new security strategy risks shifting too few resources eastward.

Time for a great reset of the financial system
Chris Watling (FT) Mar 18, 2021
A 30-year debt supercycle that has fuelled inequality illustrates the need for a new regime.

Supply chain 'sovereignty' will undo globalisation's gains
Philip Stephens (FT) Mar 18, 2021
The search for national 'resilience' can too easily tip into protectionism.

Here's how to get billions of COVID-19 vaccine doses to the world
Chad P. Bown and Thomas J. Bollyky (PIIE) Mar 18, 2021
The unprecedented development of several effective COVID-19 vaccines in less than a year is an historic achievement in the annals of scientific research. No less impressive, however, is the work of the US government in organizing and subsidizing a complex supply chain for manufacturing and distributing the COVID-19 vaccine. American policymakers made large advance purchases of potential vaccines and supported some sponsors—such as Moderna and Johnson & Johnson—carrying out clinical trials, while simultaneously working with myriad far-flung and lesser-known contract manufacturers and suppliers of equipment and ingredients (from cellular material to glass tubing to syringes), to actually produce the vaccines and related supplies. The crash effort that went from science labs to vaccine distribution began under the Trump administration's Operation Warp Speed and has continued and expanded under the Biden administration.

Indonesia: making the economic recovery sustainable and inclusive
Andrea Goldstein (OECD Ecoscope) Mar 18, 2021
The economic outlook is surrounded by substantial risks and uncertainties.

To Win Over Asia, Talk Trade
Bloomberg View Mar 18, 2021
U.S. allies in the region want economic cooperation, not just security.

The Fed's Job Isn't Getting Any Easier
Bloomberg View Mar 18, 2021
The situation has changed, but its policy hasn't. Not an easy thing to explain.

Greece Provides One Ray of Sunshine for Europe
Marcus Ashworth (Bloomberg View) Mar 18, 2021
Athens may be struggling with the pandemic, but it just got a 30-year bond away at a decent price. That's good news for EU borrowing costs.

Latin America's Economies Need About a Billion Jabs in the Arm
Mac Margolis (Bloomberg View) Mar 18, 2021
The trajectory of any economic rebound for the region will be traced by the syringe.

Clean-Tech Investment Isn't Just a Bubble This Time
Noah Smith (Bloomberg View) Mar 18, 2021
The industry has matured, entering a new phase of development that justifies the latest burst of investor enthusiasm.

Tackling the Global Learning Crisis
Pinelopi Koujianou Goldberg (Project Syndicate) Mar 18, 2021
By exacerbating a pre-existing "learning crisis," the COVID-19 pandemic has undermined many developing countries' long-term economic prospects. Even in the face of today's fiscal constraints, immediate action to improve educational outcomes has become an urgent priority.

Inequality benchmark incomes
Laurence Roope (VoxEU) Mar 18, 2021
Nearly all income inequality measures are associated with a benchmark income or position, above which income gains increase inequality, and below which income gains decrease inequality. Looking at ten contrasting countries, this column finds that the benchmark incomes associated with the Gini coefficient ranged from the 62nd percentile to the 85th percentile. Knowledge of benchmark incomes could be used to predict the impact on inequality of subsidies to incomes in particular parts of the distribution, or to identify the richest person for whom it might be deemed fair to subsidise income financed by taxation and the poorest person for whom it is just and fair not to subsidise income.

Economic preparation for the next pandemic
Peter A.G. van Bergeijk (VoxEU) Mar 18, 2021
The COVID-19 pandemic is the first time in history that closing entire economies has been used as a medical tool, simultaneously and worldwide. This column argues that such 'pandonomics' cannot be repeated during future pandemics that are sure to come – the costs are too heavy. Since lockdowns are very costly, future economic non-pharmaceutical interventions need to be designed more intelligently, helping the economy to restructure and support the transition from a basically ignorant and domestically oriented society into a pandemic-aware one.

What Comes After the COVID Relief Bill?
Michael Pugliese and Hop Mathews (WF Econ Group) Mar 18, 2021
A major infrastructure package will be a mnuch tougher lift.

Scarcity reminds us of what we take for granted
FT View Mar 19, 2021
Coronavirus disruption has led to shortages of basic goods in rich countries.

After orderly Brexit, a new European financial landscape starts to emerge
Nicolas Véron (PIIE) Mar 19, 2021
The United Kingdom's exit from the European single market on January 1 has sent trade in goods plummeting amid much confusion. By contrast, Brexit was carried out in an orderly manner in the financial sector, despite significant movement of trading in shares and derivatives away from the City of London. After five years of radical uncertainty, it has become clear that the European Union and the United Kingdom will be taking separate paths on financial regulations, a financial "decoupling" that means significant loss of business for the City. Whether the EU financial sector can gain much of what London loses will depend on the European Union's willingness to embrace further financial market integration.

India Bitcoin Ban Would Be a Terrible Idea
Shruti Rajagopalan (Bloomberg View) Mar 19, 2021
The country's previous attempts at currency controls impoverished Indians and prevented its companies from competing globally. This one won't work any better.

Why Is Oil Selling Off? There's Just Too Much of It
Liam Denning (Bloomberg View) Mar 19, 2021
Brutal market math threatens any sustained rally above $60 a barrel.

The Enduring Populist Threat
Sergei Guriev and Elias Papaioannou (Project Syndicate) Mar 19, 2021
Contrary to the hopes of many, Donald Trump's loss in the 2020 US presidential election will not automatically cause populism around the world to weaken. Yet populism is hardly invulnerable, and political and economic research in recent years should equip policymakers to push back against it.

How inflation expectations affect households' spending decisions
Olivier Coibion, Yuriy Gorodnichenko, and Michael Weber (VoxEU) Mar 19, 2021
Households in advanced economies are quite uninformed about inflation. Does this mean that they ignore inflation their economic decisions? This column uses a randomised control trial, a large-scale survey, and spending data to show that the answer is 'no'. When households change their inflation expectations, this causally alters their spending decisions. This suggests communication strategies that meaningfully impact household expectations can also be expected to affect their decisions.

How firms can make or break the green transition
Ralph De Haas, Ralf Martin, Mirabelle Muûls, and Helena Schweiger (VoxEU) Mar 19, 2021
Many countries are striving for net-zero carbon emissions by 2050, requiring massive investments over the next decades. But many companies, especially smaller ones, will not be able or willing to invest in cleaner technologies. This column explores how organisational constraints can hold back the green transition of firms in less-developed economies. The findings reveal how financial crises can slow down the decarbonisation of economic production and caution against excessive optimism about the potential green benefits of the current economic slowdown, which – like any recession – has led to temporary reductions in emissions.

Mixed and Marginal Messages From the Bank of Japan
Nick Bennenbroek (WF Econ Group) Mar 19, 2021
In a widely anticipated announcement, the Bank of Japan (BoJ) announced the results of its policy strategy review at today's monetary policy announcement. In the event, the central bank made only modest tweaks to its policy framework, and we see no clear signals that a further policy adjustment is imminent. The BoJ modestly widened the tolerance range for its 10-year Japanese government bond yield target to +/- 25 basis points. The BoJ also removed the previous floor for its purchases of exchange-traded funds, and established an interest rate scheme to promote lending that could make it easier for the central bank to lower its already negative policy interest rate. We view the changes to the policy framework as balanced, with valid arguments that today's changes could contribute to either more or less monetary easing. The yen is modestly stronger versus the greenback, though we believe that has more to do with a slight decline in U.S. Treasury yields than the changes announced by Japan's central bank.

The race for global leadership is a race for global talent
David H. McCormick and James M. Cunningham (AEI) Mar 19, 2021
America's ability to attract global talent is a unique competitive advantage that has historically been crucial to innovation and entrepreneurship. However, the United States cannot take its preferential position for granted. Remaining a magnet for global talent is key to long-term economic renewal and America's national power. As Congress and the White House consider an immigration reform package, they should prioritize policies to attract and retain highly skilled immigrants while recognizing the serious security concerns and potential impact of skilled migration on American workers. Winning the global talent race can begin with modest reforms, such as accelerating green card reviews and establishing a visa for national security–oriented work, but policymakers should also seriously consider fundamental changes to the nation's immigration policies.

Central banks' contest with the markets
FT View Mar 20, 2021
Investors are betting that loose monetary policy cannot last.

Why the young should shun government for business
Janan Ganesh (FT) Mar 20, 2021
The private sector has become the driver of history in my lifetime.

Corporate bond investors still reeling as economic recovery picks up
Joe Rennison (FT) Mar 20, 2021
Emergency measures by Federal Reserve put squeeze on returns.

Global investors keep faith in US market
Michael Mackenzie (FT) Mar 20, 2021
Strengthening economic recovery bolsters investments in dollar-based assets.

The pandemic has changed the shape of global happiness
Economist Mar 20, 2021
The old have become happier and the young more miserable.

China's markets are shaking off their casino reputationhttps://www.economist.com/finance-and-economics/2021/03/18/chinas-markets-are-shaking-off-their-casino-reputation
Economist Mar 20, 2021
Can foreign firms actually win?

UK strategy will create zombie companies that cannot grow
Daniel Thomas (FT) Mar 21, 2021
Covid loans are all well and good, but the UK government needs to consider the economy in the round.

Running Turkey's Central Bank Is a Most Perilous Assignment
Daniel Moss (Bloomberg View) Mar 21, 2021
Erdogan's sacking of governor Naci Agbal heralds a course correction. The new interest-rate chief will have to be careful to survive in the job.

When agriculture drives development
Douglas Gollin, Casper Worm Hansen, and Asger Mose Wingender (VoxEU) Mar 20, 2021
The Green Revolution was a crucial episode of agricultural innovation based on the application of modern crop-breeding techniques and high-yielding crop varieties. This column studies the economic effects of agricultural productivity growth in the context of the Green Revolution across the developing world. It finds positive but unevenly distributed effects of agricultural productivity on food crop yields, GDP per capita, schooling, and life expectancy across different countries. In the face of climate change, further investments in agricultural science targeting the developing world may have the potential to sustain these gains in the decades ahead.

Lebanon's Financial Collapse Hits Where It Hurts: The Grocery Store
Ben Hubbard and Hwaida Saad (NYT) Mar 22, 2021
The country's currency has sunk to a new low against the dollar, sending prices for once affordable foods soaring out of reach.

As 30-year yield rises foreigners shun new US debt
David P. Goldman (AT) Mar 22, 2021
The 30-year Treasury yield has climbed all the way back to its 2019 level, mainly because inflation expectations built into the yield have risen to the highest level since 2014. A US government deficit equal to 20% of GDP, a falling dollar and rising commodity prices mean more inflation in the future.

How foreign exchange intervention works through saving and investment to move the trade balance
Joseph E. Gagnon (PIIE) Mar 22, 2021
Donald Trump's failed tariff war is likely to become Exhibit A in future textbooks asserting the traditional economic view that tariffs and other trade barriers have little or no effect on the trade balance. But that does not mean that other policies, such as foreign exchange intervention, cannot move trade balances. As economists point out, the key insight is that a country's trade balance reflects the balance between saving and investment inside that country. To a good approximation, tariffs have no effect on saving and investment and thus no effect on the balance between exports and imports. Foreign exchange intervention, on the other hand, works directly through saving and investment to change a country's trade balance.

$1.9 Trillion and No Money for the Multilateral Development Banks?
Nancy Lee, Clemence Landers, Scott Morris and Erin Collinson (CGD) Mar 22, 2021
The Biden administration and the Congress rightly went big in the recently passed American Rescue Plan at a time of tremendous need. The package was appropriately focused on the domestic side, but it did not neglect the rest of the world. It provided $10.8 billion for health and humanitarian assistance, the United Nations, the US Agency for International Development, and the State Department. Yet not one penny went to the multilateral development banks (MDBs)—the World Bank and the regional development banks. These are the United States' most powerful tools for fighting global poverty, particularly during times of crisis. We know that the pandemic has driven a surge in the number of global extreme poor—those earning $1.90 per day—whose numbers are projected by the World Bank to increase by 140-160 million by the end of this year. MDB financing and technical support is playing a central role in helping developing countries deal with the economic and social impact of the current crisis, while also directly supporting the supply and distribution of vaccines as well as related medical supplies.

The City of London's Potential Growth Opportunity Outside of the EU
Sarah Hall (BRINK) Mar 22, 2021
What will the future for the city of London look like in two years, post-Brexit?

The Singapore of the Future Is Small and Rich
Daniel Moss (Bloomberg View) Mar 22, 2021
When the country was founded, big families were a threat to prosperity. Now officials are coming to terms with a shrinking population. But that doesn't have to mean economic apocalypse.

These 3 Crucial Questions Confront Investors
Mohamed Aly El-Erian (Bloomberg View) Mar 22, 2021
The answers aren't clear-cut, but they have significant implications for portfolios.

Oil Empowers the Poorest Nations, But at What Cost?
Liam Denning (Bloomberg View) Mar 22, 2021
An industry growth model predicated on vulnerable countries sticking with business as usual is less empowering than advertised. It's also unlikely to pan out.

While the World Still Struggles, the U.S. Can Power Ahead
Noah Smith (Bloomberg View) Mar 22, 2021
Now that the economy has been buoyed by mass vaccinations and big relief spending, the government has the chance to expand American exports to countries still suppressed by Covid.

Central Banks' Taper Dilemma
Patrick Drury Byrne and Sylvain Broyer (Project Syndicate) Mar 22, 2021
Central banks are clearly not responsible for today's investment decisions, but the longer their market support continues, the riskier the search for yield may become. Monetary policymakers and credit investors alike are facing an unenviable dilemma.

Building Back Worse
Mariana Mazzucato, Laurie Macfarlane, and George Dibb (Project Syndicate) Mar 22, 2021
British Prime Minister Boris Johnson's government is clearly happy for the state to play a larger role in the economy. And yet, by scrapping a perfectly sensible industrial strategy for no good reason, it has all but ensured that the country's economic problems will remain unsolved.

The UK's Hard Brexit Choices Have Arrived
Chris Patten (Project Syndicate) Mar 22, 2021
UK Prime Minister Boris Johnson's government recently spelled out how Britain will use its supposed freedom outside the European Union. But the country faces a growing number of tough choices that Johnson will not be able to avoid for much longer.

A Global Green Deal
Ursula von der Leyen and Werner Hoyer (Project Syndicate) Mar 22, 2021
By strengthening its emissions-reduction targets and investing heavily in clean energy, greentech, and research and development, the European Union has positioned itself as a global climate leader. It now must continue to lead by example while also doing more to help others achieve their climate ambitions.

How arrears could unleash a banking crisis
Erica Bosio, Rita Ramalho, and Carmen Reinhart (VoxEU) Mar 22, 2021
In sub-Saharan Africa, the government is one of the biggest purchasers of works and services in the economy. Countries in sub-Saharan Africa are also the least efficient when it comes to paying outstanding invoices. This column estimates that the size of government arrears in sub-Saharan Africa was 4.26% of GDP in 2019, and likely increased by an average of 1.92 percentage points of GDP across the region in 2020. Financing the COVID relief and recovery programmes by delaying payments is negatively affecting suppliers and contractors at a time when liquidity is crucial for firm survival, which in turn burdens the banking sector and increases the likelihood of a banking crisis.

Disagreement about U.S. and Euro-Area Inflation Forecasts
Reuven Glick and Noah Kouchekinia (FRBSF Econ Letter) Mar 22, 2021
Disagreement among economic forecasters about the outlook for inflation in both the United States and the euro area has increased since the onset of the pandemic. The nature of these forecast differences can provide insights into the inflation risks that lie ahead. Many forecasters initially expected substantially lower inflation over the next year but subsequently raised their expectations as economic activity began to improve. In contrast, changes in expectations and disagreement about longer-term inflation have been relatively subdued and suggest a balanced likelihood between higher and lower inflation.

What to do with home sovereign exposure? Reducing risks to make the EU Banking Union stronger
Heike Mai (DB Research) Mar 22, 2021
The coronavirus pandemic has caused a surge in public debt and highlights the need to tackle sovereign risk on bank balance sheets, which remains a threat to the stability of the Banking Union. Euro-area banks hold bonds and have granted loans to their domestic sovereigns worth a combined EUR 2.1 tr, equalling 6.2% of total assets. Among the largest countries, banks in Italy have the highest exposure relative to capital (194%), followed by Spain (105%), whereas it is much lower in Germany (67%) and France (60%). Sovereign risk must be mitigated to finalise the Banking Union but this will require some honest acknowledgements by supervisors and entail restrictions for banks and politicians.

The tragedy of Erdogan's economic mismanagement
FT View Mar 23, 2021
End of brief shift towards economic orthodoxy leaves Turkey vulnerable.

Consensus grows that EU must avoid past fiscal mistakes
Martin Sandbu (FT) Mar 23, 2021
European finance ministers have agreed not to withdraw support to economies prematurely.

UK industrial strategy is dead, long may it live
Andy Haldane (FT) Mar 23, 2021
The success of Britain's Covid vaccine programme contains invaluable lessons for future growth.

Turkey faces tough prospects after Erdogan shocks investors
Timothy Ash (FT) Mar 23, 2021
Speedy return to economic orthodoxy is needed after firing of central bank head.

Stock Rally Poses Question: When Does a Bull Become a Bubble?
Matt Phillips (NYT) Mar 23, 2021
The bull market, born out of the pandemic, has turned a year old. The remarkable turnaround has some analysts wondering if the breakneck pace is sustainable.

Walls don't work. Open borders don't work. It's time to try realism.
Charles Lane (WP) Mar 23, 2021
Rethinking policy on migration today should begin with the lessons of history.

Bond markets are shrugging off inflation fears, but what do they know that we don't?
Joseph E. Gagnon and Madi Sarsenbayev (PIIE) Mar 23, 2021
As the debate continues over the potential inflationary impact of President Joseph R. Biden Jr.'s $1.9 trillion "American Rescue Plan," one key indicator suggests that markets are no more worried about excessive inflation than the Federal Reserve is. "Inflation compensation" in US 10-year Treasury securities has jumped 0.25 percentage point since January 14, when Biden first proposed the package. (Inflation compensation, also known as "breakeven inflation," refers to the yield on a conventional bond minus the yield on an inflation-indexed bond of the same maturity.) The current value of inflation compensation, however, is fully consistent with the Federal Open Market Committee's goal for inflation of 2 percent, after having been somewhat below that level last year.

The Politics Behind Erdogan's Central Bank Decision
Sinan Ulgen (Bloomberg View) Mar 23, 2021
Turkey's president is gambling that a pair of controversial calls will boost his reelection chances.

A Vigilante and a Gambler Walk Into a Bond Market
Andy Mukherjee (Bloomberg View) Mar 23, 2021
Getting out or piling on risk are both logical emerging-market strategies as India's exit from Covid-19 takes shape.

A New Global Monetary Order Is Being Built Before Your Eyes
Daniel Moss (Bloomberg View) Mar 23, 2021
A worldwide tussle is underway over the spoils of ultra-cheap money.

Europe's Special Inflation Risks
Hans-Werner Sinn (Project Syndicate) Mar 23, 2021
If the economy recovers and fiscal stimulus turbocharges pent-up demand, a lot of bank credit could suddenly emerge from central bank money. Price growth will then begin to accelerate, and the European Central Bank will have a very hard time curbing it without having a functioning inflation brake.

Antifragile Europe
Javier Solana (Project Syndicate) Mar 23, 2021
The European Union survived a decade of convulsions before the pandemic in the best way possible: by deepening its integration. By responding to the COVID-19 crisis in the same way, the bloc can emerge stronger, rather than merely demonstrating resilience.

Boxed In On China
Stephen S. Roach (Project Syndicate) Mar 23, 2021
Trapped in a groundswell of anti-China sentiment, US President Joe Biden's team appears to be staying the course set by the previous administration. A better way would be for both sides to go back to basics – the economics and trade issues that have long anchored the US-China relationship.

China's Accelerating Fertility Crisis
Zhang Jun (Project Syndicate) Mar 23, 2021
In 2016, the Chinese authorities finally abandoned the country's one-child policy, which had caused the birth rate to plummet well below replacement level by the 1990s. So, why is the birth rate declining again?

Market liquidity of European sovereign bonds during the Covid-19 crisis
Emanuel Moench, Loriana Pelizzon, and Michael Schneider (VoxEU) Mar 23, 2021
In March 2020, a 'dash for cash' driven by the Covid-19 crisis affected the liquidity of the US Treasury bonds market as well as numerous other financial markets around the globe. This column investigates how euro area sovereign bond markets fared during the same period. While deteriorations in sovereign debt market liquidity are evident, these appear to be driven by a 'dash for collateral' in euro-denominated safe assets. This suggests some differences from the US experience, as well as variations across European countries.

The Delusions of Global Britain
Jeremy Shapiro and Nick Witney (FA) Mar 23, 2021
London will have to get used to life as a middle power.

The New Concert of Powers
Richard N. Haass and Charles A. Kupchan (FA) Mar 23, 2021
How to prevent catastrophe and promote stability in a multipolar world.

Hopes and fears of the global recovery
Martin Wolf (FT) Mar 24, 2021
The good news is growth is accelerating; the bad news is major economic, health and social risks remain.

Pandemic reveals weak links in global supply chain
Claire Jones (FT) Mar 24, 2021
Vaccine nationalism, Brexit and US-China tensions reflect a political environment more hostile to global trade.

Markets will soon pivot to focus on sustainability of recovery
Lena Komileva (FT) Mar 24, 2021
New post-Covid normal is set to challenge policymakers.

What a stronger dollar means for the world
Megan Greene (FT) Mar 24, 2021
The currency's turnround should boost US imports but have a negative impact on emerging markets.

If the Economy Overheats, How Will We Know?
Neil Irwin (NYT) Mar 24, 2021
We asked some prominent participants in the Great Overheating Debate of 2021 to explain what inflationary trends they're afraid of (or not, as the case may be).

Biden tests the limits of America's Asian bankers
William Pesek (AT) Mar 24, 2021
The good cop-bad cop routine that Jerome Powell and Janet Yellen attempted on Tuesday is aimed at an obvious audience: America's bankers in Asia. The last month has been a real eye-opener for the keepers of the US dollar and the most important debt market. A disastrously weak February 25 auction of 7-year notes hinted at the demand problem investors have been fearing for more than a decade now.

Japan Remade Its Supply Chains After Catastrophe. Here's What It Learned
Anjani Trivedi (Bloomberg View) Mar 24, 2021
The 2011 triple whammy of earthquake, tsunami and nuclear meltdown produced resilience and a frugal but effective effort at investing for the future.

Bitcoin Miners Are on a Path to Self-Destruction
Noah Smith (Bloomberg View) Mar 24, 2021
Producing the cryptocurrency is a massive drain on global power and computer chip supplies. Another way is needed before countries balk.

Biden's Sensible Stimulus
Jeffrey Frankel (Project Syndicate) Mar 24, 2021
America erred in 2009-10 in curtailing the size and duration of the fiscal expansion in the aftermath of the Great Recession. Regardless of who was responsible for that mistake, President Joe Biden is right to make sure it isn't repeated now.

China Must Create Shared Global Wealth
Andrew Sheng and Xiao Geng (Project Syndicate) Mar 24, 2021
China has become vastly more prosperous in the last two decades, but with greater wealth comes greater social responsibility. Instead of quarreling, the United States and China need to start solving global problems together.

Avoiding a K-Shaped Global Recovery
Michael Spence, Joseph E. Stiglitz, and Jayati Ghosh (Project Syndicate) Mar 24, 2021
While the United States and other advanced economies rush to vaccinate their populations and gear up for post-pandemic booms, developing countries and emerging economies continue to struggle. Fortunately, rich countries could help everyone else – and themselves – at little to no cost.

Global pricing of carbon-transition risk
Patrick Bolton and Marcin Kacperczyk (VoxEU) Mar 24, 2021
A company's carbon-transition risk – associated with curbing carbon emissions within a relatively short period of time – is proportional to the size and growth rate of the company's carbon emissions. This column asks whether companies with different carbon emissions have different stock returns. The total level of a company's CO2 emissions and the year-by-year growth in emissions significantly affect its stock returns in most geographic areas of the world. The increasing cost of equity for companies with higher emissions can be a form of carbon pricing by investors seeking compensation for carbon-transition risk.

Intangible value
Andrea Eisfeldt, Edward Kim, and Dimitris Papanikolaou (VoxEU) Mar 24, 2021
Intangible assets are absent from traditional measures of value, despite their large and growing importance in firms' capital stocks. As a result, the fundamental anchor for value that uses book assets is mismeasured. This column presents a new intangibles-adjusted value factor based on an improvement to the traditional Fama and French approach. The new measure prices assets as well as or better than the traditional value factor but yields substantially higher returns. Both asset pricing researchers and practitioners can benefit from incorporating intangibles in their fields of work.

There Will Not Be a New Cold War
Thomas J. Christensen (FA) Mar 24, 2021
The limits of U.S.-Chinese competition.

Rethinking the new minerals boom
Andy Whitmore (FT) Mar 25, 2021
Consumption and production patterns need to change in the energy transition.

A green solution to sovereign debt restructuring
Lee Buchheit (FT) Mar 25, 2021
Creditors should allow debtors to discharge liabilities by backing environmental projects.

The new SDR allocation will benefit all countries
Maurice Obstfeld and Edwin M. Truman (PIIE) Mar 25, 2021
A year into the COVID-19 pandemic, the International Monetary Fund (IMF) is about to agree to supplement member countries' foreign exchange reserves through a new allocation of Special Drawing Rights (SDR) of $650 billion. This action will benefit directly about 75 lower-income countries with about $62 billion to help them address the external financial consequences of the coronavirus pandemic. At the same time, it will benefit all countries indirectly by relaxing external constraint on policies to boost their economies and thereby the global recovery.

Asia-Pacific, the Gigantic Domino of Climate Change
Vitor Gaspar and Chang Yong Rhee (PIIE) Mar 25, 2021
What Asia does to fight global warming will be literally felt across the whole planet.

What a Long Suez Canal Closure Means for the Oil Price
Julian Lee (Bloomberg View) Mar 25, 2021
Faltering demand isn't the only reason crude markets have been unmoved by the Suez blockage. The waterway just isn't what it once was for oil tankers.

The Euro's Viral Turn Is More Than Pseudo-Science
John Authers (Bloomberg View) Mar 25, 2021
The currency's drop below a key technical level reflects deteriorating dynamics in the continent's fight against the pandemic.

All Eyes on Digital Payments
Raghuram G. Rajan (Project Syndicate) Mar 25, 2021
There is justifiable excitement surrounding digital payments, given the potential of the technology to support a wide range of financial services for businesses and consumers alike. But the rise of powerful new platforms and means of exchange raises public policy concerns that cannot be ignored.

Bangladesh at 50
Kaushik Basu (Project Syndicate) Mar 25, 2021
In the half-century since it gained independence, Bangladesh has gone from being what Henry Kissinger called a "basket case" to a case study in rapid economic development. A large microfinance sector, balanced labor regulations, and resistance to religious fundamentalism have been key to the country's success.

Rising temperatures, melting ratings
Patrycja Klusak, Matthew Agarwala, Matt Burke, Moritz Kraemer, and Kamiar Mohaddes (VoxEU) Mar 25, 2021
Enthusiasm for 'greening the financial system' is welcome, but does the explosion of 'green' finance indicators reflect the science? This column reports research that uses artificial intelligence to construct the world's first 'climate smart' sovereign credit rating. The results warn of climate-driven downgrades as early as 2030.

How the economic effects of COVID-19 lockdowns in different regions interact through supply chains
Hiroyasu Inoue, Yohsuke Murase, and Yasuyuki Todo (VoxEU) Mar 25, 2021
The economic benefit from lifting lockdowns may depend significantly on the lockdown strategies of other regions and countries due to supply chain links. This column analyses the importance of supply chain links in this context by conducting a simulation analysis applying rich firm-level data from Japan to an agent-based model of production. It finds that the production of two regions can attain greater recovery by lifting their lockdowns together when they are closely linked through supply chains in either direction. These results point to the need for policy coordination among regions when regional governments impose or lift lockdowns.

50 Years After Independence, Bangladesh Bursts Into Geopolitics
C. Raja Mohan (FP) Mar 25, 2021
The country is on the cusp of a second liberation—one that would end its relative isolation.

International Economic Outlook: March 2021
Nick Bennenbroek, Brendan McKenna, and Jen Licis (WF Econ Group) Mar 25, 2021
A notable theme in recent weeks has been a growing divergence across countries and regions with respect to economic performance, as well as differing responses by authorities in terms of monetary and fiscal policy. The early part of 2021 has also seen growing divergences and varied responses with governments responses to managing the COVID crisis. After a uniform surge in activity, these growing divergences could contribute to more decisive directional currency moves in the quarters ahead, while also potentially contributing to a pickup in foreign exchange market volatility from current levels. The theme of global reflation and rising global bond yields has taken a short breather as U.S. Treasury yields have stabilized temporarily. Still, somewhat elevated yields have had spillover effects into emerging markets, as several central banks have raised rates to contain inflation and support their currencies.

The OECD is an underrated institution
FT View Mar 26, 2021
New head should tread carefully and help find solutions on climate change.

The return of the inflation spectre
Martin Wolf (FT) Mar 26, 2021
Growing worries about the return of a long-forgotten bugbear highlight increasing risks for savers.

The trouble with emerged markets
Simon Edelsten (FT) Mar 26, 2021
They may not be as fast a growth story as you think.

In Suez Canal, Stuck Ship Is a Warning About Excessive Globalization
Peter S. Goodman (NYT) Mar 26, 2021
The shutdown of the vital waterway and its impact on trade underscore the world's reliance on global supply chains.

China grits its teeth and bears the tightening pain
William Pesek (AT) Mar 26, 2021
Has China's Paul Volcker moment arrived? Stock punters can't help but wonder as the People's Bank of China (PBOC) opts against refilling the proverbial monetary punchbowl, helping to send mainland shares sharply lower. It is also proving quite the contrast to a US Federal Reserve opening the liquidity tap ever wider.

The emerging markets e-commerce opportunity
Christoph Ungerer (Brookings) Mar 26, 2021
E-commerce as an economic development opportunity.

How European Banks Can Support the Recovery
Mai Chi Dao, Andreas Jobst, Aiko Mineshima, and Srobona Mitra (IMF) Mar 26, 2021
With the right policies, banks will be able to support the recovery with new lending.

What the Fed Should Do About Banks' Capital Problem
Bloomberg View Mar 26, 2021
Weakening requirements is not the answer.

How to Be Smart About Taxes on Bitcoin
Alexis Leondis (Bloomberg View) Mar 26, 2021
Savvy cryptocurrency investors can lower their capital-gains obligations. Heedless ones are asking for trouble.

Bring Back Supply-Side Economics
Tyler Cowen (Bloomberg View) Mar 26, 2021
A blockage in the Suez Canal shows the world economy does not suffer from too little demand.

This Rare Bond Both Makes Money and Saves the World
Brian Chappatta (Bloomberg View) Mar 26, 2021
A World Bank deal for endangered rhinos cuts through the ESG noise with a simple premise.

The Absent Voices of Development Economics
Arvind Subramanian and Devesh Kapur (Project Syndicate) Mar 26, 2021
Development economics focuses on improving the well-being of billions of people in low-income countries, but the Global South is severely underrepresented in the field. A small number of rich-country institutions dominate, and their growing use of randomized controlled trials in research is entrenching the imbalance.

Agents of Automation
Sami Mahroum (Project Syndicate) Mar 26, 2021
Neglected in today's debates about automation and the future of work is any consideration of principal-agent dynamics in the settings most open to technological interventions. Although a crude economic calculus almost always points toward more and more automation, the real world is never as simple as that.

New central banking calls for a European Credit Council
Eric Monnet (VoxEU) Mar 26, 2021
Since 2008, a new central banking model has emerged. Monetary authorities increasingly engage in targeted lending, hold large amounts of public debt, and focus on climate change. This column argues that the new practices of central banks call for an updated institutional framework in order to maintain democratic legitimacy. It proposes the creation of a European Credit Council, which would provide impartial assessments of the ECB's decisions, particularly those with large distributional consequences. In addition, it would develop proposals for coordinating monetary policy with other EU policies and reinforce the role of the European Parliament.

We All Live in Germany's World
Quinn Slobodian (FP) Mar 26, 2021
How the German government accelerated the 20th century's economic march toward neoliberalism.

Inflation bogeyman unsettles markets
Robin Wigglesworth (FT) Mar 27, 2021
Are investor fears over the impact of stimulus packages and vast bond-buying on rising prices justified?

Just how anchored are America's inflation expectations?
Economist Mar 27, 2021 s
The legacy of the Biden stimulus—and of Jerome Powell—may depend on the answer.

Trade inflows in Asia fuel debate over currency intervention
Economist Mar 27, 2021
Foreign-exchange reserves are both an insurance policy and a lightning rod for criticism.

A debacle at Turkey's central bank
Economist Mar 27, 2021
Firing yet another central-bank governor was a serious mistake.

America's long-ailing manufacturers are fired up
Economist Mar 27, 2021
Factory owners are benefiting from the greatest convergence of pro-industry forces in decades.

Malign or benign? China–US strategic competition under Biden
Jia Qingguo (EAF) Mar 28, 2021
Will competition shift from the malign competition that was typical under Trump towards a more benign competition under Biden?

It's time to abandon autopilot monetary policy
Andrew Parlin (FT) Mar 29, 2021
Fed chair Jay Powell's approach to the risk of inflation after huge stimulus is flawed.

Cross-border IPO boom is rich in promise — and peril
Brooke Masters (FT) Mar 28, 2021
As in the dotcom era, some investors may become wealthy while others are left holding the bag.

Fresh sanctions may barely dent Fortress Russia
Ruchir Sharma (FT) Mar 28, 2021
Past measures have arguably only helped Putin strengthen the country's financial barricades.

Joe Biden hasn't lifted Trump's tariffs on China. Good.
Henry Olsen (WP) Mar 29, 2021
The president has changed his tune on China. He should keep it that way.

If you build it, they will come – or maybe not
David P. Goldman (AT) Mar 29, 2021
With 10 million fewer Americans working than a year ago, San Francisco Federal Reserve President Mary Daly warned March 25, "the labor market is in a ditch." So is consumption, as the US government reported March 26: Personal consumption fell by 1% in February. That's not a surprise, because we already knew that retail sales fell by 3.1% in February.

America losing the future to China
Brandon J. Weichert (AT) Mar 29, 2021
Few Americans realize it, but their country's dominance in high-tech innovation is now in question. This is something that Google's former chief executive officer, Eric Schmidt, acknowledged in his recent testimony before Congress. Meanwhile, Elon Musk has stated that China will become the world's premier economy and world power, in large part because of Beijing's consistent investment in high-tech innovation.

Confronting the Hazards of Rising Leverage
Adolfo Barajas and Fabio Natalucci (IMF) Mar 29, 2021
The question becomes how to ensure that the fledgling recovery is not endangered, while at the same time avoiding an excessive buildup of leverage.

Commercial Real Estate at a Crossroads
Andrea Deghi and Fabio Natalucci (IMF) Mar 29, 2021
The commercial real estate sector has the potential to affect broader financial stability.

Faster Inflation Is Coming. How Bad Will It Be?
Mohamed Aly El-Erian (Bloomberg View) Mar 29, 2021
The potential consequences of higher prices fall largely into three camps: transitory, irritating or troubling.

Inflation This Year Will Help Tame It in 2022
Conor Sen (Bloomberg View) Mar 29, 2021
Supply and demand got so out of whack during the pandemic, we won't know until 2023 whether looming price gains across the economy are just temporary.

Europe Has a Better Lever Against China Than Sanctions
Andreas Kluth (Bloomberg View) Mar 29, 2021
As tensions escalate and the U.S. seeks allies in its rivalry with China, the EU should reconsider its investment deal with Beijing.

What Does the World Need? More Humans
Tyler Cowen (Bloomberg View) Mar 29, 2021
Global depopulation is the looming existential threat that no one is talking about.

It's Not Infrastructure; It's Reimagining the U.S. Economy
Noah Smith (Bloomberg View) Mar 30, 2021
Biden is aiming for transformation with his next legislative push that tackles social ills and climate change to fit the needs of the future

Is Bitcoin Good for Business?
Willem H. Buiter (Project Syndicate) Mar 29, 2021
Following its rapid rise in value, Bitcoin is now being touted as an investment that legitimate businesses would be remiss to ignore. But business leaders should stay off the bandwagon, because the cryptocurrency revolution has already failed.

Building a Democratic High-Tech Alliance
Anders Fogh Rasmussen (Project Syndicate) Mar 29, 2021
Digital divergence between the United States and the European Union has helped China and other autocracies as they forge ahead with developing new technologies and establishing rules and norms. Leaders on both sides of the Atlantic must now build a technological alliance of democracies to set more favorable global rules.

The New Measure of Corporate Success
Michel Fredeau and Jules Kortenhorst (Project Syndicate) Mar 29, 2021
After years of ignoring warnings about climate change and what it could mean for markets and business operations in the future, corporate leaders now must start making up for lost time. Fortunately for them, the first movers on decarbonization will be well positioned to thrive in the net-zero economy.

Brazilian Debt Jitters
Andrés Velasco and Frank Muci (Project Syndicate) Mar 29, 2021
Brazil seems determined to test the limits of financial markets' tolerance for debt accumulation. It is not hard to come up with scenarios in which the country's debt burden reaches 125% of GDP or more by 2025.

Regulation and economic growth: A 'contingent' relationship
Massimo Morelli and Matia Vannoni (VoxEU) Mar 29, 2021
The link between regulation and the economy has been central in political economy since the 1970s. Using data on US states from 1965 to 2012, this column argues that regulation may be good or bad for the economy depending on its type and the information and incentives of the regulators. More regulation leads to higher economic growth when that regulation is more detailed, when the current level of regulation is lower, when uncertainty is higher, and in contexts with greater competition and/or opportunity of experimentation among regulation proposers and greater accountability.

Capital Flow Surges and Rising Income Inequality
Renuka Diwan, Zheng Liu, and Mark M. Spiegel (FRBSF Econ Letter) Mar 29, 2021
Surges of foreign investment into developing countries can amplify economic stress and potentially undermine their financial stability. New evidence suggests that excessive foreign capital inflows can also increase income inequality in emerging economies. Research shows that, as low global interest rates trigger more investment, those inflow surges benefit entrepreneurs by raising their returns, while lowering household earnings on bank deposits within the countries. The potential impact on income inequality provides another reason beyond financial stability for resisting abrupt surges in capital inflows.

Japan powers up for the new battle over batteries
Leo Lewis (FT) Mar 30, 2021
'Thirty years ago was the last time the country could run unopposed in such a critical technology field'.

China's housing crash exposes a growing regional economic divide
Sun Yu (FT) Mar 30, 2021
Struggle to sell homes in inland cities undermines country's post-pandemic recovery.

Europe's 'green and just' transition starts with its recovery fund
Stephany Griffith-Jones (FT) Mar 30, 2021
EU states must not miss the once-in-a-lifetime opportunity to build for a sustainable future.

The Biden Boom
Thomas L. Friedman (NYT) Mar 30, 2021
The president has a chance to supercharge the economy.

Philippine economy in freefall as Covid rates soar
Jason Castaneda (AT) Mar 30, 2021
Following a steep contraction last year, the Philippine economy is again in freefall as surging Covid-19 infection rates and a snail-paced vaccination program hamper any recovery. With more than 10,000 daily infections and Metro-manila accounting for nearly half of those new infections, the government has again imposed strict lockdowns across key economic hubs, which make up close to half of the country's total economic output.

Redesigning Global Europe: The EU's Neighbourhood, Development, and International Cooperation Instrument
Mikaela Gavas and Samuel Pleeck (CGD) Mar 30, 2021
Following three years of protracted wrangling over the European Commission's proposed new rules and financial instrument for development (and our blogs charting its evolution), on 18 March, EU member states and the European Parliament's Foreign Affairs and Development Committees finally approved the new Neighbourhood, Development, and International Cooperation Instrument (NDICI)—Global Europe. The instrument, worth €79.5 billion over the period 2021-2027, marks a profound transformation of EU development policy and spending.

Italy Has a Once in a Lifetime Opportunity to Change
Rachel Sanderson (Bloomberg View) Mar 30, 2021
Rome's 200 billion euros of EU funds are a potential game changer. To have any chance of success, Mario Draghi must modernize Italy's dysfunctional state.

Can the World Survive Without Dollar Diplomacy?
Daniel Moss (Bloomberg View) Mar 30, 2021
One year after the Fed staged a rescue for the global economy, the question of its moral hazard almost seems gratuitous. The reality is, there aren't any viable alternatives.

The Dollar's Fragile Hegemony
Kenneth Rogoff (Project Syndicate) Mar 30, 2021
Today, it seems to be an article of faith among US policymakers and many economists that the world's appetite for dollar debt is virtually insatiable. But a modernization of China's exchange-rate arrangements could deal the dollar's status a painful blow.

Unstuffing banks with Fed deposits: Why and how
Robert McCauley (VoxEU) Mar 30, 2021
US banks currently hold almost $4 trillion in Fed deposits, as a result of the ongoing balance sheet expansion by the Federal Reserve. Meanwhile, a year-long exclusion of Fed deposits and US Treasuries from bank capital rules is set to expire on 31 March. This column proposes a simple, feasible, and mandate-consistent strategy to replace $3 trillion in deposits with Treasury bills. These Treasuries could be held not only by banks, but also by mutual funds and non-residents, and this substitution also could save taxpayers money.

External sovereign debt restructurings: Delay and replay
Clemens Graf von Luckner, Josefin Meyer, Carmen Reinhart, and Christoph Trebesch (VoxEU) Mar 30, 2021
Today, more than half of low-income countries eligible for relief under the Debt Service Suspension Initiative are either in debt distress or at high risk. Several emerging markets have either recently restructured (Argentina and Ecuador) or remain in default (Lebanon, Surinam, and Venezuela). In this context, this column reviews some of the features of external sovereign debt restructurings. It shows that default spells are lengthy and that the road to debt-crisis resolution is often littered with serial restructuring agreements.

After slavery
Toby Green (Aeon) Mar 30, 2021
Abolition in Africa brought longed-for freedoms, but also political turmoil, economic collapse and rising enslavement.

Emerging Markets Flipping to Tightening
Brendan McKenna (WF Econ Group) Mar 30, 2021
Over the past few weeks, multiple central banks within the emerging markets have started the process of tightening monetary policy. Policymakers in Brazil, Russia and Turkey raised interest rates, while central banks in South Africa and Mexico hinted at less dovish monetary policy this week. In most cases, each central bank cited rising bond yields in developed countries, elevated inflation and pressure on their respective currencies as rationale to lift policy rates. We believe most emerging market central banks will tighten monetary policy despite their respective economies still recovering from the COVID-induced slowdown. In that context, we recently made adjustments to many of our central bank forecasts. Given hawkish guidance from the Brazilian Central Bank, we expect additional tightening in the near future, while elevated inflation should keep policy rates in India steady for the foreseeable future. In addition, a less dovish Central Bank of Mexico has led us to forecast a 25 basis point rate hike by the end of the year. Outside the central banks we explicitly forecast, it is likely the Bank of Russia and South African Reserve Bank will lift policy rates before the end of the year. With interest rates from major central banks likely to stay effectively at 0% for the time being, emerging market central bank rate hikes can swing interest rate differentials back in the favor of emerging currencies. In our view, central bank rate hikes are an important influence on our outlook on emerging market currencies. We expect currencies associated with more hawkish central banks should display reasonable resilience over the medium-term. That said, the extent to which those currencies gain over the medium-term will still depend importantly on the global backdrop, including trends in major market bond yields and broader financial market sentiment. However, should central banks not deliver interest rate hikes or tighten monetary policy, we expect currencies associated with those central banks to underperform over the long-term.

The New China Shock
Mark Leonard (Project Syndicate) Mar 31, 2021
Like China's accession to the World Trade Organization in 2001, the country's new strategy for achieving economic self-reliance and geopolitical dominance poses an unprecedented challenge to the West. The difference this time is that Western leaders are no longer committed to a fanciful vision of "reciprocal engagement."

The Post-Vaccine Risk Phase
Olivier Blanchard and Jean Pisani-Ferri (Project Syndicate) Mar 31, 2021
Although the United States, Europe, and Britain will have vaccinated their populations by the end of the summer vacation season, it will be far too early to celebrate. As long as the virus is still circulating elsewhere, governments in advanced economies will have to keep preparing for the worst.

China Is Missing from the Great Inflation Debate
James K. Galbraith (Project Syndicate) Mar 31, 2021
Once again, massive fiscal spending in the United States has invited warnings of inflation and triggered dark memories of the 1970s. But these fears are based on a model that has since been obliterated by economic realities – not least the rise of China, which has fundamentally reshaped the US and global economies.

Japan's financial hub dream deflated by a rising China
William Pesek (AT) Mar 31, 2021
The latest news from London isn't going down well in Tokyo financial circles. The inclusion of Chinese sovereign bonds in the FTSE Russell's flagship World Government Bond Index had long been expected. But this week's confirmation of that tectonic shift – and news that China will have the sixth-largest weighting – came just as Tokyo thought its moment back in the financial spotlight had finally arrived.

Slow-Healing Scars: The Pandemic's Legacy
Sonali Das and Philippe Wingender (IMF) Mar 31, 2021
We expect world output in the medium-term to be about 3 percent lower in 2024 than pre-pandemic projections.

Working Out the Differences: Labor Policies for a Fairer Recovery
John Bluedorn (IMF) Mar 31, 2021
The pandemic is likely to inflict sizable costs on the unemployed, particularly lower-skilled workers.

Infrastructure Plan Opens Way to More Sustainable Growth
Mohamed Aly El-Erian (Bloomberg View) Mar 31, 2021
A much-needed pro-growth initiative would also most likely limit dividends and stock buybacks.

Biden Would Usher In a New Era of Industrial Policy
Karl W Smith and Noah Smith (Bloomberg View) Mar 31, 2021
The question is how involved the government should be — and how to balance regulations and incentives.

As Prices Rise Across Supply Chains, Will Inflation Come for You Too?
Anjani Trivedi (Bloomberg View) Mar 31, 2021
Shortages, stockpiling, transportation bottlenecks and Covid-19 contribute to increasing costs. When will consumer wallets be hit?

The ECB's Claims of Unity Are Woefully Misleading
Richard Cookson (Bloomberg View) Mar 31, 2021
There's growing pressure to scale back the central bank's bond purchases. So European yields are likely to rise, sooner and faster than the ECB wants.

A Decarbonization Roadmap
Katherine Dixon (Project Syndicate) Mar 31, 2021
Achieving collective climate ambitions requires rapid and deep transitions in each of the sectors that contribute to global energy demand, including power, transport, manufacturing, steel, and chemicals. To that end, three priorities in particular must be addressed.

No Winners but Only Losers in the China-US Trade War
Marlene Amstad, Leonardo Gambacorta, Chao He, and Dora Xia (VoxChina) Mar 31, 2021
Trade tensions between China and the United States have played an important role in swinging global stock markets, but the effects are difficult to quantify. Using a comprehensive database constructed by Wisers, we develop a novel trade sentiment index (TSI) based on textual analysis that assesses the positive or negative tone of Chinese media coverage of the China-US trade situation and evaluates the TSI's capacity to explain the behaviour of 60 global equity markets. We find the TSI to contribute to around 10% of the model's capacity to explain stock price variability from January 2018 to June 2019 in countries that are more exposed to the China–US value chain. No equity market benefits from the China–US trade war, and Asian markets tend to be more negatively affected. Specifically, we find that sectors most affected by tariffs, such as those related to information technology, are particularly sensitive to the media tone regarding trade tension.

Aiming for zero Covid-19 to ensure economic growth
Philippe Aghion, Patrick Artus, Miquel Oliu-Barton, and Bary Pradelski (VoxEU) Mar 31, 2021
With the pandemic continuing now for over a year, it has become clear that there is no trade-off between health and wealth. Successful pandemic management has relied on aiming for and protecting Covid-free green zones. This column argues that by choosing a swift elimination strategy, several countries around the world have gained control over the virus. They did this by minimising fatalities and uncertainty, and are now already rebuilding their economies. By contrast, most European countries have followed a stop-and-go logic that turned out to be more restrictive, more dangerous, and more damaging to the economy.

Can We Prevent the Global Fire Next Time?
Simon Johnson (Project Syndicate) Mar 31, 2021
With some countries beginning to get a handle on COVID-19, mostly through vaccination programs, we can hope for a post-crisis reform phase, with measures aimed at substantially reducing the probability of another global pandemic or similar public-health shock. But hope is not belief.

COVID-19 Made Sustainable Investments Go Viral
Michael Moran (FP)d Mar 31, 2021
The pandemic has proved the viability of ESG metrics, and the business world may be changed for good.

Should the Fed Issue Digital Currency?
Jessie Romero, Zhu Wang and Russell Wong (FRB Richmond Econ Brief) Mar 31, 2021
The United States might benefit from eventually replacing most physical cash with central bank digital currency (CBCD), but first the Federal Reserve must resolve several key policy and implementation issues, such as establishing comparative advantage over private issuers and ensuring safety and soundness.

The global saving glut and the fall in the U.S. real interest rates: A 15-year retrospective
Robert Barsky and Matthew Easton (FRB Chicago Econ Perspectives) Mar 31, 2021
The authors revisit Ben Bernanke's global saving glut (GSG) hypothesis from 2005—which links low long-term real interest rates in the United States to excess saving in a number of non-Western countries, including, but not limited to, China. Using an analytical framework and empirical data, they find that the ability of the GSG hypothesis to explain the fall in long-term real rates between 2002 and 2006 is likely much greater than its ability to account for the further fall in these rates from the Great Recession onward.