Hedge funds gain from renminbi strength
Henny Sender (FT) Aug 1, 2013
After reaching a peak in February, the renminbi has fallen nearly 2% against the dollar, but that is nothing compared with falls in other currencies.
Britain is shutting out the world
Philip Stephens (FT) Aug 1, 2013
A nation that was once a champion of the liberal, open international system is redefining itself to the world as a resentful victim.
Energy key to our civilization
Lars Schall (AT) Aug 1, 2013
The crux of today's civilization is energy - from reserves and pipelines to geopolitics. Less energy at our disposal or higher prices can lead to civil protests and even revolt, argues energy analyst Karin Kneissl in a wide-ranging discussion with.
China and the US Court Africa
Raluca Besliu (YaleGlobal) Aug 1, 2013
Africa’s rich resources, especially energy, are target for world’s leading economies.
Competing Currencies in Somalia
Finbar Feehan-Fitzgerald (Mises Daily) Aug 1, 2013
For years a debate has raged in monetary economics over the credibility of the theory that a more stable monetary system would emerge were the system to allow for concurrent currencies operating under no legal restrictions.
The $7 Trillion Problem That Could Sink Asia
William Pesek (Bloomberg) Aug 1, 2013
“It’s our currency, but it’s your problem.” This musing from Nixon-era Treasury Secretary John Connally is about to find new relevance as the White House battles Republicans over raising the U.S. debt limit.
The Regional Route to Global Free Trade
Ana Palacio (Project Syndicate) Aug 1, 2013
With the moribund Doha Round of multilateral free-trade talks awaiting its last rites, a new wave of regional trade negotiations has de facto taken up the mantle of creating a global trade regime. But the regional strategy can work only if its components are balanced and approachable to the wider international community.
New Model Europe
Enrico Letta (Project Syndicate) Aug 1, 2013
It is becoming increasingly clear that, if Europe is to overcome its crisis, business as usual will not suffice. We need a Europe that is more concrete, less rhetorical, and better suited to the current global economy.
Africa’s Urban Challenge
Kennedy Odede (Project Syndicate) Aug 1, 2013
Every day, thousands of people arrive in Africa's cities seeking a better life, only to realize that they must raise their children in a slum. But for how long will members of the new generation of urban poor – soon the majority in developing countries – allow themselves to be marginalized?
Protectionist Shadows over Solar Power
Jeffrey Frankel (Project Syndicate) Aug 1, 2013
Negotiators have now reached a settlement in the EU's anti-dumping dispute with China. The solution, under which China will ensure a minimum price for the solar panels that it exports to Europe, is much less severe than EU import tariffs would have been; nonetheless, it is a bad outcome for consumers – and for the environment.
The Federal Reserve in a Time for Doves
Kenneth Rogoff (Project Syndicate) Aug 2, 2013
The battle is on to replace current US Federal Reserve Chairman Ben Bernanke, and two of the leading candidates, Lawrence Summers and Janet Yellen, display a dovish bias regarding inflation. In normal times, that would be a handicap; under current conditions, it is an advantage.
How have financial markets reacted to financial-sector reforms after the crisis?
Alexander Schäfer, Isabel Schnabel & Beatrice Weder di Mauro (VoxEU) Aug 2, 2013
Lax financial-sector regulation was the fulcrum of the Global Crisis and policymakers reacted by introducing sweeping reforms. But has it had any impact? This column reviews evidence from bank stock returns showing that four major reforms in the US and Europe have reduced bailout expectations – especially for systemic banks. The strongest effects were found for the Dodd-Frank Act (especially the Volcker rule); the German restructuring law had little effect.
Japan Upsetting China’s Balance Between the Sudans?
Raluca Besliu (Globalist) Aug 3, 2013
Will closer ties between Japan and South Sudan undo China’s diplomacy in the region — and hurt its investments?
Did trade-policy responses to food-price spikes reduce poverty?
Kym Anderson, Maros Ivanic & Will Martin (VoxEU) Aug 3, 2013
Food prices in international markets have spiked three times in the past five years. Most governments responded by altering trade restrictions to insulate the domestic market. Did this work? This column presents new research suggesting that altering trade restrictions has less impact than is commonly thought. Since there are other options – such as conditional cash transfers – that could better, more efficiently and more equitably protect against poverty, it is time we sought a multilateral agreement to desist from changing restrictions on trade when international food prices spike.
A much-maligned engine of innovation
Martin Wolf (FT) Aug 4, 2013
Mariana Mazzucato has written a brilliant exploration of business ideas that argues government is behind the boldest risks and biggest breakthroughs.
Commodities: The end of the Holy Grail
Anne-Laure Delatte & Claude Lopez (VoxEU) Aug 4, 2013
Commodities are usually advertised as having the same returns and less volatility than equities. This column presents the results of a recent CEPR working paper showing that previous studies based on rather restrictive assumptions produced biased results that favoured commodities over equities. Using an alternative methodology, co-movement between traditional asset and commodity markets seems to be symmetric and occurs most of the time. What changes is the strength of the relationship. The returns of equities and commodities have become more integrated in the aftermath of the subprime crisis, a result that questions the diversification benefits of commodities.
Oil markets: The danger of distortion
Ajay Makan (FT) Aug 5, 2013
Governments are deliberating whether to impose more supervision on how prices are calculated – but more oversight could make matters more opaque.
Regulation pushes banks on riskier path
Daniel Schäfer (FT) Aug 5, 2013
If banks exceed liquidity ratios before enforcement, this should be welcomed but alarms should ring if contradictory regulation reverses this.
A BRICS Bank Needs a Sense of Purpose to Succeed
Jim O’Neill (Bloomberg) Aug 5, 2013
At their fifth annual summit in April, the leaders of the BRICS nations said they would build their own development bank. If it happens, this club of leading emerging economies -- Brazil, Russia, India, China and South Africa -- will be taking quite a step. Up to now their meetings have produced bold statements, but little in the way of tangible achievement.
Long Live China’s Boom
Justin Yifu Lin (Project Syndicate) Aug 5, 2013
After three decades of 9.8% average annual GDP growth, China’s economic expansion has been slowing for 13 quarters – boosting bearish sentiment among investors. But China's latecomer advantage – which means lower relative costs for innovation and industrial upgrading – implies that its GDP can grow at 8% per year until 2023.
Europe’s Fake Normal
Mohamed A. El-Erian (Project Syndicate) Aug 5, 2013
This summer’s sense of economic normality in Europe is neither natural nor necessarily tenable in the long term, because it reflects temporary and potentially reversible factors. If Europe does not return to addressing its economic challenges in a more comprehensive manner, the current calm may quickly give way to renewed turmoil.
The Changing of the Monetary Guard
Joseph E. Stiglitz (Project Syndicate) Aug 5, 2013
With leadership transitions at many central banks under way, many of those who were partly responsible for creating the global crisis that erupted in 2008 are departing to mixed reviews. The main question now is the extent to which those reviews influence their successors’ behavior.
Bowling for Adolf: How social capital helped to destroy Germany’s first democracy
Shanker Satyanath, Nico Voigtländer & Hans-Joachim Voth (VoxEU) Aug 5, 2013
The collapse of the Weimar Republic was a turning point in world history, bringing the murderous Nazi regime to power. This column argues that contrary to most conceptions of social capital, there can be negative outcomes to well-connected societies. Independent of ideology, dense social networks in interwar Germany greatly helped the Nazi party to rapidly and widely disseminate its messages. Putnam’s claims about the benefits of social capital for democracy need to be reassessed.
Obama's Patent Trade Wallop
WSJ Aug 6, 2013
The President intervenes to upbraid a protectionist agency.
Did We Waste a Recession?
Adam Davidson (NYT) Aug 6, 2013
As the financial crisis nears its fifth anniversary, economists agree on one thing. Too bad nobody is really listening.
Forced correlations
Martin Hutchinson (AT) Aug 6, 2013
As stock markets hold well into record-high territory, the forced correlations between bond markets, energy prices and equities become ever closer and more profitable for leveraged traders - and the real correlation with actual economic activity grows ever weaker. The outcome is inevitable.
China's GDP growth may be optimistic
Michael Lelyveld (AT) Aug 6, 2013
China's energy sector has been showing signs of slower growth, suggesting that real growth of the economy could be considerably lower than figures have been below the official 7.6% annual pace.
Currency is a confidence game
John Kay (FT) Aug 6, 2013
Visit places such as Ecuador, Montenegro, the Isle of Man and the Channel Islands to learn that money is what you choose to make it.
China a bigger threat than ‘taper’ risk
George Magnus (FT) Aug 6, 2013
China’s GDP deflator (measuring prices of new, domestically produced, goods and services) has slumped to an annual rate of 0.5% in the June quarter.
Global economy is distinctly Victorian
Adam S. Posen (FT) Aug 6, 2013
The Old Normal looms large on our horizons, bringing with it unfettered markets, market volatility and slower average growth.
The Myth of Hedge Funds as 'Myopic Activists'
Lucian Bebchuk (WSJ) Aug 6, 2013
A new study of 2,000 interventions finds they create long-term value.
Chinese Reform Goes Local
Zhang Monan (Project Syndicate) Aug 6, 2013
China’s government is now attempting fiscal decentralization to revitalize the public-finance position, while adopting financial decentralization to maintain currency stability. Indeed, the quest for macroeconomic balance has become the main goal of economic policy.
Dethroning King Coal
Peter Singer (Project Syndicate) Aug 6, 2013
Developing new coal projects is unethical, and to invest in them is to be complicit in this unethical activity. While this applies, to some extent, to all fossil fuels, the best way to begin to change our behavior is by reducing coal consumption and investment.
To end the Eurozone crisis, bury the debt forever
Pierre Pâris & Charles Wyplosz (VoxEU) Aug 6, 2013
The Eurozone’s debt crisis is getting worse despite appearances to the contrary. How can we end it? This column presents five major options for reducing crisis countries’ debt. Looking into the details, it seems the only option that is both realistic and effective is for countries to default by selling monetised debt to the ECB. Moral hazard aside, burying the debt seems to be the only way we can end the crisis.
Why Australia’s luck is running out
David Pilling (FT) Aug 7, 2013
After two decades of economic growth, you would have thought politicians would be prepared for changing fortunes.
Why the eurozone will come apart
Samuel Brittan (FT) Aug 8, 2013
The theory behind the euro was that the single currency would act as a harmonising force – but this has not happened.
China bets big on new global links
Emanuele Scimia (AT) Aug 7, 2013
China and its companies are betting on geopolitical corridors to expand their international clout and business opportunities. Though it is grappling with a creeping economic slowdown, the government in Beijing seems to be keen to fund a string of new, innovative transport arteries around the world.
Robots, 3-D Printers and Other Looming Innovations
Andy Kessler (WSJ) Aug 7, 2013
These new technologies will create far more high-paying jobs than they destroy.
Austerity with Chinese Characteristics
John Delury (FA) Aug 7, 2013
Why China's belt-tightening has more to do with Confucius than Keynes.
A Weaker Euro for a Weaker Europe
Franz Nauschnigg (Project Syndicate) Aug 7, 2013
The debate about how to help deficit-ridden southern European economies is often presented as a conflict between them and the eurozone’s healthy core, particularly Germany. But a new and more important imbalance – southern Europe's trade and services deficits with China – suggests a possible solution to economic malaise: a weaker euro.
Protectionist clouds darken sunny forecast for solar power
Jeffrey Frankel (VoxEU) Aug 7, 2013
Can international trade be good for the environment? This column assesses the EU-Chinese anti-dumping dispute in detail, and argues that trade could well be the saviour of solar power. Trade was good for protecting against things like sulphur dioxide, in the case of automobiles, 30 years ago. The same is true of trade in solar equipment today. Westerners should celebrate the contribution of trade to reducing the cost of solar power, not block it with protectionist anti-dumping measures.
Renewables: A rising power
Pilita Clark (FT) Aug 8, 2013
Plunging prices are making solar power competitive with conventional sources of energy, prompting established utilities to mount a counter-attack.
China's Big Commodity Chill
Daniel Yergin (WSJ) Aug 8, 2013
With the end of the supercycle, copper prices have dropped 30% from their 2011 peak, and iron ore is down 32%.
Banker to the Poor No More
WSJ Aug 8, 2013
A political rivalry threatens an antipoverty success.
India’s Fear of Growth
Clive Crook (Bloomberg) Aug 8, 2013
Congratulations to India for appointing Raghuram Rajan as the new governor of its central bank. It would be hard to think of anybody better qualified -- not even Janet Yellen. But condolences to India for the news that monetary and financial policies aren’t the main obstacles to its prosperity. The economy needs better management, all right, but not at the Reserve Bank of India.
China’s Worst Nightmare Is Turning Japanese
William Pesek (Bloomberg) Aug 8, 2013
Few words strike greater fear in the hearts of economists and politicians than “Japanization.” That specter of chronic malaise, deflation and bad debt has driven central bankers from Ben S. Bernanke in the U.S. to Mario Draghi in Europe to flood markets with liquidity in an effort to avert their own lost decades.
Japan’s Debt Looks Like This: 1,000,000,000,000,000 Yen
John Schwartz (NYT) Aug 9, 2013
Japan’s soaring national debt has reached a new milestone, surpassing one quadrillion yen. That’s a one followed by 15 zeros. The mind boggles.
India and Japan: Partners in Regional Stability?
Laldinkima Sailo (Globalist) Aug 9, 2013
Can India and Japan become bookends in Asia for regional stability?
The ECB Grows Up
Barry Eichengreen (Project Syndicate) Aug 9, 2013
The ECB statute was not engraved on stone tablets and handed down on Mount Sinai. It is a man-made charter, and it should be treated – by the German Constitutional Court and others – as a living document that is to be interpreted in light of current events.
The Responsibility to Protect Migrants
Peter Sutherland (Project Syndicate) Aug 9, 2013
With the number of international migrants on track nearly to double in the coming decades, a global framework is needed to help those caught in crisis situations, such as now exists in Syria. Most important, emergency assistance should be provided to citizens and migrants alike, without discrimination.
Who’s afraid of declining commodity prices?
Markus Jaeger (DB Research) Aug 9, 2013
Commodity prices have increased sharply over the past ten years. Large populous emerging economies, first and foremost China, have become major consumers of commodities as they build out their infrastructure, their per capita income and nutrition patterns change and their populations become more mobile and thus consume more energy. Time will tell whether we currently find ourselves in the midst of a commodity super-cycle, or not. Either way, it is worth and prudent to ask which emerging markets would be the most sensitive to a sustained drop in commodity prices.
The Indosphere: Made outside India
Economist Aug 9, 2013
As growth slows and reforms falter, economic activity is shifting out of India.
Distributional consequences of natural-resource booms: Lessons from Australia
Sambit Bhattacharyya & Jeffrey G. Williamson (VoxEU) Aug 10, 2013
What distributional effect do natural-resource booms have on wealth, income and economic power? Using Australia as a case study, this column argues that resource booms tend to exacerbate inequality. The distributional impact of commodity-price shocks in Australia yield important lessons for primary producers from the developmental south, and it’s important for resource-rich developing countries to design appropriate policies to tackle this inequality.
Indonesia: A delicate succession
Ben Bland (FT) Aug 11, 2013
Next year’s presidential election will be the country’s first real regime change in the democratic era and all eyes are on the governor of Jakarta.
Germany is strong, but not strong enough
Tony Barber (FT) Aug 11, 2013
Reforms to spur growth are essential because the country’s economic success is the ultimate guarantee of the health of the eurozone.
Competing Visions for the Future of Housing Finance
Peter Wallison (WSJ) Aug 11, 2013
A House reform would get government out of mortgages. The Senate reform is phony.
India’s Path to Prosperity Doesn’t Run Through Cities
Pankaj Mishra (Bloomberg) Aug 11, 2013
Indian leaders often warn that they need to shift the majority of their country’s population -- almost 70 percent -- from rural to urban areas. “Our salvation,” Prime Minister Manmohan Singh claims, “lies in moving people out of agriculture.” Finance Minister P. Chidambaram confirms, “My vision is to get 85 percent of India into cities.”
Harnessing services for growth in Vietnam and PNG
Aaron Batten and Dominic Mellor (East Asia Forum) Aug 11, 2013
In spite of their institutional, economic and demographic differences, Vietnam and Papua New Guinea (PNG) share something in common: neither have managed to fully harness the opportunities of a vibrant services sector.
Speaking Truth to African Power
Frank Vogl (Globalist) Aug 11, 2013
What can be done to reduce rampant corruption in resources revenues in Africa?
Ben Bernanke’s AIG bailout gets no thanks from Hank Greenberg
Tom Braithwaite (FT) Aug 12, 2013
Fed chief ordered to testify in lawsuit over AIG financing.
The Fed needs Summers’ crisis skills
Roger Altman (FT) Aug 12, 2013
It is a matter of time before the central bank’s emergency tools are required again. The next chair, therefore, must be experienced in managing crises.
India’s problems lie beyond Rajan’s reach
Swaminathan Aiyar (FT) Aug 12, 2013
Next RBI governor’s policies will not check the country’s food-led inflation. Higher interest rates tend to hurt industry more than they limit prices.
The Clinton-Era Roots of the Financial Crisis
Phil Gramm and Michael Solon (WSJ) Aug 12, 2013
Affordable-housing goals established in the 1990s led to a massive increase in risky, subprime mortgages.
The Coming Global Economic Ice Age?
Uwe Bott (Globalist) Aug 12, 2013
As investors pull back and commodity prices fall, is a new crisis in emerging markets brewing?
The Problem is Authoritarianism, Not Islam
Dani Rodrik (Project Syndicate) Aug 12, 2013
Is Islam fundamentally incompatible with democracy? Events in the Middle East compel us to ask this question again and again – and yet it is a question that obscures more than it illuminates.
Illiberal Democracy in Latin America
Andrés Velasco (Project Syndicate) Aug 12, 2013
In an influential 1997 essay, Fareed Zakaria coined the term “illiberal democracy” to describe countries that elect their leaders, yet restrict civil liberties and political freedom. Zakaria was right to describe illiberal democracy as a “growth industry”: in the past 15 years, it has opened lucrative franchises in Latin America.
Technology: Vanity or visionary?
Richard Waters (FT) Aug 13, 2013
Internet billionaires are backing futuristic ventures that may either herald a new era of scientific innovation or prove an exercise in hubris.
The inexact art of foretelling the future
John Kay (FT) Aug 13, 2013
Unlike weather forecasters, economists calibrate their models to better explain the past rather than revise them to better predict the future.
A primer in how corruption works
Victor Mallet (FT) Aug 13, 2013
A scandal has erupted involving a young female magistrate and illegal sand mining that has got the in the Indian capital in a spin.
Rajan can lift India’s corporate torpor
James Crabtree (FT) Aug 13, 2013
Business chiefs could be much more vocal about the need to improve performance in many of the sectors and companies below the top rank.
China's Fuzzy Math
Joel Brinkley (World Affairs) Aug 13, 2013
A raft of new financial data out of Beijing has some analysts saying the country’s economic problems are “bottoming out.” However it wouldn’t be the first time the Chinese fudged their numbers.
Slowdown in China Isn’t Bad News
Michael Pettis (YaleGlobal) Aug 13, 2013
China’s economy could slow to 4 percent – what matters is how leaders handle this.
Lessons from a history of thought on poverty
Martin Ravallion (VoxEU) Aug 13, 2013
Poverty is in ascendency as a policy issue – but it has not always been that way. This column, based on the author’s “The Idea of Antipoverty Policy”, recounts how mainstream thinking until well into the 19th century saw little scope for fighting widespread chronic poverty. The revolution came with a deeper understanding of how market and governmental failures interact with inequality to both perpetuate poverty and retard development more broadly. New policies for fighting poverty emerged and now extreme absolute poverty is at an historic low. History suggests, however, that continued progress is not assured.
Finance: Balance sheet battle
Tom Braithwaite and Patrick Jenkins (FT) Aug 14, 2013
Regulators are reviving an old measure to gauge banks’ ability to withstand a crash but bankers are crying foul.
EM decoupling story was over-hyped
John Plender (FT) Aug 14, 2013
The reaction to the Fed tapering statement shows that emerging markets are still irrevocably linked to developed world growth potential.
Changing Engines of Growth
NYT Aug 14, 2013
As growth in the BRIC countries is slowing, the developed economies of Japan, Europe and the United States are picking up the slack.
China Chomps at the BIT
WSJ Aug 14, 2013
An investment treaty would help U.S. firms and Chinese reform.
Recoveries: The missing third phase of the business cycles
Antonio Fatás & Ilian Mihov (VoxEU) Aug 14, 2013
The last recession in the US ended in June 2009. Yet, three years on, unemployment remains high. This column argues that we need to better understand how business cycles of recession and expansion work. Detailed evidence from the US suggests that recoveries are not simply mirror images of recessions. Because of its policy relevance, economists and policymakers must acknowledge that the pattern of recession/recovery has significantly changed over the last half century.
Has Austerity Failed in Europe?
Daniel Gros (Project Syndicate) Aug 14, 2013
If the purpose of austerity in Europe was to reduce public-debt levels, its critics are right: fiscal belt-tightening has clearly failed, because debt/GDP ratios continue to rise. But the goal of austerity was not just to stabilize debt ratios.
How the wealthy keep themselves on top
Tim Harford (FT) Aug 15, 2013
The more unequal a society becomes, the greater the incentive for the rich to pull up the ladder behind them and opportunities for the poor worsen.
Whale catch might not make banks safer
Mark Roe (FT) Aug 15, 2013
Indictments in the JPMorgan Chase case run the risk of inducing a false sense of security about the soundness of the financial system.
Africa: Mugabe undaunted
Andrew England (FT) Aug 15, 2013
Despite Zimbabwe’s economic fragility, the Zanu-PF party is vowing to press ahead with its more radical electoral pledges, particularly ‘indigenising’ foreign businesses.
Easy Credit Dries Up, Choking Growth in China
Keith Bradsher (NYT) Aug 15, 2013
Growth has slowed, causing an increase in defaults on unconventional loans, chronic overcapacity in many industries and other problems.
Debt of One Quadrillion Yen? Not a Problem
William Pesek (Bloomberg) Aug 15, 2013
Haruhiko Kuroda doesn’t wear a wizard’s hat when he arrives at Bank of Japan headquarters each morning. Once inside, I do wonder if he dons a cloak, waves a magic wand and concocts mysterious potions.
China’s Reform Anxiety
Yao Yang (Project Syndicate) Aug 15, 2013
China’s leaders seem to understand what is wrong with their country's economy. But, despite well-intentioned statements and narrow gestures, they have yet to establish a concrete, bold reform strategy capable of resolving the economy’s deep-rooted structural problems.
From boom to bust?
David Jacks (VoxEU) Aug 16, 2013
The global economy witnesses protracted and widespread commodity booms once in a generation. This column introduces a new and publicly available dataset on real commodity prices over 164 years for 32 commodities. The evidence suggests that policymakers and researchers should, first of all, not confuse cycles for trends in real commodity prices. Second, we should also be more aware of the fact that we live in a world of scarcity. Commodity-specific differences in supply and demand generate differential paths in real commodity prices not only in the past but, presumably, also in the future.
Is Big Data an Economic Big Dud?
James Glanz (NYT) Aug 17, 2013
Some economists are questioning whether Big Data will ever have the impact of the first Internet wave, let alone the industrial revolutions of past centuries.
Commodities and banks: Metal bashing
Economist Aug 17, 2013
Insinuations of market manipulation accelerate another upheaval in finance.
Education for Collaboration and Creativity
Geoff Mulgan (Globalist) Aug 17, 2013
Did the industrial era prepare us badly for the 21st century collaborative economy?
Inclusive growth revisited: Measurement and evolution
Rahul Anand, Shanaka J Peiris & Saurabh Mishra (VoxEU) Aug 17, 2013
The call for inclusive growth – the pace and distribution of economic growth – has been unanimously broadcast by policymakers across the world. This column presents a new method for measuring it that’s in line with the absolute definition of pro-poor growth. This integrated measurement should prove useful for researchers wanting to delve deeper into the patterns and to study the sources of inclusive growth.
Private equity: Last of the risk-takers?
Henny Sender (FT) Aug 18, 2013
The bold style of TPG co-founder David Bonderman appears to some investors to be emblematic of a bygone era in an industry fast becoming more institutional.
Resource nationalism has many faces
David Gardner (FT) Aug 18, 2013
Countries guarding ownership of their oil and gas can be about nation-making and institution-building, or looting and dilapidating resources.
European fables fall short of reality
Martin Sandbu (FT) Aug 18, 2013
The crisis in many euro countries has more to do with bad domestic credit regulation than with the capital imbalances between them.
Search for safety in the race for Asia
Gideon Rachman (FT) Aug 18, 2013
Hugh White’s lucid and original ‘The China Choice’ argues that the US and China must accept that neither can dominate the region – or face conflict.
Capital glut desperately needs guidance
John Authers (FT) Aug 18, 2013
Pension funds must accept that returns will be lower, budget on that basis, and avoid temptation to chase returns. We must be more alert to the risk of bubbles.
The west needs more madcap schemes
Stian Westlake (FT) Aug 18, 2013
It was animal spirits as much as pragmatism that built the the big projects that brought first Britain and then the US to global dominance.
A Summer of Troubles Saps India’s Sense of Confidence
Gardiner Harris and Bettina Wassener (NYT) Aug 18, 2013
A falling stock market and currency, and an explosion aboard a submarine, have contributed to doubts about India’s status as a dominant powerhouse of Asia.
Mugabe’s mystifying hold
Jeff Flake (WP) Aug 18, 2013
What Zimbabwe’s vote says about Africa.
Behind Mexico's Promising Oil Reform
Mary O'Grady (WSJ) Aug 18, 2013
President Peña Nieto wants private investors to help increase output and feed state coffers.
Did China really ban rare earth metals exports to Japan?
Amy King and Shiro Armstrong (East Asia Forum) Aug 18, 2013
In the aftermath of an East China Sea collision between a Chinese trawler and the Japanese coast guard in September 2010, tensions flared between Japan and China.
As a Boom Slows, Peru Grows Uneasy
William Neuman (NYT) Aug 19, 2013
In a nation used to 6 percent annual expansion, something closer to 5 percent, which would be a reason for celebration elsewhere, is producing angst.
Decision Time for the Global Economy
Michael Spence (Project Syndicate) Aug 19, 2013
Much of the uncertainty pervading the global economy is set to dissipate. In the coming months, highly consequential policy decisions (or their absence) in systemically critical parts of the global economy will be revealed, with significant effects on growth rates, asset prices, and overall confidence.
China’s New Growth Order
Andrew Sheng and Xiao Geng (Project Syndicate) Aug 19, 2013
In order to achieve sustainable, equitable, and innovative GDP growth, China needs a new, more sophisticated growth model – more like a “growth order.” With a more inclusive, long-term approach that emphasizes strong institutions and eliminates perverse incentives, China's leaders can foster a more balanced economy and society.
Reckoning is due
Martin Hutchinson (AT) Aug 20, 2013
In the last 20 years, fiscal and monetary profligacy has appeared to carry almost no cost, at least for wealthy Western economies. Thanks to the gigantic stores of wealth in a relatively few central banks, the excess money supply has been sterilized. The reckoning is overdue, and it will be a painful one.
Italian business: No way back
Rachel Sanderson (FT) Aug 20, 2013
Time is being called on the web of cross-shareholdings that have bound the country’s leading companies together since the second world war.
Debt weighs on Southeast Asian consumers
Jeremy Grant (FT) Aug 20, 2013
Betting on Asean countries may have become questionable because consumption has not been very robust, and cheap money is about to end.
EM storms could spread to Europe
Ralph Atkins (FT) Aug 20, 2013
The lesson of economic history is that when capital inflows go into reverse, the turnround is often abrupt and painful, and the effects can spread.
End Austerity Now
Mark Blyth (Project Syndicate) Aug 20, 2013
In recent weeks, talk about a budding recovery in the eurozone has gained traction, with many claiming that austerity is finally working. But, until Europe's leaders recognize that the real problem is a banking – not a sovereign-debt – crisis, and adjust policy accordingly, any sign of recovery will prove illusory.
Dithering is the root of India’s problems
David Pilling (FT) Aug 21, 2013
Rather than soothing investors’ nerves, stop-start measures have had the whiff of panic. Investors have pulled out funds and the rupee’s slide has continued.
Innovation needs help of an active state
Mariana Mazzucato (FT) Aug 21, 2013
Productive public spending leads to economic growth, as illustrated by the US state backing of the microchip, the internet and biotechnology.
Prepare now for tricky times ahead
Mohamed El-Erian (FT) Aug 21, 2013
There are good reasons why investors may wish to reconsider the conventional wisdom of waiting for autumn to reposition portfolios
Rival Economists in Public Battle Over Cure for India’s Poverty
Gardiner Harris (NYT) Aug 21, 2013
India’s inability to pull hundreds of millions out of poverty despite decades of robust growth has sparked an unusually nasty fight between two of its greatest economists.
The Eurozone’s Misplaced Orthodoxies
Yannos Papantoniou (Project Syndicate) Aug 21, 2013
With the euro crisis still far from resolved, the currency union remains at the center of heated debates. But, in many cases, positions have become so polarized that they miss the point, impeding policymakers’ ability to agree on and implement an effective crisis-response strategy.
Did Taxes Cause the Financial Crisis?
Mark Roe (Project Syndicate) Aug 21, 2013
Conventional wisdom has resolutely rejected the view that tax systems' tendency to favor corporate debt over equity contributed to the global financial crisis. But, with the Obama administration planning to overhaul US corporate-tax policy, the tax system's potential impact on financial risk merits further consideration.
Financial Inclusion Now
Zeti Akhtar Aziz (Project Syndicate) Aug 21, 2013
Giving the world's 2.5 billion unbanked and financially underserved people access to the financial system can improve their lives and benefit the global economy. A balanced regulatory framework based on the concept of "proportional regulation" can boost financial inclusion, while safeguarding the financial system’s stability.
Productivity is not everything
Samue Brittan (FT) Aug 22, 2013
There is nothing wrong with the US economy that a measure of redistribution towards both the less well-paid and public services would not put right.
Brics party’s over, so wind down the state
Anders Aslund (FT) Aug 22, 2013
While Brazil, Russia, India and China accumulated large foreign reserves, they did not take advantage of the good years to improve their economies.
One More Sign for a Turn to Growth in Europe
David Jolly (NYT) Aug 22, 2013
Economic activity this month in the 17-nation currency bloc reached its highest level in more than two years, according to a survey, pointing to a broad but uneven recovery.
This Age of Bubbles
Paul Krugman (NYT) Aug 22, 2013
Why do markets keep going wild? The answer is a variant on the same old story.
Can Egypt Learn From Thailand?
Jonathan Tepperman (NYT) Aug 22, 2013
Yingluck Shinawatra has made an unstable nation into a success story.
Ben Bernanke's Global Adventure
WSJ Aug 22, 2013
The markets show unwinding QE is not so easy.
China-US Vie For World Approval
Bruce Stokes (YaleGlobal) Aug 22, 2013
Results of a Pew Research Center survey suggest global citizens anticipate shifting balance of power resulting from China’s economic rise. Most respondents in the nations surveyed expect China to eventually overtake the US,
The New Globalists: The Road Ahead
Joseph Quinlan (Globalist) Aug 22, 2013
As global economic activity shifts from the West, how will it change the world?
How Computers Took Over Trading
Stephen Mihm (Bloomberg) Aug 22, 2013
When Wall Street traded humans for computers, companies thought they were eliminating errors not compounding them.
Africa: The Next Major Boom-Bust Cycle?
Chris Becker (Mises Daily) Aug 22, 2013
As Western economies start to regress in earnest following decades of failed and destructive monetary inflation and debt accumulation, yield-starved investors are allocating real capital to the one industrially untapped continent in the world: Africa. However, we’re not seeing industry moving to Africa to set up shop. Rather, politically-directed capital flowing into the African resources sector is fueling and financing the strongest consumer boom in the world. It’s a vendor financing model for Asia, and it portends a major boom and bust cycle for the African continental economy.
China's Incredible Shrinking Economy
Gordon G. Chang (World Affairs) Aug 22, 2013
A new paper by Christopher Balding of Peking University argues that Beijing has grossly inflated the size of its economy. If accurate, China could be headed for a major debt crisis.
China’s American Bailout?
Alexander Friedman (Project Syndicate) Aug 22, 2013
The relationship between China’s export-led GDP growth and America’s over-consumption has shaped the twenty-first-century global economy. But, as growing economic imbalances raise the risk of a financial crisis in China, the Fed must prepare for China to sell off its reserves of US debt in order to recapitalize its banking system.
Immigration, diversity, and economic prosperity
Alberto Alesina, Johann Harnoss & Hillel Rapoport (VoxEU) Aug 22, 2013
With ageing populations in the rich nations and booming labour forces in poor nations, immigration is sure to be a critical policy issue for decades. This column presents research that casts new light on the issue, showing that diversity of immigrants’ origin matters along with their numbers and skill levels. Europeans need to start thinking about immigration as a major, long-term economic policy question that deserves a long-term policy approach. They should move away from the Band-Aid approach that sees policy driven by current events.
China's 'urbanization' is a growth fallacy
Michel Pettis (AT) Aug 23, 2013
The latest argument supporting higher levels of growth in China is based on Beijing's plan for another major urbanization push, but too many fallacies undermine the idea that ever-more cities and infrastructure make for economic expansion.
The Great Potash Power Play
Gabe Collins (Diplomat) Aug 23, 2013
Critical to improving farm yields, potash is increasingly a strategic product for Asia’s largest economies.
Brazil’s Growth Imperative
Danny Leipziger (Project Syndicate) Aug 23, 2013
In 10-15 years, Brazil will be faced with a tremendous opportunity to capitalize on its demographic dividend. But, unless its government takes action now to boost GDP and productivity growth through industrial policies that emphasize investment in infrastructure and skills acquisition, it will miss its chance.
The Next Europe
Nicolas Berggruen and Nathan Gardels (FA) Aug 23, 2013
Toward a Federal Union.
What is shadow banking?
Stijn Claessens & Lev Ratnovski (VoxEU) Aug 23, 2013
There is much confusion about what shadow banking is and why it might create systemic risks. This column presents shadow banking as ‘all financial activities, except traditional banking, which require a private or public backstop to operate’. The idea that shadow banking is something that needs a backstop changes how we think about regulation. Although it won’t be easy, regulation is possible.
A Proud Nation Ponders How to Halt Its Slow Decline
Steven Erlanger (NYT) Aug 24, 2013
Europe is talking about “the French question”: whether the country’s Socialist government can prevent it from slipping permanently into Europe’s second tier.
Michael S. Derby (WSJ) Aug 24, 2013
Because the world’s financial authorities will always likely struggle to coordinate activities, some nations might need to take strong steps to protect themselves from being accidentally wounded by the monetary policies of others, an economist told policy makers gathered in Jackson Hole, Wyo., Saturday.
Part V: The Rise of Africa
Joseph Quinlan (Globalist) Aug 24, 2013
What pulls an educated Zambia native home from New York?
Creativity, cities and innovation
Neil Lee and Andrés Rodríguez-Pose (VoxEU) Aug 24, 2013
In recent years, policymakers have enthusiastically backed the fashionable ‘creative industries’. This column presents new research on the creative sector, creative occupations and innovation in the UK. The results raise questions about the dominant perception of the creative industries as an ‘innovative’ sector. Instead, it might be more appropriate for policymakers to focus on creative workers regardless of the sector in which they work.
The ironies of India’s economic crisis
Ruchir Sharma (FT) Aug 25, 2013
Leaders slow to credit the country’s boom years to the global tide of easy money are now quick to blame their woes on the receding tide.
Panama Canal: Out of the narrows
Andres Schipani and Robert Wright (FT) Aug 25, 2013
The waterway’s $5.25bn expansion is set to shake up global trade routes but infrastructure elsewhere is not yet ready to handle the bigger vessels.
Is there a future for international banks?
Dirk Schoenmaker (VoxEU) Aug 25, 2013
After the financial crisis, there was a shift from international to multinational banks due to supervisors’ increasingly national approach. This column provides an alternative solution that aims to keep international banking alive. What is key is that, first, national supervisors are internationally coordinated and, second, that the whole system is supported up by an appropriate fiscal backstop.
South Africa: Killed for crying foul
Andrew England (FT) Aug 26, 2013
Whistleblowers have to fear for their lives in a country where corruption is undermining the founding ethos of the ruling African National Congress.
In banking, simplicity can be dangerous
Peter Sands (FT) Aug 26, 2013
A regulatory framework that uses the leverage ratio as a primary measure will make banks and the industry as a whole more prone to crisis.
The Danger of an All-Powerful Federal Reserve
John H. Cochrane (WSJ) Aug 26, 2013
'Macroprudential' policy thinkers want central banks to micromanage the entire financial system.
The Next Economic Bubble
William H. Janeway (FA) Aug 26, 2013
The coming Green Tech mania---and why it's a good thing.
Don’t Blame the Fed for Asia’s Problems
William Pesek (Bloomberg) Aug 26, 2013
It’s time to set our clocks back in Asia. Not to 1997, as many are recommending, but to 1994.
The Strong Case for Optimism About U.S. Growth
A. Gary Shilling (Bloomberg) Aug 26, 2013
There is merit to some of the arguments for continued weak U.S. economic growth in the near- term, though the pessimism about the long-term prospects for the U.S. economy is unjustified.
< A HREF="http://www.project-syndicate.org/commentary/the-end-of-quantitative-easing-and-emerging-economies--growth-by-stephen-s--roach">The Global QE Exit Crisis
Stephen S. Roach (Project Syndicate) Aug 26, 2013
The global economy could be in the early stages of another crisis – and, once again, the Federal Reserve is in the eye of the storm. As the Fed attempts to exit from its unprecedented policy of massive purchases of long-term assets, many high-flying emerging economies suddenly find themselves in a vise.
A Skyscraper Curse with Chinese Characteristics
Mark A. DeWeaver (Mises Daily) Aug 26, 2013
Aabout the Chinese economy, malinvestment, booms and busts: animal spirits with Chinese characteristics.
Why does capital flow from poor to rich countries?
Daniel Gros (VoxEU) Aug 26, 2013
Why does capital flow from poor to rich countries? This column argues that the direction of capital flows makes economic sense given savings behaviour. But the real puzzle is why savings rates are high in poor countries and low in rich ones.
M&A: A new bottleneck
Anousha Sakoui and David Gelles (FT) Aug 27, 2013
International dealmaking is growing more complex and expensive as companies must win approval from regulators in up to 100 countries.
Global finance still needs fixing
Robin Harding (FT) Aug 27, 2013
Five years ago, after the collapse of Lehman Brothers, there was appetite for a new kind of financial system. We desperately need to get it back.
Beijing’s new banking dilemma
Paul J Davies (FT) Aug 27, 2013
Beijing faces a looming debt problem and the question that needs to be asked is whether the country has the money to make that problem go away.
EMs and unintended consequences of QE
John Plender (FT) Aug 27, 2013
Has the Federal Reserve’s quantitative easing programme done more to damage emerging markets than to boost the US recovery?
Fixing a Perception Gap for the Underappreciated G-20
Li Baodong (WSJ) Aug 27, 2013
After five productive years, the group deserves more respect for its vital role in the world economy. Here's how to get it.
Another Round in the Battle Between Argentina and Its Holdout Creditors
Anna Gelpern (PIIE) Aug 27, 2013
Ruling in favor of Argentina's holdout creditors, the US Court of Appeals for the Second Circuit took a very long time to say on August 23 precisely what everyone expected it to say on February 27: Argentina violated the promise to NML Capital Ltd. and its co-plaintiffs to rank its payment obligations equally, and must stop paying its performing bonds unless it also pays these holdout creditors in full.
India's Unique Crisis: A Short-Term Fix
Devesh Kapur and Arvind Subramanian (Business Standard/PIIE) Aug 27, 2013
The Indian economy has been battered by turbulence. Unless proactive action is taken, it risks flying into a perfect storm for three reasons. First, more external shocks lie ahead. All the economic data point to the United States Federal Reserve reversing its current monetary policy quicker and faster than previously expected. Further rupee pressures lurk around the corner. Second, looming elections will amplify uncertainty. Third, and perhaps most important, as we argued in our previous column, the current macroeconomic policy mix does not adequately address the situation—decelerating growth, soaring inflation and fiscal deficit, a high current account deficit, and tattered market confidence—that India faces.
The Global Implications of Falling Commodity Prices
José Antonio Ocampo and Bilge Erten (Project Syndicate) Aug 27, 2013
China's growth slowdown has serious implications for the convergence of developed and developing countries’ per capita income levels. Just as China’s economic boom benefited commodity-dependent developing countries, its slowdown – and the concomitant commodity-price downswing – is undermining their economic growth and development.
Six Reasons the U.S. Will Dominate
A. Gary Shilling (Bloomberg) Aug 27, 2013
Beyond the bright prospects for the return to rapid U.S. economic growth and the resulting decline in federal debt as a percentage of gross domestic product, the U.S. will enjoy six major long-term advantages over its competitors.
Predicting Growth From the Path of a Cricket Ball
Simon Johnson (Bloomberg) Aug 27, 2013
There are two broad views of technology and how it is likely to change in the foreseeable future.
Migration Is Expensive, but Pays Off in Productivity
Paul Collier (Bloomberg) Aug 27, 2013
Migrants are the big economic winners from migration, because they move from countries in which workers are paid little to ones in which they are paid a lot.
The Fed and the Emerging Markets Peril
Mohamed A. El-Erian (Bloomberg) Aug 27, 2013
U.S. officials have taken to the airwaves over the last few days to absolve the Federal Reserve of blame for the recent turmoil in emerging markets, a response to some of the debate that arose from the Federal Reserve Bank of Kansas City’s annual meeting last week in Jackson Hole, Wyoming.
Winners And Losers After Arab Spring
Lindsay J. Benstead, Ellen M. Lust, Dhafer Malouche, Gamal Soltan and Jakob Wichmann (YaleGlobal) Aug 27, 2013
Each political transition underway since the Arab Spring has its own characteristics, reports a group of researchers who conducted post-election surveys in Egypt, Libya and Tunisia. A one-size-fits-all approach to the transition processes – and particularly to development assistance aimed at fostering democratization – is unlikely to be effective.
Lehman’s Morbid Legacy
Mohamed A. El-Erian (Project Syndicate) Aug 27, 2013
As the fifth anniversary of Lehman Brothers' collapse approaches, we need analyses of the previously unthinkable outcomes that have become reality – with profound implications for current and future generations – and that our systems of governance have yet to address properly. Four such outcomes come to mind.
Global Development’s Winning Goals
Jeffrey D. Sachs (Project Syndicate) Aug 27, 2013
The world’s governments meet at the UN General Assembly on September 25 to discuss how to accelerate progress on the Millennium Development Goals, and also to agree on a new set of Sustainable Development Goals. In doing so, they should heed several important lessons from the MDGs' success.
Markets must force banks to grow up
Tim Harford (FT) Aug 28, 2013
Even with a large equity cushion, the perverse incentives of ‘too big to fail’ will assert themselves: bankers will find new ways to snuggle up with bankruptcy.
Eurozone heading for a debt crisis relapse
Satyajit Das (FT) Aug 28, 2013
The weaknesses of key policies will increasingly be exposed as markets test European governments and the European Central Bank.
Asia: Storm defences tested
David Pilling and Josh Noble (FT) Aug 28, 2013
Emerging markets are less vulnerable to shocks than they were in the late 1990s but too much of their growth has been built on easy credit.
India's Economic Crisis
Simon Johnson (NYT) Aug 28, 2013
Because any serious crisis causes a rush to safe havens, India’s economic difficulties will be made worse if fiscal policy disputes in the United States are not resolved, an economist writes.
Emerging-market trouble
Robert J. Samuelson (WP) Aug 28, 2013
Are we on the brink of another financial crisis?
Big Fines Won't Solve Too Big to Fail
Megan McArdle (Bloomberg) Aug 28, 2013
My general theory of the financial crisis was that it was a sort of folie-a-300 million, with the envelope being pushed in every direction.
The High Price of Immigration
Paul Collier (Bloomberg) Aug 28, 2013
Why are migrants not only the winners but also the big losers from migration?
Rupee's Swoon Dizzies Indians
Chandrahas Choudhury (Bloomberg) Aug 28, 2013
The Indian currency's steady decline against the dollar takes its toll.
From What Do Savers Need Saving?
John Aziz (Pieria) Aug 28, 2013
Save Our Savers want to help savers by stopping central banks from keeping base rates low. But will that really help savers?
Saving Europe’s Real Hegemon
Hans-Werner Sinn (Project Syndicate) Aug 28, 2013
Last June, the European Commission announced that the money for recapitalizing distressed banks would come primarily from creditors, not European taxpayers, with a pecking order to specify which lenders would be repaid first. All of this is welcome in principle; in practice, however, the scheme leaves much to be desired.
The Post-Crisis Global Economy in Three Words
Jean Pisani-Ferry (Project Syndicate) Aug 28, 2013
Five years have passed since the collapse of the American investment bank Lehman Brothers triggered financial mayhem and marked the onset of the Great Recession. Though the dust may not have fully settled, three catchwords sum up what we have learned so far – and what remains to be done.
Ignore banks over capital requirements
Martin Sandbu (FT) Aug 29, 2013
The arguments for why forcing bankers to boost their capital will shrink credit to the economy are invalid, irrelevant and unacceptable.
German miracle is running out of road
Sebastian Dullien (FT) Aug 29, 2013
The country’s foundations for doing business are deteriorating, with wages rising and spending on infrastructure, education and research falling.
Chinese find M&A deals hard to clinch
Henny Sender (FT) Aug 29, 2013
Investment bankers who once boasted to clients in the west of their contacts among potential Chinese buyers are no longer quite as confident.
Oil fund on troubled waters in Norway
Richard Milne (FT) Aug 29, 2013
The proposals to reform Norwegian oil fund risk upsetting the delicate balance that has allowed it to quadruple in size since 2005.
America's Fishy Trade Barriers
Zhenhu Bian (WSJ) Aug 29, 2013
Targeting catfish imports from China invites trouble for U.S. farm exports.
The Unsaved World
Paul Krugman (NYT) Aug 29, 2013
Why don't we learn from financial crises? As Asian currencies fall and crisis strikes, we seem to be making the same mistakes made in the '90s. Even if we are spared the spectacle of yet another region plunged into depression, the fact remains that the people who congratulated themselves for saving the world in 1999 were actually setting the world up for a far worse crisis, just a few years later.
Sweden an economic model
C. Fred Bergsten (WP) Aug 29, 2013
Social welfare can coexist with fiscally conservatism.
Abenomics for Asia
Yuriko Koike (Project Syndicate) Aug 29, 2013
For two decades, as one Asian economy after another boomed, Japan’s economy remained virtually stagnant. Now, with Asia’s two giants, China and India, slowing down – and perhaps impeding economic performance in much of the rest of Asia – Japan is recording its strongest growth since the 1980’s.
Bernanke: Maestro of misery
Noureddine Krichene (AT) Aug 29, 2013
The cheap money policy pursued by Barack Obama and Federal Reserve chairman Ben Bernanke offers a perfect model of chaos and misery. Any country that follows it will suffer poverty and social disorder. Unfortunately, Europe and Japan are forced into the same model.
Surrounded by Turmoil, Korea Faces Midlife Crisis
William Pesek (Bloomberg) Aug 29, 2013
As economists scour the earth for clues on which country is headed for a crash next, should they be worrying about South Korea?
Can Brazil's Currency Be Saved?
Raul Gallegos (Bloomberg) Aug 29, 2013
One almost feels sorry for Brazil’s central bank President Alexandre Tombini these days. The man charged with steering the monetary policy of the world’s sixth largest economy has a lot to handle.
Nationalism Threatens Racism, Not War
Paul Collier (Bloomberg) Aug 29, 2013
Somewhere in England, an elderly man reverts to the behavior of disaffected teenagers and daubs a slogan on a wall: “England for the English.” He is tracked down by the police and rightly prosecuted and convicted: The sentiment is clearly intended as racial abuse.
Market-based bank capital regulation
Jeremy Bulow, Jacob Goldfield & Paul Klemperer (VoxEU) Aug 29, 2013
Today’s regulatory rules – especially the ineffective capital requirements – have led to costly bank failures. This column proposes a new, robust approach that uses market information but does not depend upon markets being ‘right’. Under the proposed regulatory system (i) bank losses are credibly borne by the private sector (ii) systemically important institutions cannot collapse suddenly; (iii) bank investment is counter-cyclical; and (iv) regulatory actions depend upon market signals. One key innovation is ‘Equity Recourse Notes’ that gradually ‘bail in’ equity as needed. These are superficially similar to, but importantly distinct from, ’CoCos’.
The European Impasse
Susan Watkins (LRB) Aug 29, 2013
All quiet on the euro front? Seen from Berlin, it looks as though the continent is now under control, after the macro-financial warfare of the last three years. Seen from the besieged parliaments of Athens and Madrid, from the shuttered shops and boarded-up homes in Lisbon and Dublin, the single currency has turned into a monetary choke-lead, forcing a swathe of economies into perpetual recession.
The End of the Emerging-Market Party
Ricardo Hausmann (Project Syndicate) Aug 30, 2013
Enthusiasm for emerging markets is evaporating, as their stocks and bonds are down for the year and their economies are slowing. And, with stable or lower export prices reducing real growth and causing their currencies to weaken in real terms, the buoyant performance of the recent past is unlikely to return any time soon.
A new taxonomy of Sudden Stops: Which Sudden Stops should countries be most concerned about?
Eduardo Cavallo & Andrew Powell (VoxEU) Aug 30, 2013
As emerging markets slow, the fear of ‘sudden stops’ in capital flows is rising. This column presents a new taxonomy of Sudden Stops that is founded on the behaviour of gross and net capital flows. The results raise several puzzles. Given continued financial globalisation, how developing and advanced economies can protect themselves at minimum cost remains a critical topic for researchers and policymakers.
Banks in China: Too big to hail
Economist Aug 30, 2013
China’s banking behemoths are too beholden to the state. It is time to set finance free.
More Megaprojects? What China’s Rebalancing Means for Asia
Trefor Moss (Diplomat) Aug 30, 2013
China’s growth may be slowing, but that doesn’t mean its economic presence in Asia will diminish.
Why India’s Economy Is Stumbling
Arvind Subramanian (NYT) Aug 30, 2013
India’s problems have deep and stubborn origins of the country’s own making.
Global house prices: Mixed messages
Economist Aug 31, 2013
America surges, much of Europe sinks.
Whose Central Bank?
J. Bradford DeLong (Project Syndicate) Aug 31, 2013
Broadly speaking, economists have long split into two camps over the purposes a central bank should serve. One camp believes that a central bank should serve bankers, while the other camp believes that its primary responsibility is to maintain the robust functioning of the economy as a whole.
A Bumpy Ride for Emerging Markets
Laura Tyson (Project Syndicate) Aug 31, 2013
In recent months, the environment for capital flows to emerging economies has deteriorated sharply. But that does not mean that we are witnessing the collapse of yet another economic bubble, as many analysts are claiming.
Autumn’s Known Unknowns
Nouriel Roubini (Project Syndicate) Aug 31, 2013
During the height of the Iraq war, then-US Secretary of Defense Donald Rumsfeld spoke of “known unknowns” – foreseeable risks whose realization is uncertain. Today, the global economy is facing many known unknowns, most of which stem from policy uncertainty.
Dilemma not Trilemma: The global financial cycle and monetary policy independence
Hélène Rey (VoxEU) Aug 31, 2013
The global financial cycle has transformed the well-known trilemma into a ‘dilemma’. Independent monetary policies are possible if and only if the capital account is managed directly or indirectly. This column argues the right policies to deal with the ‘dilemma’ should aim at curbing excessive leverage and credit growth. A combination of macroprudential policies guided by aggressive stress?testing and tougher leverage ratios are needed. Some capital controls may also be useful.
Identifying conventional and unconventional monetary policy shocks
Takeshi Kimura & Jouchi Nakajima (VoxEU) Aug 31, 2013
Unconventional monetary policy is now routine, but its impact is still poorly understood. A key difficult is empirically separating policy changes – ‘shocks’ – from other factors driving the economy. This column proposes a new estimation framework for identifying monetary-policy shocks in both conventional and unconventional policy regimes and applies it to Japan. Japan’s increase in bank reserves lowered long-term interest rates in the unconventional policy regime and may have had a positive impact on inflation and the output gap.