News & Commentary:

Articles/Commentary

Two big mistakes that ruined Europe
Wolfgang Munchau (FT) Nov 1, 2015
The single currency is a trap and eastern expansion forced the EU to take its eye off the ball.

Between debt and the devil by Adair Turner
Giles Wilkes (FT) Nov 1, 2015
A wide-ranging overdue challenge to a financial taboo.

The sorrows of China’s one-child policy
Haining Liu (FT) Nov 1, 2015
Personal family choices must still yield to national interests.

Technology: Banks seek key to blockchain
Jane Wild, Martin Arnold and Philip Stafford (FT) Nov 1, 2015
Financial groups seek to harness the power of the transaction database as they see it slashing costs.

Enter the new power brokers
Olivier Zajec (LMD) Nov 1, 2015
There has been a fundamental shift in world diplomacy - the major initiatives in the Middle East, no matter how self-seeking, are now coming from non-western nations.

What's behind the yuan devaluation
Michel Aglietta (LMD) Nov 1, 2015
Despite President Xi Jinping's high-profile diplomacy, Chinese investment cannot carry the nation's economic future. Xi must persuade the Chinese people of the need for more modest consumption, services and social welfare.

China Should Dethrone Its GDP Target
Bloomberg View Nov 1, 2015
Fixating on a single number is counterproductive.

German reunification lessons for European Fiscal Union
Gerlinde Sinn and Hans-Werner Sinn (VoxEU) Nov 1, 2015
With a European transfer union on the cards, we can learn a lot from Germany’s reunification – a transfer union of sorts. This column takes us through various lessons, concluding that transfers would cement southern Europe’s lack of competitiveness and drive Europe into permanent stagnation. With a European transfer union on the cards, we can learn a lot from Germany’s reunification – a transfer union of sorts. This column takes us through various lessons, concluding that transfers would cement southern Europe’s lack of competitiveness and drive Europe into permanent stagnation.

Silly Robots!
William Davies (CHE)/I> Nov 1, 2015
Yes, they’re coming for our jobs. But we’ll have the last laugh.

Productivity lessons for Asia’s tiger cubs
Lawrence J. Lau and Jungsoo Park (EABER Newsletter) Nov 1, 2015
The high and persistent growth of the four Newly Industrialised Economies — also known as the East Asian Tigers: Hong Kong, South Korea, Singapore and Taiwan — from 1970 to 1990 prompted much debate about the drivers of growth in these economies. There have been numerous studies looking into this issue, but they have not yet been able to reach a common conclusion. Understanding the drivers of growth in the Tiger economies can help us grasp the future prospects for growth in the emerging Asian economies, and for Asia more generally — and the supporting policy responses needed.

Is European Integration in Trouble?
Various (TIE) Nov 1, 2015
To what degree has the refugee situation put European integration at risk?

The Core Problem
Lawrence Summers (TIE) Nov 1, 2015
The state of the world economy.

The Complications of Liftoff
John M. Berry (TIE) Nov 1, 2015
The Federal Reserve’s struggle to normalize interest rates.

Cash entices as central banks diverge
Mohamed El-Erian (FT) Nov 2, 2015
Fed signals December rate rise while ECB suggests more QE.

Statistical objectivity is a political cloak
Angus Deaton (FT) Nov 2, 2015
Politics is a danger to good data; but without it data are unlikely to be good.

China's massive grey tide
Lijia Zhang (Aljazeera) Nov 2, 2015
China isn't the only country that has been hit by an ageing population, yet no nation is facing a graver challenge.

Dysfunction Junction: Railway Puts India on Slow Train to Future
Tom Lasseter and Anurag Kotoky (Bloomberg) Nov 2, 2015
Dysfunction in Indian Railways is not a surprise. The 162-year-old system is Asia's oldest. It is the nation's economic artery, employer of more than 1.3 million people, and the government's most intractable problem. Unclogging its 65,000 kilometers of track is vital to any effort to develop the economy.

Why We Need Private Property to Deal with Scarce Resources
Patrick Barron (Mises Daily) Nov 2, 2015
Scarcity of resources exists in many forms and is the problem in economics. If resources were not scarce, there would be no need to economize. The existence of scarcity is true of all resources (such as time, human energy, and natural resources). However, it is not necessarily intuitive that allowing scarce resources to be owned privately is the solution to this problem.

Germany: From Taskmaster to Petitioner
Daniel Stelter (Globalist) Nov 2, 2015
The costs of absorbing five million immigrants could easily reach the costs of German reunification — over one trillion euros over 30 years.

After Brexit: how important would UK trade be to the EU?
Jonathan Portes (Pieria) Nov 2, 2015
The question of what trading arrangements the UK will have with the European Union, should we choose to leave the EU, is clearly central to evaluating the economic impacts of “Brexit”.

Get Ready for Big Oil 2.0
Liam Denning (Bloomberg View) Nov 2, 2015
The oil market's new normal calls for a new model.

Greece's Economy Is in the Recovery Room
Leonid Bershidsky (Bloomberg View) Nov 2, 2015
It appears to be doing better than expected. That still may not be enough.

How Merkel Survives a Revolt Over Migrants
Leonid Bershidsky (Bloomberg View) Nov 2, 2015
As often, she gets her way by muddling through.

The Fate of Abe’s Japan
Joseph S. Nye (Project Syndicate) Nov 2, 2015
As Shinzo Abe sits down this week in Seoul with South Korean President Park Geun-hye and Chinese Premier Li Keqiang, he does so as the leader of a country that many people around the world now seriously underestimate. That dynamic certainly will be felt during the three Northeast Asian powers’ first summit since 2012.

The Fed’s Communication Breakdown
Kenneth Rogoff (Project Syndicate) Nov 2, 2015
Nothing describes the US Federal Reserve’s current communication policy better than the old saying that a camel is a horse designed by committee. Indeed, the Fed’s communication strategy is a mess, and cleaning it up is far more important than the exact timing of its decision to exit near-zero interest rates.

The Return of Geopolitics to Europe
Joschka Fischer (Project Syndicate) Nov 2, 2015
It is time for Europeans to end their wishful thinking of a continental order determined by the rule of law. As Russia and, more important, China, are showing, the world isn’t like that: it is much harder, and power rules.

Erdogan’s Second Chance
Sinan Ülgen (Project Syndicate) Nov 2, 2015
The outcome of Turkey’s general election provides important insights into the nature of the country’s democracy and the preferences of its citizens. The country's voters want a strong, stable government, but not one that runs roughshod over its opponents.

Are Wages Useful in Forecasting Price Inflation?
Rhys Bidder (FRBSF Econ Letter) Nov 2, 2015
Labor costs constitute a substantial share of business expenses, and it is natural to expect wages to be an important determinant of prices. However, research suggests that wages do not contain much useful information for forecasting price inflation that is not available from other indicators. Therefore, one should not infer too much from recent wage data regarding the future path of inflation.

Capital Markets Union: An ambitious goal, but few quick wins
Orçun Kaya (DB Research) Nov 2, 2015
The creation of a European Capital Markets Union (CMU) aims to establishing a single market for capital to complement bank financing. In this paper, we make a quantitative assessment of the European stock, bond and securitisation markets to look at the CMU’s potential. Our results reveal that liquidity and IPO trends in European stock markets are similar to those in the US. However, market integration has slowed down in recent years, which the CMU could counter by harmonising company, securities and insolvency laws. European corporate bond markets have become a notable alternative to bank lending but their investor base remains restricted, which the CMU should address. The securitisation market in Europe has performed well throughout the crises and its revival is a sine qua non for lending to regain traction, especially to SMEs. The CMU should thus target a less punitive regulatory treatment for this market segment.

Securitisation and growth: The collateral matters
Ata Can Bertay, Di Gong and Wolf Wagner (VoxEU) Nov 2, 2015
Since the Global Crisis, a broad discussion about the future of securitisation has emerged. This column presents new evidence on the relationship between securitisation and economic growth. The impact of securitisation depends on the underlying type of collateral. Securitisation of business loans may encourage investment and spur economic activity, but securitisation of consumer loans may at the aggregate divert resources away from productive purposes. Since the Global Crisis, a broad discussion about the future of securitisation has emerged. This column presents new evidence on the relationship between securitisation and economic growth. The impact of securitisation depends on the underlying type of collateral. Securitisation of business loans may encourage investment and spur economic activity, but securitisation of consumer loans may at the aggregate divert resources away from productive purposes.

Investors shift to China domestic sectors
Henny Sender (FT) Nov 3, 2015
Private equity firms discover value in consumer-led industries Read more >>

Eurozone’s fiscally lax nations at it again
Tony Barber (FT) Nov 3, 2015
France, Italy and Spain are slipping the EU’s budget leash, writes

A shift to a decluttered digital economy
Diane Coyle (FT) Nov 3, 2015
Dematerialisation through technology is moving up a gear.

China manufacturing: Adapt or die
Ben Bland (FT) Nov 3, 2015
Factory owners are struggling with a slowing economy, falling orders and rising labour costs. What can they do to survive?

China Aims for 6.5% Economic Growth Over Next 5 Years, Xi Says
Edward Wong (NYT) Nov 3, 2015
The target is an apparent attempt to temper expectations that the nation’s economy will rebound to anything near the double-digit growth of recent decades.

Converting the Yuan
WSJ Nov 3, 2015
The world should welcome a freely traded Chinese currency.

How Beijing and the West Work Together to Manipulate the Global Currency War
Brendan Brown (Mises Daily) Nov 3, 2015
From reading the commentaries you might have imagined that the process of a currency winning international reserve status depends on getting the IMF seal of approval. At least that seems to be the story with China.

China's Money Exodus
Bloomberg Nov 3, 2015
Here’s how the Chinese send billions abroad to buy homes.

Britain Woos Germany
Marc Champion (Bloomberg View) Nov 3, 2015
The U.K. finance minister explains what his country needs to stay in the European Union.

China's Economy Is Worse Than You Think
Noah Smith (Bloomberg View) Nov 3, 2015
A lot of the growth could be fake.

What Economists Don't Get About Climate Change
Mark Buchanan (Bloomberg View) Nov 3, 2015
What we don't know is as important as what we do.

Big Science Faces Big Problems in China
Adam Minter (Bloomberg View) Nov 3, 2015
Corruption and cronyism weaken the country's research establishment.

Does Inequality Matter?
Ramesh Ponnuru (Bloomberg View) Nov 3, 2015
Government should help the middle class. Inequality is beside the point.

Oil Needs Deals to Refuel
Liam Denning (Bloomberg View) Nov 3, 2015
A little consolidation in E&P would boost prices.

Navigating the Energy Revolution
Abdullah M. Al-Shehri and Julian Popov (Project Syndicate) Nov 3, 2015
For decades, the global energy landscape has been relatively stable, with traditional producers like Saudi Arabia and Russia selling oil and gas to consumers in the US and Europe. In a few years, however, the energy terrain is likely to be unrecognizable.

Financing the Infrastructure Gap
Thomas Maier (Project Syndicate) Nov 3, 2015
Infrastructure – from roads and railways to ports and bridges – and economic growth go together. The best way to meet the world's growing infrastructure needs is to use multilateral development banks’ unique relationships with governments and the private sector, as several recent initiatives have shown.

Slouching Toward Brexit
Philippe Legrain Nov 3, 2015
Arguments for Britain to leave the EU don’t make much sense, but that doesn’t mean the Euroskeptics won’t win.

Beijing cannot control babies or banks
David Pilling (FT) Nov 4, 2015
The party’s repressive instincts risk hampering both society and the economy.

Why ultra-low interest rates still exist
Chris Giles (FT) Nov 4, 2015
A rise before the Fed risks attracting huge capital inflows to Britain.

China’s Slowdown Raises Questions About Long-Term Growth
Neil Gough (NYT) Nov 4, 2015
Economists are trying to determine whether China can shift to a model in which consumer demand becomes the main engine of economic growth.

Raise the Roof: Why the Debt Ceiling Is Hurting America
Pedro Nicolaci da Costa (PIIE) Nov 4, 2015
In what has become a regular spectacle in American political theater, the US Congress last week arrived at yet another 11th-hour compromise to avoid hitting the country's debt ceiling and defaulting on its debts.

How China and India May Come to Blows
Peter Navarro (Globalist) Nov 4, 2015
Reasons why there could be war between these two most populous countries in the world?

Britain's Demands Are Good for Europe
Bloomberg View Nov 4, 2015
'Ever closer union' is an idea whose time has passed.

Shenzhen Fever: Don't Sweat the Small Stuff
Matthew Brooker (Bloomberg View) Nov 4, 2015
Hopes of a cross-border trading bonanza are looking overdone.

Made in Japan Ain't What It Was
David Fickling (Bloomberg View) Nov 4, 2015
Detroit once underestimated its Asian rivals. Lexus is now doing the same to China.

The Spoofing Speed Trap
Michael P Regan (Bloomberg View) Nov 4, 2015
Questions about front-running, the algorithm wars and what to do about the magic shoe box remain.

The Battle for Libya’s Only Resource
Nicholas Linn (FP) Nov 4, 2015
Libya’s oil could help knit the country back together — or tear it apart for good.

Europe Has Lost its Way
Anders Åslund (Project Syndicate) Nov 4, 2015
The EU is facing economic stagnation that is conditioning its response to the serious external challenges it now faces; internal crisis has left its leaders little room for maneuver. Fortunately, Europe has the means to address this crisis, if it can summon the wisdom and the political will.

Science and Sustainable Development
Yukiya Amano (Project Syndicate) Nov 4, 2015
If the just-adopted Sustainable Development Goals are to be achieved, the world’s poorest countries must gain access to the best that science and technology can offer. Fortunately, the world has a sound model to emulate: the deployment of peaceful nuclear technology.

China’s One-Child Calamity
Minxin Pei (Project Syndicate) Nov 4, 2015
The abolition of China’s 35-year-old one-child policy closes one of the darkest chapters in the country’s history. Perhaps more important, it provides an important opportunity to consider the fundamental threat that an unconstrained one-party regime can pose to its people.

Robot revolution: rise of 'thinking' machines could exacerbate inequality
Heather Stewart (Guardian) Nov 4, 2015
Global economy will be transformed over next 20 years at risk of growing inequality, say analysts

Restarting the global economy: Three mismatches that need concerted public action
Michael Spence, Danny Leipziger, James Manyika and Ravi Kanbur (VoxEU) Nov 4, 2015
The global economy is not working properly. This column argues that to overcome suboptimal results, global aggregate demand must be expanded, the gap between excessively large pools of capital and huge unmet infrastructure needs must be bridged, and finally, the distributional downside of rapid technological advances and global integration must be addressed. Change will come only when a global vision is put forth, coupled with political will.

China must learn to be a great power
Philip Stephens (FT) Nov 5, 2015
The nation has emerged in the space of a couple of decades as second only to the US.

US jobs report key to 2015 Fed lift-off
Michael Mackenzie (FT) Nov 5, 2015
Numbers just need to show economy is not decelerating further.

UK Economic Chief Outlines Proposed EU Reforms Amid Questions Over Trade Ramifications
Bridges, Volume 19, Number 37 Nov 5, 2015
The UK's Chancellor of the Exchequer has outlined some of the areas where his country would like to see changes in its relationship with the EU, as London attempts to lay the groundwork for treaty renegotiation ahead of an impending referendum regarding its continued membership in the 28-nation bloc. The prospects of a potential "Brexit" have raised questions over what this could mean in economic terms, including with regards to international trade agreements.

Austerity’s Grim Legacy
Paul Krugman (NYT) Nov 5, 2015
The deficit fetishism that led to government cutbacks has been more destructive in the long run than even its critics anticipated.

Big Oil’s Windfall Losses
WSJ Nov 5, 2015
As prices fall and layoffs rise, politicians aren’t blaming ‘speculators.'

India Vs. China: The Population Race
Globalist Nov 5, 2015
India will retain positive population growth until the late 2060s under current projections.

A Chinese Guide to Corruption-Proof Investing
David Fickling (Bloomberg View) Nov 5, 2015
A graft probe into the chairman of China Southern Airlines fails to sink the stock. That's normal.

Masala Bonds Add Spice to India's Debt Offerings
Andy Mukherjee (Bloomberg View) Nov 5, 2015
NTPC may become the nation's first company to sell rupee bonds overseas.

Puerto Rico's Murky Math
Lisa Abramowicz (Bloomberg View) Nov 5, 2015
Is it $72 billion outstanding? Or is it $100 billion?

Europe’s Last Straw?
Harold James (Project Syndicate) Nov 5, 2015
Europe is overloaded by crises – so overloaded, in fact, that many claim it is too weary to respond effectively to new challenges as they arise. But addressing multiple crises simultaneously can make them all easier to resolve, by increasing the scope for tradeoffs.

Why Gender Parity Matters
Laura Tyson and Anu Madgavkar (Project Syndicate) Nov 5, 2015
A new study estimates that the cost of gender inequality is even higher than previously thought – with far-reaching consequences. While reaching gender parity will be no easy feat, it is vitally important, both to improve outcomes for women and girls, and to advance economic development and prosperity for all.

A Carbon Price-and-Rebate Plan
Pierre-André Jouvet and Christian de Perthuis (Project Syndicate) Nov 5, 2015
World leaders meeting at the UN Conference on Climate Change will have an opportunity to forge an effective agreement to reduce greenhouse-gas emissions. The best solution is a mechanism that simultaneously sets a price on emissions above a certain threshold and compensates countries that emit less than the worldwide average.

China’s Intervention Lessons
Yu Yongding (Project Syndicate) Nov 5, 2015
China’s stock market has been a hot topic since the summer, when a rapid rise gave way to a major plunge, triggering a global equities sell-off. The question now is what can and should be done to prevent further volatility – and whether Chinese officials are prepared to do it.

Is China’s rise relevant to today’s poorest states?
Duncan Green (FP2P) Nov 5, 2015
I recently attended a fascinating conference on UK-China relations, which discussed the two governments’ burgeoning cooperation on development issues.

On the global ZLB economy
Ricardo Caballero, Emmanuel Farhi & Pierre-Olivier Gourinchas (VoxEU) Nov 5, 2015
Interest rates are near zero – or moving towards it – in major economies worldwide. This column introduces a new theoretical framework that helps to organise thinking on how liquidity traps and slow growth spread across the world. It stresses the role of capital flows, exchange rates, and the shortage of safe assets. Once rates are at the ZLB, the imbalance between the supply and demand of safe assets is redressed by lower global output. Liquidity traps emerge naturally and countries drag each other into them.

Putting a Match to Big Oil
Liam Denning (Bloomberg View) Nov 6, 2015
It helps kick-start the necessary cycle of boom and bust.

India-Africa: a partnership with untapped potential
Claire Schaffnit-Chatterjee (DB Research) Nov 6, 2015
Africa is drawing a variety of investors in search of natural resources and fast-growing consumer markets. They are eager to benefit from some of the highest economic growth rates in the world – as two-thirds of the countries in the continent will grow at over 5% over the next 5 years – and favourable demographics. Africa’s fast-growing, very young and increasingly urban population is currently estimated at 1.2 bn and set to exceed 4 bn by 2100, when around 40% of the global population will be living in Africa, based on projections from the UN. As the EU and China remain Africa’s main trade and investment partners and President Obama has given momentum to the US-Africa partnership, India’s involvement with Africa has been growing steadily. It is set to intensify further, based on the synergies of needs and interests.

What To Do About Debt
Richard Kozul-Wright (Project Syndicate) Nov 6, 2015
Global debt has grown some $57 trillion since the 2008 collapse of Lehman Brothers, reaching a back-breaking $199 trillion in 2014, more than two and a half times global GDP. As these obligations become increasingly difficult to service, a better way to restructure sovereign debt is desperately needed.

Confronting the Coming Liquidity Crisis
Camila Villard Duran (Project Syndicate) Nov 6, 2015
This month, G-20 leaders will meet in Antalya, Turkey, for their tenth summit since the 2007 global financial crisis. With liquidity risks intensifying, G-20 leaders must streamline their agenda to focus on one objective: creating international financial arrangements capable of responding effectively to a crisis.

Supervising bank culture
Jakob de Haan, Wijnand Nuijts and Mirea Raaijmakers (VoxEU) Nov 6, 2015
The Global Crisis revealed serious deficiencies in the supervision of financial institutions. In particular, regulators neglected organisational culture at the institutional level. This column reviews efforts since 2011 by De Nederlandsche Bank to oversee executive behaviour and cultures at financial institutions. These measures aimed at identifying risky behaviour and decision-making processes at a sufficiently early stage for appropriate countermeasures to be implemented. The findings show that regulators can play a larger part in securing the stability of the financial system by taking an active role in shaping institutional cultural processes.The Global Crisis revealed serious deficiencies in the supervision of financial institutions. In particular, regulators neglected organisational culture at the institutional level. This column reviews efforts since 2011 by De Nederlandsche Bank to oversee executive behaviour and cultures at financial institutions. These measures aimed at identifying risky behaviour and decision-making processes at a sufficiently early stage for appropriate countermeasures to be implemented. The findings show that regulators can play a larger part in securing the stability of the financial system by taking an active role in shaping institutional cultural processes.

Income inequality in pre-industrial Europe
Guido Alfani and Wouter Ryckbosch (VoxEU) Nov 6, 2015
Thomas Piketty and others have prompted renewed interest in understanding long-term patterns of inequality. This column presents evidence from pre-industrial Europe. Inequality rose even during the success stories of early modern Europe, but it can hardly have been the sole requisite for growth. In both economic history and today’s economic theory, the idea of a universal trade-off between growth and inequality needs to be replaced by stronger attention to social processes and institutional developments.Thomas Piketty and others have prompted renewed interest in understanding long-term patterns of inequality. This column presents evidence from pre-industrial Europe. Inequality rose even during the success stories of early modern Europe, but it can hardly have been the sole requisite for growth. In both economic history and today’s economic theory, the idea of a universal trade-off between growth and inequality needs to be replaced by stronger attention to social processes and institutional developments.

Industrialisation in Africa: More a marathon than a sprint
Economist Nov 7, 2015
The world’s poorest continent is losing factories before it has even industrialised.

Tightening Global Trade Rules
EPW Vol. L No. 45 Nov 7, 2015
The United States wants to impose its rules on much of the world through the Trans-Pacific Partnership.

Dampening the Global Risk Appetite Cycle
Avinash Persaud (EPW Vol. L No. 45) Nov 7, 2015
International capital flows come in only two modes: feast or famine. The policy response to both situations has been primarily via exchange and capital controls--both have their consequences. Macro-prudential tools may represent a more flexible, less discriminatory alternative to capital controls. These tools of macroeconomic policy, though already in place, are not used as they should be, that is, to directly address the risk-appetite cycle of international capital.

Investing in family is vital to the economy
Melinda Gates (FT) Nov 8, 2015
The $10tn-worth of unpaid work that women do needs to be redistributed.

Grasp the reality of China’s rise
Lawrence H. Summers (FT) Nov 8, 2015
Reasonable dialogue requires a recognition of the tensions between short and long-term interests.

Europe’s single market is a cosy club
Wolfgang Münchau (FT) Nov 8, 2015
Producers’ interests prevail even when companies, like VW, are found to have committed serial fraud.

Central banks: Peak independence
Ferdinando Giugliano, Sam Fleming and Claire Jones (FT) Nov 8, 2015
After a post-crisis surge in central bankers’ power, some politicians want to rein in their role.

The G20 is not ready for the next crisis
Adam Triggs (EAF) Nov 8, 2015
One-third of the IMF’s funding will evaporate over the next two years as bilateral loans negotiated in 2012 start to expire. This is a major problem

Eurozone crisis: Looking back to the future
Graciela Laura Kaminsky (VoxEU) Nov 8, 2015
The Eurozone crisis is still lingering. This column uses data from 100 years of sovereign defaults to portray a new take on the crisis. The findings indicate that crises in a financial centre have persistent adverse effects on the periphery. They lead to more economic losses than home-grown idiosyncratic crises. Successful restructuring of such crises would require substantially larger debt write downs than those following idiosyncratic crises. The Eurozone crisis is still lingering. This column uses data from 100 years of sovereign defaults to portray a new take on the crisis. The findings indicate that crises in a financial centre have persistent adverse effects on the periphery. They lead to more economic losses than home-grown idiosyncratic crises. Successful restructuring of such crises would require substantially larger debt write downs than those following idiosyncratic crises.

US is suffering a profits recession
Russ Koesterich (FT) Nov 9, 2015
Question is whether this signals bull market interruption or end.

What has delayed Europe’s bank recovery?
Patrick Jenkins (FT) Nov 9, 2015
The financial crisis peaked in 2008; the eurozone crisis in 2012.

Infrastructure: Bridging the gap
John Authers (FT) Nov 9, 2015
Why is there still an annual $1tn shortfall in spending for public sector projects?

The Eurozone: Deflationary Boom Or Deflationary Bust?
John Weeks (Pieria) Nov 9, 2015
The optimistic assertion that the Eurozone clawed out of deflation in the third quarter of this year represents a lack of understanding of inflation measures and market economies.

A Bad Way to Make Banks Safe
Bloomberg View Nov 9, 2015
Creating a special class of debt would take banks into uncharted territory.

Modi Needs to Think Again
Bloomberg View Nov 9, 2015
Indian prime minister must urgently steer his government toward economic reform.

Big Data Means Better Data for China
Christopher Balding (Bloomberg View) Nov 9, 2015
A proliferation of privately sourced statistics is changing our picture of the economy.

Brazil Needs to Pay Attention to Paraguay
Mac Margolis (Bloomberg View) Nov 9, 2015
Follow the money.

Debt Wall Looms Over Fed
Lisa Abramowicz (Bloomberg View) Nov 9, 2015
Central bankers are expected to raise borrowing costs just as companies need to refinance their bonds.

What If Banks Didn't Create Money?
Leonid Bershidsky (Bloomberg View) Nov 9, 2015
Swiss initiative would let only the government add to circulation. That's a bad idea worth testing.

A Step Forward for Sovereign Debt
Joseph E. Stiglitz and Martin Guzman (Project Syndicate) Nov 9, 2015
Every advanced country has a bankruptcy law, but there is no equivalent framework for sovereign borrowers – a legal vacuum that, as we now see in Greece and Puerto Rico, can suck the life out of economies. In September, however, the UN took a big step toward filling the void.

Is US Monetary Policy Made in China?
Barry Eichengreen (Project Syndicate) Nov 9, 2015
For much of the year, investors have been fixated on when the Fed will achieve “liftoff” – that is, when it will raise interest rates by 25 basis points, or 0.25%, as a first step toward normalizing monetary conditions. But, in seeking to gauge changes in US monetary conditions, investors have been looking in the wrong place.

America’s Education Bubble
Mohamed A. El-Erian (Project Syndicate) Nov 9, 2015
If not handled carefully, the pursuit of an important social goal can sometimes have serious economic and financial consequences. America’s effort to expand access to student loans – a fundamentally good initiative, aimed at enabling more people to pursue higher education – may turn out to be one such case.

External imbalances within the Eurozone: The Dutch disease explanation
Mouhamadou Sy (VoxEU) Nov 9, 2015
From the introduction of the euro in 1999 to the Greek crisis in 2010, the Eurozone witnessed external imbalances between countries at its core and those at its periphery. These imbalances have been attributed either to differences in competitiveness or to the effect of financial integration. This column argues that in order to understand the imbalances within the Eurozone, it is necessary to consider credit costs and capital flows. The lower real cost of credit for high-inflation countries must be taken into account, as well as the inflow of capital to the non-tradable sector that this implies. Monetary policy cannot be conducted in a ‘one size fits all’ manner. From the introduction of the euro in 1999 to the Greek crisis in 2010, the Eurozone witnessed external imbalances between countries at its core and those at its periphery. These imbalances have been attributed either to differences in competitiveness or to the effect of financial integration. This column argues that in order to understand the imbalances within the Eurozone, it is necessary to consider credit costs and capital flows. The lower real cost of credit for high-inflation countries must be taken into account, as well as the inflow of capital to the non-tradable sector that this implies. Monetary policy cannot be conducted in a ‘one size fits all’ manner.

India Is Caught in a Climate Change Quandary
Eduardo Porter (NYT) Nov 10, 2015
An impoverished nation must balance domestic demands for development and international demands to limit greenhouse gas emissions.

In the long shadow of the Great Recession
Martin Wolf (FT) Nov 10, 2015
It may be hard to avoid crises but it is vital to make them both small and rare.

China’s wagging tail dogs global markets
John Plender (FT) Nov 10, 2015
Beijing’s fiscal efforts to prime export-led growth are misguided.

Hooray, Capital Controls Have Won. But That Just Might Reveal the Political Vulnerability of the TPP.
Scott Morris (CGD) Nov 10, 2015
The newly released Trans-Pacific Partnership (TPP) text reveals that US trade negotiators have finally caught up with the IMF and others on the question capital controls. Unfortunately, by allowing for appropriate uses of controls on “hot money,” the TPP may have created new enemies within the powerful US financial services lobby, further jeopardizing political support for the agreement.

China Developers, Beware the Dollar's Lure
Katrina Nicholas (Bloomberg View) Nov 10, 2015
It makes sense for home builders to sell bonds onshore. If only offshore investors weren't so welcoming.

How Volatile Will Market Volatility Get?
Mohamed A. El-Erian (Bloomberg View) Nov 10, 2015
Fed hopes rate hike will restore just the right amount of turbulence.

Where's the Growth? Africa
Matthew A. Winkler (Bloomberg View) Nov 10, 2015
Investors thrill to population-fueled GDP growth and reduced inflation.

A Trade Deal for Working Families
Barack Obama (Bloomberg View) Nov 10, 2015
The Trans-Pacific Partnership will create good jobs for Americans.

We've Seen the Real Modi
Pankaj Mishra (Bloomberg View) Nov 10, 2015
India's leader long ago chose between Hindu nationalism and economic reform.

Central America’s Triangle of Despair
Kevin Casas-Zamora (Project Syndicate) Nov 10, 2015
During the past five years, some 100,000 unaccompanied migrant children from Guatemala, Honduras, and El Salvador have been apprehended at the southern border of the US. While the challenges of the so-called Northern Triangle cannot be addressed through foreign assistance alone, they are unlikely to be overcome without it.

Two Europes in One
Kemal Dervis (Project Syndicate) Nov 10, 2015
Before Britain's 2017 referendum on EU membership, Europe's leaders must find a way to balance the need for deeper eurozone integration and the interests of non-euro countries like the UK. The best approach would be to divide Europe formally into two groups, euro and non-euro countries, with the former getting their own parliament.

When Financial Markets Misread Politics
Dani Rodrik (Project Syndicate) Nov 10, 2015
When Turkey’s ruling AKP regained a parliamentary majority in the country’s general election on November 1, financial markets cheered. The same short-term focus and herd behavior that often lead financial markets to neglect more significant economic fundamentals can also distort markets’ judgment of countries' political prospects.

China’s New Economic Plan Tackles the Rebalancing Puzzle
Stephen S. Roach (YaleGlobal) Nov 10, 2015
China’s new Five-Year Plan could inspire citizen confidence with focus on social safety net and quality growth.

The Other Liquid Gold
Selim Can Sazak and Lauren R. Sukin (FA) Nov 10, 2015
Nuclear power and desalination in Saudi Arabia.

Rebalancing finance
Çagatay Bircan, Ralph De Haas, Hans Peter Lankes and Alexander Plekhanov (VoxEU) Nov 10, 2015
In the wake of the Global Crisis, emerging Europe has experienced a sharp drop in investment levels. As a result, income convergence has virtually come to a halt. This column presents key findings of the EBRD’s latest Transition Report, urging countries in emerging Europe to rebalance their financial systems in order to reignite economic growth. Rebalancing is necessary in terms of the available debt–equity mix, the currency composition of credit, banks’ funding sources, and cross-border investment partners.

The TPP is a trade agreement, and then some
Keith Head and Thierry Mayer (VoxEU) Nov 10, 2015
There seems to be a general consensus that the Trans-Pacific Partnership is not a pure trade agreement. This column presents evidence suggesting that for at least one major sector – the auto industry – the agreement will make a huge difference, bringing considerable disruption to the industry but offering sizeable gains for car buyers.There seems to be a general consensus that the Trans-Pacific Partnership is not a pure trade agreement. This column presents evidence suggesting that for at least one major sector – the auto industry – the agreement will make a huge difference, bringing considerable disruption to the industry but offering sizeable gains for car buyers.

We were wrong about universal banking
John Reed (FT) Nov 11, 2015
Few cost efficiencies come from merging many functions in a single bank.

A welcome step for Saudi suffragettes
Roula Khalaf (FT) Nov 11, 2015
The municipal poll promises to be a move towards breaking down social barriers in the kingdom.

EM slowdown third and last wave of crisis
Peter Oppenheimer (FT) Nov 11, 2015
Risks posed to global growth have been overstated.

Robots Won't Own You. You'll Own the Robot.
Noah Smith (Bloomberg View) Nov 11, 2015
What if the rise of the machines brings on a revolution in corporate ownership?

Modi's Festive Offering Can Revive Indian Property
Andy Mukherjee (Bloomberg View) Nov 11, 2015
Removing curbs on foreign capital will help builders access new financing.

Debt Market Flashes Scary Signal
Lisa Abramowicz (Bloomberg View) Nov 11, 2015
Growing distress among weak companies could be an alarming development for the broader economy.

The Brexit Balance Sheet
Ian Buruma (Project Syndicate) Nov 11, 2015
The growing temptation in Britain to abandon what appears to be the sinking ship of Europe and go it gloriously alone certainly is understandable. The question is whether “Brexit” would be as beneficial as its proponents seem to think.

Is It Time for Global Money?
Larry Hatheway and Alexander Friedman (Project Syndicate) Nov 11, 2015
With the world more economically and financially integrated than at any time since the late nineteenth century, a global central bank and a world currency would make more sense than our confusing, inefficient, and outdated assemblage of national monetary policies and currencies. But it couldn't work – and it doesn't need to be tried.

The Poverty Line’s Battle Lines
Kaushik Basu (Project Syndicate) Nov 11, 2015
Much is at stake when the World Bank formulates the global poverty line. But, because there is no unique definition of poverty, what matters most is to draw a line at some reasonable place and then hold it constant in real terms so that the performance of the world and individual countries can be tracked over time.

China’s Unwilling Consumers
Keyu Jin (Project Syndicate) Nov 11, 2015
For several years, Chinese leaders have been pursuing economic “rebalancing”: The country’s longstanding growth model, based on investment and exports, is to be replaced by one based on services and domestic consumption. Unfortunately, household spending will not be driving the economy anytime soon.

Austerity’s impact on EZ growth, 2011-2013
Ansgar Rannenberg, Christian Schoder and Jan Strasky (VoxEU) Nov 11, 2015
From 2011 to 2013, fiscal policy in the Eurozone turned progressively more restrictive. This column argues that output cost of fiscal consolidation strongly depends on presence and strength of credit constraints. With credit constraints both in the household and the firm sector, fiscal consolidation would be largely responsible for the weak growth performance during 2011-2013. Postponing the fiscal consolidation to a period of unconstrained monetary policy would have avoided most of these losses.From 2011 to 2013, fiscal policy in the Eurozone turned progressively more restrictive. This column argues that output cost of fiscal consolidation strongly depends on presence and strength of credit constraints. With credit constraints both in the household and the firm sector, fiscal consolidation would be largely responsible for the weak growth performance during 2011-2013. Postponing the fiscal consolidation to a period of unconstrained monetary policy would have avoided most of these losses.

The Beginning of Modi's End?
Milan Vaishnav (FA) Nov 11, 2015
How the BJP lost Bihar.

Short-sighted monetary policy and fear of liftoff
Athanasios Orphanides (VoxEU) Nov 11, 2015
There is generally consensus among macroeconomists that monetary policy works best when it is systematic. Following the financial crisis, the US Federal Reserve shifted from long-term, systematic policy to short-term goals targeting unemployment. This column argues that, while these were appropriate in the aftermath of the downturn, such policy accommodations have been pursued for too long since. The need for a somewhat accommodative policy cannot be used to defend the current non-systematic policy and excessive emphasis on short-term employment gains.There is generally consensus among macroeconomists that monetary policy works best when it is systematic. Following the financial crisis, the US Federal Reserve shifted from long-term, systematic policy to short-term goals targeting unemployment. This column argues that, while these were appropriate in the aftermath of the downturn, such policy accommodations have been pursued for too long since. The need for a somewhat accommodative policy cannot be used to defend the current non-systematic policy and excessive emphasis on short-term employment gains.

Everything You Need to Know about Government, Innovation and Entrepreneurship
Mariana Mazzucato (Evonomics) Nov 11, 2015
In the end, if we want growth that is not only smarter but also more inclusive we need something that goes beyond taxing wealth, as Piketty argues for. What we need is a more complete understanding of where wealth comes from in the first place, so that the returns can be shared by all the contributors—rather than being siphoned off to the 1%.

The fatal flaw in the case for Brexit
Philip Stephens (FT) Nov 12, 2015
Britain would struggle to advance national interests in splendid isolation.

America’s cannot be the only bold voice
Barack Obama (FT) Nov 12, 2015
The global economy is growing but too slowly.

Investors will pay if liquidity dries up
Dan McCrum (FT) Nov 12, 2015
Low levels now will prompt higher premiums later.

Climate talks: High pressure in Paris
Pilita Clark (FT) Nov 12, 2015
As fears grow over the outcome of UN talks, the focus will be on holding nations to their pledges.

TPP Debate Ramps Up Following Public Release of Trade Deal Text
Bridges, Volume 19, Number 38 Nov 12, 2015
The text of the 12-country Trans-Pacific Partnership (TPP) Agreement was publicly released late last week, prompting intense scrutiny as stakeholders attempt to understand the deal's implications, both for TPP countries themselves as well as for the global economy.

WTO Negotiators Start to Stake Out Shape of Nairobi Declaration
Bridges, Volume 19, Number 38 Nov 12, 2015
Negotiators have tabled a flurry of proposals on the text of the WTO's ministerial declaration, ahead of the organisation's ministerial conference in the Kenyan capital city of Nairobi being held in less than five weeks' time.

EU Commission Releases TTIP Sustainable Development Proposal
Bridges, Volume 19, Number 38 Nov 12, 2015
The European Commission publicly released last week its proposal for a chapter on sustainable development within a trade and investment agreement currently being negotiated with the US, calling for a series of provisions on labour and the environment.

WTO Members Approve 17-Year Extension of Pharmaceuticals Transition Period for LDCs
Bridges, Volume 19, Number 38 Nov 12, 2015
WTO members agreed last Friday to extend for 17 years the transitional period for least developed countries (LDCs) for enforcing global trade rules protecting pharmaceutical patents and clinical data, with the new expiration date set for 1 January 2033.

Brexit: A Bad Idea Hard to Defeat
Laszlo Andor (Globalist) Nov 12, 2015
Why Brexit is real and unreal at the same time.

Cameron's Hopeless Task on Europe
Clive Crook (Bloomberg View) Nov 12, 2015
The U.K.'s demands can't fix what really ails the EU.

The Wrong Way for China to Take Off
Adam Minter (Bloomberg View) Nov 12, 2015
The country should've built up experience gradually rather than trying to race to the finish line.

Chinese Dollar Bond Investors Should Read the Fine Print
Katrina Nicholas (Bloomberg View) Nov 12, 2015
Shanshui's letter of support is cold comfort after default.

Russia Can't Keep Relying on Oil
Leonid Bershidsky (Bloomberg View) Nov 12, 2015
The budget is built on unfounded faith.

The Eurozone’s Minsky Conundrum
Daniel Gros (Project Syndicate) Nov 12, 2015
Stubbornly low inflation has the European Central Bank worried. But its response – buying even more bonds and lowering its benchmark interest rate even further into negative territory – could backfire, exacerbating existing imbalances and generating serious financial instability.

Is Traditional Banking Unbreakable?
Dambisa Moyo (Project Syndicate) Nov 12, 2015
It is a rare modern industry nowadays that is not at risk of being upended by digital technology. But while high-tech startups have begun to penetrate terrain traditionally dominated by banks and financial-services companies, there is reason to believe that this industry will prove more resilient to disruption than others.

Keeping the Climate-Finance Promise
Nicholas Stern (Project Syndicate) Nov 12, 2015
In 2009, the world’s rich countries pledged to mobilize $100 billion a year by 2020 to help poor countries tackle climate change. Since then, that promise has come to be regarded as a key test of the developed world’s resolve to do its part in the fight against global warming.

Happiness by Design
Geoff Mulgan (Project Syndicate) Nov 12, 2015
Until recently, it seemed sensible to assume that our happiness was determined by factors – luck, fate, or genes – beyond our control. New discoveries, however, point to a fresh way of thinking about happiness, as something over which we do have control – and that can be taught and even legislated.

The Deadly Axis of TB and Diabetes
Anthony Harries (Project Syndicate) Nov 12, 2015
Last year, tuberculosis surpassed HIV/AIDS to become the world's deadliest infectious disease. World leaders must mount a response commensurate with the scale of the problem – especially as we learn more about the interaction between TB and another deadly global killer: diabetes.

Opposition Wins in Myanmar, But Military Still Holds the Reins
Bertil Lintner (YaleGlobal) Nov 12, 2015
Despite NLD's landslide victory in Myanmar, threat lingers from rebel groups and the military may not fade in the background.

China's Strategy For Global Technology Dominance By Any Means Necessary
Robert D. Atkinson (Forbes) Nov 12, 2015
If you found it unnerving to watch U.S. factory jobs vanish in the last few decades as an overwhelming tide of consumer products were emblazoned with “Made in China,” then now would be an appropriate time to panic again, because China is trying to do the same thing with the kinds of cutting-edge technologies that drive the digital economy.

The Transmission of Exchange Rate Changes to Output and Inflation
Stanley Fischer (FRB) Nov 12, 2015
I will focus on a key transmission channel in an open economy--the exchange rate.

When US intergenerational income mobility vanished: 1900-1920
Claudia Olivetti and M Daniele Paserman (VoxEU) Nov 12, 2015
Intergenerational income mobility is currently not very high in the US compared to other developed countries. This column shows that US intergenerational income equality was high in the 19th century but plummeted between 1900 and 1920. The income-mobility ladder was thus pulled up during the so-called Great Gatsby era. Intergenerational income mobility is currently not very high in the US compared to other developed countries. This column shows that US intergenerational income equality was high in the 19th century but plummeted between 1900 and 1920. The income-mobility ladder was thus pulled up during the so-called Great Gatsby era.

Protectionism and the fall in world trade
Simon J Evenett and Johannes Fritz (VoxEU) Nov 12, 2015
The value of world trade is falling. This column, which introduces the 18th Global Trade Alert report, shows that the manufactures that account for a large share of the fall are those where G20 nations have imposed the most trade restrictions since 2014. G20 leaders should request that the Chinese G20 Presidency support initiatives to revive global trade and avoid more trade distortions.The value of world trade is falling. This column, which introduces the 18th Global Trade Alert report, shows that the manufactures that account for a large share of the fall are those where G20 nations have imposed the most trade restrictions since 2014. G20 leaders should request that the Chinese G20 Presidency support initiatives to revive global trade and avoid more trade distortions.

The Tide Turns? Trade, Protectionism, and Slowing Global Growth
Simon J Evenett and Johannes Fritz (VoxEU) Nov 12, 2015
The value of world trade is falling. The 18th Global Trade Alert report shows that the manufactures that account for a large share of the fall are those where G20 nations have imposed the most trade restrictions since 2014. G20 leaders should request that the Chinese G20 Presidency support initiatives to revive global trade and avoid more trade distortions. The value of world trade is falling. The 18th Global Trade Alert report shows that the manufactures that account for a large share of the fall are those where G20 nations have imposed the most trade restrictions since 2014. G20 leaders should request that the Chinese G20 Presidency support initiatives to revive global trade and avoid more trade distortions.

Samsung and the South Korean Success Story
James Estrin (NYT) Nov 13, 2015
In South Korea, virtually all of your wants and needs can be met by Samsung, the most dominant conglomerate. A look behind the success story.

Emerging Europe Sees Stronger Growth Ahead, but Faces New Risks
IMF Survey Nov 13, 2015
The regional outlook for Central, Eastern and Southeastern Europe shows a mixed picture this year, as countries in Central and Eastern Europe continue to grow at a solid pace, while Russia and other Commonwealth of Independent States are in recession, according to the latest IMF’s Regional Economic Issues report.

How to Monetize a Nation's Allure and Charm
Ashby Monk (II) Nov 13, 2015
New types of sovereign funds will monetize noncore assets, including citizenship.

Portugal's Risky Experiment
Jacob Funk Kirkegaard (PIIE) Nov 13, 2015
Portugal is heading into politically unchartered territory with the fall of its center-right government on November 10 in the face of protests and defections by anti-austerity lawmakers. A new Socialist government led by Antonio Costa is expected to take power with two other leftist parties, the Left Bloc (BE) and the Unitary Democratic Coalition (CDU), both of which have been excluded from political influence in the past. If such a new government reverses Portugal's fiscal and structural policies, it could set up a confrontation with the European Central Bank (ECB), whose lifeline to Portugal has kept interest rates from spiking on its huge burden of debt.

This Land Was Your Land
Michael Albertus (FP) Nov 13, 2015
In Venezuela, land redistribution is not just an ideological imperative — it’s how the regime rewards its friends and punishes its enemies.

Oil Heads Back to the Thirties
Liam Denning (Bloomberg View) Nov 13, 2015
U.S. oil production could be much higher than we realize.

The Old Get Richer, the Young Get Poorer
Leonid Bershidsky (Bloomberg View) Nov 13, 2015
The gap is growing in Europe because government policies favor retirees over young people.

Reigniting South African Growth
Acha Leke and Michael Katz (Project Syndicate) Nov 13, 2015
One of the paradoxes of Sub-Saharan Africa’s rapid economic expansion is how the region’s most sophisticated economy seems to have become decoupled from the rest of the region. South Africa needs to reclaim the economic initiative, by – literally – building the Africa of the future.

Helmut Schmidt’s World
Frank-Walter Steinmeier (Project Syndicate) Nov 13, 2015
Germany lost one of its giants this week when former Chancellor Helmut Schmidt died at the great age of 96. Our own day and age may seem particularly tumultuous; but the years when Schmidt governed Germany were anything but quiet.

Inclusive Growth and Global Justice
Recep Tayyip Erdogan (Project Syndicate) Nov 13, 2015
As France and the world mourn the terrorist slaughter of innocents in Paris, the leaders of the G-20 are meeting in Antalya, Turkey. Terror will now vault to the top of the long list of pressing issues that will be discussed.

Voluntary disclosure of offshore tax evasion
Dominika Langenmayr (VoxEU) Nov 13, 2015
Voluntary disclosure programmes offer tax evaders the opportunity to come clean with reduced penalties. This column uses data from the US and Germany to examine the merits of such programmes. They are found to increase tax evasion, but also to significantly lower administrative costs, leading to a net increase in tax revenues. Voluntary disclosure programmes offer tax evaders the opportunity to come clean with reduced penalties. This column uses data from the US and Germany to examine the merits of such programmes. They are found to increase tax evasion, but also to significantly lower administrative costs, leading to a net increase in tax revenues.

Alternative measures of government indebtedness
Daniel A. Dias and Mark L. J. Wright (VoxEU) Nov 13, 2015
Measured as a percentage of its GDP, Greece’s debt is higher than that of Portugal and Ireland. This column discusses a range of new techniques for measuring the debts of Greece, Ireland, and Portugal. It argues that plausible alternative measures of indebtedness suggest that Greece is anywhere from as much as 50% more indebted than Portugal and Ireland to as little as half as indebted. The most reasonable measures imply that Greece is far less indebted than is commonly reported. Measured as a percentage of its GDP, Greece’s debt is higher than that of Portugal and Ireland. This column discusses a range of new techniques for measuring the debts of Greece, Ireland, and Portugal. It argues that plausible alternative measures of indebtedness suggest that Greece is anywhere from as much as 50% more indebted than Portugal and Ireland to as little as half as indebted. The most reasonable measures imply that Greece is far less indebted than is commonly reported.

Migration’s response to increasing temperatures
Cristina Cattaneo and Giovanni Peri (VoxEU) Nov 14, 2015
Climate change can affect agricultural productivity and the incentives of people to remain in rural areas. This column looks at the effects of warming trends on rural-urban and international migration. In middle-income economies, higher temperatures increased emigration rates to urban areas and to other countries. In very poor countries, however, higher temperatures reduced the probability of emigration to cities or to other countries, consistent with the presence of liquidity constraints. Climate change can affect agricultural productivity and the incentives of people to remain in rural areas. This column looks at the effects of warming trends on rural-urban and international migration. In middle-income economies, higher temperatures increased emigration rates to urban areas and to other countries. In very poor countries, however, higher temperatures reduced the probability of emigration to cities or to other countries, consistent with the presence of liquidity constraints.

Firms’ organisational choices along value chains
Laura Alfaro, Pol Antràs, Davin Chor and Paola Conconi (VoxEU) Nov 14, 2015
Trade in intermediate inputs now accounts for as much as two-thirds of international trade. Firms must decide which segments of their production processes to own and which to outsource. Using global plant-level data, this column empirically examines firms’ organisational choices along value chains. Decisions to integrate or outsource upstream and downstream functions are found to depend on demand elasticity relative to the substitutability of inputs. These results provide strong evidence that integration decisions are driven by contractual frictions. Trade in intermediate inputs now accounts for as much as two-thirds of international trade. Firms must decide which segments of their production processes to own and which to outsource. Using global plant-level data, this column empirically examines firms’ organisational choices along value chains. Decisions to integrate or outsource upstream and downstream functions are found to depend on demand elasticity relative to the substitutability of inputs. These results provide strong evidence that integration decisions are driven by contractual frictions.

The equilibrium real funds rate: Past, present and future
James D. Hamilton, Ethan Harris, Jan Hatzius and Kenneth D. West (VoxEU) Nov 15, 2015
No-one is sure what the Fed’s long-delayed nominal interest rate hikes will bring, and there has been much speculation on what the equilibrium rate might look like when the Fed acts. This column argues that it would be foolish to attempt to pin down a precise value for the steady-state real rate. A better approach is to predict the plausible range of values, and evidence suggests that the equilibrium rate will range from a little above zero up to 2%.

The world economy: The never-ending story
Economist Nov 14, 2015
First America, then Europe. Now the debt crisis has reached emerging markets.

Brazil institutions react well to crisis
Lee Alston (FT) Nov 15, 2015
Country’s economy looks bad but some things have turned out better than expected.

Italy’s recovery is not what it seems
Wolfgang Münchau (FT) Nov 15, 2015
If country fails to bounce back from recession, it is hard to see how it can stay in the eurozone.

Yen’s days as weakest among peers are numbered
Mansoor Mohi-uddin (FT) Nov 16, 2015
Japan’s policy shifts leave room for currency to make up ground.

Ten Questions on Productivity, the Holy Grail of Economics
Nicolaci da Costa (PIIE) Nov 16, 2015
Productivity, the amount of goods or services firms and workers can produce per hour of labor, is as central a concept to modern economic thinking as it is elusive to grasp and explain.

The Trans-Pacific Partnership and Japan
C. Fred Bergsten (PIIE/Nikkei Asian Review) Nov 16, 2015
The Trans-Pacific Partnership (TPP) is the most important trade agreement in world history in both economic and geopolitical terms. It incorporates 40 percent of the global economy, including its largest and third largest countries.

The Global Haves And Have-Nots In The 21st Century
Branko Milanovic and Marshall Auerback (INET) Nov 16, 2015
This is almost certainly the highest level of relative, and certainly absolute, global inequality at any point in human history. Is there anything we can do to reverse or mitigate this trend?

What's Good for Asia Is Good for Europe
Bloomberg View Nov 16, 2015
At least when it comes to resolving trade disputes.

China's Banks Aren't Feeling the Love
Katrina Nicholas (Bloomberg View) Nov 16, 2015
They have plenty more to worry about than international rule-makers.

Myth of the Endangered Market Maker
Lisa Abramowicz (Bloomberg View) Nov 16, 2015
Piece of scary data doesn't spell doom for credit trading.

Emerging markets: Deeper into the red
Jonathan Wheatley and James Kynge (FT) Nov 16, 2015
Companies from Brazil to China are finding it harder to repay loans and raise fresh cash, hampering growth.

After Paris: Long Cycles in Politics and History
Meghnad Desai (Globalist) Nov 16, 2015
The world still awaits a resolution of the end of the Ottoman Empire, Caliphate or not.

Don’t Fear a Rising Dollar
Anatole Kaletsky (Project Syndicate) Nov 16, 2015
The US Federal Reserve is almost certain to start raising interest rates at its next policy-setting meeting, on December 16. How worried should businesses, investors, and policymakers around the world be about the end of near-zero interest rates and the start of the first monetary-tightening cycle since 2004-2008?

What’s Different about the Latest Housing Boom?
Reuven Glick, Kevin J. Lansing, and Daniel Molitor (FRBSF Econ Letter) Nov 16, 2015
After peaking in 2006, the median U.S. house price fell about 30%, finally hitting bottom in late 2011. Since then, house prices have rebounded strongly and are nearly back to the pre-recession peak. However, conditions in the latest boom appear far less precarious than those in the previous episode. The current run-up exhibits a less-pronounced increase in the house price-to-rent ratio and an outright decline in the household mortgage debt-to-income ratio—a pattern that is not suggestive of a credit-fueled bubble.

African Eurobonds: Will the boom continue?
Oliver Masetti (DB Research) Nov 16, 2015
Against a challenging economic backdrop Eurobond issuance by Sub-Saharan African (SSA) sovereigns has continued in 2015, but yields on primary and secondary markets have increased sharply. Outstanding Eurobonds are widely shielded from the current turmoil by their fixed coupon structure and long maturities, but depreciating currencies, if not reversed, will significantly raise the local currency burden of future repayments. Although the external environment is likely to remain challenging for frontier markets we expect SSA governments to continue to issue Eurobonds, as the drop in commodity prices increases financing needs. Given that local debt markets are still small and illiquid, part of these borrowing needs will be financed through Eurobonds.

Corporate contribution to savings glut
Martin Wolf (FT) Nov 17, 2015
This behaviour raises important policy questions. Should there be higher taxes on retained earnings?

For savers liquidity is of little value
John Kay (FT) Nov 17, 2015
Retail investors’ needs could be met by a market that opened once a week, or even once a year.

BoJ pay rise to put limit on equity gains
Henny Sender (FT) Nov 17, 2015
First raise for 19 years taken as proof of recovering economy.

Pollution in India: Gasping for air
Amy Kazmin (FT) Nov 17, 2015
Citizens turn to the courts amid claims the government is failing to clean up New Delhi’s toxic atmosphere Read

Christine Lagarde and the SDR Basket
Edwin M. Truman (PIIE) Nov 17, 2015
International Monetary Fund (IMF) managing director Christine Lagarde has thrown her personal support behind China's long-time campaign for the inclusion of its currency, the yuan or renminbi, among the small basket of currencies that are used to value the IMF's special drawing rights (SDR).

What Can We Really Know About the Future of Stock Prices?
Lynn Parramore (INET) Nov 17, 2015
A gap between theory and reality has haunted economists.

Recession Is No Reason for Japan to Panic
Bloomberg View Nov 17, 2015
Most data suggest the economy is still moving in the right direction.

Japan Needs Workers. Women Are Ready.
Noah Smith (Bloomberg View) Nov 17, 2015
Demographics is the reason Abe's 'womenomics' is for real.

Oil. Adrift.
Rani Molla (Bloomberg View) Nov 17, 2015
It's unlikely to change until prices rise about $8 a barrel.

Japan's Endless Struggle to Spark Inflation
Noah Smith (Bloomberg View) Nov 17, 2015
A modest rise in prices would fix a host of ills.

Don't Rule Out the BRICs
Mohamed A. El-Erian (Bloomberg View) Nov 17, 2015
Goldman Sachs was right to end its fund, but the concept still has value for investors.

Is South Korea Turning Japanese?
Lee Jong-Wha (Project Syndicate) Nov 17, 2015
Many are worrying that South Korea is headed for the kind of protracted deflation and stagnation that characterized Japan’s two so-called “lost decades.” While the two countries face many of the same problems, South Korea has a distinct advantage: it can learn from Japan what not to do.

Europe Still Needs the Migrants
Giles Merritt (Project Syndicate) Nov 17, 2015
Last week’s terrorist attacks in Paris are likely to compound Europe’s deep divisions over how to respond to its refugee and migrant crisis. But calls for a new “Fortress Europe” risk making it harder than ever to convey the economic case for integrating more newcomers into the EU’s workforce.

The IMF’s analysis of the Irish bailout
Richard Baldwin (VoxEU) Nov 17, 2015
The IMF, together with CEPR and the Central Bank of Ireland, put on a conference that drew lessons from Ireland’s bailout package titled “Ireland: Lessons from its Recovery from the Bank-Sovereign Loop”. This column summarises the contributions by Eichengreen, Fatás and Schoenmaker, as well as panel comments by Christine Lagarde, Benoît Coeuré, Michael Noonan, and Valdis Dombrovskis. The IMF, together with CEPR and the Central Bank of Ireland, put on a conference that drew lessons from Ireland’s bailout package titled “Ireland: Lessons from its Recovery from the Bank-Sovereign Loop”. This column summarises the contributions by Eichengreen, Fatás and Schoenmaker, as well as panel comments by Christine Lagarde, Benoît Coeuré, Michael Noonan, and Valdis Dombrovskis.

Economies are hard for Isis to destroy
John Gapper (FT) Nov 18, 2015
Terrorism has its own logic. It fosters fear far in excess of the danger that it presents.

A break in the clouds for investment
Sarah Gordon (FT) Nov 18, 2015
CFOs have plenty of reasons to keep a tight grip on spending but there are signs the gloom is lifting.

Stress tests needed for EU bond funds
Huw van Steenis (FT) Nov 18, 2015
Liquidity risk has increasingly shifted from banks to the buy side.

British business must join Brexit debate
Stuart Rose (FT) Nov 18, 2015
Following Norway and Switzerland would weaken our control over economic affairs.

CME Group: political clout counts
Gregory Meyer (FT) Nov 18, 2015
The company is set to profit from a US rate rise but it must fend off regulators and jealous rivals.

A More Inflexible Fed Would Cause More Crises
Adam S. Posen (PIIE) Nov 18, 2015
Having saved the US economy from a second Great Depression, the Federal Reserve has become a political scapegoat in the Congress for its own failures to secure the recovery. Rather than improving our tax code, investing in our future, or simply passing a budget that is little more than avoiding default, the House is prioritizing so-called "reform" of the Fed.

Admitting Syrian Refugees Is Good Economics
Noah Smith (Bloomberg View) Nov 18, 2015
Immigrants make an economy grow faster.

Watch Out for the Yuan
Michael P Regan (Bloomberg View) Nov 18, 2015
One devaluation roiled markets, and another could be on the way.

QE in the eurozone has failed
Thomas Fazi (Pieria) Nov 18, 2015
Almost everyone in Europe seems to agree with Mario Draghi that ‘QE has been a success’. But is such enthusiasm warranted?

The Economics of Syrian Refugees
John Cassidy (New Yorker) Nov 18, 2015
You might think countries like Turkey would be sagging under the burden, but they aren’t. Why not, and what might happen here?

Why Turkish growth ended
Daron Acemoglu and Murat Üçer (VoxEU) Nov 18, 2015
Following an anaemic performance with severe imbalances in the 1990s and a debilitating financial crisis in 2001, Turkey enjoyed a period of rapid economic growth. Since about 2007 onwards, however, economic growth has slowed significantly and productivity growth has stagnated. This column argues that, rather than providing another example of the ‘stop-and-go’ cycles typical of emerging economies, the Turkish economy's ups and downs during this era reflect institutional improvements in the immediate aftermath of its financial crisis, followed by an ominous slide in the quality of these economic and political institutions. Following an anaemic performance with severe imbalances in the 1990s and a debilitating financial crisis in 2001, Turkey enjoyed a period of rapid economic growth. Since about 2007 onwards, however, economic growth has slowed significantly and productivity growth has stagnated. This column argues that, rather than providing another example of the ‘stop-and-go’ cycles typical of emerging economies, the Turkish economy's ups and downs during this era reflect institutional improvements in the immediate aftermath of its financial crisis, followed by an ominous slide in the quality of these economic and political institutions.

China inclusion in SDR not just symbolic
Jennifer Hughes (FT) Nov 19, 2015
Move is about embedding renminbi in international system and committing country to financial reform.

Capital Adequacy for Banks: Why the New Standard Falls Short
Avinash Persaud (PIIE) Nov 19, 2015
Can systemically important banks now fail without placing the rest of the financial system or public funds at risk? Has "too-big-to-fail" been dealt with? "Yes" was the courageous judgment of the Financial Stability Board (FSB) when it unveiled its new capital adequacy regime on November 9 for the 30 banks identified as global systemically important banks (G-SIBs).

TPP Leaders Push for Swift Ratification of Trade Deal Following Manila Meet
Bridges, Volume 19, Number 39 Nov 19, 2015
Leaders from the 12 Trans-Pacific Partnership (TPP) countries met on Wednesday in the Philippines to discuss next steps in implementing the trade pact, pushing for its swift approval while highlighting the interest of potential new entrants from the Asia-Pacific region.

Brazil, EU Propose Tighter WTO Rules on Agricultural Export Competition
Bridges, Volume 19, Number 39 Nov 19, 2015
The EU has joined forces with Brazil and five other farm exporting countries to propose tighter WTO rules on export subsidies and similar measures, one month ahead of the global trade body's ministerial conference in Nairobi, Kenya.

EU, Australia Begin Preparations to Launch Trade Talks
Bridges, Volume 19, Number 39 Nov 19, 2015
The EU and Australia will begin work with a view to launching free trade talks in 2017, leaders from both sides confirmed on Sunday following a meeting in the Turkish city of Antalya on the sidelines of the G-20 leaders' summit.

The Misery of Brazil's Economy
Monica de Bolle (PIIE) Nov 19, 2015
The sum of the inflation and the unemployment rates, referred to as the misery index, is often used as a measure of economic well-being. Brazil's runaway inflation and rising unemployment over the course of 2015 show a steep increase in misery.

Truth-Telling on China's Economy
A. Gary Shilling (Bloomberg View) Nov 19, 2015
It's shifting away from an unhealthy dependence on exports.

EU Without Open Borders Isn't the EU
Noah Feldman (Bloomberg View) Nov 19, 2015
Refugee crisis shows how Europe needs to do more to integrate.

France Needs Both Economic Growth And Security
Therese Raphael (Bloomberg View) Nov 19, 2015
No trade-off here: More economic stability is in France's security interest.

Capital stock of many industrial sectors is crumbling in Germany
Eric Heymann (DB Research) Nov 19, 2015
In the German manufacturing sector real net fixed assets in 2013 were 0.8% lower than in 2000. Looking at the average, however, masks the fact that only four out of 19 manufacturing sectors expanded their capital stock compared with 2000. The major importance of the automotive industry is striking. Its net fixed capital formation exceeded that of all other manufacturing sectors combined between 1995 and 2006 and has done so since 2009. The auto industry boosted its real net fixed asset in Germany between 2000 and 2013 by nearly 38%. In the energy-intensive sectors, by contrast, the capital stock in Germany continues to shrink, a trend that has been ongoing for years. If economic policy conditions in Germany were to deteriorate in future, we would expect manufacturing companies to invest even more heavily abroad.

It Pays Too Well to Run a Russian State Company
Leonid Bershidsky (Bloomberg View) Nov 19, 2015
Huge salaries reflect the companies' bloated role in the economy.

Dark Pools Can't Keep Themselves Clean
Noah Feldman (Bloomberg View) Nov 19, 2015
Even sophisticated users will face temptation without disclosure.

The Rise and Fall of Shadow Banking in China
Sara Hsu (Diplomat) Nov 19, 2015
How shadow banking became the catch-all for riskier finance.

The Most Perverse Story to Justify Inequality
Eric Michael Johnson (Evonomics) Nov 19, 2015
While this perspective may be common among those primates who live in the concrete jungle of Wall Street, it doesn’t hold true for the natural world more generally.

Crashing the SDR
Benjamin J. Cohen (Project Syndicate) Nov 19, 2015
The decision to include the Chinese renminbi in the currency basket that determines the value of the IMF's reserve asset seems to be a done deal. Far from having been made on solid economic grounds, the decision can only be understood as political, which means that the long-term consequences are likely to be regrettable.

The Commodity Roller Coaster
Carmen Reinhart (Project Syndicate) Nov 19, 2015
The details may change, but the global commodity super-cycle follows a familiar pattern. The question now is: Has the ongoing commodity-price downturn run its course, or will the recent break soon be giving way to another drop?

Made in Africa: Some new thinking for Africa Industrialization Day
John Page (Brookings) Nov 19, 2015
While the annual commemoration should be reason to celebrate, the region's industrial decline is becoming a growing matter of concern for African leaders.

IMF programmes: Greece vs Iceland
Margarita Katsimi and Gylfi Zoega (VoxEU) Nov 19, 2015
Iceland and Greece were both seriously affected by the Global Crisis, yet their experiences with the implemented IMF programmes have been quite different. In Iceland the programme has been a success, whereas the one in Greece has been a failure. This column explains why this happened. First, Iceland’s external debt was de jure private, while Greece’s external debt was sovereign debt. Second, Iceland has its own currency, making it easy to create a current account surplus through a lower exchange rate. Finally, the government of Iceland took full ownership of the IMF programme, which was not the case in Greece. Iceland and Greece were both seriously affected by the Global Crisis, yet their experiences with the implemented IMF programmes have been quite different. In Iceland the programme has been a success, whereas the one in Greece has been a failure. This column explains why this happened. First, Iceland’s external debt was de jure private, while Greece’s external debt was sovereign debt. Second, Iceland has its own currency, making it easy to create a current account surplus through a lower exchange rate. Finally, the government of Iceland took full ownership of the IMF programme, which was not the case in Greece.

Distance to frontier, productivity distribution and travelling waves
Jan Lorenz, Fabrizio Zilibotti and Michael König (VoxEU) Nov 19, 2015
Recieved wisdom would make you think that you need lots of small firms that are innovating in order to push productivity in an economy. This column provides data suggesting that large firms with high productivity growth can act as technological leaders and supply the economy with a continuous stream of innovations. Overly strong patent protection can significantly reduce growth and increase inequality. Recieved wisdom would make you think that you need lots of small firms that are innovating in order to push productivity in an economy. This column provides data suggesting that large firms with high productivity growth can act as technological leaders and supply the economy with a continuous stream of innovations. Overly strong patent protection can significantly reduce growth and increase inequality.

Rebooting the Eurozone: Step 1 – Agreeing a Crisis narrative
Richard Baldwin, Thorsten Beck, Agnès Benassy-Quéré, Olivier Blanchard, Giancarlo Corsetti, Paul De Grauwe, Wouter den Haan, Francesco Giavazzi, Daniel Gros, Sebnem Kalemli-Ozcan, Stefano Micossi, Elias Papaioannou, Paolo Pesenti and Christopher Pissarides (VoxEU) Nov 19, 2015
The Eurozone Crisis, which broke out in May 2010, is a long way from finished. Worse yet, many of the fragilities and imbalances that primed the monetary union for the Crisis are still present. EZ decision-makers will never agree upon the changes needed to prevent future crises unless they agree upon the basic facts that explain how the EZ Crisis got so bad and lasted so long. CEPR Policy Insight 85 presents a consensus narrative of the causes. The Eurozone Crisis, which broke out in May 2010, is a long way from finished. Worse yet, many of the fragilities and imbalances that primed the monetary union for the Crisis are still present. EZ decision-makers will never agree upon the changes needed to prevent future crises unless they agree upon the basic facts that explain how the EZ Crisis got so bad and lasted so long. CEPR Policy Insight 85 presents a consensus narrative of the causes.

Robots will enrich not replace us
David Willetts (FT) Nov 20, 2015
It is not that machines will take jobs but that they will do so too slowly.

Leave Bitcoin Alone. Abolish Cash Instead.
Leonid Bershidsky (Bloomberg View) Nov 20, 2015
Terrorists find the virtual currencies too risky for now.

The World Isn't Ready for Gross National Happiness
Noah Smith (Bloomberg View) Nov 20, 2015
Measuring personal satisfaction is too much art, not enough science.

The Fed’s Dollar Distraction
Gita Gopinath (Project Syndicate) Nov 20, 2015
The Fed has delayed increasing interest rates, because policymakers expect that dollar appreciation, by lowering import prices, will undermine their ability to meet their 2% inflation target. But while it is true that some global developments, such as falling commodity prices, push down US inflation, dollar appreciation does not.

Rehearsals for Retirement
Brigitte Miksa (Project Syndicate) Nov 20, 2015
Over the rest of the twenty-first century, the global population is expected to keep growing; even more important, it will keep growing older. Only four countries – Finland, Norway, the Netherlands, and New Zealand – have adequately prepared to face the looming wave of retirees.

Africa Industrialization Day through the micro lens
Eyerusalem Siba (Brookings) Nov 20, 2015
Answers to six questions on the state of Africa's industrial sector for small and medium enterprises, growth prospects, challenges, and what the future holds for the region's development.

A new historical database on world human development
Leandro Prados de la Escosura (VoxEU) Nov 20, 2015
Human development provides a long-run view of well-being. This column presents a new historical index of human development covering 157 countries from the mid-19th century. The index gives a comprehensive view on human development on the global scale, and stresses the health and knowledge dimensions of well-being. Human development provides a long-run view of well-being. This column presents a new historical index of human development covering 157 countries from the mid-19th century. The index gives a comprehensive view on human development on the global scale, and stresses the health and knowledge dimensions of well-being.

A blueprint for overcoming systemic risk
Avinash Persaud (VoxEU) Nov 20, 2015
As the recent Financial Stability Board decision on loss-absorbing capital shows, repairing the financial system is still a work in progress. This column reviews the author’s new book on the matter, Reinventing Financial Regulation: A Blueprint for Overcoming Systemic Risks. It argues that financial institutions should be required to put up capital against the mismatch between each type of risk they hold and their natural capacity to hold that type of risk. As the recent Financial Stability Board decision on loss-absorbing capital shows, repairing the financial system is still a work in progress. This column reviews the author’s new book on the matter, Reinventing Financial Regulation: A Blueprint for Overcoming Systemic Risks. It argues that financial institutions should be required to put up capital against the mismatch between each type of risk they hold and their natural capacity to hold that type of risk.

Germany’s industry: Does Deutschland do digital?
Economist Nov 21, 2015
Europe’s biggest economy is rightly worried that digitisation is a threat to its industrial leadership

The Four Forces Driving Angela Merkel
Stephan Richter (Globalist) Nov 21, 2015
Seizing America’s “future preference” and having grown up behind the “Iron Curtain” help explain Merkel’s approach to the refugee crisis.

Playing with Foreign Investment Policy
EPW Vol. L, No. 46-47 Nov 21, 2015
The new policy on foreign investment is only concerned with augmenting inflows.

The political aftermath of financial crises: Going to extremes
Manuel Funke, Moritz Schularick and Christoph Trebesch (VoxEU) Nov 21, 2015
Recent events in Europe provide ample evidence that the political aftershocks of financial crises can be severe. This column uses a new dataset that covers elections and crises in 20 advanced economies going back to 1870 to systematically study the political aftermath of financial crises. Far-right parties are the biggest beneficiaries of financial crises, while the fractionalisation of parliaments complicates post-crisis governance. These effects are not observed following normal recessions or severe non-financial macroeconomic shocks. Recent events in Europe provide ample evidence that the political aftershocks of financial crises can be severe. This column uses a new dataset that covers elections and crises in 20 advanced economies going back to 1870 to systematically study the political aftermath of financial crises. Far-right parties are the biggest beneficiaries of financial crises, while the fractionalisation of parliaments complicates post-crisis governance. These effects are not observed following normal recessions or severe non-financial macroeconomic shocks.

The Public Perils of Private Debt
Tim Sablik (FRBR Econ Focus) Nov 21, 2015
Debt makes the wheels of commerce turn. But under certain circumstances, it can also heighten financial crises and recessions.

End the folly of a borderless Europe
Wolfgang Munchau (FT) Nov 22, 2015
There are, in principle, two fixes, repair the Schengen area or revert to national systems.

The Future of Finance
Clive Crook (Bloomberg View) Nov 22, 2015
A new book argues for a very old kind of banking.

You're Not the Yuan That I Want
Christopher Balding (Bloomberg View) Nov 22, 2015
Establishing the renminbi as a true reserve currency will require Beijing to give up control.

Facing up to the long-term fiscal challenges
Alan J. Auerbach (EAF) Nov 22, 2015
Many countries — especially more advanced industrial countries, which are already struggling with high debt levels after the global financial crisis — also confront substantial and largely unrelated fiscal challenges over the longer term.

Fed risks using wrong tool to tighten
Manmohan Singh (FT) Nov 23, 2015
Expanding reverse repo programme would rust financial plumbing.

We feel Europe’s fear — and need its help
Jamal Khashoggi (FT) Nov 23, 2015
Isis is a threat but so is the general chaos and collapse in the Arab world.

Macri’s choice: shock treatment or gradual change
John Paul Rathbone (FT) Nov 23, 2015
Latin America’s pink tide ebbs further with victory of Buenos Aires mayor.

Reviving Argentina
WSJ Nov 23, 2015
Three ways Macri can restore the rule of law and investor confidence.

Want Innovation? Try Raising Minimum Wages
Noah Smith (Bloomberg View) Nov 23, 2015
When labor costs rise, innovators go to work.

Pragmatism in Climate Policy
Oliver Geden (Project Syndicate) Nov 23, 2015
The diplomatic effort to forge an international agreement to mitigate climate change is undergoing a fundamental shift. Rather than attempting to base an accord on legally binding limits on greenhouse-gas emissions, the new approach – both a step back and a step forward – relies on voluntary commitments by individual countries.

A Hard Look at a Soft Global Economy
Michael Spence (Project Syndicate) Nov 23, 2015
The global economy is settling into a slow-growth rut, steered there by policymakers’ inability or unwillingness to address major impediments at a global level. The question is whether an honest assessment of the impediments to economic performance worldwide will spur policymakers into action.

China’s Multilateral Financial Mobilization
Erik Berglöf (Project Syndicate) Nov 23, 2015
China's impending membership in the European Bank for Reconstruction and Development is only one instance of the country's rapidly growing role in the major international financial institutions. The question now is whether China will spur change within these institutions, or vice versa.

Technological Unemployment and the Future of Work
Irving Wladawsky-Berger (Pieria) Nov 23, 2015
How are job markets likely to evolve in our 21st century digital economy?

Global Fallout from China's Industrial Slowdown
Mark Spiegel (FRBSF Econ Letter) Nov 23, 2015
China’s demand for imports helps support the global economic recovery, so China’s recent economic slowdown has caused international concern. China’s slowdown is concentrated in the industrial sector, while its emerging service sector has shown much new strength. However, China’s service sector is relatively closed and relies only modestly on imports. Accordingly, service sector growth is unlikely to offset the adverse implications of a slowing China for global trade.

The anti-poor effects of large exchange rate devaluations
Javier Cravino and Andrei Levchenko (VoxEU) Nov 23, 2015
Large exchange rate swings remain a prominent and recurring feature of the world economy. This column uses household consumption patterns to examine the distributional impact of the devaluation of the peso during Mexico’s ‘Tequila Crisis’. Cost of living increases are found to be 1.25 to 1.6 times higher for the poor compared to the rich. In the interests of equity, exchange rate policy should take account of such distributional impacts. Large exchange rate swings remain a prominent and recurring feature of the world economy. This column uses household consumption patterns to examine the distributional impact of the devaluation of the peso during Mexico’s ‘Tequila Crisis’. Cost of living increases are found to be 1.25 to 1.6 times higher for the poor compared to the rich. In the interests of equity, exchange rate policy should take account of such distributional impacts.

A new historical database on economic freedom in OECD countries
Leandro Prados de la Escosura (VoxEU) Nov 23, 2015
Indices of economic freedom refer mostly to the recent past, making policy prescriptions difficult to draw. This column presents a new historical index of economic liberty covering 21 OECD countries for the period 1850-2007. Over time, progress in economic liberty has derived from different factors, but improvements in legal structures and property rights emerge as the main forces behind the long-term gains. Indices of economic freedom refer mostly to the recent past, making policy prescriptions difficult to draw. This column presents a new historical index of economic liberty covering 21 OECD countries for the period 1850-2007. Over time, progress in economic liberty has derived from different factors, but improvements in legal structures and property rights emerge as the main forces behind the long-term gains.

Why Not Just Print More Money?
John Cassidy (New Yorker) Nov 23, 2015
A prominent economist has a radical proposal for stimulating the economy: just add money to everyone’s bank account. It is crazy enough to work?

South Africa and the ‘Belindia’ trap
Martin Wolf (FT) Nov 24, 2015
The legacy of injustice has shaped the country. Now it needs growth, of the right kind.

HBOS collapse and the winner’s curse
John Kay (FT) Nov 24, 2015
Most groups hit in the crisis were crippled by losses in areas far from their principal business.

QE has clouded market vision of normal
John Plender (FT) Nov 24, 2015
Changes in policy are often accompanied by market disruption.

Don't Blame the Fed for Low Rates
William Poole (WSJ) Nov 24, 2015
Long-term rates reflect weak job creation and credit demand, both a result of President Obama’s poor economic stewardship.

Renminbi Inclusion in SDR--More about Financial Reform
Zixuan Huang and Nicholas R. Lardy (PIIE) Nov 24, 2015
The International Monetary Fund (IMF) will decide soon whether or not to add the renminbi to its Special Drawing Rights (SDR) basket. The Fund's review of this issue last summer focused on two issues.

What Mauricio Macri Means for Brazil
Monica de Bolle (PIIE) Nov 24, 2015
In a presidential runoff on Sunday, Mauricio Macri of the opposition alliance Cambiemos became Argentina's new president, ending over a decade of so-called Kirchnerism. While opening up Argentina's economy and turning Kirchnerist economic policy on its head will be a major challenge for the president-elect, especially in view of the Peronist-dominated congress, his election victory is likely to reverberate strongly in neighboring Brazil, which is still mired in economic populism.

The Trouble with International Policy Coordination
Jeffrey Frankel (Project Syndicate) Nov 24, 2015
After a 30-year hiatus, international coordination of macroeconomic policy seems to be back on policymakers’ agenda. Unfortunately, the reasons why coordination fell into abeyance are still with us.

A Banker’s Revolution
Alfred Hannig (Project Syndicate) Nov 24, 2015
Financial regulators are generally known for taking a measured and cautious approach to change. But in the developed world, that reputation is being turned upside down, as central bankers embrace innovative approaches in their quest to broaden participation in the formal financial system.

Argentina's Surprise
Juan de Onis (FA) Nov 24, 2015
Why Macri won---and what it means for the region.

Productivity lessons for Asia’s tiger cubs
Lawrence J. Lau and Jungsoo Park (EABER) Nov 24, 2015
The high and persistent growth of the four Newly Industrialised Economies — also known as the East Asian Tigers: Hong Kong, South Korea, Singapore and Taiwan — from 1970 to 1990 prompted much debate about the drivers of growth in these economies. There have been numerous studies looking into this issue, but they have not yet been able to reach a common conclusion. Understanding the drivers of growth in the Tiger economies can help us grasp the future prospects for growth in the emerging Asian economies, and for Asia more generally — and the supporting policy responses needed.

Leverage and liquidity are risks to watch
Rick Lacaille (FT) Nov 25, 2015
Asset managers must work with regulators to detect problems.

Macri difference will go beyond Argentina
Daniel Lansberg-Rodriguez (FT) Nov 25, 2015
His victory shows change is possible through the ballot box.

We are all Eurasian now
Bruno Maçães (FT) Nov 25, 2015
In the new age of geopolitics Europeans must think on a supercontinental scale.

China’s most powerful weapon is trade
David Pilling (FT) Nov 25, 2015
Commercial tussles are less dramatic than scraps in the South China Sea but may be more important.

It Could Be Worse: Five Things to Be Thankful for in a Wobbly World Economy
Pedro Nicolaci da Costa (PIIE) Nov 25, 2015
It's all too easy these days to be pessimistic about the global economic outlook in a post-crisis world that has shown itself prone to persistent scrapes and bruises. But in the spirit of Thanksgiving, perhaps it's time to try to take a glass half-full (of wine?) approach to gauging global economic performance.

China’s Macro Disconnect
Stephen S. Roach (Project Syndicate) Nov 25, 2015
China has been highly successful in transforming the industrial structure of its economy from manufacturing to services, but it has made far less progress in boosting private consumption. The country now has no choice but to address the causes of households' high precautionary saving and low discretionary spending.

Argentina’s Fresh Start
Andrés Velasco (Project Syndicate) Nov 25, 2015
For the first time in decades, Argentine voters elected a president who is not a Peronist, a radical, or an army general. If a similar change of power had taken place in France or Brazil, the country’s citizens would be celebrating the birth of a new republic.

How to Save the Schengen Zone
Kathleen R. McNamara (FP) Nov 25, 2015
The treaty that provides for free movement of people through Europe is under threat from all sides. Here’s how to rescue it — and all that it stands for.

Latin America’s Leftists Get a Wake-Up Call
Daniel Lansberg-Rodríguez (FP) Nov 25, 2015
Mauricio Macri's victory in Argentina may lead to a new era of honesty about human rights abuses in Latin America and could serve as a wake-up call for the left.

The Folly of Empire
Antoinette Burton (FA) Nov 25, 2015
The trouble with rise-and-fall narratives.

Ten Questions for the Global Economy
Alessandro Magnoli Bocchi (RGE Monitor) Nov 25, 2015
The fundamental structure of the world economy is changing. While the contribution of services to global output is on the rise, investment and productivity remain stagnant, savings keep accumulating, and growth and inflation decline. Meanwhile, globalization has increased co-dependence: a rising number of countries can influence the world’s economic performance and its financial stability. Yet, the international monetary system is neither fostering an efficient allocation of global capital nor preventing currency volatility. As a result, the global economy is in the middle of a “lost decade”: emerging markets (EMs) struggle with slowing growth, a sizeable external debt, capital outflows and depreciating currencies. Europe’s economies suffer from stagnating growth, separatist politics, a heavy sovereign debt, unfavourable demographics, inflexible labor markets, a migrant crisis and religious divides. Until 2020, the price of oil will stay in the US Dollars (USD) 50-60 range. As the shortcut to recovery is an ‘unfair’ mix of orderly debt restructuring and mild inflation, monetary policy normalization will take longer than expected, buoying the financial markets. As a result, the financial system is reaching an unstable equilibrium. The global economy is weak, the markets are strong, but the trade-off between sustained growth and financial stability is likely to continue. While high volatility will favour traders, for fundamental investors returns are likely to be lower than in recent years.

Markets must get used to price quirks
Dan McCrum (FT) Nov 26, 2015
Less capital and more technology are likely to bring more dislocation.

Britain as ‘most prosperous economy’ is a fantasy
Martin Wolf (FT) Nov 26, 2015
It is right to hope. But the productivity revival remains uncertain.

India must resist carbon imperialism
Arvind Subramanian (FT) Nov 26, 2015
The rich world’s move against fossil fuels is a disaster for poorer states.

Tensions over migration: Barbed rhetoric
Henry Foy and Neil Buckley (FT) Nov 26, 2015
Nationalist and anti-immigrant sentiment in central and eastern European countries are threatening the spirit of EU unity.

New Farm Trade Proposals Reveal WTO Divide over Nairobi Ministerial
Bridges, Volume 19, Number 40 Nov 26, 2015
A slate of new agriculture proposals has revealed that WTO members have significantly different priorities for the organisation's ministerial conference in Nairobi, Kenya, which is scheduled to begin in just under three weeks.

OECD Members Reach Deal to Limit Coal Technology Export Finance
Bridges, Volume 19, Number 40 Nov 26, 2015
Several of the world's richest economies clinched a deal last week to restrict government support for technology exports for coal-fired power plants during a meeting of the Organisation for Economic Co-operation and Development (OECD) that concluded on 17 November in Paris, France.

WTO Members Approve TRIPS Non-Violation Extension, Debate E-commerce Language
Bridges, Volume 19, Number 40 Nov 26, 2015
WTO negotiators have agreed to extend a moratorium on "non-violation and situation" complaints under the organisation's intellectual property rules for an additional two years, forwarding the planned decision to the global trade body's upcoming ministerial conference for adoption.

Japan's Debt Trap Won't Fix Itself
Noah Smith (Bloomberg View) Nov 26, 2015
Tax increases and spending cuts are inevitable.

ECB Failure Ruins 'Short of a Lifetime'
Mark Gilbert (Bloomberg View) Nov 26, 2015
QE isn't accelerating inflation. Bond prices aren't dropping. Too bad for Bill Gross.

Putin Doesn't Mind Oil's Fall
Leonid Bershidsky (Bloomberg View) Nov 26, 2015
The Kremlin lets the ruble slide, and tries to distract Russians from the economic pain.

The Import of Exports
Ricardo Hausmann (Project Syndicate) Nov 26, 2015
Many people wonder whether exports, which aim to satisfy the needs of distant foreign consumers, belong at the center of a country's development strategy. But this is the wrong question: in a market economy, fulfilling the needs of others is the source of our own livelihood.

Can the Islamic State Unify Europe?
Hans-Werner Sinn (Project Syndicate) Nov 26, 2015
If recent events have taught us anything, it is that the biggest threats to the EU stem not from inadequate fiscal risk-sharing, but from insufficient coordination on foreign-policy and security challenges. That is why, instead of continuing to push for unbalanced fiscal integration, the EU must pursue political union.

Europe Isn't Doomed to a Clash of Civilizations
Pankaj Mishra (Bloomberg View) Nov 27, 2015
But out-of-the-box thinking is needed to avert one.

Europe Should Use its Last QE Bullet Wisely
Jean-Michel Paul (Bloomberg View) Nov 27, 2015
Europe should use QE to increase investment, not social spending.

CFM monthly survey: China’s growth slowdown
Angus Armstrong, Francesco Caselli, Jagjit Chadha and Wouter den Haan (VoxEU) Nov 27, 2015
Economists often disagree on China’s prospects. This column provides the results from a survey of top UK-based macroeconomists by the Centre for Macroeconomics (CFM). It turns out that three quarters of the experts believe that China’s annual growth rate will be less than 6% over the next ten years or so. But the panel is divided on whether the slowdown will have a significant impact on the UK economy. Economists often disagree on China’s prospects. This column provides the results from a survey of top UK-based macroeconomists by the Centre for Macroeconomics (CFM). It turns out that three quarters of the experts believe that China’s annual growth rate will be less than 6% over the next ten years or so. But the panel is divided on whether the slowdown will have a significant impact on the UK economy.

The Trouble With Interest Rates
J. Bradford DeLong (Project Syndicate) Nov 28, 2015
Conservative economists are wrong to accuse central banks of keeping interest rates unnaturally low. On the contrary, interest rates are higher than they should be, and central banks are doing the best they can in a difficult situation.

Worker Protection in the Gig Economy
Laura Tyson and Lenny Mendonca (Project Syndicate) Nov 28, 2015
Digital platforms are transforming how labor markets operate and revolutionizing the nature of work. In many ways, this is a positive development, but it is also undermining the traditional employer-employee relationships that have been the primary channel through which worker benefits and protections have been provided.

China’s Latest Five-Year Plan
Martin Feldstein (Project Syndicate) Nov 28, 2015
Last month, the Chinese government released a preliminary summary of its 13th Five-Year Plan. While this is an important document for understanding where China is headed in the 2016-2020 period, China’s five-year plans just aren’t what they used to be.

Accounting for differences in Europe’s post-Crisis growth
Kevin Daly and Tim Munday (VoxEU) Nov 28, 2015
The fallout from the Global Crisis and its aftermath has been deeply damaging for European output. This column uses a growth accounting framework to explore the pre-Crisis and post-Crisis growth dynamics of several European countries. The weakness of post-Crisis real GDP in the Eurozone manifested itself in a decline in employment and average hours worked. However, decomposing growth for the Eurozone as a whole conceals significant differences across European countries, in both real GDP growth and its factor inputs. The fallout from the Global Crisis and its aftermath has been deeply damaging for European output. This column uses a growth accounting framework to explore the pre-Crisis and post-Crisis growth dynamics of several European countries. The weakness of post-Crisis real GDP in the Eurozone manifested itself in a decline in employment and average hours worked. However, decomposing growth for the Eurozone as a whole conceals significant differences across European countries, in both real GDP growth and its factor inputs.

Pro-poor bias of trade: New research on the expenditure channel
Pablo Fajgelbaum and Amit Khandelwal (VoxEU) Nov 28, 2015
Recent studies have established a causal link between trade and rising wage inequality. This column suggests there is also a pro-poor bias of trade. In moving from autarky to trade, the relative prices of goods consumed intensively by the poor, such as food, fall more. The gains from opening to trade are estimated at 63% for the 10th percentile of the income distribution and 28% for the 90th percentile. Recent studies have established a causal link between trade and rising wage inequality. This column suggests there is also a pro-poor bias of trade. In moving from autarky to trade, the relative prices of goods consumed intensively by the poor, such as food, fall more. The gains from opening to trade are estimated at 63% for the 10th percentile of the income distribution and 28% for the 90th percentile.

Election-day vote buying: Evidence from monetary aggregates
Toke S. Aidt, Zareh Asatryan, Lusine Samvel Badalyan and Friedrich Heinemann (VoxEU) Nov 28, 2015
Central bank independence was supposed to end politically driven monetary policy. This column discusses new evidence showing a sizeable spike in the growth rate of cash and overnight bank deposits centred on election days. The spike is present in countries with weak political institutions, but not in OECD countries. The cycle seems to be related to the cash demand created by systemic vote buying. Central bank independence was supposed to end politically driven monetary policy. This column discusses new evidence showing a sizeable spike in the growth rate of cash and overnight bank deposits centred on election days. The spike is present in countries with weak political institutions, but not in OECD countries. The cycle seems to be related to the cash demand created by systemic vote buying.

Paris and prosperity for poorer nations
Narendra Modi (FT) Nov 29, 2015
Justice demands that carbon curbs should not limit poorer nations’ ability to grow.

A continent overwhelmed by crises
Wolfgang Münchau (FT) Nov 29, 2015
Too many major events are occurring simultaneously: soon we will need a database to keep track.

Saudi Arabia: The wake-up call
Roula Khalaf, Lionel Barber and Simeon Kerr (FT) Nov 29, 2015
Ensuring stability will be crucial for Riyadh’s power brokers as they face discontent and war Read more >>

China in 2049: The People's Republic's 100th Anniversary
Jean-Pierre Lehmann (Globalist) Nov 29, 2015
What will China look like a century after Mao’s victory in 1949?

Think of Debt as Pollution
Clive Crook (Bloomberg View) Nov 29, 2015
To avoid the next crash, manage the credit cycle.

Will Japan’s corporate governance reform work?
Bruce Greenwald (EAF) Nov 29, 2015
As part of the Abe administration's structural reform agenda, Japan's new corporate governance code focuses on making Japanese corporations more transparent, more responsive to shareholders.

TPP unveiled
Jayant Menon (VoxEU) Nov 29, 2015
After more than five years, negotiations surrounding the Trans-Pacific Partnership (TPP) have finally been concluded. Yet, there is a lot that needs to be done before the agreement comes into force, and there is no certainty that it will. This column examines what TPP has achieved so far, what it has still not achieved, and the next steps involved, including the likely fate of the agreement itself. After more than five years, negotiations surrounding the Trans-Pacific Partnership (TPP) have finally been concluded. Yet, there is a lot that needs to be done before the agreement comes into force, and there is no certainty that it will. This column examines what TPP has achieved so far, what it has still not achieved, and the next steps involved, including the likely fate of the agreement itself.

Sovereign wealth funds in the new era of oil
Rabah Arezki, Adnan Mazarei and Ananthakrishnan Prasad (VoxEU) Nov 29, 2015
As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. This column goes through the evidence, suggesting that the low price environment is likely to test the relationship between governments in oil-exporting countries and their sovereign wealth funds, at a time when spending is going up. As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. This column goes through the evidence, suggesting that the low price environment is likely to test the relationship between governments in oil-exporting countries and their sovereign wealth funds, at a time when spending is going up.

World powers are aligned in Paris
Jeffrey Sachs (FT) Nov 30, 2015
An agreement is needed to prevent countries from freeriding on others’ efforts.

Trillions on carbon curbs is immoral
Bjorn Lomborg (FT) Nov 30, 2015
Spending money that way, while billions lack basic necessities, is wrong.

Divergence is key for investors for 2016
Mohamed El-Erian (FT) Nov 30, 2015
Several dislocations have developed this year that affect portfolio drivers.

Lessons From Cellphones on Distribution of Wealth
Sindya N. Bhanoo (NYT) Nov 30, 2015
A new study reports that in developing countries, mobile phone information can be used to determine the geographic distribution of wealth and poverty.

The Choice Facing China as Its Currency Becomes More Global
Neil Irwin (NYT) Nov 30, 2015
Among the benefits are more geopolitical sway. The cost? A loss of control.

The Yuan and Chinese Reform
WSJ Nov 30, 2015
A freely traded currency would make the economy more competitive.

Euro-Dollar Parity Again?
Simeon Djankov (PIIE) Nov 30, 2015
The euro is again heading towards parity with the dollar—after 13 years. The currency ended last week at 1.059 to the dollar. That's up from a 2015 low of $1.0458 in March. The euro was last at dollar parity in December 2002, having peaked at $1.60 in July 2008.

The Case for Further Policy Stimulus in the Euro Area
Angel Ubide (PIIE) Nov 30, 2015
The European Central Bank (ECB) signaled in October that it would consider an increase in monetary stimulus in December, noting that it was monitoring "the strength and persistence of the factors that are currently slowing the return of inflation to levels below, but close to, 2 percent in the medium term." Economic activity in the euro area has improved somewhat recently, but the case for further stimulus is overwhelming.

Paris Climate Talks Need to Focus on Innovation
Robert D. Atkinson (Globalist) Nov 30, 2015
Only when the unsubsidized cost of clean energy is cheaper than fossil fuels will nations switch en masse.

The Problem With "Rules-Based" Monetary Policy
Tommy Behnke (Mises Daily) Nov 30, 2015
The phrase “rules-based monetary policy” has frequented conservative circles a lot lately.

Reaping the Benefits of Financial Integration: What Is To Be Done?
Mitsuhiro Furusawa (IMF) Nov 30, 2015
The challenges and risks of financial development and integration, and the policies that can ensure success.

The Yuan Grows Up
Bloomberg View Nov 30, 2015
Its elevation to global reserve status will be a milestone for the world economy.

Eight Ways to Save the Planet
Christopher Flavelle (Bloomberg View) Nov 30, 2015
Cheaper nuclear. Catching carbon. Smarter taxes. Experts offer some ideas for the world leaders talking climate in Paris.

Europe’s Three Fault Lines
Jean Pisani-Ferry (Project Syndicate) Nov 30, 2015
Ten or 20 years ago, the existential question facing the EU was whether it still had a purpose in a globalized world. Today, the question is whether Europe can respond effectively to major external shocks.

China’s Twin Challenges
Adair Turner (Project Syndicate) Nov 30, 2015
This month’s monetary-policy statement from the People’s Bank of China contained a striking statement: “If endogenous momentum is inadequate and returns on investment low, growth must rely on debt to a great extent.” Those words highlight the twin challenges – real and financial – the Chinese economy now confronts.

Failure at the Financial Stability Board
Simon Johnson (Project Syndicate) Nov 30, 2015
At least since the fall of 2008, leading economies’ officials have agreed – in principle – that something must be done about financial firms that are “too big to fail.” But a recent report released by the Financial Stability Board underscores how little progress has been made.

Managing a World of Great Powers
Javier Solana (Project Syndicate) Nov 30, 2015
Great-power competition – like that playing out today among a long-dominant US, a more active Russia, and a rising China – is nothing new. But its persistence does not – indeed, must not – prevent cooperation on major security issues, like the crisis in Syria.

Europe’s Barbarians Inside the Gate
Nouriel Roubini (Project Syndicate) Nov 30, 2015
For Europe, solidarity begins at home. That means supporting aggregate demand and pro-growth reforms to ensure a more resilient recovery of jobs and incomes – and thereby beating back the populists and nationalists currently gaining ground throughout the continent.

The Promise of China’s G-20 Presidency
Andrew Sheng and Xiao Geng (Project Syndicate) Nov 30, 2015
Next year, the G-20 has an opportunity to show that it can deal effectively with global crises, from plummeting growth to transnational terrorism. With China – a country that has proved its willingness to put its money where its mouth is – at the helm, greater international cooperation and economic integration is certainly possible.

German wage moderation and the EZ Crisis
Peter Bofinger (VoxEU) Nov 30, 2015
The EZ ‘consensus narrative’ argues the Crisis should not be thought of as a government debt crisis in its origin. Instead it regards large intra-EZ capital flows that emerged in the decade before the Crisis as the real culprit. This column argues that while the narrative is correct, it is also incomplete. With its focus on the deficit countries, it neglects the role of Germany, by far the largest member state, and its contribution to the imbalances in the years preceding the Crisis. A narrative that does not account for the effects of the German wage moderation is incomplete. The EZ ‘consensus narrative’ argues the Crisis should not be thought of as a government debt crisis in its origin. Instead it regards large intra-EZ capital flows that emerged in the decade before the Crisis as the real culprit. This column argues that while the narrative is correct, it is also incomplete. With its focus on the deficit countries, it neglects the role of Germany, by far the largest member state, and its contribution to the imbalances in the years preceding the Crisis. A narrative that does not account for the effects of the German wage moderation is incomplete.

Towards a new WTO: An institutional approach
Kent Jones (VoxEU) Nov 30, 2015
WTO members have somehow found it extremely difficult, in the 21st century, to reach a comprehensive multilateral agreement to expand mutual gains from trade. This column argues that success in expanding global trade will depend on major trading countries’ willingness to seek new institutional paths to multilateral agreements, through new negotiating modalities, openness to the expansion of regional agreements to new members, and in establishing reciprocity expectations for members according to their development status.