News & Commentary:

Articles/Commentary

Market jitters only underscore China's importance to global economy
John Plender (FT) Aug 1, 2021
US threats, combined with Beijing's drive for control, raise the very real risk of tensions escalating.

How the Fed Is Hedging Its Inflation Bet
Phil Gramm and Thomas R. Saving (WSJ) Aug 1, 2021
Though few have noticed, the central bank is already slowing the growth of the money supply.

Pankaj Mishra (Bloomberg View) Aug 1, 2021
As in South Africa, the pandemic is exposing years of social division, rising inequality and incompetent governance.

The Future Will Be Weirder Than We Think
Tyler Cowen (Bloomberg View) Aug 1, 2021
Developments in the next few decades could change humanity for the next few millennia.

How Should Investors React to China's Crackdown?
Mohamed A El-Erian (Bloomberg View) Aug 1, 2021
The country's regulatory curbs on private companies risk making it "uninvestible" for foreigners.

Why bond funds may be riskier than they seem
Robin Wigglesworth (FT) Aug 2, 2021
Research claims many portfolios are misreported by managers to game rating system.

'Greenflation' threatens to derail climate change action
Ruchir Sharma (FT) Aug 2, 2021
Fossil fuels will be needed in the green transition but vital supplies are being squeezed.

Electric vehicles: recycled batteries and the search for a circular economy
Patrick McGee and Henry Sanderson (FT) Aug 2, 2021
The explosion in demand for EVs has spurred a quest for alternative sources of key metals such as cobalt and nickel.

Lessons for Today From the Gold Standard
William J. Luther and Alexander William Salter (WSJ) Aug 2, 2021
Though a return to the old system isn’t likely, the Fed’s management of the fiat dollar has been worse.

What if bitcoin went to zero?
Economist Aug 2, 2021
A thought experiment helps uncover the links between crypto and mainstream finance.

How the Pandemic Widened Global Current Account Balances
Martin Kaufman and Daniel Leigh (IMF) Aug 2, 2021
If not for the crisis, global current account balances would have continued to decline.

Bank of England Should Mind Its Policy Gap with the Fed
Mark Gilbert and Marcus Ashworth Aug 2, 2021
The U.K. economy is sending mixed signals about a recovery. That means it's too early for the central bank to start tapering support.

When Will Stocks Drop? Watch Profit Margins (and Get Nervous)
Gina Martin Adams (Bloomberg View) Aug 2, 2021
The evidence is mounting that companies are having a harder time passing off cost increases to their customers.

GDP Growth Under Trump Was the Worst Since Hoover
Justin Fox (Bloomberg View) Aug 2, 2021
The pandemic was partly to blame, and there are some measures that make his record look better. But it was not a stellar performance.

China's Unavoidable Financial Rise
Zhang Jun (Project Syndicate) Aug 2, 2021
A decade ago, few economists were bullish about the growth of China's external financial strength. But the government's commitment to capital-market opening and renminbi internationalization – together with China's sheer size – have fueled a rapid financial rise that will only continue.

Preventing a Stablecoin Liquidity Crisis
Andrés Velasco (Project Syndicate) Aug 2, 2021
There is no sound argument for applying lender-of-last-resort protection to privately issued cryptocurrencies. But regulators can prevent the all-too-predictable liquidity squeeze caused by a run on stablecoins – including by regulating them out of existence if necessary.

The Case for a G21
Jeffrey D. Sachs (Project Syndicate) Aug 2, 2021
As a powerful complement to the United Nations, the G20 has acquitted itself well by representing most of the world's population and economic output with a limited membership. By expanding to include the African Union, it would overcome its biggest limitation without any loss of agility.

The Dangers of Endless Quantitative Easing
Raghuram G. Rajan (Project Syndicate) Aug 2, 2021
With asset prices so frothy, it is understandable that central banks would be wary of beginning to taper monthly bond purchases before it is clear that inflation has taken off. But they would do well to recognize that prolonging quantitative easing implies significant risks, too.

Laying Out Economic Scenarios...A "What If" Game
Brendan McKenna and Nick Bennenbroek (WF Econ Group) Aug 2, 2021
The spread of the Delta COVID variant has raised some concerns over the pace of global economic growth. Rising case numbers have reintroduced fears that restrictions could be imposed, or at a minimum, consumer behavior might be disrupted. For now, we remain fairly confident in the underlying health of the global economy and optimistic on global growth prospects; however, we believe risks around our global growth forecast are tilted to the downside. In this report, we lay out our base case assumptions and forecasts for the global economy, while also highlighting what a downside scenario for the global economy could entail and how our forecasts could change. On the other hand, should COVID cases and fears recede quickly and consumers disregard the current wave of infections, we lay out what an upside scenario for the global economy could look like as well.

Why it might be good for China if foreign investors are wary
Michael Pettis (FT) Aug 3, 2021
Regulators should be more worried by too much buying of its stocks and bonds than by too little.

Global race to attract high earners threatens governments' tax revenues
Delphine Strauss (FT) Aug 3, 2021
Pandemic-driven rise of digital nomads spurs nations to offer relocation incentives.

Why we should not be too sanguine about a shrinking population
Sarah O'Connor (FT) Aug 3, 2021
Falling birth rates are good news for the planet, but they are also a symptom of generational inequality

America's recovery: is Joe Biden's presidency vulnerable to inflation?
James Politi and Aime Williams (FT) Aug 3, 2021
Rising prices are giving Republicans a chance to label the administration as reckless big spenders.

Resource-rich countries need to get their mining tax systems right
James Otto (FT) Aug 3, 2021
Governments should implement policies that both encourage investment and fill state coffers.

A Digital Trade Opportunity in Asia
WSJ Aug 3, 2021
Biden’s trade rep is too cautious about a new pact with Pacific allies.

Xi’s tech clampdown signals end of a capitalist era
William Pesek (AT) Aug 3, 2021
China is so keen to maintain control over its sprawling and expanding economy that it’s even willing to go communist. For all the claims from Communist Party bigwigs that President Xi Jinping isn’t on an anti-wealth crusade, the losses – at over over $1 trillion and counting – are too jarring to dismiss as “capitalism doing its thing.”

In Focus: Flowering Among the Ruins: Why Emerging Markets Are Poised for a Revival
Larry Light (CIO) Aug 3, 2021
This battered asset class should benefit from a host of new developments—such as a weaker dollar.

How To Escape The Perils of Fragility
Olusegun Akanbi, Kenji Moriyama, and Keyra Primus (IMF) Aug 3, 2021
Weaker growth raises the probability of falling into fragility, particularly for countries in the middle-range of government effectiveness.

The Bond Market’s Very Misleading Message
Richard Cookson (Bloomberg View) Aug 3, 2021
Much of the drop in yields on U.S. government securities has nothing to do with inflation, and even the bit that does doesn’t say anything interesting about where it’s headed.

Wall Street  Is Underestimating the Economic Recovery
Conor Sen (Bloomberg View) Aug 3, 2021
The U.S. should be able to sustain stronger rates of growth for years to come thanks to the pandemic unlocking trends we might not otherwise have seen.

You Won’t See Teslas in India Anytime Soon
Anjani Trivedi (Bloomberg View) Aug 3, 2021
A habit of protectionism will discourage foreign carmakers and hamstring any attempt to implement China-style EV policies.

Nexus Could Be Banking’s Next Big Thing
Andy Mukherjee (Bloomberg View) Aug 3, 2021
Budding cross-border fast payment systems could put fee-heavy international wire transfers in the museum where they belong.

Helping the Poor to Survive Lockdown
Risto Rönkkö, Stuart Rutherford, and Kunal Sen (Project Syndicate) Aug 3, 2021
The Hrishipara Daily Diaries Project has been tracking the daily spending of 60 poor households in rural Bangladesh for the last six years. Analysis of the data collected – especially the changes to spending patterns that have occurred during the pandemic – reveals four areas where policymakers should step in.

The US Economy’s Great Adjustment
Betsey Stevenson (Project Syndicate) Aug 3, 2021
With many low-paying jobs going unfilled, it seems that the COVID-19 crisis has forced a much-needed adjustment in a labor market where workers had long suffered from a decline in bargaining power. But, as pandemic-support programs end and automation accelerates, workers face serious risks.

Biden's Neo-Populist Economic Doctrine
Nouriel Roubini (Project Syndicate) Aug 3, 2021
Within the space of just half a year, US President Joe Biden has completed a necessary economic-policy regime shift that started chaotically under his predecessor. But while the Biden administration has a much better handle on the issues, that doesn't mean the new dispensation will be without risk.

Macroeconomic indicators with real incomes
Marin Ravallion (VoxEU) Aug 3, 2021
Economists have long debated the most effective metrics for measuring poverty and inequality. This column presents analysis of the relative importance of three prominent macroeconomic indicators – the rate of unemployment, the inflation rate, and the growth rate of GDP per capita. Using evidence from the US, the author argues that higher unemployment rates unambiguously increase poverty measures, but that inflation matters more in the middle and upper-middle of the distribution than in the tails.

Part V: Favorable Demographics But Weak Investment in Latin America
Jay Bryson and Hop Mathews (WF Econ Group) Aug 3, 2021
In our fifth installment in our series on the economic implications of population growth in different regions of the world, we turn to Latin America. Although its demographic outlook is not as challenging as it is in some other major regions, economic growth in Latin America likely will remain lackluster unless it significantly raises its rates of saving and investment.

Investors shouldn’t bet too much on macro forecasts
Howard Marks (FT) Aug 4, 2021
Risk of inflation is rising but prediction of economic outcomes remains an uncertain game.

Collapse: Inside Lebanon’s Worst Economic Meltdown in More Than a Century
Ben Hubbard and Bryan Denton (NYT) Aug 4, 2021
The small Mediterranean country is in the throes of a financial crisis that the World Bank has said could rank among the world’s worst since the mid-1800s.

China Century Missing In World's Most-Valued Equity
Matthew A Winkler (Bloomberg View) Aug 4, 2021
The dearth of Chinese enterprises at the top of the market capitalization rankings is a referendum on the world’s second-largest company.

Is Capitalism Just a Phase? China Struggles With the Math
Matthew Brooker (Bloomberg View) Aug 4, 2021
Beijing is using the market economy to evolve toward an ideal Marxist society. But lots of things (like Big Tech) get broken on the way to communism.

U.S. Should Look South for Better Supply Chains
Shannon K O'Neil (Bloomberg View) Aug 4, 2021
When it comes to “friendshoring,” Latin America has much to offer, and much to gain.

Are Central Banks to Blame for Rising Inequality?
Kenneth Rogoff (Project Syndicate) Aug 4, 2021
The view that central-bank interest-rate policy can and should be the main driving force behind greater income equality is stupefyingly naive, no matter how often it is stated. Central banks can do more to address the inequality problem, but they cannot do everything.

Are Economists in Love with Tough Love?
Ricardo Hausmann (Project Syndicate) Aug 4, 2021
Vigorous economic competition certainly has a place in today’s world. But economists may currently be overly reliant on this default approach, attributing to a lack of discipline outcomes that may instead result from insufficient solidarity and concern.

The Summer of Disaster
J. Bradford DeLong (Project Syndicate) Aug 4, 2021
A full year after the first indications that mRNA vaccines against COVID-19 would be highly effective and safe, the world is now reeling from even more dangerous variants of the virus. What does that say about us, particularly in the wealthy Global North?

The Impact of FDI on Domestic Firm Innovation: Evidence from Foreign Investment Deregulation in China
Yan Liu and Xuan Wang (VoxChina) Aug 4, 2021
This paper studies the impact of foreign direct investment (FDI) on domestic firms’ innovation in China. Using firm level patent application records that cover all manufacturing firms with annual sales above 5M Yuan from 1998 to 2007, our results show that both the quantity and quality of domestic firms’ innovation benefit from FDI. In addition to the traditional spillover effect from FDI in the same industry, the paper emphasizes the importance of knowledge spillover: FDI in similar technology domains spurs domestic firms’ innovation much more than FDI in the same industry. The paper also shows that knowledge spillover from FDI in similar technology domains is not driven by input-out linkages. And the spillover effect is stronger in cities with higher human capital stock and firms with higher absorptive capacity.

Shipping costs are still surging at breakneck speed
Claire Jones (FT) Aug 5, 2021
Inflation in carrying cargoes across the world’s oceans now looks much stickier than many hoped.

Everyone Else Gets Fed Up
WSJ Aug 5, 2021
U.K. inflation leaves policy makers in a bind if the U.S. Federal Reserve won’t act, too.

Three lemons on the inflation slot machine
David P. Goldman (AT) Aug 5, 2021
Prices paid by service-producing businesses hit a record in July in the Institute for Supply Management survey. Shelter, goods, services show the highest increase rates since the '70s – in some cases the highest in history. “We see inflation coming into the picture more and more,” said ISM economist Anthony Nieves. “There’s a real shortage. That’s the reality of it.”

Managing the Political Economy of Climate Change Policies
Davide Furceri, Michael Ganslmeier, and Jonathan D. Ostry (IMF) Aug 5, 2021
We identify strategies that can minimize or even eliminate such challenges.

America Squandered Decades Living for the Moment
Noah Smith (Bloomberg View) Aug 5, 2021
Biden's $3.5 trillion spending plan is badly needed to refocus the U.S. economy on investing in the future.

Is the Next Financial Crisis Coded in Tech’s DNA?
Andy Mukherjee (Bloomberg View) Aug 5, 2021
Central banks need to regulate aspects of the consumer internet or watch stablecoins and other digital innovations become too big to fail.

China’s Demographic Manipulation
Yi Fuxian (Project Syndicate) Aug 5, 2021
By around 2035, China will be doing worse than the United States on all demographic metrics, and in terms of economic growth, owing to its declining population and fertility rates. China’s leaders must recognize this and take a strategic step back.

The pandemic has boosted firm investments in digital technologies
Lutz Bellmann, Pauline Bourgeon, Christina Gathmann, Patrick Gleiser, Christian Kagerl, Eva Kleifgen, Corinna König, Ute Leber, David Marguerit, Ludivine Martin, Laura Pohlan, Duncan Roth, Malte Schierholz, Jens Stegmaier, and Armin Aminian (VoxEU) Aug 5, 2021
The Covid-19 pandemic has forced firms to adapt their work processes to the infectious dynamic and the public health measures to contain it. Using survey data of almost 2,000 establishments in Germany, this column shows that the pandemic has accelerated the diffusion of digital technologies, especially in combination with working from home. Investments are particularly prominent in large establishments, while small and medium-sized establishments are less likely to invest in digital technologies and more likely to face financial or logistic barriers to investment. Investments vary a lot across sectors, but are less influenced by the current economic condition of the establishment.

Fiscal-monetary crosswinds in the euro area
Lucrezia Reichlin, Giovanni Ricco, and Matthieu Tarbé (VoxEU) Aug 5, 2021
Monetary policy has fiscal implications since its effect on interest rates, inflation and output relaxes or tightens the general government inter-temporal budget constraint. Inflation dynamics is the result of both monetary policy and the fiscal response to it via the adjustment of the primary deficit. This column discusses estimates of the fiscal responses to monetary policy in the euro area. It shows that the more modest impact of unconventional monetary policy easing on inflation, if compared with the impact of conventional easing, can be explained by a more modest increase in the primary deficit in the former case.

Specter of Stagflation Hangs Over Emerging Markets
Jayati Ghosh (FP) Aug 5, 2021
Rich countries’ pandemic policies are sucking growth and capital out of the developing world.

What A Drag It Is Getting Old: Implications for Economic Growth: Part VI: Conclusion
Jay Bryson and Hop Mathews (WF Econ Group) Aug 5, 2021
We offer some conclusions in this sixth and final installment in our series on the global demographic outlook. In short, slower growth in the world's working-age population likely will exert some headwinds on global economic growth in coming years, everything else equal.

The market is overlooking the change in Europe’s investment banks
Magdalena Stoklosa (FT) Aug 6, 2021
Resilience through the pandemic shows how much has changed for sector.

What happens when investors lose faith in Beijing?
Simon Edelsten (FT) Aug 6, 2021
It could take China years to win back confidence after recent state intervention in tech.

How the Fed’s digital currency could displace crypto
Gillian Tett (FT) Aug 6, 2021
The Boston Fed and MIT are building a CBDC from scratch that aims to usurp existing tokens.

Dollar strength a double-edged sword for Asia
William Pesek (AT) Aug 6, 2021
Everything currency traders thought they knew about financial gravity is being challenged by the dollar’s surprising bull run. The reasons why the US currency should be stumbling are almost too many to list, but its upward momentum could prove more curse than blessing for much of Asia.

Why Yields Fell, and What Happens Next
Tony Crescenzi (PIMCO) Aug 6, 2021
PIMCO’s base case forecast includes a modest rise in U.S. Treasury yields, amid likely volatility and risks to the outlook.

How an OECD tax proposal would reallocate international taxing rights more fairly
Simeon Djankov (PIIE) Aug 6, 2021
As of July 9, 132 countries have agreed to support the Organization for Economic Cooperation and Development’s (OECD) two tax reform proposals. The global minimum corporation tax (explained here) dominated international headlines, but a second part of the proposal that reallocates some taxation rights to countries where revenues are made has received less attention.

'Buy America' Was a Bad Idea Last Century. It's a Worse One Now.
Allison Schrager (Bloomberg View) Aug 6, 2021
Far from modernizing the economy, recycling these old rules in the new infrastructure plan won't create more jobs or make the U.S. more competitive.

The Political Lessons of COVID-19
Luigi Zingales (Project Syndicate) Aug 6, 2021
Even if the world can muddle through this pandemic without an effective system of global governance, it cannot necessarily muddle through the next one – or through other problems like climate change that also require global solutions. If we do not learn this lesson, our species deserves to become extinct.

What's Behind the “Crisis of Democracy”?
Jan-Werner Mueller (Project Syndicate) Aug 6, 2021
According to the conventional wisdom, the biggest threats to liberal democracy today come from abstract groups of people, with one side blaming "elites" and the other decrying the poor judgement of the masses. Yet by ignoring the evolving role of political institutions, this dichotomy misses what is really going on.

Bond investors need to step up on human rights
Laurence Fletcher (FT) Aug 7, 2021
Too many fund firms use strong rhetoric on abuses while lending money to oppressive regimes.

Did Inequality Really Increase During the Pandemic?
Justin Fox (Bloomberg View) Aug 7, 2021
Yes, the billionaires got richer. But poverty also plummeted by some measures.

Trump’s Obsession With GDP Growth Didn’t Work Out So Well
Brooke Sample (Bloomberg View) Aug 7, 2021
As a measure of presidential economic performance, it reflects pretty badly on him, even when you take Covid-19 into account.

Globalisation, specialisation, and the division of labour
Nuno Limão and Yang Xu (VoxEU) Aug 7, 2021
Production is increasingly specialised, with firms concentrating workers on certain tasks that take advantage of outsourced intermediate inputs. This column uses a new framework where firms can adopt intermediate-intensive technologies to study the relationship between globalisation and specialisation, and its implications for the labour share and income. It finds that an expansion in market size such as that resulting from globalisation increases production specialisation, decreases labour cost shares, and increases profit concentration.

A consumption boom is nothing to fear
Gavin Jackson (FT) Aug 8, 2021
Though it is seen as the good kind of spending, investment does not always have the best return.

Joe Manchin’s Inflation Risk
WSJ Aug 8, 2021
He warns the Fed, but the Senator’s spending is part of the problem.

Will the rich world’s worker deficit last?
Economist Aug 8, 2021
It will depend on whether the people who have left the workforce can be lured back.

Asia and the Pacific a collateral EU carbon controls target
Ken Heydon (EAF) Aug 8, 2021
The EU plan reflects concerns about carbon leakage and fear of a, largely unsubstantiated, race to the bottom as production moves to countries with less strict emissions regulation.

China Can’t Lead on Crypto With Isolationism
Michael Schuman (Bloomberg View) Aug 8, 2021
Don’t think of Beijing’s policies toward virtual currencies as a global pacesetter. They’re part of the broader turn inward.

The risks of China’s African lending
Claire Jones (FT) Aug 9, 2021
A combination of opacity and the strings attached could leave debtors in a bind when it comes to accessing more credit.

Why banks fear central bank digital currencies
Jonathan Guthrie (FT) Aug 9, 2021
Crypto push threatens to diminish the role of traditional lenders.

Stable coins’ rise has echoes of Bretton Woods
Ousmène Jacques Mandeng (FT) Aug 9, 2021
A half-century on from the decision that defined the current monetary set-up, calls are mounting for new ideas to address old monetary problems.

Government Failure Gave the World Covid
Casey B. Mulligan and Tomas J. Philipson (WSJ) Aug 9, 2021
And markets provided the remedy. Economists don’t always appreciate how often that happens.

Bond Yields Can’t Stay This Low Forever
William C Dudley (Bloomberg View) Aug 9, 2021
It might take a while, but normality will return.

Truckers Have a Tech Problem, Not a Labor Problem
Karl W Smith (Bloomberg View) Aug 9, 2021
The industry does not need a loosening of government regulations.

Big Oil’s Climate Has Changed Forever
Liam Denning (Bloomberg View) Aug 9, 2021
Just as the IPCC warns of tipping points with regard to climate change, the oil sector is faced with potential tipping points on several other fronts, from political to technological.

Will Central Bank Digital Currencies Doom Dollar Dominance?
Barry Eichengreen (Project Syndicate) Aug 9, 2021
Some say that issuance of central bank digital currencies will transform the international monetary status quo by eroding the US dollar’s dominance of cross-border payments and greatly reducing transaction costs. But this is not going to happen.

Downgrading Africa’s Development
Hippolyte Fofack (Project Syndicate) Aug 9, 2021
During the COVID-19 pandemic, more than 60% of African sovereigns have suffered credit-rating downgrades that risk exacerbating the immediate crisis. Ratings agencies should instead pursue a more balanced approach that accounts for increases in credit risk without undermining developing countries’ economic prospects.

Where Are the Green Sovereign Funds?
Håvard Halland and Gunter Thallinger (Project Syndicate) Aug 9, 2021
Much of the global financial sector is mobilizing behind mid-century net-zero emissions targets, recognizing the opportunities that will come with the transition to a low-carbon economy. The longer that sovereign funds remain on the sidelines, the more they and their countries stand to lose.

Money flow networks: Evidence from Japan
Yoshi Fujiwara, Hiroyasu Inoue, Takayuki Yamaguchi, Hideaki Aoyama, Takuma Tanaka, and Kentaro Kikuchi (VoxEU) Aug 9, 2021
The way money flows among firms can tell us about their economic activities and responses to economic shocks such as the one caused by Covid-19. This column uses data on remittances among in a regional bank in Japan to demonstrate how the three parts of the network structure of the flow of money – upstream, downstream, and circulation of flow – reflect characteristics of supplier-customer relationships. As well as helping with the prediction of occurrences following an economic shock, the findings also have implications for banks’ management of credit risk.

Training Entrepreneurs: Issue 2
David McKenzie and Christopher Woodruff (VoxDev) Aug 9, 2021
Aid agencies and governments spend more than a billion US$ on entrepreneurship training annually. What have we learned about the effectiveness of training?

Lebanon Is in Terminal Brain Drain
Anchal Vohra (FP) Aug 9, 2021
As the country’s economy goes into free fall, there’s a rush for the exits that could hamstring the country for generations.

Return of the Original Phillips Curve
Peter Lihn Jørgensen and Kevin J. Lansing (FRBSF Econ Letter) Aug 9, 2021
The link between changes in U.S. inflation and the output gap has weakened in recent decades. Over the same time, a positive link between the level of inflation and the output gap has emerged, reminiscent of the original 1958 version of the Phillips curve. This development is important because it indicates that structural changes in the economy have not eliminated the inflationary pressure of gap variables. Improved anchoring of people’s expectations for inflation, which makes the expected inflation term in the Phillips curve more stable, can account for both observations.

Infrastructure bill shows US system can still work
FT View Aug 10, 2021
The $1tn package is a central part of Joe Biden’s economic strategy.

Beware fairy tales about inflation
Chris Giles (FT) Aug 10, 2021
There are signs we will soon have to worry about rising prices despite reassuring central bank forecasts.

Gas crunch tests the old cure for higher prices
David Sheppard (FT) Aug 10, 2021
Pressures to reduce carbon emissions might curtail new supply to energy markets.

A Bipartisan Cryptocurrency Crackup
WSJ Aug 10, 2021
Negotiators wrote a sloppy provision that could slow innovation.

Coming Together
Vitor Gaspar and Gita Gopinath (IMF) Aug 10, 2021
IMF support focused most where it mattered the most.

Special Interests Are the Last Barrier to Fix Climate Change
Noah Smith (Bloomberg View) Aug 10, 2021
Technological gains mean governments don't have to worry about economic trade-offs anymore, but fossil fuel industries are still slowing progress in the world's top carbon emitters.

Singapore Is Shaping the Future of Mobility
Carlo Ratti (Project Syndicate) Aug 10, 2021
Singapore owes much of its economic success to a government that has consistently demonstrated a capacity for long-term vision and decisive action. Ongoing experiments in urban mobility are no exception.

The New-Old Sovereign-Debt Challenge
José Antonio Ocampo (Project Syndicate) Aug 10, 2021
To help poorer countries at risk of sovereign-debt distress, international policymakers need to promote much greater private-creditor participation in debt reprofiling and restructuring. They should also provide additional financial support that enables these countries’ continued investment in sustainable development.

How disruptive technologies diffuse
Nicholas Bloom, Tarek Hassan, Aakash Kalyani, Josh Lerner, and Ahmed Tahoun (VoxEU) Aug 10, 2021
It has long been recognised that innovation is unevenly distributed, but whether such technical progress may be the root cause of the rising income and wealth inequality in the US has been a matter of intense debate. This column studies the diffusion of 29 disruptive technologies across firms and labour markets in the US. It finds the locations where such technologies arise are highly concentrated but as they mature they gradually spread across space, particularly for lower-skilled hiring. Higher-skilled hiring is much slower to spread, with locations where initial discoveries were made retaining their leading positions among high-paying positions for decades. These technology hubs are more likely to arise in areas with universities and high-skilled labour pools.

Inflation Expectations, the Phillips Curve, and the Fed’s Dual Mandate
Jane Ihrig, Ekaterina Peneva, and Scott A. Wolla (FRBSL Page One Econ) Aug 10, 2021
How inflation has evolved and what the Fed has said recently about its plan to meet this part of its mandate.

At what point does inflation really start to matter?
Claire Jones (FT) Aug 11, 2021
It’s the most important question in macro right now. But there’s no clear answer.

Italy is basking in a summer of hard-won success
Ben Hall (FT) Aug 11, 2021
Mario Draghi has begun a programme of essential reforms and overseen a strong economic recovery.

Fortress-type resilience makes big banks hard to topple
William Cohan (FT) Aug 11, 2021
Major lenders have become cartel-like institutions that suffer only fleeting impact from scandals.

Investors in China should beware Beijing’s unpredictability
Brooke Masters (FT) Aug 11, 2021
The authorities are capable of turning their wrath on any company or sector that displeases them

IPCC report underlines global leaders’ dangerous climate roulette
Anjana Ahuja (FT) Aug 11, 2021
The drive for certainty has been the enemy of action in this planetary emergency.

One Number to Gauge Where the Economy Is Headed
Matt Phililips (NYT) Aug 11, 2021
The yield on the 10-year Treasury note is often a reliable indicator of how Wall Street views the prospects of economic growth — especially when other data points send confusing signals.

Biden Has an Inflation Problem
WSJ Aug 11, 2021
Real average hourly earnings have declined for seven months.

Inflation Punishes the Unprotected
Phil Gramm and Mike Solon (WSJ) Aug 11, 2021
Government shields its employees and beneficiaries, but not ordinary workers, from higher prices.

Pakistan shifts gears on China’s Belt and Road
FM Shakil (AT) Aug 11, 2021
With the appointment of businessman Khalid Mansoor as the nation’s new point person for the Beijing-backed US$62 billion China-Pakistan Economic Corridor (CPEC), Pakistan is changing direction on China’s Belt and Road in an apparent bid to assuage Beijing amid rising security risks to its in-country nationals, interests and investments.

Will China Ever Become a Fully Developed Economy?
David Dollar (BRINK) Aug 11, 2021
The Chinese government has set a long-term goal to turn China into a fully developed and prosperous country by 2049. But the country faces tremendous challenges that could get in the way.

The Fed Is Watching How the BOE Inches to a Taper
Mohamed A El-Erian (Bloomberg View) Aug 11, 2021
The data for July isn’t conclusive enough for the “transitory” camp or its opponents to declare victory.

Mohamed A El-Erian (Bloomberg View) Aug 11, 2021
The data for July isn’t conclusive enough for the “transitory” camp or its opponents to declare victory.

The Carbon Price Conundrum
Kemal Dervis (Project Syndicate) Aug 11, 2021
The race between climate change and emissions reductions remains tight. Limiting the damage already done will require the use of all available tools and broad global participation. Two recent carbon-pricing proposals highlight the political sensitivities involved, especially given countries’ different levels of economic development.

The Rich World’s Super-Spreader Shame
Ngaire Woods and Anna Petherick (Project Syndicate) Aug 11, 2021
G20 countries have failed the rest of the world during the pandemic, not least by serving as viral super spreaders. To make up for it, they must follow through on global vaccination commitments and establish new international standards for pathogen surveillance and travel.

Accounting for (de)industrialisation in Ireland
Seán Kenny, Jason Lennard, and Kevin O'Rourke (VoxEU) Aug 11, 2021
Economic historians have not reached a consensus on whether Ireland deindustrialised in the 19th century, although nationalists have argued that the 1800 union with Great Britain exposed Irish industry to the full force of competition. This column constructs a new annual index of industrial production in Ireland between 1840 and 1913. Despite a shrinking industrial labour force, Irish industry expanded by 1.4% a year on average in this period due to the productivity growth of those that remained. However, Ireland’s performance was still dismal by international standards.

Governments must help manage the risks of fintech
Eswar Prasad (FT) Aug 12, 2021
Even the relatively low cost of entry into new digital markets does not guarantee fair competition.

Investors need to evaluate the impact of a growing nationalism
John Redwood (FT) Aug 12, 2021
Moves to protect technology and secure food and raw material supplies hit markets.

Don’t Let Inflation Anxiety Undermine Our Future
Paul Krugman (NYT) Aug 12, 2021
Please, Senator Manchin, do the math.

How to Send U.S. Companies Overseas
WSJ Aug 12, 2021
A new study shows how the Biden plan would hurt U.S. firms.

Rosy upsides to Xi’s neo-socialism
Francesco Sisci (AT) Aug 12, 2021
China’s record may look appalling when seen through the lens of most Western media, and thus many foreigners expect a country in tatters on the brink of collapse. On the contrary, the picture inside China is quite different, and it’s not just “propaganda.” Xi is actively pursuing a “neo-socialistic” society and is having a lot of success for it.

What Another $3.5 Trillion Could Do to Inflation
Karl W Smith (Bloomberg View) Aug 12, 2021
The Democrats’ outsized budget proposal has the potential to overheat a U.S. economy that is already struggling to keep up with record demand.

Rate Cuts in Turkey Were Supposed To Be a Sure Thing. We Are Still Waiting
Daniel Moss (Bloomberg View) Aug 12, 2021
Swapping out top positions and browbeating the central bank hasn’t given Turkey’s president the reductions he seeks — an indication it’s the circumstances and not the people that need managing.

The Fed’s State of Exception
John B. Taylor (Project Syndicate) Aug 12, 2021
Despite the recent surge of inflation in the United States, the Federal Reserve is keeping the federal funds rate in a range far below what its own monetary-policy rules would prescribe. But since history shows that this deviation cannot last indefinitely, it would be better to normalize sooner rather than later.

Hong Kong’s Liberties Are Dying but Business Lives On
Hilton Yip (FP) Aug 12, 2021
The territory’s role as a major financial hub remains despite the crackdown.

A fourth globalisation
Marc Levinson (Aeon) Aug 12, 2021
A new form of trade is reshaping our world, and it’s driven by the movement of bits and bytes, not goods, around the globe

Banxico Not So Hawkish
Brendan McKenna (WF Econ Group) Aug 12, 2021
The Central Bank of Mexico opted to raise its policy rate 25 bps to 4.50% at today's monetary policy meeting, a widely expected decision; however, policymakers sent less hawkish guidance on the direction of monetary policy than markets expected. In the immediate aftermath of the announcement, the Mexican peso gave up gains from earlier in the day and is trending toward the key USD/MXN20.00 level. In our view, markets will continue to adjust interest rate expectations lower in Mexico, which combined with broad strength in the U.S. dollar, should push the USD/MXN exchange rate toward MXN20.25 by the end of Q3.

Central banks vs the data regulators
Izabella Kaminska (FT) Aug 13, 2021
Who is on the hook when CBDCs get hacked?

Quitting QE may be harder than the Bank of England believes
Tommy Stubbington (FT) Aug 13, 2021
It is rash to pretend that withdrawal of support for bond markets will be straightforward.

Boosting brain health is key to a thriving economy
Megan Greene (FT) Aug 13, 2021
The jobs of the future will value different skills than those of the past.

Wonking Out: Who Knew Used Cars and Shipping Containers Would Matter So Much?
Paul Krugman (NYT) Aug 13, 2021
Economic notes from inside Plato’s Cave.

Xi’s Dictatorship Threatens the Chinese State
George Soros (WSJ) Aug 13, 2021
In his quest for personal power, he’s rejected Deng Xiaoping’s economic reform path and turned the Communist Party into an assemblage of yes-men.

New era of ‘persistent’ US inflation has arrived
David P. Goldman (AT) Aug 13, 2021
The two earlier periods of persistent inflation (1973 and 2007) coincided with spikes in the oil price and thus reflected a shock from outside the US economy. This time, we’ve had six months of a 30% rate of increase of commodity inflation due to factors inside the US economy. That’s what is really scary.

Renminbi internationalisation getting back on track
Herbert Poenisch (OMFIF) Aug 13, 2021
The issue of whether the internationalisation of the renminbi is a good idea is being discussed both in China and the rest of the world. Domestically, opinions are divided between hotheads, who want to see the renminbi replace the dollar as soon as possible, and realists, whose views are similar to Japan’s prudent policy-makers in the 1980s. The prevailing sentiment of Chinese authorities is that it is a good idea in the long run but not a priority.

Malaysia: Five takeaways from the new OECD Economic Survey
Patrick Lenain and Kosuke Suzuki (OECD Ecoscope) Aug 13, 2021
Malaysia should continue its reforms to remain a business-friendly country and achieve strong, inclusive and clean growth.

Economic Reality Is Dragging Russia Toward Climate Acceptance
Clara Ferreira Marques (Bloomberg View) Aug 13, 2021
Europe’s border tax and China’s carbon-neutral ambitions might just force a fossil fuel giant to face climate facts.

Three Reasons to Be Worried About Africa’s Progress
Tyler Cowen (Bloomberg View) Aug 13, 2021
Ethiopia, Nigeria and South Africa were supposed to be the economic engines of an entire continent, but conditions in all three countries have recently taken a turn for the worse.

When America Remade the World Economy
Jeffrey E. Garten (Project Syndicate) Aug 13, 2021
Over a single weekend in August 1971, US President Richard Nixon and a crack team of advisers set in motion developments that would inaugurate a new world order. Though there was little choice but to end the dollar's convertibility into gold, how the US went about it holds lessons that remain valid today.

Income inequality during the Covid-19 pandemic
Nikolay Angelov and Daniel Waldenström (VoxEU) Aug 13, 2021
The negative economic impact of the Covid-19 pandemic has received much attention, but less is known about its distributional consequences. This column presents new evidence on the pandemic’s inequality effects in Sweden using data on earnings and individual take-up of government Covid-19 support. The results show that income inequality increased during the pandemic, mostly due to layoffs and fewer working hours among low-income, part-time employees. The government’s support policies significantly dampened the increase in inequality increase but did not reverse it.

Darwinian reallocations and the origins of aggregate increasing returns to scale
David Baqaee and Kunal Sangani (VoxEU) Aug 14, 2021
There are multiple mechanisms that drive aggregate increasing returns to scale. This column argues that the higher aggregate efficiency in larger markets may principally arise from a ‘Darwinian effect’ that causes high-markup firms to expand relative to low-markup firms as market size increases. This effect, which does not depend on the shape of the demand curve, means that additional firm entry can be valuable because it helps mitigate cross-sectional misallocation. Policymakers can harness this effect by incentivising entry, for example with a subsidy on entry costs.

A hedge fund revival? Industry hopes a dismal decade is over
Robin Wigglesworth and Laurence Fletcher (FT) Aug 15, 2021
Although the sector is enjoying a pandemic renaissance, some leading investors still believe many funds do not justify the high fees.

Japan’s Economy Returns to Growth, but Virus Threat Looms
Ben Dooley and Makiko Inoue (NYT) Aug 15, 2021
Even as other major economies have roared back to life, Japan’s has been stuck in a cycle of growth and contraction.

Asia won’t solve climate change without reform of financial markets
Adam Triggs (EAF) Aug 15, 2021
The substantial environmental and economic benefits from sustainable practices like lowering carbon emissions, improving land management and other environmental good practices often go unrewarded by the financial system, even though the returns to society are high.

50 Years After Going Off Gold, the Dollar Must Go for Crypto
Niall Ferguson (Bloomberg View) Aug 15, 2021
After Richard Nixon scrapped Bretton Woods, the U.S. currency’s exorbitant privilege only grew — because the U.S. embraced innovation, not regulation.

Jay Powell and Yi Gang Sound Pretty Similar These Days
Daniel Moss (Bloomberg View) Aug 15, 2021
Despite a widening diplomatic rift, monetary officials in the U.S. and China are using almost identical language.

Delta variant and floods spark anxiety over Chinese growth
Thomas Hale (FT) Aug 16, 2021
Biggest Covid outbreak this year coincides with signs of deeper structural shifts in the economy.

The Bad Economics of Fossil Fuel Defenders
Paul Krugman (NYT) Aug 16, 2021
Why you should ignore claims that we can't afford to reduce emissions.

Vietnam’s Covid stumble threatens economic boom
William Pesek (AT) Aug 16, 2021
Vietnam risks giving the old investment adage “buy the rumor, sell the fact” a bad name as the Delta variant upends an economy rumored to have beaten Covid-19. Vietnam is now reminding the globe it’s far less ready for global prime time than hoped as a new Covid wave overwhelms the place.

From the History Books: The Rethinking of the International Monetary System
Atish Rex Ghosh (IMF) Aug 16, 2021
The collapse of Bretton Woods prompted a fundamental rethink about what would give stability to the international monetary system.

U.S. Fiscal Policy Is Broken. Here’s How to Fix It
Bloomberg View Aug 16, 2021
A grand overhaul may be too much to ask for. But with trillions going out the door, some modest restraints are in order.

Copycat Asian Nationalists Threaten to Overheat Earth for All
Pankaj Mishra (Bloomberg View) Aug 16, 2021
The biggest climate change threat increasingly comes from the leaders of China and India chasing a toxic 19th-century fantasy of wealth and power. They should know better.

How to Make Progress in the Immigration Debate
Karl W Smith (Bloomberg View) Aug 16, 2021
Addressing some of the economic anxieties caused by immigration could help ease some of the cultural ones.

Hedge Funds Are Demanding Their SPAC Money Back
Chris Bryant (Bloomberg View) Aug 16, 2021
The special sauce that's flavored blank-check firms has become potential poison. It’s time to reform their financial incentives.

Why Only a Huge Shock Will Deter Risk-Taking Investors
Mohamed A El-Erian (Bloomberg View) Aug 16, 2021
Conditioned by the Fed and three new mantras, investors are anchored in the expectation of never-ending stock index records.

The Fed Has a Chance to Boost Equality With Digital Currency
Karen D Shaw Petrou (Bloomberg View) Aug 16, 2021
The central bank must focus not only how it would impact the transmission of monetary policy, but also on ensuring that it improves economic opportunity.

The BRICS’ Lagging Vaccine Diplomacy
Luanda Mpungose (Project Syndicate) Aug 16, 2021
The COVID-19 pandemic has tested the BRICS countries’ collective strength, and found them largely wanting. The bloc has therefore missed a chance to bolster its advocacy of international governance reform, and cast doubt on its fitness for purpose in responding to critical global challenges.

Economic backwardness and religious persecution
Mauricio Drelichman, Jordi Vidal-Robert, and Hans-Joachim Voth (VoxEU) Aug 16, 2021
Throughout history, religion has influenced growth and per capita output, and its effects are felt even in modern times. This column investigates the effect of one of history’s longest-running and most intrusive forms of religious persecution – the Spanish Inquisition. In areas without measured persecution, annual GDP per capita is significantly higher than in areas where the Inquisition was most active. Local levels of persecution continue to influence economic activity and basic attitudes some 200 years after the abolition of the Inquisition, undermining trust, reducing investments in human capital, and impoverishing hardest-hit areas.

Predicting inflation using cumulative wage gaps
Liviu Voinea and Prakash Loungani (VoxEU) Aug 16, 2021
Over the past three decades, post-crisis inflation in OECD economies has only picked up once the gap between current wages and peak pre-crisis wages has closed. This column explores the role of the cumulative wage gap in driving inflation, with a particular focus on Covid-19. The authors argue that the increase in inflation in recent months, which appears driven by one-off increases in income and supply bottlenecks, will not be sustained, as long as the as cumulative wage gaps remain wide.

Labor Productivity in a Pandemic
John Fernald, Huiyu Li, and Mitchell Ochse (FRBSF Econ Letter) Aug 16, 2021
U.S. labor productivity has grown quickly during the pandemic compared with the past decade. However, this rapid pace is unlikely to be sustained. Similar to the Great Recession, the primary reasons for strong productivity growth now are cyclical effects that are likely to unwind as the economy continues to recover. For example, the number of workers has fallen, so capital per worker has risen—raising labor productivity in the short term. What effect the pandemic itself might have on productivity remains uncertain.

Another reason to raise the Fed's inflation target: An employment and output boom
David Reifschneider and David Wilcox (PIIE) Aug 16, 2021
In 2012, the Federal Reserve formally adopted an inflation target and set it at 2 percent, in line with the level chosen by many other central banks. In hindsight, this setting left policymakers with too little room to cut interest rates when they want to fight recessions. Many researchers have noted that if central banks raised their inflation targets—either individually or in concert—they could do a better job in the long run of keeping inflation near its target and the workforce fully employed. Reifschneider and Wilcox highlight an additional and less-noted consequence of raising the inflation target modestly: The economy could enjoy a temporary but substantial boom in employment and output as it adjusted to the increase in the target. Critical to generating this favorable outcome would be decisive action by monetary policymakers to ensure that the higher inflation target is achieved in a reasonably timely manner. In light of substantial transition benefits, as well as the long-run improvement in economic performance, the authors recommend that the Federal Reserve raise its inflation target to 3 percent as part of its next framework review.

The stark disconnect between India’s macro outlook and markets
Henny Sender (FT) Aug 17, 2021
Economy still to recover from Covid pandemic scarring.

ESG must learn from the tech bubble — returns matter
Stephen Beer (FT) Aug 17, 2021
Investors must not forget about profits, even as they focus on wider criteria.

Class conflict is back at the core of economics
Martin Sandbu (FT) Aug 17, 2021
Workers’ unexpected bargaining power could also help boost the profits of business.

The age of the ETF is looming
Robin Wigglesworth (FT) Aug 17, 2021
Exchange traded funds are much more than just passive index-trackers.

Actually, it doesn’t matter who runs the Fed
Edward Price (FT) Aug 17, 2021
Central bank independence is too theoretical for any appointment to make a difference.

A coming clash over Hong Kong sanctions?
Jeffrey J. Schott (PIIE) Aug 17, 2021
US sanctions and Chinese countermeasures related to the situation in Hong Kong threaten to ignite the tinderbox of US-China economic relations. That potential conflagration could soon endanger not only bilateral trade and finance but also cooperation to counter global warming and nuclear proliferation. Yet officials in both countries, along with business leaders, seem complacent about the risks inherent in escalating the US-China sanctions war. Neither side is likely to give in to the other's economic pressure, but both need to temper and contain the scope of their escalatory actions.

The Demise of the Gold Standard
Mark Thornton (Mises Wire) Aug 17, 2021
Nixon’s closing the gold window should be seen as the end of the last remnant of the gold standard, not some kind of market failure. Governments controlled most of the gold and set its price.

Trade liberalisation and taxation
Rabah Arezki, Alou Adesse Dama, and Grégoire Rota-Graziosi (VoxEU) Aug 17, 2021
The empirical evidence on the relationship between trade orientation and growth in developing countries has been hotly contested for over half a century. This column focuses on the dynamic effects of trade liberalisation on tax revenue. Using a worldwide panel dataset, it shows a statistically negative effect of liberalisation on (non-resource) tax revenues in the short term and no significant effect in the medium term. Implementing a VAT prior to liberalisation mitigates its negative effects on tax revenues.

One-stop source for inflation: A new database
Jongrim Ha, M. Ayhan Kose, and Franziska Ohnsorge (VoxEU) Aug 17, 2021
Understanding the dynamics of inflation requires a comprehensive database that covers a large number of countries over a long period. This column introduces a new global database of inflation that has a significantly larger coverage than other databases as it includes multiple measures of inflation for up to 196 countries over 1970-2021. The database can be used in a variety of contexts. A few potential applications are illustrated, analysing the evolution of inflation since 1970, the behaviour of inflation during global recessions, and the synchronisation of inflation across countries and over time.

Climate policy is macroeconomic policy, and the implications will be significant
Jean Pisani-Ferry (PIIE) Aug 17, 2021
For all the long-term benefits of urgently addressing climate change, economic policymakers must plan for a challenging transition to carbon neutrality. Pretending that the costs will be trivial is dangerous. Estimates by the Intergovernmental Panel on Climate Change of the United Nations indicate that emergency action is indispensable to limit catastrophic climate disruption. Because of the magnitude of the efforts involved and the pace of the transformation implied, the accelerated transition to a carbon-neutral economy is bound to have serious, immediate economic implications, warns Pisani-Ferry. Some equipment will lose economic value. Some plants will have to close. Employees will have to be reallocated to other occupations. Investment will have to increase, to repair or rebuild infrastructure and the capital stock. He argues that so far policymakers have not addressed these implications in a systematic manner. It is high time policymakers realize that climate policy is also macroeconomic policy and

A 50-year quest for monetary stability
FT View Aug 18, 2021
Nostalgia for the gold standard is misguided and misplaced.

Transmission revamp will reshape the financial world
Anne Richards (FT) Aug 18, 2021
The business of transacting is barrelling down a path of unstoppable change.

U.S. and I.M.F. Apply a Financial Squeeze on the Taliban
Eshe Nelson and Alan Rappeport (NYT) Aug 18, 2021
Most of the Afghan central bank’s reserves are frozen at the Federal Reserve. And the International Monetary Fund will block more than $400 million in aid.

Graeme Smith and David Mansfield (NYT) Aug 18, 2021
And there’s very little the West can do about it.

The IMF Acts Against the Taliban
Josh Lipsky and William F. Wechsler (WSJ) Aug 18, 2021
Afghanistan was in line to receive more than $400 million in Special Drawing Rights next week.

How a Single Covid Case Derailed a Central Bank
Daniel Moss (Bloomberg View) Aug 18, 2021
The Reserve Bank of New Zealand blinked on its plan to raise rates. If history is any guide, it shouldn’t rush to get back on course.

How Afghanistan Snags China in a $282 Billion Creditor Trap
Shuli Ren (Bloomberg View) Aug 18, 2021
The danger comes from instability in Pakistan, where Beijing banks has invested heavily. The Chinese still have nightmares about a major miscalculation in Venezuela.

Afghan Refugees Are No Economic Threat to Americans
Noah Smith (Bloomberg View) Aug 18, 2021
Far from becoming a drain on public coffers, decades of research has shown refugees, over time, will pay back much more than they receive.

The Taliban and the Dollar
Jim O'Neill (Project Syndicate) Aug 18, 2021
In the half-century since US President Richard Nixon closed the curtain on the Bretton Woods system, the US dollar has been the dominant global currency, largely because there were no other aspirants to the throne. Nonetheless, recent events have reminded us that conditions can change both gradually and suddenly.

Food Systems on the Edge
Barbara Unmüßig (Project Syndicate) Aug 18, 2021
Those most affected by the negative consequences of large-scale industrialized food production must play a vital part in discussing how to transform it. The world therefore needs a people’s Food Systems Summit that aims to end hunger and malnutrition, protect ecosystems, and provide small farmers with a decent livelihood.

Fail-Safe Failures
Robert Skidelsky (Project Syndicate) Aug 18, 2021
So much of our lives nowadays are determined by the smooth functioning of technologies of which we know little. Even if the risk of a global breakdown remains remote, we will increasingly find ourselves helpless and panic-stricken in the face of even mild upsets to ‘normal’ life.

Monetary policy and inequality
Ethan Ilzetzki (VoxEU) Aug 18, 2021
By most measures, income inequality has increased in the UK in the past several decades. The July 2021 CfM survey asked the members of its UK panel to evaluate the impact of central banks on inequality and whether the Bank of England should consider income and wealth distribution in its monetary policy decisions. The majority the panel thinks monetary policy has only a small impact on wealth and income inequality. A larger majority of nearly 90% of the panel believes that inequality should play a minimal role or no role in the Bank of England’s monetary policy decisions.

How natural disasters reshape supply chains
Caroline Freund, Aaditya Mattoo, Alen Mulabdic, and Michele Ruta (VoxEU) Aug 18, 2021
The immediate consequences of natural disasters for global value chains are well-documented, but little is known about the longer term. This column examines the long-term impact of the 2011 earthquake in Japan on auto and electronics supply chains using data on imports of Japanese products worldwide. Imports shifted to new suppliers, especially in products where dependence on Japan was greater. The new suppliers tended to be developing and large countries, suggesting cost and scale were important. The observed pattern of switching may be relevant to the COVID-19 pandemic.

COVID Concerns Keep Reserve Bank of New Zealand on Hold
Nick Bennenbroek (WF Econ Group) Aug 18, 2021
The Reserve Bank of New Zealand (RBNZ) held its policy rate steady at 0.25% at this week's meeting, with policymakers saying they kept rates steady given heightened uncertainty with the country in lockdown. At the same time, the RBNZ offered a sturdy underlying view of the economy, saying the recovery has broadened, that the economic rebound in New Zealand has been stronger than in most countries, and that employment is currently at or above its maximum sustainable level. The RBNZ signaled a policy rate increase during Q4-2021. Despite the current fluid and uncertain situation, our base case anticipates an initial 25 basis point rate hike in November, and further cumulative rate hikes of 75 to 100 basis points during 2022. While the RBNZ's still hawkish bias could limit New Zealand dollar downside, the currency may also struggle to gain meaningfully while the situation remain uncertain. As a result, we see moderate downside risk to our medium-term NZD/USD exchange rate target of $0.7600 by end-2022.

The case for continuing QE is hard to fathom
John Plender (FT) Aug 19, 2021
Unconventional monetary policy is creating ever greater vulnerabilities.

Wealth gap sparks Xi’s call for ‘common prosperity’
Jeff Pao (AT) Aug 19, 2021
China could soon reduce the gap between the rich and poor by imposing new taxes on property and inheritance, capping state-owned-enterprise (SOE) executives’ salaries, strengthening antitrust enforcement and promoting more charity following calls by President Xi Jinping to promote “common prosperity.”

US needs a coherent tech strategy for China
William J. Holstein and David B.H. Denoon (AT) Aug 19, 2021
The sooner the US recognizes the scope of China’s tech ambitions, the sooner it can devise a strategy with allies to compete.

‘Avoid-China’ trade an opportunity for Xi Jinping
William Pesek (AT) Aug 19, 2021
The value-investing argument of the ages is playing out over whether China’s tech crackdown is a reason to cut ties with the mainland or a necessary risk worth taking. Xi Jinping’s regulators need to make China Inc less of a wild ride and there’s no time like the present to narrow the extremes.

Contrarian Investors Should Love Emerging Markets
Nir Kaissar (Bloomberg View) Aug 19, 2021
Stocks in developing countries are lagging behind those in the U.S. They could be poised to outperform in the coming years.

Where, Exactly, Did $800 Billion in PPP Money Go?
Timothy L O'Brien (Bloomberg View) Aug 19, 2021
Taxpayers deserve a thorough examination into potential fraud before the government closes the books.

Trickle-Down Economics Has Failed Its Growth Mission
Noah Smith (Bloomberg View) Aug 19, 2021
Decades of fiscal policy that made it cheaper for companies to invest hasn't succeeded in building many new factories. But the answer isn't trickle up, either.

Climate Change Is Making the U.S. Poorer Than It Realizes
Carl Pope (Bloomberg View) Aug 19, 2021
To protect American infrastructure, it is essential to accelerate the clean energy transition and adopt a prevention-first approach to extreme weather.

Afghanistan Got Rid of the U.S., But Not the Dollar
Daniel Moss (Bloomberg View) Aug 19, 2021
For a country so reliant on international aid, extricating from the greenback isn’t going to be straightforward. Washington still has important cards to play.

Can China Hold On to Its Property Balloon? Not Likely
Matthew Brooker (Bloomberg View) Aug 19, 2021
The real estate bubble has made prices beyond unaffordable, but even a simple solution like a property tax could be a dire threat to the economy.

Why Aviation Should Embrace Carbon Taxation
Adair Turner (Project Syndicate) Aug 19, 2021
The European Union’s recently proposed levy on conventional aviation jet fuel for intra-European flights has provoked opposition from the airline industry. But the sector should welcome carbon pricing as a powerful tool to achieve emissions reductions at least cost.

How to Reap a Demographic Dividend
Andrea M. Wojnar (Project Syndicate) Aug 19, 2021
With its population growth continuing to outpace the expansion of education and employment possibilities for young people, Mozambique is still far from seizing its demographic opportunity. But given the right policy mix, the country can accelerate fertility decline and realize large and sustained economic dividends.

Biden Sparked a Refugee Crisis. He Must Help Europe Bear the Cost.
Elisabeth Braw (FP) Aug 19, 2021
The chaotic U.S. withdrawal has already led thousands of Afghans to flee.

The Slow but Steady Strengthening of Europe’s Values
Caroline de Gruyter (FP) Aug 19, 2021
Democratic principles were largely irrelevant to the EU’s founding—but are at the center of the project today.

A quality theory of Treasuries
Brendan Greeley (FT) Aug 20, 2021
To value US sovereign debt, think about what it buys.

Xi Jinping takes aim at the gross inequalities of China’s ‘gilded age’
James Kynge (FT) Aug 20, 2021
Reforms designed to ease social tensions and bolster legitimacy of Communist party rule.

Honey, Who Shrunk the World?
Paul Krugman (NYT) Aug 20, 2021
Globalization and the power of ideas.

What Happens When China’s Bling Binge Comes to an End?
Andrea Felsted and Anjani Trivedi (Bloomberg View) Aug 20, 2021
The delta variant and government interest in “common prosperity” may soon threaten consumption in China. That'll hit the luxury industry hard.

Why Nation-Building Failed in Afghanistan
Daron Acemoglu (Project Syndicate) Aug 20, 2021
Although the United States clearly could have done a better job of managing its departure from Afghanistan, the tragedy playing out this month has been 20 years in the making. From the outset, America and its allies embraced – and never reconsidered – a top-down state-building strategy that was always destined to fail.

The Opportunity in Aging
Mona Mourshed (Project Syndicate) Aug 20, 2021
With the pandemic and technological change upending labor markets around the world, midcareer workers over 45 increasingly find themselves out in the cold. But this neglect is not only morally wrong and socially risky; it also represents a massive missed economic opportunity.

Inflation drivers: Before and after the Global Crisis
Philipp F. M. Baumann, Enzo Rossi, and Alexander Volkmann (VoxEU) Aug 20, 2021
After bouts in the 1970s and 1980s, consumer price inflation has been trending downward since the 1990s. Recently, voices fearing a pick-up in inflation have become more numerous and louder. This column describes the main forces acting on inflation in 122 countries over the last two decades, with the aim of informing the current debate. While energy prices act strongly on inflation, factors such as central bank independence or inflation targeting have little explanatory power.

A time-varying carbon tax to protect the environment while safeguarding the economy
Ghassane Benmir, Ivan Jaccard, and Gauthier Vermandel (VoxEU) Aug 20, 2021
Climate change is one of the most pressing issues of our time. The challenge for policymakers is that climate policies could have a negative impact on the economy in the short term. This column discusses how this trade-off between fighting climate change and ensuring a stable business cycle affects the design of environmental policies. The authors argue in favour of a time-varying carbon tax that is increased during booms and decreased during recessions.

The euro area Phillips curve: Damaged but not dead
Elena Bobeica, Benny Hartwig, and Christiane Nickel (VoxEU) Aug 20, 2021
The initially muted reaction of euro area inflation to the recent recession suggests that the Phillips curve is flat or may have flattened during the pandemic. This column argues that the assessment of the Phillips curve has become more complicated due to numerous confounding factors. It discusses evidence that underlying inflationary pressures have been dampened by the build-up of slack, and that models accounting for tail events reveal more stable Phillips curve parameters. Despite the many confounding factors, it seems that the Phillips curve is still at play – even if it is hard to pin down precisely.

How to Escape the Cycle of Mismanaged Aid in Haiti
Montas, M. (NYT) Aug 21, 2021
The unimaginable destruction I witnessed in the country demands that we do better now.

China’s Delta dilemma
Economist Aug 21, 2021
Efforts to battle the virus compound an economic slowdown.

Billions are pouring into the business of decarbonisation
Economist Aug 21, 2021
Wall Street giants and corporate titans are betting on climate innovation.

Persuading investors: A video-based study
Allen Hu and Song Ma (VoxEU) Aug 21, 2021
Persuasive communication relies not only on content but also on its delivery. This column uses machine learning algorithms to examine the persuasiveness of delivery in startup pitches to venture capitalists. Positive (i.e. passionate, warm) pitches increase the probability of funding, but on receiving funding, high-positivity startups tend to underperform. Women are more heavily judged on delivery when evaluating single-gender teams, but they are neglected when pitching alongside men. The results of an experiment suggest that persuasion delivery works mainly through leading investors to form inaccurate beliefs.

The west has paid the price for neglecting the Afghan economy
Martin Sandbu (FT) Aug 22, 2021
Per capita incomes flatlined over the past decade and corruption is endemic.

America Looks More Like Europe All the Time
Josef Joffe (WSJ) Aug 22, 2021
The U.S. adopts, and in some ways exceeds, the high taxes and spending that have hurt the Continent.

The new Powell doctrine
Economist Aug 22, 2021
The Fed has taken a bold gamble under Jerome Powell. Will he get to see it through?

Indonesia stuck in the middle with its COVID-19 crisis
Liam Gammon (EAF) Aug 22, 2021
As the world looks upon the horrifying images of Indonesia’s COVID-19 crisis, many naturally wonder whether, or how, the country will be diminished at home and on the world stage by its experience and its management of the pandemic. That perhaps reflects an underestimation of the resilience of Indonesian society, the country’s economic fundamentals and the political status quo.

Fifty Years of the Gold Stanard. Fifty Years of Monetary Insanity
Daniel Lacalle (Mises Wire) Aug 22, 2021
The gold standard was supposed a limit to the fiscal voracity of governments, and suspending it unleashed the perverse proclivity of the states toward indebtedness and to pass the current imbalances on to future generations.

The U.S. Dollar Is King But It Commands Too High a Premium
Marcus Ashworth (Bloomberg View) Aug 22, 2021
What will it take to take it down a bit? Reason and the natural forces of foreign exchange, inflation and interest rates don’t seem to work. At least so far.

India Is No Country for Dying Firms
Andy Mukherjee (Bloomberg View) Aug 22, 2021
Corporate death is a feature of capitalism, not a bug. India needs a second stab at bankruptcy reform, with more and better judges backed by political will.

Why Jay Powell should be bold at Jackson Hole
Mohamed El-Erian (FT) Aug 23, 2021
The longer the Fed chair waits to detail his own thinking, the greater the economic, financial and institutional risks

Tata’s rise mirrors the sweep of India’s history
Benjamin Parkin (FT) Aug 23, 2021
A new book charts the evolution of the vast conglomerate from a single opium trader to quasi-sovereign power.

IMF chief: how the world can make the most of new special drawing rights
Kristalina Georgieva (FT) Aug 23, 2021
Poor and vulnerable countries need help to fight their way out of the pandemic.

A Simple Rule Could End Debt-Ceiling Shenanigans
Alan S. Blinder (WSJ) Aug 23, 2021
Federal debt may face a downgrade if Democrats and Republicans don’t agree to increase the limit.

Beijing urges HK to help globalize the yuan
Jeff Pao (AT) Aug 23, 2021
A rush to launch the Anti-Foreign Sanctions Law in city may deter foreign banks and slow currency development.

Can slow-building democracies compete with China?
Urban C. Lehner (AT) Aug 23, 2021
President Joe Biden speaks often of the need to demonstrate that democracies can compete with autocracies in the 21st century. The US$1.2 trillion infrastructure bill the Senate recently passed with bipartisan support seems encouraging. Yet for all the back-patting over senators’ willingness to compromise, two discouraging facts about the bill stand out.

ASEAN Economies Are Starting to Falter Because of COVID
Trinh Nguyen (BRINK) Aug 23, 2021
COVID-19 is raging across the five ASEAN countries, and the reliance on mobility suppression to control the virus is taking a toll on economic activities, from manufacturing to services. Expectations for GDP growth in the region this year dropped from an average of 5.2% to 3.8%. Senior Economist Trinh Nguyen of Natixis explains these new predictions and what they mean for the economy in the ASEAN region. Learn more »

The Federal Reserve Takes Climate Change Seriously
William C Dudley (Bloomberg View) Aug 23, 2021
Activists need to recognize the political constraints the central bank faces.

Central Banks Are Risking Their Independence
Mervyn Allister King and Dan Katz (Bloomberg View) Aug 23, 2021
The Federal Reserve, European Central Bank and Bank of England all seem willing to take on vexing social challenges. If they aren’t careful, they may end up losing their autonomy.

The G20's COVID Agenda
Jeffrey Frankel (Project Syndicate) Aug 23, 2021
Heads of state and government from the world's largest economies will have plenty on their plate at this year's G20 summit in Rome on October 30-31. But with the COVID-19 pandemic still raging, it is clear what their immediate priorities should be.

Pandemics and Progress
Anne O. Krueger (Project Syndicate) Aug 23, 2021
The COVID-19 pandemic has prompted soul-searching in the West, with many proposing radical reforms to longstanding economic and political structures. But we should pause to consider the historically unprecedented benefits that the current system has given us.

New Global Rules for a Fairer Food Future
Gloria Abraham Peralta (Project Syndicate) Aug 23, 2021
Today, governments must strive to overcome the pandemic, build more inclusive and sustainable economies, and lay the foundations for a fairer and more resilient future. An agreement on food and agricultural trade at the World Trade Organization’s ministerial conference later this year would be an important start.

How Do Low and Negative Interest Rates Affect Banks?
Mauricio Ulate and Olivia Lofton (FRBSF Econ Letter) Aug 23, 2021
Developed countries have recently turned to very low—even negative—interest rates to try to stimulate their economies. Low or negative rates can affect banks in novel ways because they often base their retail rates on the policy rate. In particular, the rate banks pay households for deposits usually remains at zero during times of low or negative policy rates, rather than falling together with the policy rate, as it would during normal times. This can decrease banks’ net interest margins, negatively impacting their profitability, equity, and ability to lend.

Crypto exchanges are booming, for now
Eva Szalay (FT) Aug 24, 2021
Rapid rate of growth and juicy profits likely to attract greater competition and regulatory scrutiny.

Afghanistan faces an economic crisis, as well as a humanitarian one
Ajmal Ahmady (FT) Aug 24, 2021
The Taliban has inadequate revenues or incoming investment to operate a functional government.

China’s courts take centre stage as defaults shake $17tn bond market
Edward White (FT) Aug 24, 2021
Judiciary takes stronger role in restructurings and bankruptcies but foreign investors still at a disadvantage.

Biden Faces a Trade-Off: Stop Corruption, or Migration?
Natalie Kitroeff (NYT) Aug 24, 2021
President Biden promised to attack corruption in Central America head on, but that goal has taken a back seat to cooperating on stopping migrants from the region.

Delta variant cools inflation fears – for now
William Pesek (AT) Aug 24, 2021
At a minimum, today’s inflation worries need a serious reality check. It’s not that deflation is afoot. The overhang of 2020’s trauma to consumer and business confidence is now colliding with fresh uncertainty about where growth and employment levels might be in 2022 as Delta does its worst and other, even scarier, variants emerge.

The Biden administration’s anti-corruption initiative is a welcome first step
Sean Hagan (PIIE) Aug 24, 2021
In June of this year, President Joseph R. Biden Jr. launched an anti-corruption initiative that received less attention than it deserved. The president's memorandum declared combatting corruption at home and abroad a core US national security interest and initiated an interagency review process to formulate a comprehensive anti-corruption strategy.

Powell Should Send a Message on Phasing Out Quantitative Easing
Bloomberg View Aug 24, 2021
The Federal Reserve must grapple with two risks: that too little demand will stall the recovery, or that too much will force inflation above target. This changes the QE calculation.

Will Slow-and-Steady Europe Win the Economic Recovery Race?
Marcus Ashworth (Bloomberg View) Aug 24, 2021
Growth seems more consistently positive than the U.S. and the U.K. But will it survive a potential American taper tantrum?

Powell's Jackson Hole Speech Came Three Years Too Early
Daniel Moss (Bloomberg View) Aug 24, 2021
The Fed chair’s comments in 2018 didn’t make history, but his argument for taking things slowly resonate today amid the global delta outbreak.

Australia Has Lessons for India’s Asset Recycling Plan
Andy Mukherjee (Bloomberg View) Aug 24, 2021
There’s already a worrying rise in the concentration of economic power in India in everything from transport to telecom, and this latest bid could intensify the problem.

Fed Decries a Wealth Gap It Helps Perpetuate
Lisa Abramowicz (Bloomberg View) Aug 24, 2021
The longer the central bank continues ultra-easy monetary conditions, the more the richest families benefit disproportionately.

A World of Heat and Headwinds
Michael Spence (Project Syndicate) Aug 24, 2021
The outlook for the global economy has gone from hopeful to bleak in the space of just a few months, owing to the rise of the Delta variant, climate-driven disasters, and previously underappreciated supply-chain disruptions. In fact, it is now hard not to conclude that future growth and development are in peril.

Olivia White and Anu Madgavkar (Project Syndicate) Aug 24, 2021
Establishing and expanding digital financial data-sharing systems presents complex technical and regulatory challenges. But secure and trusted schemes also offer a large potential upside for consumers, financial institutions, and the economy.

The Transformative Power of Early Education
Manos Antoninis (Project Syndicate) Aug 24, 2021
Despite the importance of a person’s early years, an estimated two in five children, mostly in low- and lower-middle-income countries, are still completely missing out on pre-primary school. Giving everyone the same educational opportunity from the beginning can play a powerful role in fostering inclusion.

COVID and the Conservative Economic Crack-up
Eric Posner (Project Syndicate) Aug 24, 2021
Free-market advocates have been unable to stem the erosion of intellectual and public confidence in their arguments. Two prominent economists, both former Trump administration officials, recently showed that those arguments have now veered into incoherence.

IMF loans and offshore financial flows
Shekhar Aiyar and Manasa Patnam (VoxEU) Aug 24, 2021
Recent research suggests that World Bank aid disbursements are associated with outflows from recipient countries to offshore financial centres, indicating elite capture of aid. This column uses 25 years of data to examine whether the same is true for IMF lending. It finds no evidence that IMF loans are diverted to offshore bank accounts. This could be because IMF lending differs in structural respects – such as conditionality, concessionality, and continuity – from World Bank aid.

The COVID Charter
Rajiv J. Shah (FA) Aug 24, 2021
A new development model for a world in crisis.

Maersk points the way to a lower-carbon future
FT View Aug 25, 2021
Global shipping industry risks being a laggard in cutting emissions.

What the Bank of England exit strategy signals for other central banks
Karen Ward (FT) Aug 25, 2021
Investors need to watch out for any potential shift in thinking.

Halting east Asia’s education arms race could help birth rates
Robin Harding (FT) Aug 25, 2021
Rather than a tutoring crackdown, China and Japan should overhaul systems that make one child’s gain another’s loss.

To Kill a Democracy and Modi’s India — a dream in peril
James Crabtree (FT) Aug 25, 2021
Two books look at the rise of autocracy and inequality in the country.

Wealthy nations under pressure to pass IMF stimulus on to poor countries
Jonathan Wheatley (FT) Aug 25, 2021
Low-income members handed just $21bn of the $650bn of special drawing rights issued to cushion pandemic hit.

Supply chains are a mess. So how come trade is booming?
Claire Jones (FT) Aug 25, 2021
At first glance, the economic headlines make for some mixed messages.

Banks Are Bingeing on Bonds, but Not Because They Want To
Matt Phillips (NYT) Aug 25, 2021
Banks are awash in deposits, and their customers are taking out fewer loans. So they have little choice but to buy up government debt, even if it means skimpy profits.

IMF Funding for the Taliban?
WSJ Aug 25, 2021
Yellen’s expanded SDRs could become cash for the jihadists.

We Need Cap-and-Trade For Individuals As Well As Companies
Andreas Kluth (Bloomberg View) Aug 25, 2021
Personal carbon allowances may be a truly big idea whose time has finally come. There should be an app for that.

Libor Should Die With a Whimper, Not a Bang
Mark Gilbert (Bloomberg View) Aug 25, 2021
Sterling markets have been the quickest to abandon the discredited interest-rate benchmarks. Regulators elsewhere should pay heed.

Used Solar Panels Are Powering the Developing World
Adam Minter (Bloomberg View) Aug 25, 2021
An overlooked niche in the energy trade is keeping high-tech waste out of the trash — and helping to connect millions of people to reliable electricity.

Three Years of Living Dangerously With Indonesia’s Radical Experiment
Daniel Moss (Bloomberg View) Aug 25, 2021
Once subversive ideas are now ho-hum, with Jakarta signaling its emergency economic measures will be needed for a while yet.

The Pandemic’s Impact on China’s Growth Prospects
Yu Yongding (Project Syndicate) Aug 25, 2021
While a policy failure is largely responsible for China’s disappointing growth in the second quarter of 2021, a policy change might not be enough to get the economy back on track. Instead, China’s economic recovery may well depend, above all, on how the fight against COVID-19 unfolds.

Jackson Hole offers the Fed a chance to provide clarity
FT View Aug 26, 2021
Delta variant’s spread in the US will overshadow the central banking jamboree.

Welcome to the great speculative era
Philip Coggan (FT) Aug 26, 2021
There are plenty of tools for investors, including Spacs and cryptocurrencies.

Will gold have its day as a crisis hedge?
Stefan Wagstyl (FT) Aug 26, 2021
Palantir’s investment in bullion bars raises questions for retail savers.

Central banks need to go slow on digital currencies
Megan Greene (FT) Aug 26, 2021
New technologies will transform global banking but rushing risks great harm to the system.

Now It’s Everyone’s Dollar, and Everyone’s Problem
Joseph C. Sternberg (WSJ) Aug 26, 2021
Debate over who should lead the Fed will focus on regulation and politics. What about the currency?

The Future of Development: Lessons from China’s Success (and Failures)
Shanta Devarajan and Ranil Dissanayake (CGD) Aug 26, 2021
Our series on the big challenges and opportunities for developing countries over the next couple of decades has so far largely focused on specific sectors: agriculture, health and finance. The fourth took a different tack, considering instead what we should—and should not—learn from the most dramatic development success of the past century: China.

Is Norway the New East India Company?
Branko Milanovic (Globalist) Aug 26, 2021
A tale of gas and oil, opium and hypocrisy.

Is This the Last Charge of the Stimulus Brigade?
Marcus Ashworth (Bloomberg View) Aug 26, 2021
The U.S. is closer to spending big on infrastructure. Beijing is pumping more credit into its economy. The IMF and the EU are doling out cash. What effect is all this money going to have?

South Korea Doesn't Seem Too Worried About Delta. Are You?
Daniel Moss (Bloomberg View) Aug 26, 2021
The first major Asian economy to hike rates post-pandemic is more stressed about surging household debt and asset bubbles. That’s a big bet at a risky moment.

Don’t Throw Out the Baby with the Greenwashing
Mark Gilbert (Bloomberg View) Aug 26, 2021
Regulators are investigating DWS’s ESG practices. While the risks of misrepresentation are real, they shouldn’t hobble efforts to allocate capital with virtue in mind.

The Communist Dotcom Bubble Is a Dead Giveaway
Matthew Brooker (Bloomberg View) Aug 26, 2021
The more China’s tech companies pledge to dole out to the government’s favored social causes, the more the stock market says they’re worth.

America’s Big Oil Problem
Clair Brown (Project Syndicate) Aug 26, 2021
For decades, Big Oil has wielded more power than US voters, but the Intergovernmental Panel on Climate Change’s latest report shows unequivocally why this must end. To keep our planet habitable, popular majorities in favor of climate action must come together and demand that their government do what is needed.

Japan's Delta Desperation
Takatoshi Ito (Project Syndicate) Aug 26, 2021
When he succeeded Shinzo Abe last year, Japanese Prime Minister Yoshihide Suga was hoping to parlay a general election victory into his own re-election as the leader of the Liberal Democratic Party. But despite a generally successful Olympic Games, a pandemic surge and his own inaction have derailed Suga's plan.

The long-run effects of R&D place-based policies
Helena Schweiger, Alexander Stepanov, and Paolo Zacchia (VoxEU) Aug 26, 2021
Localised innovation policies, such as local R&D clusters, are very popular, yet the evidence about their effectiveness is scarce in the short run, let alone the long run. This column fills the gap by studying the long-run effects of a historic localised place-based innovation policy in the form of Russian science cities. It finds that in present-day Russia, science cities remain more innovative and productive, host more highly skilled workers, and pay them higher salaries.

Fed should prepare for autumn financial plumbing problem
John Dizard (FT) Aug 27, 2021
Collateral chains are key to market liquidity, but credit conditions could tighten.

Central banks need to stop the mission creep
Merryn Somerset Webb (FT) Aug 27, 2021
Political statements and climate change initiatives distract bankers from managing inflation.

Why Would an Economist Ever Look on the Bright Side?
Jeanna Smialek (NYT) Aug 27, 2021
For Wall Street, and the dismal science as a whole, trouble is around every corner even as the economy booms.

Liquidity in times of crisis
Pierre Ortlieb (OMFIF) Aug 27, 2021
The advantages of holding gold and inflation-protected government bonds.

Fed Chair Jerome Powell Schools the Inflation Hawks
Robert Burgess (Bloomberg View) Aug 27, 2021
Reducing monetary stimulus is appropriate at this stage of the recovery, but it won't do anything to curb the recent spike in prices.

Modi’s Green New Deal Might Actually Work
Mihir Sharma (Bloomberg View) Aug 27, 2021
India is resisting a net-zero target, yet it also needs a new growth story. A focus on hydrogen, electric vehicles and energy-efficient factories could win over investors.

How Paradigm Blindness Leads to Bad Policy
Andrew Sheng and Xiao Geng (Project Syndicate) Aug 27, 2021
Though we live in a highly complex, networked world, the paradigm that guides policymaking is largely linear, mechanical, and “rational.” This leaves us blind to the obvious – including our own blindness – and vulnerable to conceptual traps and collective-action problems.

The Case for a Food Systems Stability Board
Sandrine Dixson-Declève, José Antonio Ocampo, and Felia Salim (Project Syndicate) Aug 27, 2021
The absence of a Food Systems Stability Board is a notable gap in the global governance architecture needed to bolster sustainability and resilience. By agreeing to launch consultations regarding the creation of such a body, governments could contribute to a better future for hundreds of millions of highly vulnerable people.

Mind the Mind Gap
Ricardo Hausmann (Project Syndicate) Aug 27, 2021
While developing countries have been catching up to their richer counterparts on some key metrics, they appear to be falling behind on others. Most worrisome is a growing gap in the local capabilities needed to make the most of new technological innovations.

The effect of infrastructure on firm gains from trade liberalisation: Evidence from Ethiopia
Matteo Fiorini, Marco Sanfilippo, and Asha Sundaram (VoxDev) Aug 27, 2021
Improvements in road infrastructure magnify firm productivity gains from input tariff liberalisation.

Declining capital formation in Japan and the role of intangibles
Tsutomu Miyagawa and Takayuki Ishikawa (VoxEU) Aug 27, 2021
The Japanese economy has seen a decline in the contribution of capital accumulation to economic growth since 2000. This column uses over 30 years of national productivity data to explore this trend. It finds that the fall in tangible capital accumulation has largely been offset by investment into intangible capital. However, the growth in tangible and intangible capital accumulation has been imbalanced, calling for support of both types of asset accumulation.

International Economic Outlook: August 2021
Nick Bennenbroek and Brendan McKenna (WF Econ Group) Aug 27, 2021
COVID has intensified over the course of August and is beginning to have an impact on consumer and business sentiment. Just this month, consumer and business sentiment data in the United States, Australia and parts of Europe softened significantly, highlighting the increased caution in the span of a month. Given how quickly sentiment has deteriorated, we now believe our downside scenario for the global economy is edging closer to fully unfolding. For the time being, the outlook for global monetary policy has changed only modestly; however, the Reserve Bank of New Zealand (RBNZ) surprised markets and held off on raising interest rates recently, which gave market participants some concern global policymakers may abandon, or at least pause, plans to tighten monetary policy. That said, RBNZ policymakers reinforced that rates are likely to go higher, and in our view, central bankers around the world in general share the same sentiment. With consumers turning more cautious and activity likely to slow going forward, we believe market participants could seek safe-haven investments through the end of this year. The U.S. dollar has already exhibited strong safe-haven qualities recently and will likely continue to do so going forward, which should see the dollar's recent stronger run being extended until at least the end of this year.

Jackson Hole may be virtual, but investor anxieties remain real
Katie Martin (FT) Aug 28, 2021
Powell speech likely leaves us back where we were before the Fed chief spoke on monetary policy.

Some Say Low Interest Rates Cause Inequality. What if It’s the Reverse?
Neil Irwin (NYT) Aug 28, 2021
With an increasing share of the world’s wealth in the hands of its top earners, a savings glut is pushing asset prices up and interest rates down.

Despite his shortcomings, Jerome Powell should be reappointed Fed chairman
Economist Aug 28, 2021
It would be a bad time to cast any doubt on the Fed’s independence.

Adam Tooze’s new book documents the economic impact of the pandemic
Economist Aug 28, 2021
It demonstrates the value and pitfalls of instant history.

The battle over the future of work is about autonomy
Emma Jacobs (FT) Aug 29, 2021
While the debate around offices reopening pits the workplace against the home, the real issue is control.

Powell Takes a Victory Lap
WSJ Aug 29, 2021
The Fed chairman says everything the White House wants to hear.

Dollars for Duds in Latin America
Mary Anastasia O’Grady (WSJ) Aug 29, 2021
A new round of IMF assistance rewards bad policy and criminal governments.

Indonesia struggling to tighten its bulging debt
John McBeth (AT) Aug 29, 2021
Indonesian Finance Minister Sri Mulyani Indrawati has set an ambitious 2022 budget deficit target of 4.85% as she strives to keep faith with Covid-19 emergency legislation that mandates a return to below 3% of gross domestic product (GDP) by the end of 2023, months out from the next presidential and general elections.

How to Make Vietnam a Powerful Trade Ally for the U.S.
Noah Smith (Bloomberg View) Aug 29, 2021
Helping America's old war-time foe transition to a more high-tech economy would make the Asian nation a more valuable strategic partner.

Fed’s Powell Cheers Markets But Risks a Mistake
Mohamed A El-Erian (Bloomberg View) Aug 29, 2021
Investors will happily continue to give the Federal Reserve chair the benefit of the doubt, but there’s good reason to question his characterization of policy being “well positioned.”

Global weather disruptions, food commodity prices, and economic activity
Jasmien De Winne and Gert Peersman (VoxEU) Aug 29, 2021
The world is expected to see a significant rise in the frequency, duration, and intensity of extreme weather events. This column examines the macroeconomic effects of global food commodity price increases that are caused by global harvest and weather disruptions, and finds that the decline in economic activity is substantial and greater in advanced than in low-income countries. The findings suggest that the consequences of climate change for advanced countries may be greater than previously thought, and the strong rise in food prices since the outbreak of COVID-19 could seriously impede the recovery.

Price discovery in markets not imperilled by index funds
Amin Rajan (FT) Aug 30, 2021
Flows by active traders still set pricing levels despite relentless rise of passive vehicles.

Emerging economies cannot afford ‘taper tantrum’ repeat, says IMF’s Gopinath
Colby Smith and Jonathan Wheatley (FT) Aug 30, 2021
Fund’s chief economist sounds cautious note as Fed inches closer to dialling back stimulus.

Investors in Xi’s China face a rude awakening
George Soros (FT) Aug 30, 2021
The leader’s crackdown on private enterprise shows he does not understand the market economy.

The economy that covid-19 could not stop
Economist Aug 30, 2021
Trade and foreign investment helped Vietnam emerge from extreme poverty. Can they make it rich?

Divergent climate change policies among countries could spark a trade war. The WTO should step in.
Gary Clyde Hufbauer (PIIE) Aug 30, 2021
Two months before the next big United Nations climate conference in November, the three biggest greenhouse gas emitters—the United States, Europe, and China—are at loggerheads over how to reduce reliance on fossil fuels without excessively disadvantaging their own economies. Their confrontation is based on fears that if each country or region takes tough steps on climate change, the other two players will take unfair advantage in the arena of international trade.

Xi Is Forgetting the Very Thing That Made China Great Again
Bloomberg View Aug 30, 2021
The economy only began to excel when the party’s cadres released their grip from the nation’s throat. Beijing should not take a backward step now.

The IMF Needs to Sync Its Belarus Policy with the West
Nigel Gould-Davies (Bloomberg View) Aug 30, 2021
Major western powers still dominate the institution but it is financing an autocratic regime they have no longer recognize as legitimate.

Higher Prices Are Here, Whether or Not You Call It Inflation
Justin Fox (Bloomberg View) Aug 30, 2021
While economists hold their lofty debates about the bigger picture, down on the ground things cost more now, and that’s tough for a lot of Americans.

Climate vs. Capitalism?
Jean Pisani-Ferry (Project Syndicate) Aug 30, 2021
Addressing climate change will require a massive transition from fossil fuels to cleaner technologies, as well as behavioral changes on the part of millions of households. The existing economic system can manage the challenge, but political leaders should be clear about what it will entail.

The AI Revolution and Strategic Competition with China
Eric Schmidt (Project Syndicate) Aug 30, 2021
Artificial intelligence is going to reorganize the world and change the course of human history. With China increasingly using the technology to usher in a new form of authoritarianism, the world’s democracies must come together and stand up for their own values and strategic interests.

The Stagflation Threat Is Real
Nouriel Roubini (Project Syndicate) Aug 30, 2021
There is a growing consensus that the US economy’s inflationary pressures and growth challenges are attributable largely to temporary supply bottlenecks that will be alleviated in due course. But there are plenty of reasons to think the optimists will be disappointed.

The Electric Vehicle Revolution Goes Global
Reda Cherif, Fuad Hasanov, and Min Zhu (Project Syndicate) Aug 30, 2021
The exponential increase in EVs suggests that they will take over the global auto market by the early 2040s. This will send oil prices plummeting, with profound economic and geopolitical consequences.

Labour adjustment and productivity dynamics
Maarten Dossche, Andrea Giovanni Gazzani, and Vivien Lewis (VoxEU) Aug 30, 2021
Labour productivity is more procyclical in OECD countries with lower employment volatility. To capture this new stylised fact, this column proposes a business cycle model with employment adjustment costs, variable hours, and labour effort. In the model with variable effort, it shows that greater labour market frictions are associated with procyclical labour productivity as well as stable employment. In contrast, the constant-effort model fails to replicate the observed cross-country pattern in the data. Labour market deregulation has a greater effect on labour productivity cyclicality and employment volatility when effort can vary.

Effects of Asset Valuations on U.S. Wealth Distribution
Renuka Diwan, Evgeniya A. Duzhak, and Thomas M. Mertens (FRBSF Econ Letter) Aug 30, 2021
Net household wealth is highly unequal across U.S. households, and the types of assets people hold tend to change according to their position along the distribution of wealth. The pattern of household portfolios shows that the top 1% of households hold most of their wealth in stocks, while home values are most important for the wealth of the bottom half of the distribution. Higher growth in equity values relative to real estate values therefore tends to widen the wealth distribution, as experienced during the coronavirus pandemic.

The troubling parallels between supply chains and securitisation
Peter Atwater (FT) Aug 31, 2021
Pandemic raises concerns about just-in-time inventory model for companies.

Vietnam’s status as manufacturing powerhouse is shaken by Covid surge
John Reed (FT) Aug 31, 2021
The Delta variant is causing havoc in Ho Chi Minh City, disrupting business and supply chains of global brands.

The Economy Is Booming but Far From Normal, Posing a Challenge for Biden
Jim Tankersley and Ben Casselman (NYT) Aug 31, 2021
High inflation, ghostly downtowns and a resurgent virus have rattled consumers and created new obstacles as the president tries to push his broader economic agenda.

Europe’s Latest Inflation Surprise
WSJ Aug 31, 2021
Maybe it’s time for a global response to a global problem.

No bad market news allowed in China
William Pesek (AT) Aug 31, 2021
China is proving remarkably skilled at taking its censorship policies global. From NBA players to H&M executives to European Union officials to Hollywood celebrities like John Cena, the outside world is learning it’s best to avoid offending President Xi Jinping’s Communist Party. But are Xi era sensitivities about to cut into economic bone?

Taiwan's early emphasis on exports vindicates the power of economic ideas
Douglas A. Irwin (PIIE) Aug 31, 2021
Taiwan provides a concrete example of Krugman's claim that economic ideas matter for policy.

Which will be the top 30 consumer markets of this decade? 5 Asian markets below the radar
Homi Kharas and Wolfgang Fengler (Brookings) Aug 31, 2021
Despite COVID-19, the global consumer class—those who are middle class or rich—is rising fast. In an earlier post, we showed that we are experiencing a truly secular shift in the size of this global consumer class. COVID-19 is a transitory setback of one or two years in this long-term shift. Since 2000, the global consumer class grew by more than 4 percent each year, reaching a new milestone of 4 billion people—for the first time—in 2020 or 2021. At the beginning of this century, the middle class was mostly a Western phenomenon. Consumer companies were selling their goods in OECD countries, especially the USA and Europe. Today, the consumer class is global and increasingly Asian. Spending by the Asian middle class exceeds that in Europe and North America combined.

The EU’s Guidelines on U.S. Visitors Sound Like Trade War Diplomacy
Lionel Laurent (Bloomberg View) Aug 31, 2021
The people of the European Union have been kept out of America for almost two years because of Covid. It’s time the bloc showed some teeth.

Should I Sell When the Stock Market Wobbles? Some Advice
Stuart Trow (Bloomberg View) Aug 31, 2021
How to limit the fallout from market stumbles, while remaining true to the principles of long-term wealth accumulation.

Back to the Seventies?
Kenneth Rogoff (Project Syndicate) Aug 31, 2021
Many economists seem to view inflation as a purely technocratic problem, and most central bankers would like to believe that. In fact, the roots of sustained inflation mainly stem from political economy problems, and here the long list of similarities between the 1970s and today is unsettling.

Reduced R&D investments: A potential flip side of immigration
Torje Hegna and Karen Helene Ulltveit-Moe (VoxEU) Aug 31, 2021
Though R&D is a key driver of productivity growth, the effects of immigration on R&D investment remain poorly understood. This column investigates the impact that a large immigration shock – in this case, the sudden influx of migrants to Norway following the 2004 enlargement of the EU – had on R&D investments. The results suggest that immigration shocks can have a negative impact on a receiving country’s R&D investments, with potentially long-term consequences for productivity growth.

The Divestment Delusion
Yemi Osinbajo (FA) Aug 31, 2021
Why banning fossil fuel investments would crush Africa.