News & Commentary:

Articles/Commentary

EU leaders set their terms for a negotiated Brexit
FT View May 1, 2017
The framework for talks agreed by the 27 is tough but reasonable.

Brexit and the slide into nationalism
Gideon Rachman (FT) May 1, 2017
There is a British ‘finest hour’ reflex susceptible to appeals to glorious isolation.

China can suck in Asian exports only for so long
Jennifer Hughes (FT) May 1, 2017
EM investors have benefited but growth rates are set to slow.

Asean DataView: Malaysians worried by Trump’s trade rhetoric
FTCR May 1, 2017
FTCR survey reveals Asean scepticism over US trade policy.

China’s Case for Trump’s Tax Cuts
WSJ May 1, 2017
Chinese leaders warn that business may move to the U.S.

Bridging the Humanitarian-Development Divide: Three Priorities from Three Global Leaders
Janeen Madan (CGD) May 1, 2017
How can the world find realistic, workable solutions to bridge the divide between humanitarian response and development assistance? This question was front and center at a high-level discussion, co-hosted by CGD and the International Rescue Committee (IRC), in the run up to last week’s Spring Meetings. The event marked the launch of a new CGD-IRC report, which puts forth one emerging solution to the refugee crisis—compact agreements between host governments and development and humanitarian actors. The discussion featured three global leaders on the frontline of today’s displacement challenge: Jordan’s Minister of Planning and International Cooperation Imad Fakhoury, World Bank CEO Kristalina Georgieva, and IRC President and CEO David Miliband. Here are three takeaways.

IMF Treads Water as G20 Awaits Clear Signals from US
Tom Bernes (CIGI) May 1, 2017
The shadow of the Donald Trump administration hung over the spring meetings of the IMF and World Bank. What impact might this have on the upcoming G20 meetings?

Here’s what US cuts to the UN would look like
John McArthur and Krista Rasmussen (Brookings) May 1, 2017
Examining budget data for the United Nations, an exploration of the effects of potential U.S. funding cuts on various U.N. agencies.

(Some) Americans Are Saving (Some) Money Again
Justin Fox (Bloomberg View) May 1, 2017
First the savings rate was too low. Now some say it's too high. So what's the right number anyway?

Start Worrying About Emerging Markets
Satyajit Das (Bloomberg View) May 1, 2017
Despite reform, no one's prepared for what comes next.

The Brexit Grandstanding Works in the EU's Favor
Leonid Bershidsky (Bloomberg View) May 1, 2017
The U.K. prime minister’s tough talk may boost her in the short term, but that won’t last.

Central Banks to Stay Looser Longer Than Markets Expect
Ben Emons (Bloomberg View) May 1, 2017
There's a stark divergence between economic data based on sentiment and data based on actual activity.

A False Spring at the Spring Meetings?
Carmen Reinhart and Vincent Reinhart (Project Syndicate) May 1, 2017
The IMF is optimistic about the world economy's growth prospects over the next two years. But the Fund is taking too much comfort in the stabilization of economic conditions: beneath the headline numbers, there is little evidence that underlying problems have been resolved.

Mending Bangladesh’s Garment Industry
M Niaz Asadullah and Zaki Wahhaj (Project Syndicate) May 1, 2017
It has been three years since the deadly collapse of Rana Plaza brought to light the unsafe conditions in which millions of women in Bangladesh’s ready-made garments sector earn their livelihood. Yet not only do those conditions persist; reliance on child labor seems to be growing – which, paradoxically, may not be a bad thing.

Lessons from the Anti-Globalists
Joseph E. Stiglitz (Project Syndicate) May 1, 2017
The likely victory of Emmanuel Macron in the French presidential election has elicited a global sigh of relief. But it would be a mistake to conclude that discontent with the global economy has crested.

The Coming Brexit Breakdown?
Mark Leonard (Project Syndicate) May 1, 2017
After British Prime Minister Theresa May invoked Article 50 in March, many experts think there is a strong chance that the outcome of the UK-EU break-up talks will be calamitous for both sides. Mark Leonard, director of the European Council on Foreign Relations, joins PS Short Cut to explain why.

Twenty years on: Is there still a case for Bank of England independence?
Ed Balls and Anna Stansbury (VoxEU) May 1, 2017
Until recently, the independence granted to the Bank of England 20 years ago had gone unchallenged. But the financial crisis has raised questions over whether central bank independence is necessary, feasible, and democratic. This column revisits the relationship between inflation and the operational and political independence of the central bank in advanced economies. The findings support the Bank of England model of monetary policy independence: fully operationally independent, but somewhat politically dependent. To make operational independence work, however, further reforms are needed to the model in both monetary–fiscal coordination and macroprudential policy. Until recently, the independence granted to the Bank of England 20 years ago had gone unchallenged. But the financial crisis has raised questions over whether central bank independence is necessary, feasible, and democratic. This column revisits the relationship between inflation and the operational and political independence of the central bank in advanced economies. The findings support the Bank of England model of monetary policy independence: fully operationally independent, but somewhat politically dependent. To make operational independence work, however, further reforms are needed to the model in both monetary–fiscal coordination and macroprudential policy.

Mexico’s Revenge
Franklin Foer (Atlantic) May 1, 2017
By antagonizing the U.S.’s neighbor to the south, Donald Trump has made the classic bully’s error: He has underestimated his victim.

In Trump’s Plan to Gut Foreign Aid, Battle Lines Drawn Over Global Women’s Issues
Robbie Gramer and Ruby Mellen (FP) May 1, 2017
Even the Republican Congress doesn't seem to think the budget cuts are a good idea.

The False Promise of Protectionism
Douglas A. Irwin (FA) May 1, 2017
Why Trump’s trade policy could backfire.

The Boom Was a Blip
Ruchir Sharma (FA) May 1, 2017
Getting used to slow growth.

The Liberal Order Is Rigged
Jeff D. Colgan and Robert O. Keohane (FA) May 1, 2017
Fix it now or watch it wither.

Upgrading the G7
William R. White (TIE) May 1, 2017
It’s more than economics.

Argentina’s carry trade bonanza driven by high interest rates
Benedict Mander (FT) May 2, 2017
A big inflection point may be the midterm legislative elections due in October.

Beware the easy promise of a post-Brexit wage boost
Sarah O'Connor (FT) May 2, 2017
Employers prove unwilling to raise pay even when the labour market tightens.

China’s corruption clampdown risks policy paralysis
Daniel Bell (FT) May 2, 2017
The drive has worked almost too well, with few officials willing to take chances.

Is China the World’s New Colonial Power?
Brook Larmer (NYT) May 2, 2017
The rising superpower has built up enormous holdings in poor, resource-rich African countries —but its business partners there aren’t always thrilled.

Give Trade Paranoia the Heave-Ho
George Melloan (WSJ) May 2, 2017
Advice for Trump: Tell Bannon to hit the showers, revive TPP, and undo Obama’s economic legacy.

The higher the inequality, the more likely we are to move away from democracy
Branko Milanovic (Guardian) May 2, 2017
In every political system, the rich tend to hold more power – but the relationship between politics, economics and inequality is complex. To better understand these critical issues, we must look to Big Data.

China’s Mobile Economy: Opportunities in the Largest and Fastest Information Consumption Boom
Winston Ma (ChinaFile) May 2, 2017
The year of 2014-15 marks the most important inflection point in the history of the Internet in China. Almost overnight, the world’s largest digitally-connected middle class went both mobile and multi-screen (smart phone, tablets, laptops, and more), with huge implications for how consumers behave and what companies need to do to successfully compete. As next-generation mobile devices and services take off, China’s strength in this arena will transform it from a global “trend follower” to a “trend setter.”

A Less ‘Impulsive’ China: Bracing for Lower Growth
Gene Frieda (PIMCO) May 2, 2017
By focusing so intensely on U.S. political developments, investors risk missing a silent shift in what has arguably been the strongest driver of global reflation in the last five years: Chinese credit.

Have Western economies hit 'peak stuff'?
Brian Caplen (Banker) May 2, 2017
Millennials think doing things is more important than buying things. Brian Caplen assesses what this means for the banks when they decide on credit card and personal loan limits.

For Middle East and North Africa Region, Reforms Can Refuel Growth Engines
Bruno Versailles and Magali Pinat (IMF News) May 2, 2017
Growth is slightly improving in the countries of the Middle East and North Africa region, largely driven by higher oil prices and improved export prospects.

Trump's Jawboning Alone Isn't Driving the Dollar
Komal S Sri-Kumar (Bloomberg View) May 2, 2017
The economy's performance and Fed policy matter, too.

Italy Is Europe's Next Big Problem
Ferdinando Giugliano (Bloomberg View) May 2, 2017
After France votes, watch out for the storm that's brewing across the Alps.

How the Robot Apocalypse Will Go Down
Catherine H O'Neil (Bloomberg View) May 2, 2017
Artificial intelligence is like a weapon. Worry about the people wielding it.

Low Volatility and the Risks of Crowded Trades
Dean C Curnutt (Bloomberg View) May 2, 2017
Investors need to appreciate the disconnect that can emerge between the price of risk in the market and the actual risks.

Democratizing Artificial Intelligence
Maciej Kuziemski (Project Syndicate) May 2, 2017
Artificial Intelligence has the potential to make or break the world order, either pulling the “bottom billion” out of poverty and transforming dysfunctional institutions or entrenching injustice and increasing inequality. The outcome will depend on how we manage the coming changes.

Women in the Green Economy
Isabella Lövin and Ngozi Okonjo-Iweala (Project Syndicate) May 2, 2017
To sustain economic growth and development, we need to tap the potential of all people, giving women opportunities not just to work, but also to lead. What better moment to transform women's role in the economy than now, when the world is pursuing another economic transformation, toward a green economy?

Persistent economic slowdown and debt-ridden borrowers
Keiichiro Kobayashi (VoxEU) May 2, 2017
There is concern about the persistent slowdown of economic growth in the aftermath of financial crises. This column presents a framework which shows that excessive debt accumulated by firms and households during a crisis can cause persistent stagnation. Relief from excessive debt has a direct impact on economic growth, whereas unconventional monetary and fiscal policies cannot directly solve the fundamental debt problem. There is concern about the persistent slowdown of economic growth in the aftermath of financial crises. This column presents a framework which shows that excessive debt accumulated by firms and households during a crisis can cause persistent stagnation. Relief from excessive debt has a direct impact on economic growth, whereas unconventional monetary and fiscal policies cannot directly solve the fundamental debt problem.

Venezuela Is Heading for a Soviet-Style Collapse
Anders Aslund (FP) May 2, 2017
A few lessons from the last time an oil economy crashed catastrophically.

Japan proposes a rescue mission for Trans-Pacific trade
FT View May 3, 2017
Tokyo’s aim may be overambitious but the sentiment is laudable

The eurozone’s revival heralds spring cheer
FT View May 3, 2017
A broad economic upswing makes room for structural reform.

What we learn when populists win power
Roula Khalaf (FT) May 3, 2017
Only by demonstrating its inability to govern can an extremist ideology be defeated.

U.S., Canada Both Practice Protectionism
Michael Taube (WSJ) May 3, 2017
Trump is right about dairy supply management, but he’s wrong about the softwood-lumber dispute.

Productivity: A Surprise Upside Risk to the Global Economy?
Matthew Tracey and Joachim Fels (PIMCO) May 3, 2017
Global labor productivity – GDP per hour worked – has been in a slump for years. But when we look at the state of industry in 2017 from the bottom up, we see underappreciated productivity growth potential. The productivity gap between leading firms and laggards has widened dramatically in recent years. Laggards can play defense for a while – creative destruction takes time – but eventually they will converge toward the productivity frontier or exit. Several microeconomic catalysts could push creative destruction into high gear. A productivity rebound isn’t PIMCO’s baseline outlook, but we see rising upside potential. For investors, a global productivity rebound could mean higher interest rates and steeper yield curves – and it could boost the resilience of the global economy in the face of several looming secular risks. Bottom line: don’t rule out a global productivity rebound in the coming years that ushers in “old normal” global GDP growth.

Reviving Productivity Is a Moral Imperative
Clive Crook (Bloomberg View) May 3, 2017
Stagnating growth and unrewarding work make society smaller and meaner.

Searching for the Easy Ways to Raise Productivity
Noah Smith (Bloomberg View) May 3, 2017
Admitting more skilled immigrants, investing in infrastructure and deregulation would be a good start.

One Productivity Problem: We're Only Human
Tyler Cowen (Bloomberg View) May 3, 2017
We're not great at following rules, and we work better in communities.

Trade Is the Scapegoat for Political Failure
Frank Wilkinson (Bloomberg View) May 3, 2017
Liberals who side with Trump on the issue are missing the larger picture.

Where US Manufacturing Jobs Really Went
J. Bradford DeLong (Project Syndicate) May 3, 2017
In the decade between 1999 and 2009, the number of jobs in manufacturing fell from 17 million to 12 million, giving rise to the idea that the US economy suddenly stopped working – at least for blue-collar males – at the turn of the century. But it is wrong to suggest that previously all was well in US manufacturing.

Seizing the Center
Andrés Velasco (Project Syndicate) May 3, 2017
The international press has had a hard time labeling the political positions of French presidential candidate Emmanuel Macron, though most seem to have settled on “centrist.” While that choice is understandable, it minimizes the extent to which a political movement of the center, like Macron's, must have its own distinct ideas.

Finance Capital and Neo-Fascism: The French Elections Mirror the Crises of Western States
Abayomi Azikiwe (EFR) May 3, 2017
Developments of the “Le Pen phenomenon” is being followed by the global world. Abayomi Azikiwe tackles how French elections reflect implications on the realities of joblessness, poverty and the burgeoning inequality within capitalist society.

Making Chile Great Again
Shannon K. O'Neil (FA) May 3, 2017
How Latin America's Success Story Can Stay Ahead

Georgia: The Black Sea Hub for China's 'Belt and Road'
Joseph Larsen (Diplomat) May 3, 2017
New investments (some not even involving China) make Georgia an attractive link between Asia and Europe.

The implosion of the Venezuelan thugocracy
FT View May 4, 2017
Regime change is possible, and the consequences would be global.

Accounting scandals put the Big Four on the spot
FT View May 4, 2017
Auditors’ view of their role is at odds with investors’ expectations.

Avocado shortages show what happens when commodities go global
Alan Beattie (FT) May 4, 2017
There have been problems in the production chain for a while.

Mrs Watanabe prefers emerging markets for first time
Steve Johnson (FT) May 5, 2017
Developing world currencies account for record high share of Uridashi issuance.

China wields power with boycott diplomacy
Ben Bland, Tom Hancock and Bryan Harris (FT) May 4, 2017
South Korea is the latest to suffer from a hostile campaign backed by Beijing, but do such sanctions work in changing policy?

The Great Productivity Slowdown
Marie-Josée Kravis (WSJ) May 4, 2017
It began long before the financial crisis, and it has worsened markedly in the past six years.

China faces resistance to a cherished theme of its foreign policy
Economist May 4, 2017
Silk routes are not always as appealing as they sound.

Trump Orders Trade Deal Review, Continues NAFTA and South Korea Renegotiation Push
Bridges, Volume 21, Number 15 May 4, 2017
US President Donald Trump issued an executive order last weekend ordering a review of all trade deals involving the United States, which he said would play a role in keeping "jobs and wealth in our country."

Industrial Overcapacity Debate Continues on Domestic, International Fronts
Bridges, Volume 21, Number 15 May 4, 2017
The international debate over how to address global overcapacity in steel and aluminium continues across multiple fronts, amid new investigations being launched in Washington; another meeting of the new global forum dedicated to steel; and discussions under a WTO committee on subsidies.

Trump, Macri Pledge to Boost US-Argentina Trade Ties
Bridges, Volume 21, Number 15 May 4, 2017
Argentine President Mauricio Macri met with US President Donald Trump on 27 April to discuss how to deepen economic ties between their countries, including on bilateral trade.

Venezuela Before Chavez: A Prelude to Socialist Failure
José Niño (Mises Wire) May 4, 2017
While Chávez and his successor Nicolás Maduro deserve the brunt of the blame for Venezuela’s current economic calamity, the underlying flaws of Venezuela’s political economy point to much more systemic problems.

Europeans rediscover enthusiasm for globalisation
Uuriintuya Batsaikhan and Zsolt Darvas (Bruegel) May 4, 2017
The general political mood on both sides of the Atlantic seems to suggest declining public support for globalisation, but people in the EU increasingly see globalisation as an opportunity for economic growth. This shift in public opinion coincides with improved economic conditions.

Theresa May’s and England’s Miscalculations on Brexit
Stephan Richter (Globalist) May 4, 2017
Why Germany’s Angela Merkel felt compelled to end the Tories’ delusions.

Why Did Trump Accept Venezuela’s Money?
Kenneth Rogoff (Project Syndicate) May 4, 2017
Barack Obama’s administration took a principled stand on Venezuela, by imposing sanctions to rein in rogue behavior. Donald Trump, by contrast, had no qualms about taking a half-million-dollar donation for his inauguration festivities from a country whose government is driving its people to the brink of starvation.

Cheating Britain Out of Europe
Jacek Rostowski (Project Syndicate) May 4, 2017
In the name of democracy, British voters have been denied any chance to reconsider the outcome of last year's referendum on leaving the EU. And the snap election that Prime Minister Theresa May has called for June 8 all but guarantees that the Brexit they get will not be the one that most thought they were supporting.

Pegxit pressure
Kris Mitchener and Gonçalo Pina (VoxEU) May 4, 2017
Fixed exchange-rate regimes reduce uncertainty, which may increase trade and encourage investment and capital flows. This column identifies and tests one reason why markets expect countries to abandon pegs and devalue their currencies – shocks to the value of their output. During the classical gold standard era, commodity price fluctuations determined expected devaluation by investors, as measured by currency risk. These results highlight how trade shocks in an integrated world may undermine fixed exchange rate regimes under limited fiscal adjustments. Fixed exchange-rate regimes reduce uncertainty, which may increase trade and encourage investment and capital flows. This column identifies and tests one reason why markets expect countries to abandon pegs and devalue their currencies – shocks to the value of their output. During the classical gold standard era, commodity price fluctuations determined expected devaluation by investors, as measured by currency risk. These results highlight how trade shocks in an integrated world may undermine fixed exchange rate regimes under limited fiscal adjustments.

Let Free Markets Govern the Bond Rating Agencies
Gretchen Morgenson (NYT) May 5, 2017
The S.E.C. has strict oversight of which companies, like Moody’s and Standard & Poor’s, can rate corporate bonds, but that system isn’t working well.

How Good is China at Sanctions Enforcement?
Kent Boydston (PIIE) May 5, 2017
In February, China announced that it was cutting off all coal imports from North Korea for the rest of the year effective immediately. The move was somewhat of a surprise, as it seemed to exceed commitments under UNSC Resolution 2321, which appeared to allow a somewhat more generous cap.

Bank of Canada on Hold, Assessing Uncertainties in Nation’s Economy
Ed Devlin (PIMCO) May 5, 2017
We still think that the Bank of Canada (BOC) is keeping policy on hold for 2017, mindful of the range of uncertainties over the horizon as well as serial disappointments thus far in the Canadian recovery. U.S. policy – especially trade – is by far the greatest source of uncertainty to Canada’s outlook. In addition, persistently underwhelming exports, the housing boom (and related consumer debt) and anemic business investment are all concerns keeping the BOC in pause mode. A key question is whether we can expect continued fiscal discipline as the Canadian economy steadies over the long run. One key fiscal initiative, the new infrastructure bank slated to begin operation by the end of 2017, could be either a tremendous boost or a mess – the devil is in the details.

Mr. Trump: Focus on China
Peter Morici (Globalist) May 5, 2017
American worker’s prosperity depends on it.

How Zombie Companies Stop Productivity Growth
Catherine L Mann and Dan Andrews (Bloomberg View) May 5, 2017
When lagging firms don't go bust, they hog scarce resources and drag down productivity.

The EU Must Change After the French Election
Leonid Bershidsky (Leonid Bershidsky) May 5, 2017
The bloc's growing popularity is helping centrist leaders win, but without reform the effect won't last.

Obama and the $400,000 Question
Kaushik Basu (Kaushik Basu) May 5, 2017
Former US President Barack Obama recently agreed to accept $400,000 from the investment firm Cantor Fitzpatrick for a speech he will give this September. He should use those proceeds to fight inequality – even at the risk of reducing the speaking fees his successors can command.

Trends in US absolute income mobility since 1940
Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca and Jimmy Narang (VoxEU) May 5, 2017
One of the defining features of the ‘American Dream’ is the ideal that children have a higher standard of living than their parents. This column examines rates of ‘absolute income mobility’ – the fraction of children who earn more than their parents – to assess whether the US is living up to this ideal. Rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. Most of this decline is driven by the more unequal distribution of economic growth rather than the slowdown in aggregate growth rates. One of the defining features of the ‘American Dream’ is the ideal that children have a higher standard of living than their parents. This column examines rates of ‘absolute income mobility’ – the fraction of children who earn more than their parents – to assess whether the US is living up to this ideal. Rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. Most of this decline is driven by the more unequal distribution of economic growth rather than the slowdown in aggregate growth rates.

Arguments against basic income are straw men
Martin Ravallion (VoxEU) May 5, 2017
A universal basic income as a poverty-reduction policy is often contrasted unfavourably with targeted transfers. This column argues that five of the common arguments employed against basic income are really straw men that overstate the relative effectiveness of targeted transfers. While a universal basic income is not yet feasible in many countries, more universality and less fine targeting would create better social policies. A universal basic income as a poverty-reduction policy is often contrasted unfavourably with targeted transfers. This column argues that five of the common arguments employed against basic income are really straw men that overstate the relative effectiveness of targeted transfers. While a universal basic income is not yet feasible in many countries, more universality and less fine targeting would create better social policies.

G-7 Economic Cooperation in the Trump Era
C. Fred Bergsten, Edwin M. Truman and Jeromin Zettelmeyer (PIIE) May 5, 2017
This paper examines how G-7 cooperation can be maintained in the Trump era. Its working assumption is that the US administration will remain open to international cooperation in principle and yet be constrained by Trump’s economic nationalism and specific campaign promises, such as reducing trade.

Corporate Tax Cuts: Examining the Record in Other Countries
Simeon Djankov (PIIE) May 5, 2017
At 35 percent, the United States has the highest statutory corporate income tax rate among advanced economies, and this high rate coexists with a number of large preferences and exceptions.

Focus Germany: Positive signs
Barbara Böttcher, Dieter Bräuninger, Eric Heymann, Jochen Möbert and Stefan Schneider (DB Research) May 5, 2017
Growth in global trade almost stagnated at just 1.3% in 2016, and in some months was even negative. During winter, global trade picked up again, rising by around 3% compared to the same period a year earlier. Given the positive sentiment prevailing across the globe, this rebound could well continue. However, this trend is not yet being fully reflected in other hard economic indicators, usually highly correlated with global trade, and sentiment may therefore overstate the actual trend a little. Still, our simple model of world trade, which suggests moderate growth of just over 2% in 2017 and around 3% in 2018 might represent the lower limit of the forecast range. However, compared to previous cycles the upturn could remain weak, not least because of the global trade restrictions that have been progressively ratcheted up since 2008. (Further articles: Germany’s employment miracle, German election campaign not in full swing, yet)

The world’s most valuable resource is no longer oil, but data
Economist May 6, 2017
The data economy demands a new approach to antitrust rules.

Asia’s Heightened Jitters Over NAFTA Risks Spilling Over
Shihoko Goto (Globalist) May 6, 2017
Asian countries like South Korea are nervous about the United States changing its trade deals next.

The Macron Effect: Can France Overtake Germany Again?
Holger Schmieding (Globalist) May 7, 2017
It’s not a foregone conclusion that Germany always has the upper hand economically over France.

Trump aims for an industrial policy that works for America
Rana Foroohar (FT) May 7, 2017
More co-operation between private and public sectors would reshape the economy.

Trump’s low-growth trap
Robert J. Samuelson (WP) May 7, 2017
Countries aren’t growing as fast as they used to, and economists worry about the political fallout.

China is bent on world domination — but not in the way you think
Fred Hiatt (WP) May 7, 2017
Can Trump translate his earlier skepticism into smart trade policy?

Macron and the Revival of Europe
Roger Cohen (NYT) May 7, 2017
Hold the Marseillaise! Time for the "Ode to Joy."

Trump’s Tax Plan Would Spur Growth
Edward P. Lazear (WSJ) May 7, 2017
By moving toward a consumption levy, it could generate a GDP gain of between 2.5% and 4.5%.

The Myth of the Rule of Law
Robert Taylor (Mises Wire) May 7, 2017
Any state, no matter how powerful, cannot not rule solely through the use of brute force.

Emmanuel Macron gives Europe — and the eurozone — hope
Wolfgang Münchau (FT) May 8, 2017
France faced a stark choice between reforming the EU, or quitting — it chose to stay.

The ECB’s dilemma is when to trigger the turning point
Lorenzo Bini Smaghi (FT) May 8, 2017
So far, the central bank has tightened too early and eased too late.

What To Do When Machines Do Everything by Malcolm Frank et al
John Thornhill (FT) May 8, 2017
Incumbents, not disrupters, will be winners in the digital arms race.

Risk of dollar shortage hits investors’ radar
Jennifer Hughes (FT) May 8, 2017
Further monetary tightening from the Fed may unsettle emerging markets used to abundant dollars.

Green bonds need global standards
Chris Floods (FT) May 8, 2017
Campaigners raise the alarm on ‘greenwashing’.

China: not such a champion of global trade
Silvia Pavoni (FT) May 8, 2017
Free-trade rhetoric yet to be matched by action, says IDB report.

Why Emmanuel Macron matters to the whole world
Gideon Rachman (FT) May 8, 2017
If he fails, populism, nationalism and protectionism will soon be resurgent

Mexico’s multiplying problems threaten to undermine Nafta talks
Jude Webber (FT) May 8, 2017
While the country has handled international crises well, domestic problems are another issue.

China DataView: exporters buy into steady renminbi
FT Confidential Research May 8, 2017
FTCR data show companies see rate stability ahead but renewed volatility looms.

Volatile Money Hurts Growth and Trade
James Kemp and Sean Rushton (WSJ) May 8, 2017
The dollar-euro exchange rate has moved 20% eight times in a decade, causing crisis and stagnation.

The truth about the effectiveness of foreign aid
Steve Radelet (Brookings) May 8, 2017
Responding to “old and tired” claims that foreign assistance programs don’t work, Steve Radelet summarizes the leading evidence on the importance of aid in supporting development and economic growth.

Countries with Higher Tariffs Have Larger Trade Deficits
Caroline Freund and Melina Kolb (PIIE) May 8, 2017
President Trump has ordered a study on what causes trade deficits in order to discover potential unfair trade practices that could be contributing to the imbalance. Tariffs have been proposed as a solution to this issue. However, there are several reasons why this approach is misguided.

Macron's Victory Signals Reform in France and a Stronger Europe
Jacob Funk Kirkegaard (PIIE) May 8, 2017
Emmanuel Macron's victory in the French presidential election clearly demonstrates that the populist dominos in advanced economies outside the Anglo-Saxon world were not even close to falling.

The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers
Gary Clyde Hufbauer and Zhiyao (Lucy) Lu (PIIE) May 8, 2017
A re-calculation of the payoff to the United States from trade expansion from 1950 to 2016 yields $2.1 trillion. The payoff has stemmed from trade expansion resulting from policy liberalization and improved transportation and communications technology.

How the Fed Misinterprets Wage Growth
Lakshman Achuthan and Anirvan Banerji (Bloomberg View) May 8, 2017
The central bank is confused about the interplay between cycles in growth and inflation.

Actually, Americans Don't Spend Too Much
Michael Pettis (Bloomberg View) May 8, 2017
Foreign money, not greed, is driving down U.S. savings rates.

A Boost for the Poor Makes Everyone Richer
Cass R Sunstein (Bloomberg View) May 8, 2017
The earned-income tax credit encourages more people to join the work force.

What Macron Can Do for Free Markets Everywhere
Mohamed Aly El-Erian (Bloomberg View) May 8, 2017
He can help open the way for better economic governance in the West rather than just setting the stage for a bigger political shock.

Foreign-Exchange Focus Turns to Europe's Economic Fundamentals
Jason M Schenker (Bloomberg View) May 8, 2017
Macron's victory will strengthen the euro by easing uncertainty about the single currency's future.

Commodities Rout Shouldn't Be Taken Lightly
Shelley Goldberg (Bloomberg View) May 8, 2017
The market is signaling something ominous about the state of the global economy.

Tech's Next Surprise: Jumpstarting Productivity
Leonid Bershidsky (Leonid Bershidsky) May 8, 2017
The sector lifted growth before 2010, and it's likely to do so again in a not-so-distant future.

America Is Forgetting Why We Share Things
Noah Smith (Noah Smith) May 8, 2017
Investing in the stuff we all use and own in common makes the country richer and puts a check wealth inequality.

Macron and a Multi-Need Europe
Klaus Schwab (Project Syndicate) May 8, 2017
Emmanuel Macron’s victory in the French presidential election is the surest sign yet that after a series of crises and setbacks, Europe may be regaining some semblance of self-confidence. But renewed confidence must not lead to resumed complacency.

Whistling Past the Geopolitical Graveyard
Nouriel Roubini (Project Syndicate) May 8, 2017
Even with geopolitical conflicts proliferating around the world, global financial markets have reached new heights. But while there are many explanations for why investors might be underpricing today's risks, there is no good reason for them to ignore the possibility of another "black swan" event on the horizon.

Energy, Economics, and the Environment
Giulio Boccaletti (Project Syndicate) May 8, 2017
Even with massive expansion in solar and wind power, most forecasts assume that meeting global climate-mitigation goals will require a 50% increase in hydropower capacity by 2040. But free-flowing rivers are essential to the health of communities, local economies, and ecosystems.

Development Beyond Aid
Justin Yifu Lin and Yan Wang (Project Syndicate) May 8, 2017
Modern economic development is a process of continuous structural change in technologies, industries, and hard and soft infrastructure – all of which increases labor productivity, and thus per capita income. To account for this, development assistance should be expanded beyond aid, to include trade and new forms of investment.

Inflation targets and the benefits of an explicit tolerance ban
Fredrik Andersson and Lars Jonung (VoxEU) May 8, 2017
Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome. Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.

Regional trade agreements and growth volatility
Kangni Kpodar and Patrick Imam (VoxEU) May 8, 2017
The debate over regional trade agreements is ongoing. It has been argued that they can heighten exposure to shocks as they lead to more specialisation, and conversely that they can alleviate volatility by improving policy coordination within the anchors of a formal trade contract. This column suggests that the benefits from lowering long-term growth volatility tend to dominate potential costs, with the magnitude of this effect depending on the depth of the regional integration and the development stage of trade partners. The debate over regional trade agreements is ongoing. It has been argued that they can heighten exposure to shocks as they lead to more specialisation, and conversely that they can alleviate volatility by improving policy coordination within the anchors of a formal trade contract. This column suggests that the benefits from lowering long-term growth volatility tend to dominate potential costs, with the magnitude of this effect depending on the depth of the regional integration and the development stage of trade partners.

Italexit is not a Solution for Italy’s Problems
Lorenzo Codogno and Giampaolo Galli (EFR) May 8, 2017
An “Italexit” would be a catastrophic scenario, with incommensurable economic, social, and political costs lasting for many years.

Cheap Chinese Aluminum Is a National Security Threat
Allen-Ebrahimian (FP) May 8, 2017
Cheap Chinese steel has upset U.S. steel producers for years, as Chinese manufacturers have unloaded excess capacity on world markets at unbeatably low prices.

The myth of the EM FX pass-through
Jan Dehn (FT) May 9, 2017
Weak currencies can as easily cause deflation as inflation.

Britain need not slam its doors to limit migration
FT View May 9, 2017
May’s resolve to slash numbers poses risks to the country’s economy.

Macron’s worthy goals for eurozone reform
FT View May 9, 2017
The new French president’s ideas are very ambitious but largely right.

Emmanuel Macron weighs up France’s biggest challenges
Martin Wolf (FT) May 9, 2017
Country’s economy is no basket case, but the president-elect still has problems to solve.

France's Election Provides Only Short-Term Relief For The Euro
Thorsten Polleit (Mises Daily) May 9, 2017
From what little is known about his economic views, the new president seems to have a liking for a Keynesian-style economic policy.

Sub-Saharan Africa: Restarting the Growth Engine
IMF News May 9, 2017
Sub-Saharan Africa’s growth has fallen to its lowest level in more than 20 years,

Asia's Dynamic Economies Continue to Lead Global Growth
IMF News May 9, 2017
The Asia and Pacific region continues to deliver strong growth, in the face of widespread concerns about growing protectionism, a rapidly aging society, and slow productivity growth.

Why German taxpayers are Europe’s weak link
Brian Caplen (Banker) May 9, 2017
With Emmanuel Macron’s victory in France, the populist threat to the EU has receded. But longer term the bigger issue is who will pay for it?

The Trump Trade Arrived Several Years Too Soon
Gary Shilling (Bloomberg View) May 9, 2017
Fiscal stimulus, if it comes, will take two to three years before it spurs the economy.

Europe Ought to Seize the Macron Moment
Bloomberg View May 9, 2017
The new French president is right to call for EU reform.

Reasons to Like the Euro Again
Tyler Cowen (Bloomberg View) May 9, 2017
France's vote is the latest sign that the currency's future looks better than its past.

Good Managers, Not Machines, Drive Productivity Growth
John Van Reenen (Bloomberg View) May 9, 2017
Successful economies feature better bosses.

The Trump Trade Arrived Several Years Too Soon
Gary Shilling (Bloomberg View) May 9, 2017
Fiscal stimulus, if it comes, will take two to three years before it spurs the economy.

Germany's Enthusiasm for Macron Won't Last
Clive Crook (Bloomberg View) May 9, 2017
The leaders of France and Germany have different ambitions for Europe.

Macron’s Scandi-Solution for France
Philippe Aghion (Project Syndicate) May 9, 2017
If Emmanuel Macron is to see off the populist challenge for good, he will have to turn around France’s moribund, statist economy. He has a plan, says Philippe Aghion of the College de France, that looks to Scandinavia for inspiration.

Can Macron Pull it Off?
Dani Rodrik (Project Syndicate) May 9, 2017
Emmanuel Macron’s victory over Marine Le Pen was much-needed good news for anyone who favors open, liberal democratic societies over their nativist, xenophobic counterparts. But the battle against right-wing populism cannot be won without deeper European integration, and Germany may not be ready to go along.

Rage against the machines: New technology and violent unrest
Bruno Caprettini and Joachim Voth (VoxEU) May 9, 2017
Over the last 200 years, new machines have increasingly replaced humans, and even advanced tasks like speech recognition and translation can now be performed by relatively cheap computers and smartphones. This column describes how labour-saving technology appeared to play a key role in one of the most dramatic cases of labour unrest in recent history – the Swing riots in England during the 1830s – serving as a reminder of how disruptive new, labour-saving technologies can be in economic, social, and political terms.

Sectoral concentration and bank performance
Thorsten Beck, Olivier De Jonghe and Klaas Mulier (VoxEU) May 9, 2017
There is little empirical evidence that specialised banks are less stable or perform worse, as suggested by standard portfolio diversification theory. This column uses new data to argue that more specialised banks between 2002 and 2012 did not perform as theory would suggest. More specialised banks, and banks with similar sectoral exposures to their peers, suffered less volatility and had lower exposure to systemic risk. The lack of post-crisis regulatory reform in this area may, accidentally, have been a good thing.

Young Koreans Are Winning Their Generational War
Troy Stangarone (FP) May 9, 2017
Young South Koreans are angry about jobs and elite corruption - but that's driven them left, not right.

Labour corporation tax rise plan poses risk for long-term growth
Gemma Tetlow (FT) May 10, 2017
Any gains from tax cuts will have to be spent wisely to minimise impact on wages and jobs.

China likely to act as risks rise from interbank crackdown
FT Confidential Research May 10, 2017
Central bank could intervene if tighter credit threatens growth and stability.

Saudi Arabia’s oil policy must take its inspiration from the Fed
Pierre Lacaze (FT) May 10, 2017
The kingdom needs to combine supply cuts with intervention in the oil futures market.

Farmers Know the Benefits of Trade
Sonny Perdue (WSJ) May 10, 2017
Each $1 billion in ag exports supports 8,000 jobs. What America grows, the USDA will help sell.

Making everyone count: A clock to track world poverty in real time
Homi Kharas and Wolfgang Fengler (Brookings) May 10, 2017
Enter the World Poverty Clock, the first attempt to develop a real-time global model for poverty with projections until 2030.

When Is X-centric Eccentric? The Curious State of Development Economics
Lant Pritchett (CGD) May 10, 2017
Most research starts from wanting to explain the causes of effects. A different approach to research is “x-centric” or “effects of causes,” which is to start from an X that is under some agent’s active control and ask: “What is the impulse response function of Y with respect to purposive variations in X?”

How to Make Immigration the Bridge to an Orderly and Timely Brexit
Jacob Funk Kirkegaard (PIIE) May 10, 2017
In March, UK Prime Minister Theresa May formally initiated a two-year negotiation period for the United Kingdom to leave the European Union under the EU Treaty’s Article 50. Since the June 2016 Brexit referendum, she has missed several good opportunities to generate the necessary political goodwill.

France and the EU at a Crossroads
K@W May 10, 2017
Can Macron spark a resurgence?

Are Robots 'Stealing' Productivity from Humans?
Senior Partner (BRINK) May 10, 2017
The good news: Automation is creating factory work for humans, not just destroying it. And working in today’s auto factory is safer and more engaging than ever. The bad news: The U.S. can’t find the right humans for all this new work.

Xi's Big Road Is Going to Be Bumpy
Michael Schuman (Bloomberg View) May 10, 2017
Projecting power is more complicated than it looks.

China's Big Play for Middle East Oil
Robin Mills (Bloomberg View) May 10, 2017
The deals have been plentiful, but now Chinese companies must show they can deliver.

The Wages of Wage Fear
Bill Emmott (Project Syndicate) May 10, 2017
"If all else fails, try the previously unthinkable," is not a bad principle for economic policy in the best of times. Today, it may be just what is needed: many Western countries – especially the US, Japan, and Germany – should pursue direct government intervention in wage bargaining.

The Macron Miracle
Dominique Moisi (Project Syndicate) May 10, 2017
In many ways, France was primed for a right-wing populist to win power: beyond having been hit hard by the eurozone crises of the past decade, voters have lately faced a wave of terrorist attacks. But the French displayed a level of political maturity and intelligence that others might rightly envy.

Escaping the Wage Trap
Bill Emmott (Project Syndicate) May 10, 2017
Wages have stagnated, especially for those at the bottom of the earnings scale, boosting support for populists. So, says Bill Emmott, author of The Fate of the West, now is the time to consider a dramatic increase to the minimum wage.

Has Populism Peaked?
Philippe Legrain (Project Syndicate) May 10, 2017
With the election of the socially liberal and pro-European Emmanuel Macron as France's next president, many are claiming that the wave of right-wing populism sweeping the West has crested. But Macron faces formidable challenges in delivering on his promise for change.

A head-to-head comparison of augmented wealth in Germany and the US
Timm Boenke, Markus M. Grabka, Carsten Schroeder and Edward Wolff (VoxEU) May 10, 2017
International comparisons of private household wealth place the US among the richest countries, whereas German households appear rather poor. This column argues that as these rankings are based on average household net wealth, they do not tell the whole story. An augmented wealth approach that adds social security wealth to net wealth reduces wealth inequalities in both countries and the wealth gap between the two. International comparisons of private household wealth place the US among the richest countries, whereas German households appear rather poor. This column argues that as these rankings are based on average household net wealth, they do not tell the whole story. An augmented wealth approach that adds social security wealth to net wealth reduces wealth inequalities in both countries and the wealth gap between the two.

Emmanuel Macron Victory and the Fragility of the European Union
Abayomi Azikiwe (EFR) May 10, 2017
En Marche candidate prevails with support of world financial system.

What is human capital?
Peter Fleming (Aeon) May 10, 2017
Human capital theory was invented as an ideological weapon in the Cold War. Now it is helping to Uberise the world of work

Peak emerging markets heave into view
Jonathan Wheatley (FT) May 11, 2017
Sharp rally in EM assets raises questions over whether we are near the cycle’s high point.

Zimbabwe warns Jacob Zuma not to copy land seizures
Steve Johnson (FT) May 11, 2017
Tourism minister tells South Africa that Marxism has had ‘dire consequences’.

Malmström: EU, Mexico "Committed" to 2017 Trade Deal
Bridges, Volume 21, Number 16 May 11, 2017
The European Union and Mexico are "committed" to finishing talks to revamp their decades-old trade agreement this year, according to the EU’s top trade official.

WTO Chief Calls for Additional "Clarity and Purpose" in Buenos Aires Preparations
Bridges, Volume 21, Number 16 May 11, 2017
WTO Director-General Roberto Azevêdo urged members earlier this week to press on in their negotiating efforts ahead of this December’s ministerial conference in Buenos Aires, Argentina, as meetings continue in various configurations to prepare for the high-level event.

Is Germany Unbalanced or Unhinged?
Barry Eichengreen (Project Syndicate) May 11, 2017
Donald Trump thinks Germany's massive current-account surplus reflects currency manipulation and import restrictions. But, while the German external balance is indeed a problem, the best way to address it has nothing to do with the exchange rate or trade policy.

Taking the Politics Out of Development
Keyu Jin (Project Syndicate) May 11, 2017
Since introducing the "one belt, one road" initiative, China has been accused of trying to wrest greater control over the developing world, and even to replace the US as the dominant global superpower. The reality is not nearly so worrying.

Macron and a Sixth Republic?
Giles Merritt (Project Syndicate) May 11, 2017
The arrival of a centrist, pro-Europe technocrat in France’s powerful presidency is being widely hailed as auguring a turnaround in the EU’s fortunes. In fact, it may turn out to be anything but, with serious consequences for France itself and for hopes of a revival of the EU’s popularity.

Options for a ‘Global Britain’ after Brexit
Steven Brakman, Harry Garretsen and Tristan Kohl (VoxEU) May 11, 2017
New trade deals for the UK will be an important part of the Brexit negotiations, not only with the EU but also with the rest of the world. This column argues, however, that the UK has no trade-enhancing alternative to an agreement with the EU that essentially mimics its current situation as an EU member. A gravity model predicts that the negative impact of Brexit would be only marginally offset by a bilateral trade agreement with the US, and even in the case of trade agreements with all non-EU countries, the UK’s valued-added exports would still fall by more than 6%. New trade deals for the UK will be an important part of the Brexit negotiations, not only with the EU but also with the rest of the world. This column argues, however, that the UK has no trade-enhancing alternative to an agreement with the EU that essentially mimics its current situation as an EU member. A gravity model predicts that the negative impact of Brexit would be only marginally offset by a bilateral trade agreement with the US, and even in the case of trade agreements with all non-EU countries, the UK’s valued-added exports would still fall by more than 6%.

France Defies Populism With Strong Advocacy for Europe
François Godement (YaleGlobal) May 11, 2017
Macron's priorities include reforms for France and rebuilding the means of future international influence.

Understanding Populist Challenges To The Liberal Order
Pranab Bardhan (Boston Review) May 11, 2017
The idea that the rise of populism was caused by market-driven inequalities fails to address why populism is so cozy with crony capitalists.

China cannot finance the Belt and Road alone
Alicia García-Herrero (Bruegel) May 12, 2017
The One Belt One Road initiative holds great promise for the global economy, but will need a huge amount of finance. Initial presumptions that China would be able to provide all the finance are now unrealistic. Other partners should consider providing finance for some aspects, especially Europe - which has a lot to gain from the project.

How historic would a $1 trillion infrastructure program be?
Adie Tomer, Joseph Kane, and Robert Puentes (Brookings) May 12, 2017
Kicking off Infrastructure Week in the United States, Adie Tomer, Joseph Kane, and Robert Puentes examine how President Trump's pledge to invest $1 trillion in infrastructure over the next ten years stacks up to historic federal infrastructure investments of the past, such as the New Deal.

A New Model for Chinese Overseas Investment
Liu Jiahua (Project Syndicate) May 12, 2017
Chinese outward investment is forecast to triple by 2020, to some $20 trillion, putting China behind only the US. But moving quickly to invest overseas – while appealing to many in China – will be highly risky, unless policymakers and companies alike learn from past failures.

Why Africa Should Go Cashless
Carl Manlan (Project Syndicate) May 12, 2017
India’s pursuit of a cashless economy, despite early missteps and frustrations, will turn out to be a positive step for the country’s 1.31 billion people. Africa should make a similar move – one that begins with the establishment of a monetary union.

La Condition Française
Brigitte Granville (Project Syndicate) May 12, 2017
From the looks of Emmanuel Macron’s sweeping victory in the French presidential election, France seems to be recovering its self-confidence. But appearances can deceive: Macron will inherit a deeply divided country that remains mired in dysfunction and despair.

Policy responses to capital flows in emerging markets
Atish R. Ghosh, Jonathan D. Ostry and Mahvash S. Qureshi (VoxEU) May 12, 2017
There has been growing recognition that emerging markets may benefit from more proactive management of capital flows, and thus avoid crises when the flows recede. But do they do this in practice? By analysing policy responses in a sample of emerging markets, this column argues that central banks respond to capital inflows through various tools. Ironically, the most commonly prescribed instrument for coping with capital inflows – tighter fiscal policy – is the least-used tool in practice. There has been growing recognition that emerging markets may benefit from more proactive management of capital flows, and thus avoid crises when the flows recede. But do they do this in practice? By analysing policy responses in a sample of emerging markets, this column argues that central banks respond to capital inflows through various tools. Ironically, the most commonly prescribed instrument for coping with capital inflows – tighter fiscal policy – is the least-used tool in practice.

Why Are Economists Giving Piketty the Cold Shoulder?
Marshall Steinbaum (Boston Review) May 12, 2017
"Capital in the Twenty-First Century" raised important questions about inequality that the Ivory Tower would rather ignore.

Behind China's $1 Trillion Plan to Shake Up the Economic Order
Jane Perlez and Yufan Huang (NYT) May 13, 2017
In stark contrast to President Trump's "America First" mantra, the "One Belt, One Road" plan aims to remake global commerce in China's image.

Can the Belt and Road Initiative resurrect a liberal international order?
David Vines (EAF) May 13, 2017
Though there are risks in its delivery, the Belt and Road Initiative presents a huge opportunity: it offers a framework for deepening international economic cooperation through a platform of open regionalism that promotes economic integration through deepening five types of links, namely: policy, infrastructure, trade and investment, financial and people-to-people exchanges.

Jobless recoveries: Exploring technology's role
Georg Graetz and Guy Michaels (VoxEU) May 13, 2017
Recoveries from recessions in the US used to involve rapid job generation, but job growth has failed to match GDP recovery after recent US recessions. This column examines the role of technology in this and asks whether jobless recoveries are a wider problem outside of the US. In the US, industries that are more prone to technological change experienced slower job growth during recent recoveries, but it appears unlikely that modern technologies are causing jobless recoveries outside of the US. This poses a puzzle as to the nature of recent jobless US recoveries. Recoveries from recessions in the US used to involve rapid job generation, but job growth has failed to match GDP recovery after recent US recessions. This column examines the role of technology in this and asks whether jobless recoveries are a wider problem outside of the US. In the US, industries that are more prone to technological change experienced slower job growth during recent recoveries, but it appears unlikely that modern technologies are causing jobless recoveries outside of the US. This poses a puzzle as to the nature of recent jobless US recoveries.

How Venezuela Stumbled to the Brink of Collapse
Max Fisher and Amanda Taub (NYT) May 14, 2017
Established democracies are not supposed to implode like this. But economic missteps, power grabs and political opportunism have made it happen.

One Belt, One Road — and many questions
FT View May 14, 2017
China’s global plan must not reproduce domestic economic problems.

Are US Treasury yields truly on the rise?
FT Reporters May 14, 2017
Also in focus is China’s yield curve inversion, the BoE and the pound.

Trump’s Pretty Good China Deal
WSJ May 14, 2017
Modest trade benefits for both sides, even if they were overhyped.

Robots Will Save the Economy
Bret Swanson and Michael Mandel (WSJ) May 14, 2017
The problem today is too little technology. Physical industries haven’t kept up.

The Trump Trade Team’s Vocabulary Problem
Chad P. Bown and Alan O. Sykes (WSJ) May 14, 2017
It’s not clear that officials understand the meaning of ‘reciprocity’ and ‘most favored nation.’

Five Ways to Fight Populism
Bernard Wasow (Globalist) May 14, 2017
The best response to populism is active government policy. We need more and better smart liberalism.

The historical impact of technology on the skill premium
Rui Luo (VoxEU) May 14, 2017
While the impact of modern technological change on the skill premium has been well explained, there has been no study of the evolution of the skill premium over the very long run. This column reveals that the skill premium in Western Europe declined between 1300 and 1600, and converged to a low and stable level afterwards. Growth and technological change, while stimulating economic development and the transition from a pre-modern era to modern era, reduced wage inequality between different working groups.

Will Italian Banks Derail Financial Stability In The Eurozone?
Phil Molyneux (EFR) May 14, 2017
In this article the author discusses whether the worsening state of Italy’s banks could spark a financial crisis in the Eurozone, and prove an obstacle to plans for a European Banking Union.

Merkel can keep options open on eurozone
FT View May 15, 2017
Leading in the polls, the chancellor is in a position to show flexibility.

EU-managed control of euro clearing is not viable
Barnabas Reynolds (FT) May 15, 2017
Euro-denominated derivatives markets have to remain free of political influences.

Emmanuel Macron’s grand Franco-German bargain
Janan Ganesh (FT) May 15, 2017
A well-led and united EU leadership will make life harder for Britain as it leaves.

Technology is the tool to spur a healthcare revolution
John Thornhill (FT) May 15, 2017
Big data and artificial intelligence would address the productivity challenge.

Puerto Rico’s Debt Lessons
WSJ May 15, 2017
The island and its lenders will share the pain of bad government.

How Trump Can Save Europe
William McGurn (WSJ) May 15, 2017
By playing the British card, the president could advance free and fair trade.

China has a plan to become a global superpower. It probably won’t work.
WP May 15, 2017
The massive international infrastructure plan is likely to fall short of Xi Jinping’s aims.

Correcting the Record on NAFTA
Gary Clyde Hufbauer and Jeffrey J. Schott (PIIE) May 15, 2017
In a recent blog , Kevin P. Gallagher of Boston University takes the Peterson Institute to task for “overselling” the North American Free Trade Agreement (NAFTA) to the American public in 1993.

Governance and Ownership of Significant Euro Area Banks
Nicolas Véron (PIIE) May 15, 2017
European policymakers and analysts often appear to assume that most euro area banks are publicly listed companies with ownership scattered among many institutional investors, a structure in which no single shareholder has controlling influence and that allows for considerable flexibility to raise capital when needed.

Free and Fair US Trade?
Agnieszka Gehringer (Globalist) May 15, 2017
The Donald Trump administration aims at redefining US trade relationships with the rest of the world to make trade “free and fair” again.

Trump Just Did Something Good on Trade
Bloomberg View May 15, 2017
He probably didn't intend to, but we'll take what we can get.

6 Long-Term Economic and Investment Themes
Gary Shilling (Bloomberg View) May 15, 2017
With Trump’s agenda mostly stalled, pay attention to stimulus plans, globalization and the aging of the population.

How to Boost Productivity and Make It Last
Noah Smith (Bloomberg View) May 15, 2017
Growth will be limited by finite reserves of fossil fuels; the solution is the most abundant energy source -- solar.

The Populist Wave Hasn't Crested Yet
Mihir Sharma (Bloomberg View) May 15, 2017
Youth globally are still drawn to extremes.

U.K.'s Corporate Tax Cuts Offer a Lesson for Trump
Jamie Murray (Bloomberg View) May 15, 2017
They boost growth only if the money isn't taken from much-needed investment.

The Other Side of the Fed’s Balance Sheet
Ben Emons (Bloomberg View) May 15, 2017
When the central bank sheds assets, fractional reserves will be affected, too.

Germany Will Lose if Macron Fails
Hans-Helmut Kotz (Project Syndicate) May 15, 2017
When Emmanuel Macron won the French presidential election, many Germans breathed a loud sigh of relief. But if the nationalist threat to Europe is truly to be contained, Germany will have to work with Macron to address the economic challenges that have driven so many voters to reject the European Union.

How Culture Shapes Human Evolution
Kevin Laland (Project Syndicate) May 15, 2017
Scientists have lately confirmed that other animals do not possess hidden reasoning powers and cognitive complexity. This raises a fundamental question: How could something as extraordinary and unique as the human mind have evolved?

Congratulations, President Macron – Now We Oppose You
Yanis Varoufakis (Project Syndicate) May 15, 2017
Reasonable people understood that Emmanuel Macron ought to be supported against Marine Le Pen in the second round of France's presidential election. Now they understand that Macron’s policies will worsen the deflationary, regressive cycle that is Le Pen’s greatest ally.

Could the Iranian Economy Sink Rouhani?
Djavad Salehi-Isfahani (Project Syndicate) May 15, 2017
Iranian President Hassan Rouhani is expected to win re-election this May, because he has generally done what he said he would do, and because every president of the Islamic Republic before him has served two terms. But if he loses, he can blame his harsh economic policies, which delivered too little, too late.

What we can learn from euro-dollar tweets
Vahid Gholampour and Eric van Wincoop (VoxEU) May 15, 2017
Large numbers of traders share their thoughts about the euro-dollar exchange rate on Twitter. By identifying and classifying opinionated tweets, and constructing a daily measure of sentiment, this column shows that a trading strategy that takes long or short positions based on the forecasts of high-follower accounts provides a Sharpe ratio significantly above that of the carry trade. The methodology could easily be applied to other currencies or portfolios of currencies, as well as other financial markets such as the stock market. Large numbers of traders share their thoughts about the euro-dollar exchange rate on Twitter. By identifying and classifying opinionated tweets, and constructing a daily measure of sentiment, this column shows that a trading strategy that takes long or short positions based on the forecasts of high-follower accounts provides a Sharpe ratio significantly above that of the carry trade. The methodology could easily be applied to other currencies or portfolios of currencies, as well as other financial markets such as the stock market.

Determinants of sovereign bond yields
Mélika Ben Salem and Bárbara Castelletti (VoxEU) May 15, 2017
In the aftermath of the Global Crisis, sovereign yield differentials have increasingly widened among European developed countries. Financial markets seem to discriminate among peripheral economies requiring a higher risk premium than is justified by fiscal factors only. This column discusses the causes of this phenomenon. In peripheral countries, it is not due simply to the lack of fiscal discipline, but to a combination of both internal and external imbalances. In the aftermath of the Global Crisis, sovereign yield differentials have increasingly widened among European developed countries. Financial markets seem to discriminate among peripheral economies requiring a higher risk premium than is justified by fiscal factors only. This column discusses the causes of this phenomenon. In peripheral countries, it is not due simply to the lack of fiscal discipline, but to a combination of both internal and external imbalances.

The Great Divergences of wages and productivity
Giuseppe Berlingieri, Patrick Blanchenay and Chiara Criscuolo (VoxEU) May 15, 2017
Some firms pay well while others don’t; and some are highly productive while many aren’t. This column presents new firm-level data on the increasing dispersion of wages and productivity in both the manufacturing and services sectors in 16 OECD countries. Wage inequalities are growing between firms, even those operating in the same sector – and they are linked to growing differences between high and low productivity firms. Both globalisation and technological progress (notably information and communications technologies) influence these outcomes – as do policies and institutions such as minimum wages, employment protection legislation, unions, and processes of wage-setting. Some firms pay well while others don’t; and some are highly productive while many aren’t. This column presents new firm-level data on the increasing dispersion of wages and productivity in both the manufacturing and services sectors in 16 OECD countries. Wage inequalities are growing between firms, even those operating in the same sector – and they are linked to growing differences between high and low productivity firms. Both globalisation and technological progress (notably information and communications technologies) influence these outcomes – as do policies and institutions such as minimum wages, employment protection legislation, unions, and processes of wage-setting.

The Egalitarian Struggle
Patrick Diamond (Boston Review) May 15, 2017
Centuries after Paine published "The Rights of Man," Western economies are still characterized by intractable inequalities in the distribution of wealth and inheritance. Basic income has emerged as a popular solution, but "predistribution" offers a fertile alternative.

An easier path for EU trade agreements
FT View May 16, 2017
The European Court of Justice ruling has little impact on Brexit.

A squeeze to test the UK economy’s resilience
FT View May 16, 2017
The BoE takes a sanguine view on weak productivity and wages.

Asia in danger of growing old before it becomes rich
Steve Johnson (FT) May 16, 2017
In contrast, Africa risks being held back by a surfeit of young people.

Never mind the robots; future jobs demand human skills
Sarah O'Connor (FT) May 16, 2017
In ageing nations, the fastest growing occupations are caring for others.

Trump’s threat to scrap Opic should be opposed
Matteo Stefanel (FT) May 16, 2017
Development agency makes money while bolstering emerging markets.

Capital markets growth promises big gains for GCC countries
George Abed (FT) May 16, 2017
Cheap oil has strained public accounts and that must be addressed

Brazil’s Meirelles reins in profligate spending
John Authers (FT) May 16, 2017
Finance minister says he is determined to make cuts, even if they are disliked.

The Struggle Behind Oil’s Ups and Downs
Daniel Yergin (WSJ) May 16, 2017
We likely won’t see $100 a barrel again. The industry has been recalibrated to a lower price level.

100 Plus Days of Trade Policy: A Review of Key Administration Actions
Cathleen Cimino-Isaacs (PIIE) May 16, 2017
The Trump administration has issued a wide array of often technical executive actions, “self-initiated” investigations, and other steps related to trade since taking office just over a hundred days ago.

Migration Vs. the Welfare State?
Branko Milanovic (Globalist) May 16, 2017
A self-fulfilling prophecy of failure: Welfare states attract a lot of unskilled migrants who fail to assimilate. A political disaster is looming.

Cargo Loss Control: How to Make a Million in Two Hours
John Dalby (Brink) May 16, 2017
Globally, 90 percent of all goods are shipped by sea. Most shipments are trouble-free and incur no losses. However, literally at the stroke of a pen or misuse of a measuring instrument, losses can exceed millions of dollars.

The French Economy Is Bad in a Crisis
Philippe Waechter (Bloomberg View) May 16, 2017
President Macron's biggest challenge is to make the nation dynamic again.

Immigrants Can Unlock Productivity Growth
Leonid Bershidsky (Bloomberg View) May 16, 2017
But only when their skills are a match for the country that is hosting them.

Long Term Economic and Investment Themes, Part 2
Gary Shilling (Bloomberg View) May 16, 2017
Be bearish about the Asian Century, keep an eye on deflation and don't give up on Treasury bonds.

For Poor Nations, Productivity Begins on the Farm
Mihir Sharma (Bloomberg View) May 16, 2017
Freeing up farmers and food prices is the key first step.

Rising Investor Confidence Is Premature
Komal S Sri-Kumar (Bloomberg View) May 16, 2017
Financial markets may reward those who seek safety rather than higher-risk opportunities.

Brexit Can Now Be Quicker But Harder
Leonid Bershidsky (Bloomberg View) May 16, 2017
The European Court of Justice just handed the hard-line European Commission more power to negotiate a deal with the U.K.

Brexit or Breakup?
Carl Bildt (Project Syndicate) May 16, 2017
It soon will be one year since the UK decided, by a slim majority, to leave the EU. Now that the UK has invoked Article 50 of the Treaty of Lisbon, and clarified some of its objectives for leaving the bloc, we can begin to get a sense of how the process will play out over the next few years – and it probably won't be pretty.

Toward a Global Treaty on Plastic Waste
Nils Simon and Lili Fuhr (Project Syndicate) May 16, 2017
If there are any geologists in millions of years, they will easily be able to pinpoint the start of the so-called Anthropocene – the geological age during which humans became the dominant influence on our planet’s environment. Wherever they look, they will find clear evidence of its onset, in the form of plastic waste.

Taking Eurozone Growth Seriously
Jim O'Neill (Project Syndicate) May 16, 2017
At least until recently, embracing the idea that eurozone economic growth may be about to take off might earn one a referral to a mental-health specialist. But analysts should consider the possibility, because, on the off-chance that growth accelerates, as it did in the first quarter, there would be some serious money to be made.

Reducing inequality by deconcentrating capital
Branko Milanovic (VoxEU) May 16, 2017
The capital–income ratio continues to rise. This increases interpersonal inequality when three conditions are met (as they are in all rich economies today): the rate of return to capital outstrips that of income, income from capital is concentrated among the rich, and the income source that is less equally distributed is correlated with overall income. This column argues that the third condition is not inevitable, and that policies to share income from capital more equally would decrease overall inequality. We have tools to do this, but policymakers lack the political will. The capital–income ratio continues to rise. This increases interpersonal inequality when three conditions are met (as they are in all rich economies today): the rate of return to capital outstrips that of income, income from capital is concentrated among the rich, and the income source that is less equally distributed is correlated with overall income. This column argues that the third condition is not inevitable, and that policies to share income from capital more equally would decrease overall inequality. We have tools to do this, but policymakers lack the political will.

Investment-less credit booms
Franziska Ohnsorge and Shu Yu 16 (VoxEU) May 16, 2017
Since the Global Crisis, private credit has risen sharply in several emerging market and developing economies as well as advanced economies. This column examines the role of investment alongside these credit booms, and how output growth has been affected. These booms have been unusually ‘investment-less’ in comparison to previous episodes, which were accompanied by investment surges. The absence of investment surges during credit booms is accompanied by lower growth, especially once the credit boom unwinds.

ASEAN Summit’s China Tilt Portends a New World Order
June Teufel Dreyer (YaleGlobal) May 16, 2017
ASEAN follows the lead of US, backing off from criticism of China for broad claims over South China Sea.

Has China Restored Private Land Ownership?
Donald Clarke (FA) May 16, 2017
The implications of Beijing's new policy.

How Big a Deal is the New U.S.-China Trade Deal?
Various (ChinaFile) May 16, 2017
Last week, the United States and China announced a new trade deal on the eve of China launching a sweeping conference to promote its One Belt, One Road development and infrastructure investment initiative. How good are the terms of the Washington-Beijing agreement, and how do they relate to China’s push to become a bigger trading partner with many of its neighbors?

A close look at OBOR reveals overstated gains
Cecilia Joy Perez and Derek Scissors (AEI) May 16, 2017
The China Global Investment Tracker shows China has won $135 billion in construction projects and invested $86 billion in One Belt, One Road (OBOR) countries from 2014 to 2016. These are notable sums, but OBOR faces a number of limitations. Chinese companies have acted primarily as OBOR contractors. The temporary nature of the construction contracts limits geopolitical gains China can reap from OBOR. Moreover, the construction focuses heavily on energy and transportation. Once Chinese contractors leave, if a host country is unable to perform the considerable maintenance on such projects, the facilities and their benefits will deteriorate. This would limit the benefit for the host. Finally, financing OBOR is becoming a heavier burden for China, in light of rapid increases in domestic debt and sharp drop in once-inexhaustible stock of foreign exchange. The larger figures thrown around for OBOR's ultimate size are nowhere in sight.

Iran’s choice lies between hope and vested interests
FT View May 17, 2017
Rouhani offers the best chance of more openness to the world.

Macron’s choices show that he will govern from the centre
Tony Barber (FT) May 17, 2017
The French president is redrawing the political map.

A green revolution would unleash Africa’s potential
David Pilling (FT) May 17, 2017
The continent imports $40bn of food yet has resources to be an agricultural powerhouse.

Trumpian chaos balanced by rest of world
Timothy Ash (FT) May 17, 2017
China, Europe and US economy are in good shape, helping explain muted market reaction.

The Economic Headwinds Obama Set in Motion
Phil Gramm and Thomas R. Saving (WSJ) May 17, 2017
A booming recovery would force the Treasury and Fed to compete with the private sector for credit.

China is filling the vacuum of global economic leadership
Jeff Steagall (Standard-Examiner) May 17, 2017
A new vacuum is emerging. It is being filled in a way that should worry workers and consumers from Ogden, Utah, to Oxford, England, to Osaka, Japan.

Venezuela: Forty Years of Economic Decline
José Niño (Mises Wire) May 17, 2017
The ideological and institutional seeds of the current crises were sown decades earlier.

Budget Advice for the EU's Big Three
Bloomberg View May 17, 2017
Germany, France and Italy face different challenges. Here’s how to get fiscal policy right.

Can China Afford Its Belt and Road?
Christopher Balding (Bloomberg View) May 17, 2017
Financing its grand geopolitical ambitions will be harder than it looks.

Bond Market Stalemate Exposes Deep Divide on Outlook
Scott Dorf (Bloomberg View) May 17, 2017
There's plenty to back both bullish and bearish views.

Workers in Their 40s Can Jumpstart Productivity
Conor Sen (Bloomberg View) May 17, 2017
Invite more mid-career workers to immigrate to the U.S., and help working parents work more.

Taking on Nimbys in the Quest for Growth
Noah Smith (Bloomberg View) May 17, 2017
Cities power the economy but high land costs are a drag. California's plan to build more housing would help.

Latin America's Clean-Power Play
Mac Margolis (Bloomberg View) May 17, 2017
Ramping up renewable energy is a big win for the region.

Restoring Competition in the Digital Economy
Dalia Marin (Project Syndicate) May 17, 2017
The digital economy is carving out new divides between capital and labor, by creating “winner-takes-most” outcomes in which one firm, or a small number of firms, can capture a very large market share. To address this problem, the G20 should consider creating a World Competition Network.

The immigrants who made America
Sandra Sequeira, Nathan Nunn and Nancy Qian (VoxEU) May 17, 2017
Recent empirical studies of the effects of immigration have tended to focus on short-run outcomes. This column considers the longer run by examining how mass migration at the turn of the 20th century has affected US outcomes today. Higher historical immigration between 1860 and 1920 is found to result in significantly better social and economic outcomes today. The results suggest that the long-run benefits of immigration can be large, can persist across time, and need not come at a high social cost. Recent empirical studies of the effects of immigration have tended to focus on short-run outcomes. This column considers the longer run by examining how mass migration at the turn of the 20th century has affected US outcomes today. Higher historical immigration between 1860 and 1920 is found to result in significantly better social and economic outcomes today. The results suggest that the long-run benefits of immigration can be large, can persist across time, and need not come at a high social cost.

Management practices and productivity
Nicholas Bloom, Erik Brynjolfsson, Lucia Foster, Ron Jarmin, Megha Patnaik, Itay Saporta Eksten and John Van Reenen (VoxEU) May 17, 2017
Disentangling the relationship between management practices and productivity has been hampered by the absence of large sample data across plants and firms. This column exploits a new survey covering US manufacturing to show that management practices vary both among and within companies. Furthermore, management practices are just as important for productivity as a number of other factors associated with successful businesses, such as technology adoption. Disentangling the relationship between management practices and productivity has been hampered by the absence of large sample data across plants and firms. This column exploits a new survey covering US manufacturing to show that management practices vary both among and within companies. Furthermore, management practices are just as important for productivity as a number of other factors associated with successful businesses, such as technology adoption.

The Future of Work, Robotization, and Capitalism’s Ability to Generate Useless Jobs
Rutger Bregman (Evonomics) May 17, 2017
The value of your work should not be determined by your paycheck.

Crises, chaos and the world according to Donald Trump
Philip Stephens (FT) May 18, 2017
The organising goal of US foreign policy is the avoidance of fresh calamities.

Watch the build-up in US student debt
Rana Foroohar May 18, 2017
New figures from the NY Fed suggest three reasons for particular concern.

EM hit as Brazil bears brunt of investor unease
Roger Blitz (FT) May 18, 2017
Nearly 8% wiped off nation’s currency following corruption allegations.

The True Trade Deficit
Martin Neil Baily and Adam Looney (WSJ) May 18, 2017
Halving the official figure gets closer to the truth, as the iPhone example shows.

China's Trillion-Dollar Foreign Policy
NYT May 18, 2017
President Xi Jinping is building his way across continents as American influence recedes.

European Court of Justice Rules on EU Competence in Singapore Trade Deal
Bridges, Volume 21, Number 17 May 18, 2017
The European Court of Justice (ECJ) issued its final opinion on Tuesday 16 May regarding the EU-Singapore trade agreement, deeming that while some aspects of the deal's current version fall within the bloc's "exclusive competence," others will require additional approval from national and regional legislatures.

Trade, Connectivity Take Centre Stage at "Belt and Road" Forum
Bridges, Volume 21, Number 17 May 18, 2017
Leaders from 30 countries concluded the "Belt and Road" forum on Monday 15 May, hosted by China in the Asian economy’s capital city. The event, which also drew participation from international organisations and delegates from various countries, was meant to highlight the Belt and Road Initiative – a Chinese-led infrastructure plan aimed at connecting Asia and Europe through a combination of train routes, ports, and roads.

G7 Finance Officials Pledge to Address Inequality, Growth Imbalances
Bridges, Volume 21, Number 17 May 18, 2017
Finance ministers and central bank governors from the G7 coalition of major economies agreed to increase their efforts at tackling inequality and ensuring that trade better supports their economies, just two weeks before leaders are due to gather in the Sicilian town of Taormina.

US, Chinese Officials Announce "Initial Results" From Trade Talks
Bridges, Volume 21, Number 17 May 18, 2017
Officials from the US and China announced last week that they had agreed on a series of trade-related deliverables, affecting certain agricultural goods, electronic payment services, and select other areas, while suggesting that more are on the way.

Bye Bye G7… Hello to The Seven Bastards
Jean-Francois Boittin (Globalist) May 18, 2017
Donald Trump’s musings upon leaving Sicily after the G7 summit.

China Is Building Its Way to an Empire
Noah Feldman (Bloomberg View) May 18, 2017
Don't look now, but Russia isn't the only threat to U.S. dominance.

The end of silver as a unit of account
Ricardo Fernholz, Kris Mitchener and Marc Weidenmier (VoxEU) May 18, 2017
There has been speculation that the dollar may soon be displaced by the euro or renminbi as the primary international currency. This column examines the demise of silver-based monetary standards in the 19th century to explore price dynamics when a money ceases to function as a global unit of account. According to new data on the historical prices of agricultural commodities, silver ceased functioning as a global price anchor in the mid-1890s. Over the same period, the volatility of agricultural commodity prices also declined. There has been speculation that the dollar may soon be displaced by the euro or renminbi as the primary international currency. This column examines the demise of silver-based monetary standards in the 19th century to explore price dynamics when a money ceases to function as a global unit of account. According to new data on the historical prices of agricultural commodities, silver ceased functioning as a global price anchor in the mid-1890s. Over the same period, the volatility of agricultural commodity prices also declined.

The missing stimulus from the 2014-16 US oil price decline
Christiane Baumeister and Lutz Kilian (VoxEU) May 18, 2017
The sluggish growth of the US economy after the 2014-2016 decline in the oil price surprised many economists. This column argues that it should have been expected. The modest stimulus to private consumption and non-oil business investment was largely offset by a large decline in investment by the oil sector. Growth was further slowed by a simultaneous global economic slowdown, reflected in lower US exports. The sluggish growth of the US economy after the 2014-2016 decline in the oil price surprised many economists. This column argues that it should have been expected. The modest stimulus to private consumption and non-oil business investment was largely offset by a large decline in investment by the oil sector. Growth was further slowed by a simultaneous global economic slowdown, reflected in lower US exports.

Student Debt Rising Worldwide
Joseph Chamie (YaleGlobal) May 18, 2017
Governments confront economic challenges with rising education costs and college graduates starting careers with huge debts

Emmanuel Macron Is About to Face Five Years of Crazy Rothschild Conspiracy Theories
David Clay Large (FP) May 18, 2017
French President Emmanuel Macron’s greatest vulnerability might be his connection to an international banking family that has obsessed the country for centuries.

U.S. Will Renegotiate NAFTA, Talks Could Begin In August
Jessica Holzer (FP) May 18, 2017
Newly minted U.S. trade negotiator Robert Lighthizer said the goal is to revamp, not scrap, NAFTA. He wants to wrap up the talks this year.

China faces ‘acid test’ over credit bubble
Michael Mackenzie (FT) May 19, 2017
Investors shouldn’t take their eyes off China as the 19th Party Congress looms.

Pakistan Vs. China’s Grand Designs
James M. Dorsey (Globalist) May 19, 2017
The Muslim nation stands in the way of China’s “One Belt, One Road” dubbed plan for Chinese dominance and authoritarianism.

China's OBOR Vision: No Development Masterpiece
Salman R. Sheikh (Asia Sentinel) May 19, 2017
Where will One Belt-One Road lead participant countries to: towards a sustainable or a debt-trapped course of development?

India Shies Away from the OBOR Party
Neeta Lal (Asia Sentinel) May 19, 2017
India's objections are rooted on the fundamental issue of its sovereignty and territorial integrity, which it says have been violated due to the project.

Currency Manipulation in the NAFTA Renegotiation
C. Fred Bergsten (PIIE) May 19, 2017
US Trade Representative Robert Lighthizer has indicated that the Trump administration will seek to include the currency issue in the renegotiated North American Free Trade Agreement (NAFTA) and in any other trade agreements it might pursue.

Changing the Narrative About Haiti
Bjørn Lomborg (Project Syndicate) May 19, 2017
Prioritizing spending alternatives is difficult in every country. But it is especially challenging in Haiti, where, following years of fractious politics, a newly elected government is striving to expand the economy and improve wellbeing while confronting the lingering consequences of the massive 2010 earthquake.

Can J-nomics Save South Korea’s Economy?
Lee Jong-Wha (Project Syndicate) May 19, 2017
South Korea’s new president, Moon Jae-in, has his work cut out for him. Though North Korea’s increasingly provocative behavior will likely continue to dominate headlines, the success of Moon’s presidency will hinge largely upon the success of his economic policies.

International inflation synchronisation through global value chains
Raphael Auer, Andrei Levchenko and Philip Sauré (VoxEU) May 19, 2017
Inflation has been shown to co-move across countries, but whether this is due to common shocks or propagation via real and financial channels has not been established. This column argues that global value chains propagate cost pressures across borders, thereby synchronising inflation. As international input linkages represent a direct link between foreign marginal costs and domestic production costs, their prevalence has a significant effect on the extent to which optimal monetary policy is inward-looking.

The markets are quiet. Too quiet?
Economist May 20, 2017
The low level of a popular measure of volatility causes alarm.

Assessing the value of preferential market access
Peter Egger and Filip Tarlea (VoxEU) May 20, 2017
Putting a number on how effective policymakers are in boosting cross-border trade is important. But doing so in a statistically sound way is not trivial. This column presents a new methodology to identify the causal effect of preferential economic integration agreements. It finds trade effects that are somewhat smaller than predicted by established, but problematic, procedures. Putting a number on how effective policymakers are in boosting cross-border trade is important. But doing so in a statistically sound way is not trivial. This column presents a new methodology to identify the causal effect of preferential economic integration agreements. It finds trade effects that are somewhat smaller than predicted by established, but problematic, procedures.

The Lights Are Going Out in the Middle East
Robin Wright (New Yorker) May 20, 2017
The world’s most volatile region faces a challenge that doesn’t involve guns, militias, or bloodshed, yet is also destroying communities.

The challenge that awaits a new leader of the WHO
FT View May 21, 2017
Without refocusing the global health agency, its vital role will dwindle.

Nafta needs to be updated, not torn apart
FT View May 21, 2017
Trump’s ideas for renegotiation of the trade pact are misguided.

Macron’s fiscal union points the way for eurobonds
Wolfgang Münchau (FT) May 21, 2017
They would over time replace sovereign debt; if a country wants to default, let it.

Theresa May has got it right about business
Philip Stephens (FT) May 21, 2017
Market capitalism can only work within frameworks that secure the consent of citizens.

Reenergising the multilateral trading system
Roberto Azevêdo (EAF) May 21, 2017
A strong, rules-based trading system is essential for global economic stability. How can that system can be re-energised?

Temer corruption claims cloud Brazil reform prospects
Joe Leahy and Andres Schipani (FT) May 22, 2017
Could plans to overhaul economy survive the president’s ousting?

Give Emmanuel Macron time to develop eurozone reforms
Clemens Fuest (FT) May 22, 2017
The French president’s proposals alarm Germany but the answer lies in co-operation.

Happiness for All?, by Carol Graham
Geoff Dyer (FT) May 22, 2017
Meticulous analysis of the social and economic problems of the US white working class.

India: Perils of Digital Transformation
Ronald Meinardus (Globalist) May 22, 2017
Just like China may grow old before it gets rich, Modi’s hoped-for manufacturing boom in India may not happen due to the onset of automation.

Debt relief or a fourth financial assistance programme for Greece?
Zsolt Darvas (Bruegel) May 22, 2017
The Eurogroup faces a difficult choice on Greece — implementing a debt reduction plan drastic enough to make a return to market borrowing possible, or agreeing to a fourth financial assistance programme and continuing to fund Greece at the preferential lending rate.

The U.S. Has a Big Stake in Africa's Success
Bloomberg View May 22, 2017
American engagement should go beyond more drones in the air and boots on the ground.

Think Twice About Going Cashless
Satyajit Das (Bloomberg View) May 22, 2017
No one's talking about the real motivations behind demonetization.

India's New Tax Is Too Complicated
Mihir Sharma (Bloomberg View) May 22, 2017
The government is putting politics ahead of economic efficiency.

The Real Problem With Productivity Is Measuring It
Zachary Karabell (Bloomberg View) May 22, 2017
The impact of a Google or Waze isn't factored into productivity data. It should be.

The Iranian Opportunity
Javier Solana (Project Syndicate) May 22, 2017
By re-electing moderate President Hassan Rouhani, Iran's voters have made clear their desire to continue along the path toward openness. The world should welcome the result as an opportunity to improve relations with a country that is central to progress toward a more peaceful Middle East.

How to Be an Open Economy
Michael Spence (Project Syndicate) May 22, 2017
Because changing technologies and trade patterns can be both beneficial and disruptive, countries must strike a balance between the abstract principle of openness and concrete measures to limit their negative impact. To this end, policymakers should be mindful of not just how but when they implement structural reforms.

Science and International Development Policy
Anne-Marie Slaughter and Kate Himes (Project Syndicate) May 22, 2017
Mark Green, who was recently nominated to head the US Agency for International Development, has been hailed by advocates of aid and diplomacy. To advance his goals, Green would do well to increase the role of science and technology in development practice, building on the work of Barack Obama’s administration.

Precaution, mercantilism, and the real exchange rate
Woo Jin Choi and Alan Taylor (VoxEU) May 22, 2017
Widening global imbalances, driven by reserve accumulation, can help us investigate how real exchange rates are determined. Standard theory would predict real exchange rate appreciation when there is an increase in net foreign assets. This column uses recent data from 75 countries to argue that, in practice, there is the opposite correlation in the particular case of reserve accumulation, notably in countries with higher capital controls and in developing countries. Widening global imbalances, driven by reserve accumulation, can help us investigate how real exchange rates are determined. Standard theory would predict real exchange rate appreciation when there is an increase in net foreign assets. This column uses recent data from 75 countries to argue that, in practice, there is the opposite correlation in the particular case of reserve accumulation, notably in countries with higher capital controls and in developing countries.

Reserve Requirements as a Chinese Macro Policy Tool
Zheng Liu and Mark M. Spiegel (FRBSF Econ Letter) May 22, 2017
China’s central bank frequently adjusts its reserve requirements for commercial banks as a way to stabilize economic fluctuations. These adjustments affect the overall credit supply but can also lead to the reallocation of credit and capital. Evidence shows that increases in reserve requirements raise off-balance-sheet lending, which typically benefits China’s more productive private sector, at the expense of on-balance-sheet loans to less productive state-owned enterprises. Under certain conditions, reserve requirements can be a useful additional policy instrument for improving resource allocations and also for macroeconomic stabilization in China.

Fewer crisis spots on the euro-area housing market
Jochen Möbert (DB Research) May 22, 2017
The massive overvaluations on the euro-area market for residential real estate (as measured by the price-income ratios for 2007 and 2008) are a thing of the past. Currently, house prices are excessive only in several smaller countries. However, this situation is likely to change towards the end of the decade if the dynamic uptrend in German house prices continues as expected.

Who’s Going to Be the Next Leader of WHO?
Laurie Garrett (FP) May 22, 2017
As the World Health Organization votes in a monumental open ballot for its new chief, the developing world and the developed world are in a battle of ideas.

Frontier markets remain unloved amid EM rebound
Steve Johnson (FT) May 23, 2017
Investors head for the exits despite strong growth and soft valuations.

Alibaba bets on do-it-yourself globalisation
Louise Lucas (FT) May 23, 2017
The Chinese ecommerce group seeks to break down trade barriers but faces fierce competition at home.

What Ten Million Simulations Tell Us about President Trump's Chances of Achieving 3-Percent Economic Growth
Jason Furman (PIIE) May 23, 2017
President Donald Trump's budget is premised on the projection that the United States will be able to raise its long-run economic growth rate to 3 percent a year. This rate allows the budget to assume large tax cuts and still project a balanced budget after ten years.

Standing on the shoulders of distant giants
Fabio Matera and Georg Zachmann (Bruegel) May 23, 2017
New inventions build on earlier inventions, so patent citations are one indication of who is standing on whose shoulders. We show that four low-carbon technologies (wind, solar, electric vehicles and batteries) exhibit markedly different patterns of citation behaviour. If technology spillovers are structurally different between sectors, this could imply that policies to support innovation clusters would need different approaches. Differentiated policies could range from promoting individual champions for technologies with strong internal spillovers, to supporting regional eco-systems for technologies with more fuzzy spillovers.

China Can’t Finance ‘Belt and Road’ Alone
Alicia García-Herrero (Brink/Bruegel) May 23, 2017
The One Belt One Road Initiative holds great promise for the global economy, but it needs a huge amount of financing. Initial presumptions that China would be able to provide all of the financing are now unrealistic. Other partners should consider providing finance for some aspects, especially Europe, which has much to gain from the project.

Canada Must Deflate Its Housing Bubble
Bloomberg View May 23, 2017
The central bank needs to raise interest rates, and soon.

Greece Has the Resources to Heal Itself
Leonid Bershidsky (Bloomberg View) May 23, 2017
But it will have to curb tax evasion or remain an eternal ward of the euro zone.

Centrism Takes On the Extremes
Noah Smith (Bloomberg View) May 23, 2017
A blend of free markets, regulation and redistribution turned the U.S. into the world's richest nation. What's not to like?

Shale Is Just a Scapegoat for Weaker Oil Prices
Jason M Schenker (Bloomberg View) May 23, 2017
OPEC's attempts to limit output are offset by a cooling of Chinese manufacturing.

China's Deleveraging Puts the Yuan Closer to a Free Float
Ben Emons (Bloomberg View) May 23, 2017
Liberalizing capital markets is generally not achieved without liberalizing the exchange rate mechanism.

How Central Bankers Get Their Communication Timing Wrong
Mohamed Aly El-Erian (Bloomberg View) May 23, 2017
Comments by the president of the St. Louis Fed encouraged the markets' belief that the Fed is their BFF.

Merkel's Weak-Euro Complaint Has Two Goals
Leonid Bershidsky (Bloomberg View) May 23, 2017
A political boost at home now, maybe a German atop the European Central Bank later.

How to Make the Service Economy Really Deliver
Victoria Bateman (Bloomberg View) May 23, 2017
Services can hold back productivity growth in the economy as a whole. The answer is more competition.

Understanding Today’s Stagnation
Robert J. Shiller (Project Syndicate) May 23, 2017
One explanation for today’s stagnation focuses on growing angst about new technologies that could eventually replace many or most of our jobs, fueling massive economic inequality. People may be increasingly reluctant to spend today because they have vague fears about their employability tomorrow.

How Macron Can Unite Europe
Hans-Werner Sinn (Project Syndicate) May 23, 2017
Pushing for the creation of a fiscal union without a political union could forever block the road to European unification, and set the people of Europe against one another more than the euro ever did. If French President Emmanuel Macron really wants to unite Europe, he should focus on strengthening defense partnerships.

Globalization Without Uncle Sam: America First May Mean America Out
Hassan Siddiq (YaleGlobal) May 23, 2017
The US retreats on global security, immigration and trade while globalization’s many connections in developing nations flourish.

Can the U.S. Pivot Back to Asia?
Ziad Haider (FA) May 23, 2017
How Trump should respond to China's Belt and Road initiative.

Kazahhstan comes in from the cold
Steven Johnson (FT) May 24, 2017
Struggling oil producer tipped as emerging market investment hot spot.

China’s sovereign debt downgraded by Moody’s
Gabriel Wildau and Tom Mitchell (FT) May 24, 2017
Beijing condemns rating agency decision that could curb foreign appetite for bonds.

The EU must act against illiberal forces within
FT View May 24, 2017
The rule of law is under rising pressure in central and eastern Europe.

Passive investing charts path into new territory
FT View May 24, 2017
But how will an index-tracking market respond to a big correction?

Why zombies are striking a blow for market forces in China
Charles Clover and Sherry Fei Ju (FT) May 24, 2017
Beijing is relying on Hollywood to drive box office growth, despite a surge of investment in the domestic industry.

China DataView: Positive consumer sentiment built on housing boom
FT Confidential Research May 24, 2017
End of credit-fuelled surge in house prices would hit households.

At Hanoi Meet, Asia-Pacific Ministers Debate Future Trade Integration Paths
Bridges, Volume 21, Number 18 May 24, 2017
The past weekend saw ministerial meetings of multiple configurations in the Vietnamese city of Hanoi, as officials discussed the future of various trade-related initiatives in the region.

Farm Exporting Countries Outline Agriculture Negotiating Ideas for WTO Ministerial
Bridges, Volume 21, Number 18 May 24, 2017
The Cairns Group of agricultural exporting countries has called for action on farm trade issues for the WTO’s upcoming ministerial conference in Buenos Aires, Argentina, this December, tabling an informal paper that notes "overwhelming" support for an outcome on agricultural domestic support.

Can Trump Make America Grow Again? The Signs Are Hopeful
Andy Puzder (WSJ) May 24, 2017
More people are working, and the jobs are better. Now for the hard work of health and tax reform.

The Productivity Pump Is Primed
Matthew Tracey and Joachim Fels (PIMCO) May 24, 2017
When we look at the state of industry in 2017 from the bottom up, we see a global economy with underappreciated potential.

Making Money off Mayhem
Marcus Noland (PIIE) May 24, 2017
Using the stock market to assess the zeitgeist is inadvisable, but the blog queue is bare…so here goes.

The Real Reasons for Trump’s Anti-Globalization Circus
Thomas I. Palley (Globalist) May 24, 2017
Trumponomics: How Trump skillfully used anti-globalization as bait to cover up his extremely neoliberal switch.

Modi's Idea of India
Pankaj Mishra (Bloomberg View) May 24, 2017
The East Asian strongman model isn’t suited to a diverse country.

For Europe, Infrastructure Is the Wrong Priority
Ferdinando Giugliano (Bloomberg View) May 24, 2017
Closing the productivity gap with the U.S. requires innovation and creative destruction, not simply building works.

The Saudi Oil Blunder That Will Keep Costing
Leonid Bershidsky (Bloomberg View) May 24, 2017
Instead of OPEC production cuts, the kingdom should have fought for market share.

The TPP’s Second Act
Minxin Pei (Project Syndicate) May 24, 2017
India and Japan are demonstrating that Asia’s major powers can frustrate Chinese ambitions without the US. To see this dynamic at work, look no further than Japanese Prime Minister Shinzo Abe’s recent declaration that Japan will continue to push ahead with the Trans-Pacific Partnership.

American Prosperity Depends on a Nonwhite Future
Noah Smith (Bloomberg View) May 24, 2017
Without immigration, mostly of Hispanics and Asians, economic growth will falter.

China’s Imperial Overreach
Brahma Chellaney (Project Syndicate) May 24, 2017
According to a Chinese proverb, “To feed the ambition in your heart is like carrying a tiger under your arm.” The further Xi carries China’s “one belt, one road” initiative, the more likely it is to bite him.

Iran’s Long Economic Journey
Hassan Hakimian (Project Syndicate) May 24, 2017
The landslide re-election of Iran’s president, Hassan Rouhani, reflects the by now familiar pattern of continuity and change that has characterized Iran’s major elections over the last two decades. But it also stands out in one key way: Rouhani has remained popular despite pursuing painful macroeconomic stabilization.

Maintaining Growth in a Fast-Aging Asia
Changyong Rhee (Project Syndicate) May 24, 2017
In past decades, Asian countries reaped a demographic dividend from a young, expanding workforce and strong growth policies. But the region is aging remarkably fast, and advanced and emerging economies alike are now at risk of growing old before ever becoming rich.

Risk-based capital requirements and corporate lending
Brunella Bruno, Giacomo Nocera and Andrea Resti (VoxEU) May 24, 2017
Bank risk-weighted assets differ significantly across banks. Using a unique database covering Europe’s top 50 banking groups, this column argues that national segmentations explain a significant (albeit decreasing) share of this variability. Furthermore, institutions that rely more heavily on the internal ratings-based approach have reduced more (or increased less) their corporate loan portfolio. This effect is somewhat stronger for banks located in Eurozone periphery countries during the 2010-12 sovereign crisis.

Financial integration in the Eurozone should not be a tough sell
Teunis Brosens (VoxEU) May 24, 2017
Much progress has been made in recent years to improve the financial integration of the Eurozone. This column argues that while banking union promotes stability, markets remain fragmented and consumers aren’t yet fully enjoying the fruits of integration. With Brexit on the horizon, it is up to the remaining EU member states to foster competition and efficiency in financial services by completing the banking union, harmonising national regulation, and accelerating the realisation of a true capital markets union.

The puzzle of high policy uncertainty and low market volatility
Lubos Pastor and Pietro Veronesi (VoxEU) May 24, 2017
Since 2000, political uncertainty has had a strong influence on market volatility in the US. Since Donald Trump became president, however, high policy uncertainty has not translated into high market volatility. Building on a theoretical framework linking stock prices and political news, this column argues that the US market does not respond to political uncertainty because political news coming from the new administration has been unreliable and difficult for investors to interpret.

Does India's Chabahar Deal Make Sense?
Sarah Watson (Diplomat) May 24, 2017
Without a clear economic rationale, Chabahar port might do little more than embroil India in geopolitical games.

Chinese Citizens Want the Government to Rank Them
Amy Hawkins (FP) May 24, 2017
The government thinks "social credit" will fix the country's lack of trust — and the public agrees.

Innovation flows from emerging to the developed world
Peter Vanham (FT) May 25, 2017
India, Africa and China act as a springboard but there are obstacles to overcome.

These rules could stop the next big financial crisis. Don’t get rid of them.
Sheila Bair and Paul A. Volcker (WP) May 25, 2017
It would be a serious misstep to eliminate the regulatory tools necessary to end bailouts of Lehman-like financial firms in the future.

Let the Private Sector Help Tackle the Migration Crisis
George Clooney (WSJ) May 25, 2017
Businesses and charities can boost transparency and aid in resettling international refugees.

How to Unmask Corruption in Ghana
Lolan Ekow Sagoe-Moses (NYT) May 25, 2017
To identify whom the government is likely to repay, first we need to know whom it owes.

Five Innovations at the AIIB
Nancy Birdsall and Scott Morris (CGD) May 25, 2017
We visited the AIIB a few weeks ago, and heard more about the emerging AIIB model: What is likely to be the same—as at the five big legacy banks (the World Bank and the four regional development banks) and what is likely to be different.

Ramping Up Anti-Corruption Compliance Performance
Leslie Benton (Brink) May 25, 2017
Developing key performance indicators for anti-corruption programs enables organizations to showcase their commitment to anti-corruption compliance. We identify and analyze the seven categories necessary for a robust anti-corruption program.

Assigning Credit for the Irish Economic Miracle
Bloomberg View May 25, 2017
Ireland’s voters should give departing Taoiseach Enda Kenny higher marks.

Macron's Work Has Barely Begun
Bloomberg View May 25, 2017
France's labor laws are blighting the country’s prospects.

China's Bill Will Have to Be Paid
Michael Schuman (Bloomberg View) May 25, 2017
A Moody's downgrade makes clear there's no easy way out of its debt problems.

The Boosterism Behind China's Silk Road Story
Virginia Postrel (Bloomberg View) May 25, 2017
Beijing is downplaying certain facts to sell a heroic narrative at home and abroad.

Beware of the Consequences of Low, Non-Inclusive Growth
Mohamed Aly El-Erian (Bloomberg View) May 25, 2017
The benefits of weak expansion have accrued to the rich.

Rethinking the Next China
Stephen S. Roach (Project Syndicate) May 25, 2017
Once an adapter to globalization, China is increasingly a driver of it. The Next China is becoming a Global China, upping the ante on its connection to an increasingly integrated world – and creating a new set of risks and opportunities.

Growth, import dependence, and war
Roberto Bonfatti and Kevin O'Rourke (VoxEU) May 25, 2017
Classical models suggest that shifts in the balance of power can lead to conflict, where the established power has the incentive to trigger war to deter the threat to its dominance. This column argues that this changes if international trade is taken into account. Industrialisation requires the import of natural resources, potentially leading a smaller nation to trigger war either against a resource-rich country or the incumbent nation. The model can help explain the US-Japanese conflict of 1941 and Hitler’s invasion of Poland, and has implications for US-Chinese relations today.

Gauging globalisation
Randolph Bruno, Nauro Campos and Saul Estrin (VoxEU) May 25, 2017
The economic effects of foreign direct investment are generally expected to be positive for the host economy. However, this is usually conditional on certain thresholds of development being met, for instance in terms of human capital or institutional quality. This column argues that the economic impact of foreign direct investment is less ‘conditional’ than commonly thought, perhaps because below the thresholds, the difference between private and social returns is substantial, while above them it is smaller.

Trump Advisor Stephen Miller Blocked G-7 Migration Proposal
Colum Lynch (FP) May 25, 2017
Trump advisor Stephen Miller, the author of the Muslim ban, blocked a G-7 migration proposal to scuttle plans to settle refugees.

The Promise of China’s Pearl River Delta
Andrew Sheng and Xiao Geng (Project Syndicate) May 26, 2017
July 1 will mark the 20th anniversary of Hong Kong’s return to China, after more than 100 years of British colonial rule. It's an ideal moment to highlight the role of China's "city clusters," particularly the Pearl River Delta – which includes Hong Kong, Macau, and Guangdong province – in advancing the country's development.

The Hunger Bonds
Ricardo Hausmann (Project Syndicate) May 26, 2017
Investing often creates a dilemma over goals: Should we aim to do well or to do good? Nowadays, it is emerging markets as an asset class that should make people morally queasy, owing to Venezuela's outsize role in driving the performance of index funds.

Bank bail-in: The effects on credit supply and real economy
Thorsten Beck, Samuel Da-Rocha-Lopes and Andre Silva (VoxEU) May 26, 2017
The new resolution and bail-in regime in Europe hypothetically lets banks fail without resorting to public funding. This column examines the effects of the bail-in of the Portuguese Banco Espírito Santo. Existing borrowers from the banks exposed to the bail-in experienced a negative impact on their credit supply from these banks, but were able to compensate with increased borrowing from other, less-exposed banks. Nevertheless, the bail-in had negative real economy consequences with affected firms reducing investment and employment, while increasing precautionary cash holdings.

The History of OPEC: Has it been a Success?
Focus Econ May 26, 2017
OPEC's decision on 25 May to extend oil production cuts for a further 9 months in attempt to manipulate oil prices for the umpteenth time since its inception in 1960 has prompted us to take a look back at OPEC’s history of influencing global oil prices. But first, what exactly is OPEC?

Memories of Sisyphus: European banks are back where they started
Jan Schildbach (DB Research) May 26, 2017
European banks have enjoyed a good start to the year. Revenues have risen, much more than costs. Loan loss provisions have remained low. Bottom-line profit has jumped by more than 40% compared with 12 months ago. However, the rebound has followed what was a weak period in the previous year – in fact, the industry is in many ways just back where it was in Q1 2015. What is more, judging only by the P&L, there has been relatively little change since the European debt crisis erupted in Greece seven years ago. The industry has more or less been treading water ever since, a frustrating experience after decades of strong growth and massive recent restructuring efforts. However, other performance indicators clearly show major improvements, not least with regard to banks’ de-risking and buildup of capital.

Is efficient-market theory becoming more efficient?
Economist May 27, 2017
Theory is changing traders’ behaviour. And vice versa.

An investigation of the root causes of the Greek crisis
Paul-Adrien Hyppolite (VoxEU) May 27, 2017
The Greek crisis is typically seen as a sovereign debt crisis. Using a new dataset, this column explores the dynamics of national wealth accumulation in Greece over the past two decades. It argues that, despite certain idiosyncrasies, the Greek crisis can be better characterised as a balance of payments crisis. This implies that Greece shouldn’t be seen as an outlier amongst the periphery Eurozone countries. The Greek crisis is typically seen as a sovereign debt crisis. Using a new dataset, this column explores the dynamics of national wealth accumulation in Greece over the past two decades. It argues that, despite certain idiosyncrasies, the Greek crisis can be better characterised as a balance of payments crisis. This implies that Greece shouldn’t be seen as an outlier amongst the periphery Eurozone countries.

Clean political hands needed to reform Brazil
FT View May 28, 2017
Many investors hope for a smooth and quick presidential exit.

Stable dollar exchange rate masks ongoing renminbi slide
Steve Johnson (FT) May 28, 2017
Chinese currency has fallen 2.5% against trade-weighted basket this year.

How to fix the welfare state for the entrepreneurial age
Nicolas Colin (FT) May 28, 2017
Technology allows us to harness personal computing and networks to pool risks.

Is China’s economy turning Japanese?
Leo Lewis, Tom Mitchell and Yuan Yang (FT) May 28, 2017
It is more than 30 years since Tokyo began inflating a property and stock market bubble, as fears grow that Beijing faces a similar fate.

Stable dollar exchange rate masks ongoing renminbi slide
Steve Johnson (FT) May 28, 2017
Chinese currency has fallen 2.5% against trade-weighted basket this year.

Brazil’s elite is being eaten alive by corruption
WP May 28, 2017
And its scandal is spreading across Latin America.

Bank resolution: The importance of a public backstop
Stephen Cecchetti and Kim Schoenholtz (VoxEU) May 28, 2017
In April 2017, the US House of Representatives passed a bipartisan revision of the bankruptcy code, which would expedite the resolution of adequately structured intermediaries. This column considers the new Financial Institutions Bankruptcy Act of 2017 and how it fits in with the existing Dodd-Frank mechanism. By raising the odds of an effective resolution, the Act (as a complement to Dodd-Frank) boosts the credibility of the US regime. However, in the absence of an Orderly Liquidation Fund-like provision for temporary government funding, investors and foreign regulators will expect a future US government to re-introduce an ad hoc bailout mechanism when it is inevitably needed.

Sharing economy takes mercantile twist in China
Louise Lucas (FT) May 29, 2017
Income from rented goods accrues to owners of capital, not regular citizens.

The myth that voters have chosen to be poorer
Janan Ganesh (FT) May 29, 2017
Politicians should not count on the public to suffer economic pain on the way to Brexit.

Global debt woes are building up to a tidal wave
Dambisa Moyo (FT) May 29, 2017
Borrowing in the US is at record highs but the phenomenon is a far wider problem.

Innovation Won't Overcome Stagnation
Satyajit Das (Bloomberg View) May 29, 2017
Policy makers think technology will save them. It's an illusion.

Brazil Bulls Can Take Comfort in Options Markets
Ashwin Alankar (Bloomberg View) May 29, 2017
Investors are likely to receive more upside for the amount of downside risk they bear.

The Macron Method
Mark Leonard (Project Syndicate) May 29, 2017
Rather than standing exclusively with the old elites or the new populists, French President Emmanuel Macron has promised to rally broad political support under the banner of European unity. But can he really breathe new life into an ailing project?

The Case Against Subsidizing Housing Debt
Jeffrey Frankel (Project Syndicate) May 29, 2017
Advocates of an “ownership society” argue that homeowners take better care of their properties than renters, with positive externalities for communities. But there is also an argument against public policies that encourage home ownership, not least that it leaves households with too much debt and too little savings.

Trump’s Magic Budget
Carmen Reinhart (Project Syndicate) May 29, 2017
Many observers have criticized the White House's budget plan for fiscal year 2018, owing to its optimistic assumptions about underlying economic growth. But the budget appears to be unrealistic in another crucial respect: interest rates – and thus debt-service costs – are supposed to remain low, even as full employment is reached.

China’s real credit risk lurks in shadow finance
FT View May 30, 2017
A crackdown on irregular dealings is creating collateral damage.

New Trade Routes: Arab World
FT Reporters May 30, 2017
Saudi Arabia and the UAE are looking towards China for new trade links, although Saudi Arabia has also signed deals with the US. Morocco is banking on renewable energy, Jordan has made a refugee/trade deal with the EU, and Egypt is building an industrial hub on the Suez Canal.

After Brexit: the UK will need to renegotiate at least 759 treaties
Paul McClean (FT) May 30, 2017
FT research reveals that agreements with 168 countries must be redone just for Britain to stand still.

Has the global trade revival run out of puff?
Jonathan Wheatley (FT) May 30, 2017
Trade growth may have peaked, as both emerging and developed economies fail to ignite.

To Grow the Economy, America Needs Immigrants
Jason L. Riley (WSJ) May 30, 2017
Some farmers are finding that even if they pay more they still have a worker shortage.

For globalisation to work for all, you have to fix the playing field first
Adrian Blundell-Wignall (OECD Insights) May 30, 2017
Key corporate and financial issues must be addressed if globalisation is to work better for all.

How the G20 should change its approach to migration and development in Africa
Guntram B. Wolff and Maria Demertzis (Bruegel) May 30, 2017
The G20 is redesigning its Africa strategy. Meanwhile, migration from Africa is an increasingly controversial topic in European politics, even though total flows are stable. Many hope that economic development in Africa will reduce migration pressures. But many African countries are so poor that increased wealth will actually accelerate emigration - by giving people the means to leave. The EU should support economic development in Africa, but Europe also needs to realise that migration from Africa is likely to increase in the coming years.

Moody’s China Downgrade: The Longer-Term Policy Impact
Isaac Meng (PIMCO) May 30, 2017
It took less than a day for China’s financial markets to recover from the credit rating downgrade by Moody’s Investors Service on 24 May. However, the downgrade is far from a non-event.

Why Moody’s is right about China
Brian Caplen (Banker) May 30, 2017
Rating agency Moody's got a stiff rebuke from China’s finance ministry following its sovereign downgrade but the rationale is realistic and measured.

Trump and Russia: Just Follow the Money
Frank Vogl (Globalist) May 30, 2017
The G7 summit communiqué surprisingly contains a direct and troublesome admonition for U.S. President Donald Trump.

France to Corrupt Multinationals: You Can Run, But You Can’t Hide
Olivier Lopez (Brink) May 30, 2017
France recently passed a sweeping anti-corporate-corruption law that could have a significant impact on multinational companies worldwide. It appears firms are not yet taking the law seriously—but noncompliance could prove a costly mistake.

China's Seniors Will Reshape the World
Adam Minter (Bloomberg View) May 30, 2017
China's old people have growing consumer clout. Companies are catching on.

The Fed Shouldn’t Be Afraid of Growth
Narayana Kocherlakota (Bloomberg View) May 30, 2017
Why slow it down when you can’t know what the right pace is?

Merkel to Macron: We've Got This
Leonid Bershidsky (Bloomberg View) May 30, 2017
The Franco-German duo has a chance to establish Europe as the global center of soft power.

Trump's Right: Germany's Trade Surplus Is Too Big
Justin Fox (Bloomberg View) May 30, 2017
But getting a country of savers to start spending is easier said than done.

Should China Be Ejected from the SDR?
Benjamin J. Cohen (Project Syndicate) May 30, 2017
China’s decision to tighten its grip on the renminbi's exchange rate indicates that it has no intention of playing by the rules of the game. Indeed, if the Chinese government were serious about opening its capital market, it would have to implement reforms that would threaten its model of political and economic management.

The Best Investments We Can Make
Muna Al Gurg (Project Syndicate) May 30, 2017
To have the biggest impact, philanthropists should focus on education and social entrepreneurship. Together, these sectors create opportunities at every level of society, from refugees who are unable to complete their studies, to professionals looking to pursue an entrepreneurial vision.

Jobs in the Age of Artificial Intelligence
Simon Johnson and Jonathan Ruane (Project Syndicate) May 30, 2017
Apocalyptic fiction writers may one day be proved correct: we should not underestimate humans’ abilities to inflict damage on their community, their environment, and even the entire planet. But, for now, we have a powerful new tool for enabling all people to live better lives.

Brexit and systemic risk
Jon Danielsson, Robert Macrae and Eva Micheler (VoxEU) May 30, 2017
Brexit is likely to cause considerable disruption for financial markets. Some worry that it may also increase systemic risk. This column revisits the debate and argues that an increase in systemic risk is unlikely. While legal ‘plumbing’ and institutional and regulatory equivalence are of concern, systemic risk is more likely to fall due to increased financial fragmentation and caution by market participants in the face of uncertainty. Brexit is likely to cause considerable disruption for financial markets. Some worry that it may also increase systemic risk. This column revisits the debate and argues that an increase in systemic risk is unlikely. While legal ‘plumbing’ and institutional and regulatory equivalence are of concern, systemic risk is more likely to fall due to increased financial fragmentation and caution by market participants in the face of uncertainty.

Exorbitant privilege and the Triffin dilemma through FX swaps
Takeshi Kimura and Teppei Nagano (VoxEU) May 30, 2017
While non-US entities pay dollar funding premiums in the FX swap market, the US earns profits on FX-hedged investments in non-US sovereign securities. This column argues that this new form of the ‘exorbitant privilege’ presents a modern version of the ‘Triffin dilemma’. If the distributional effect of US privilege becomes large enough to induce non-US entities to take excessive risk, the stability of the global financial system will come under threat. While non-US entities pay dollar funding premiums in the FX swap market, the US earns profits on FX-hedged investments in non-US sovereign securities. This column argues that this new form of the ‘exorbitant privilege’ presents a modern version of the ‘Triffin dilemma’. If the distributional effect of US privilege becomes large enough to induce non-US entities to take excessive risk, the stability of the global financial system will come under threat.

The Vienna Deal: Only Temporary Relief in Oil Markets
Dan Steinbock (EFR) May 30, 2017
The Vienna agreement among OPEC and non-OPEC oil producers will extend oil cuts by nine months. After the deal, oil price plummeted by about 5 percent. Far more is needed to subdue new economic uncertainty and market volatility.

R-star, Uncertainty, and Monetary Policy
Kevin J. Lansing (FRBSF Econ Letter) May 30, 2017
Investors’ demand for safe assets tends to increase when there’s more uncertainty, as in recessions. Consistent with this idea, short-term movements in the natural rate of interest, or r-star, are negatively correlated with an index of macroeconomic uncertainty. This relationship may be relevant for assessing monetary policy. An estimated policy rule that incorporates both r-star and the uncertainty index can largely reproduce the path of the federal funds rate since 1988, except during periods when policy was constrained by the zero lower bound.

In Praise of a Transatlantic Divorce
Stephen M. Walt (FP) May 30, 2017
Trump’s trip wasn’t a “home run,” but it’s not bad for Europe to start taking more responsibility for itself.

Trump’s No Hypocrite
Henry Farrell and Martha Finnemore (FA) May 30, 2017
And that’s bad news for the international order.

China’s financial clampdown will continue — for now
George Magnus (FT) May 31, 2017
The authorities reckoned that doing nothing was worse than trying to restore order.

Wilbur Ross and the sugar barons: How a Mexican trade deal got sticky
Shawn Donnan and Jude Webber (FT) May 31, 2017
Washington’s frustrated efforts to settle a cross-border row offers a cautionary tale for Nafta renegotiation.

Do African Countries Consume Less (or More) Electricity than Their Income Levels Suggest?
Todd Moss and Gailyn Portelance (CGD) May 31, 2017
Are some countries too poor to consume a lot more energy? Or is income growth being held back by a lack of reliable and affordable electricity? While there is a strong relationship between energy consumption and income, the direction of causality is often far less clear. One way to estimate unmet demand may be to try to compare pairs of countries—e.g., how much additional energy does Kenya need to reach the level of Tunisia?

Toward a New World Order
Uwe Bott and Stephan Richter (Globalist) May 31, 2017
Life in the age of Trump.

Europe's Tax Competition Is Unfair and Inefficient
Leonid Bershidsky (Bloomberg View) May 31, 2017
It would be cheaper to compensate small countries for lost revenue than to continue tolerating tax avoidance.

China’s Monetary Conundrum
Zhang Jun (Project Syndicate) May 31, 2017
Weak demand is dragging down China’s economic growth. And, because the problem lies primarily in financial constraints on the real economy – not an overall cash shortage – the slowdown will be very difficult to reverse.

The U.S. Has Forgotten How to Do Infrastructure
Noah Smith (Bloomberg View) May 31, 2017
The nation once built things fast and cheaply. Now experts are puzzled why costs are higher and projects take longer than in other countries.

In This Market, It's Best to Heed Bonds, Not Stocks
Komal S Sri-Kumar (Bloomberg View) May 31, 2017
Historically, the two- to 10-year spread seems to be a better indicator of the economy.

The Divergence of US and British Populism
Anatole Kaletsky (Project Syndicate) May 31, 2017
With its recent election, France seemed to distinguish itself from the US and the UK, both of which seem to exemplify the populist revolt that swept the West in 2016. In fact, it is the UK – where rethinking the biggest political decision of people's lifetimes is viewed as an affront to democracy – that may be the odd one out.

New Paths for Leadership in International Development
Mark Suzman (Project Syndicate) May 31, 2017
The UK should be proud of the tremendous progress its development leadership has brought, and that more governments are increasing their contributions to the cause. But the UK should also continue to advance its work in this area, building new partnerships with other donor countries, particularly in the Middle East.

Europe’s Political Spring: Fixing the Eurozone and Beyond
Agnès Bénassy-Quéré and Francesco Giavazzi (VoxEU) May 31, 2017
The euro’s economic architecture is still incomplete, meaning that any number of large shocks could reignite the crisis in the Eurozone. This column introduces a new VoxEU eBook which summarises the main issues that need to be addressed to make the euro work and identifies, for each issue, the degree of consensus among experts.

China’s Southeast Asia Gambit
Gatra Priyandita and Trissia Wijaya (Diplomat) May 31, 2017
China paradoxically presents both threats and opportunities to Southeast Asia.

Different Visions for Europe
George Friedman (GPF) May 31, 2017
Europe is fractured and, as a whole, its interests have diverged from those of the United States.

If Trump dumps the Paris Accord, China will rule the energy future
Gina McCarthy (FP) May 31, 2017
The United States isn’t just forfeiting its environmental leadership. It’s shipping jobs and influence to Beijing.

Germany’s Surplus Is a Problem
Adam Davidson (New Yorker) May 31, 2017
Trump may be wrong on trade, but Germany’s growing hoard of cash could create dangerous forces in the global economy.