News & Commentary:

Articles/Commentary

Article 50 is not for ever and the UK could change its mind
Jean-Claude Piris (FT) Sep 1, 2016
To Brexiters this would be heresy, a repudiation of the will of the people.

Patience is needed for Brazil to come good again
Michael Hasenstab (FT) Sep 1, 2016
With the prospect of political stability returning, Brazil is a good long-term bet.

Europe lobby warns on China market barriers
Tom Mitchell and Christian Shepherd (FT) Sep 1, 2016
Business group says lack of access ‘politically unsustainable’ as Chinese investment pours into EU.

Small Nations—Not the G-20—Lead the Way
David Skilling and Michael O'Sullivan (WSJ) Sep 1, 2016
Countries like Brunei and Estonia are implementing first what later becomes mainstream.

On Digital Currencies, Central Banks Should Lead
Yifei Fan (Bloomberg View) Sep 1, 2016
To create a safe, legal and widely used digital currency, central banks should lead the way.

The Lure of Protectionism Will Grow
Mohamed Aly El-Erian (Bloomberg View) Sep 1, 2016
Low growth and rising inequality have sparked a populist backlash on both sides of the Atlantic.

Securing the UN’s Future
Kevin Rudd (Project Syndicate) Sep 1, 2016
As the international order becomes more fragmented, strong global-governance institutions are crucial for addressing the world’s collective challenges – and yet rarely have our existing institutions been weaker. To reinvigorate multilateralism, the UN, in particular, will need to make major organizational changes.

Playing Defense in Europe
Mark Leonard (Project Syndicate) Sep 1, 2016
The most frightening periods in history have often been interregnums – moments between the death of one king and the rise of the next. The global order is in such a state now, and the EU’s goal, achievable only with flexibility and courage, must be to remain a viable project long enough to help write the new rules.

All the President’s Little Men
Andrei Kolesnikov (Project Syndicate) Sep 1, 2016
Russian President Vladimir Putin has been purging his closest and longest-serving advisers, replacing an old guard made up of relative equals with a new guard of loyal apparatchiks. A clear pattern has emerged: those who could speak to Putin as equals are being replaced by those whom he has created, and who owe their careers to him.

How to Fix Brazil
Eduardo Mello and Matias Spektor (FA) Sep 1, 2016
Breaking an addiction to bad government.

Brexit: Economic prosperity and voting behaviour
Gylfi Zoega (VoxEU) Sep 1, 2016
Britain’s decision to leave the EU surprised many. This column examines the relationship between economic prosperity and voting behaviour in the referendum. The regions that have benefitted most from immigration and trade voted most strongly in favour of remaining, while the regions where people feel most threatened voted to leave. In other countries fearing a similar EU exit, economic policy should aim to ensure that the gains from trade and immigration are as widespread as possible. Britain’s decision to leave the EU surprised many. This column examines the relationship between economic prosperity and voting behaviour in the referendum. The regions that have benefitted most from immigration and trade voted most strongly in favour of remaining, while the regions where people feel most threatened voted to leave. In other countries fearing a similar EU exit, economic policy should aim to ensure that the gains from trade and immigration are as widespread as possible.

Selected takeaways from the ECB’s Sintra Forum
Vitor Constâncio and Philipp Hartmann (VoxEU) Sep 1, 2016
The ECB’s 2016 Sintra Forum on Central Banking focused on the international monetary and financial system. In this column, the organisers of the forum highlight some of the main points from the discussions, including concerns that the world economy may be suffering from a shortage of safe assets and proposals for which areas international regulatory reforms should be further developed. The ECB’s 2016 Sintra Forum on Central Banking focused on the international monetary and financial system. In this column, the organisers of the forum highlight some of the main points from the discussions, including concerns that the world economy may be suffering from a shortage of safe assets and proposals for which areas international regulatory reforms should be further developed.

Measuring global hunger: The importance of variances
John Gibson (VoxEU) Sep 1, 2016
Different survey methodologies are typically employed to produce estimates of global hunger. This column considers some of the methodological issues that arise. Short reference periods for each household lead to overstated variances and the confounding of chronic and transient welfare components. The column goes on to present a new approach to measuring chronic hunger which tackles this sampling problem by employing an intra-year panel. Different survey methodologies are typically employed to produce estimates of global hunger. This column considers some of the methodological issues that arise. Short reference periods for each household lead to overstated variances and the confounding of chronic and transient welfare components. The column goes on to present a new approach to measuring chronic hunger which tackles this sampling problem by employing an intra-year panel.

China’s Infrastructure Play
Gal Luft (FA) Sep 1, 2016
Why Washington should accept the New Silk Road.

Intelligent Technology
Hal Varian (F&D) Sep 1, 2016
As digital applications encroach on various aspects of daily life, the impact on the economy will help us live smarter and better.

Robots, Growth, and Inequality
Andrew Berg, Edward F. Buffie, and Luis-Felipe Zanna (F&D) Sep 1, 2016
The robot revolution could have negative implications for equality.

The Dark Side of Technology
Chris Wellisz (F&D) Sep 1, 2016
The benefits of the digital age are tempered by the risks.

Two Faces of Change
Aditya Narain (F&D) Sep 1, 2016
New financial technologies hold both promise and pitfalls.

Big Data's Big Muscle
Sanjiv Ranjan Das (F&D) Sep 1, 2016
Computing power is driving machine learning and transforming business and finance.

Transmission Troubles
Adolfo Barajas, Ralph Chami, Christian Ebeke, and Anne Oeking (F&D) Sep 1, 2016
Heavy inflows of remittances impair a country's ability to conduct monetary policy.

The Private Debt Crisis
Richard Vague (Democracy) Sep 1, 2016
China is drowning in it. The whole world has too much of it. History suggests: This won’t end well.

Brazilian politics after the impeachment vote
FT View Sep 2, 2016
President Temer’s biggest challenges are the economy and corruption.

Echoes of 2008 as danger signs are ignored
Gillian Tett (FT) Sep 2, 2016
Absent from Jackson Hole was a full-blown discussion of issues concerning financial practitioners.

Theresa May appeases Conservative party with stance on Brexit
Sebastian Payne (FT) Sep 2, 2016
The decision to focus on migration controls is right politically.

China: the former EM darling
James Kynge (FT) Sep 2, 2016
Emerging market investors begin to retreat from China as fears grow over its debt pile.

Taking the Long View in investing: eight lessons
John Authers (FT) Sep 2, 2016
What Hindsight Capital, an imaginary fund with perfect foresight, would have done over the past decade.

Falling Midwest Crop Prices Need a Free-Trade Response
Bill Horan (WSJ) Sep 2, 2016
The feds buy $20 million of cheese to prop up prices. Yet the Pacific trade deal would boost dairy sales to Canada by $1.2 billion.

Jack Bogle: The Undisputed Champion of the Long Run
Holman Jenkins (WSJ) Sep 2, 2016
Vanguard’s founder on 40 years of indexing success and how to invest in today’s ‘extremely risky world.’

The rising complexity of the global economy
Sony Kapoor (OECD Insights) Sep 2, 2016
A complicated system (such as a car) can be disassembled and understood as the sum of its parts. In contrast, a complex system (such as traffic) exhibits emergent characteristics that arise out of the interaction between its constituent parts. Applying complexity theory to economic policy making requires this important recognition – that the economy is not a complicated system, but a complex one.

The Coming Storm for Global Financial Markets
A Gary Shilling (Bloomberg View) Sep 2, 2016
Market prices don't reflect economic fundamentals. That's worrying.

Europe's Broken Banks Need the Urge to Merge
Mark Gilbert (Bloomberg View) Sep 2, 2016
Europe needs fewer, more focused financial firms.

Indexing Is Capitalism at Its Best
Clifford Scott Asness (Bloomberg View) Sep 2, 2016
Piggybacking on prices developed by other people is fine. That's how free markets work.

The Unavoidable Costs of Helicopter Money
Michael Heise (Project Syndicate) Sep 2, 2016
The long-running debate about the advisability of so-called helicopter money has changed shape, as new ideas emerge about the form it could take – and questions arise about whether it is already being dropped on some economies. What hasn't changed is that it is a very bad idea.

Summer’s Unhappy Returns
Project Syndicate Sep 2, 2016
As much of the world resumes its normal post-summer routine, nothing in the global economy or the geopolitical order seems either normal or routine. What will it take for the world’s policymakers to overcome their crisis of imagination?

Reinventing IS-LM to explain secular stagnation
Roger Farmer and Konstantin Platonov (VoxEU) Sep 2, 2016
The concept of 'secular stagnation' asserts that unemployment remains high and output below potential because investors are pessimistic. This column presents a way to rethink the IS-LM model to include investor expectations. This 'IS-LM-NAC' model explains the slow recovery from the Great Recession, provides a theory-consistent explanation for secular stagnation, and suggests policy options to escape it. The concept of 'secular stagnation' asserts that unemployment remains high and output below potential because investors are pessimistic. This column presents a way to rethink the IS-LM model to include investor expectations. This 'IS-LM-NAC' model explains the slow recovery from the Great Recession, provides a theory-consistent explanation for secular stagnation, and suggests policy options to escape it.

What Else Can Central Banks Do?
Laurence Ball, Joseph Gagnon, Patrick Honohan and Signe Krogstrup (VoxEU) Sep 2, 2016
This column presents the latest Geneva Report on the World Economy, in which the authors argue that central banks can do more to stimulate economies and restore full employment when nominal interest rates are near zero. Quantitative easing and negative interest rates have had beneficial effects so far and can be used more aggressively, and the lower bound constraint can be mitigated by modestly raising inflation targets. This column presents the latest Geneva Report on the World Economy, in which the authors argue that central banks can do more to stimulate economies and restore full employment when nominal interest rates are near zero. Quantitative easing and negative interest rates have had beneficial effects so far and can be used more aggressively, and the lower bound constraint can be mitigated by modestly raising inflation targets.

The United Nations: What’s the Point?
Uri Friedman (Atlantic) Sep 3, 2016
It’s not clear the organization can effectively confront—or even survive—today’s challenges.

The role of BRICS in global governance
Huifang Tian (EAF) Sep 3, 2016
Along with other more traditional multilateral economic organisations, the BRICS countries consistently weigh into international economic affairs.

Free Trade Wins: The TTIP Is in Trouble
Mark Thornton (Mises Daily) Sep 3, 2016
It has recently surfaced that top European officials have declared the TTIP a de facto dead deal.

Lessons of past unconventional monetary policy
Patrick O'Brien and Nuno Palma (VoxEU) Sep 3, 2016
Today's unconventional central bank policies have historical precedent. One example is the suspension of convertibility of banknotes into gold by the Bank of England between 1797 and 1821. This column argues that, although there were important differences between then and now, it demonstrates that bank reputation and interaction between bank and state are vital to the success of unconventional policies. Also, short-term unconventional policies may persist long after a crisis has passed. Today's unconventional central bank policies have historical precedent. One example is the suspension of convertibility of banknotes into gold by the Bank of England between 1797 and 1821. This column argues that, although there were important differences between then and now, it demonstrates that bank reputation and interaction between bank and state are vital to the success of unconventional policies. Also, short-term unconventional policies may persist long after a crisis has passed.

Breaking the oil spell: The path to diversification
Reda Cherif, Fuad Hasanov and Min Zhu (VoxEU) Sep 3, 2016
Amid a persistent fall in oil prices, many oil-exporting countries are realising that economic diversification should be a top priority. One important pathway is to create a dynamic export sector. This column argues the standard policy of structural reforms – which mostly tackle ‘government failures’ rather than ‘market failures’ – are not sufficient. The state needs to intervene to change the incentive structure of firms and workers, and impose a strict accountability framework. Amid a persistent fall in oil prices, many oil-exporting countries are realising that economic diversification should be a top priority. One important pathway is to create a dynamic export sector. This column argues the standard policy of structural reforms – which mostly tackle ‘government failures’ rather than ‘market failures’ – are not sufficient. The state needs to intervene to change the incentive structure of firms and workers, and impose a strict accountability framework.

Policymakers should not dilute City of London regulation
FT View Sep 4, 2016
The answer to Brexit challenges is not a return to a light touch.

The transatlantic trade pact that risks more harm than good
Wolfgang Münchau (FT) Sep 4, 2016
As real incomes stagnate voters have concluded that economic gains benefit everyone but them.

So Long to the Asian Sweatshop
Adam Minter (Bloomberg View) Sep 4, 2016
Automation is coming for low-wage factory workers.

ASEAN centrality losing ground
Mathew Davies (EAF) Sep 4, 2016
Vientiane will host the 28th ASEAN Summit this week, with the summit documents rotating around the same themes that ASEAN has been promoting for decades: unity and centrality. The worry, both at the upcoming summit and beyond, is that there is little effort to put substance into these goals.

Structural reforms in difficult times
Aida Caldera, Alain de Serres and Naomitsu Yashiro (VoxEU) Sep 4, 2016
Structural reforms can have adverse effects in the short run if implemented under weak macroeconomic conditions. This column argues that prioritising reform measures that bring short-term benefits even in a bad conjuncture, and packaging them to benefit from reform complementarities across product and labour markets, remains the most promising growth strategy, especially in the post-Global Crisis context Structural reforms can have adverse effects in the short run if implemented under weak macroeconomic conditions. This column argues that prioritising reform measures that bring short-term benefits even in a bad conjuncture, and packaging them to benefit from reform complementarities across product and labour markets, remains the most promising growth strategy, especially in the post-Global Crisis context

Consumer heterogeneity and the gains from trade
Sergey Nigai (VoxEU) Sep 4, 2016
Trade economists routinely evaluate changes in consumer welfare due to trade based on the assumption of a representative consumer. This column argues that this assumption often disguises much of the heterogeneity in gains across the income distribution, which leads to an overestimation of the gains for the poor and underestimation for the rich, especially for developing countries. This could help explain the lack of public consensus on the benefits of recent free trade agreements.

‘Game Over’ by George Papaconstantinou
Peter Spiegel (FT) Sep 5, 2016
‘How does it feels to be Greece’s most hated man?’ The question felt like a punch in the stomach.

Asean is coming together — slowly
Simon Roughneen (FT) Sep 5, 2016
Much depends on how the bloc positions itself alongside China and India.

Japan’s plea for clarity on Brexit for business
FT View Sep 5, 2016
The concerns raised by Tokyo are just as pressing for UK companies.

What my loan portfolio tells us about the future of India
Amy Kazmin (FT) Sep 5, 2016
Notebook: Aspiring members of the middle class remain vulnerable to moneylenders.

Debt issuance by EM corporates turns negative
Steven Johnson (FT) Sep 5, 2016
Repayment of interest and principal to exceed new borrowing.

Call to action: China’s Xi Jinping seeks to rally G20 leaders around global growth cause
Zhou Xin (SCMP) Sep 5, 2016
Chinese president presses structural reform as part of policy mix but other group members may be in no economic mood to sign up, analyst says

When Growth Isn't Good
Mihir Sharma (Bloomberg View) Sep 5, 2016
Government spending is propping up the Indian economy.

Mapping Britain's Exit From Europe
Clive Crook (Bloomberg View) Sep 5, 2016
The only sensible way forward is an enhanced free-trade agreement.

Africa and the G20’s Moment of Truth
Olusegun Obasanjo (Project Syndicate) Sep 5, 2016
An increasingly atomized and uncertain world demands a new multilateralism, which world leaders should embrace this month at the G20 summit in Hangzhou, China. They can start by following through on past promises to support Africa's sustainable development and to restore global financial stability.

Chile’s Pension Crunch
Andrés Velasco (Project Syndicate) Sep 5, 2016
Chile, which since 1981 has required citizens to save for retirement in individual accounts, managed by private administrators, is supposed to be the poster child for pension reform. Yet hundreds of thousands of Chileans have taken to the streets to protest against low benefits.

The Case Against Cash
Kenneth Rogoff (Project Syndicate) Sep 5, 2016
The world is awash in paper currency, with major country central banks pumping out hundreds of billions of dollars’ worth each year, mainly in very large denomination notes such as the $100 bill. And all this cash is facilitating growth mainly in the underground economy, not the legal one.

The G20 Embraces Green Finance
Ma Jun and Simon Zadek (Project Syndicate) Sep 5, 2016
The G20’s finance ministers and central-bank governors have become increasingly convinced that “green finance” should be central to economic development strategies. This week’s summit in China is the ideal place to start implementing an agenda that reflects this realization.

Brazil’s Way Out
Otaviano Canuto (Project Syndicate) Sep 5, 2016
Now that impeached Brazilian President Dilma Rousseff is out of office, the newly empowered administration of President Michel Temer must clean up the mess she left behind. Can Temer’s government save Brazil’s crumbling economy?

Early globalisation and the law of one price
Mario Crucini and Gregor Smith (VoxEU) Sep 5, 2016
Commodity price convergence is often seen as the best way to measure the integration of markets that defines globalisation. This column reviews research on historical prices and also presents intranational evidence from Sweden from 1732 to 1914. Price convergence appears to date to the 18th century, well before the adoption of the telegraph or the railway. For emerging economies today, intranational price convergence arising from declining internal distance effects may be a precursor to globalisation. Commodity price convergence is often seen as the best way to measure the integration of markets that defines globalisation. This column reviews research on historical prices and also presents intranational evidence from Sweden from 1732 to 1914. Price convergence appears to date to the 18th century, well before the adoption of the telegraph or the railway. For emerging economies today, intranational price convergence arising from declining internal distance effects may be a precursor to globalisation.

Inclusive capitalism must begin at home
FT View Sep 6, 2016
G20 leaders need to change domestic rhetoric as well as policies.

The tide of globalisation is turning
Martin Wolf (FT) Sep 6, 2016
Trade liberalisation has stalled and one can see a steady rise in protectionist measures.

Why emerging market bonds are not the answer for the yield-starved
Jonathan Wheatley (FT) Sep 6, 2016
The total figure runs into the trillions, but the pool available to western investors is small.

South Africa: political risk revives
Dan Bogler (FT) Sep 6, 2016
With Zuma fighting for survival, investors should brace for volatility

Analysts laud ‘remarkable’ pick-up in emerging markets
Steve Johnson (FT) Sep 6, 2016
Inflows so strong that BofA Merrill Lynch sees risk of EM bubble in 2017.

A Non-Contest at the World Bank
NYT Sep 6, 2016
The lack of competition for the top job represents a lost opportunity to use the election as a forum to debate the institution's future.

How to Assess China’s G20 Presidency
Noe van Hulst (OECD Insights) Sep 6, 2016
The final communique has been coined The Hangzhou Consensus: linking a vision based on innovative, sustainable economic growth and a well-balanced policy mix with forcefully tackling inequalities and promoting an open global economy

Brazil’s Post-Impeachment Economics
Monica de Bolle (PIIE) Sep 6, 2016
Financial markets’ renewed fondness for Brazil—the country’s stock market has rallied 60 percent this year—is hard to square with the country’s increasingly worrisome political and economic realities.

NAFTA's Impact on the U.S. Economy: What Are the Facts?
K@W Sep 6, 2016
It's not easy to disentangle the impact that NAFTA has had on the U.S. economy from other economic, social and political factors that have influenced U.S. growth.

Why China Isn't a Financial Center
Christopher Balding (Bloomberg View) Sep 6, 2016
Without free-flowing capital, China's markets can't compete.

Risk Is Worse When You Can’t See It
Mark Buchanan (Bloomberg View) Sep 6, 2016
New research highlights the dangers of complexity in banking.

How Index Funds Prevailed
Stephen Mihm (Bloomberg View) Sep 6, 2016
The notion of eliminating the role of the middleman was not popular with money managers.

The EU's Migration Crisis Is Far From Over
Leonid Bershidsky (Bloomberg View) Sep 6, 2016
Thousands of undocumented migrants are still arriving in the EU, and there's no easy solution to the political crises that creates.

Leadership Icons of a Globalized World
Harold James (Project Syndicate) Sep 6, 2016
In today’s global culture, where simple models help make sense of so much complexity, German Chancellor Angela Merkel and Russian President Vladimir Putin embody opposing archetypes of national leadership. Such icons emerge during periods of political and economic strain, with other national leaders aligning with one or the other.

Meant to Promote Cooperation, G20 Meeting Shows Discord
Chris Miller (YaleGlobal) Sep 6, 2016
G20 leaders, many embattled and questioned at home, struggle to manage globalization or explain its rewards

Happiness inequality and the importance of trust
John Helliwell (VoxEU) Sep 6, 2016
Discussions about inequality tend to focus on the distribution of income and wealth. This column argues for a shift in focus towards another source of inequality – subjective wellbeing. Wellbeing inequality has grown significantly for the world as a whole and in eight of the ten global regions. One way to address this inequality is to increase social trust. Discussions about inequality tend to focus on the distribution of income and wealth. This column argues for a shift in focus towards another source of inequality – subjective wellbeing. Wellbeing inequality has grown significantly for the world as a whole and in eight of the ten global regions. One way to address this inequality is to increase social trust.

Premarital sex ratios and household saving rates
Charles Yuji Horioka and Akiko Terada-Hagiwara (VoxEU) Sep 6, 2016
China’s one-child policy and a general preference for sons increased competition among grooms, whose families typically bear marriage expenses. This is believed to have increased household saving in the country. This column explores whether the same is observed in other countries with unbalanced sex ratios. Premarital sex ratios are found to have a significant impact on household saving rates in India and Korea, with the direction of the effect dependent on whether the bride’s (India) or groom’s (Korea) family is typically expected to bear the brunt of marriage-related expenses. China’s one-child policy and a general preference for sons increased competition among grooms, whose families typically bear marriage expenses. This is believed to have increased household saving in the country. This column explores whether the same is observed in other countries with unbalanced sex ratios. Premarital sex ratios are found to have a significant impact on household saving rates in India and Korea, with the direction of the effect dependent on whether the bride’s (India) or groom’s (Korea) family is typically expected to bear the brunt of marriage-related expenses.

Fed Communication: Words and Numbers
Fernanda Nechio and Rebecca Regan (FRBSF Econ Letter) Sep 6, 2016
In response to the global financial crisis, the Federal Reserve relied more heavily on communication to shape expectations. Since 2012 the Fed has released the Summary of Economic Projections reflecting the range of expectations from FOMC meeting participants. Policymakers also deliver speeches to further clarify their views. Using textual analysis to quantify the content of those speeches reveals a somewhat diverse set of views among policymakers. Regardless of the broad range of views, there is a positive relationship between the content of the centermost speech and the median projection for the policy rate.

Silicon Valley’s European stars are returning home
Lars Fjeldsoe-Nielsen (FT) Sep 7, 2016
Obstacles have either been removed or fallen away.

Shrink the big container ship to fit the world
John Gapper (FT) Sep 7, 2016
Shipping companies such as Hanjin have not been through a crisis quite as intense in their history.

Brexit means myriad trade-offs and tough choices
Chris Giles (FT) Sep 7, 2016
The British prime minister must stop saying the resultant deal will benefit everyone — it won’t.

China’s Big Debt Worries George Soros. Should It Worry You?
Michael Schuman (NYT) Sep 7, 2016
Its borrowing binge looks familiar to those who study financial crises elsewhere. But others say China can cope if it makes the right choices.

G-20 Leaders Pledge to Revitalise Growth Agenda at Hangzhou Summit
Bridges, Volume 20, Number 29 Sep 7, 2016
Leaders from the G-20 coalition of advanced and emerging economies concluded two days of high-level meetings in China on Monday with a pledge to implement a new "Hangzhou Consensus" – a set of policies aimed at shoring up global economic and trade growth, boosting confidence, and responding to anti-globalisation sentiments that have been on the rise in some countries.

TTIP: Political Support in Europe Wavers Ahead of Bratislava Meet
Bridges, Volume 20, Number 29 Sep 7, 2016
All eyes are set to turn to Bratislava this month as the European Council meets to debate the future of bilateral trade and investment talks with the US, particularly amid suggestions from some ministers and national leaders that the process should be put on hold.

As TPP Ratification Faces Uphill Battle in Washington, Questions Build for RCEP Timing
Bridges, Volume 20, Number 29 Sep 7, 2016
The prospects for the US Congress to ratify the Trans-Pacific Partnership (TPP) Agreement are looking increasingly dim this year, despite continued efforts by the White House to build support for the deal in a fraught election climate.

The False Promises Behind Quantitative Easing
Claudio Grass (Mises Daily) Sep 7, 2016
Loose monetary policy is based on a trickle-down theory designed to encourage spending and punish saving. This will lead to greater pain in the end.

Financial Stability Board Acts to Assess the Decline in Cross-Border Banking
Vijaya Ramachandran and Matt Juden (CGD) Sep 7, 2016
Last November, a CGD working group of experts convened to address the unintended consequences of anti-money laundering (AML) policies for poor countries, where they recommended that the Financial Stability Board (FSB) should take the lead on addressing problematic de-risking by banks. Below, we outline our takeaways on the FSB’s progress thus far.

The G-20 Gets It, but Is Unlikely to Act
Mohamed Aly El-Erian (Bloomberg View) Sep 7, 2016
World economic leaders know what needs to be done, though politics stand in the way.

EU Fiscal Stimulus Is Just a Rule-Change Away
Jean-Michel Paul (Bloomberg View) Sep 7, 2016
Europe's accounting rules discourage investment. Private sector principles provide a way forward.

The Great Income Stagnation
Laura Tyson and Anu Madgavkar (Project Syndicate) Sep 7, 2016
Nowadays, the inequality debate often focuses on the disproportionate accumulation of income and wealth by a very small share of households in the advanced economies. Less noticed – but just as corrosive – is inequality between generations, a result of falling or stagnating incomes for the majority of households.

Why China’s Cities Will Drive Global Growth
Chang Ka Mun and Jaana Remes (Project Syndicate) Sep 7, 2016
Now that China’s investment-led boom has run its course, continued economic growth – in China and globally – will depend on urban Chinese consumers. By 2030, China will account for 12 cents of every $1 of worldwide urban consumption.

The Weird New Normal of Negative Interest Rates
Gillian Tett (FP) Sep 7, 2016
The United States, Germany, and other economic powerhouses haven't learned the dire lessons of Japan's lost decades.

Europe's incompatible political trinities
Marco Buti and Muriel Lacoue-Labarthe (VoxEU) Sep 7, 2016
The Eurozone Crisis has taken a significant toll – both economic and political – on EU member states as well as the Union as a whole. This column identifies three elements that are key to a working solution for continued union: overcoming the intergovernmental method that has dominated EU decision making since the crisis, avoiding the seemingly easy route of blaming all evils on ‘Brussels’, and a more unified external representation in global economic governance. The Eurozone Crisis has taken a significant toll – both economic and political – on EU member states as well as the Union as a whole. This column identifies three elements that are key to a working solution for continued union: overcoming the intergovernmental method that has dominated EU decision making since the crisis, avoiding the seemingly easy route of blaming all evils on ‘Brussels’, and a more unified external representation in global economic governance.

Dirty Money in Afghanistan
Javid Ahmad (FA) Sep 7, 2016
How Kabul is cleaning up the illicit economy.

Mario Draghi’s fight to uphold ECB credibility
FT View Sep 8, 2016
The rearguard action against further stimulus is deeply misguided.

Britain is falling into denial about Brexit
Philip Stephens (FT) Sep 8, 2016
Leave supporters view an EU deal as an event. In truth, it will be a long, tortuous process

South Africa lurches between democracy and despotism
Richard Calland (FT) Sep 8, 2016
The decline in governance standards has eroded investor confidence.

How China bought its way into Cambodia
James Kynge, Leila Haddou and Michael Peel (FT) Sep 8, 2016
Phnom Penh has emerged as a vital ally, and in return Beijing is driving development in the country

Europe’s Impending Fiscal Volte-Face
Jacob Funk Kirkegaard (PIIE) Sep 8, 2016
Treasury Secretary Jack Lew recently declared victory for the US position in the debate over stimulus versus austerity within the G-20. “Today the G-20 is no longer debating growth versus austerity, but rather how to best employ fiscal policy to support our economies ,” he said at the end of August...

The future of work
Homi Kharas (Brookings) Sep 8, 2016
The twin forces of technology and globalization are dramatically reshaping today's labor markets throughout the world. Homi Kharas reflects on the future of work in the developing world and provides key takeaways from this year's Brookings-Blum Roundtable.

Crash Course Part 1: The Problems of Overvalued Assets & High Debt
Satyajit Das (RGE Economonitor) Sep 8, 2016
In economics and finance, over-valued assets and excessive debt levels generally do not lead to happy endings.

The Not-So-High Costs of Brexit
Daniel Gros (Project Syndicate) Sep 8, 2016
Beyond a weaker pound and lower UK interest rates, the British vote to exit the EU has not had a lasting economic impact. In fact, thanks to the economic transformation that the UK has undergone over the last 20 years – in part, driven by the country's EU membership – the economy may well be able to dodge the Brexit bullet.

How to Help the Middle East
Ishac Diwan (Project Syndicate) Sep 8, 2016
With the Middle East seemingly being sucked deeper into a vortex of permanent conflict, it is easy to believe that dictators and religious bigots will rule it forever. But the vast majority of people in the region want legitimate states that uphold the rule of law, protect civic rights, and promote coexistence among communities.

Drivers of inequality: Trade versus tax rates
Douglas Campbell and Lester Lusher (VoxEU) Sep 8, 2016
Growing inequality has been one of the most pressing political issues since the Great Recession. However, there is a relative lack of consensus on the significant drivers of this trend. This column investigates the contribution of globalisation, via international trade, to US inequality. Although trade is found to have had important effects on certain parts of the US labour market in the early 2000s, the growth in US inequality since 1980 can be traced back to Reagan-era tax cuts. Growing inequality has been one of the most pressing political issues since the Great Recession. However, there is a relative lack of consensus on the significant drivers of this trend. This column investigates the contribution of globalisation, via international trade, to US inequality. Although trade is found to have had important effects on certain parts of the US labour market in the early 2000s, the growth in US inequality since 1980 can be traced back to Reagan-era tax cuts.

Trade Policy under Siege
Kimberly Ann Elliott (CGD) Sep 9, 2016
A key argument for trade liberalization is that benefits are generally large enough to compensate the losers and leave no one worse off. In practice, compensation rarely occurs. So part of what is happening is the chickens are coming home to roost for policymakers, especially in the United States, who paid too little heed to the losers from trade. But there is more to the opposition to trade agreements, especially in Europe where the safety nets and adjustment programs are more robust.

Rough waters for container shipping. Why Hanjin, the world’s seventh largest container line, went under
Olaf Merk (OECD Insights) Sep 9, 2016
Hanjin is gone; the problem is still very much there.

World Bank Presidents, Ranked: From McNamara to Kim
Justin Sandefur and Dev Patel (CGD) Sep 9, 2016
The United States is pushing to re-elect the World Bank’s twelfth consecutive American president. Does he deserve another term? Both lending growth and project performance at the Bank appear weak by historical standards, but evaluating a bank with no profit motive is inherently difficult.

The Climate’s Low-Hanging Fruit
Patricia Espinosa and Mario Molina (Project Syndicate) Sep 9, 2016
An amendment to the Montreal Protocol to phase out hydrofluorocarbons – potent greenhouse-gas substances used in air conditioners and refrigeration systems worldwide – could be a boon for climate-change mitigation. But any accord must address worries in the world's hottest countries, which depend heavily on current technologies.

Refugees and Rural Poverty
Kanayo F. Nwanze (Project Syndicate) Sep 9, 2016
Urbanization is understandably a central theme for development experts and policymakers, but they should not lose sight of the dramatic changes happening in the places people leave behind when they seek better livelihoods elsewhere. Rural areas deserve attention, too, because many of the world’s displaced people originate there.

The Illiberal International
Slawomir Sierakowski (Project Syndicate) Sep 9, 2016
When Hungarian Prime Minister Viktor Orban declared in 2014 his intention to build an "illiberal democracy," many assumed he was referring to his own country. Now, he and Jaroslaw Kaczynski, the leader of Poland's ruling Law and Justice party, have proclaimed a counter-revolution aimed at turning the EU into an illiberal project.

German Europe or European Germany?
Hugo Drochon (Project Syndicate) Sep 9, 2016
The UK’s vote in June to leave the European Union not only changed the course of British history, but also underscored fundamental questions about Germany’s role in Europe and the world. With the migration crisis weakening German Chancellor Angela Merkel politically just when her authority in Europe is most needed, the new “German Question” can no longer be avoided.

Infrastructure Investment’s Missing Link
Christopher Smart (Project Syndicate) Sep 9, 2016
G20 countries have once again pledged to invest in advanced-economy infrastructure as a strategy to boost global growth. The world has heard this before, but it never seems to work out as promised, because policymakers continue to ignore the factors that deter investors.

Public investment stimulus spillovers in the Eurozone
Jan in 't Veld (VoxEU) Sep 9, 2016
The spillover effects of a fiscal stimulus in normal times are likely to be small, at best. This column argues, however, that when interest rates are stuck at the zero lower bound and monetary policy does not offset the expansion, public investment in surplus countries could have significant positive GDP spillovers to the rest of the Eurozone. Given current low borrowing costs, the increase in government debt for surplus countries would be modest, while debt ratios in the rest of the Eurozone could be improved. The spillover effects of a fiscal stimulus in normal times are likely to be small, at best. This column argues, however, that when interest rates are stuck at the zero lower bound and monetary policy does not offset the expansion, public investment in surplus countries could have significant positive GDP spillovers to the rest of the Eurozone. Given current low borrowing costs, the increase in government debt for surplus countries would be modest, while debt ratios in the rest of the Eurozone could be improved.

Reported Death Of TTIP – An Abhorrent Political Deception
Graham Vanbergen (EFR) Sep 9, 2016
How the stunning success of the peoples uprising against the Transatlantic Trade and Investment Partnership or TTIP will not stop the Americans from going through with the biggest trade deal in human history which is designed to enrich the few via extreme neoliberal capitalism under the guise of free trade.

Britain and the European Union: So what will Brexit really mean?
Economist Sep 10, 2016
Theresa May’s ministers are carefully avoiding specific answers. But she is systematically disowning many of the Brexiteers’ promises

EU regional funding: When the party is over
Guglielmo Barone, Francesco David and Guido de Blasio (VoxEU) Sep 10, 2016
EU regional policies aim to lead regions onto a path of self-sustaining growth. Fully successful interventions should imply a higher growth rate, not only during the treatment (when the region benefits from the transfers), but also after the expiry of the programme (when the financing terminates). This column uses evidence from the Abruzzi region in Southern Italy to document that when the party is over and the funding ends, growth may slow down significantly. EU regional policies aim to lead regions onto a path of self-sustaining growth. Fully successful interventions should imply a higher growth rate, not only during the treatment (when the region benefits from the transfers), but also after the expiry of the programme (when the financing terminates). This column uses evidence from the Abruzzi region in Southern Italy to document that when the party is over and the funding ends, growth may slow down significantly.

Languages and gender norms of behaviour
ictor Gay, Daniel Hicks and Estefania Santacreu-Vasut (VoxEU) Sep 10, 2016
Evidence suggests that many forms of gender inequality are higher in countries where the language distinguishes gender. But these patterns could arise spuriously, as languages and other cultural institutions have co-evolved throughout history. This column uses an epidemiological approach to isolate language from other cultural forces and provide direct evidence on whether language matters. The findings suggest how gender roles have been shaped, how they are perpetuated, and, ultimately, how they can be changed. Evidence suggests that many forms of gender inequality are higher in countries where the language distinguishes gender. But these patterns could arise spuriously, as languages and other cultural institutions have co-evolved throughout history. This column uses an epidemiological approach to isolate language from other cultural forces and provide direct evidence on whether language matters. The findings suggest how gender roles have been shaped, how they are perpetuated, and, ultimately, how they can be changed.

Measuring institutional investor performance
Daniel Cavagnaro, Berk Sensoy, Yingdi Wang and Michael Weisbach (VoxEU) Sep 10, 2016
Investment officers are often the highest-paid individuals in institutions such as pension funds and foundations, because of the size and importance of the decisions they make. This column argues that successful investment officers earn their pay, because they make returns that can't be explained by luck alone. Therefore, institutional investors might benefit from investing in high-quality investment officers. Investment officers are often the highest-paid individuals in institutions such as pension funds and foundations, because of the size and importance of the decisions they make. This column argues that successful investment officers earn their pay, because they make returns that can't be explained by luck alone. Therefore, institutional investors might benefit from investing in high-quality investment officers.

Investment threats in a changing climate
FT View Sep 11, 2016
Global warming is a business issue that cannot be ignored any longer.

Building the case for greater infrastructure investment
Lawrence Summers (FT) Sep 11, 2016
The issue now is not whether the US should invest more but what the policy framework should be.

China’s new growth model key to tackling climate change
Fergus Green and Nicholas Stern (EAF) Sep 11, 2016
The picture of Presidents Xi and Obama, beaming as they shake hands after jointly announcing their ratification of the Paris Climate Agreement on the eve of the G20 summit, is all the more striking when one considers just how far apart the two countries were on the issue of climate change as recently as 2012.

The origin of secular stagnation
Julian Kozlowski, Laura Veldkamp and Venky Venkateswaran (VoxEU) Sep 11, 2016
The Great Recession has had long-lasting effects on credit markets, employment, and output. This column combines a model with macroeconomic data to measure how the recession has changed beliefs about the possibility of future crises. According to the model, the estimated change in sentiment correlates with economic activity. A short-lived financial crisis can trigger long-lived shifts in expectations, which in turn can trigger secular stagnation. The Great Recession has had long-lasting effects on credit markets, employment, and output. This column combines a model with macroeconomic data to measure how the recession has changed beliefs about the possibility of future crises. According to the model, the estimated change in sentiment correlates with economic activity. A short-lived financial crisis can trigger long-lived shifts in expectations, which in turn can trigger secular stagnation.

Conceptual pitfalls and monetary policy errors
Andrew Levin (VoxEU) Sep 11, 2015
The Federal Reserve is on the verge of triggering the process of monetary policy tightening. This column argues that the rationale for that policy judgement rests on faulty analytical assumptions about the labour market, inflation dynamics, the stance of monetary policy, and the balance of risks to the economic outlook. What’s more, the current opacity of the FOMC’s near-term strategy is likely to exacerbate uncertainty and hinder the effectiveness of monetary policy in fostering the goals of maximum employment and price stability.

Mongolia: Living from loan to loan
Lucy Hornby (FT) Sep 12, 2016
Since the commodities boom turned to bust, the country has traded self-sufficiency for indebtedness

A two-tier model to revive Europe
Gideon Rachman (FT) Sep 12, 2016
Rather than viewing Brexit as a threat, the EU should treat it as an opportunity.

One Year into the SDGs, Six Ideas To Leverage The Private Sector
Theodore Talbot and Owen Barder (CGD) Sep 12, 2016
“Private sector” appears 18 times in the outcome document from last year’s UN financing for development conference in Addis Ababa—exactly the same number of times as “international cooperati

Multinational Corporations: Friends or Foes of the American Worker?
Caroline Freund (PIIE) Sep 12, 2016
Multinational corporations (MNCs) are being demonized in the news as never before. But the example of Colgate-Palmolive, cited in a letter to the author, shows that MNCs that invest abroad also add jobs at home, making the US economy bigger and more productive.

Urbanisation and Complex Systems
Colin Harrison (OECD Insights) Sep 12, 2016
The city is humanity's greatest invention.

Fifty Years Isn’t Enough for the Work of the Asian Development Bank
Gailyn Portelance and Scott Morris (CGD) Sep 12, 2016
If one thing is for certain following the CGD event, the “Asian Development Bank at 50,” the ADB’s work is far from done, and there will be no lack of ambition on the part of the US government and the bank’s other shareholders when it comes to a forward-looking agenda.

Why Mitch McConnell Should Move Ahead on the Pacific Trade Deal
Alan Wolff (Fortune) Sep 12, 2016
America’s credibility is on the line.

Crash Course Part 2: Crisis Triggers
Satyajit Das (RGE Economonitor) Sep 12, 2016
There are a number of potential triggers to a new crisis.

Fed Needs to Rethink How to Tighten Monetary Policy
Thomas I. Palley (Globalist) Sep 12, 2016
The Federal Reserve going about the process of tightening in the wrong way could have severe global repercussions.

Immigration Policy for a Post-Brexit Britain
Bloomberg View Sep 12, 2016
The U.K. wants control of immigration -- but what kind of control?

Debating Government's Role in Boosting Growth: Cowen and Smith
Tyler Cowen and Noah Smith (Bloomberg View) Sep 12, 2016
Fiscal stimulus can work. The trick is knowing when distortions offset the gains.

Saving Refugees to Save Europe
George Soros (Project Syndicate) Sep 12, 2016
Rather than uniting to resist the populist threat they all face, EU member states have played into its hands, by becoming increasingly unwilling to cooperate with one another. Nowhere is this trend clearer than in the EU's response to the ongoing refugee crisis.

Erdogan’s Tragic Choice
Dani Rodrik (Project Syndicate) Sep 12, 2016
Ever since Turkish President Recep Tayyip Erdogan won his first general election in late 2002, he has been obsessed with the idea that power would be wrested from him through a coup. That obsession helps explain the widening repression and rapid descent into lawlessness since July's failed putsch.

The World Bank’s Recipe for Irrelevance
Devesh Kapur (Project Syndicate) Sep 12, 2016
World Bank President Jim Yong Kim’s nomination for a second term is moving forward with a lack of transparency that has become all too typical. The US monopoly over the Bank's top position has resulted in one disastrous pick after another, yet few member countries seem to care enough to do anything about it.

Migration’s Private-Sector Problem-Solvers
Peter Sutherland (Project Syndicate) Sep 12, 2016
International cooperation among governments is necessary to help displaced people, but it is not always sufficient. The private sector is providing critical support for migrants as they travel through legal pathways and integrate into new communities, and its participation may be about to expand.

Mobile money, trade credit, and economic development
Thorsten Beck, Haki Pamuk, Ravindra Ramrattan and Burak Uras (VoxEU) Sep 12, 2015
The focus of the financial inclusion debate has been mainly on credit and savings services. This column provides evidence that more effective payment systems can help ease small businesses’ access to external finance, ultimately resulting in faster economic growth. The success story of M-PESA in Kenya shows that mobile money technology not only increases financial inclusion of households, but also alleviates small firms’ financing constraints.

Bubbles, Credit, and Their Consequences
Òscar Jordà, Moritz Schularick, and Alan M. Taylor (FRBSF Econ Letter) Sep 12, 2016
The collapse of an asset price bubble usually creates a great deal of economic disruption. But bubbles are hard to anticipate and costly to deflate. As a result, policymakers struggle to determine how they should respond, if at all. Evaluating the economic costs of past equity and real estate bubbles—with particular attention to how much credit grew during boom phases—can provide valuable insights for this debate. A recent study finds that equity bubbles are relatively benign. More danger comes from housing bubbles in which credit grows rapidly.

Globalisation ‘not to blame’ for income woes, study says
Chris Giles and Shawn Donnan (FT) Sep 13, 2016
Resolution Foundation data challenge idea that trade harms lower middle class in rich countries.

Active managers earn their corn in EMs
Steve Johnson (FT) Sep 13, 2016
Surprise findings suggest genuinely unconstrained active funds are worth buying.

Monetary policy in a low-rate world
Martin Wolf (FT) Sep 13, 2016
Premature rises in interest rates might trigger a sharper slowdown than people expect.

The charting of inequality deserves greater scrutiny
Martin Sandbu (FT) Sep 13, 2016
The left-behind story survives the dissection of the ‘elephant’ curve.

Making Globalization Work for All
Christine Lagarde (IMF) Sep 13, 2016
The ability of countries to rise above narrow self-interest has brought unprecedented economic progress over the past 70 years.

US: Corruption Unchained
Frank Vogl (Globalist) Sep 13, 2016
It’s becoming ever harder to go after corrupt politicians and lobbyists in the United States.

How’s Trump Doing? Look at the Mexican Peso.
David Francis (FP) Sep 13, 2016
Wonder how Trump is doing? The value of the Mexican peso holds some clues

What It Takes to Lead the United Nations
Bloomberg View Sep 13, 2016
Start with a commitment to fight climate change.

Bond Markets Hit Another 'Ukrainian Chicken Moment'
Mark Gilbert (Bloomberg View) Sep 13, 2016
Signs of excess and distress echo the run-up to the financial crisis.

The Closing of the World Economy
Satyajit Das (Bloomberg View) Sep 13, 2016
Governments have been leading the attack on globalization.

Don't Believe the Good Economic News About Brexit
Tyler Cowen (Bloomberg View) Sep 13, 2016
Even if there's no recession, the damage will be heavy and long-lasting.

Brexit and the Pound in Your Pocket
Barry Eichengreen (Project Syndicate) Sep 13, 2016
The early returns on Brexit are in, and the data are not good, regardless of claims to the contrary by supporters of the UK’s decision in June to withdraw from the EU. And, though sterling's depreciation should boost exports, history is not on Britain's side.

On the Cusp of an AI Revolution
Marc Benioff (Project Syndicate) Sep 13, 2016
Every few decades, emerging technologies converge and yield a new suite of products and services. Just as a maturing Internet, affordable bandwidth, and ubiquitous smartphones yielded services such as Uber and Airbnb, the conditions are in place for artificial intelligence to go mainstream.

The End of Work
Claude S. Fischer (Boston Review) Sep 13, 2016
Those who fear a technology-driven workerless future—of self-driving trucks and robot-run factories—forget that strong government has always played an outsize role in creating jobs—and still can.

Budget-related cross-border flows: EU versus US
Pasquale D'Apice (VoxEU) Sep 13, 2016
There has been renewed interest in economic analysis of the EU budget following the Global Crisis. This column presents new calculations of cross-border flows operated through the EU budget and compares them with those estimated for the US. For each euro paid by an average net (EU member state) contributor, approximately 75 cents return through the EU budget, and 25 cents cross a border. At the margin, the US federal budget is less redistributive in normal times, with around 90 cents per dollar returning to the contributing state, but net cross-border fiscal flows in the US increased steeply in the wake of the Global Crisis, financed by federal borrowing. There has been renewed interest in economic analysis of the EU budget following the Global Crisis. This column presents new calculations of cross-border flows operated through the EU budget and compares them with those estimated for the US. For each euro paid by an average net (EU member state) contributor, approximately 75 cents return through the EU budget, and 25 cents cross a border. At the margin, the US federal budget is less redistributive in normal times, with around 90 cents per dollar returning to the contributing state, but net cross-border fiscal flows in the US increased steeply in the wake of the Global Crisis, financed by federal borrowing.

The efficiency of entry, monopoly, and market deregulation
Florin Bilbiie, Fabio Ghironi and Marc Melitz (VoxEU) Sep 13, 2016
Structural reform and deregulation are often promoted as ways to lower barriers to market entry. The Dixit-Stiglitz model provides an important benchmark – given specific preferences, there is a constrained-optimal amount of producer entry and product variety. This column reconsiders optimality of product creation, differentiating between consumer-producer and intertemporal inefficiencies and quantifying the welfare costs of inefficient entry. Monopoly profits should be preserved when product variety is endogenously determined by firm entry, as they play a crucial role in generating the welfare-maximising level of product variety in equilibrium. Structural reform and deregulation are often promoted as ways to lower barriers to market entry. The Dixit-Stiglitz model provides an important benchmark – given specific preferences, there is a constrained-optimal amount of producer entry and product variety. This column reconsiders optimality of product creation, differentiating between consumer-producer and intertemporal inefficiencies and quantifying the welfare costs of inefficient entry. Monopoly profits should be preserved when product variety is endogenously determined by firm entry, as they play a crucial role in generating the welfare-maximising level of product variety in equilibrium.

Does Italy pose a threat to the global economy?
Desmond Lachman and Ryan Nabil (AEI) Sep 13, 2016
Global markets and economic policymakers seem to be turning a blind eye to the fact that Italy's stagnant economy could pose a large spillover threat to the global economy. Italy's banking system suffers from a staggering share of nonperforming loans that raise the risk of an Italian banking crisis, while very low economic growth and high public-debt levels raise questions about debt sustainability. Given the size of its economy and the possibility of an Italian exit from the euro, financial contagion risks from Italy to the rest of the European economy are simply too big to ignore.

Europe’s crises demand hard talk in Bratislava
FT View Sep 14, 2016
Member states need to rethink the union’s founding principles.

Africa is growing in fits and starts
David Pilling (FT) Sep 14, 2016
The hopes of resource-rich countries have faded along with commodity prices.

Peace and prosperity in Ireland are threatened by Brexit
John Bruton (FT) Sep 14, 2016
Assumption of the Good Friday agreement was of free movement of goods and people.

Crash Course Part 3: The Age of Stagnation?
Satyajit Das (RGE Economonitor) Sep 14, 2016
There are now three possible scenarios for the global economy and financial markets.

G20: Overcoming Protectionism, Emerging Growth
Dan Steinbock (RGE Economonitor) Sep 14, 2016
In Hangzhou, China began the push for G20 to overcome protectionism and fuel global growth prospects. That is vital to reverse stagnation in advanced economies and slowdown in emerging nations.

Complexity, modesty and economic policy
Lex Hoogduin (OECD Insights) Sep 14, 2016
Societies and economies are complex systems, but the theories used to inform economic policies predominantly neglect complexity. They assume for example representative agents such as a typical consumers, and they also assume that the future is risky

TTIP: Why the Rush?
Stephan Richter (Globalist) Sep 14, 2016
Reflections on the negotiating style of the United States.

TTIP – Yes or No?
Stephan Richter (Globalist) Sep 14, 2016
A brief checklist.

Latin America Has a Different Migration Problem
Mac Margolis (Bloomberg View) Sep 14, 2016
The region's economies might prosper if more outsiders were admitted.

The Robin Hood Tax Is Dead. Just Say So.
Mark Gilbert (Bloomberg View) Sep 14, 2016
A dwindling number of European countries want to adopt a tax on financial transactions. It won't work.

Iran's Plan to Lure Big Oil
Amir Ali Handjani (Bloomberg View) Sep 14, 2016
A new contract system would give foreign investors a better deal. But they are still scared of U.S. sanctions.

The Robots Aren't Here Yet
Mihir Sharma (Bloomberg View) Sep 14, 2016
Why India can't leapfrog past factories.

Who Has Space for Renewables?
Adair Turner (Project Syndicate) Sep 14, 2016
Estimated space requirements for solar energy sufficient to power the entire world are reassuringly trivial, at 0.5-1% of global land area. For individual countries however, the challenges vary greatly, reflecting dramatic differences in population density.

Probing the Productivity Paradox
Kemal Dervis and Zia Qureshi (Project Syndicate) Sep 14, 2016
Over the last decade or so, productivity growth has slowed considerably in most major developed economies, even as impressive advances have been made in areas like computing, mobile telephony, and robotics. What is going on – and what can be done to reverse the trend?

A Better Economic Plan for Japan
Joseph E. Stiglitz (Project Syndicate) Sep 14, 2016
Japan has been mired in economic malaise for more than two decades – and it is likely to remain there unless policymakers change course. That means, above all, embracing a large carbon tax and green finance, as well as considering monetizing government debt.

Theresa May’s Incredible Shrinking Brexit
Robert Colville (FP) Sep 14, 2016
The British prime minister has reduced a world-historical event to an anonymous technocratic exercise -- for now.

Russia’s election remains far from truly free
FT View/I> Sep 15, 2016
Domestic political system is ossified even as the economy deteriorates.

US investment in its backyard in decline
James Whitten (FT) Sep 15, 2016
Latin America and the Caribbean receive less greenfield investment as economies slow.

The alchemists who turn negative bond yields into profit
Gillian Tett (FT) Sep 15, 2016
Canny investors can make the most of the dollar rise offsetting the yen loss.

How to save capitalism from capitalists
Philip Stephens (FT) Sep 15, 2016
The cross-border activities of big companies make it harder to map a level playing field.

Does globalization hurt poor workers? It’s complicated.
Layna Mosley (WP) Sep 15, 2016
The source of poor working conditions can be as much domestic as it is international.

EU Leaders Gear Up for Talks Aimed at Charting Long-Term Future
Bridges, Volume 20, Number 30 Sep 15, 2016
EU leaders are gearing up for an "informal" summit being held this Friday in Bratislava, Slovakia, which is meant to help the bloc's members begin a process of "political reflection" toward developing a strategy in response to the various challenges they are facing on economic and political fronts. The group will notably not include the United Kingdom, in light of the "Brexit" vote earlier this year.

Obama Pushes TPP Case in Asia, Despite Difficult Landscape at Home
Bridges, Volume 20, Number 30 Sep 15, 2016
US President Barack Obama continued to make the case for the Trans-Pacific Partnership (TPP) during a visit to Asia last week, warning of the risk to his country's leadership prospects abroad should ratification efforts in Washington falter.

OECD Steel Committee: Some Signs of Recovery, But More Work Remains
Bridges, Volume 20, Number 30 Sep 15, 2016
Global steelmaking capacity is slated to grow over the next two years, officials from the Organisation for Economic Co-operation and Development's (OECD) Steel Committee warned last week, just days after a G-20 summit where leaders agreed to set up an international forum to tackle the problem.

ASEAN Leaders Eye Next Steps For Boosting Economic Integration
Bridges, Volume 20, Number 30 Sep 15, 2016
The Association of Southeast Nations (ASEAN) concluded a series of leaders' level meetings last week, gathering in Vientiane, Laos, for three days of talks on "Turning Vision into Reality for a Dynamic ASEAN Community."

How the EU's Leaders Should Think About Brexit
Bloomberg View Sep 15, 2016
Enlightened self-interest can strengthen the European project.

Watering the Middle East
Moha Ennaji (Project Syndicate) Sep 15, 2016
This year, hundreds of thousands of people in the Middle East and North Africa have faced the worst water shortages in decades. If governments do not take urgent action to preserve water reserves and standardize supply, the most defenseless populations will continue to suffer.

No-Brainer Sustainable Development
Bjørn Lomborg (Project Syndicate) Sep 15, 2016
The current political climate in high-income countries doesn't bode well for the UN Sustainable Development Goals. Donor governments are unlikely to increase their foreign-aid outlays, which means policymakers will have to spend what money they have more wisely.

Hungary Wants Foreign Workers, So Long as They Aren’t Syrian Refugees
Kavitha Surana (FP) Sep 15, 2016
Facing a labor shortage, Hungary’s economic minister said the country only wants immigrant workers who share the country’s “cultural” background.

Estimating currency misalignment using the Penn effect
Yin-Wong Cheung, Menzie Chinn and Xin Nong (VoxEU) Sep 15, 2016
As long as countries strive to reallocate aggregate demand in their own favour, disputes will arise regarding the degree to which currency values are 'fair'. This column argues that the Penn effect – the observation that the price level is higher in countries with higher per capita income – may not be a reliable method to discern the fair value of a currency. Different specifications and different datasets lead to different estimates of the degree of misalignment, for example for the Chinese renminbi. As long as countries strive to reallocate aggregate demand in their own favour, disputes will arise regarding the degree to which currency values are 'fair'. This column argues that the Penn effect – the observation that the price level is higher in countries with higher per capita income – may not be a reliable method to discern the fair value of a currency. Different specifications and different datasets lead to different estimates of the degree of misalignment, for example for the Chinese renminbi.

Which Countries Have the Best Migration Policies?
Owen Barder and Petra Krylová (PIIE) Sep 16, 2016
As President Obama convenes an important global summit on refugees, and world leaders at the UN General Assembly address the burgeoning issue of migration and forced displacement, we’ve taken a closer look at how the richest countries in the world support development and the alleviation of poverty through their migration policies.

A Vote Against Trade Is a Vote Against Growth
John R. Kasich (WSJ) Sep 15, 2016
China and Russia want the U.S. out of the Trans-Pacific Partnership. Why? It will make us stronger.

Negative Interest Rates: A Useful But Limited Tool
Joseph E. Gagnon (PIIE) Sep 16, 2016
Negative interest rates have attracted much attention this year, most of it critical. Many investors are outraged at the idea that the value of their deposits or bonds might decline steadily over time instead of grow. Yet one of the options the Bank of Japan is considering for the forthcoming review of its policy framework is to lower the interest rates it pays banks further below zero.1 The evidence shows that negative interest rates can be a useful form of monetary stimulus, although the net benefits differ across countries. In all economies, the scope for pushing rates into negative territory is limited.

Assessing progress and considering the stakes
Amy Copley and Amadou Sy (Brookings) Sep 16, 2016
What progress has been made in the two years since the last U.S.-Africa Business Forum? Amy Copley and Amadou Sy assess where the relationship stands and provide recommendations to build on the current momentum.

Deutsche Bank’s Real-Time Stress Test
Ed Caesar (New Yorker) Sep 16, 2016
Deutsche Bank won’t pay a fourteen-billion-dollar fine related to mortgage-backed securities. But, even if paid half that, it would still be in the mire.

Help American Workers. Pass TPP.
Michael R. Bloomberg & Thomas J. Donohue (Bloomberg View) Sep 16, 2016
Congress should take a stand for the TPP.

The Problem With the Oil ETF: It Does a Great Job
Eric Balchunas (Bloomberg View) Sep 16, 2016
It's a trader's best friend and an investor's worst enemy.

Education and the Invisible Child
Gordon Brown (Project Syndicate) Sep 16, 2016
Today, 900 million of the world’s 1.4 billion children reach adulthood un- or under-educated, which means that they lack the skills they will need to succeed in a quickly changing global labor market. By short-changing the world’s children, we are squandering the most valuable untapped resource we have.

Africa Still Rising
Donald P. Kaberuka and Acha Leke (Project Syndicate) Sep 16, 2016
After years of rapid growth and development, Africa has experienced some severe economic setbacks, and average GDP growth has fallen sharply in recent years. But a closer look reveals massive economic potential that simply needs to be tapped.

Modernization, Literacy, and Stagnation in the Arab World
Colin Wells (WA) Sep 16, 2016
Perhaps the Arab world’s deep-rooted problems with literacy and modernity would be aided—like in much of the developing world—by adoption of alphabetic writing.

The VIX and its derivatives
Enrique Sentana (VoxEU) Sep 16, 2016
Determining which risks are worth taking is one of the key problems facing financial market participants. Central to this is the time-varying nature of volatility. This column examines the Chicago Board Options Exchange volatility index, VIX, which has become the standard measure of volatility risk. Complementary approaches to pricing VIX derivatives are considered, and the tumultuous economy since the Great Recession is used to assess the empirical performance of the different models. Determining which risks are worth taking is one of the key problems facing financial market participants. Central to this is the time-varying nature of volatility. This column examines the Chicago Board Options Exchange volatility index, VIX, which has become the standard measure of volatility risk. Complementary approaches to pricing VIX derivatives are considered, and the tumultuous economy since the Great Recession is used to assess the empirical performance of the different models.

Put Globalization to Work for Democracies
Dani Rodrik (NYT) Sep 17, 2016
We need to rescue globalization not just from its populist critics but also from its cheerleaders.

The superstar company: A giant problem
Economist Sep 17, 2016
The rise of the corporate colossus threatens both competition and the legitimacy of business.

MERCOSUR is not really a free trade agreement, let alone a customs union
Chad Bown and Patricia Tovar (VoxEU) Sep 17, 2016
Argentina and Brazil began to open their markets to the world significantly – but only partially – in the 1990s. Yet these countries’ efforts to liberalise beyond their Latin American trading partners have stalled since 1995. This column re-examines the 1990s MERCOSUR experience and raises questions over just how much trade policy cooperation these two countries have undertaken. This lack of coordination also has implications for the ‘building blocks’ versus ‘stumbling blocks’ debate in trade policy. Argentina and Brazil began to open their markets to the world significantly – but only partially – in the 1990s. Yet these countries’ efforts to liberalise beyond their Latin American trading partners have stalled since 1995. This column re-examines the 1990s MERCOSUR experience and raises questions over just how much trade policy cooperation these two countries have undertaken. This lack of coordination also has implications for the ‘building blocks’ versus ‘stumbling blocks’ debate in trade policy.

Trade globalisation in the last two centuries
Michel Fouquin and Jules Hugot (VoxEU) Sep 17, 2016
Historians and economists generally identify two periods of trade globalisation, the first beginning around 1870 and the second during the 1970s. The column argues that new data from 1827 onwards shows globalisation beginning as trade barriers were lowered around 1840, and that both periods of globalisation were surprisingly fuelled by a regionalisation of world trade. If globalisation continues to grow in future, regionalisation may decline. Historians and economists generally identify two periods of trade globalisation, the first beginning around 1870 and the second during the 1970s. The column argues that new data from 1827 onwards shows globalisation beginning as trade barriers were lowered around 1840, and that both periods of globalisation were surprisingly fuelled by a regionalisation of world trade. If globalisation continues to grow in future, regionalisation may decline.

Do Immigrants Import Their Economic Destiny?
Garett Jones (Evonomics) Sep 17, 2016
How migration shapes the prosperity of countries.

All of Brazil must go through the car wash
FT View Sep 18, 2016
Nobody is too powerful to escape the Petrobras corruption probe.

Putting a number on global inequality is long overdue
Branko Milanovic (FT) Sep 18, 2016
This should be one of the metrics we use to gauge the state of the world.

Europe’s leaders focus on the next distraction
Wolfgang Münchau (FT) Sep 18, 2016
The degree of integration is no longer determined by what you believe in, but by what you need.

Who Will Run the U.N.?
WSJ Sep 18, 2016
The best choice for reform at Turtle Bay is Serbia’s Vuk Jeremic.

Japan’s prime-minister-in-waiting trades nationalism for globalism
Josh Rogin (WP) Sep 18, 2016
In Washington, Defense Minister Tomomi Inada looks more like Hillary Clinton than Sarah Palin.

China’s addiction to debt threatens the economy
FT View Sep 19, 2016
Beijing should admit the scale of the problem and begin deleveraging.

The City’s passport to a bright future outside the bloc
Reza Moghadam (FT) Sep 19, 2016
Join the EU banking union and allow free movement of labour in finance.

Why a President Trump Could Start a Trade War With Surprising Ease
Justin Wolfers (NYT) Sep 19, 2016
International trade policy is one area where a President Trump could unilaterally deliver on the changes that he has promised.

The Post-Brexit Boom is Baffling Elites by George Pickering
George Pickering (Mises Daily) Sep 19, 2016
Contrary to dire warning of economic disaster, the British economy has weathered Brexit quite well. Now central bankers are taking the credit.

What if slow economic growth is the new normal?
Mark Thoma (CBS Moneywatch) Sep 19, 2016
Let’s look at some explanations for today’s subpar growth rates and what it might mean if they’re not reversed.

Rethinking US Development Policy
Scott Morris (CGD) Sep 19, 2016
At the moment, the issue of US leadership at the multilateral development banks (MDBs) is focused squarely on the World Bank presidency. But there’s a lot more to it than that, and a lot more at risk for the United States in the years ahead. In a new paper for the Council on Foreign Relations, I examine the US role in the MDB system—why it matters for the United States itself, how China has emerged as a game changer, and how the United States is too often its own worst enemy when it comes to effective leadership.

Increasing finance and capital investment
Christina Golubski and Amadou Sy (Brookings) Sep 19, 2016
Recent data show that the United States has been a leader when it comes to investment on the African continent, but Christina Golubski and Amadou Sy share that those numbers can be deceiving, and countries such as China are fast on America's heels.

OECD countries need to address the migration backlash
Stefano Scarpetta (OECD Insight) Sep 19, 2016
The public is losing faith in the capacity of governments to manage migration.

Give Libor Some Competition
Bloomberg View Sep 19, 2016
The interest-rate benchmark has improved, but the market still needs an alternative.

Free Trade's Unwilling Victims
Noah Smith (Bloomberg View) Sep 19, 2016
The poor and working class lose jobs and income. The well-off benefit from cheaper goods.

Getting Migration Governance Right
Sheikh Hasina (Project Syndicate) Sep 19, 2016
The many social and economic benefits of migration will be squandered if it is not governed responsibly and cooperatively at a global level. With more than 4,300 migrants having already died this year, world leaders now meeting at the UN need to establish a coherent international framework to prevent further losses.

Globalization for Everyone
Hernando de Soto (Project Syndicate) Sep 19, 2016
Nowadays, globalization’s opponents seem to be drowning out its defenders – not least because of the very real surge in inequality in recent decades. But there is a way to make globalization work for everyone, and it depends on information technology – specifically, blockchain, the decentralized ledger that underpins Bitcoin.

The Coming Anti-National Revolution
Robert J. Shiller (Project Syndicate) Sep 19, 2016
In recent centuries, humanity has experienced a sequence of intellectual revolutions, whereby accepted realities – from slavery to gender discrimination – came to be regarded as intolerable injustices. The next such revolution is likely to challenge the economic implications of the nation-state.

Political foundations of the lender of last resort
Charles Calomiris , Marc Flandreau and Luc Laeven (VoxEU) Sep 19, 2016
The Global Crisis has stirred up a debate on the constraints and boundaries of lender of last resort (LOLR) policies. This column examines the history of the development of the LOLR throughout the world. The LOLR is a locus of political power, and as such, its creation should be viewed as the outcome of a political bargain. It is therefore not surprising that countries differed in their propensity to create LOLRs, and in the powers with which they chose to endow them. The Global Crisis has stirred up a debate on the constraints and boundaries of lender of last resort (LOLR) policies. This column examines the history of the development of the LOLR throughout the world. The LOLR is a locus of political power, and as such, its creation should be viewed as the outcome of a political bargain. It is therefore not surprising that countries differed in their propensity to create LOLRs, and in the powers with which they chose to endow them.

Extreme Inequality Is Not Driven by Merit, but by Rent-Seeking and Luck
Didier Jacobs and Sam Pizzigati (Evonomics) Sep 19, 2016
Debunking the meritocratic argument on its own terms.

How to Fix the United Nations
Kevin Rudd (FP) Sep 19, 2016
The world is approaching a new global tipping point that demands a strong United Nations.

Assessing Trade Agendas in the US Presidential Campaign
Marcus Noland, Gary Clyde Hufbauer, Sherman Robinson and Tyler Moran (PIIE) Sep 19, 2016
Republican candidate Donald J. Trump’s sweeping proposals on international trade, if implemented, could unleash a trade war that would plunge the US economy into recession and cost more than 4 million private sector American jobs.

Fiscal stimulus would serve Germany’s interest
FT View Sep 20, 2016
A consumer boom is welcome but Berlin could do more to support it.

A clear message that central banks are not all-powerful
Eswar Prasad (FT) Sep 20, 2016
Credibility is mostly about managing expectations.

Refugees and those who flee war and strife deserve better
Paul Collier (FT) Sep 20, 2016
The challenge is manageable but the global system remains devoid of a strategy.

How to Raise Trillions for Green Investments
Henry M. Paulson Jr (NYT) Sep 20, 2016
Governments must create the conditions to encourage private investment in clean technologies and sustainable development.

The post-Brexit economy: Doom or boom?
Economist Sep 20, 2016
Since Britain voted to leave the EU in June, its economy has not crashed. The main stock index is above its pre-referendum level. The pound has stopped falling. But talk of a “Brexit boom” is misplaced. Investment is falling. Jobs and credit growth are slowing. The Bank of England lowered its growth forecast for 2017 from 2.3% to just 0.8%. And Brexit itself is still to come.

Africa’s “middle class” and the “in-between” sector—A new opening for manufacturing?
John Page (Brookings) Sep 20, 2016
While Africa’s experience with industrialization has been disappointing, John Page explains that its growing middle class may offer a new opening to grow and create jobs in the manufacturing sector.

Economic complexity, institutions and income inequality
César Hidalgo and Dominik Hartmann (OECD Insights) Sep 20, 2016
Decades ago Simon Kuznets proposed an inverted-u-shaped relationship describing the connection between a country’s average level of income and its level of income inequality. Kuznets’ curve suggested that income inequality would first rise and then fall as countries’ income moved from low to high. Yet, the curve has proven difficult to verify empirically.

Appraising the TPP: What Should We Care About?
Robert Z. Lawrence (PIIE) Sep 20, 2016
It appears likely that the Trans-Pacific Partnership (TPP) will come up for a vote in the lame duck session to be held after the presidential elections. How should we judge if it is a good deal?

Angela Merkel Isn't Backing Down
Leonid Bershidsky (Bloomberg View) Sep 20, 2016
The refugee crisis has cost her and her party, but she is determined to forge ahead.

On Antimicrobial Resistance, It’s Now or Never
Jim O'Neill and Eric Goosby (Project Syndicate) Sep 20, 2016
The human and economic toll of rising antimicrobial resistance is set to spiral out of control: left unchecked, drug-resistant infections could claim ten million lives each year by 2050, and cost global GDP a cumulative $100 trillion. We can avert this bleak future only if we launch an effective response immediately.

The End of the European Supernation?
Ana Palacio (Project Syndicate) Sep 20, 2016
As the EU prepares to negotiate Britain’s exit, it is becoming increasingly apparent that European supranationalism gave way to inter-governmentalism long ago. The question is whether the EU’s status as an enterprise dominated by its member states is a permanent condition.

Up the Commonwealth
adakat Kadri (LRB) Sep 20, 2016
For the time being, Boris owes Theresa May his political life, but as negotiations with Brussels grind on and she makes inevitable concessions, the tables are going to turn. All he’d need then to re-emerge as Brexist-in-Chief is a pseudo-manifesto, and free trade with ex-colonies would fit the bill perfectly.

Income inequality in a globalising world
Miguel Niño-Zarazúa, Laurence Roope and Finn Tarp (VoxEU) Sep 20, 2016
Since the turn of the century, income inequality has risen to be among the most prominent policy issues of our time. This column looks at inequality trends in recent decades. While relative global inequality has fallen, insufficient economic convergence, together with substantial growth in per capita incomes, has resulted in increased absolute inequality since the mid-1970s. The inclusivity aspect of growth is now more imperative than ever. Since the turn of the century, income inequality has risen to be among the most prominent policy issues of our time. This column looks at inequality trends in recent decades. While relative global inequality has fallen, insufficient economic convergence, together with substantial growth in per capita incomes, has resulted in increased absolute inequality since the mid-1970s. The inclusivity aspect of growth is now more imperative than ever.

ESBies: Safety in the tranches
Markus K Brunnermeier, Sam Langfield, Marco Pagano, Ricardo Reis, Stijn Van Nieuwerburgh and Dimitri Vayanos (VoxEU) Sep 20, 2016
The Eurozone lacks a safe asset that is provided by the region as a whole. This column highlights why and how European Safe Bonds, a union-wide safe asset without joint liability, would resolve this problem, and outlines steps to put them into practice. For given sovereign default probabilities, these bonds would be as safe as German bunds and would approximately double the supply of euro safe assets. Moreover, owing to general equilibrium effects, they would weaken the diabolic loop between sovereign risk and bank risk. The Eurozone lacks a safe asset that is provided by the region as a whole. This column highlights why and how European Safe Bonds, a union-wide safe asset without joint liability, would resolve this problem, and outlines steps to put them into practice. For given sovereign default probabilities, these bonds would be as safe as German bunds and would approximately double the supply of euro safe assets. Moreover, owing to general equilibrium effects, they would weaken the diabolic loop between sovereign risk and bank risk.

The IMF and Euro Area Crises: Review of a Report from the Independent Evaluation Office
Edwin M. Truman (PIIE) Sep 20, 2016
The economic and financial crises in euro area countries since 2010 have tested the viability of the euro area and continue to challenge the future of the seven-decade European integration project. Euro area leaders reluctantly brought the International Monetary Fund (IMF) into the management of six of these crises—in Cyprus, Greece, Ireland, Italy, Portugal, and Spain—through the provision of financing and the design of economic and financial rescue programs. The IMF's Independent Evaluation Office (IEO) reviewed the Fund's handling of four of these crises: in Greece (first program), Ireland, Portugal, and Spain. The report is bureaucratically constrained in its language, but the underlying message is distinctly critical of the IMF: Political influence on IMF decision making was excessive, the IMF did not implement a coherent euro area strategy, and the IMF failed to comply with its own standard for transparency and, therefore, accountability. This Policy Brief provides some background on the IEO and summarizes the conclusions of the IEO report. It then addresses four aspects of the report and its examination of the IMF's performance in these crises: addressing the crises individually rather than as a crisis for the euro area as a whole, the charge of excessive political intervention in the formulation of IMF policies for these countries, the IMF's lack of transparency and accountability both in these programs and vis-à-vis the IEO, and issues surrounding the Greek debt restructuring and the IMF's policy on exceptional access to Fund financial resources.

The Bank of Japan steels itself for further easing
FT View Sep 21, 2016
Having restocked its policy toolbox the central bank must now use it.

Congo’s President Kabila must accept he has to go
FT View Sep 21, 2016
The country at the heart of Africa has reached a treacherous impasse.

The City of London strategy for Brexit talks faces hurdles
Chris Giles (FT) Sep 21, 2016
An appeal to mutual advantage works if all sides agree over the benefits of the current practice.

Four Comments and a Suggestion for the World Bank Board
Nancy Birdsall (CGD) Sep 21, 2016
Last week the World Bank Board closed the three-week window, announced in late August, for member countries to nominate candidates for the presidency of the World Bank. Jim Kim, the US nominee and incumbent since his election in 2012, was formally nominated by the United States at 12:01 a.m. at the opening bell, so to speak. He is the sole candidate in what appears to have been a kind of insider coup by the United States (called a “charade” in a World Bank Staff Association letter to its members) of the procedures agreed by World Bank members in 2011.

Achieving and sharing the benefits of globalisation
Catherine L. Mann (OECD Insights) Sep 21, 2016
Open trade and cross-border investment are key vectors for diffusion of new technologies and competition, which are central to achieving productivity gains and improving well-being.

Are these the last days of free trade?
Robert J. Samuelson (WP) Sep 21, 2016
A President Trump could trigger a global trade war, according to a new study.

You're Not as Rich as You Think
Satyajit Das (Bloomberg View) Sep 21, 2016
The $250 trillion global savings glut may be a myth.

When a Blockchain Isn’t a Blockchain
Elaine Ou (Bloomberg View) Sep 21, 2016
The technology behind Bitcoin won't solve all the financial world's problems.

Creating a Learning Generation
Felipe Calderón (Project Syndicate) Sep 21, 2016
In recent years, some countries have made far more progress than others, both by increasing the share of young people in school and by guaranteeing the quality of that education. Closing this global education gap must be a top priority for policymakers worldwide.

Market Myths and Social Facts
Kate Pickett and Richard Wilkinson (Project Syndicate) Sep 21, 2016
Now that we know how inequality harms the health of societies, individuals, and economies, reducing it should be our top priority. Anyone advocating policies that increase inequality and threaten the wellbeing of our societies is taking us for fools.

The Human Right That Keeps on Giving
Kailash Satyarthi (Project Syndicate) Sep 21, 2016
Easy and safe access to quality education is not just a fundamental human right, but also an enabling right – essential for the exercise of all others. With such a powerful tool available to us, we should be doing whatever we can to use it, and this month's United Nations General Assembly summit is a good place to start.

Can the EU Benefit from Brexit?
K@W Sep 21, 2016
How a concerted program could create new growth.

Rethinking inflation targets for long ZLB episodes
Marc Dordal i Carreras, Olivier Coibion, Yuriy Gorodnichenko and Johannes Wieland (VoxEU) Sep 21, 2016
Models that estimate optimal inflation rates struggle to accurately account for interest rates reaching the zero lower bound, due to the lack of historical data available. This column suggests periods of hitting the zero lower bound are longer than previously thought, and models the optimal inflation rate target on this. Given the uncertainty associated with measuring the historical frequency and duration of such episodes, the wide range of plausible optimal inflation rates implies that any inflation targets should be treated with caution. Models that estimate optimal inflation rates struggle to accurately account for interest rates reaching the zero lower bound, due to the lack of historical data available. This column suggests periods of hitting the zero lower bound are longer than previously thought, and models the optimal inflation rate target on this. Given the uncertainty associated with measuring the historical frequency and duration of such episodes, the wide range of plausible optimal inflation rates implies that any inflation targets should be treated with caution.

The Trumpian threat to the global order
Philip Stephens (FT) Sep 22, 2016
The liberal rules-based system established after 1945 is under unprecedented strain.

Guarded optimism beats gloom for emerging economies
Arvind Subramanian (FT) Sep 22, 2016
If we focus on the longue durée, there is promise for the developing world.

Emerging markets risk sparking new global financial crisis
Jonathan Wheatley (FT) Sep 22, 2016
UN warns of deflationary spiral after QE-fuelled boom.

Looming credit crunch adds to Africa’s woes
Adrienne Klasa (FT) Sep 22, 2016
Oil exporters hit hard after passing over chance to diversify their economies.

Free trade v populism: The fight for America’s economy
Shawn Donnan (FT) Sep 22, 2016
The presidential campaign’s protectionist rhetoric is throttling the dream of global commerce.

Central Bankers at Wit’s End
WSJ Sep 22, 2016
At the Fed and in Japan, monetary policy has lost its mojo.

WTO rules Europe illegally subsidized airlines, handing victory to Obama administration ahead of trade fight
Jim Tankersley (WP) Sep 22, 2016
The World Trade Organization ruled Thursday that the European Union and several of its members failed to end illegal subsidies for airline giant Airbus, a victory for the United States in what has become the most expensive dispute in international trade history.

EU, North American Officials Push Trade Deals Ahead of Key Meeting
Bridges, Volume 20, Number 31 Sep 22, 2016
Trade officials from the EU, Canada, and the United States have been pushing two major international accords over the past week, aiming to make a compelling case in time for a key meeting of European trade ministers beginning later today.

Leaders of "EU 27" Call for Unity, Confidence at Bratislava Summit
Bridges, Volume 20, Number 31 Sep 22, 2016
An informal meeting of the EU's 27 national leaders was held on Friday, 16 September in Bratislava, Slovakia, representing a crucial summit to map out the future of the bloc in the wake of the UK vote to leave.

The EU and the German Risk
Markus Heinrich (Globalist) Sep 22, 2016
Germany is not just a core member of the EU, it is the core member. Being the EU’s biggest asset also means it is its Achilles heel.

Turning Off the Dividend Spigot
Viral Acharya, Diane Pierret and Sascha Steffen (Project Syndicate) Sep 22, 2016
As European regulators search for solutions to poor bank performance, they should consider banks’ revenue distribution as part of the problem. If under-capitalized banks had not been paying out dividends in recent years, they would have retained enough equity to reduce today's capital shortfalls significantly.

SOS for China’s SOEs
Yao Yang (Project Syndicate) Sep 22, 2016
China's government has made corporate-sector deleveraging a major goal for 2016, but its state-owned enterprises are still holding far too much debt. The government should now turn to the private sector, which has accumulated savings and needs new investment opportunities, to help clean up the SOEs' balance sheets.

Helicopter Money Is in the Air
Robert Skidelsky (Project Syndicate) Sep 22, 2016
Fiscal policy has been out of fashion since 2010, if not longer. But now that unconventional monetary-policy measures have failed to deliver more than mediocre outcomes, policymakers have started mooting ideas for unconventional fiscal policy.

Europe’s Leadership Crisis
Guy Verhofstadt (Project Syndicate) Sep 22, 2016
The recent informal EU summit in Bratislava, Slovakia, was supposed to demonstrate solidarity and kick-start the post-Brexit reform process. But instead of displaying unity, the meeting revealed only further division.

How computer automation affects occupations
James Bessen (VoxEU) Sep 22, 2016
A popular notion is that computer automation leads to major job losses. However, this ignores the dynamic economic responses that involve both changing demand and inter-occupation substitution. Using US data, this column explores the effect of automation on employment growth for detailed occupational categories. Computer-using occupations have had greater job growth to date, while those using few computers suffer greater computer-related losses. The real challenge posed by automation is developing a workforce with the skills to use new technologies. A popular notion is that computer automation leads to major job losses. However, this ignores the dynamic economic responses that involve both changing demand and inter-occupation substitution. Using US data, this column explores the effect of automation on employment growth for detailed occupational categories. Computer-using occupations have had greater job growth to date, while those using few computers suffer greater computer-related losses. The real challenge posed by automation is developing a workforce with the skills to use new technologies.

Michel Temer’s attempt to reunify Brazil has a long way to go
Alex Cuadros (FT) Sep 23, 2016
It will take more than fresh elections to fix the flaws.

Swiss-EU Pragmatism on Immigration Will Have Limited Bearing on Brexit Negotiations
Jacob Funk Kirkegaard (PIIE) Sep 23, 2016
The emerging notion among Brexit optimists that the United Kingdom could use Switzerland as a template for negotiating new immigration arrangements with the European Union is filled with holes.

Governing Education in a Complex World
Tracey Burns (OECD Insight) Sep 23, 2016
The famous slogan “KISS” urges listeners to “Keep it simple, stupid!” However, modern policy making is increasingly discovering that not keeping it simple – in fact, embracing the complex - is essential to understanding contemporary systems and making reform work.

Don't Gamble With the City of London's Fortunes
Mark Gilbert (Bloomberg View) Sep 23, 2016
As it negotiates Brexit, Britain must be careful not to sacrifice its most valuable -- and vulnerable -- asset.

Can South Korea Make More Babies?
Lee Jong-Wha (Project Syndicate) Sep 23, 2016
South Korea is facing major demographic challenges, rooted in an ultra-low fertility rate. With the population shrinking and aging, the government is trying to boost fertility, but it isn't going nearly far enough.

Whither Turkey?
Sinan Ülgen (Project Syndicate) Sep 23, 2016
The accession narrative no longer frames Turkey’s relationship with the European Union, and the government’s far-reaching crackdown on opponents since July’s coup attempt has probably buried that diplomatic framework for good. What will take its place?

The Promise of Bank Mergers
Xavier Vives (Project Syndicate) Sep 23, 2016
In a difficult market, mergers – by enabling banks to cut costs, share information-technology platforms, and increase market power, thereby relieving pressure on margins and rebuilding capital – make sense. And a difficult market is precisely what Europe's banks face today.

Land of the Free Trade
Allen Best (TNR) Sep 23, 2016
The Eastern Plains of Colorado have gone Republican for decades. But will farmers and ranchers who rely on global markets vote for Donald Trump?

Beijing Wants More Baby-Making
Mei Fong (FP) Sep 23, 2016
But is it too late to reverse the damage of the one-child era?

Does Algeria Still Have Time to Turn It Around?
Robert Looney (FP) Sep 23, 2016
Algeria’s oil money is running out and the government's new development plan is looking doubtful.

How to regulate CEO pay (and how not to do it)
Alex Edmans (VoxEU) Sep 23, 2016
During political campaigns, candidates often set their sights on CEO compensation as a target for potential regulation. This column considers the various arguments for regulating CEO pay and questions whether it is a legitimate target for political intervention. Some arguments for regulation are shown to be erroneous, and some previous interventions are shown to have failed. While regulation can address the symptoms, only independent boards and large shareholders can solve the underlying problems. During political campaigns, candidates often set their sights on CEO compensation as a target for potential regulation. This column considers the various arguments for regulating CEO pay and questions whether it is a legitimate target for political intervention. Some arguments for regulation are shown to be erroneous, and some previous interventions are shown to have failed. While regulation can address the symptoms, only independent boards and large shareholders can solve the underlying problems.

After 2004, EU accession countries increased trade with Australia
Richard Pomfret and Patricia Sourdin (VoxEU) Sep 23, 2016
Joining a customs union is supposed to reduce trade with third countries. But after 2004, the largest EU accession countries actually increased their trade with Australia, especially their exports. This column argues that new regional value chains made accession country industries more competitive, especially in the auto industry. Trade with Australia has also been facilitated by a drop in the costs of bilateral international trade. Joining a customs union is supposed to reduce trade with third countries. But after 2004, the largest EU accession countries actually increased their trade with Australia, especially their exports. This column argues that new regional value chains made accession country industries more competitive, especially in the auto industry. Trade with Australia has also been facilitated by a drop in the costs of bilateral international trade.

A tax policy guided by public opinion on inequality
Matthew Weinzierl (VoxEU) Sep 24, 2016
Tax policy to correct inequality assumes that nobody is entitled to advantages due to luck alone. But the public largely rejects complete equalisation of 'brute luck' inequality. This column argues that there is near universal public support for an alternative, benefit-based theory of taxation. Treating optimal tax policy as an empirical matter may help us to close the gap between theory and reality. Tax policy to correct inequality assumes that nobody is entitled to advantages due to luck alone. But the public largely rejects complete equalisation of 'brute luck' inequality. This column argues that there is near universal public support for an alternative, benefit-based theory of taxation. Treating optimal tax policy as an empirical matter may help us to close the gap between theory and reality.

How to Suffocate Your Economy: Drown it in Massive Private Debt
Richard Vague (Evonomics) Sep 24, 2016
The whole world has too much of it. History suggests this won’t end well.

Mexico’s piñata peso is a signal of ‘Trump risk’
FT View Sep 25, 2016
US politics wallops world’s most-liquid emerging market currency.

Only government action can resolve a global solvency crisis
William White (FT) Sep 25, 2016
Fear of the unknown has had no moderating influence on central banks.

Mint economies: Returns are tinged with risks
Gideon Rachman (FT) Sep 25, 2016
The four states have their problems but can still excite investors.

Scare stories will not stop populist insurrections
Wolfgang Münchau (FT) Sep 25, 2016
Unpredictable electorates will no longer be cowed.

A New Measure of China's Vulnerability
Mark Whitehouse (Bloomberg View) Sep 25, 2016
Credit creation far exceeds its long-term trend. Historically, that's not a good sign.

Tapping Africa’s Full Potential
Michael Froman and Amina Mohamed (Project Syndicate) Sep 25, 2016
The US African Growth and Opportunity Act has been a success insofar that it has helped African countries nearly triple their non-oil exports to the US. But with African entrepreneurs facing new and evolving challenges unrelated to tariff reduction, a more comprehensive trade-policy framework.is needed.

Is LNG the new fuel for the global economy?
Tomoo Kikuchi and Yohei Tanaka (EABER) Sep 25, 2016
During this year’s G7 summit, Japan announced its vision of creating a LNG market to meet increasing energy demand. Natural resource markets are a foundation for trade and economic development. What is less well known is the close link between the natural resource markets and the currency markets.

Airbus and Boeing could both lose battle of the skies
FT View Sep 26, 2016
Companies have wasted enough time at the WTO.

Review – ‘Citizens’ Wealth’, by Angela Cummine
Martin Sandbu (FT) Sep 26, 2016
Sovereign funds require systematic thinking not just debate.

Oil outlook: ‘bearish’ inventories aren’t what they seem
David Fyfe (FT) Sep 26, 2016
While historically bearish in OECD countries, hefty inventories in EMs are a bullish signal for oil.

Artificial intelligence is too important to leave unmanaged
John Thornhill (FT) Sep 26, 2016
Investors are scrambling to understand how technology will enable wealth to be created and destroyed.

Europe’s latest bank crackdown sparks fear and relief
Patrick Jenkins (FT) Sep 26, 2016
New rules determine whether lenders are a good investment.

Emerging markets have ‘good chance of massively outperforming’
Steve Johnson (FT) Sep 26, 2016
On some, but not all, valuation metrics the sector looks attractive with dividends forecast to rise.

Deutsche Bank’s problem doesn’t mean a broader financial crisis
David P. Goldman (AT) Sep 26, 2016
Europe’s banks need to merge into larger institutions with a lower cost base, and far fewer employees.

Can Indonesia’s energy path be nudged away from coal?
Kurnya Roesad and Frank Jotzo (EAF) Sep 26, 2016
Is Indonesia missing out on the global renewable energy revolution?

China's Most Misleading Indicator
Christopher Balding (Bloomberg View) Sep 26, 2016
Measuring growth is only getting harder.

Keynes and Hayek in China’s Property Markets
Andrew Sheng and Xiao Geng (Project Syndicate) Sep 26, 2016
Real-estate prices in China’s top cities have been spiking recently, generating contradictory predictions of either bursting bubbles or a coming economic turn-around. What's really going on in China’s hot property markets?

Desperate Central Bankers
Stephen S. Roach (Project Syndicate) Sep 26, 2016
The final day of the summer marked the start of yet another season of futile policymaking by two of the world’s major central banks – the US Federal Reserve and the Bank of Japan. The Fed did nothing, which is precisely the problem, while the alchemists at the BOJ unveiled yet another feeble unconventional policy gambit.

Managing the Economic Consequences of Nationalism
Mohamed A. El-Erian (Project Syndicate) Sep 26, 2016
The aftermath of the UK's unexpected vote to leave the EU is being monitored closely. People all over the world want to know how Brexit will unfold, not just to manage its specific effects, but also to gain insight into what is likely to happen if other upcoming votes tip in favor of nationalist agendas.

The Return of Fiscal Policy
Nouriel Roubini (Project Syndicate) Sep 26, 2016
Since the global financial crisis of 2008, monetary policy has borne much of the burden of sustaining aggregate demand, boosting growth, and preventing deflation in developed economies. Eight years later, its time to pass the baton to fiscal policy.

Negative interest rate policies: Channels and consequences
Carlos Arteta, M Ayhan Kose, Marc Stocker and Temel Taskin (VoxEU) Sep 26, 2016
Against a background of persistently weak growth and low inflation expectations, a number of central banks have implemented negative interest rate policies over the past few years. This column argues that such policies could help provide additional monetary policy stimulus, as long as policy interest rates are only modestly negative and do not stay negative for too long to avoid adverse effects on the financial sector. While these policies do have a place in the policymaker’s toolkit, they need to be handled with care to secure their benefits while mitigating risks. Against a background of persistently weak growth and low inflation expectations, a number of central banks have implemented negative interest rate policies over the past few years. This column argues that such policies could help provide additional monetary policy stimulus, as long as policy interest rates are only modestly negative and do not stay negative for too long to avoid adverse effects on the financial sector. While these policies do have a place in the policymaker’s toolkit, they need to be handled with care to secure their benefits while mitigating risks.

Slow Credit Recovery and Excess Returns on Capital
Zheng Liu and Andrew Tai (FRBSF Econ Letter) Sep 26, 2016
During the recovery from the Great Recession, real interest rates on government securities have stayed low, but real returns on capital have rebounded. Although this divergence is puzzling in light of standard economic theory, it can be explained by credit market imperfections that raise the cost of capital and depress aggregate investment. The unusually slow credit market recovery is likely to have contributed to the diverging paths of the risk-free rate and returns on capital. It may have also contributed to a slow recovery in investment and output.

Is Argentina’s investment revival really under way?
Jacopo Dettoni (FT) Sep 27, 2016
Macri has impressed investors but whether they will walk the walk remains to be seen.

Hard Brexit is not inevitable
Peter Mandelson (FT) Sep 27, 2016
There is room for compromise on both sides.

How Short-Termism Saps the Economy
Joe Biden (WSJ) Sep 27, 2016
Paying CEOs so much in stocks puts their focus on the share price instead of building for the long run.

Big Data, Complexity Theory and Urban Development
Ricardo Herranz (OECD Insights) Sep 27, 2016
There is an emerging view that the global challenges of poverty eradication, environmental sustainability, climate change, and sustainable and secure energy are all intimately linked to cities, which are simultaneously places where these global problems emerge and solutions can be found.

Europe's Free-Trade Advocates Need to Speak Up
Bloomberg View Sep 27, 2016
A deal with Canada would bring many benefits. Unless they are explained, opponents will win by shouting louder.

China Wants GMOs. The Chinese People Don't.
Adam Minter (Bloomberg View) Sep 27, 2016
The government is relying on technologically enhanced crops to feed the world's biggest population.

Saving Italy From Itself
Paola Subacchi (Project Syndicate) Sep 27, 2016
Italian Prime Minister Matteo Renzi is an astute politician who speaks to many voters’ gut feelings about the state of the economy and immigration. But his political future now depends on whether Italians still trust him to deliver the change he promised two years ago.

Secular Stagnation or Self-Inflicted Malaise?
Hans-Werner Sinn (Project Syndicate) Sep 27, 2016
Almost exactly eight years ago, the Lehman Brothers collapse plunged the entire industrialized world into the worst crisis since the end of World War II. The crisis still has not been fully overcome, because monetary policy preempted the creative destruction that could have formed the basis for a new upswing in growth.

Saudi Arabia’s Shock Therapy
Nasser Saidi (Project Syndicate) Sep 27, 2016
Last June, Saudi Arabia's Crown Prince Mohammad bin Salman announced a National Transformation Program, aimed at diversifying the Kingdom's oil-dependent economy in just five years. The program is ambitious and comprehensive, but is it achievable?

Prepare for the 21st Century Exodus of Migrants
Joseph Chamie (YaleGlobal) Sep 27, 2016
Policy planning requires new assumptions about migration in a densely populated world with conflict and climate change

Why a banking crisis in China seems unavoidable
Edoardo Campanella and Daniel Vernazza (VoxEU) Sep 27, 2016
China’s debt – in particular its corporate debt – is large by historical and international standards. This column argues that of greater concern is the sharp increase in recent years, and that the vulnerability is heightened by the concentration of this debt in old industries that suffer from overcapacity and weak competitiveness. The authorities appear to be only now taking steps to halt the rise in corporate debt, but as prior episodes of banking crises show, this is unlikely to be enough to avert either a prolonged period of slowing growth or a financial crisis in the medium term. China’s debt – in particular its corporate debt – is large by historical and international standards. This column argues that of greater concern is the sharp increase in recent years, and that the vulnerability is heightened by the concentration of this debt in old industries that suffer from overcapacity and weak competitiveness. The authorities appear to be only now taking steps to halt the rise in corporate debt, but as prior episodes of banking crises show, this is unlikely to be enough to avert either a prolonged period of slowing growth or a financial crisis in the medium term.

Spillovers from Migration and China's Transition
IMF Sep 27, 2016
New IMF spillover analysis looks into China’s transition and international migration. Despite challenges, China’s transition and migration can have positive long-run effects if managed well. Key finding: 1 percent increase in migrant share in adult population results in 2 percent higher GDP in the long run.

Combating Persistent Disinflation: A Challenge for Many Central Banks
Samya Beidas-Strom, Davide Furceri and Bertrand Gruss (IMF) Sep 27, 2016
Broad-based decline in inflation across countries over the past few years; inflation expectations not much affected yet. Effectiveness of monetary policy to tackle persistent disinflation may be diminishing in economies whose interest rates are close to zero. An appropriate policy mix needed to avoid a downward drift in inflation expectations that could cut into economic activity and jobs.

Prospects for Taiwan’s Participation in the Trans-Pacific Partnership
Jeffrey J. Schott, Cathleen Cimino-Isaacs, Zhiyao (Lucy) Lu and Sean Miner (PIIE) Sep 27, 2016
Taiwan has long faced declining competitiveness due to both slow domestic economic reforms and discrimination from nonparticipation in many free trade agreements in the Asia-Pacific region, which have caused (or threatened) trade and investment diversion. Participating in the Trans-Pacific Partnership (TPP) could mitigate much of the discrimination faced by Taiwanese exporters and investors in Asia-Pacific markets. To join, Taiwan would need to undertake significant policy reforms to meet TPP requirements for liberalization of goods, services, investment, and other areas including the environment and intellectual property rights (IPRs). In some areas Taiwan’s existing bilateral agreements with China and TPP members New Zealand and Singapore have significant gaps with TPP standards, while others should not be as difficult to bridge. The Briefing also considers the status of US-Taiwan trade and investment relations and outstanding bilateral irritants, including concerns over agricultural market access and animal health and safety regulations, Taiwanese foreign direct investment restrictions and approval process, IPRs, and exchange rate policy. Resolving these issues will be critical for US support for Taiwan’s TPP participation.

India gains further ground in competitiveness stakes, says WEF
Steve Johnson (FT) Sep 28, 2016
Brazil ranked worst in the world for trust in politicians.

How long can the emerging market bond rally run?
Thomas Hale and Roger Blitz (FT) Sep 28, 2016
Moment when tailwinds turn will be hard to predict.

Who’s the Systemic Risk Now?
WSJ Sep 28, 2016
Washington’s assault on Deutsche Bank imperils Europe’s economy.

Will the TPP rise from the dead?
Robert J. Samuelson (WP) Sep 28, 2016
Obama’s signature trade agreement may only be in intensive care.

Separating Wheat from Chaff in PPP Assessments of Exchange Rate Misalignment
William R. Cline (PIIE) Sep 28, 2016
In a recent paper, Cheung, Chinn, and Nong (2016), or CCN, have updated and extended their ongoing analysis examining exchange rate misalignments based on deviations from international patterns involving purchasing power parity (PPP).

China’s Renminbi Is about to Break the Financial Glass Ceiling
Tamim Bayoumi (PIIE) Sep 28, 2016
China’s currency, the renminbi, is about to break the financial world's ultimate glass ceiling when it enters into the currency basket of the International Monetary Fund’s (IMF) special drawing rights (SDRs) on October 1.

Boosting Growth and Adjusting to Change
Christine Lagarde (IMF) Sep 28, 2016
The task at hand is to take the right macroeconomic policy decisions and maintain economic openness, a combination that has delivered so much good for the world in recent decades.

Americans Actually Don't Hate Trade
Noah Smith (Bloomberg View) Sep 28, 2016
The public understands that trade with most countries is a plus. It also grasps the damage done by China.

The Perils of Debt Complacency
Carmen Reinhart (Project Syndicate) Sep 28, 2016
In a Project Syndicate commentary last month, Robert Skidelsky called rising levels of public debt in the advanced countries a "scarecrow" and urged more borrowing. But, as Greece, Italy, and Japan have learned the hard way, the scarecrow has teeth.

Confronting the Populists
Chris Patten (Project Syndicate) Sep 28, 2016
In the political world – on the left and right – few mainstream leaders are having a very good year, and one must search for any notable achievements. Still, if they are to win the battle of ideas against populism, they must adopt a fighting spirit and signal confidence in their cause.

How Scary is Disruptive Technology?
Martin Feldstein (Project Syndicate) Sep 28, 2016
The US unemployment rate currently is less than half the rate in the European Union. There are many reasons for the disparity; but a critical one is the absence in the US of labor laws and union rules that prevent employees and firms from adapting to the latest innovations.

Yes, We Can Beat China
Richard Vague (Democracy) Sep 28, 2016
Trump wildly overstates China's power, but the point on trade imbalance is one that must be addressed.

Donald Trump Is Owning Hillary Clinton on Trade
Alex Shephard (TNR) Sep 28, 2016
Trump doesn't know what he's talking about, but his message is resonating in key states. Here's how Clinton can fight back.

Euro septic
Paul Collier (TLS) Sep 28, 2016
The euro is a modern tragedy.

Bye-bye covered interest parity
Claudio Borio, Robert McCauley, Patrick McGuire and Vladyslav Sushko (VoxEU) Sep 28, 2016
Covered interest parity is close to a physical law in international finance, yet it has been consistently violated since the Global Crisis. Violations since 2014, once banks had strengthened their balance sheets and regained easy access to funding, are especially puzzling. This column argues that the violation reflects a combination of foreign exchange hedging demand and tighter limits to arbitrage. Hedging demand has been boosted, in particular, by divergent monetary policies in an ultra-low interest rate environment, while tighter limits to arbitrage result from a stricter management of banks’ balance sheets. Covered interest parity is close to a physical law in international finance, yet it has been consistently violated since the Global Crisis. Violations since 2014, once banks had strengthened their balance sheets and regained easy access to funding, are especially puzzling. This column argues that the violation reflects a combination of foreign exchange hedging demand and tighter limits to arbitrage. Hedging demand has been boosted, in particular, by divergent monetary policies in an ultra-low interest rate environment, while tighter limits to arbitrage result from a stricter management of banks’ balance sheets.

Conceptual challenges in international finance
Stefan Avdjiev, Robert McCauley and Hyun Song Shin (VoxEU) Sep 28, 2016
Working with the wrong accounting classifications can lead to wrong conclusions in any area of economics. But it is especially treacherous in international finance, due to the importance of key currencies and the operations of multinational firms, especially global banks. Much of the analysis in international finance is still conducted under the assumption that the GDP area, decision-making unit and the currency area coincide – the so-called ‘triple coincidence’. This column illustrates the common analytical missteps that can arise by reviewing three examples from the recent past, and argues that a proper analysis of capital flows necessitates paying greater attention to basic accounting building blocks. Working with the wrong accounting classifications can lead to wrong conclusions in any area of economics. But it is especially treacherous in international finance, due to the importance of key currencies and the operations of multinational firms, especially global banks. Much of the analysis in international finance is still conducted under the assumption that the GDP area, decision-making unit and the currency area coincide – the so-called ‘triple coincidence’. This column illustrates the common analytical missteps that can arise by reviewing three examples from the recent past, and argues that a proper analysis of capital flows necessitates paying greater attention to basic accounting building blocks.

The objectives of financial stability policy
Paul Tucker (VoxEU) Sep 28, 2016
The objective of financial stability policy is unclear. Is it the resilience of the financial system, avoiding the costs of systemic collapse, or managing the credit cycle, containing the costs of resource misallocation and over-indebtedness? This column argues that the answers have serious implications for what can decently be delegated to independent ‘macroprudential authorities’, but have barely been debated in those terms. The objective of financial stability policy is unclear. Is it the resilience of the financial system, avoiding the costs of systemic collapse, or managing the credit cycle, containing the costs of resource misallocation and over-indebtedness? This column argues that the answers have serious implications for what can decently be delegated to independent ‘macroprudential authorities’, but have barely been debated in those terms.

Balancing Act: The China-India-U.S. Triangle
Mohan Malik (WA) Sep 28, 2016
The colliding and intersecting security and economic interests of Asia’s powers makes for a delicate dance of cooperation, coalition, and competition between China, India, and the United States.

Europe must address its banks’ enduring malaise
FT View Sep 29, 2016
There is a suspicion that institutions have been gaming the rules.

Clawback emerges as a vital weapon in finance
Gillian Tett (FT) Sep 29, 2016
Even by the standards of America’s rich, the $41m taken from John Stumpf is not small change.

Why political risk is losing its power to scare EM investors
Roger Blitz (FT) Sep 29, 2016
Easing worries on China, improving terms of trade and search for yield outweigh wider concerns.

Deutsche’s woes will prompt a long-overdue consolidation of banking system
David P. Goldman (AT) Sep 29, 2016
Nothing particularly exciting will happen.

US Presidential Candidates Face Off on Trade in First Debate
Bridges, Volume 20, Number 32 Sep 29, 2016
Hillary Rodham Clinton and Donald J. Trump openly clashed on trade and their respective visions on how to boost the American economy on Monday, during their first of three presidential debates.

EU Trade Ministers: TTIP Conclusion Unlikely This Year
Bridges, Volume 20, Number 32 Sep 29, 2016
EU trade ministers affirmed last week that finishing negotiations on a bilateral trade and investment deal with the US before year's end is an "unrealistic" goal, following informal meetings held late last week in Bratislava, Slovakia.

WTO Public Forum Sets "Inclusive Trade" at Top of Agenda
Bridges, Volume 20, Number 32 Sep 29, 2016
The importance of making trade even more inclusive – especially for smaller businesses, women, and other stakeholders who have historically struggled to access the full benefits of trade – took centre stage this week at the World Trade Organization during its annual Public Forum.

WTO Cuts Trade Forecasts, Warns of Sluggish Growth Ramifications
Bridges, Volume 20, Number 32 Sep 29, 2016
The WTO has once again downgraded its global trade growth forecast for 2016 and 2017, issuing sobering new figures on Tuesday morning during its annual Public Forum.

Stronger Emerging Market Corporate Governance Enhances Financial Resilience
IMF News Sep 29, 2016
Improved corporate governance over past two decades. Governance bolsters resilience to financial shocks. Corporate governance can strengthen firms' balance sheets.

Monetary Policy Not Hurt by Rise of Nonbank Finance
IMF News Sep 29, 2016
Impact of monetary policy actions on economic activity has generally strengthened since 2000. Nonbank credit increases the effectiveness of monetary policy. Risk taking by banks, nonbanks responds to monetary policy.

Stop pretending that an economy can be controlled
Angel Gurría (OECD Insights) Sep 29, 2016
The crisis exposed some serious flaws in our economic thinking.

TPP: The “National Security” Sales Pitch
Jeff Faux (Globalist) Sep 29, 2016
Like other trade deals since NAFTA, is the TPP also just a device for capitalists to drive down the wages of American workers?

A Cup of Sake Suggests Bond Yields Should Be 12%
Mark Gilbert (Bloomberg View) Sep 29, 2016
Record-low yields are trashing pension assets.

What Deutsche Bank Is Telling Investors in Europe
Mohamed Aly El-Erian (Bloomberg View) Sep 29, 2016
Germany's largest institution isn't the only one battling headwinds.

The New Face of Immigration Is Changing the Housing Market
Conor Sen (Bloomberg View) Sep 29, 2016
Newly arrived Americans are more likely to be buying nice suburban homes than building them. That cuts supply and adds demand.

Markets and School Quality
Andrés Velasco (Project Syndicate) Sep 29, 2016
Recent research makes clear that many factors affecting education outcomes have nothing to do with whether schools are public or private. So it makes sense to consider how to combine the virtues of both systems, instead of simply choosing between them.

Managing a Multipolar Europe
Mark Leonard (Project Syndicate) Sep 29, 2016
When the Cold War ended, the EU and NATO were at the center of an expanding unipolar order that, it was assumed, would establish the conditions for European security. In fact, that was far from guaranteed, as the existential challenge to the European order posed by the refugee crisis and the Syrian conflict shows.

From the CIA to the GFE
Jeffrey D. Sachs (Project Syndicate) Sep 29, 2016
The US spends $1 billion per year on global education, and $900 billion on military-related programs. Unfortunately, it is not the only country where policymakers believe that sustainable development is best achieved through superior firepower.

Saving Europe By Reversing Brexit
Anatole Kaletsky (Project Syndicate) Sep 29, 2016
“Never let a crisis go to waste” has always been a guiding principle of the EU. But today, it is the EU, facing five crises simultaneously, that could be laid to waste, with Brexit detonating the demolition.

Is globalization bad for the global poor? This study ran an experiment to find out.
Zack Beauchamp (Vox) Sep 29, 2016
In the past several decades, manufacturing jobs have fled the developed world for the developing world. Obviously, that’s profoundly reshaped the economies of developing countries like China and Bangladesh. But what does that mean for the ordinary people who are doing the work — often for incredibly low wages?

How to make womenomics work
Nobuko Nagase (EAF) Spe 29, 2016
Japan has seen some progress in increasing women’s workforce participation. But the fundamental barriers to womenomics are the labour practices and workplace norms that separate long-term employees from other forms of employment.

Hungary’s Refugee Referendum Is a Referendum on Europe’s Survival
Jan-Werner Mueller (FP) Sep 29, 2016
Viktor Orban’s anti-Merkel crusade will never carry the EU as a whole. That may be the point.

U.S. to OPEC: Don’t Drill, Baby, Don’t Drill
Keith Johnson (FP) Sep 29, 2016
OPEC collusion used to be bad news for America. Now, the oil patch is cheering signs the cartel might rein in production.

Evaluating Trump’s trade policies
Gary Hufbauer, Euijin Jung (VoxEU) Sep 29, 2016
Donald Trump has consistently made headlines with unusual and potentially dangerous economic policy proposals, including threatening to pull out of the WTO, renegotiating trade agreements, and imposing tariffs on imports from Mexico and China. This column explores the legal and economic dimensions of these proposals. Old and modern legal statutes could allow a US president to implement such policies, and the repercussions for the US economy could be severely negative. Donald Trump has consistently made headlines with unusual and potentially dangerous economic policy proposals, including threatening to pull out of the WTO, renegotiating trade agreements, and imposing tariffs on imports from Mexico and China. This column explores the legal and economic dimensions of these proposals. Old and modern legal statutes could allow a US president to implement such policies, and the repercussions for the US economy could be severely negative.

The State of Advanced Economies and Related Policy Debates: A Fall 2016 Assessment
Olivier Blanchard (PIIE) Sep 29, 2016
This Policy Brief reassesses macroeconomic policies in the current environment of low growth and low interest rates in major advanced economies. Despite low rates, demand remains anemic. The scope for monetary policy, which has carried much of the burden to stimulate demand, is increasingly limited.

Yet more years of low but stable growth is unsustainable
Mohamed El-Erian (FT) Sep 30, 2016
The longer the economic malaise endures, the greater the influence of anger politics.

China Manipulates Its Currency, but Not in the Way Trump Claims
Neil Gough (NYT) Sep 30, 2016
Various forces are trying to push down the value of the Chinese currency. But Beijing — in a reversal of previous policies — is trying to shore it up.

The renminbi rises, but is no match for the dollar
Eswar Prasad (Brookings) Sep 30, 2016
While the rise of China's renminbi has so far been powered by the country's economic growth, Eswar Prasad argues that the currency will ultimately be held back by the failure of reforms

What Deutsche Bank’s Troubles Tell Us about the Health of Europe’s Banking System
Jacob Funk Kirkegaard (PIIE) Sep 30, 2016
The stock of Germany’s largest bank, Deutsche Bank, is currently trading at multi-decade lows and the bank is edging closer to suffering a general crisis of confidence, which could see investors pull their business from the bank and even depositors wanting their money out.

IMF Adds Chinese Renminbi to Special Drawing Rights Basket
IMF News Sep 30, 2016
Renminbi joins U.S. dollar, euro, yen, and British pound in SDR basket. Change represents important milestone for IMF, SDR, and China. Move recognizes and reinforces China’s continuing reform progress.

Deutsche Bank's Troubles, Europe's Failures
Bloomberg View Sep 30, 2016
The region's banks desperately need more equity. Get on with it.

Asia's Rise Keeps Pulling Americans West
Noah Smith (Bloomberg View) Sep 30, 2016
Population and industry tend to move closer to a country's biggest trade partners.

Escaping the New Normal of Weak Growth
Michael Spence (Project Syndicate) Sep 30, 2016
Eight years after the crisis erupted, what the global economy is experiencing is starting to look less like a slow recovery than like a new low-growth equilibrium. With monetary policy unable to stimulate demand, or even inflation, it's time for fiscal authorities to relieve the burden on central banks.

The Geography of Elections
Jean Pisani-Ferry (Project Syndicate) Sep 30, 2016
In many countries, where you live tends to be an accurate predictor of what or whom you are voting for. Though regional or local voting patterns are as old as democracy, a growing correlation of spatial, social, and political polarization is turning fellow citizens into near-strangers.

Sovereign Default and Economic Performance in Oil-Producing Economies
Maria A. Arias and Paulina Restrepo-Echavarria (FRBSL Econ Synopses) Sep 30, 2016
Because oil-producing countries do hold public debt and do default, we must understand how oil reserves and production affect risk and economic performance.

Democracy does not cause growth
Julia Ruiz Pozuelo, Amy Slipowitz and Guillermo Vuletin (VoxEU) Sep 30, 2016
The debate over whether democracy causes economic prosperity and growth dates back millennia. Recent empirical results suggest that democratisation has a sizable positive effect on economic growth, but endogeneity and reverse causality may be driving these results. This column uses new data from surveys of democracy experts to solve the endogeneity puzzle. The positive association between democracy and economic growth is a reflection of economic turmoil causing the emergence of democratic rule, rather than democracy causing more economic growth.

Italy: Can Reforms Lift Growth Prospects?
Alessandro Magnoli Bocchi (RGE Economonitor) Sep 30, 2016
The Italian economy is large, relatively diversified and sturdy. Historically, growth has been driven by external factors (e.g.: the “economic miracle” after World War II) or political efforts (e.g.: competitive devaluations and fiscal spending between the 1970s and the 1990s). For decades, innovation and international competitiveness lagged most peers. After joining the Euro, the Maastricht deficit-and-debt thresholds constrained public expenditures and – as a result – growth declined below the European Union (EU) average. In 2016, growth is stagnant and prospects are lacklustre: power structures hamper meritocracy and risk taking, the investment climate is challenging, taxes are high. A crisis is looming in the banking system. Unemployment is above pre-crisis levels, and poverty and inequality on the rise. Over the next few years, the economy will be exposed to adverse shocks. Going forward, global growth will remain at best sluggish, inflation low. To avoid two lost decades, Italy should not count on external growth-drivers (it would be equivalent to waiting for Godot) but should instead proactively build internal growth-drivers via structural reforms.

Think Local: What Brexit would mean for regional and cohesion policies in Europe
Patricia Wruuck and Laura Rosenberger (DB Research) Sep 30, 2016
Brexit affects regional policy both in the UK and in the EU27. It has a direct impact via financial adjustments for the individual funds, and indirect effects, possibly influencing the budgetary debates to come and adjusting regional policy priorities. However, the effects are highly contingent on the timing of Brexit and the planning processes and preparations for the new EU budget beyond 2020. The biggest stakes are potential changes to the structural funds which invest all across the EU. Finally, there is the issue of possible future cooperation between the EU27 and the UK after a Brexit. In principle, regional policy programmes already provide for some options here. However, the specific arrangements and conditions are only going to be defined as part of the negotiations to structure the new relationship.