News & Commentary:

Articles/Commentary

Elections that rely on votes for sale are bound to be violent
Abhishek Parajuli (FT) Oct 1, 2017
Developing nations must break the grip of a clientelist model of political support.

Donald Trump’s trickle-down delusion on tax
Rana Foroohar (FT) Oct 1, 2017
America has a private sector system that no longer serves the real economy.

Macron may have a bold vision but Merkel calls the shots
Wolfgang Munchau (FT) Oct 1, 2017
Germany aims to turn the stability mechanism into a full-blown European Monetary Fund.

Donald Trump’s war on trade deficit backfires
Shawn Donnan (FT) Oct 1, 2017
The US president has made correcting the imbalance a focus of his administration. But the deficit has risen during his administration and he is partly to blame.

The U.S. Can No Longer Afford Deficit-Increasing Tax Cuts
Jason Furman (WSJ) Oct 1, 2017
Compared with 1981 and 2001, revenue is down and the debt is way up as a share of GDP.

China pushes targeted lending amid patchy deleveraging progress
FTCR Oct 2, 2017
Unlocking bank funds not at odds with incomplete task of reining in credit excesses.

Political ads on Facebook recall memories of the banking crisis
Rana Foroohar (FT) Oct 2, 2017
The algorithmic use of data is like subprime securitisation.

The Fed is going to make interest rate risk great again (sort of)
Matthew C Klein (FT) Oct 2, 2017
Interest rate volatility has been really low.

Brains, not oil, should fuel Russia’s economy
John Turnbull (FT) Oct 2, 2017
Success in AI and the energy industry means allowing creativity to flourish.

Unfinished Business by Tamim Bayoumi
John Authers (FT) Oct 2, 2017
An analysis of the financial crisis offers a primer to prevent it happening again.

Federal Reserve does little to shake ‘buy the dip’ mindset
Mohamed El-Erian (FT) Oct 2, 2017
US central bank raises expectations for December rate rise without rattling markets.

Understanding Debt: A Better Tool for Low-Income Countries
IMF Oct 2, 2017
The IMF and the World Bank are looking to update the framework for assessing debt-related risks in low income countries by mid-2018. The framework consists of a number of tools to help governments analyze risks and make sound decisions on how much debt to take up, including for public investment that can support development.

Solving the Private Sector Aid Imbroglio
Paddy Carter (CGD) Oct 2, 2017
In 2014, Mark Lowcock, then head of the UK’s Department for International Development, pulled off an unexpected coup: securing an agreement between donor governments on new rules for counting official loans as aid. Some neat diplomatic footwork is needed again now, because negotiations over extending this agreement to donors’ investments in the private sector are threatening to fall apart. Among the consequences could be that the UK walks away from using internationally agreed standards for measuring aid and starts to create its own statistics. Other countries may follow.

A Better Way to Make Economic Forecasts
Mark Buchanan (Bloomberg View) Oct 2, 2017
Try looking at what a country knows how to produce.

Abe Makes Life a Lot Tougher for Bank of Japan
Daniel Moss (Bloomberg View) Oct 2, 2017
The prime minister's tax hike is at odds with the central bank's mandate. Good luck.

Can Communists Be Good Capitalists?
Michael Schuman (Bloomberg View) Oct 2, 2017
The key isn't where managers come from, but the environment that surrounds them.

Debt Keeps Rising and Nothing Bad Happens
Noah Smith (Bloomberg View) Oct 2, 2017
Economists are stumped.

How Investors Can Help Meet UN Sustainable Development Goals
Alex Struc and Scott A. Mather (PIMCO) Oct 2, 2017
Two ways the investment community can make the biggest impact towards meeting the Sustainable Development Goals.

Six Features of the Disinformation Age
Kelly Born (Project Syndicate) Oct 2, 2017
We are living in a brave new world of disinformation and propaganda, and as long as only its purveyors have the data needed to understand it, the responses we craft will remain inadequate. Because they are also likely to be poorly targeted, they may even end up doing more harm than good.

South Korea’s Looming Crisis
Lee Jong-Wha (Project Syndicate) Oct 2, 2017
In the 1990s, South Korea waited for a crisis to erupt before responding with necessary reforms. But now the country is confronting a new set of internal and external risks, which it should nip the bud, both by pursuing domestic economic reforms and by working with China and the US to defuse the North Korean nuclear threat.

Europe’s Future After Germany’s Election
Guy Verhofstadt (Project Syndicate) Oct 2, 2017
Observers have been wringing their hands over Germany's recent election, in which the large mainstream parties, the CDU and the SPD, suffered significant setbacks, while the far right exceeded expectations. But the election also upended a governing coalition that had avoided desperately needed reforms for too long.

Limits of digitisation
Bruno Frey (VoxEU) Oct 2, 2017
One of the major effects of digitisation has been to drastically lower costs of measurement in a wide range of activities and areas. This column argues that this has prompted many to react against the domination of measurement and the loss of intrinsic preferences, often by escaping into areas not yet captured by measurement which will likely be preserved. One of the major effects of digitisation has been to drastically lower costs of measurement in a wide range of activities and areas. This column argues that this has prompted many to react against the domination of measurement and the loss of intrinsic preferences, often by escaping into areas not yet captured by measurement which will likely be preserved.

Measuring living standards in African cities and rural areas
Douglas Gollin, Martina Kirchberger and David Lagakos (VoxDev) Oct 2, 2017
It’s no wonder that people are moving to cities. Urban areas offer better amenities and, on average, pay higher wages than rural areas.

Why nation-states are good
Dani Rodrik (Aeon) Oct 2, 2017
The nation-state remains the best foundation for capitalism, and hyper-globalisation risks destroying it

China's Exchange Rate Policies and U.S. Financial Markets
Thomas M. Mertens and Patrick Shultz (FRBSF Econ Letter) Oct 2, 2017
Exchange rate stabilization or currency “pegs” are among the most prevalent interventions in international financial markets. Removing a peg to a safer currency can make the home currency more risky and less attractive to investors. When a country with market influence removes its peg from a safer country, the risk associated with holding either currency can be affected. Analyzing the effects of a scenario that changes a peg of the renminbi from the U.S. dollar to a basket of currencies suggests that China’s interest rates increase while U.S. interest rates decrease.

Emerging markets outflow biggest since Trump election
Steve Johnson (FT) Oct 3, 2017
Since Fed meeting investors have withdrawn $1.8bn from EM equities and $1bn from bonds.

Emerging market investors flock back into Russia
Steve Johnson (FT) Oct 3, 2017
Sanctions-hit country overtakes India as top pick for equity funds.

Emerging market investors flock back into Russia
FTCR Oct 3, 2017
Sanctions-hit country overtakes India as top pick for equity funds.

Tax Cuts, Sold as Fuel for Growth, Widen Gap Between Rich and Poor
Eduardo Porter (NYT) Oct 3, 2017
New research undermines the contention since the 1970s that lower rates stimulate the economy. What they seem to do instead is increase inequality.

Trump Tax Plan Is Only Bearish for Bonds in the Short Term
David A Ader (Bloomberg View) Oct 3, 2017
There's a glut of savings in the world even as the higher yields offered on U.S. bonds act as a powerful lure to international investors.

Australia's Luck Has Run Out
Satyajit Das (Bloomberg View) Oct 3, 2017
Gaudy numbers mask serious flaws in the country's economic model.

The World Doesn't Care About TPP
Clyde Prestowitz (TAP) Oct 3, 2017
Since the Trump administration’s decision not to ratify the Trans-Pacific Partnership (TPP) so-called free trade agreement, it has become an article of faith of the U.S. foreign policy elite and pundit class that this inaction is causing a decline in American global influence. This view—a common cliché among policy elites—is profoundly and dangerously wrong. TPP would not have contained Chinese influence, and was not really designed to.

Credit growth and the Global Crisis: A new narrative
Stefania Albanesi, Giacomo De Giorgi and Jaromir Nosal (VoxEU) Oct 3, 2017
The Global Crisis narrative has suggested that an expansion of subprime credit was the reason for rising mortgage defaults, leading to the large-scale recession in 2007-09. Taking a closer look at the characteristics of subprime credit holders over the period, this column argues that the growth in mortgage defaults did not occur predominantly amongst subprime credit holders. Instead, it was real estate investors that played a critical role in the rise in mortgage debt, specifically among the middle and the top of the credit score distribution. The Global Crisis narrative has suggested that an expansion of subprime credit was the reason for rising mortgage defaults, leading to the large-scale recession in 2007-09. Taking a closer look at the characteristics of subprime credit holders over the period, this column argues that the growth in mortgage defaults did not occur predominantly amongst subprime credit holders. Instead, it was real estate investors that played a critical role in the rise in mortgage debt, specifically among the middle and the top of the credit score distribution.

Yellen deserves a second term at the Fed’s helm
FT View Oct 4, 2017
The US needs to maintain easy money and tough financial regulation.

The European Commission is right to play hardball on tax
Alan Beattie (FT) Oct 4, 2017
Attempts to co-ordinate action on avoidance have yielded little.

Fear of Federal Debt Has Faded, but Risks Remain
Binyamin Appelbaum (NYT) Oct 4, 2017
The federal debt is already much larger than experts long considered safe. Some see a warrant for more borrowing; others urge caution.

Oil Market Shifts From Contango to Backwardation: Implications for Investors
Nicholas J. Johnson and Andrew DeWitt (PIMCO) Oct 4, 2017
The pivot to backwardation is notable for investors for three key reasons.

Europe's Bond Markets Are Only Getting Uglier
Mark Grant (Bloomberg View) Oct 4, 2017
High-yield securities have entered a sort of “no-man’s land” where the risk-pricing mechanism has defaulted to government intervention.

The Fed Has Freed Emerging Markets From Uncertainty
Daniel Moss (Bloomberg View) Oct 4, 2017
The U.S. central bank now conveys its intentions so clearly that its counterparts elsewhere don't have to guess and react.

Italian Businesses Don't Need a Cheap Lira After All
Ferdinando Giugliano (Bloomberg View) Oct 4, 2017
It has taken a while, but the country has learned to be competitive within the euro zone.

Investors Are Too Inured to Markets' Repeated Records
Danielle DiMartino Booth (Bloomberg View) Oct 4, 2017
Stocks and bonds shrug off concerns about a bubble.

Is Africa Still Rising?
Brahima Coulibaly (Project Syndicate) Oct 4, 2017
Growth across Sub-Saharan Africa has weakened since 2015, and the poor outlook for commodity prices has cast doubt on the region’s economic promise, leading critics to conclude that Africa's economic heyday is over. Yet the gains that African economies have made are real, and will not be easily reversed.

Securing Land Rights in Africa
Frank Pichel (Project Syndicate) Oct 4, 2017
Across the continent, insecure rights to land are robbing millions of financial stability and long-term prosperity. While new technology is giving people the tools to define what’s theirs, governments must recognize that certainty of ownership is a prerequisite of sustainable development.

The Chimera of Franco-German Reform
Hans-Helmut Kotz (Project Syndicate) Oct 4, 2017
In the past month, European Commission President Jean-Claude Juncker and French President Emmanuel Macron have both unveiled ambitious visions for Europe's future. But both leaders' reform agendas will require the buy-in of a German electorate that is moving in the opposite direction.

How Britain Lost Its Cool
Mark Leonard (Project Syndicate) Oct 4, 2017
In the past 20 years, the UK and Germany have switched positions, with the latter now representing openness while the former has come to embody backward-looking nationalism. But there is no reason to believe that the two countries won't switch places again.

Book Synopsis New Cycle or Old (Guaranteed) Bubble?
Ning Zhu (VoxChina) Oct 4, 2017
It seems necessary that one gains some deeper understanding of the sources of China’s phenomenal economic growth. Apart from all well-founded extant explanations, my recent book Guaranteed Bubble argues for another important yet previously overlooked source: the guarantees provided by the Chinese government.

Capital Flows, Interest Rates and Asset Prices
John E. Silvia and Michael Pugliese (WF) Oct 4, 2017
Interactions between capital flows and asset prices are critical to understanding the process of price determination. The allocation of capital around the globe both drives and is driven by capital flows.

Strengthening eurozone solidarity while preserving market discipline
Adam Lerrick (AEI) Oct 4, 2017
In times of market stress, interest rates for weak eurozone members rise, creating an unexpected fiscal loss, and interest rates for strong members fall, generating an unexpected fiscal gain. When market stability returns, the members' costs of funds reverse direction and return to their structural levels. A Eurozone Financing Cost Stabilization Account will reallocate 50 percent of gains of members with temporary decreases in relative financing costs to offset 50 percent of losses of members with temporary increases in relative financing costs. This stabilization account will strengthen eurozone solidarity, preserve market discipline, and moderate shocks to member costs of funds, all without mutualization of liability.

The Paradox of Prosperity
Ty McCormick (FP) Oct 4, 2017
Europe is spending billions of dollars to jump-start Africa’s poorest economies. But that may just accelerate the exodus.

ECB action on bad loans will gird banks’ defences
FT View Oct 5, 2017
Crisis-era debt remains a problem but tough new rules are a start.

South Africa has become a byword for corruption
David Pilling (FT) Oct 5, 2017
Corporate reputations are shredded because of ‘state capture’ by private interests.

Puerto Rico’s recovery depends on debt forgiveness
Gillian Tett (FT) Oct 5, 2017
But a write-off needs to be part of a wider economic plan for the island.

Tariffs and energetic protection of US trade is the American way
Alan Beattie (FT) Oct 5, 2017
US policy on imports is tough whoever is in the White House.

More evidence that bail-ins are better than bailouts
Matthew C Klein (FT) Oct 5, 2017
Government responses to financial crises can be sorted according to who bears the losses. The state can concentrate the pain on the individuals and institutions who made bad decisions — they can be bailed in — or policymakers can bail out the people who caused the problem by spreading the damage across the rest of society.

Saudis consider easing austerity to spur growth, says IMF
Simeon Kerr (FT) Oct 5, 2017
Fund urges government to push back plan to balance the budget from 2019 to 2022.

Pacific Trade Advances Without the U.S.
WSJ Oct 5, 2017
TPP is moving ahead in ways that will cost American exporters.

China’s Biggest Political Summit
Tom Clifford (Globalist) Oct 5, 2017
For all of China’s active global summitry, the most complex diplomatic exercise is entirely domestic – the CCP’s Party Congress, held every five years.

China’s 19th Party Congress: A New Cycle?
Isaac Meng (PIMCO) Oct 5, 2017
If President Xi Jinping’s power is strongly reinforced, the 19th Party Congress could be a defining moment for the next decade.

(Not Too) Late-Cycle Positioning in an Aging Expansion
(Not Too) Late-Cycle Positioning in an Aging Expansion Oct 5, 2017
We believe it’s not too late for investors to seek attractive relative value opportunities and reposition equity exposures in this aging cycle.

NAFTA Negotiators Report Progress, Warn of Challenging Road Ahead
Bridges, Volume 21, Number 32 Oct 5, 2017
Ministers from Canada, Mexico, and the United States announced last week that they have made steady progress in their latest negotiating round on modernising the North American Free Trade Agreement (NAFTA), and are set to reconvene next week in Washington to continue negotiating.

Testing Europe's Resolve on Failing Banks
Ferdinando Giugliano (Bloomberg View) Oct 5, 2017
The Single Resolution Board was off to a good start, but there are causes for concern.

A Volatility Trap Is Inflating Market Bubbles
Alberto Gallo (Bloomberg View) Oct 5, 2017
A number of markets show not only elevated valuations, but also irrational investor behavior.

Life-and-Death Inequality
Thorvaldur Gylfason (Project Syndicate) Oct 6, 2017
Although people are living longer almost everywhere, life-expectancy figures in the US tell a more complicated story. Rich Americans can expect to live significantly longer than poor Americans, owing to disturbing levels of inequality not only of income and wealth, but also of access to basic health care.

New survey evidence on the impact of Brexit on UK firms
Nicholas Bloom and Paul Mizen (VoxEU) Oct 5, 2017
UK economic performance has been poor since the vote to leave the EU in June 2016, but has not been the catastrophe that many predicted. This column draws four results from the evidence gathered in the new Decision Maker Panel survey of around 2,500 businesses in the UK. While most firms expect a negative impact of Brexit on sales, investment and costs, only larger firms and those that are more exposed to international markets are likely to think that they might move part of their business abroad.

Can Macron’s "Fire and Fury" Lead a Renaissance for Europe?
François Godement (YaleGlobal) Oct 5, 2017
Macron, avoiding treaty changes, moves swiftly in proposing reforms to revitalize the European Union and France’s role

Should We Worry about Trade Imbalances?
Thomas A. Lubik and Tim Sablik (FRBR Econ Brief) Oct 5, 2017
Trade imbalances are a perennial concern for policymakers and the public. But what does it mean for a country to have a trade surplus or deficit? The United States has run persistent trade deficits since the late 1970s, while Germany has had trade surpluses since the 1990s. Is either position inherently good or bad? The answer to this fundamental question of economic policy is a resounding "no" — up to a point.

In markets worldwide, sceptics lose the fight
FT View Oct 6, 2017
The rally has all the fundamentals behind it — except valuation.

Protect faith in privatised monopolies with tougher regulation
Diane Coyle (FT) Oct 6, 2017
An overhaul of industry watchdogs will head off calls for renationalisation.

The Catalan crisis poses a threat to the European order
Tony Barber (FT) Oct 6, 2017
The nationalists’ push for independence risks opening a Pandora’s box of problems.

Seven theses on the eurozone
Martin Sandbu (FT) Oct 6, 2017
A summary of heretical arguments on current accounts and fiscal union.

Chinese share boom obscures governance flaws
James Kynge (FT) Oct 6, 2017
Equity investing in country is governance minefield for the uninitiated.

Is the “globalisation –> disinflation” thesis bunk?
Matthew C Klein (FT) Oct 6, 2017
Since the early 1990s, inflation in the rich world has been quiescent and the share of domestic consumption satisfied by imports has soared. It’s not unreasonable to think these two facts may be related.

Stumbling Blocks for Brazil’s Economic Recovery as Election Looms
Monica de Bolle (PIIE) Oct 6, 2017
Against all odds, the Brazilian economy is gradually recovering.

Battling for Independence: Small States Stake Their Claim
James M. Dorsey (Globalist) Oct 6, 2017
Beyond the present efforts in Catalonia and Iraqi Kurdistan: How do the strategies of existing small states Singapore, the UAE and Qatar compare?

Don't Count on Ever-Growing Corporate Profit
Lakshman Achuthan and Anirvan Banerji (Bloomberg View) Oct 6, 2017
Economic growth is about as good as it gets, and we’re on the cusp of a fresh downturn.

Japan Rises as a Free-Trade Leader as the U.S. Sinks
Noah Smith (Bloomberg View) Oct 6, 2017
The nation is pursuing America's traditional agenda, though the results will be different.

China's Reserve Ratio Cut Is About Economic Efficiency
David Millhouse (Bloomberg View) Oct 6, 2017
If the goal were purely to add liquidity, the PBOC had several tools other it could have used.

Fed Officials Reveal Their True Inflation Attitudes
Timothy A Duy (Bloomberg View) Oct 6, 2017
The central bank's commitment to gradualism is cracking, and might not last past the December meeting.

Your Local Bank Could Be the Central Bank
Jean-Michel Paul (Bloomberg View) Oct 6, 2017
Central banks will have to embrace digital currencies; the question is how far they will go.

Spain’s Crisis is Europe’s Opportunity
Yanis Varoufakis (Project Syndicate) Oct 6, 2017
The Catalonia crisis is a strong hint from history that Europe needs to develop a new type of sovereignty, one that strengthens cities and regions, dissolves national particularism, and upholds democratic norms. Imagining a pan-European democracy is the prerequisite for imagining a Europe worth saving.

Three Ways Ahead for the Eurozone
Kemal Dervis (Project Syndicate) Oct 6, 2017
With German Chancellor Angela Merkel still forming her new coalition government, it is impossible to say for certain what approach to integration Europe will take in the coming years. But reform of the EU and the eurozone will almost certainly not follow the highly ambitious path favored by European Commission President Jean-Claude Juncker.

Overcoming Eurozone wage inertia
Marco Buti and Alessandro Turrini (VoxEU) Oct 6, 2017
Exceptionally low wage growth is at the heart of low Eurozone inflation, while wage growth differentials are not contributing enough to a symmetric rebalancing in the currency union. This column discusses the role that wage developments at the Eurozone level can play in supporting monetary policy and fostering external rebalancing. Although wage setting is a prerogative and not a policy under direct government control, a rationale for the coordination of a number of government policies affecting competitiveness exists, and potential benefits are apparent in the current context. Exceptionally low wage growth is at the heart of low Eurozone inflation, while wage growth differentials are not contributing enough to a symmetric rebalancing in the currency union. This column discusses the role that wage developments at the Eurozone level can play in supporting monetary policy and fostering external rebalancing. Although wage setting is a prerogative and not a policy under direct government control, a rationale for the coordination of a number of government policies affecting competitiveness exists, and potential benefits are apparent in the current context.

Declining Japanese long-term interest rates and implications for monetary policy
Sayuri Shirai (VoxEU) Oct 6, 2017
Interest rates in many advanced economies have been declining since the 1990s. This column takes a close look at the case of Japan. In 2013 the Bank of Japan pursued a policy of quantitative and qualitative monetary easing that aimed to lower the real interest rate substantially below its natural rate. The evidence suggests that this policy has had mixed success at best, and that the natural rate of interest may decline in the foreseeable future. Interest rates in many advanced economies have been declining since the 1990s. This column takes a close look at the case of Japan. In 2013 the Bank of Japan pursued a policy of quantitative and qualitative monetary easing that aimed to lower the real interest rate substantially below its natural rate. The evidence suggests that this policy has had mixed success at best, and that the natural rate of interest may decline in the foreseeable future.

US immigration reform and Mexican migration dynamics
Khulan Altangerel and Jan van Ours (VoxEU) Oct 6, 2017
The Immigration Reform and Control Act of 1986 was the first major reform intended to control and deter illegal immigration to the US through legalisation of unauthorised immigrants, increased border security, and sanctions on employers that hired unauthorised immigrants. This column uses data from an annual survey of Mexican households to show that the Act had a negative and significant effect on undocumented migration. However, since the Act’s legalisation programme was active for only a few years, its long-term effects appear to have been limited. The Immigration Reform and Control Act of 1986 was the first major reform intended to control and deter illegal immigration to the US through legalisation of unauthorised immigrants, increased border security, and sanctions on employers that hired unauthorised immigrants. This column uses data from an annual survey of Mexican households to show that the Act had a negative and significant effect on undocumented migration. However, since the Act’s legalisation programme was active for only a few years, its long-term effects appear to have been limited.

The implication of firm competition on industrial policies
Martin Rotemberg (VoxDev) Oct 6, 2017
Small firms that receive subsidies in India grow more quickly than their competitors. But is it a zero-sum game?

The Dam Will Hold. Until It Doesn’t.
Cameron Abadi (FP) Oct 6, 2017
Europe has managed to slow the flow of migrants, at least for now — but it's undermining its most cherished values in the process.

Is China the Future of Bitcoin, or Its Past?
Andrew Collier, Isaac Mao and Charlie Custer (ChinaFile) Oct 6, 2017
At points over the last few years, China may have accounted for more than 75 percent of Bitcoin trading, dominating the market. In September, Beijing moved to curb Bitcoin trading in the country, with what appears to be limited success. Is China the future of Bitcoin, or its past? And what does this say about Chinese regulators’ appetite for financial experimentation?

Asset prices are high across the board. Is it time to worry?
Economist Oct 7, 2017
With ultra-loose monetary policy coming to an end, it is best to tread carefully.

Global Economy’s Stubborn Reality: Plenty of Work, Not Enough Pay
Peter S. Goodman and Jonathan Soble (NYT) Oct 7, 2017
Even as job markets are tight in many major economies, low unemployment is failing to spur robust increases in wages, leaving workers angry.

Tech’s fight for the upper hand on open data
Rana Foroohar (FT) Oct 8, 2017
What happens if big companies control who has access to the marketplace of ideas?

America’s tax plan is not worth its name
Lawrence Summers (FT) Oct 8, 2017
The international community should give officials a very uncomfortable week

A Catalan breakaway would make Brexit look like a cake walk
Wolfgang Münchau (FT) Oct 8, 2017
Exiting the EU and currency union at the same time is an economic suicide mission.

The Economy Is Humming. Bankers Are Cheering. What Could Go Wrong?
Landon Thomas Jr (NYT) Oct 8, 2017
As global policy makers meet in Washington for the International Monetary Fund's biannual meetings, the global economy is thriving.

Why Bitcoin’s Bubble Matters
WSJ Oct 8, 2017
If there’s a price crash in the cryptocurrency, it could hit the tech sector---and more.

Economic cannibalism
Robert J. Samuelson (WP) Oct 8, 2017
A formula for resentment and discord: When people fight over getting a bigger pie of the economic pie, rather than growing the pie so that everyone benefits.

Northeast China needs to shed its ‘big government’ mindset
Hu Shuli (EAF) Oct 8, 2017
The roots of northeastern China's economic predicament run deeper than its out-of-date industrial structure.

The Saudi Paper Tiger
James M. Dorsey (Globalist) Oct 8, 2017
Far from dominant, Saudi Arabia’s future in the Middle East is that of a second fiddle state.

Dollar rebound has legs — just not against the euro
Roger Hallam (FT) Oct 9, 2017
Investors would be better off buying the dollar against the yen and emerging market currencies.

Wolfgang Schäuble remains blind to his policy failures
Alan Beattie (FT) Oct 9, 2017
The outgoing German finance minister continues to promote bad ideas.

Bullying the Bank
Roger Lowenstein (WSJ) Oct 9, 2017
After each financial disaster, Congress off-loads blame on the Fed, threatening stricter controls and fuller accountability. Roger Lowenstein reviews ‘The Myth of Independence’ by Sarah Binder and Mark Spindel.

October 2017 update to TIGER: A synchronized but sluggish recovery
Eswar Prasad and Karim Foda (Brookings) Oct 9, 2017
An update to the Tracking Indexes for the Global Economic Recovery (TIGER) finds that weak productivity and investment growth are hampering the world's economic recovery.

China’s industrial revolution: was it the last one?
Brian Caplen (Banker) Oct 9, 2017
If robots become the mainstay of manufacturing, the advantage of cheap labour disappears and with it the prospects for poor countries to get rich.

Europe's New Mistake on Failing Banks
Bloomberg View Oct 9, 2017
Banks in trouble should be resolved, not frozen.

Why Japan Wants Your Junk
Adam Minter (Bloomberg View) Oct 9, 2017
There's treasure to be found in the world's trash.

India Needs to Open Its Wallet
Dhiraj Nayyar (Bloomberg View) Oct 9, 2017
Spending more is the only way to get the economy moving again.

Currency Convertibility Is Back as a Risk in European Bonds
Ben Emons (Bloomberg View) Oct 9, 2017
Markets see a risk that Catalonia may inspire populist movements across Europe, threatening the euro.

Catalonia and Spain Need Outside Mediation
Mohamed Aly El-Erian (Bloomberg View) Oct 9, 2017
Madrid's heavy-handed response to the region's desire for greater self-determination has empowered separatists.

It's Denmark Versus Singapore for the Growth Crown
Noah Smith (Bloomberg View) Oct 9, 2017
There's no guarantee that democracy produces better results.

Will EU Integration Create More Catalonias?
Leonid Bershidsky (Bloomberg View) Oct 9, 2017
The more federalist Europe becomes, the less regions may see a need for the nation.

Why Fed Policy Is Boosting Commodities
Shelley Goldberg (Bloomberg View) Oct 9, 2017
Janet Yellen's dovish approach should push prices down. Yet that’s not happening.

Africa’s Schooling Without Learning
Atukwei Okai (Project Syndicate) Oct 9, 2017
Despite progressive reforms in countries such as Ghana, students across Africa still face steep barriers to a truly comprehensive education. In Sub-Saharan Africa, it is estimated that 88% of children and teenagers will enter adulthood without basic literacy, owing to low investment in schools and teacher training.

Crypto-Fool’s Gold?
Kenneth Rogoff (Project Syndicate) Oct 9, 2017
The price of Bitcoin is up 600% over the past 12 months, and 1,600% in the past 24 months. But the long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates – and there is no reason to expect virtual currency to avoid a similar fate.

Commodity booms and busts in emerging economies
Thomas Drechsel and Silvana Tenreyro (VoxEU) Oct 9, 2017
Emerging economies, particularly those dependent on commodity exports, are prone to highly disruptive economic cycles. This column points to fluctuations in international commodity prices as a key driver of these cycles. Using a small open economy model, it quantitatively assesses their importance for Argentina’s economy, and finds that they explain 38%, 42%, and 61% of the variance of output, consumption and investment growth, respectively. Emerging economies, particularly those dependent on commodity exports, are prone to highly disruptive economic cycles. This column points to fluctuations in international commodity prices as a key driver of these cycles. Using a small open economy model, it quantitatively assesses their importance for Argentina’s economy, and finds that they explain 38%, 42%, and 61% of the variance of output, consumption and investment growth, respectively.

Trade and inequality: From theory to estimation
Elhanan Helpman, Oleg Itskhoki, Marc Muendler and Stephen Redding (VoxDev) Oct 9, 2017
Starting from a closed economy, trade liberalisation increases wage inequality; as costs fall further, wage inequality peaks and also starts to fall.

What Realists Don’t Understand About Law
Oona Hathaway and Scott J. Shapiro (FP) Oct 9, 2017
There’s nothing more realistic than realizing that national interests aren’t just about power, geography, and great men.

Revival of the Trans-Pacific Partnership
David Bartlett (EFR) Oct 9, 2017
The withdrawal of the United States from the Trans-Pacific Partnership Agreement disrupted the institutional structure of global trade. However, it seems that the foremost loser from the United States' retreat is the US itself.

The puzzling, persistent weakness of wages
FT View Oct 10, 2017
The International Monetary Fund warns that earnings growth remains subdued.

The Federal Reserve treads a fine line on monetary tightening
Martin Wolf (FT) Oct 10, 2017
Inflation will determine how bumpy the ride will be.

Brexit exposes the UK’s weak business strategy
Sarah Gordon (FT) Oct 10, 2017
The government needs a ruthless analysis of which sectors have a competitive advantage.

Modi’s pursuit of black money proves drag on India’s economy
Amy Kazmin (FT) Oct 10, 2017
Prime minister’s anti-corruption drive seems incompatible with growth ambitions.

Emerging markets credit growth rebounds from 6-year decline
Steve Johnson (FT) Oct 10, 2017
International Monetary Fund warns of risks as debt levels rise.

European convergence moves east
Guillermo Tolosa and Evghenia Sleptsova (FT) Oct 10, 2017
Central European economies race ahead of southern laggards.

Dollar revival interrupts carefree year for EM investors
Roger Blitz (FT) Oct 10, 2017
A testing September has investors starting to doubt emerging market currencies.

Why Big Cities Thrive, and Smaller Ones Are Being Left Behind
Eduardo Porter (NYT) Oct 10, 2017
Population is a growing source of economic cleavage, as larger metropolitan areas adapt better to the disruptions arising from trade and technology.

Lessons From the Sorry History of Steel Protectionism
Bill Lane (WSJ) Oct 10, 2017
Even the Trump team seems to recognize that tariffs or quotas would start a global trade war.

Forgiving Debt Would Hurt Puerto Rico
John Tamny (WSJ) Oct 10, 2017
Wiping out creditors would simply enable more dysfunction.

Trump’s moves on NAFTA risk massive damage
WP Oct 10, 2017
Undoing the economic integration from the trade deal now would hurt workers on all sides.

Can Trump Terminate NAFTA?
Gary Clyde Hufbauer (PIIE) Oct 10, 2017
President Trump’s longstanding threats to terminate the North American Free Trade Agreement (NAFTA) seem closer than ever to being realized.

Emerging Markets Outlook: Constructive, But for Investors the Work Begins
Lupin Rahman (PIMCO) Oct 10, 2017
While PIMCO’s cyclical outlook is cautious overall, our outlook for emerging markets is more constructive.

Don't Expect China to Change
Christopher Balding (Bloomberg View) Oct 10, 2017
Even an unchallenged Xi Jinping isn't likely to push forward daring reforms.

Piketty's Got a Point About India
Mihir Sharma (Bloomberg View) Oct 10, 2017
The rich-poor gap may be undermining the consensus behind reform.

Guarded Optimism About the Global Economy
Mohamed Aly El-Erian (Bloomberg View) Oct 10, 2017
Despite improved growth, it is way too early to declare “mission accomplished.”

Catalonia Crisis Offers Opportunity for Investors
Komal S Sri-Kumar (Bloomberg View) Oct 10, 2017
Prospects are for Spain to remain intact even as discontent simmers.

Schaeuble Leaves, But His Ideas Are Here to Stay
Leonid Bershidsky (Bloomberg View) Oct 10, 2017
The outgoing German finance minister's recommendations for the euro zone reveal the limits of fiscal integration.

Interest Rates and the "New Normal"
John C. Williams (FRBSF Econ Latter) Oct 10, 2017
The Federal Reserve is moving towards more normal monetary policy, which means rising interest rates. But factors including the real natural rate of interest, a slower sustainable pace of growth, and inflation all point to a new normal where interest rates are lower than in the 1990s and early 2000s.

Growth Without Industrialization?
Dani Rodrik (Project Syndicate) Oct 10, 2017
Low-income African countries can sustain moderate rates of productivity growth into the future, on the back of steady improvements in human capital and governance. But the evidence suggests that, without manufacturing gains, the growth rates brought about recently by rapid structural change are exceptional and may not last.

Three Scenarios for the Global Economy
Nouriel Roubini (Project Syndicate) Oct 10, 2017
he International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook. But is the IMF right to think that the recent growth spurt will continue over the next few years, or is a temporary cyclical upswing about to be subdued by new tail risks?

A Spanish Disquisition
Victor Lapuente Giné 9Project Syndicate) Oct 10, 2017
At first sight, the idea that Spain could descend into chaos is puzzling. But the actors in the conflict between Catalonia and Spain are facing what political scientists call a social dilemma: either side gains from selfish behavior unless the other side behaves selfishly, too, in which case both sides lose.

A New Front in Asia’s Water War
Brahma Chellaney (Project Syndicate) Oct 10, 2017
For decades, China has been dragging its neighbors into high-stakes games of geopolitical poker over water-related issues. But the country's politically motivated decision to withhold hydrological data from India amounts to an escalation of China's efforts to exploit its status as the world's hydro-hegemon to gain strategic leverage over its neighbors.

The economic effects of goods and factor market integration
Lorenzo Caliendo, Luca David Opromolla, Fernando Parro and Alessandro Sforza (VoxEU) Oct 10, 2017
The effects of international trade and of international migration have been central to the recent debate on economic integration. Evaluating trade and migration policies is challenging, however, because they often take place at the same time and reinforce each other, making it hard to distinguish their effects. This column uses a general equilibrium approach to quantify the effects of the 2004 EU enlargement. It finds that all EU countries gained from enlargement, but that the largest winners were the new member states, and in particular their low-skilled workers. The effects of international trade and of international migration have been central to the recent debate on economic integration. Evaluating trade and migration policies is challenging, however, because they often take place at the same time and reinforce each other, making it hard to distinguish their effects. This column uses a general equilibrium approach to quantify the effects of the 2004 EU enlargement. It finds that all EU countries gained from enlargement, but that the largest winners were the new member states, and in particular their low-skilled workers.

Rules versus discretion in tax policy
Roger Gordon (VoxDev) Oct 10, 2017
Compared to existing income taxes, a value-added tax limits the tax base to information that can easily be monitored, reducing the role of discretion.

The Postcolonial Cold War
Timothy Nunan (FA) Oct 10, 2017
How the U.S. and China fought over the Third World.

Lessons from New Zealand on fiscal discipline
Dag Detter (FT) Oct 11, 2017
Net worth, not debt or the deficit, is the best measure of a government’s position.

Cross-currency basis, RIP?
Matthew C Klein (FT) Oct 11, 2017
It was one of the more interesting stories of 2016 — but now it’s gone.

Central bankers face a crisis of confidence as models fail
Chris Giles (FT) Oct 11, 2017
The new masters of the universe are struggling to understand what makes a modern economy tick and their actions could prove harmful

China congress will disappoint hopes for radical economic change
FTCR Oct 12, 2017
Leadership has highlighted gradual approach to policy commitments.

China’s Reform Canary
WSJ Oct 11, 2017
The central bank governor calls for an end to capital controls.

Financial Stability Improves, But Rising Vulnerabilities Could Put Growth at Risk
Tobias Adrian (IMF) Oct 11, 2017
The world’s financial system is getting stronger, thanks to healthy economic growth, buoyant markets, and low interest rates. Yet despite these favorable conditions, dangers in the form of rising financial vulnerabilities are starting to loom.

Inequality: Fiscal Policy Can Make the Difference
Vitor Gaspar and Mercedes Garcia-Escribano (IMF) Oct 11, 2017
Income inequality among people around the world has been declining in recent decades.

Digital Economy Outlook 2017: What artificial intelligence really means for policy makers
Wonki Min (OECD Insight) Oct 11, 2017
As countries and international communities grapple with this question and the consequences of the rapid diffusion of AI and industrial robots, the 2017 OECD Digital Economy Outlook takes a timely look at the potential benefits and opportunities offered by AI as it begins to take hold and slowly penetrate, if not disrupt and transform, our economies and societies.

Ending Inequality Between Countries: Not By Trade Alone
Branko Milanovic (Globalist) Oct 11, 2017
Is a world of approximately equal country incomes really possible to envisage any time soon?

Africa's Economic Future Depends on Its Farms
Bloomberg View Oct 11, 2017
Faster and more sustainable agricultural growth is essential for jobs as well as food.

IMF Risks Raining on Its Own Pretty Good Parade
Daniel Moss (Bloomberg View) Oct 11, 2017
It's dangerous to fixate on weak patches and overlook the world economy's broad growth.

Central Banks' Return to Normalcy Is Nothing But a Charade
Mark Grant (Bloomberg View) Oct 11, 2017
With their $21.5 trillion in assets, central banks have effectively manufactured the world's biggest economy.

Fed Is Ignoring Actual Inflation Data
Timothy A Duy (Bloomberg View) Oct 11, 2017
Policy makers may be relying on the wrong model as they push for a December rate hike.

Come On, Bondholders! Give Puerto Rico a Break.
Joe Nocera (Bloomberg View) Oct 11, 2017
You took on risk. You lost. That's life. Now think of the victims of Hurricane Maria.

Australia Doesn't Have the Answers
Satyajit Das (Bloomberg View) Oct 11, 2017
Its pension system is the envy of the world. It shouldn't be.

Whiffs of Doubt Appear in Fed's View of Inflation
Daniel Moss (Bloomberg View) Oct 11, 2017
Skeptics of a price rise came to the latest meeting with some ammo.

Globalization for All
Anabel González (Project Syndicate) Oct 11, 2017
After a year of turmoil for globalization, new efforts are underway to gain a better understanding of the dynamics of international trade and evolving technologies. Armed with empirical studies and reasoned proposals, policymakers around the world can start to ensure that these two key engines of economic growth work for everyone.

The Demise of Dollar Diplomacy?
Barry Eichengreen (Project Syndicate) Oct 11, 2017
Pundits have been saying last rites for the dollar’s global dominance since the 1960s – that is, for more than half a century now. But the pundits may finally be right, because the greenback's dominance has been sustained by geopolitical alliances that are now fraying badly.

Closing the Education Gender Gap
Julia Gillard (Project Syndicate) Oct 11, 2017
On this International Day of the Girl, the number of girls not attending school, despite having fallen by 40% since 2000, still stands at 130 million. This represents both a moral and a practical failing, because girls are not receiving the education they deserve, and businesses are struggling to find workers with the skills they need.

Europe’s Return to Crisis?
Daniel Gros (Project Syndicate) Oct 11, 2017
The European Union – which relies on the nation-state not just for the implementation of its policies, but also for its own legitimacy – can function only as well as its member states. And, today, those member states, including but not limited to Spain, are severely weakened by internal strife.

Industrial robots and inclusive growth
Jörg Mayer (VoxEU) Oct 11, 2017
Most of the current debate on the threat of robots focuses on developed countries, but robotisation clearly also concerns developing countries. This column examines whether robots will reduce the familiar benefits of industrialisation as a development strategy. It argues that robots are not yet suitable for a range of labour-intensive industries, leaving the door open for developing countries to enter industrialisation processes along traditional lines. At the same time, it suggests ways that developing countries should embrace the digital revolution. Most of the current debate on the threat of robots focuses on developed countries, but robotisation clearly also concerns developing countries. This column examines whether robots will reduce the familiar benefits of industrialisation as a development strategy. It argues that robots are not yet suitable for a range of labour-intensive industries, leaving the door open for developing countries to enter industrialisation processes along traditional lines. At the same time, it suggests ways that developing countries should embrace the digital revolution.

China’s Great Housing Boom
Kaiji Chen and Yi Wen (VoxChina) Oct 11, 2017
We provide a theory to explain China’s excessive housing price growth in the most recent decades, despite a high vacancy rate and a high rate of return to capital. We argue that China’s housing prices contain a significant and rapidly growing bubble component. This growing housing bubble generates a substantial degree of welfare losses and resource misallocation in the capital market, which are prolonging economic transition and hindering aggregate economic growth.

It’s Time to Rewrite the Rules of Our Economy
Tim O’Reilly (Evonomics) Oct 11, 2017
The economic game is enormously fun for far too few players, and an increasingly miserable experience for many others.

US demands World Bank overhaul of lending to China
Shawn Donnan (FT) Oct 12, 2017
Resistance to capital increase for the bank creates new battle with Beijing.

China is winning the future. Here’s how.
Fareed Zakaria (WP) Oct 12, 2017
When it comes to clean energy, the United States is falling behind a country that the president loves to hate.

Ministers in Marrakech Grapple with Buenos Aires Deliverables, Future WTO Agenda
Bridges, Volume 21, Number 33 Oct 12, 2017
Trade ministers from nearly 40 WTO members concluded a two-day series of meetings in Marrakech, Morocco, this week, with Director-General Roberto Azevêdo stating afterwards that much work remains to ensure that the upcoming ministerial conference in Buenos Aires, Argentina, leads to tangible results.

Brexit: UK, EU Propose Cooperative Approach to WTO Commitments
Bridges, Volume 21, Number 33 Oct 12, 2017
The UK and EU wrote on Wednesday 10 October to other WTO members to set out proposals for a “cooperative and transparent” approach to adjusting their existing commitments at the global trade body, as Britain prepares to leave the 28-member bloc in March 2019.

EU, India Leaders Call for "Timely Relaunch" of Trade Talks
Bridges, Volume 21, Number 33 Oct 12, 2017
Leaders from the EU and India are pushing to see the “timely relaunch” of their long-running trade talks, reaffirming their continued interest in advancing the negotiations following a summit held in New Delhi last week.

As Good as It Gets? Three Risks to Global Growth
Joachim Fels (PIMCO) Oct 12, 2017
When the macroeconomic environment is as good as it gets and valuations are tight, it is time to emphasize caution, capital preservation and diversified sources of carry away from the crowded trades.

Tariffs on Solar Panels Would Kill U.S. Jobs
Bloomberg View Oct 12, 2017
If Trump means what he says about employment, he'll keep America's market open.

Slowdown Reflects an Investment in India's Future
Daniel Moss (Bloomberg View) Oct 12, 2017
Tax reform is not painless, but it was needed. And it will pay off.

Oil Futures in China Would Be Transformational
David Millhouse (Bloomberg View) Oct 12, 2017
It could be the first step in removing capital controls on remittance of foreign investors’ profits.

Low Bond Yields Have Little to Do With Lax Monetary Policies
Lars Christensen (Bloomberg View) Oct 12, 2017
Demographic trends are having a very significant impact on savings and risk appetite.

The U.S. Is Still Growing Faster Than Other Rich Countries
Justin Fox (Bloomberg View) Oct 12, 2017
But the IMF's projections aren't as rosy as you'd hope.

The Case Against Free-Market Capitalism
Ngaire Woods (Project Syndicate) Oct 12, 2017
In the United Kingdom and around the world, neoliberalism is on trial, and the orthodoxy established by Margaret Thatcher and Ronald Reagan in the 1980s – to roll back the state and let the market work its magic – may indeed be guilty as charged. But will governments be given the tools and support they need to rehabilitate the defendant?

The Two Backlashes Against Globalization
Shashi Tharoor (Project Syndicate) Oct 12, 2017
The reaction against globalization has taken two forms: economic resistance to rising inequality and a revolt against multiculturalism and cosmopolitanism. To save globalization – which has lifted hundreds of millions out of poverty, created new markets for goods made by poor countries, and reduced prices for rich-country consumers – both must be addressed.

Quantifying the effect of the Bank of Japan’s equity purchases
Toby Nangle and Anthony Yates (VoxEU) Oct 12, 2017
Among the many in quantitative easing programmes that central banks have engaged in to combat low inflation since the Global Crisis, the Bank of Japan’s programme stands out for its size and scope. This column explores whether the Bank’s programme of purchasing Japanese equities through exchange-traded funds has succeeded in its aim of lowering risk premia of asset prices. The Bank has timed the execution of the programme to coincide with episodes of market weakness, possibly with the aim of dampening price volatility. Over the course of the programme, however, Japanese stocks de-rated against global stocks. Among the many in quantitative easing programmes that central banks have engaged in to combat low inflation since the Global Crisis, the Bank of Japan’s programme stands out for its size and scope. This column explores whether the Bank’s programme of purchasing Japanese equities through exchange-traded funds has succeeded in its aim of lowering risk premia of asset prices. The Bank has timed the execution of the programme to coincide with episodes of market weakness, possibly with the aim of dampening price volatility. Over the course of the programme, however, Japanese stocks de-rated against global stocks.

Trade effects of deep agreements
Aaditya Mattoo, Alen Mulabdic and Michele Ruta (VoxEU) Oct 12, 2017
Trade agreements have extended their reach well beyond tariff reduction, to policy areas such as investment and competition policy. This column shows that the deepening of trade agreements has contributed to trade growth among members and had a positive spillover effect on trade with non-members. The reason is that, differently from tariffs, these new provisions are often non-discriminatory and, hence, have a public good aspect. Undoing deep agreements is likely to be painful for all. Trade agreements have extended their reach well beyond tariff reduction, to policy areas such as investment and competition policy. This column shows that the deepening of trade agreements has contributed to trade growth among members and had a positive spillover effect on trade with non-members. The reason is that, differently from tariffs, these new provisions are often non-discriminatory and, hence, have a public good aspect. Undoing deep agreements is likely to be painful for all.

Prospects for emerging market economies in a normalizing global economy
Jerome H. Powell (FRB Board) Oct 12, 2017
Despite the risks and uncertainties, EMEs are likely to manage that normalization reasonably well.

The View from Mexico on NAFTA: It's Complicated
David Agren (CIGI) Oct 12, 2017
Elites in Mexico have bet everything on NAFTA — but could there be life after the trade agreement? David Agren reports from Mexico, where he finds varying assessments of NAFTA’s impact over the last 23 years.

Morneau’s Big Challenge: IMF Reform and the Reluctant Hegemon
James A. Haley (CIGI) Oct 12, 2017
If Canada is to play a leadership role in the year it hosts the G7, it must be seen as an effective advocate of meaningful solutions to global problems. Senior Fellow James A. Haley outlines the weight of Finance Minister Bill Morneau's role in the global economy.

For Asia, Growth Pickup Provides Opportunity for Reforms
IMF News Oct 13, 2017
Asia continues to lead the global economy with strong growth projected at 5.6 percent this year and 5.5 percent in 2018. The strength of many economies in the region provides an opportunity to pursue key reforms that can amplify and accelerate their beneficial effects, boosting living standards for all.

Latin America's Recovery on Track but Long-Term Growth Weak
IMF News Oct 13, 2017
Economic activity in Latin America remains on track to recover gradually in 2017–18, but long-term growth remains stuck in low gear, slowing progress in catching up to income levels in advanced countries,

Handouts for Hard Times in India
Mihir Sharma (Bloomberg View) Oct 13, 2017
Reform will have to give way to populism for now.

Bank of England Governor Takes a Crack at the Inflation Mystery
Daniel Moss (Bloomberg View) Oct 13, 2017
A domestic view won't explain the disconnect between employment and prices.

Logic Doesn't Work With Bonds and U.S. Deficits
David A Ader (Bloomberg View) Oct 13, 2017
Larger deficits mean more Treasuries. But is that really bearish for interest rates?

Higher Oil Prices May Not Be So Temporary
Jason M Schenker (Bloomberg View) Oct 13, 2017
Demand is bolstered by increasing global growth and expanding Chinese manufacturing.

Understanding the Secessionist Surge
Edoardo Campanella (Project Syndicate) Oct 13, 2017
National self-determination was a key engine of twentieth-century geopolitics, driving the creation of many new countries after the two world wars, and again after the collapse of the Soviet Union. But, rather than correcting imperialist aberrations, most of today’s attempts at statehood pose a threat to global or regional stability.

The Economic Case for China’s Belt and Road
Shang-Jin Wei (Project Syndicate) Oct 13, 2017
In recent years, many of the world’s most influential countries have turned inward, with politicians promising protectionism, immigration restrictions, and even border walls. But, to achieve stronger economic growth and development, the world needs initiatives focused on building bridges – initiatives like China's Belt and Road.

Monetary easing and the Bank of Japan's balance sheet
Sayuri Shirai (VoxEU) Oct 13, 2017
Japan continues to struggle with sluggish inflation despite recent economic growth. This column discusses the impact of the Bank of Japan’s normalisation monetary easing on the economy, and also specifically on the Bank’s balance sheet. Policy discussion should focus on how to taper bond purchases without causing severe disturbances to the markets, given the economy is some way off its 2% inflation target.

Ten years after the crisis: Looking back, looking forward
Richard Baldwin, Thomas Huertas and Tessa Ogden (VoxEU) Oct 13, 2017
The Global Crisis started ten years ago and proved a turning point in global economic policy. CEPR organised a high-level conference to discuss the whether the regulatory reaction has been sufficient and where the next crisis might come from. This column summarises the conference discussions and introduces a set of video interviews with leading economists at the conference, including Paul Krugman, Anat Admati, John Vickers, Paul Tucker, among others. The Global Crisis started ten years ago and proved a turning point in global economic policy. CEPR organised a high-level conference to discuss the whether the regulatory reaction has been sufficient and where the next crisis might come from. This column summarises the conference discussions and introduces a set of video interviews with leading economists at the conference, including Paul Krugman, Anat Admati, John Vickers, Paul Tucker, among others.

Brexit Could Actually Be a Good Thing... For Europe and The Global Economy
John M. Eger (EFR) Oct 13, 2017
While the world seems to be in disarray, the future of the EU appears brighter since Brexit.

Xi Jinping has more clout than Donald Trump. The world should be wary
Economist Oct 14, 2017
Do not expect Mr Xi to change China, or the world, for the better.

Jones Act Descended From Centuries of Lazy Protectionism
Stephen Mihm (Bloomberg View) Oct 14, 2017
The cabotage laws straining Puerto Rico and many other places around the world are rooted in a fear of competition.

Jones Act Descended From Centuries of Lazy Protectionism
Luigi Guiso, Helios Herrera, Massimo Morelli and Tommaso Sonno (VoxEU) Oct 14, 2017
Populism – on both the left and right – has recently become a powerful force in western politics. This column uses individual data on political attitudes to argue that economic drivers are the most important factors influencing the demand for, and supply of, populist parties. Recent data also show that as these parties gain support, their political rivals adapt to embrace populism.

The US puts the World Bank under renewed fire
FT View Oct 15, 2017
The bank should stand firm on its carefully-established principles.

London is right to prepare for no deal on Brexit
Wolfgang Munchau (FT) Oct 15, 2017
Failure is often a precondition to subsequent agreement, but the talks could break down

China’s next five years: ‘Only Xi is indispensable’
Tom Mitchell (FT) Oct 15, 2017
Having strengthened the Communist party, the president will use its congress to cement his position further. But his appetite for reform is uncertain

Trump’s Nafta Threat
WSJ Oct 15, 2017
Ending the pact would be the worst economic blunder since Nixon.

Nafta Needs an Update, Not Repeal
George P. Shultz and Pedro Aspe (NYT) Oct 15, 2017
North America is a global powerhouse. Canada, Mexico and the United States can do more.

Can Technology Facilitate Democracy? The Case of India
Arun Maira (Globalist) Oct 15, 2017
Technology might help countries like India with government services, but it’s no silver bullet for the business of governance.

International value-added linkages in development accounting
Alejandro Cuñat and Robert Zymek (VoxEU) Oct 15, 2017
A large portion of international income differences remains poorly understood. It is traditionally attributed to cross-country differences in total factor productivity, which cannot be measured directly. This column argues that the importance of total factor productivity has been overstated because differences in countries’ patterns of international linkages have been overlooked. Using input-output data for 40 countries, it shows how the assumption that economies are closed has led traditional development accounting to overestimate total factor productivity. A large portion of international income differences remains poorly understood. It is traditionally attributed to cross-country differences in total factor productivity, which cannot be measured directly. This column argues that the importance of total factor productivity has been overstated because differences in countries’ patterns of international linkages have been overlooked. Using input-output data for 40 countries, it shows how the assumption that economies are closed has led traditional development accounting to overestimate total factor productivity.

Narendra Modi’s vision of a ‘new India’ is being tested
Amy Kazmin (FT) Oct 16, 2017
The prime minister wants to ‘purify the country’ but the shock of demonetisation has cast doubt over his methods

Donald Trump drags Nafta towards breaking point
FT View Oct 16, 2017
Stakeholders must hold the line and insist on realistic trade reform.

Serious economic reform is key to unlocking India’s potential
Eswar Prasad (FT) Oct 16, 2017
Narendra Modi’s government can win investor confidence with bold strategies for change.

Behold the New Emperor of China
Graham T. Allison (WSJ) Oct 16, 2017
Xi Jinping is the most powerful leader since Mao, and he is set to hold power for as long as he wants.

The Good, the Bad, and the Ugly: How Do Tax Incentives Impact Investment?
Maya Forstater (CGD) Oct 16, 2017
There are arguments for and against “spending through the tax system.” On one hand tax incentives are relatively easy to implement; they don’t require an outlay of cash and they make use of information that revenue agencies already collect. But on the other, loading the tax system with too many policy objectives conflicts with the drive for a coherent, simple, transparent tax system. Despite decades of advice from international organisations to curtail tax incentives, they remain a popular tool for governments.

Can Sub-Saharan Africa Be a Manufacturing Destination?
Vijaya Ramachandran (CGD) Oct 16, 2017
A new paper coauthored by Alan Gelb, Christian Meyer, Divyanshi Wadhwa, and myself suggests that Africa is not, in general, poised to embark on a manufacturing-led take-off, stepping into the shoes of emerging Asia. Africa, including those countries that have come to be regarded as leaders in development, has high manufacturing labor costs relative to GDP as well as high capital costs relative to low-income comparators.

Looking for signs of progress on ending rural hunger
Geoffrey Gertz, Homi Kharas, John McArthur, and Lorenz Noe (Brookings) Oct 16, 2017
This World Food Day, experts from the Global Economy and Development program assess the international community’s progress toward meeting the Sustainable Development Goal of ending hunger by 2030 and find that the goal is slipping further out of reach.

Quo Vadis, China?
Agnieszka Gehringer and Norbert F. Tofall (Globalist) Oct 16, 2017
Under Xi Jinping, will China opt for a “new totalitarianism,” the current “hard authoritarianism,” turn back to a sort of “soft authoritarianism” or move toward a “semi-democracy”?

Trump Might Actually Wreck Nafta, Believe Him
Bloomberg View Oct 16, 2017
A trade pact that’s served U.S. interests for years is in jeopardy.

Free Trade With South Korea Works
Bloomberg View Oct 16, 2017
Korus is a valuable agreement, even if it needs a little work.

The Three Scenarios That Should Guide Investors
Mohamed Aly El-Erian (Bloomberg View) Oct 16, 2017
Take into account endogenous economic and financial healing, long-awaited policy breakthroughs and bigger liquidity waves.

What's the IMF to Do Without a Crisis? Mostly Fret
Daniel Moss (Bloomberg View) Oct 16, 2017
The past decade was spent at red alert. Now it's hard to enjoy the (relative) silence.

Global risks from rising debt and asset prices
Wouter den Haan, Martin Ellison, Ethan Ilzetzki, Michael McMahon and Ricardo Reis (VoxEU) Oct 16, 2017
The outgoing German finance minister, Wolfgang Schäuble, has recently expressed concerns about the risks posed to the world economy by high levels of debt. This column presents the latest Centre for Macroeconomics and CEPR survey of leading economists, in which a strong majority of respondents agree that an excess of public and private debt together with inflated asset prices mean that the world economy faces heightened risks. A similarly strong majority of the experts also agree that the loose monetary policy of major central banks is responsible for the recent increase in global leverage and asset values. The outgoing German finance minister, Wolfgang Schäuble, has recently expressed concerns about the risks posed to the world economy by high levels of debt. This column presents the latest Centre for Macroeconomics and CEPR survey of leading economists, in which a strong majority of respondents agree that an excess of public and private debt together with inflated asset prices mean that the world economy faces heightened risks. A similarly strong majority of the experts also agree that the loose monetary policy of major central banks is responsible for the recent increase in global leverage and asset values.

Who Will Be the Next Fed Chief---And Why It Matters
Dan Steinbock (WFR) Oct 16, 2017
Janet Yellen's term is ending at the Federal Reserve. With new appointments, President Trump can indirectly shape US monetary policy for years to come---for better or worse.

Xi Jinping consolidates his power in China
George Magnus (FT) Oct 17, 2017
As the Chinese leader tightens his grip, serious economic questions remain

Not even Mexico can interrupt the emerging markets love-in
Katie Martin (FT) Oct 17, 2017
Investors have remained confident in the face of potential difficulties.

How big is the risk of another Black Monday crash
Nicole Bullock, Robin Wigglesworth, John Authers and Christian Pfrang (FT) Oct 17, 2017
Thirty years on, the market is different but has similar characteristics, from high valuations to trading strategies that could accelerate a sell-off

Why the Trade Deficit Matters, and What Trump Can Do About It
Eduardo Porter (NYT) Oct 17, 2017
Economists may argue that trade deficits are ultimately irrelevant. But they have wounded American workers.

Is Populism a Threat to Democracy?
William A. Galston (WSJ) Oct 17, 2017
Disagreements over immigration and sovereignty needn’t imperil basic norms.

One Final Offer From the EU to the UK
Paul Goldschmidt (Globalist) Oct 17, 2017
As there are no “good” solutions to the Brexit conundrum, it’s time to focus on the practicality of the least “bad” one.

Authoritarian Cryptocurrencies Are Coming
Leonid Bershidsky (Bloomberg View) Oct 17, 2017
Russia and China see a new way to completely control their financial systems.

Bond Market Bubbles Exist If You Know Where to Look
Ben Emons (Bloomberg View) Oct 17, 2017
There are two potential trouble spots: U.S. investment-grade corporate debt and European government securities.

China's Stronger Without a Strongman
Michael Schuman (Bloomberg View) Oct 17, 2017
The country thrives when leaders are forced to seek consensus and new ideas.

Intellectual Property for the Twenty-First-Century Economy
Joseph E. Stiglitz, Dean Baker and Arjun Jayadev (Project Syndicate) Oct 17, 2017
Developing countries are increasingly pushing back against the intellectual property regime foisted on them by the advanced economies over the last 30 years. They are right to do so, because what matters is not only the production of knowledge, but also that it is used in ways that put the health and wellbeing of people ahead of corporate profits.

A Chinese Model for Foreign Aid
Asit K. Biswas and Kris Hartley (Project Syndicate) Oct 17, 2017
As the United States and the European Union retreat from their foreign-aid commitments, only one country has the resources and the interest to assume the mantle of global development leadership. The world will have to become accustomed to China's new role.

Brexit – a cry of financial pain, not the influence of the old
Federica Liberini, Andrew Oswald, Eugenio Proto and Michela Redoano (VoxEU) Oct 17, 2017
There has been much debate on the determinants of the vote for Brexit. This column uses newly released data from the Understanding Society study to examine the characteristics of individuals who were for and against Brexit. Unhappiness contributed to the vote to leave the EU, but this was driven by feelings about individual financial situations rather than a general dissatisfaction with life. Brexit does not appear to have been caused by the old – only those under the age of 25 were substantially pro-Remain.

Making globalisation more inclusive
Sergei Guriev, Danny Leipziger and Jonathan D. Ostry (VoxEU) Oct 17, 2017
Globalisation and technological change present policymakers with tremendous challenges in sustaining benefits while containing the dislocations and polarisation that are plaguing many countries. This column argues that the answer is not to roll back these forces, but rather to redouble efforts to make globalisation genuinely inclusive. This involves thinking hard about the design and rules governing globalisation itself, including with respect to finance, but also with respect to trade. It also necessitates a recalibration of national economic policies that affect who benefits and who pays, and a host of complementary policies to mitigate exclusion and allow citizens to bounce back when dislocations occur.

It’s No Accident That China’s Tycoons Are Bad Investors
Heiwai Tang and Christopher Beddor (FP) Oct 17, 2017
The first priority for wealthy Chinese has been to move as much money abroad as possible. If Beijing has its way, that won't be an option anymore.

Can Congress Block Trump if He Pulls Out of NAFTA?
Bethany Allen-Ebrahimian (FP) Oct 17, 2017
Trump says pulling out of NAFTA is his decision to make. Lawmakers and legal scholars aren’t so sure.

Both the UK and the EU need a solution to Brexit
FT View Oct 18, 2017
In a feverish atmosphere, Britain should avoid undue brinkmanship.

Bitter differences over Nafta break into the open
Shawn Donnan (FT) Oct 18, 2017
US trade chief Lighthizer urges Canada and Mexico to ‘give up a little bit of candy’

Why Wall Street’s fear index remains calm
Dambisa Moyo (FT) Oct 18, 2017
The Vix index is a 30-day measure and does not give weight to long-tailed risks.

Donald Trump’s poisoning of global trade
Edward Luce (FT) Oct 18, 2017
The suspicion is that the president never wanted to make deals in the first place

The Hidden Headline from the IMF/World Bank Annual Meetings
James A. Haley (CIGI) Oct 18, 2017
The chaotic approach to governance embraced by the Trump administration hasn't made its way to the US relationship with international financial institutions. According to Senior Fellow James A. Haley, this is not a coincidence. The president is taking on an unexpected role when it comes to the IMF and the World Bank.

Nafta Gets a Welcome Reprieve
Bloomberg View Oct 18, 2017
The Trump administration needs to pause and rethink its approach to the agreement.

China Isn't Fixing Its Flaws
Leland Miller and Derek Scissors (Bloomberg View) Oct 18, 2017
Optimism about the economy is based on misconceptions.

What China's Party Congress Means for Global Markets
Komal S Sri-Kumar (Bloomberg View) Oct 18, 2017
Developments could affect the prices of equities, metals and energy.

Why Some Nations Are Warming to Technocracy
Leonid Bershidsky (Bloomberg View) Oct 18, 2017
Young democracies are hungry for competent government, even if they didn't elect it.

Who Has the World's No. 1 Economy? Not the U.S.
Noah Smith (Bloomberg View) Oct 18, 2017
By the most measures, China has passed the U.S. and is pulling away.

Don't Rely on U.S. Consumers to Power Global Growth
Danielle DiMartino Booth (Bloomberg View) Oct 18, 2017
American households have maintained spending by taking on debts that could prove unsustainable.

The Mis-Measure of Development
Bjørn Lomborg (Project Syndicate) Oct 18, 2017
Today’s global development agenda is trying to be all things to all people. The Millennium Development Goals worked because they were few in number and sharply focused. By contrast, the MDGs' successor, the Sustainable Development Goals, comprise an eye-popping 169 targets, which means there is no focus at all.

Don’t Bank on Bankruptcy for Banks
Mark Roe (Project Syndicate) Oct 18, 2017
As a part of their efforts to roll back the 2010 Dodd-Frank Act, congressional Republicans have approved a measure that would have courts, rather than regulators, oversee megabank bankruptcies. It is now up to the Trump administration to decide if it wants to set the stage for a repeat of the Lehman Brothers collapse in 2008.

What’s Really at Stake at the CCP Congress?
Jim O'Neill (Project Syndicate) Oct 18, 2017
Whenever the Chinese Communist Party holds its quinquennial National Congress, pundits revel in speculating about the behind-the-scenes political dynamics driving what is invariably a carefully choreographed event. But they should really be focusing on whether China's leaders will signal continuity or change regarding the country's economic and trade policies.

Central Banks Must Work Together – or Suffer Alone
Kaushik Basu (Project Syndicate) Oct 18, 2017
In recent years, the world’s major central banks have pursued unprecedentedly easy monetary policies, characterized by ultra-low and even negative interest rates. These policies are turning out to be a classic bad equilibrium: each central bank stands to gain by keeping interest rates low, but, collectively, low rates constitute a trap from which none can escape.

Trading Restriction as a Channel of Financial Contagion—Evidence from China’s Stock Market
Laura Xiaolei Liu, Jiajie Xu and Ninghua Zhong (VoxChina) Oct 18, 2017
China’s stock market imposes various trading restrictions such as daily price limits and trading suspension rules, which are intended to stabilize the market during turmoil. During China’s stock market crash in the summer of 2015, these trading restrictions made many highly valued stocks non-tradable and consequently caused mutual funds facing redemption pressure or with precautious concerns to sell other tradable stocks, exacerbating their price drops.

Bail-ins and bailouts: Incentives, connectivity, and systemic stability
Benjamin Bernard, Agostino Capponi and Joseph Stiglitz (VoxEU) Oct 18, 2017
Worried about the cost of public bailouts, governments have proposed bail-ins whereby banks contribute to rescuing their debtors. This column analyses the conditions under which bail-in strategies can be credibly implemented, showing that this heavily depends on the network structure. While earlier work has suggested that denser networks are socially preferred to more sparsely connected networks, the opposite holds in the presence of the government’s strategic intervention. Worried about the cost of public bailouts, governments have proposed bail-ins whereby banks contribute to rescuing their debtors. This column analyses the conditions under which bail-in strategies can be credibly implemented, showing that this heavily depends on the network structure. While earlier work has suggested that denser networks are socially preferred to more sparsely connected networks, the opposite holds in the presence of the government’s strategic intervention.

Central bank evolution and innovation
Michael Bordo and Pierre Siklos (VoxEU) Oct 18, 2017
The role of central banks in monetary policy and financial stability has changed radically over time. This examines the similarities and idiosyncrasies of ten central banks, and also considers how inflation might have looked had the central banks been around earlier, or had they adopted different strategies. While important differences between the narrative and statistical analyses of crises indicate that neither is sufficient on its own, small open economies appear to do comparatively well across the various crisis conditions, and inflation is almost always higher in the absence of an inflation target. The role of central banks in monetary policy and financial stability has changed radically over time. This examines the similarities and idiosyncrasies of ten central banks, and also considers how inflation might have looked had the central banks been around earlier, or had they adopted different strategies. While important differences between the narrative and statistical analyses of crises indicate that neither is sufficient on its own, small open economies appear to do comparatively well across the various crisis conditions, and inflation is almost always higher in the absence of an inflation target.

The 1970s Origins of Too Big to Fail
George Nurisso and Edward S. Prescott (FRB Cleveland) Oct 18, 2017
In 1972, bank regulators bailed out the $1.2 billion Bank of the Commonwealth partly because they viewed it as “too big to fail.” We describe this bailout and subsequent ones through that of Continental Illinois in 1984 and use the descriptions to draw lessons about too-big-to-fail policy. We argue that some of the same issues that motivated bailouts during this earlier period, particularly worries about banking concentration, are relevant today.

A Stock Market Panic Like 1987 Could Happen Again
Robert J. Shiller (NYT) Oct 19, 2017
On Oct. 19, 1987, the stock market fell more than 20 percent. It would be comforting to believe a crash couldn't recur. But we are still at risk.

A Fed for a Growth Economy
WSJ Oct 19, 2017
Trump needs a leader at the central bank who supports faster growth.

NAFTA Ministers Acknowledge Significant Challenges, Extend Timetable to 2018
Bridges, Volume 21, Number 34 Oct 19, 2017
Negotiators from Canada, Mexico, and the United States completed their fourth round of negotiations for modernising the North American Free Trade Agreement (NAFTA) on Tuesday 17 October, with ministers announcing that the talks are in a challenging phase and will need to be extended into 2018.

World Bank, IMF Annual Meetings Highlight Improved Growth, Opportunity for Change
Bridges, Volume 21, Number 34 Oct 19, 2017
The annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) drew to a close on Sunday 15 October, capping several days of meetings that brought to the fore issues of inequality, sustained global growth, multilateralism, and development financing.

Japan, US Pledge to Step Up Economic, Trade Cooperation
Bridges, Volume 21, Number 34 Oct 19, 2017
Japanese Deputy Prime Minister Taro Aso and US Vice President Mike Pence concluded their second bilateral "economic dialogue" on Monday 16 October, amid continued speculation over whether the two sides may eventually agree to formal negotiations for a free trade deal.

Europe’s Backward Step on Banking Union
Bloomberg View Oct 19, 2017
Brussels is wrong to water down its plans for joint deposit insurance.

Scoring the Great Debate Over Capital Rules
Ferdinando Giugliano (Bloomberg View) Oct 19, 2017
Making banks safer can restrict lending. That does not mean policy makers should give up.

The Not-So-Dire Future of Work
Zia Qureshi (Project Syndicate) Oct 19, 2017
The current debate about technological change often skews toward the melodramatic, foretelling a future in which machines, algorithms, and lines of code drive humans out of work. But, with smart, forward-looking policies, we can meet the coming challenges head on – and ensure that the future of work is a better job.

Four proposals to help commodity exporters cope with price volatility
Jeffrey Frankel (VoxEU) Oct 19, 2017
Financial markets have done little, if anything, to moderate the impact of commodity price volatility on the exporting countries. This column reviews four proposals to make exporters less vulnerable to volatility – two attempts at appropriate financial engineering, and two attempts at countercyclical macroeconomic policy. One in each category is tried and tested; the other two have hardly been tried.

Brexit: The economics of international disintegration
Thomas Sampson (VoxEU) Oct 19, 2017
While we can estimate the economic impact of Brexit, we do not yet understand what made people vote for it. This column argues that political pro-Brexit rhetoric conflates two distinct hypotheses that have different policy implications. If voters wanted to reclaim sovereignty from the EU, they may view a negative economic impact as a price worth paying. But, if 'left-behind' voters blamed the EU for their economic and social problems, post-Brexit policy should focus on the underlying causes of discontent.

US farm policy and trade: The inconsistency continues
Joseph W. Glauber and Daniel A. Sumner (AEI) Oct 19, 2017
US agriculture trade has expanded dramatically over the past 25 years and is expected to increase because of increasing global demand, unless new US or foreign trade barriers disrupt it. Despite the burgeoning global demand, the US share of world trade for many commodities will likely fall as foreign farm productivity and competitiveness improves. The inconsistency between US farm policy and trade policy first noted by D. Gale Johnson as early as 1950 remains a major concern. While specifics have changed, US farm policy remains in conflict with the sort of open international markets that Johnson envisioned and that would most benefit US and world agriculture and the economy more broadly. Creation of the World Trade Organization and other trade agreements have significantly reduced export subsidies and tariff and nontariff barriers to trade. Those reforms have also brought US farm policies under closer scrutiny and discipline.

African debt worries intensify as levels near tipping point
David Pilling (FT) Oct 20, 2017
Concerns grow that some African nations have taken to private debt markets too eagerly.

China's Toughest Job?
Christopher Balding (Bloomberg View) Oct 20, 2017
Whoever takes the helm at China's central bank, the job is fraught with risks.

How Money Could Unblock the Brexit Talks
Anatole Kaletsky (Project Syndicate) Oct 20, 2017
With talks on the UK's withdrawal from the EU stalled, negotiators should shift to the temporary “transition” Prime Minister Theresa May officially requested last month. Above all, the negotiators should focus immediately on the British budget contributions that will be required to make an orderly transition possible.

The Sovereignty that Really Matters
Javier Solana (Project Syndicate) Oct 20, 2017
The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by imposing strict isolation. Even in states that have succumbed to reductionist discourses, much of the population has not.

Why the Renminbi Won’t Rule
Paola Subacchi (Project Syndicate) Oct 20, 2017
As the US retreats from the world stage and a multipolar global order emerges, the international monetary system may well be transformed – but probably not into a renminbi-led system. Indeed, not even China expects the age of renminbi diplomacy to arrive anytime soon.

323 years of UK national debt
Martin Ellison and Andrew Scott (VoxEU) Oct 20, 2017
A new dataset for the market value of British government debt makes a long-run analysis of fiscal sustainability and debt management possible. It shows that the 20th century saw a shift to financing debt by inflation and low bondholder returns, rather than through fiscal surpluses. This column uses a counterfactual analysis to show that long bonds have been an expensive way of financing debt, especially after a financial crisis. Had the government issued only three-year bonds since 1914, the level of debt in 2017 would have been lower by 28% of GDP. A new dataset for the market value of British government debt makes a long-run analysis of fiscal sustainability and debt management possible. It shows that the 20th century saw a shift to financing debt by inflation and low bondholder returns, rather than through fiscal surpluses. This column uses a counterfactual analysis to show that long bonds have been an expensive way of financing debt, especially after a financial crisis. Had the government issued only three-year bonds since 1914, the level of debt in 2017 would have been lower by 28% of GDP.

On city size and economic growth
Susanne Frick and Andrés Rodríguez-Pose (VoxEU) Oct 20, 2017
Big cities have historically been seen as an important prerequisite for a country’s economic growth. In recent decades, however, developing countries have rapidly urbanised, and large cities are increasingly found in relatively poor countries. This column uses a new dataset to revisit the relationship between city size and economic growth. It finds that relatively small cities (with populations under three million) have been more conducive to economic growth, while very large cities are only growth-enhancing in countries with a very large urban population. Big cities have historically been seen as an important prerequisite for a country’s economic growth. In recent decades, however, developing countries have rapidly urbanised, and large cities are increasingly found in relatively poor countries. This column uses a new dataset to revisit the relationship between city size and economic growth. It finds that relatively small cities (with populations under three million) have been more conducive to economic growth, while very large cities are only growth-enhancing in countries with a very large urban population.

The problem of public sector absenteeism
Michael Callen, Saad Gulzar, Muhammad Yasir Khan and Ali Hasanain (VoxDev) Oct 20, 2017
Government employees not showing up for work is a major problem in developing countries.

Globalisation’s losersThe right way to help declining places
Economist Oct 21, 2017
Time for fresh thinking about the changing economics of geography.

Walter Bagehot would have loathed government by referendum
Economist Oct 21, 2017
The author of “The English Constitution” was no Europhile, but nor would he have backed Brexit.

How should recessions be fought when interest rates are low?
Economist Oct 21, 2017
Both monetary-policy and fiscal-policy answers remain contentious.

The Architecture of Democracy’s Processes
Arun Maira (Globalist) Oct 21, 2017
It is not enough for a democracy in the 21st century to make decisions by up-down majoritarian votes.

Xi offers long-term view of China’s ambition
Kevin Rudd (FT) Oct 22, 2017
This president has an iron grip on power and a strategy to reach global pre-eminence.

Germany’s financial squeeze offers Brexit hope
Wolfgang Munchau (FT) Oct 22, 2017
Its big current account surplus means Merkel will not want a cliff-edge British exit.

Argentines Keep Moving to the Right
Mary Anastasia O’Grady (WSJ) Oct 22, 2017
President Mauricio Macri’s ‘Let’s Change’ coalition is expected to do well in Sunday’s elections.

Short-term impact of Brexit on UK exports
Hiau Looi Kee and Alessandro Nicita (VoxEU) Oct 22, 2017
More than a year has passed since the UK voted for Brexit. This column analyses the short-term fallout of trade in goods due to potential changes in trade policies. It argues that if the UK fails to secure a new trade deal with the EU and must face tariffs with no preferences, total UK's exports to the EU would drop by at most 2%. The impact is small because the EU's import demand for UK exports is fairly inelastic, especially for products that that may face higher tariffs. More than a year has passed since the UK voted for Brexit. This column analyses the short-term fallout of trade in goods due to potential changes in trade policies. It argues that if the UK fails to secure a new trade deal with the EU and must face tariffs with no preferences, total UK's exports to the EU would drop by at most 2%. The impact is small because the EU's import demand for UK exports is fairly inelastic, especially for products that that may face higher tariffs.

Will Germany save Brexit?
Sebastian Payne (FT) Oct 23, 2017
Berlin ultimately wants a cost-neutral Brexit.

Emerging market rally leaves currencies behind
Steve Johnson (FT) Oct 23, 2017
In real, trade-weighted terms EM FX has fallen this year.

An assertive China challenges the west
Gideon Rachman (FT) Oct 23, 2017
Beijing is gaining confidence that it can mix political control with growth and innovation.

The IMF on Protecting the Poor during Fiscal “Consolidations”: Better Late Than Never
Nancy Birdsall and Nora Lustig (CGD) Oct 23, 2017
Inequality and inclusive growth were high on the agenda of the Annual Meetings of the International Monetary Fund and World Bank earlier this month. We are glad about that, but the under-reported story here is that this prominence marks a dramatic shift in the IMF over the last two decades in the IMF’s approach to the relevant challenges for the poorest countries, including on the issue of social safety nets and social expenditures.

The Challenges to Sustaining the Global Recovery
David Lipton (IMF) Oct 23, 2017
The bottom line is that the global recovery is strengthening. That provides an environment of opportunity to address key policy issues that can help support stronger and more sustainable growth—and foster the financial stability essential to the health of the global economy.

The world is off track to end hunger, so what’s the solution?
Homi Kharas and John McArthur (Brookings) Oct 23, 2017
For the first time in many years, the estimated number of undernourished people—about 800 million worldwide—has actually gone up rather than down. Homi Kharas and John McArthur examine the troubling trends in global hunger and explore what can be done.

Can Japan Be Great Again?
Shihoko Goto (Globalist) Oct 23, 2017
Shinzo Abe, the reelected Prime Minister, will have a hard time to make his vision of a Japan as the biggest Asian power a reality.

China Won’t Have a Typical 'Minsky Moment'
Mohamed Aly El-Erian (Bloomberg View) Oct 23, 2017
The threat of a financial crisis is lower than the general risks facing economic growth.

Crisis, What Crisis? Banks Pile Back Into China
Mark Whitehouse (Bloomberg View) Oct 23, 2017
Growth has picked up, but there's still plenty for lenders to worry about.

Central Bank Independence Requires Accountability
Ferdinando Giugliano (Bloomberg View) Oct 23, 2017
A power struggle at the Bank of Italy shows the importance of transparency.

The Harder Brexit Gets, the More Necessary It Seems
Clive Crook (Bloomberg View) Oct 23, 2017
The costs of the split in 2019 will be high -- but it might be now or never.

Piketty's Inequality Theory Gets Dinged
Noah Smith (Bloomberg View) Oct 23, 2017
Data for the 19th century looks too spotty to draw broader conclusions.

Sorry, Czechs, Your Country Isn't a Business, Either
Leonid Bershidsky (Bloomberg View) Oct 23, 2017
Market populism hasn't worked in the U.S., Italy or elsewhere. You just can't run governments like companies.

Forget the Fed Sweepstakes. Watch Treasuries Instead.
Komal S Sri-Kumar (Bloomberg View) Oct 23, 2017
The next central bank chief may end up being a follower rather than leader of credit and equity markets.

China vs. the Washington Consensus
Adair Turner (Project Syndicate) Oct 23, 2017
The 2008 financial crisis was a shock to faith in entirely free financial markets. But the neoliberal assumptions underlying the previously dominant “Washington Consensus” continue to inform much Western commentary on China’s economy.

China’s Contradictions
Stephen S. Roach (Project Syndicate) Oct 23, 2017
Notwithstanding all the self-congratulatory flourishes in Chinese President Xi Jinping’s political report to the 19th National Congress, there is good reason to believe that the Chinese economy is only in the early stages of its long-heralded structural transformation. To reach its goal, China will have to resolve three contradictions.

Business cycle stabilisation in the Eurozone
Giancarlo Corsetti, Luca Dedola, Marek Jarocinski, Bartosz Mackowiak and Sebastian Schmidt (VoxEU) Oct 23, 2017
Business cycle stabilisation policy in the Eurozone may end up being far from optimal if member states must tighten fiscal policy amid weak economic activity while monetary policy is constrained by the lower bound on nominal interest rates. This column surveys the recent literature formulating practical lessons for the Eurozone’s ability to implement an effective monetary–fiscal policy mix. Business cycle stabilisation policy in the Eurozone may end up being far from optimal if member states must tighten fiscal policy amid weak economic activity while monetary policy is constrained by the lower bound on nominal interest rates. This column surveys the recent literature formulating practical lessons for the Eurozone’s ability to implement an effective monetary–fiscal policy mix.

The impact of religious values on economic growth and productivity
Thomas Andersen, Jeanet Bentzen, Carl-Johan Dalgaard and Paul Sharp (VoxEU) Oct 23, 2017
Examples of the interaction of religious influence and economic performance have occurred throughout history, most notable Weber’s argument of the ‘Protestant ethic’. This column uses an earlier example, of the Cistercian Catholic Order, to show that religious values did influence productivity and economic performance in England and across Europe. The effect of this historic influence has persisted to today. Examples of the interaction of religious influence and economic performance have occurred throughout history, most notable Weber’s argument of the ‘Protestant ethic’. This column uses an earlier example, of the Cistercian Catholic Order, to show that religious values did influence productivity and economic performance in England and across Europe. The effect of this historic influence has persisted to today.

Missing Growth from Creative Destruction
Pete Klenow and Huiyu Li (FRBSF Econ Letter) Oct 23, 2017
When products disappear from the market with no substitutes from the same manufacturer, they may have been replaced by cheaper or better products from a different manufacturer. Official measurements typically approximate price changes from such creative destruction using price changes for products that were not replaced. This can lead to overstating inflation and, in turn, understating economic growth. A recent estimate suggests that around 0.6 percentage point of growth is missed per year. The bias has not increased over time, however, so it does not explain the slowdown in productivity growth.

Emerging market ETFs: no special snowflakes
FT Oct 24, 2017
Good performers are safe but the mediocre will be out of a job.

Central banks alone cannot deliver stable finance
Martin Wolf (FT) Oct 24, 2017
Government policy must counter the growing risk of a crash in asset valuations.

Double-whammy of Middle East geopolitics may add fuel to oil-price rally
Simon Constable (MEE) Oct 24, 2017
Iraq's conflict with the Kurds and US sanctions on Iran may spike oil prices.

The World Bank Progresses on Poverty Lines
Lant Pritchett (CGD) Oct 24, 2017
The announcement via this blog that the World Bank will now routinely calculate and report multiple international poverty lines is an important advance for development.

Making international payments at domestic prices
Brian Caplen (Banker) Oct 24, 2017
The pressures being felt in the payments industry are set to continue as banks prepare for fees to go even lower. And, as Brian Caplen writes, it is mid-sized banks that are under the biggest threat.

Cleaning Up Money Laundering
Adrian Murphy, Stefano Boezio & Allen Meyer (BRINK) Oct 24, 2017
Money laundering is one of the greatest growth industries of our time. Stopping it requires institutions to adopt more strategic, end-to-end processes that take advantage of recent innovations in data analysis.

Brexit Talks Are Running Out of Time
Bloomberg View Oct 24, 2017
Negotiations must move to the next stage as soon as possible.

Apprenticeships Could Narrow the U.S. Skills Gap
Joe Nocera (Bloomberg View) Oct 24, 2017
A real-life suggestion for a reality-show employer.

To Manage Expectations, Central Banks Need Social Media Savvy
Howard Davies (Project Syndicate) Oct 24, 2017
As the global economic recovery strengthens, and central banks move to raise interest rates, they need to improve their communication with the general public. To do that, they should follow the trail blazed by Donald Trump.

Empowering China’s New Miracle Workers
Michael Spence (Project Syndicate) Oct 24, 2017
China’s success in the next five years will depend largely on how well the government manages the tensions underlying its complex agenda. In particular, China’s leaders will need to balance a muscular Communist Party, setting standards and protecting the public interest, with an empowered market, driving the economy into the future.

Resurrecting Creditor Adjustment
Robert Skidelsky (Project Syndicate) Oct 24, 2017
When the Bretton Woods Agreement was hashed out in 1944, it was agreed that countries with current-account deficits should be able to limit temporarily purchases of goods from countries running surpluses. In the ensuing 73 years, the so-called "scarce-currency clause" has been largely forgotten; but it may be time to bring it back.

Interpreting the ECB’s definition of price stability
Maritta Paloviita, Markus Haavio, Pirkka Jalasjoki and Juha Kilponen (VoxEU) Oct 24, 2017
Price stability is an explicit target for the ECB, but the definition of the 2% target is less clear in its monetary policy stance over time. This column presents two alternative interpretations of the ECB’s definition of price stability. First, the ECB dislikes inflation rates above 2% more than rates below 2%. Second, the ECB’s policy responses to past inflation gaps are symmetric around a target of 1.6% to 1.7%. Out-of-sample predictions of the reaction function based on the second interpretation track well an estimated shadow interest rate during the zero lower bound period. Price stability is an explicit target for the ECB, but the definition of the 2% target is less clear in its monetary policy stance over time. This column presents two alternative interpretations of the ECB’s definition of price stability. First, the ECB dislikes inflation rates above 2% more than rates below 2%. Second, the ECB’s policy responses to past inflation gaps are symmetric around a target of 1.6% to 1.7%. Out-of-sample predictions of the reaction function based on the second interpretation track well an estimated shadow interest rate during the zero lower bound period.

Made in China: Millions of Hindu Gods
Farok J. Contractor (YaleGlobal) Oct 24, 2017
Seven obstacles block success for Modi’s “Make in India” campaign and encourage India’s growing trade imbalance with China

China’s $62 Billion Bet on Pakistan
Arif Rafiq (FA) Oct 24, 2017
Letter from Gwadar.

525,600 Metrics: How Do You Measure a Year in Income Growth?
Sarah House, Michael Pugliese, and Ariana Vaisey (Wells Fargo) Oct 24, 2017
Household spending is the engine that powers the U.S. economy, making income growth the fuel that keeps the engine running. In this report, we help decision makers cut through the noise and deepen their understanding of the key indicators that measure U.S. income trends.

British GDP picks up but economic malaise goes on
Martin Sandbu (FT) Oct 25, 2017

Is a NAFTA showdown approaching?
Robert J. Samuelson (WP) Oct 25, 2017
Perceptions are driven by political rhetoric, not economic reality.

Toward a Europe of the Regions?
Paul Goldschmidt (Globalist) Oct 25, 2017
The crisis in Catalonia and the European Union’s options?

'Follow the Money' Getting More Important in Markets
Mark Grant (Bloomberg View) Oct 25, 2017
Pay attention to what central bankers are doing and not what they say they are doing.

China and Xi Challenge the World's Constitutions
Noah Feldman (Bloomberg View) Oct 25, 2017
An authoritarian government that runs smoothly looks like a viable option. Unless it falters.

Mexico Feels Mortgaged to Nafta. Time to Refinance.
Daniel Moss (Bloomberg View) Oct 25, 2017
It's not just trade. Suddenly the nation is realizing how much of its identity became wrapped up in its neighbor's power.

Economic Growth Is No Longer Enough
Manuel Muñiz (Project Syndicate) Oct 25, 2017
As new technologies subject the world’s economies to massive structural change, wages are no longer playing the central redistributive role they once did. Unless the decoupling of productivity and wages is addressed, the political convulsions many countries are experiencing will only intensify.

Modernity with Chinese Characteristics
Andrew Sheng and Xiao Geng (Project Syndicate) Oct 25, 2017
In a world comprising a diverse array of countries, each with its own complex, dynamic, and evolving system, there can be no one-size-fits-all development path. With Xi Jinping's speech at the Chinese Communist Party’s 19th National Congress, China's path has now been mapped, with the understanding that the map can and will be revised as needed.

Daily Price Limits and the Magnet Effect
Ting Chen, Zhenyu Gao, Jibao He, Wenxi Jiang, Wei Xiong (VoxChina) Oct 25, 2017
We find that the widely adopted daily price limit rules may induce large investors as a group to pursue a destructive trading strategy of pushing stock prices to the upper price limit and then profiting from selling these stocks on the next day. Their trading accelerates the price increase on the day that the upper price limit is reached, thus leading to the so-called Magnet Effect. This unintended effect renders the daily price limits — a market stabilization scheme — counterproductive.

Economic factors in the 1896 presidential election
Barry Eichengreen, Michael Haines, Matthew Jaremski and David Leblang (VoxEU) Oct 25, 2017
The 1896 US presidential election has acquired new resonance in light of the recent up-surge in populism. This column combines voting results with economic, financial, and demographic data from the 1890s to offer a systematic empirical study of voting patterns in the election. The results confirm a role for identity politics, but also a role for economic factors. They also suggest, however, that a small or even moderate change in economic conditions would not have altered the outcome of the 1896 election, nor the subsequent course of American history. The 1896 US presidential election has acquired new resonance in light of the recent up-surge in populism. This column combines voting results with economic, financial, and demographic data from the 1890s to offer a systematic empirical study of voting patterns in the election. The results confirm a role for identity politics, but also a role for economic factors. They also suggest, however, that a small or even moderate change in economic conditions would not have altered the outcome of the 1896 election, nor the subsequent course of American history.

Elusive inflation and the Great Recession
David Miles, Ugo Panizza, Ricardo Reis and Ángel Ubide (VoxEU) Oct 25, 2017
Occasionally, inflation is stubborn. For many years it was hard to bring under control, but in the last decade has been low and stable. The latest Geneva Report on the World Economy studies the latest bout of stubbornness, asking why inflation has remained in such a narrow range. It shows that a large number of diverse shocks have hit developed economies during the last decade, which have more or less cancelled each other out. One of these 'shocks' has been monetary policy, which was skilfully used in response to wider macroeconomic events. Central banks, in other words, combined good policies and good luck. Next time, however, we may not be so lucky. Occasionally, inflation is stubborn. For many years it was hard to bring under control, but in the last decade has been low and stable. The latest Geneva Report on the World Economy studies the latest bout of stubbornness, asking why inflation has remained in such a narrow range. It shows that a large number of diverse shocks have hit developed economies during the last decade, which have more or less cancelled each other out. One of these 'shocks' has been monetary policy, which was skilfully used in response to wider macroeconomic events. Central banks, in other words, combined good policies and good luck. Next time, however, we may not be so lucky.

The Global Factor in Neutral Policy Rates
Richard Clarida (PIMCO) Oct 25, 2017
If countries are adjusting monetary policy in response to common, global neutral real rate shocks, there may well be a positive correlation in policy – even in the absence of policy cooperation or coordination. In the face of a country-specific decline in the neutral rate, exchange rate depreciation may not in and of itself signal a “beggar-thy-neighbor” policy. By contrast, no exchange rate adjustment may be required for global (rather than country-specific) neutral rate shocks. The global factor present in neutral (r*) policy rates around the world may inform and influence monetary policy decisions and prompt useful coordination – but likely not binding cooperation.

The ECB maintains its skilful balancing act
FT View Oct 26, 2017
Scaling back quantitative easing must not be an irrevocable move.

There are alternatives: late Brexit or no Brexit
Philip Stephens (FT) Oct 26, 2017
Two years was never going to be long enough to repatriate responsibilities.

The radiating mischief of protectionism
George F. Will (WP) Oct 26, 2017
The Boeing pot calls the Bombardier kettle black.

Trump's $700 Billion Gift to Wealthy Foreigners
Paul Krugman (NYT) Oct 26, 2017
Tax cuts: They're not just for American plutocrats.

WTO Conference Chair Malcorra Urges Members to Prepare for Post-Buenos Aires Work
Bridges, Volume 21, Number 35 Oct 26, 2017
Susana Malcorra, the Argentine minister who will chair the WTO’s upcoming ministerial conference in Buenos Aires, told negotiators in Geneva last week that fisheries subsidies and agriculture remain high on the agenda for the December meeting, while reminding them that issues that do not yield concrete deliverables at the event should still be addressed by countries afterward.

EU Leaders Prepare for 2018, Eyeing Next Steps on Economic and Digital Integration
Bridges, Volume 21, Number 35 Oct 26, 2017
EU leaders signed off on a two-year “agenda” for work on areas ranging from trade to migration last weekend, during a summit that also highlighted the significant work left to do in setting up a “digital single market” by the end of next year. Officials also evaluated the state of play in the Brexit negotiations, while pledging continued unity among the remaining 27 member states going forward.

TPP-11 Negotiators Prepare for Last Push After NZ, Japan Electoral Processes Conclude
Bridges, Volume 21, Number 35 Oct 26, 2017
Negotiators from the 11 remaining members of the Trans-Pacific Partnership (TPP) are due to convene in Japan early next week, in a bid to advance talks significantly before ministers and leaders convene in early November to determine next steps for the trade pact.

The Potential Belt and Road Debt Bubble: Are We Asking the Right Questions?
John Hurley (CGD) Oct 26, 2017
During the recent IMF and World Bank meetings, all eyes were on China. As the US administration contemplates scaling back its global economic engagement, China is doing the exact opposite. But there is increasing attention being paid to risks associated with Chinese financing on two fronts.

NAFTA and WTO: Terminator Trump?
Jean-Francois Boittin (Globalist) Oct 26, 2017
U.S. trade policy under Trump does not reflect a self confident global power, but a giant caught in a dwarf's mindset.

European Central Bank Takes a Cautious Step. A Little Too Cautious.
Daniel Moss (Bloomberg View) Oct 26, 2017
The Continent is growing and can afford to cut stimulus a bit more aggressively.

Japan Goes With Another Round of Abenomics
Noah Smith (Bloomberg View) Oct 26, 2017
And why not? The economy hasn't been this good since the 1980s.

India's Banks Need More Than a Bailout
Mihir Sharma (Bloomberg View) Oct 26, 2017
Without reform, another recapitalization is meaningless.

What to Expect From the ECB Meeting
Mohamed Aly El-Erian (Bloomberg View) Oct 26, 2017
The most likely outcome is specific guidance to the markets on a very gradual reduction in monthly asset purchases.

Rule-Based Monetary Policies Will Keep Volatility Low
Ben Emons (Bloomberg View) Oct 26, 2017
When central bankers are predictable, there tend to be fewer surprises for markets.

The Next Fed Chair
Jeffrey Frankel (Project Syndicate) Oct 26, 2017
Good central bankers make decisions based on what they believe is best for the economy, relying on evolving data, not on evolving political imperatives. Only two of the Trump administration's five apparent candidates to chair the US Federal Reserve fit the bill.

Fragmented civil wars
Michael König, Dominic Rohner, Mathias Thoenig and Fabrizio Zilibotti (VoxDev) Oct 26, 2017
Multilateral pacification policies can be effective in resolving civil wars, but arms embargoes can fail if targeted militias increase their activity.

Understanding the destination-based approach to business taxation
Alan Auerbach (VoxEU) Oct 26, 2017
The rising importance of multinational companies and the changing nature of production represents a challenge to the traditional ways that countries try to tax corporate profits. This column examines one potential policy response – a destination-based cash-flow tax – which it argues would confront the key international problems of existing tax systems. It also addresses some of the concerns arising in particular from US proposals to introduce such a tax.

China Is Eyeballing a Major Strategic Investment in Saudi Arabia’s Oil
Mishaal al Gergawi (FP) Oct 26, 2017
Washington may have invented the petrodollar system, but Beijing is looking toward the future.

Are STEM Fields Over-Prioritized in Higher Education?
Paul Axelrod (YaleGlobal) Oct 26, 2017
Nations eye education as a tool for economic competition, pushing students into sciences and technology while neglecting the liberal arts

Private equity: Twilight for the buyout barbarians
Henny Sender and Gary Silverman (FT) Oct 27, 2017
The founding partners of some of the biggest buyout firms are preparing to hand control to a new generation who will face a more forbidding landscape.

Why Bonds Aren't Boring Right Now
Jeff Sommer (NYT) Oct 27, 2017
Bonds usually provide a hedge against stock market losses. But at current prices, bonds can't do that job as effectively. It's a dilemma for investors.

The Computer That Could Rule the World
Arthur Herman (WSJ) Oct 27, 2017
To understand the power of quantum computing, imagine 1,000 Equifax hacks happening at once.

Assessing Global Financial Stability
Tobias Adrian (IMF) Oct 27, 2017
Forces in the global economy are reshaping the outlook for financial stability.

Can China Inflate Its Debt Away?
Christopher Balding (Bloomberg View) Oct 27, 2017
Rising prices are a hopeful sign. But don't get carried away.

The ECB Shows It Has Won the Market's Trust
Ferdinando Giugliano (Bloomberg View) Oct 27, 2017
The first step in a long process of normalization went smoothly. That's something.

Rise of the Creative Class Worked a Little Too Well
Noah Smith (Bloomberg View) Oct 27, 2017
Urbanist Richard Florida reconsiders his ideas for how cities can remake themselves.

The Paradox of Xi’s Power
Minxin Pei (Project Syndicate) Oct 27, 2017
Chinese President Xi Jinping has now been catapulted into the Pantheon of the founders of the People’s Republic, becoming as the most powerful leader that the world’s largest one-party state has had in decades. But Xi's ability to shape Chinese society may turn out to be far more limited than he, his allies, and most observers expect.

The Perils of a Trumped Fed
Eswar Prasad (Project Syndicate) Oct 27, 2017
The US Federal Reserve has spent decades establishing its credibility as an apolitical guarantor of growth and stability. But now that US President Donald Trump has a chance to pack the Fed Board with his own appointees, the institution's tradition of careful, dispassionate economic stewardship could come to a sudden end.

When China Leads
Kevin Rudd (Project Syndicate) Oct 27, 2017
For the last 40 years, China has implemented a national strategy that, despite its many twists and turns, has produced the economic and political juggernaut we see today. It would be reckless to assume, as many still do in the US, Europe, and elsewhere, that China’s transition to global preeminence will somehow simply implode, under the weight of the political and economic contradictions they believe to be inherent to the Chinese model.

The Bubble that Never Came (and other Misconceptions about Treasury Bonds)
Michele Mazzoleni and Ashish Garg (RA) Oct 27, 2017
A 10-year US Treasury note yielding just little above 2% does feel expensive. Yet we should not be misled by appearances. Our research shows that, contrary to common wisdom, Treasury bonds are only moderately overvalued. All in all, bonds are not as unattractive as a simple historical comparison of their yields may suggest.

EU: Putting Things in Perspective
Steven Hill (Globalist) Oct 28, 2017
The European Way has great potential to nudge the world forward.

Post-Capitalist Entrepreneurship: Basic Income, Blockchain Cities, and Local Currencies
Boyd Cohen (Evonomics) Oct 28, 2017
Towards a new, local, but globally interconnected, digital, collaborative, urban economic model of shared prosperity.

Why ailing eurozone still needs extreme treatment
Wolfgang Munchau (FT) Oct 29, 2017
Even after a decade-long recovery, the ECB may never be able to halt asset purchases.

Trump tax cut will put America on a path to growth
Arthur Laffer (FT) Oct 29, 2017
Economics is about getting incentives right — taxes are an incentive to not act.

ASEAN against the world on trade
Chatib Basri (EAF) Oct 29, 2017
East Asia is now an indispensable engine of the global economy.

Trump’s States Need Nafta
Mary Anastasia O’Grady (WSJ) Oct 29, 2017
‘Coastal elites’ won’t be hardest hit if the President nixes the trade agreement.

Europe, the US or China?
Steven Hill (Globalist) Oct 29, 2017
Which development model today among the Big Three – Europe, the US or China – best fosters economic and environmental sustainability?

Corruption uncertainty and corporate practices
Jan Hanousek, Anastasiya Shamshur and Jiri Tresl (VoxEU) Oct 29, 2017
The idea that corruption hinders investments is not new, but the literature has tended to focus on the impact of average corruption levels. Based on 140,000 firm-level observations for 13 Central and Eastern European countries, this column explores the impact of corruption uncertainty. The evidence suggests that while foreign-controlled firms are unaffected by the corruption uncertainty factor, domestic firms decrease investments significantly when uncertainty about corruption practices increases. This decrease in investment is accompanied by a decrease in cash holdings, which points to a possible motive to build off-balance sheet funds for bribery purposes. The idea that corruption hinders investments is not new, but the literature has tended to focus on the impact of average corruption levels. Based on 140,000 firm-level observations for 13 Central and Eastern European countries, this column explores the impact of corruption uncertainty. The evidence suggests that while foreign-controlled firms are unaffected by the corruption uncertainty factor, domestic firms decrease investments significantly when uncertainty about corruption practices increases. This decrease in investment is accompanied by a decrease in cash holdings, which points to a possible motive to build off-balance sheet funds for bribery purposes. \

Data trusts can stimulate the digital economy
John Thornhill (FT) Oct 30, 2017
A nation’s ability to exploit information in smart, creative ways will help determine its economic success.

The (Sometime) Tyranny of (Somewhat) Arbitrary Income Lines
Charles Kenny (CGD) Oct 30, 2017
As Lant Pritchett reports, the World Bank has introduced two new poverty lines: $3.20 for lower middle income countries, and $5.50 for upper middle income countries. I’m with Lant that this is broadly a good thing. But the process by which the World Bank came up with its new poverty lines suggests it might be worth revisiting some of the pitfalls of income thresholds at the individual or national level.

Sub-Saharan Africa: The Path to Recovery
IMF News Oct 30, 2017
The broad-based slowdown in sub-Saharan Africa is easing, and growth is expected to pick up to 2.6 percent in 2017 from last year's 1.4 percent, the IMF said in its latest Regional Economic Outlook for sub-Saharan Africa.

Bank of Japan Is in Kuroda Mode Even If He Leaves
Daniel Moss (Bloomberg View) Oct 30, 2017
The current governor's stimulus policy is pegged to bond yields, a clever way to scale up or down without fuss.

Europe Needs to Face Its Bad-Loan Problem
Bloomberg View Oct 30, 2017
Banks in the European Union should recognize their losses more quickly.

The European Project Needs a New Long-Term Vision
Jean Tirole (Bloomberg View) Oct 30, 2017
For the union to work, people must be willing to share risks and cede more sovereignty.

The Dollar's Enjoying a Renaissance
Jason M Schenker (Bloomberg View) Oct 30, 2017
The greenback could keep pushing higher if U.S. tax cuts happen.

An Opportunity for the WTO
Hector R. Torres (Project Syndicate) Oct 30, 2017
The World Trade Organization has long swept its problems – from flawed rules for granting members “special and differential treatment” to an unworkable understanding of consensus – under the rug. If it doesn't take action soon to reform and upgrade its functioning, it may well become increasingly irrelevant.

Banking on African Infrastructure
Ibrahim Assane Mayaki (Project Syndicate) Oct 30, 2017
Africa faces a yawning gap between its infrastructure needs and its ability to attract the foreign investment required to finance projects. The continent's leaders must recommit to creating a more favorable investment climate, one that can attract capital while limiting investors’ risk exposure.

Centrifugal and Centripetal Forces on Economic Areas
Michael J. Boskin (Project Syndicate) Oct 30, 2017
The flurry of secessionist around the world today raises important questions about optimal political and economic arrangements. But if there is any clear takeaway, it is that "optimal" is a moving target: good governance entails adaptability to constantly changing circumstances and accommodation of diversity.

Europe’s Economic Dilemma
Martin Feldstein (Project Syndicate) Oct 30, 2017
The European Central Bank deserves credit for the economic improvements that have occurred in the past few years. But the ECB’s policies also mean that the eurozone has no ammunition left to fight the next recession, because interest rates cannot be reduced further and fiscal policy remains in the hands of national governments.

Anti-corruption and entrepreneurial activity in China
Mariassunta Giannetti and Xiaoyun Yu (VoxEU) Oct 30, 2017
One of Chinese President Xi Jinping’s defining policies has been in the fight against corruption, which hinders innovation and growth by creating privileges for established firms. This column shows that extensive corruption in China may indeed have hampered the process of firm progress, and that the anti-corruption campaign has been a good move towards favouring an efficient allocation of resources and, ultimately, sustained growth.

Competition makes IT better
Leonardo Iacovone, Mariana Pereira-López and Marc Schiffbauer (VoxEU) Oct 30, 2017
In spite of its potential, the use of digital technology is still basic in most developing countries. This column presents evidence that firms in Mexico facing higher external competition have used IT more intensively and efficiently. External competition has encouraged them to make the necessary complementary investments in innovation and organisational changes.

Xi Jinping Vows No Poverty in China by 2020. That Could Be Hard.
Javier C. Hernandez (NYT) Oct 31, 2017
The president's lofty vision clashes with the harsh reality of deteriorating rural life and disparities in education and health care.

One Misstep Now Would Cost the Bank of England Its Credibility
Daniel Moss (Bloomberg View) Oct 31, 2017
It signaled quite clearly that it would raise interest rates. To do anything else would cause years of trouble.

Why Development Finance Institutions Use Tax Havens
Paddy Carter (CGD) Oct 31, 2017
Development Finance Institutions (DFIs) exist to promote development by investing in the poorest, least developed countries. They often route those investments via holding companies or private equity funds domiciled in tax havens. On the face of it, that seems absurd: tax havens are widely seen as a drain on development, depriving cash-strapped governments of billions of dollars in public revenue. In a new paper I argue that whilst widespread opposition to DFIs investing via tax havens is understandable, it is misguided. Banning the use of tax havens would do more harm than good.

Rich Nations Need a Cure for the Baby Bust
Noah Smith (Bloomberg View) Oct 31, 2017
Paid parental leave and subsidized day care aren't cheap, but they show promise.

The Future of Work Might Not Be So Bleak
Jean Tirole (Bloomberg View) Oct 31, 2017
Technology won't eliminate good jobs, but it could exacerbate inequality.

What’s Behind Latin America’s Jobless Recovery?
Ernesto Talvi (Project Syndicate) Oct 31, 2017
A common explanation for the apparent decoupling of growth and employment in many countries is that technological advances, such as automation and robotics, have resulted in capital substituting for labor across the region’s economies. But in Latin America, at least, a simpler and more plausible hypothesis has not yet been ruled out.

Why China’s Capital-Account Liberalization Has Stalled
Yu Yongding (Project Syndicate) Oct 31, 2017
Last year, the People's Bank of China abruptly hit the brakes on capital-account liberalization, tightening controls to a degree not seen since the Asian financial crisis of the late 1990s. Yet large-scale capital flight continues – and neither economists nor officials in China seem sufficiently concerned about it.

Lesbos’s Ghosts, Europe’s Disgrace
Yanis Varoufakis (Project Syndicate) Oct 31, 2017
In September alone, another 2,238 refugees arrived in Lesbos, despite Turkey’s attempts to cut the flow. A camp designed for 2,000 people now “houses” three times that number, behind rows of barbed wire, in a magma of mud, refuse, and human excrement.

Learning from Martin Luther About Technological Disruption
Nicholas Davis (Project Syndicate) Oct 31, 2017
Five hundred years ago, Martin Luther used the printing press to spur debate on the Church's practice of "indulgences." The fact his efforts kicked off one of the most divisive periods of European history should serve as a reminder that while technology can support constructive debate, it can also fuel violent conflict.

Venezuela’s debt: Untying the Petroleos de Venezuela knot
Adam Lerrick (AEI) Oct 31, 2017
Although Venezuela clearly cannot pay its debt, the government continues to divert scarce cash needed for food and medicine for the Venezuelan people to pay foreign bondholders. This choice is driven by fears that the knot tying the government’s $35 billion of foreign bonds to the national oil company Petroleos de Venezuela, S.A.’s (PDVSA) $30 billion of foreign bonds creates an insurmountable obstacle to a debt restructuring. But transferring PDVSA's Venezuelan assets, including its oil concessions, to the government by a National Assembly act, combined with an offer to exchange PDVSA bonds dollar for dollar for identical government bonds, will cut the knot.

Under Xi, China Aims to Be the World’s Middle Kingdom
Börje Ljunggren (YaleGlobal) Oct 31, 2017
Communist Party leader Xi sets out to orchestrate China’s path to global prominence, but controlocracy may lack international appeal

The tyranny of benchmarks
Marlene Amstad and Eli Remolona (VoxEU) Oct 31, 2017
Global investors are assumed to differentiate between economies using economic fundamentals. This column uses returns on sovereign CDS contracts for 18 emerging markets and ten advanced countries to argue that fundamentals do not drive these decisions. Instead, most of the variation across sovereigns reflects whether or not the country is designated as an 'emerging market'. Investment strategies tend simply to replicate benchmark portfolios.

The Protestant Reformation and the allocation of resources in Europe
Davide Cantoni, Jeremiah Dittmar and Noam Yuchtman (VoxEU) Oct 31, 2017
Five hundred years ago today, Martin Luther posted 95 theses on the Wittenberg Castle church door critiquing Catholic Church corruption, setting off the Protestant Reformation. This column argues that the Reformation not only transformed Western Europe's religious landscape, but also led to an immediate and large secularisation of Europe’s political economy.

The mortgage rate conundrum
Alejandro Justiniano, Giorgio Primiceri and Andrea Tambalotti (VoxEU) Oct 31, 2017
The US witnessed an unprecedented boom in mortgage debt and house prices in the early 2000s, which precipitated the crisis in 2007. This column documents a sudden, large and persistent fall in the spread of mortgage over Treasury rates in the summer of 2003. It argues that the emergence of this ‘conundrum’ marked a crucial turning point in the dynamics of the boom, with the resulting easier credit conditions in the subprime market in particular leading to the origination of mortgages that defaulted progressively more frequently down the road.