News & Commentary:

Articles/Commentary

'No deal’ Brexit would justify another referendum
Martin Wolf (FT) Nov 1, 2018
In this game of chicken, the EU may wrongly expect the UK to swerve on Irish backstop.

What the lessons of 1918 can teach today’s world leaders
Simon Kuper (FT) Nov 1, 2018
No other ideology has the emotive power of nationalism. But using it in moderation is tricky.

Foreign investor faith in Tokyo again proves fragile
Leo Lewis (FT) Nov 1, 2018
Japan’s bull-bear debate in the final months of 2018 centres on value.

A Better China Trade Strategy
WSJ Nov 1, 2018
The U.S. hits a Chinese company for allegedly stealing Micron’s secrets.

Talking their way out of the China-US trade war
Gordon Watts (AT) Nov 1, 2018
Influential economists and professors at the prestigious Peking University map out their economic visions of the future

Ottawa Ministerial: Officials Call for "Sustained and Meaningful Political Engagement" for WTO Update
Bridges, Volume 22, Number 36 Nov 1, 2018
Thirteen international trade ministers gathered in Ottawa on 24-25 October to issue a call for action to strengthen the World Trade Organization (WTO), with officials weighing options for modernising the global trade club by way of updating its negotiation process, improving its dispute settlement system, and ensuring the effective implementation of existing rules, among other ideas.

Australia, Canada, New Zealand Ratify CPTPP, Setting Stage for Trade Deal's Entry into Force
Bridges, Volume 22, Number 36 Nov 1, 2018
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has now been ratified by six signatories, meeting the minimum threshold to take effect from the end of this year.

Reflections on International Spillovers and Cooperation
David Lipton (IMF) Nov 1, 2018
Technological advances, the rapid growth of trade, and the explosion of gross capital flows have produced cross-border integration that perhaps go beyond the imagination of this institution’s founders. But for all its benefits, this integration also has left some people behind and produced risks and crises that have tested policy makers—not least the Global Financial Crisis—and will continue to test them.

Yes, China’s Lending Is a Problem for Debt-Vulnerable Countries
Scott Morris (CGD) Nov 1, 2018
An analysis by the IMF suggests that China’s lending has become a particular problem in countries already vulnerable to debt distress. The highly politicized charges of “debt trap diplomacy” coming from the United States this year have led to counter charges that the role of China’s lending is greatly exaggerated in relation to other sources of financing for developing economies.

Trump and Navarro's Mistaken Assumptions about Trade Deficits
Joseph E. Gagnon (PIIE) Nov 1, 2018
President Donald Trump has a logically coherent strategy for achieving the goal of reducing the US trade deficit, one of his stated priorities. The problem is that his strategy is based on totally wrong assumptions about trade deficits.

The Bank of Japan Is Too Focused on 2 Percent
Daniel Moss (Bloomberg View) Nov 1, 2018
Loosening the inflation target would provide much-needed leeway.

Wake Up, U.K.! You’ll Need Those EU Workers After Brexit.
Therese Raphael (Bloomberg View) Nov 1, 2018
More than 3.5 million Europeans enrich British life. Where’s the plan to keep them?

Ta-da! America’s Shale Boom Makes a New Mexico
Liam Denning (Bloomberg View) Nov 1, 2018
U.S. oil and gas production keeps defying expectations, including a nation-sized surge this year.

Don’t Expect Robots to Take Everyone’s Job
Noah Smith (Bloomberg View) Nov 1, 2018
For 200 years, automation has displaced humans. And what do you know, almost everyone is working.

Winter Is Coming to the UK
Harold James (Project Syndicate) Nov 1, 2018
With the deadline for a Brexit deal fast approaching, British Prime Minister Theresa May not only has run out of cards to play, but was never playing from a full deck to begin with. That is because the force behind Brexit is a notion of sovereignty that is better suited to "Game of Thrones."

The Reforms China Needs
Shang-Jin Wei (Project Syndicate) Nov 1, 2018
Under pressure from Donald Trump’s tariffs, China might be tempted to try to stimulate aggregate demand using short-term measures, much as it did after the 2008 global economic crisis. A better strategy, however, would be to focus on structural reforms.

Lessons for the Crisis Fighters
Andrew Metrick (Yale Insights) Nov 1, 2018
One challenge in studying a once-in-a-century financial crisis is that it only happens once in a century; lessons aren’t easily passed down to the people who will face the next one. Yale SOM’s Andrew Metrick and a team at the Yale Program on Financial Stability are studying the global financial crisis of 2007-09, working to create the knowledge and tools to prepare the next generation of policymakers who find themselves in the eye of a monetary maelstrom.

How to Save Globalization
Kenneth F. Scheve and Matthew J. Slaughter (FA) Nov 1, 2018
Rebuilding America’s ladder of opportunity,

KORUS Amendments: Minor Adjustments Fixed What Trump Called "Horrible Trade Deal"
Jeffrey J. Schott and Euijin Jung (PIIE) Nov 1, 2018
The amended Korea-US Free Trade Agreement (KORUS FTA)—quickly negotiated and signed in September 2018—involves only limited changes to the original pact. Schott and Jung assess what was changed as a result of the negotiations and, importantly, what was left off the agenda.The revised deal rectifies problems with Korean implementation of KORUS obligations, revises Korean auto regulations, and extends US import protection for trucks but does not address agricultural issues or rules of origin for autos and parts. On balance, the modest revisions will restrict, not enlarge, bilateral trade. While it has reduced short-term trade friction between Seoul and Washington, the KORUS amendment has not resolved the Trump administration’s fundamental concerns about bilateral trade in autos and parts. Korea remains vulnerable to new US trade protection in that sector.

Britain faces a bumpy road ahead at the WTO
FT View Nov 2, 2018
World trade governance is technically hard and coldly unsentimental.

EM investors can tolerate more risk after correction
Jonathan Wheatley (FT) Nov 2, 2018
Grim period for asset class has not dented inflows as much as expected.

Stocks just a sideshow to the real drama of bonds
Robin Wigglesworth (FT) Nov 2, 2018
Banking’s diminished role in lending has enormous, still under-appreciated implications.

Trouble brewing at central banks at worst moment
William Pesek (AT) Nov 2, 2018
Central banks in Asia such as the RBI in India have been involved in much more testy disputes over monetary policy than the US and the Fed.

Trump branded ‘foolish’ for ‘bungling’ trade war with China
Gordon Watts (AT) Nov 2, 2018
Ex-director at Chinese Academy of Social Sciences says ‘attacks’ on the country will only make it stronger.

What would it take to get US debt under control?
James C. Capretta (AEI) Nov 3, 2018
The recession of 2007 to 2009 and rising expenses for entitlement programs have propelled US government debt to levels not seen since the end of World War II, writes James Capretta. The federal government ran an annual deficit of $779 billion in fiscal year 2018, pushing cumulative federal debt up to about $15.7 trillion, or 78 percent of gross domestic product (GDP). From 1950 to 2008, the average level of federal debt was 40 percent of GDP. The Congressional Budget Office projects federal debt will rise to 152 percent of GDP in 2048 under its extended baseline scenario.

A New Direction for China’s Belt and Road
Bloomberg View Nov 2, 2018
The massive infrastructure development program needs a course correction.

The Fed Might Kill Your Job Faster Than Any Robot
Mark Gongloff (Bloomberg View) Nov 2, 2018
Automation has its upsides, while central bankers are busy fighting inflation that may not materialize.

China Is Changing, Far Beyond Tariffs and Exchange Rates
Daniel Moss (Bloomberg View) Nov 2, 2018
Don’t confuse news with history: The slow turn in China began before Trump’s election and will outlast him.

Workers of the World, Revise!
Minouche Shafik (Bloomberg View) Nov 2, 2018
The social contract governments have made with their citizens is failing. It’s time to write a new one.

End of the Road?
Nisid Hajari (Bloomberg View) Nov 2, 2018
A master plan to project Chinese power, influence and trade across much of the world could well undermine all three.

An Earnest Proposal for Tackling AMR
Jim O'Neill (Project Syndicate) Nov 2, 2018
Despite global recognition of the threat posed by antimicrobial resistance (AMR), not nearly enough has been done to bring new antibiotics into development. With some drug makers now leaving the antibiotics market altogether, there is an urgent need for a realignment of incentives in this vital area of public health.

Forex intervention and reserve management in Switzerland and Israel since the Global Crisis
Alex Cukierman (VoxEU) Nov 2, 2018
The size and nature of an economy have a crucial influence on the measures that can be taken in response to major shocks. This column investigates the forex interventions taken by Switzerland and Israel – two small, open economies – in the wake of the Global Crisis. While discretionary interventions are shown to be preferable when policy rates are strictly positive, this is no longer valid when the effective lower bound is reached and unconventional monetary policy is called for. The transfer of reserve management to a sovereign wealth fund is also discussed.

Euro area interbank market fragmentation
Silvia Gabrieli and Claire Labonne (VoxEU) Nov 2, 2018
By affecting the funding capacity of banks, interbank market fragmentation can hinder the smooth transmission of monetary policy and thus impair the provision of credit to the real economy. This column examines the fragmentation of the euro area interbank market in 2011-15, and finds that the size and quality of banks’ exposures to peripheral countries impaired banks’ access to, and increased the price paid for, interbank funding. This important channel of fragmentation risk was stopped by the ECB’s announcement of possible Outright Monetary Transactions in secondary government bonds markets.

Cooling of trade war rhetoric is respite markets crave
Michael Mackenzie (FT) Nov 3, 2018
Beijing is in a tight corner but the pressure Trump can exert is not boundless.

How the big emerging economies climbed the World Bank business ranking
Economist Nov 3, 2018
China emulates India and zooms up the league table.

Can Central Banks Survive the Age of Populism?
Mihir Sharma (Bloomberg View) Nov 2, 2018
The very idea of independent, technocratic leadership flies in the face of strongman politics.

Emerging markets become more able to withstand a crisis
James Kynge (FT) Nov 4, 2018
Developing economies appear more robust, but China slowdown is biggest threat.

If the Chinese look to the West for a democratic model, what are we showing them?
Fred Hiatt (WP) Nov 4, 2018
Even as China modernizes, the country has a chokehold over its own market forces.

Crunch time for Malaysia on economic reform
Stewart Nixon (EAF) Nov 4, 2018
The commitment to reform in key areas is underwhelming.

Why deregulation ahead of a downturn is dumb
Patrick Jenkins (FT) Nov 5, 2018
The outlook for banks is more worrying than US policymakers intended.

India’s central bank battle has deep roots
Devesh Kapur (FT) Nov 5, 2018
Attacks on the RBI are one example of politicians undermining institutions.

Global slowdown begins to look more troublesome
Gavyn Davies (FT) Nov 5, 2018
October’s collapse in equities may reflect weaker global growth.

Fed bashing is a fool’s game
Lawrence Summers (FT) Nov 5, 2018
But there is a need for pragmatism regarding the independence of central banks.

‘Brazil above all’ — what will Bolsonaro’s motto mean for trade?
Andres Schipani and Joe Leahy (FT) Nov 5, 2018
Many expect new president to follow in Trump’s footsteps.

Iran Sanctions and Oil Prices: Who’ll Feel the Pain?
Clifford Krauss (NYT) Nov 5, 2018
Markets have taken the Trump administration’s move in stride so far. But experts differ on whether a reduction in output could yet prove disruptive.

Should governments favor small firms with special tax regimes?
Santiago Levy (Brookings) Nov 5, 2018
Small firms are responsible for much of the job creation in Latin America.

The Stock Market Correction in Context: Are Equities Cheap or Expensive?
Christopher G. Collins and Joseph E. Gagnon (PIIE) Nov 5, 2018
October was a bad month for the US stock market. The S&P 500 index fell nearly 7 percent in the month, erasing most of its year-to-date gains. This large swing in the market has left many wondering where we stand; are equities cheap or expensive?

Italy-EU Budget Confrontation: Prospects for a Happy Ending
Jacob Funk Kirkegaard (PIIE) Nov 5, 2018
Perhaps predictably, the new anti-establishment Italian coalition government, which took office in May, is engaged in a confrontation with the European Commission over its expansionary budget. With a significantly larger deficit planned for the coming fiscal year, the budget conflicts with the EU’s fiscal rules and reneges on commitments made by the previous government, a development that has already unsettled financial markets.

Has Norway Been Saving Too Much or Too Little? What Intertemporal Accounting Can Tell Us
Joseph E. Gagnon (PIIE) Nov 5, 2018
Despite amassing the world’s largest sovereign wealth fund, Norway has still not been saving enough to meet future budget demands from an aging population, according to a recent paper from economists at the International Monetary Fund (IMF).

Fishermen, SCOTUS, and the IFC: Litigating Development
Vijaya Ramachandran (CGD) Nov 5, 2018
Last week, the United States Supreme Court heard oral arguments in Jam et al v. International Finance Corporation. At stake: the extent to which international organizations including the IFC enjoy immunity from prosecution in US courts.

Redesigning the IDA Private Sector Window for Impact: Some Principles and Potential Practices
Charles Kenny (CGD) Nov 5, 2018
Some ideas on how the World Bank Group could reconstruct the PSW towards real development impact in the next round of IDA funding, to be negotiated in 2019. This could build on some clear principles of design and incorporate a number of tools.

Italy: The New Greece?
Martin Hüfner (Globalist) Nov 5, 2018
Is Italy’s crisis the new Greece? Is it just as bad? Or different? Could it take just as long to resolve it?

Diverging Economies Will Keep Driving Markets
Mohamed Aly El-Erian (Bloomberg View) Nov 5, 2018
Fiscal stimulus is powering U.S. household income and consumption. But Europe and Japan can’t seem to capitalize on a pickup in growth.

Why the U.S.’s Share of Global Wealth Keeps Growing
Leonid Bershidsky (Bloomberg View) Nov 5, 2018
The American-led economic and political system appears to have stopped benefiting other parts of the world.

We’re All Climate Catastrophe Preppers Now
Chris Bryant (Bloomberg View) Nov 5, 2018
Trillions of dollars of financial assets are at risk.

Fed’s Rosy Outlook Snubs History
Danielle DiMartino Booth (Bloomberg View) Nov 5, 2018
Goldilocks herself would blush at the near-perfect jobs and inflation scenario forecast by the central bank.

Steve Eisman’s Big Brexit Short
Lionel Laurent (Bloomberg View) Nov 5, 2018
The money manager’s intervention is hardly surprising, but it is a useful market corrective against too much optimism over Britain’s EU departure.

Grappling With Globalization 4.0
Klaus Schwab (Project Syndicate) Nov 5, 2018
The world is experiencing an economic and political upheaval that will not cease any time soon. The forces of the Fourth Industrial Revolution have ushered in a new economy and a new form of globalization, both of which demand new forms of governance to safeguard the public good.

Investors’ Bright Future in Africa
Akinwumi A. Adesina (Project Syndicate) Nov 5, 2018
For decades, risk, or at least the perception of it, has been a major impediment to Africa's efforts to attract foreign investment. But rapid economic growth and a much-improved business environment are changing how investors view the continent.

The future of pro-EU sentiment in the UK
Barry Eichengreen, Rebecca Mari and Gregory Thwaites (VoxEU) Nov 5, 2018
In the UK’s 2016 referendum on EU membership, young voters were more likely than their elders to vote Remain. Applying new methods to a half century of data, this column shows that this pattern reflects both ageing and cohort effects. Although voters become more Eurosceptical as they age, recent cohorts are also more pro-European than their predecessors, which will offset at least in part the ageing of the electorate going forward. However, the existence of large nationwide swings in sentiment that have little to do with either seasoning or cohort effects suggests that demographic trends are unlikely to be the decisive determinants of future changes in European sentiment.

Italy’s recipe for another eurozone financial mess
FT View Nov 6, 2018
Rome’s budget will not prove a model for the rest of Europe to follow.

Brexit teaches Britain its true place in the world
Robert Shrimsley (FT) Nov 6, 2018
Politicians and voters alike have nourished delusions about the nation’s global role.

We are living in an age of serious risks
Henry Paulson (FT) Nov 6, 2018
Business faces political upheaval while politics grapples with disruption.

Congress Should Set the Fed’s Inflation Target—Ideally at Zero
Amar Bhidé (WSJ) Nov 6, 2018
There’s no evidence that aiming for 2% does any good, and it could do real economic harm.

The consequences of Italy’s increasing dependence on domestic debt-holders
Jan Mazza (Bruegel) Nov 6, 2018
Bruegel’s updated data set of sovereign bond holdings illustrates how a rising share of Italian debt is held by domestic investors – a development with particularly significant implications, in the context of the Italian government’s disagreement with the European Commission over spending plans outlined in its draft budget.

Japan Can Trim Stimulus Without Repeating Mistakes
Daniel Moss (Bloomberg View) Nov 6, 2018
A misstep 18 years ago should not prevent a careful step today.

Railways Put China on a Belt and Road to Nowhere
David Fickling (Bloomberg View) Nov 6, 2018
More often than not, train transport is neither the most logical nor efficient way to move goods, and traffic remains dwarfed by maritime volumes.

Italy Gets a Warning From the 14th Century
Ferdinando Giugliano (Bloomberg View) Nov 6, 2018
The New Hanseatic League’s attempt to beef up the ESM shows a growing mistrust of the European Commission from euro zone members.

Immigrants Remain a Driving Force of U.S. Power
Justin Fox (Bloomberg View) Nov 6, 2018
Newcomers have long made the country stronger. Is there any good reason to think they aren’t doing so now?

After Democracy
Dan Slater (FA) Nov 6, 2018
What happens when freedom erodes?

Why Import Promotion Could Increase China’s Trade Surplus
Shang-Jin Wei (Project Syndicate) Nov 6, 2018
China's just-launched International Import Expo, which will be an annual event, has attracted thousands of companies from dozens of countries with the promise of large orders from Chinese firms. But, if the expo contributes to increasing imports, China's export sectors will benefit, too.

Legal clauses and sovereign bond pricing in the euro area
Marcos Chamon, Julian Schumacher and Christoph Trebesch (VoxEU) Nov 6, 2018
Do investors care about the legal characteristics of sovereign debt? Focusing on the euro area, this column compares sovereign bonds issued under domestic law to those issued under a foreign jurisdiction, which are harder to restructure in a debt crisis since they are out of reach of the borrowing country’s legislature. This legal protection means that foreign law bonds trade at a premium (with lower yields), but only in situations of severe distress such as Greece or Portugal in 2011/2012. In the midst of a crisis, governments can borrow more cheaply by issuing in foreign law.

New Players in a Dollarized World
Michal Romanowski (YaleGlobal) Nov 6, 2018
A multipolar currency landscape could emerge as nations question the US dollar’s near-monopoly.

Can India Become the Next $10 Trillion Economy? That Depends...
Marshall M. Bouton (K@W) Nov 6, 2018
The U.S. and India could become stronger partners if they find a way to deal with threats of sanctions.

Africa’s warp-speed health revolution has dangers
David Pilling (FT) Nov 7, 2018
Poor countries must devote more resources to urban planning and improving sanitation.

The dollar’s role as global reserve currency is safe
Megan Greene (FT) Nov 7, 2018
There is no alternative even if the US government grows tired of the downsides.

Congressional gridlock? Markets are fine with it
Michael Mackenzie (FT) Nov 7, 2018
Traders can get back to focusing on what really worries them — the Fed and China.

China can no longer be counted on for EM growth
Henny Sender (FT) Nov 7, 2018
A slowdown, a changing economic model and a trade war make it a bad long-term bet.

Asia’s free traders aim to transcend Trump’s war
David Hutt (AT) Nov 7, 2018
The Regional Comprehensive Economic Partnership, a still pending Asian trade bloc that would be the world's largest and exclude the US, is gaining momentum to seal the deal.

The Surprising Beneficiaries of Autonomous Trucking
Brink Nov 7, 2018
As a result of several advances in technology—ranging from wirelessly connected trucks traveling together to fleets of autonomous trucks led by a human driver—the operating costs of trucking could drop as much as 40 percent within the next 15 years. The likely beneficiary? Rail.

The fate of the World Bank during a divided US government
Christopher Kilby (Brookings) Nov 7, 2018
In its first two years, the Trump administration has not paid much attention to the World Bank. Recent research suggests that this will change now that Republicans have lost control in the House of Representatives in this week’s midterm elections.

Hong Kong Ponders a Belt and Road to Perdition
Andy Mukherjee (Bloomberg View) Nov 7, 2018
A custodian of public money investing in a Chinese state-led initiative already marred by financial troubles? Please, no.

The Treasury Market Has a Big Chicken-and-Egg Problem
Brian Chappatta (Bloomberg View) Nov 7, 2018
Which came first: record demand for long duration or bond yields at multiyear highs?

The Future of Transport Is the Future of Cities
David Fickling and Elaine He (Bloomberg View) Nov 7, 2018
Migration from rural to urban areas is causing catastrophic pollution levels. That points to a bigger role for train networks.

The Global Impact of a Chinese Recession
Kenneth Rogoff (Project Syndicate) Nov 7, 2018
Most economic forecasts suggest that a recession in China will hurt everyone, but that the pain would be more regionally confined than would be the case for a deep recession in the United States. Unfortunately, that may be wishful thinking.

Brexit vs. the Irish Question
Michael Burleigh (Project Syndicate) Nov 7, 2018
Brexiteers have given no serious thought to what withdrawal from the European Union will mean for Northern Ireland and its relationship with Great Britain. If they had, they would have known that there is no way to bring twenty-first-century reality into line with their nineteenth-century delusions of grandeur.

What Do a Billion Observations Say about Distance and Relationship Lending?
Haoyu Gao, Hong Ru and Xiaoguang Yang (VoxChina) Nov 7, 2018
Using big data of the locations of bank branches and borrowers in China, we document a non-trivial amount of distant lending. The inter-firm network helps banks collect soft information which facilitates the distant lending. We also use novel data of monthly internal loan rating changes to directly measure soft information and find that banks have better soft information and predict delinquent events more accurately for borrowers connected via the inter-firm network.

What Might a Trump Withdrawal from the World Trade Organization Mean for US Tariffs?
Chad P. Bown and Douglas A. Irwin (PIIE) Nov 7, 2018
President Donald Trump has long made clear his disdain for the World Trade Organization (WTO) and has reportedly often stated his desire to pull the United States out of the organization. Given that the president withdrew the United States from the Trans-Pacific Partnership and repeatedly threatened to withdraw from the North American Free Trade Agreement, merely floating the idea that the United States would pull out of the WTO has set off alarm bells in Washington and around the world. Before Trump became president, a US withdrawal from the WTO had never been considered within the realm of possibility. It now raises several important questions. Bown and Irwin address two of them: First, what would be the consequences for US tariffs if the United States withdrew from the WTO? Second, does the president have the legal authority to pull the United States out of the organization and impose higher tariffs without congressional approval? A decision by President Trump to withdraw the United States from the WTO—if deemed legal under US law—could deal a disastrous blow to America’s foreign trade and would likely cripple an organization that has helped foster peaceful commercial relations for over seven decades.

Conflict between the US and China is not inevitable
FT View Nov 8, 2018
Washington could prove Thucydides wrong by being tough and engaged with Beijing.

The economic effects of a Brexit deal are already known
Chris Giles (FT) Nov 8, 2018
A plausible short-term forecast for the post-agreement UK economy is as dull as dishwater.

The enduring benefits of trade
Christopher Hartwell (FT) Nov 8, 2018
EU deals with developing countries show gains on both sides.

US Midterm Elections: Incoming Congress to Face Slate of Trade Policy Considerations
Bridges, Volume 22, Number 37 Nov 8, 2018
The US held its midterm elections on Tuesday 6 November, with Democrats taking control of the House of Representatives and Republicans retaining their majority in the Senate, setting up a divided legislature that could have significant implications for Washington trade policy for the coming two years.

China's International Import Expo Launches, With Cooperation and Open Markets in Focus
Bridges, Volume 22, Number 37 Nov 8, 2018
China kicked off its inaugural International Import Expo (CIIE) this week in Shanghai, bringing together a host of participants from around the world from 5-10 November to discuss the current and future landscape of trade and investment.

Bloomberg Forum Highlights Business-Government Cooperation to Meet Global Challenges
Bridges, Volume 22, Number 37 Nov 8, 2018
The inaugural Bloomberg New Economy Forum wrapped up in Singapore this week, bringing together world business and political leaders to broach imminent challenges around global governance, international trade, technology, climate change, and inclusion against an evolving global economic backdrop

Protectionism Was Threatening Global Supply Chains before Trump
Chad P. Bown (PIIE) Nov 8, 2018
President Trump’s protectionism has a distinctive focus on disrupting US access to global supply chains. This column reveals that the major economies had in fact begun to impose additional trade protection on intermediate inputs even prior to 2016.

China’s “Green” Belt and Road Initiative Isn’t Very Green
scott Morris (CGD) Nov 8, 2018
What would it look like today if major multilateral finance institutions like the World Bank had never adopted the climate agenda as a binding constraint on their operations?

ASEAN and the IMF: Staying on Track with the Sustainable Development Goals
IMF Nov 8, 2018
The member countries of the Association of Southeast Asian Nations (ASEAN) continue to achieve strong growth, projected to average 5.2 percent for 2018. Such growth rates have helped to lower poverty, boost incomes, and improve economic welfare.

Data Is Revolutionizing Risk Finance—Here’s How
Christian Wertli and Steve Harry (Brink) Nov 8, 2018
New ways of using data are starting to revolutionize risk finance—the heart of the historically slow-to-change insurance industry. Our contributors outline the changes and how they are likely to pave the way for faster payouts and faster recovery.

Norway's $1 Trillion Wealth Fund Has a First-World Problem
Marcus Ashworth (Bloomberg View) Nov 8, 2018
The world's biggest SWF wants to cut back on the diversification of its fixed-income portfolio. It deserves a hearing, whatever the experts say.

From Economic Crisis to World War III
Qian Liu (Project Syndicate) Nov 8, 2018
The response to the 2008 economic crisis has relied far too much on monetary stimulus, in the form of quantitative easing and near-zero (or even negative) interest rates, and included far too little structural reform. This means that the next crisis could come soon – and pave the way for a large-scale military conflict.

The Myth of China’s Forced Technology Transfer
Daniel Gros (Project Syndicate) Nov 8, 2018
One of the Trump administration's chief complaints against China is that its trade practices rely on what US authorities call “forced technology transfer.” But the impact of this policy on both foreign companies and China's economy – not to mention the amount of "force" it actually entails – is vastly overestimated.

Central bank balance sheets and monetary policy
Idris Ademuyiwa, Pierre Siklos and Samantha St. Amand (VoxEU) Nov 8, 2018
Changes in central banks’ balance sheets are often used as an indicator of monetary policy stance. This column describes the challenges associated with using balance sheet data to analyse policy. Data for 31 advanced and emerging economies reveal a potentially negative, albeit tenuous, relationship between balance sheet policies and monetary policy objectives. The finding calls for more detailed and consistent balance sheet accounting from central banks around the world.

The not-so-generalised effects of the Generalised System of Preferences
Emanuel Ornelas and Marcos Ritel (VoxEU) Nov 8, 2018
Generalised System of Preferences programmes, a form of nonreciprocal tariff cuts, have proliferated since the 1970s. Using a well-documented dataset of international trade agreements, this column studies the effectiveness of the system on beneficiaries’ aggregate exports. It finds that nonreciprocal tariff preferences can have a strong positive effect on the exports of least-developed countries, provided that they are WTO members. Conversely, other developing economies enjoying nonreciprocal preferences are able to increase exports only if they are not WTO members.

The Commission's Autumn 2018 Forecast
Marco Buti and Björn Döhring (VoxEU) Nov 8, 2018
GDP growth has become more uneven globally, and has shifted into a lower gear in Europe. So it is unsurprising that commentators have started warning about a more severe downturn. The Commission's autumn 2018 European Economic Forecast is no exception in highlighting an unusual amount of uncertainty clouding the economic outlook. The predominance of downside risks implies that macroeconomic outcomes could ex post be worse than our central scenario. This column discusses, on the basis of concrete examples, different types of uncertainty surrounding the still benign forecast baseline. Prudence requires economic policy to prepare for the eventuality of worse outturns.

The economic risks of a more aggressive Trump
FT View Nov 9, 2018
The midterms are over but the 2020 presidential election has already begun.

Why China’s business innovation can survive trade war
Josef Stadler (FT) Nov 9, 2018
US-Sino trade tensions are unlikely to sink country’s billionaire-driven innovative verve.

Japan’s M&A wave risks rolling over minority investors
Leo Lewis (FT) Nov 9, 2018
All eyes on expert panel tasked with making domestic mergers ‘fair and healthy’.

Investors start to fret about US public debt
Gillian Tett (FT) Nov 9, 2018
The CBO calculates that servicing costs will triple in size to nearly $1tn by 2028.

What Have We Learned from Expenditure Conditionality in IMF Programs?
Sanjeev Gupta (CGD) Nov 9, 2018
As part of borrowing from the IMF, the IMF and the country that is borrowing agree on the implementation of certain policies (conditions) during the program period. The implementation of some conditions is not essential for the continuation of the program, such as those pertaining to budgetary expenditures. Their implementation often vary from country to country, and the empirical analysis shows that certain budgetary conditions achieve their intended objectives over the long term, while others do not. In this blog, I explain which budget conditions work, and which don’t work.

Will Brazil Retreat from Its Role in International Development?
Stephan Kyburz (CGD) Nov 9, 2018
Brazil’s newly elected President Jair Bolsonaro has been characterised as an unsavoury anti-globalist—so, will he unwind Brazil’s progress as a development actor over the last two decades? Below, I will highlight Brazil’s important contributions to international development, and argue that Bolsonaro’s best bid to eliminate corruption, restore trust in government institutions, and reinstate the country’s path of prosperity is to finalise Brazil’s OECD membership—becoming its second biggest member by population—while also strengthening partnerships and commitments to fast growing markets in the Global South.

Answering the World Bank’s $75 Billion Question
Scott Morris (CGD) Nov 9, 2018
Next week in Zambia, donors to the World Bank’s financing window for low-income countries, the International Development Association (IDA), meet to discuss IDA’s future. This “mid-term review” is both a stocktaking session and a teeing up of the next round of fundraising for the world’s largest concessional lending fund.

What Robopocalypse?
Charles Kenny (CGD) Nov 9, 2018
The Future of Work is all the rage—the latest World Bank World Development Report is dedicated to the issue, the World Economic Forum and McKinsey have issued multiple reports, and "your job is being stolen by a robot" articles are being churned out at a rate that suggests IBM’s Watson has been reprogrammed to deliver 50 think pieces a day. We’ve been here before, of course: dire warnings of a machine age of mass unemployment have been around for at least a century. Is this time different? I don’t think there’s compelling evidence yet to suggest it is. That said, technology change has long interacted with policy choices to influence who gains from production both nationally and globally, so even if this is business as usual, policy makers should respond.

Don’t Let Development Finance Institutions Water Down Principles on Subsidizing Private Companies
Charles Kenny (CGD) Nov 9, 2018
The DFI Working Group recommendations suggest the best that can be achieved when DFIs use their current approach to project finance and try to add subsidies. That isn’t enough. If development finance institutions including the IFC are going to divert significant aid resources to the private sector, they need to redesign the way they operate so that they can follow best practices on subsidy allocation and reporting.

Are Sound Democratic and Legal Institutions Necessary for Growth?
Cullen S. Hendrix (PIIE) Nov 9, 2018
In the 2000s, the emerging consensus among economists was that if countries had the right economic and legal institutions that govern exchange, property rights, dispute resolution, and corruption, good policies and economic growth would follow.

From Cars to Cornflakes, Libor’s Departure Will Ripple through Corporate America
Paul Cantwell, Adam Schneider and Ming Min Lee (Brink) Nov 9, 2018
The phrase “Libor transition” doesn’t elicit more than a yawn from most corporate treasurers. But how about this: “The terms on your debt maturing after 2021 are going to change, whether you like it or not.” If your company is late to the table, it could prove costly.

The Battle for Italy (Continued)
Florian Hense (Globalist) Nov 9, 2018
The European Commission exposes Italy’s wishful thinking.

For China’s Bad Banks, the Future’s Worse
Nisha Gopalan (Bloomberg View) Nov 9, 2018
State-owned managers of distressed debt are being forced to shrink after overseas adventures.

UBS’s Brexit Dog Whistle Is Loud and Clear
Lionel Laurent (Bloomberg View) Nov 9, 2018
In the race to succeed London as Europe’s financial capital, banks aren’t above throwing their weight around.

The Dollar Is a Haven in Sea of Uncertainty
Gary Shilling (Bloomberg View) Nov 9, 2018
Whether it’s trade wars or the Fed, the greenback’s pre-eminent status among global currencies should remain intact.

Brexit Enters Its Most Dangerous Phase
Therese Raphael (Bloomberg View) Nov 9, 2018
Getting any deal through Parliament will be far harder for Theresa May than reaching an agreement with Brussels.

Populism's Common Denominator
Barry Eichengreen (Project Syndicate) Nov 9, 2018
What unites supporters of authoritarian, upstart politicians like US President Donald Trump and Brazilian President-elect Jair Bolsonaro is revulsion against the corruption of the political process. But voters will learn the hard way that strongman rule exacerbates rather than mitigates corruption.

Forecasting Is Fallible, Yet Necessary
Mark Cliffe (Project Syndicate) Nov 9, 2018
Given that economic forecasters are so often caught out by shocks, one might reasonably ask why they bother. The short answer is that they have no choice, even when they are well aware of the imperfection of their analyses, because people simply cannot live without predictions.

Sovereign debt, banks, and firms’ investment in Italy
Pierluigi Balduzzi, Emanuele Brancati and Fabio Schiantarelli (VoxEU) Nov 9, 2018
The Italian government has decided to pursue an expansionary fiscal policy, with increased welfare spending as its focus. This column uses evidence from the 2010-2012 sovereign debt crisis to explore the potential negative effects of this policy on private investment. It finds that an increase in a bank’s credit default swap spreads leads to lower investment and employment for younger and smaller firms and in the aggregate. These findings suggest the planned fiscal expansion could substantially crowd out private investment.

Cryptocurrencies: Financial stability and fairness
Jon Danielsson (VoxEU) Nov 9, 2018
Cryptocurrencies are primarily held today for speculative reasons and see little economic use outside of that. This column argues that if private cryptocurrencies were to find widespread economic use, either coexisting with or fully displacing fiat money, the result would be increased financial instability, inequality, and social instability.

The Bogus Backlash to Globalization
Charles Kenny (FA) Nov 9, 2018
Resentful nativists oppose free trade and immigration--don’t appease them.

How Universal Basic Income Solves Widespread Insecurity and Radical Inequality
Daniel Nettle (Evonomics) Nov 9, 2018
Answering the four big objections from critics of UBI.

Forty Years on, Is China Still Reforming?
Various (ChinaFile) Nov 9, 2018
In late October, to commemorate the 40th anniversary of the “Reform and Opening” policy, China’s Chairman Xi Jinping visited the southern metropolis of Shenzhen, the first major laboratory for the Party’s post-Mao economic reforms. Like his predecessors, Xi often praises the policy, which the Chinese leader Deng Xiaoping launched in 1978. Xi visited Shenzhen, he said, “so that we can declare to the world: China’s reform and opening up will never stop.” What does this common but vague expression actually mean to Xi? And is Beijing actually reforming and opening up, or stagnating and closing down?

Earth’s natural resources risk being squandered
FT View Nov 11, 2018
Long-term economic growth depends on protecting the planet better.

Shareholder welfare should be the priority
Luigi Zingales (FT) Nov 11, 2018
Most of us would sacrifice some money for our beliefs. So should the companies we own.

The Anti-Manufacturing Tariff
WSJ Nov 11, 2018
Five months after seeking a waiver, Mid Continent still waits.

It wasn’t meant to be like this: PNG’s hosting of APEC
Stephen Howes (EAF) Nov 11, 2018
When PNG put up its hand to host APEC in 2013, its economy was booming. Prospects were bright. And reform was underway, in particular to clamp down on the corruption that has been the country's curse. Fast forward five years and the environment could not be more different.

If OPEC Thought Its Job Was Done, 2019 Will Be a Nasty Shock
Julian Lee (Bloomberg View) Nov 11, 2018
Producers face a supply glut, despite the return of sanctions against Iran. Surging shale means the group will have to extend output cuts.

The lasting impact of the Taiping Rebellion
Lixin Colin Xu and Li Yang (VoxEU) Nov 11, 2018
The Taiping Rebellion, from 1851 to 1864, was the deadliest civil war in history. This column provides evidence that this cataclysmic event significantly shaped China’s Malthusian transition and long-term development that followed, especially in areas where the experiences that stemmed from the rebellion led to better property rights, stronger local fiscal capacity, and rule by leaders with longer-term governance horizons.

The German export machine is in need of an upgrade
FT View Nov 12, 2018
Vulnerability to protectionism is a chance to rebalance the economy.

India’s shadow banks risk repeating crisis-era mistakes
Patrick Jenkins (FT) Nov 12, 2018
Non-bank financial companies have become a crucial part of the country’s economy.

No boom, no bust in US housing
Gavyn Davies (FT) Nov 12, 2018
Higher mortgage rates will not cause a repeat of the 2006-08 slump.

EU could balk at giving the UK more time
Wolfgang Münchau (FT) Nov 12, 2018
The bloc has good reasons not to extend the March 29 deadline for withdrawal.

US mid-term elections and the global economy
Bowen Call (Bruegel) Nov 12, 2018
Democrats won control of the House and Republicans held onto the Senate in the most consequential US mid-term elections in decades. Bowen Call reviews economists’ and scholars’ analyses of the impact this might have on the world economy.

Energy Extraction Politics in the Renewable Age
Globalist Nov 12, 2018
Emerging market economies in a post-oil era might find themselves in the same traps when mining for the necessary metals.

Oil Bedevils An Already Complicated World Economy
John Authers (Bloomberg View) Nov 12, 2018
The bear market in crude has vastly different implications for the U.S. and euro zone. Also, fun with emerging markets and (in)efficient markets.

India's Moving Fast and Breaking the Wrong Things
Andy Mukherjee (Bloomberg View) Nov 12, 2018
Government overreach has brought relations with the central bank to a low point, and that will hurt the country.

Markets Will Continue Their Tug of War
Mohamed Aly El-Erian (Bloomberg View) Nov 12, 2018
The U.S. economy’s gains are offset by sluggishness in Europe and worries about China.

Italy Gets Starvation Rations From Mario Draghi
Marcus Ashworth (Bloomberg View) Nov 12, 2018
Even if it wanted to, there’s not much the ECB could do to help Italian bondholders, apart from some more cheap credit for the country’s banks.

Who Should Control India’s Central Bank?
Jayati Ghosh (Project Syndicate) Nov 12, 2018
The standoff between India's government and the Reserve Bank of India isn't problematic because of the risk of infringing on central-bank independence. It is problematic because, rather than fighting to protect the public interest, the government's goal is to revive irresponsible bank lending, protect its cronies, and win votes.

Global trends in interest rates
Marco Del Negro, Domenico Giannone, Marc Giannoni and Andrea Tambalotti (VoxEU) Nov 12, 2018
Interest rates are at their lowest levels of the last 150 years in virtually all advanced economies. This column argues that this unprecedented environment reflects secular global forces that have lowered the trend in the world real interest rate by about two percentage points over the past 30 to 40 years. Whatever forces might lift real interest rates in the future must also be global, such as a sustained pickup in world economic growth, or a better alignment between the global demand and supply for safe and liquid assets.

UK skills squeeze poses another Brexit dilemma
FT View Nov 13, 2018
Government must balance immigration curbs with companies’ needs.

China’s biggest financial risk is the US
Michele Wucker (FT) Nov 13, 2018
Washington’s devil-may-care attitude has become Beijing’s top priority.

Monsters lurk in the calm of low market volatility
Stuart Kirk (FT) Nov 13, 2018
A statistical tool can help stockpickers who do not want to be caught unawares.

Complacent investors face prospect of a Minsky moment
John Plender (FT) Nov 13, 2018
Big question around instability hypothesis turns on behaviour of central banks.

Britain and E.U. Agree on a Plan for Brexit
Stephen Castle (NYT) Nov 13, 2018
The draft agreement is being reviewed by Conservative cabinet members before a full meeting on Wednesday.

What China talks about when it talks about stimulus
Economist Nov 13, 2018
Excesses from its 2008 push limit options today.

Sliding Chinese yuan risks Trump trade war backlash
William Pesek (AT) Nov 13, 2018
With Beijing's options limited by the fear of Washington’s wrath, the People’s Bank of China has more to ponder than just economics

The Balance of Global Oil and Gas Markets Is Changing—Here’s How
John V. Mitchell (Brink) Nov 13, 2018
The world of oil and gas has undergone a significant rebalancing in recent decades. The interaction between sources, infrastructure, investment and demand is not easy to predict. What can trends tell us about how the markets are changing?

Development Agencies: Fit for the Future?
Mikaela Gavas (CGD) Nov 13, 2018
Official bilateral and multilateral development agencies are under strain from opposing forces: on the one hand, they are confronted with a world in which the development challenges are interconnected and daunting, and the risks are systemic and increasing; on the other, they are grappling with a world in which ardent nationalism, protectionism, and populism are rising, and rules-based multilateralism is declining.

How to fight a trade war: Turn the other cheek
Shanta Devarajan (Brookings) Nov 13, 2018
Trade wars between large countries create openings for non-warring countries to increase exports to the combatants. The best policy response is to take advantage of those opportunities.

How the Middle East and Central Asian Countries Can Reduce Debt and Preserve Growth
Jihad Azour (IMF) Nov 13, 2018
Well-designed public finance reforms can help policymakers reduce debt while preserving growth and protecting the most vulnerable.

India’s Shadow Banks Need to Suffer
Mihir Sharma (Bloomberg View) Nov 13, 2018
Bailouts now are more likely to spread contagion than contain it.

Malaysia’s Market Calm Rests on Sticky Foundations
Shuli Ren (Bloomberg View) Nov 13, 2018
The ringgit and stocks have remained relatively stable thanks to the rising price of oil. With that support removed, things could get messy.

Banks Will Pay for China’s Private Obsession
Nisha Gopalan (Bloomberg View) Nov 13, 2018
State-directed lending hasn’t worked out well in the past. There’s little reason to think that this time will be different.

The EU’s Games of Chicken Are Coming Home to Roost
John Authers (Bloomberg View) Nov 13, 2018
The disaster scenario in the case of Italy would be much worse than with U.K. Also, stock rotations, tariff talk, and ebola’s on the rise.

Don’t Put Trump’s Fox Into Financial Regulation Henhouse
Melvyn Krauss (Bloomberg View) Nov 13, 2018
The U.S. choice to head the Financial Stability Board wouldn’t have the independence needed to press banks on reforms.

Italy’s Money Problems Are Only Just Beginning
Marcus Ashworth (Bloomberg View) Nov 13, 2018
Italy is really struggling to sell its longer-term debt. It will probably cope for the rest of this year, but how will it raise 250 billion euros in 2019?

Automation and job displacement in emerging markets
Mitali Das (VoxEU) Nov 13, 2018
Evidence that routinisation lies behind labour market polarisation has been documented for many developed economies, but less is known about its impact in emerging markets. This column draws on national censuses and labour surveys for 160 countries between 1960 and 2015 to argue that although large-scale labour market dislocation is not imminent, emerging markets are becoming increasingly exposed to routinisation – and thus labour market polarisation – from the long-term effects of structural transformation and the onshoring of routine-intensive jobs.

The Global Impact of US Midterms
Robert A. Manning (YaleGlobal) Nov 13, 2018
The world anticipates a wild ride from the Trump presidency and a divided US Congress.

Our Latest Thoughts on Brexit
Erik Nelson and Abigail Kinnaman (WF) Nov 13, 2018
With the March 2019 Brexit deadline quickly approaching, we wanted to take an opportunity to update readers on our latest views on Brexit. We still think a deal will be reached and ratified by E.U. and U.K. parliaments before the March 2019 deadline, and we expect the pound to move higher on balance over the coming weeks and months if that expectation is realized.

May faces a fight to seal Brexit deal
Sebastian Payne (FT) Nov 14, 2018
PM must first persuade cabinet and then the Commons.

Italy’s budget row leaves eurozone in limbo
John Redwood (FT) Nov 14, 2018
Europe has been here before with Greece — but this is far more dangerous.

More losers than winners from trade war in Asia
James Kynge (FT) Nov 14, 2018
Gains for region’s manufacturers are likely to be offset by slowing Chinese demand.

Shale price band that never left crude market
Olivier Jakob (FT) Nov 14, 2018
Under the new rules of US exports, free-market economics dominates oil prices.

Japan risks repeating some old mistakes
Robin Harding (FT) Nov 14, 2018
The central bank is muddying its commitment to easy monetary policy.

Zimbabwe must embark on painful reforms
Emmerson Mnangagwa (FT) Nov 14, 2018
Spending cuts, new taxes and an anti-corruption drive can help to revive the economy.

The Best Bad Brexit Deal
WSJ Nov 14, 2018
May’s withdrawal pact from the EU is lousy but is the only game in town.

Is there a financial time bomb in sight?
Sebastian Mallaby (WP) Nov 14, 2018
If an expert committee makes the wrong call on Thursday, there is a disquieting possibility that the cliff may be in sight.

Is Trump about to shift his trade fight to the Atlantic?
Christopher Scott (AT) Nov 14, 2018
A decision on tariffs for European cars looms while chatter of China trade deal persists

Be wary of spending on the Belt and Road
Cecilia Joy-Pérez and Derek Scissors (AEI) Nov 14, 2018
From January 2014 to June 2018, construction activity ($256 billion) outpaced investment ($148 billion) in 75 Belt and Road countries. Activity across both construction and investment focused on energy first, then transport. From the end of June to mid-October, the Belt and Road mushroomed to 117 countries, but construction and investment trends were unchanged. The share of private investment in the Belt and Road fell by 12 percent in the first half of 2018 versus the first half of 2017. Private companies that were interested in participating have reconsidered. This puts more pressure on the Chinese state. China’s foreign exchange reserves are no longer growing and are further threatened by a possible contraction in exports to the US. Beijing is more wary of spending to finance Belt and Road projects.

How Markets May React to a Brexit Deal
Mike Amey (PIMCO) Nov 14, 2018
We expect volatility, along with a potential rise in UK sovereign yields and strengthening of the pound.

Is this time different? Reflections on recent emerging-market turbulence
Marek Dabrowski (Bruegel) Nov 14, 2018
Since the beginning of 2018, currencies of two large emerging-market economies – Argentina and Turkey – suffered from substantial depreciation. Other currencies also recorded losses. Which factors are determining macroeconomic and financial stability in emerging-market economies? And what can be done to prevent a crisis and avoid its economic, social and political costs?

When the Next Recession Hits: A User’s Guide for Future QE
Joseph E. Gagnon (PIIE) Nov 14, 2018
The global financial crisis of a decade ago pushed economies into deep recessions. To prevent these recessions from becoming depressions, several major central banks made large-scale purchases of long-term bonds and other financial assets to ease financial conditions and support spending.

Why the World Bank is taking a wide-angle view of poverty
Dhiraj Sharma (Brookings) Nov 14, 2018
The World Bank has used an international poverty line, originally the “dollar a day” line, since at least 1990 to monitor global poverty.

UK's Economic Outlook in Six Charts
IMF Nov 14, 2018
Growth in the United Kingdom has moderated since the 2016 Brexit referendum. An exit from the European Union without an agreement is the most significant risk to the outlook, the IMF said in its latest annual assessment of the economy.

Winds of Change: The Case for New Digital Currency
Christine Lagarde (IMF) Nov 14, 2018
First, frame the issue in terms of the changing nature of money and the fintech revolution. Second, evaluate the role for central banks in this new financial landscape—especially in providing digital currency. Third, look at some downsides, and consider how they can be minimized.

Don’t Let Italy Block Euro-Zone Reform
Bloomberg View Nov 14, 2018
Rome’s budget plans are no reason for Europe to go slow on revamping the monetary union.

Got Dividend Jitters? Take a Look at Emerging Markets
Shuli Ren (Bloomberg View) Nov 14, 2018
The income play is shifting to Asia after U.S. companies stoked a record rally with debt-fueled generosity.

Italy's Banks Leap Aboard a Burning Ship
Ferdinando Giugliano (Bloomberg View) Nov 14, 2018
The lifeline thrown to Carige brings to mind the ill-fated Atlante rescue of two Venetian lenders. Is this a voyage that’s really worth repeating?

The Oil-Price Collapse Is Being Driven by Cars
David Fickling (Bloomberg View) Nov 14, 2018
In emerging markets, spending less at the pump hasn’t gotten more consumers on the road.

Where America’s Oil Majors Stand as Prices Fall
Liam Denning (Bloomberg View) Nov 14, 2018
Some are better able to keep cash flowing than others.

India’s Central Bank Under Attack
Eswar Prasad (Project Syndicate) Nov 14, 2018
So far, Reserve Bank of India Governor Urjit Patel has refused to cave in to government pressure for politically expedient but economically risky policy changes – a stance that has boosted the RBI's credibility. But that credibility could yet be destroyed if the government's attacks continue, especially if they lead to Patel's removal.

The Case for Compensated Free Trade
Robert Skidelsky (Project Syndicate) Nov 14, 2018
According to Harvard’s Dani Rodrik, the nation-state, democracy, and globalization are mutually irreconcilable: we can have any two, but not all three simultaneously. In fact, there may be a solution to Rodrik's “trilemma.”

How Not to Fight Income Inequality
Ricardo Hausmann (Project Syndicate) Nov 14, 2018
Trying to combat income inequality through mandated wage compression is not just an odd preference. It is a mistake, as Mexico's president-elect, Andrés Manuel López Obrador, will find out in a few years, after much damage has been done.

On risk and black swans in emerging markets
Carlos Vegh, Guillermo Vuletin, Daniel Riera-Crichton, Juan Pablo Medina, Diego Friedheim, Luis Morano and Lucila Venturi Grosso (VoxEU) Nov 14, 2018
Emerging markets are especially vulnerable to a myriad of domestic and external risks. This column develops a framework to classify these risks based on their predictability and, hence, their insurability. As the probability of relatively large events increases, it becomes more to insure against such risks. In the extreme case in which countries face truly unpredictable and impactful events (or ‘black swans’), they must rely on building broad-based resilience or resorting to ex-post aid.

Firm sorting and agglomeration
Cecile Gaubert (VoxEU) Nov 14, 2018
In order to encourage economic growth and development, governments often put in place a range of policies aimed at attracting firms to specific areas of a country. Yet relatively little is known about their implications for efficiency.This column argues that such subsidies have costly long-run effects, both on the productive efficiency of the economy and in terms of welfare. Moreover, place-based policies do not necessarily decrease spatial disparities.

Europe Should Let Italy Win
Harold James (FP) Nov 15, 2018
The European Union should recognize that its showdown with Italy over its budget resembles the game of chicken that drove the Greek debt crisis in 2015, and it should back away.

Sri Lanka turmoil points to China’s increasing role
FT View Nov 15, 2018
Beijing is vying with rival India for influence across south Asia.

Business needs the certainty of a Brexit deal
Stephen Martin (FT) Nov 15, 2018
It is a minimum insurance policy that provides for an orderly withdrawal.

China’s response to slowing economy and trade war in charts
Gabriel Wildau (FT) Nov 15, 2018
Beijing uses monetary easing, fiscal stimulus and weaker currency to support growth.

Choosing between emerging market bonds is a bet on the dollar
Steve Johnson (FT) Nov 15, 2018
Opinion is split on best option: debt denominated in local or hard currencies.

The next capitalist revolution
Economist Nov 15, 2018
Market power lies behind many economic ills. Time to restore competition.

Into the Brexit endgame
Economist Nov 15, 2018
How Parliament should weigh up the Brexit deal.

Theresa May’s Brexit deal gives everyone something to hate
Anne Applebaum (WP) Nov 15, 2018
The grim reality: There aren’t any better deals available.

Why the Housing Market Is Slumping Despite a Booming Economy
Neil Irwin (NYT) Nov 16, 2018
Home prices are out of reach relative to incomes and mortgage rates. The big question for the economy is how the imbalance adjusts.

Asia-Pacific Summits Update: RCEP Talks in “Final Stage,” Extending into 2019
Bridges, Volume 22, Number 38 Nov 15, 2018
A series of high-level summits in the Asia-Pacific region are getting underway this week, kicking off with the Association of Southeast Asian Nations (ASEAN) and concluding with the Asia-Pacific Economic Cooperation (APEC) leaders’ meetings. These events, among others, are being watched closely for news of possible advances in trade and investment agendas, including on the Regional Comprehensive Economic Partnership (RCEP) negotiations, which are now set to continue into 2019.

EU, US Officials Reconvene in Washington to Advance Bilateral Trade Agenda
Bridges, Volume 22, Number 38 Nov 15, 2018
Trade ministers from the European Union and the United States met on Wednesday 14 November, looking to take stock of working group discussions on trade and chart a shared path ahead. The high-level discussions are among a series of events this week expected to address international cooperation and the multilateral trading system, coming on the heels of the inaugural Paris Peace Forum.

Brexit Draft Deal Floated, UK Continues Preparations for Trade Future with Other Partners
Bridges, Volume 22, Number 38 Nov 15, 2018
Negotiators from the EU and UK have endorsed a draft text of a Brexit agreement, capping months of uncertainty over how the two sides will address some of the thorniest issues of the UK’s withdrawal from the bloc. Concurrently, UK officials have continued meeting with non-EU partners to lay the groundwork for its post-Brexit trading relationships.

The Brexit endgame: Deal or no deal
Amanda Sloat (Brookings) Nov 15, 2018
With British Prime Minister Theresa May facing a political crisis after reaching a Brexit deal on Tuesday, Amanda Sloat describes what the EU-U.K. withdrawal agreement entails, how key issues were resolved, and the highly uncertain road ahead.

Not Even the End of the Beginning for UK and EU
Denis MacShane (Globalist) Nov 15, 2018
Years and years of negotiations about the future UK-EU relations lie ahead — if the ambitions are ever to be set into an international treaty.

An Easy Alternative to the Brexit Agreement
Gary North (Mises Daily) Nov 15, 2018
No agreement necessary: her Majesty's government simply adopts a policy of zero tariffs and zero import quotas, beginning tomorrow.

How Do You Measure Aid Quality and Who Ranks Highest?
Ian Mitchell and Caitlin McKee (CGD) Nov 15, 2018
Donors have lost their focus on aid effectiveness in the last decade, limiting aid’s impact. Here we report on new results of one of the few measures of aid “quality”—the Quality of Official Development Assistance (QuODA), which aims to bring aid effectiveness back into focus. Aid effectiveness still matters enormously to the world’s poor; donors should revisit effective aid principles and agree measures which take better account of today’s challenges and context.

Trump's Steel Tariffs Have Hit Smaller and Poorer Countries the Hardest
Chad P. Bown, Euijin Jung and Eva (Yiwen) Zhang (PIIE) Nov 15, 2018
President Donald Trump’s steel tariffs hit almost all US trading partners large and small with the same penalty: a 25 percent duty on imported steel. The main victims included China, Canada, Mexico, and the European Union—all of which then retaliated as part of Trump’s trade war.

What the 2018 EBA stress tests (don’t) tell you about Italy
Inês Goncalves Raposo (Bruegel) Nov 15, 2018
The results of the latest European Banking Authority stress tests were eagerly awaited for their results on the four biggest Italian banks. At first sight, these banks seem well prepared to withstand an adverse macro-financial shock. But judging by the market reaction following their publication, the results have not appeased investors.

How Does Protectionism Impact Global Supply Chains? We Asked an Expert.
Gary Gereffi (Brink) Nov 15, 2018
How are global value chains adapting to today's world of protectionism? BRINK News spoke to Gary Gereffi, director of the Global Value Chains Center at Duke University, about the impact that protectionism has and how China is adapting its supply chains in real time.

Sounding the Alarm on Leveraged Lending
Tobias Adrian, Fabio Natalucci, and Thomas Piontek (IMF) Nov 15, 2018
We warned in the most recent Global Financial Stability Report that speculative excesses in some financial markets may be approaching a threatening level. For evidence, look no further than the $1.3 trillion global market for so-called leverage loans, which has some analysts and academics sounding the alarm on a dangerous deterioration in lending standards. They have a point.

Is the Trade War Really Holding China Back?
Christopher Balding (Bloomberg View) Nov 15, 2018
Domestic policies such as reining in credit and investment-driven growth are having a much bigger impact on the economy.

Brexit’s Only Sure Bet is Higher Pound Volatility
John Authers (Bloomberg View) Nov 15, 2018
The U.K. has wasted almost three years tearing itself apart over the question of leaving the EU, and it’s not over. Also, oil snaps a bad streak, and there’s lots of FAANGst.

Commodities Are Sending a Distressing Signal
Komal S Sri-Kumar (Bloomberg View) Nov 15, 2018
Professor Oil and Dr. Copper are suggesting all is not well with the global economy.

Indonesia Shows It’s the Mature Kid on the Emerging Block
Shuli Ren (Bloomberg View) Nov 15, 2018
The country’s hawkish monetary and economic policy decisions deserve to win the confidence of foreign investors.

The Brexit Deal Is Just Too Good for Europe
Leonid Bershidsky (Bloomberg View) Nov 15, 2018
If Theresa May fails to get the draft agreement past her lawmakers, Michel Barnier and the EU leaders will have themselves to blame.

Trump’s Protectionist Quagmire
Anne O. Krueger (Project Syndicate) Nov 15, 2018
US President Donald Trump's tariffs on imported steel are a perfect example of how protectionism can raise costs for consumers and producers, destroy jobs, and undermine domestic competitiveness. Now that he is considering additional tariffs on imported automobiles, a wide range of US industries should be very worried.

How Can Countries Reduce Poverty Faster?
M Niaz Asadullah and Antonio Savoia (Project Syndicate) Nov 15, 2018
While the total number of impoverished people worldwide is declining, the rate of progress is not as fast as it needs to be to achieve the Sustainable Development Goal of ending extreme poverty by 2030. To increase the pace of poverty reduction, lessons from the recent past can help.

Relative valuation of distributed ledger technologies
Demelza Hays and Friederich Zapke (VoxEU) Nov 15, 2018
Traditional absolute valuation methods can’t be applied to cryptocurrencies like Bitcoin and Ethereum. This column instead applies relative valuation models to crypto-assets, leveraging Metcalfe’s theory of communication system valuation. Preliminary results show that the network value to Metcalfe ratio is relatively successful at identifying periods when Bitcoin was over-and undervalued.

Why does the yield-curve slope predict recessions?
Luca Benzoni, Olena Chyruk and David Kelley (FRB Chicago Fed Letter) Nov 15, 2018
Many studies document the predictive power of the slope of the Treasury yield curve for forecasting recessions. This work is motivated, for example, by the empirical evidence in figure 1, which shows the term-structure slope, measured by the spread between the yields on ten-year and two-year U.S. Treasury securities, and shading that denotes U.S. recessions (dated by the National Bureau of Economic Research). Note that the yield-curve slope becomes negative before each economic recession since the 1970s. That is, an “inversion” of the yield curve, in which short-maturity interest rates exceed long-maturity rates, is typically associated with a recession in the near future

China is winning the trade war with the US for now
Gillian Tett (FT) Nov 16, 2018
The White House would do better to focus on areas of legitimate grievance.

US opposition to Belt and Road is a losing battle
Raffaello Pantucci (FT) Nov 16, 2018
US should not oppose the projects but offer alternative solutions.

Theresa May must change course on her deal to leave the bloc/A>
Camilla Cavendish (FT) Nov 16, 2018
Parliamentary support for the prime minister’s agreement requires a more detailed political declaration.

Turbulence poses Wall St dealmakers a tricky question
James Fontanella-Khan (FT) Nov 16, 2018
Volatility in stocks has hit the ambitions of public companies but helped private equity firms.

Stomaching the Brexit volatility will be worth it
Karen Ward (FT) Nov 16, 2018
If investors are prepared to take a view on the deal outcome, there will be rewards.

Why Central Bankers Missed the Crisis
Joseph C. Sternberg (WSJ) Nov 16, 2018
The lesson of 2008, a top economist says, is that monetary policy theories fail to take account of how financial markets work.

The political inertness of Brexit, the deal no one seems to like
Quentin Letts (WP) Nov 16, 2018
Theresa May’s draft plan for Britain’s exit from the E.U. is met with howls. But time is growing short to come up with any viable alternative.

What happens when development cooperation becomes development competition
Scott Morris (Brookings) Nov 16, 2018
Development cooperation has been a common thread running through the geography of aid agreements of recent years: from the Busan Partnership to the Paris Declaration and on to the Accra Agenda. If there is one thing that major donor countries have agreed on, it’s the need to cooperate, with developing country “partners” and with each other when it comes to the delivery of development assistance.

Britain’s Brexit Solution Is Staring It in the Face
Mark Gongloff (Bloomberg View) Nov 16, 2018
The best outcome is not leaving the EU at all.

Trump Isn’t the Global Economy’s Only Challenge
Daniel Moss (Bloomberg View) Nov 16, 2018
Personalizing things does everyone a disservice.

India Can’t Keep Dodging Trade Deals
Mihir Sharma (Bloomberg View) Nov 16, 2018
If Beijing needs to compromise to get regional talks across the finish line, so does New Delhi.

Give Italy’s Government a Chance
Bill Emmott (Project Syndicate) Nov 16, 2018
Given the poor track record of populist economic policies, it is understandable that the European Commission's first instinct is to take a hard line against the Italian government's proposed 2019 budget. But in doing so, it is condemning Italy to continued economic stagnation, and risking a much larger political crisis.

The Bank of Japan’s Stealth Tapering
Takatoshi Ito (Project Syndicate) Nov 16, 2018
When Japanese Prime Minister Shinzo Abe appointed Haruhiko Kuroda as governor of the Bank of Japan in 2013, the country had been living with deflation for 15 years. Kuroda may not have achieved the BOJ’s target of 2% inflation, but that was never his only goal.

Rising Brexit uncertainty has reduced investment and employment
Nicholas Bloom, Scarlet Chen and Paul Mizen (VoxEU) Nov 16, 2018
The majority of businesses in the UK report that Brexit is a source of uncertainty. This column uses survey responses from around 3,000 businesses to evaluate the level and impact of this uncertainty. It finds that Brexit uncertainty has already reduced growth in investment by 6 percentage points and employment by 1.5 percentage points, and is likely to reduce future UK productivity by half of a percentage point.

Brexit and Broken Promises
Peter Hall (FA) Nov 16, 2018
Leaving the EU without consequences was always a fantasy.

The Brexit Fantasy Goes Down in Tears
John Cassidy (New Yorker) Nov 16, 2018
If no agreement can be reached, Britain could crash out of the E.U. without any exit deal, a prospect that horrifies business leaders and investors but is looked upon with equanimity by some ardent Brexiteers.

Will Oil and the Stock Market Derail Fed Tightening?
Jay Bryson (WF) Nov 16, 2018
The stock market has weakened recently and oil prices have moved lower. Unless the core rate of inflation recedes, however, the Fed will probably tighten further, at least in the foreseeable future.

Market rotation offers glimpse of hard Brexit playbook
Michael Mackenzie (FT) Nov 17, 2018
Backdrop to turmoil was a volatile pound and weaker share prices for UK-exposed groups.

To calm Brexit storm, we must listen to UK voices again
Gordon Brown (FT) Nov 17, 2018
Examining the issues behind the vote will move the debate away from political bickering,

Oil Demand for Cars Is Already Falling
Nathaniel Bullard (Bloomberg View) Nov 17, 2018
Electric vehicles are displacing hundreds of thousands of barrels a day, exceeding expectations.

The Fed’s Mood Music Is Mellowing
Daniel Moss (Bloomberg View) Nov 17, 2018
Maybe it won’t overdo interest-rate hikes after all.

The real effects of mitigating counterparty risk
Guillaume Vuillemey (VoxEU) Nov 17, 2018
A key function of financial markets is to share risks, and thus to mitigate the transmission of shocks to the real economy. This column analyses one historical setup in which risk-sharing possibilities in financial markets suddenly increased – the creation of the first central clearing counterparty in 1882 in France in the market for coffee futures. The ability to better hedge coffee prices had real effects and increased trade flows Europe-wide.

Market pressure will not save the Brexit deal
Wolfgang Münchau (FT) Nov 18, 2018
There is a striking gap between analysis of investors and that of political commentators.

The ECB should extend its bond-buying programme
Melvyn Krauss (FT) Nov 18, 2018
Slowing growth in the eurozone makes quantitative easing as important as ever.

A Strong Dollar Is Good for America
Larry Harris (WSJ) Nov 18, 2018
Weak currencies don’t help countries become—or stay—wealthy.

The unfolding of a new Cold War
Gary Hufbauer (EAF) Nov 18, 2018
The Pence declaration last month represents a significant departure from 'business-as-usual'.

Can Central Banks Go Broke? A Question for India
Andy Mukherjee (Bloomberg View) Nov 18, 2018
A resource-strapped government covets the RBI’s surplus capital. Here’s why Governor Urjit Patel should hold firm.

The Oil Price Is Now Controlled By Just Three Men
Julian Lee (Bloomberg View) Nov 18, 2018
Bin Salman, Trump and Putin are calling the market shots. The prince may struggle to defend output cuts against a hostile Trump and indifferent Putin.

Learning from your peers to import
Márta Bisztray, Miklós Koren and Adam Szeidl (VoxEU) Nov 18, 2018
Several recent studies have used network methods to explore the spatial spillovers within cities. This column adds to this literature by exploring how the spatial and managerial networks in Budapest influence firms’ import decisions. A peer in the same building with import experience from a specific country has a strong positive effect on the probability that a firm will start importing from that country. These findings point to the importance of social multipliers in facilitating the diffusion of good business practices.

Weakening Europe will not be global growth locomotive
Gavyn Davies (FT) Nov 19, 2018
Eurozone returns to ‘old normal’ after last year’s temporary surge.

Japan’s biggest overseas M&A a sign of things to come
Leo Lewis (FT) Nov 19, 2018
Takeda could be just the first of many looking for growth through acquisitions abroad.

A deal between Trump and Xi will not last
Gideon Rachman (FT) Nov 19, 2018
Growing military tensions make the US-China trade dispute harder to settle.

EU must find its own post-Brexit path
Philip Stafford (FT) Nov 19, 2018
Brussels’ latest rules are intended to capture high-frequency traders.

China’s slowing finance highlights growth challenge
FTCR Nov 19, 2018
Policymakers will soon face choice of sticking to growth targets or debt commitments.

How China Copes With Capital Flight
John Greenwood and Steve H. Hanke (WSJ) Nov 19, 2018
As growth slows and tariffs threaten, the central bank now strives to prevent a sharp slide in the yuan.

Billions to Trillions” is Not about Africa
W. Gyude Moore (CGD) Nov 19, 2018
The G20’s Infrastructure Hub estimates that the global infrastructure financing gap through 2040 will be about $15 trillion.

Could Italian private wealth compensate for flight of foreign bond-holders?
Jan Mazza and Silvia Merler (Bruegel) Nov 19, 2018
Italy’s deputy prime minister Matteo Salvini is "convinced" that Italians can help out their government, in the face of a widening yield spread between German and Italian government bonds. The authors assess the feasibility of recourse to household wealth in Italy, and estimate the relative importance of foreign debt-holders in the upcoming bond redemptions.

Abe’s Japan tries a decidedly foreign concept
William Pesek (AT) Nov 19, 2018
One of the world’s most homogeneous nations is opening up to foreign trade, tourists and even migrants. But Tokyo needs to push the policy harder

Why Stimulus Isn’t Working in China
Andrew Polk (Bloomberg View) Nov 19, 2018
The government is trying to accomplish too many contradictory goals at the same time.

Jacob Rees-Mogg Turns Brexit Britain into Italy
Lionel Laurent (Bloomberg View) Nov 19, 2018
British euroskeptics need to take note: Investors aren’t buying the vision of Singapore-on-Thames.

How Powerful Companies Might Hold Back Growth
Mark Whitehouse (Bloomberg View) Nov 19, 2018
There’s evidence that low wages are undermining production.

Saving South Korea’s Economy
Lee Jong-Wha (Project Syndicate) Nov 19, 2018
South Koreans are now focused less on developments in North Korea and more on their own economic concerns. Addressing those concerns – and thus ensuring continued support for inter-Korean cooperation – will require practical solutions to structural issues, not more redistributive policies.

Why Central Bank Digital Currencies Will Destroy Cryptocurrencies
Nouriel Roubini (Project Syndicate) Nov 19, 2018
Leading economic policymakers are now considering whether central banks should issue their own digital currencies, to be made available to everyone, rather than just to licensed commercial banks. The idea deserves serious consideration, as it would replace an inherently crisis-prone banking system and close the door on crypto-scammers.

Food Security Rests on Trade
Angel Gurría and José Graziano da Silva (Project Syndicate) Nov 19, 2018
Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most.

International production networks and disaster resilience
Yasuyuki Todo, Yuzuka Kashiwagi and Petr Matous (VoxEU) Nov 19, 2018
Global producers, service providers, and international financial institutions are becoming increasingly intertwined through expanding supply chains. This column uses new firm-level data on the impact of Hurricane Sandy in 2012 to examine how economic shocks are propagated by global supply chains. While the hurricane’s negative shock appeared to propagate among firms within the US, the shock does not seem to have spread internationally. The findings suggest that access to global opportunities and to alternative partners can be a source of resilience against disaster shocks for internationalised firms.

Globalization’s Government Turns 10
Adam Tooze (FP) Nov 19, 2018
For a decade, the G-20 has provided the kind of nondemocratic oversight of the global economy that is worth not only preserving, but expanding.

Will Goldilocks Inflation Stay in 2019?
Sarah House and Shannon Seery (WF) Nov 19, 2018
Inflation has reached a Goldilocks state as far as the Fed is concerned. Both headline and core PCE inflation are up 2.0% over the past year, exactly in line with the FOMC's target. Yet could the Goldilocks scenario change and cause the Fed to either quicken its pace of policy tightening or ease up on the brakes?

Catastrophe bonds: A primer and retrospective
Andy Polacek (FRB Chicago Fed Letter) Nov 19, 2018
Since 1997, the catastrophe (CAT) bond market has provided the insurance industry with protections against natural disasters that have grown more frequent and costly. This article explains how CAT bonds work, and then looks at how the market for them has grown in size, coverage, and sophistication over the past two decades. It also explores how and why different types of institutions use CAT bonds to transfer insurance risks

Risks rise for investors as developed economies falter
Mohamed El-Erian (FT) Nov 20, 2018
Most nations yet to adopt big pro-growth measures, leaving market volatility to reign.

Brexit hardliners have shown they are all bluster
Robert Shrimsley (FT) Nov 20, 2018
Their final hope rests with killing Theresa May’s deal and limping to a no-deal exit.

Stock Market’s Slide Is Flashing a Warning About the Economy
Matt Phillips (NYT) Nov 20, 2018
Stocks often pick up subtle changes before they appear in the economic data. Other markets have also been signaling worry.

The Trade Canary
WSJ Nov 20, 2018
The 2018 decline in the rate of growth in trade volume is a warning to the White House.

Expect Trump to double down on the trade war with China
William Pesek (AT) Nov 20, 2018
In two speeches, Vice-President Pence gave up America’s Asia game plan for 2019 – and it won’t be pretty for policymakers, markets or investors

Sisi’s Debt Crisis
Maged Mandour (CEIP) Nov 20, 2018
Egypt’s current attempt to reduce public debt through austerity measures ignores the problem’s roots in uncontrolled military spending.

Solved! The productivity mystery
Brian Caplen (Banker) Nov 20, 2018
The challenges banks face with regulation and legacy IT systems hold lessons for the wider economy, writes Brian Caplen.

Euro-area sovereign bond holdings: An update on the impact of quantitative easing
Michael Baltensperger and Bowen Call (Bruegel) Nov 20, 2018
Since the European Central Bank’s announcement of its quantitative easing (QE) programme in January 2015, national central banks have been buying government and national agency bonds. In this post the authors look at the effect of QE on sectoral holdings of government bonds, updating the calculations published initially in May 2016.

Who Gains From Growth? Let’s Get a Better Answer
Bloomberg View Nov 20, 2018
Gross domestic product doesn’t tell the whole story.

Ray Dalio Sees Parallels to 1930s in Today’s Markets
Brian Chappatta (Bloomberg View) Nov 20, 2018
The Bridgewater Associates founder raises big questions about the world’s debt levels.

China’s Biggest Problem Isn’t Trump. It’s China.
Mark Gongloff (Bloomberg View) Nov 20, 2018
Long before the trade war heated up, Beijing started cooling off its own economy.

U.S. Versus China Isn’t a ‘Cold War’ for Emerging Markets
Daniel Moss (Bloomberg View) Nov 20, 2018
Most member states of the Asia-Pacific Economic Cooperation group will continue to rely on both.

This Truce Is a Defeat for India’s Central Bank
Mihir Sharma (Bloomberg View) Nov 20, 2018
The government is recklessly eroding the country’s institutional stability.

Troika of Tyranny Versus the Three Amigos
James G Stavridis (Bloomberg View) Nov 20, 2018
How Washington can help its new Latin American friends — Argentina, Brazil and Colombia — deal with crumbling dictatorships.

May’s Brexit Deal Has a Fatal Defect
Clive Crook (Bloomberg View) Nov 20, 2018
The agreement makes Britain a perpetual subordinate.

Surge of Inflation Isn’t a Guaranteed Portfolio Wrecker
Nir Kaissar (Bloomberg View) Nov 20, 2018
Stocks and bonds have weathered increases in prices before.

Capitalizing on Africa’s Demographic Dividend
Carl Manlan (Project Syndicate) Nov 20, 2018
With as many as 20 million young people poised to join the workforce every year for the next three decades, Africa has an opportunity to shift the balance of local and global growth with a purpose: jobs. But it is far from inevitable that it will do so.

The Global Talent Race
Ejaz Ghani (Project Syndicate) Nov 20, 2018
Since the end of World War II, trade and capital flows have been liberalized more than at any other point in history, whereas the mobility of labor remains heavily restricted. But in a global knowledge economy, countries that do not join the competition for high-skilled workers will fall behind.

The ECB’s measures of underlying inflation for the euro area
Christiane Nickel and Derry O'Brien (VoxEU) Nov 20, 2018
Just like other central banks, the ECB generally monitors a range of measures of underlying inflation to help distinguish noise from signal in headline inflation. This column describes measures of underlying inflation that are routinely used at the ECB for measuring euro area headline inflation and provides some insights on their interpretation. Each of the measures has merits and shortcomings and they should be taken together in arriving at a first-pass assessment of developments in headline inflation. At the same time, the measures need to be complemented by a more structural examination of their driving forces in order to better understand the inflation process.

Energy’s Changing Role in Relief Aid
Morgan D. Bazilian, Liliana Benitez, Glada Lahn, David Mozersky and Sherwin Das (YaleGlobal) Nov 20, 2018
World confronts record numbers of forcibly displaced people, and aid agencies aim for an energy efficiency upgrade

Is a “No Deal” Brexit Still Avoidable?
Henry Farrell (FA) Nov 20, 2018
Why the Irish border remains a stumbling block for negotiations.

Impact of Italy’s Draft Budget on Growth and Fiscal Solvency
Olivier Blanchard, Álvaro Leandro, Silvia Merler and Jeromin Zettelmeyer (PIIE) Nov 20, 2018
A bitter standoff is under way between Italy’s new government and the European Commission over the Commission’s objections to Italy’s proposed expansionary budget for 2019. In this Policy Brief, the authors look at the merits of fiscal expansion, concluding that Italy’s budget is unlikely to stimulate growth and may well depress it.

The eurozone recovery continues to falter
FT View Nov 21, 2018
The ECB should retain all options to counter any renewed downturn.

Trade unions seek role in age of automation
Sarah O'Connor (FT) Nov 21, 2018
Digital transformation is both an opportunity and a threat.

Modi should trust his central bank’s tactics
John Gapper (FT) Nov 21, 2018
If handled wisely, there is time to strengthen India’s shadow banking groups and restore confidence.

Markets, not Brussels, will determine Italy’s fate
Tony Barber (FT) Nov 21, 2018
There is little appetite for inflicting punishment among Rome’s eurozone partners.

Europe’s crises hide opportunities for another path
Timothy Garton Ash (FT) Nov 21, 2018
The spectre of disintegration concentrates minds across the continent.

Trump’s Tariffs Haven’t Really Transformed Trade. Yet.
Justin Wolfers (NYT) Nov 21, 2018
Despite his tough talk, President Trump has not fundamentally altered America’s approach to trade. But that could change, and future increases in tariffs could be very costly to the United States.

Chess, AI and Asia's future
James Crabtree (NAR) Nov 21, 2018
Game offers lessons for region's technological and economic development

Why central bank digital currencies could destroy crypto
Nouriel Roubini (AT) Nov 21, 2018
If central banks issue their own digital currencies will they replace the world's crisis-prone finance system and close the door on crypto-currencies?

Theresa May Plays Brexit Chicken
Jacob Funk Kirkegaard (PIIE) Nov 21, 2018
It is easy to understand why British advocates of leaving the European Union responded to the Withdrawal Agreement that Prime Minister Theresa May forged with Brussels with jeers, cries of outrage, and groans in Parliament in mid-November.

Xi Ignored Private Enterprise. Now He Needs It
Richard McGregor (Bloomberg View) Nov 21, 2018
The Communist Party has been cemented at the core of the Chinese state, but only independent businesses can save the economy.

The Next Credit Crisis Will Hit Consumers Hardest
Aaron Brown (Bloomberg View) Nov 21, 2018
The most vulnerable are those households with debt and no financial, real estate or business assets.

Italy's Populists Lose a Big Confidence Vote
Marcus Ashworth (Bloomberg View) Nov 21, 2018
Italian retail investors are usually loyal customers for sovereign bonds. But even a four-year maturity isn’t winning them over. They’re right to worry.

Exchange rate pass-through in a significant trading relationship
Ana Fernandes and L Alan Winters (VoxEU) Nov 21, 2018
Understanding the effect of exchange rate movements on international trade is a major issue for economists and policymakers. This column shows that Portuguese exporters absorbed little of the effect of the large and unanticipated depreciation of sterling following the Brexit referendum into their markups – the vast bulk of the effect of the depreciation was visited on UK users and consumers of Portuguese goods. The lesson for the UK as it contemplates life after Brexit is that it is, in the technical sense, a ‘small open economy’ and will have little ability to negotiate or otherwise achieve better trading terms.

Divorced, But Still Living Together
Owen Matthews (FP) Nov 21, 2018
U.K. Prime Minister Theresa May’s deal with Brussels would keep Britain in the European Union in all but name.

The Brexit road to Britain’s collapse
Philip Stephens (FT) Nov 22, 2018
The gradual journey to withdrawal has become a sudden leap for clarity and conclusion.

Emerging market fortunes do not pivot off the dollar
Jonathan Wheatley (FT) Nov 22, 2018
Many other factors, from slowing growth in China to trade war prospects, play bigger roles.

Why talk of a two-tier Europe should worry investors
Tony Barber (FT) Nov 22, 2018
Political spats and diverging national interests are threatening to create an EU ‘second division’.

Recalculating GDP for the Facebook age
Gillian Tett (FT) Nov 22, 2018
The true impact of social media? Economists are approaching the question from a different angle

Italy’s populists learn virtue of patience in budget row
Miles Johnson (FT) Nov 22, 2018
Coalition leaders adopt a softer tone as they play a tactical game.

Trump should find a trade victory with China at the G-20 — before it’s too late
David Ignatius (WP) Nov 22, 2018
The Trump administration’s trade strategy has been a gradual march toward the cliff.

Emerging markets’ currencies have staged a comeback
Economist Nov 22, 2018
But threats to growth remain.

APEC Leaders Debate Approach to Trade Tensions, WTO Issues at Port Moresby Summit
Bridges, Volume 22, Number 39 Nov 22, 2018
Leaders from 21 Asia-Pacific Economic Cooperation (APEC) economies wrapped up their annual summit this past weekend in Port Moresby, Papua New Guinea, tackling a host of subjects relating to regional connectivity and economic integration. However, disagreements on trade between the US and China prevented leaders from endorsing a joint communiqué by the meeting’s close, in a notable first for the group.

EU Leaders Prepare for Brexit Summit, UK Officials Debate Deal Text
Bridges, Volume 22, Number 39 Nov 22, 2018
European leaders are preparing for a landmark summit on Sunday 25 November, where they are expected to sign off on a draft Brexit deal reached by EU and UK negotiators last week. Meanwhile, debate continues among UK political officials over the accord’s final terms and whether it will gain the necessary approval from domestic lawmakers.

EU, South Africa Discuss Options for Closer Economic Ties at Presidential Summit
Bridges, Volume 22, Number 39 Nov 22, 2018
South African leaders met with their European counterparts in Brussels for a presidential summit on 15 November to discuss future opportunities for cooperation, including on economic issues. Discussions between the two sides included a wide array of topics such as trade and market access, Brexit, migration, and sustainability, among others.

Everything's Great in China's Economy. By Decree
Nisha Gopalan (Bloomberg View) Nov 22, 2018
An effort by securities regulators to tune out negative opinions is cause for alarm, and unlikely to have the desired effect.

China Confronts the Pain of Deleveraging, and Blinks
Christopher Balding (Bloomberg View) Nov 22, 2018
Beijing is wavering on its commitment to restrict debt as stock and commodity markets slump.

Brexit and the Global Economy
Mohamed A. El-Erian (Project Syndicate) Nov 22, 2018
The United Kingdom’s divorce negotiations with the European Union have dragged on through multiple déjà vu moments, and the consensus among experts is that the economic fallout will be felt far more acutely in Britain than in the EU. But policymakers worldwide would benefit from watching the process closely.

The Brexit vote and EU law application in the UK
Arthur Dyevre, Monika Glavina, Nicolas Lampach, Michal Ovádek and Wessel Wijtvliet (VoxEU) Nov 22, 2018
Twenty-eight months after the Brexit referendum, EU laws, regulations, and doctrines continue to apply to UK residents and state officials. This column shows that UK judges and litigants have already started to move away from EU law in anticipation of Brexit, with judges submitting 22–23% fewer questions to the European Court of Justice since the referendum. The broader lesson for the future of supranational legal systems is that effective disintegration may precede formal withdrawal, or may occur even if formal withdrawal is delayed or does not come about.

Bitcoin’s crash is not the end of cyber currencies
FT View Nov 23, 2018
Banks and governments face a push to make money more digital.

One African Nation Put the Brakes on Chinese Debt. But Not for Long.
Dionne Searcey and Jaime Yaya Barry (NYT) Nov 23, 2018
Sierra Leone canceled a $300 million airport loan. Then its president changed his tone. Across the continent, Beijing’s money often proves irresistible.

The Costs of the Euro
WSJ Nov 23, 2018
Voters will finally see what they’ll pay for a European fiscal union.

The UK and Brexit: Approaching the Moment of Truth
Kallum Pickering (Globalist) Nov 23, 2018
There are four scenarios if May’s Brexit deal falls through.

A New Class of Cultural Elites May Be Contributing to Rising Inequality
Elizabeth Currid-Halkett (Brink) Nov 23, 2018
A new consumer class—based not on income but on shared values and education—is ascendant.

Trump Is Doing China a Favor
Michael Schuman (Bloomberg View) Nov 23, 2018
The “Made in China 2025” industrial strategy is going to cause Beijing more headaches than anyone.

Europe’s First Small Step Toward Fiscal Reform
Bloomberg View Nov 23, 2018
The Macron-Merkel plan is timid — but it’s a start.

Silent Inflation
Robert J. Shiller (Project Syndicate) Nov 23, 2018
Inflation targeting is supposed to reduce uncertainty about prices. But keeping the inflation target at 2% or more, might actually increase a sense of uncertainty about real things like home values or investments.

The Right Is Wrong to Lose Faith in Economic Growth
Michael R Strain (Bloomberg View) Nov 23, 2018
Some conservatives forget what is driving gains for low-wage workers.

The Economy’s Too Robust for the Fed to Bow to Markets
Timothy A Duy (Bloomberg View) Nov 23, 2018
Growth would need to slow to around 1.8 percent before the central bank considers slowing the pace of interest-rate hikes.

A Thelma and Louise Brexit? You Know the Ending
Therese Raphael (Bloomberg View) Nov 23, 2018
A "managed no-deal" Brexit risks driving Britain off a cliff.

Uniting Africa for Power
Tony Blair (Project Syndicate) Nov 23, 2018
Despite advances in recent years, more than 600 million Africans still lack access to electricity. An integrated power market, like that in the European Union, would help, and the place to start is at the sub-regional level.

How do migration and remittances affect inequality? A case study of Mexico
Zsoka Koczan and Franz Loyola (VoxDev) Nov 23, 2018
Remittances can lower inequality and may help mitigate some of the negative impact of shocks on the poorest.

China’s Producer Price Reflation in 2016–2017: Capacity Cuts or Recovering Aggregate Demand?
Linxi Chen, Ding Ding and Rui C. Mano (VoxChina) Nov 23, 2018
In late 2015, the Chinese government launched a multi-year plan to reduce capacity in the coal and steel industries. Around the same time, producer price inflation in China started to pick up strongly after being trapped in negative territory for 4½ years. What is behind this broad reflation—cuts in coal and steel capacity or a strengthening of aggregate demand? Our analyses indicate that a pickup in aggregate demand, possibly due to the government’s stimulus package in 2015–2016, was the more important driver of the broad reflation. Capacity cuts played a role in propping up coal and steel prices but explain, at most, 40 percent of their price increase.

Financial supervisory architecture since the Global Crisis
Daniel Calvo, Juan Carlos Crisanto and Stefan Hohl (VoxEU) Nov 23, 2018
A well designed financial supervisory architecture is essential for the effective functioning of any financial system. Using a survey of 82 jurisdictions, this column describes the state of financial supervisory models around the world and highlights the key institutional changes after the Global Crisis. It finds that the prevailing financial supervisory model continues to be sectoral, but that there have been incremental but important changes within existing models. Central banks have acquired more financial oversight responsibilities after the Global Crisis, and many jurisdictions have enhanced or are in the process of enhancing their consumer/investor protection supervision.

Market corrections mark return to pre-QE investing
Michael Mackenzie (FT) Nov 24, 2018
Policymakers will not ride to investors’ rescue while global economy keeps on expanding.

Sino-US trade risks pile on equity concerns
Nicole Bullock (FT) Nov 24, 2018
Myriad sources of uncertainty are weighing on share prices.

The truth about a no-deal Brexit
Economist Nov 24, 2018
Time to bust the last great Brexit myth.

An Agenda for Resolving the US-China Conflict
Stephen S. Roach (Project Syndicate) Nov 24, 2018
Ahead of the meeting between Donald Trump and Xi Jinping at the G20 summit in Buenos Aires, it is hard to be optimistic that a meaningful breakthrough between the US and China is at hand. But an agenda of substance should be used as a checklist against any accord that the two leaders might reach.

The African Threat
Dambisa Moyo (Project Syndicate) Nov 24, 2018
Although international engagement with Africa has evolved over time, it has never succeeded in putting the region on a path toward long-term and sustainable growth and development. Today, continued failure could expose the world to a new age of pandemics, terror, and mass migration.

Dirty work: Buying votes at the UN Security Council
Axel Dreher, Valentin Lang, B. Peter Rosendorff and James Raymond Vreeland (VoxEU) Nov 24, 2018
Countries that vote with the US when serving on the UN Security Council also receive more financial assistance. This column uses voting records in the Council to show that when these countries were US allies, they received more in US aid, but when the countries were not natural allies, they received more financial assistance from US-dominated international institutions instead.

Shared prosperity demands co-operation on trade
Zhang Jun (FT) Nov 25, 2018
China’s G20 sherpa: we are committed to trade and investment liberalisation.

This Brexit deal is the best available
Wolfgang Münchau (FT) Nov 25, 2018
It leaves several options open, including the Norway model, that would otherwise shut.

Africa must demand loans are made in local currencies
Vera Songwe (FT) Nov 25, 2018
Foreign-denominated debt has a pernicious effect because of rising interest rates.

US capital expenditure fails to live up to promises
Rana Foroohar (FT) Nov 25, 2018
Tax cut boosts tech companies but workers see fewer benefits.

The Monopolization of America
David Leonhardt (NYT) Nov 25, 2018
In one industry after another, big companies have become more dominant over the past 15 years, new data show.

How Cheap Labor Drives China’s A.I. Ambitions
Li Yuan (NYT) Nov 25, 2018
If China is the Saudi Arabia of data, its data factories are the refineries, turning raw data into the fuel that can power China’s goal of A.I. supremacy.

Bad Trade Timing
WSJ Nov 25, 2018
New Nafta lacks investor protections just when Americans need them.

Pockets of risk in European housing markets
Jane Kelly, Julia Le Blanc and Reamonn Lydon (VoxEU) Nov 25, 2018
Loan-to-value limits and other borrower-based macroprudential measures are now used in two-thirds of advanced economies. This column uses survey data to document changes in credit standards in a cross-section of countries in the run-up to, and aftermath of, the financial crisis. There is clear evidence of laxer credit standards in countries that experienced a real estate boom-bust, and a significant tightening after the bust. The results imply that compared to earlier years, younger and lower-income borrowers have to save for longer before buying.

The G20 must not surrender to bilateral bullying
Adam Triggs (EAF) Nov 25, 2018
None of the big challenges facing the world, including trade, can be addressed bilaterally.

India Is Missing the Wake-Up Call From Its Shadow-Bank Bust
Andy Mukherjee (Bloomberg View) Nov 25, 2018
Ratings companies and mutual funds refuse to heed lessons from the $12.8 billion bankruptcy of IL&FS Group.

The World Can Change China
Andrew Browne (Bloomberg View) Nov 25, 2018
Historically, pressure from the West has led to many of the country’s toughest and most influential reforms.

Recessions and bear markets: close but not twins
Gavyn Davies (FT) Nov 26, 2018
Equities have come under pressure even though a recession seems unlikely.

Can UN code help scandal-prone banks clean up act?
Patrick Jenkins (FT) Nov 26, 2018
Ten years on from financial crisis, headlines hardly show a more ethical sector.

One big shift in the energy market is a surprise
Nick Butler (FT) Nov 26, 2018
The geography of supply and demand has been transformed in the last decade.

Why it’s too early to call time on ageing bull market
Robert Buckland (FT) Nov 26, 2018
Citi equity strategist sees some red flags but not enough to say this is the dip to sell.

EU moves to protect interests against predatory China
Philippe Le Corre (FT) Nov 26, 2018
Screening scheme will act as alert mechanism on foreign investments.

Why Theresa May’s Brexit deal deserves support
Gideon Rachman (FT) Nov 26, 2018
Britain’s tradition of political stability is even more valuable than EU membership.

A rate rise would take froth out of the US economy
Elga Bartsch (FT) Nov 26, 2018
The Fed should act to prevent the build up of imbalances within the financial sector.

Do not assume the UK will avoid a no-deal Brexit
Robert Shrimsley (FT) Nov 26, 2018
Without co-ordination, opponents of crashing out could end up shooting down their best options.

The US, China and Wall Street’s man in the middle
Tom Mitchell and James Politi (FT) Nov 26, 2018
Trump’s tough trade approach undermines role of executives such as Blackstone’s Stephen Schwarzman.

The Deal America and China Need
Thomas J. Duesterberg (WSJ) Nov 26, 2018
It is in both countries’ interests to back away from the brink. Can Trump offer Xi a way to save face?

Raise Rates Today to Fight a Recession Tomorrow
Martin Feldstein (WSJ) Nov 26, 2018
A downturn is inevitable as asset prices fall. The Fed can prepare by continuing to raise rates now.

The Climate Won’t Crash the Economy
Steven Koonin (WSJ) Nov 26, 2018
A worst-case scenario projects annual GDP growth will be slower by 0.05 percentage point.

When Blue Chip Companies Pile on Debt, It’s Time to Worry
William D. Cohan (NYT) Nov 26, 2018
Fueled by cheap credit, American corporations have been gorging on acquisitions. The party may soon be over.

Mexico: ‘Tequila’ Sunrise?
Gene Frieda (PIMCO) Nov 26, 2018
A plan to cancel the new Mexico City airport highlights the risk that President-elect Andrés Manuel López Obrador may implement some of his more costly campaign promises.

Competition Is Dying, and Taking Capitalism With It
Jonathan Tepper (Bloomberg View) Nov 26, 2018
We need a revolution to cast off monopolies and restore entrepreneurial freedom. First of two excerpts from “The Myth of Capitalism.”

China’s Tech Giants Are Looking Weaker Than Ever
Tim Culpan (Bloomberg View) Nov 26, 2018
The startup phase is long gone. It’s time they show some financial maturity.

Asia’s Liquidity Squeeze Is the Worst Since 2008
Andy Mukherjee (Bloomberg View) Nov 26, 2018
Previous episodes either preceded or coincided with global slowdowns. And it’s only going to get worse.

Markets Can No Longer Rely on the Fed 'Put'
John Authers (Bloomberg View) Nov 26, 2018
Policy makers are more worried by the risk of not raising rates enough than pausing because stocks are down. Also, the Brexit plot thickens.

China’s Oil Benchmark Fails Its First Big Test
David Fickling (Bloomberg View) Nov 26, 2018
The Shanghai crude contract shows little sign that it can become a price-setting instrument to rival WTI and Brent.

Italy's Populists Aren't the Only Ones to Blame
Ferdinando Giugliano (Bloomberg View) Nov 26, 2018
Di Maio and Salvini have provoked Brussels, but the country has lived with an enormous public debt for more than two decades with little consequence.

Oil Gets Caught in a Perfect Storm
Mohamed Aly El-Erian (Bloomberg View) Nov 26, 2018
Prices are being pushed lower by uncertainty about demand, increased production and skepticism about OPEC’s determination to curb output.

Why a US-China Tariff Ceasefire Is Coming Soon
Anatole Kaletsky (Project Syndicate) Nov 26, 2018
Donald Trump's negotiating style – “shout loudly and carry a white flag” – may seem incoherent and dishonest, but it has been spectacularly successful for him. And he's about to use it again with China.

A Trade War is No Reason to Ease Monetary Policy
Jeffrey Frankel (Project Syndicate) Nov 26, 2018
A trade war is a negative supply shock, and central banks cannot counteract the negative effects of current policies on real incomes in the United States, the United Kingdom, and many other countries. Only voters can do that.

Securing the Digital Revolution
Julian King (Project Syndicate) Nov 26, 2018
The world is hurtling toward a more decentralized digital future, characterized by unprecedented linkages among people, data, and objects. In order to reap the benefits of innovation, without creating massive vulnerabilities, we need to anticipate and address the threats now.

Correlating social mobility and economic outcomes
Maia Güell, Michele Pellizzari, Giovanni Pica and Sevi Rodriguez Mora (VoxEU) Nov 26, 2018
Measuring intergenerational mobility and understanding its drivers is key to removing the obstacles to equal opportunities and assuring a level playing field in access to jobs and education. This column uses the informational content of Italian surnames to show that social mobility varies greatly across regions in the country, and that it correlates positively with economic activity, education and social capital, and negatively with inequality. The findings suggest that policies and political institutions are unlikely to be the main drivers of geographical differences in social mobility.

López Obrador poses bigger threat than Bolsonaro
John Paul Rathbone (FT) Nov 27, 2018
Mexico’s new president will be unconstrained by institutions, unlike his Brazilian counterpart.

Only the ‘Norway Plus’ plan can save Brexit
Nicholas Boles (FT) Nov 27, 2018
If parliament blocks May’s deal, the European Economic Area offers an alternative.

The Case Against Staying the Course on Interest-Rate Hikes
Jason Furman (WSJ) Nov 27, 2018
The Fed predicted another increase this year, but changing conditions should lead it to reconsider.

Was the Great Recession worse than the Great Depression?
Robert J. Samuelson (WP) Nov 27, 2018
Taking a look at more than just the jobless rate, it may have been, according to one economist.

Financing International Cooperation
Jeffrey D. Sachs (Project Syndicate) Nov 27, 2018
Today's world must combat climate change, manage surging migration, and confront a host of other threats to international peace and stability. Yet, because taxation and spending are overwhelmingly carried out at the national and local levels, needs that must be addressed at the global and regional levels are increasingly going unmet.

The Eurozone Economy’s Coming Downturn
Lucrezia Reichlin (Project Syndicate) Nov 27, 2018
Until recently, the prevailing narrative in Europe was that the economic crisis was over. But there are signs that the eurozone may be facing an economic slowdown – a development that could change significantly the discourse leading up to next May's European Parliament election.

How the Belt and Road Initiative could reduce trade costs
Francois de Soyres, Alen Mulabdic, Siobhan Murray, Nadia Rocha and Michele Ruta (VoxEU) Nov 27, 2018
The Belt and Road Initiative, proposed by China in 2013, consists primarily of a series of infrastructure projects aimed at improving connectivity on a trans-continental scale. This column presents new evidence on the potential impact of the initiative on trade costs. It shows that through a reduction in shipment times, the initiative could substantially reduce trade costs for participating countries, with positive spillover effects on the rest of the world.

Bolsonaro’s Impact on Global Markets
Claudia Ribeiro P. Nunes and Pedro D. Peralta (YaleGlobal) Nov 27, 2018
Brazil’s president-elect may follow Trump’s playbook, defying the right-wing agenda in global markets.

Can the G20 Save Globalization's Waning Reputation?
Catherine Tsalikis (CIGI) Nov 27, 2018
A decade after the first Group of Twenty’s (G20) Leaders’ Summit, former Canadian Prime Minister Paul Martin and former US Treasury Secretary Lawrence Summers — the G20’s founders — reflect on how the forum came to be and how it can better serve the international community going forward.

There Is No Grand Bargain With China
Ely Ratner (FA) Nov 27, 2018
Why Trump and Xi can’t meet each other halfway.

China’s state groups are run for-party, not for-profit
Tom Mitchell (FT) Nov 28, 2018
Huarong’s move to erase memory of its disgraced chairman shows pitfalls for investors.

Political tensions spill over into global debt markets
Kate Allen (FT) Nov 28, 2018
Nations and investors that stoke global rivalries are playing a dangerous game.

Modi mania in short supply amid Indian stock doubts
Henny Sender (FT) Nov 28, 2018
Government has brought positives for the economy — pressure now is to deliver more.

The romance of drilling for oil has peaked
John Gapper (FT) Nov 28, 2018
Energy companies must remake their industry for an era of lower demand.

We all collude in exploiting commodity-rich nations
David Pilling (FT) Nov 28, 2018
The power relations of slavery are preserved by global markets.

Markets may be down but the US economy is far from out
Megan Greene (FT) Nov 28, 2018
The party is over due to trade uncertainty and rising rates but signs of a downturn are few.

The Fed’s Welcome Rethink
WSJ Nov 28, 2018
And Donald Trump did not make Powell and Clarida say it.

Japan's Economic Outlook in Five Charts
IMF Nov 28, 2018
Japan has had an extended period of strong economic growth. On the policy front, six years of “Abenomics” saw lower fiscal deficits, near-record unemployment, and higher female labor force participation. But inflation remains stubbornly low, and macroeconomic and financial sector challenges are set to grow as demographic headwinds—the aging and shrinking of Japan’s population—intensify.

Italian Companies Face Higher Borrowing Costs Since Elections
Álvaro Leandro (PIIE) Nov 28, 2018
The yield on Italian sovereign bonds has risen significantly since Italy’s elections in March, with 10-year spreads against German bunds reaching 300 basis points at the beginning of October. But sovereign debt is not alone in having become more expensive.

Can Digital Flows Compensate for Lethargic Trade and Investment?
Gary Clyde Hufbauer and Zhiyao (Lucy) Lu (PIIE) Nov 28, 2018
In the 21st century, international digital flows have taken the lead role in promoting globalization. The calculations that follow make the strong policy argument that growth in digital trade compensated for the lethargic growth in merchandise trade and business services in recent years, and that governments should be cautious in regulating digital traffic. Yet some governments try to censor or tax digital traffic, and many governments seek to compel localization of digital platforms. Forced localization of digital platforms (servers and analysts) is a bad idea, censorship or taxation of digital traffic is worse, and privacy rules should be narrowly drawn.

Sustainable investing: How to do it
Dirk Schoenmaker (Bruegel) Nov 28, 2018
Sustainable investment is gaining momentum in Europe, but its current proposed taxonomy might hinder innovation in the field. In this Policy Contribution, Dirk Schoenmaker advocates for an active investment approach with concentrated portfolios, and sets out a six-point plan for sustainable investing.

G20: Step Up to Boost Inclusive Growth
Christine Lagarde (IMF) Nov 28, 2018
As G20 leaders gather in Argentina, the global economy faces a critical juncture. We have had a good stretch of solid growth by historical standards, but now we are facing a period where significant risks are materializing and darker clouds are looming.

Will the G-20 Be President Macri’s Last Tango?
Peter Schechter (Brink) Nov 28, 2018
Inflation in Argentina has rocketed. The peso is reeling. Stocks are hurting. Argentina’s financial crisis represents a huge political blow to President Macri’s pro-business, center-right government. But, strangely enough, this does not mean that his electoral loss is inevitable.

Apple Can’t Shrug Off Being Sucked Into a Trade War
Shira Ovide (Bloomberg View) Nov 28, 2018
A tariff on iPhones might not be critical, but it’s another problem the company doesn’t need.

Latin America’s New Populism Isn’t About the Economy
Shannon K O'Neil (Bloomberg View) Nov 28, 2018
Injustice, not economic class, is what’s turning voters against the political establishment.

China’s Central Bank Can Step Up a Little Faster
Daniel Moss (Bloomberg View) Nov 28, 2018
The People’s Bank of China is (rather slowly) becoming more like the Fed.

Wall Street May Rue China’s Opening
Nisha Gopalan (Bloomberg View) Nov 28, 2018
Global banks have been clamoring for access to the mainland market. There could be good reason to pause.

Why Valuations Don’t Matter Much in Emerging Markets
Shuli Ren (Bloomberg View) Nov 28, 2018
Analysts’ earnings estimates are all over the place. A better bet for 2019 might be picking the stocks hit hardest this year.

France and Germany Cut Bankers Some Brexit Slack
Lionel Laurent (Bloomberg View) Nov 28, 2018
In a cliff-edge exit from the EU, some British industries are getting parachutes.

Putin Is Throwing His Weight Behind the Euro
Leonid Bershidsky (Bloomberg View) Nov 28, 2018
Even as Russia steadily cuts holdings of U.S. assets, it’s planning to sell bonds denominated in the EU currency.

Pimco Extracts Its Pound of Flesh From Italy
Marcus Ashworth (Bloomberg View) Nov 28, 2018
It’s hard not to have sympathy for UniCredit as it tries to satisfy EU capital demands just as its funding costs soar because of Italy's budget battle.

This Strange Expansion Might Set Up a Mundane Recession
Noah Smith (Bloomberg View) Nov 28, 2018
The economy never quite recovered from the financial crisis, but signs suggest the next slump will be pretty routine.

A New U.S. Yield Curve Is Racing Toward Inversion
Brian Chappatta (Bloomberg View) Nov 28, 2018
Watch the spread between two-year and five-year Treasuries.

How to Save Social Security Systems
Martin Feldstein (Project Syndicate) Nov 28, 2018
Providing benefits to support a comfortable standard of living for retirees with just a modest rate of tax on the working population depends on there being a small number of pensioners relative to the number of taxpayers. That is no longer the case.

The Big Con: Reassessing the ‘Great’ Recession and its ‘fix’
Laurence Kotlikoff (VoxEU) Nov 28, 2018
The general consensus on what caused the Great Recession can be summed up as “bad banks full of bad bankers did bad things”. This column argues, however, that this narrative doesn’t fit the facts. And worse, it diverts attention from the real problem, which was regular use of a bad banking system – a banking system built to fail.

Will China Save the Planet?
Barbara Finamore (Diplomat) Nov 28, 2018
China’s efforts are transforming the economics of our global energy system.

Xi and Trump Should Swallow Their Pride and Join the TPP
James McGregor (FP) Nov 28, 2018
At the G-20 summit, China and the United States should make a bilateral leap to join the Trans-Pacific Partnership, and avert a crisis for the global economy.

May’s Brexit deal deserves conditional support
FT View Nov 29, 2018
If parliament cannot ratify it, a second referendum may be needed.

Europe’s unpleasant choice between Trump and Xi
Philip Stephens (FT) Nov 29, 2018
A less dependable US leaves Britain and the EU vulnerable to China’s blandishments.

Why Donald Trump wants Theresa May to fail on Brexit
Edward Luce (FT) Nov 29, 2018
There are deep reasons for US president’s hostility to UK’s exit deal from EU.

G20: Protectionist tide dampens Argentina’s globalisation instincts
Benedict Mander (FT) Nov 29, 2018
Buenos Aires summit meeting comes with open trade on the back foot.

G20 ‘talking shop’ still resonates with many emerging markets
Jonathan Wheatley (FT) Nov 29, 2018
Forum has ‘done much of what it set out to and offers voice to developing economies’.

The painful price of Argentina’s tumultuous past
Andres Schipani (FT) Nov 29, 2018
A personal view of country’s ‘crazy’ past 40 years.

Brazil’s Bolsonaro destined to disappoint on economy
Yerlan Syzdykov (FT) Nov 29, 2018
Limited fiscal options and other restraints mean investors should be wary of new president.

Trump loves big deals. But let’s not hold our breath for one with China at the G-20.
Catherine Rampell (WP) Nov 29, 2018
As we have seen in the past, President Trump’s idea of a deal doesn’t always pan out.

‘Godzilla’ in Buenos Aires: Asia cowers as Trump battles Xi
William Pesek (AT) Nov 29, 2018
As trade war threatens to crush Asian supply chains, can a solution be found at the G20?

Powell’s Speech Lifted Markets, But We Expect Gradual Rate Hikes to Continue
Tiffany Wilding (PIMCO) Nov 29, 2018
Markets may have taken Fed Chairman Powell’s speech as a sign that the risks of central bank overtightening have receded, but we wouldn’t over-interpret Powell’s message to suggest that he is ignoring the risks of the economy overheating.

Can US cities help the world achieve the Sustainable Development Goals?
Anthony F. Pipa (Brookings) Nov 29, 2018
Despite a crisis of confidence at the national level, a significant majority of Americans still believe in the ability of their local governments to deliver. This is good news, because U.S. cities are increasingly responsible for taking on local challenges with global implications, such as pollution, violence, climate change, and economic opportunity and security.

A New Cold War With China? No, Thanks
Bloomberg View Nov 29, 2018
The U.S. can defend its interests without making Beijing an enemy.

China's Aging Problem Is a Serious Threat to Growth
Peter R Orszag (Bloomberg View) Nov 29, 2018
Countries, including the U.S., need accelerated labor productivity to offset their shrinking workforce. Unfortunately, no one really knows how to make that happen.

At Last, Something About Brexit Everyone Can Agree On
Therese Raphael (Bloomberg View) Nov 29, 2018
Economists agree leaving will have a cost. If it came to a popular vote, Brexiters would have a hard time arguing the price is right.

Why Xi Won’t Cave to Trump at G-20
Michael Schuman (Bloomberg View) Nov 29, 2018
China’s leader, convinced of the course he has set, has little incentive to appease a wounded and unpopular U.S. president.

Bull Case for Emerging Markets Has One Big Caveat
Shuli Ren (Bloomberg View) Nov 29, 2018
It’s China, where the outlook remains unclear. In the meantime, nimble investors prepared to ride the volatility can do well.

Rewriting History Muddies India’s Economic Future
Andy Mukherjee (Bloomberg View) Nov 29, 2018
Exciting new GDP variables: Under which ruling party did the growth happen...and under which party was it measured?

Imagine Donald Trump During a Financial Crisis
Ferdinando Giugliano (Bloomberg View) Nov 29, 2018
Back in 2009, the G-20 put together a $1 trillion fiscal stimulus to steady the world economy. The same multi-lateralism may not prevail in the next emergency.

Don’t Call May’s Brexit a Compromise
Clive Crook (Bloomberg View) Nov 29, 2018
It’s a gross failure of leadership, and Parliament should reject it.

The Fed Should Take a Sharper Look at Corporate Debt
Stephen Gandel (Bloomberg View) Nov 29, 2018
Business borrowing is leaving little room for a cushion in a downturn.

That Emerging Markets Rally Might Finally Be Real
Mark Gilbert (Bloomberg View) Nov 29, 2018
Shares of Ashmore, a key barometer of investor sentiment toward the asset class, have been on a tear.

Republicans Rejected Free Trade for No Good Reason
Michael R Strain (Bloomberg View) Nov 29, 2018
Many Americans may be frustrated with economic and cultural change, but they are not protectionists.

There Are Two Gig Economies
Justin Fox (Bloomberg View) Nov 29, 2018
One is huge, skews old and isn’t growing. The other is smaller, younger and harder to measure, but it shouldn’t be ignored.

The Digital Key to Inclusive Growth
Chen Long and Michael Spence (Project Syndicate) Nov 29, 2018
So far, it seems that the rise of the digital economy has already contributed to a broad pattern of income and job polarization in the developed world. Yet digital technology can play a powerful role in fostering inclusive growth patterns, especially in developing economies.

The Hollowing Out of the G20
Ana Palacio (Project Syndicate) Nov 29, 2018
Since helping to mitigate the global financial crisis, the G20 has degenerated from a platform for action to a forum for discussion. In the age of Donald Trump, it could sink even further, becoming a vehicle for legitimating illegal behavior, from Russia's aggression in Ukraine to Saudi Arabia's murder of a journalist.

A new history of the French banking crisis during the Great Depression
Patrice Baubeau, Eric Monnet, Angelo Riva and Stefano Ungaro (VoxEU) Nov 29, 2018
Previous research has downplayed the role of banking panics and financial factors in the French Great Depression. This column uses a newly assembled dataset of balance sheets for more than 400 French banks from the interwar period to challenge this long-held idea. The empirical results show two dramatic waves of panic in 1930 and 1931, and point to a flight-to-safety mechanism. The findings illustrate how minor macroeconomic assumptions and extrapolations on monetary statistics can introduce large, persistent biases in historiography.

Global uncertainty is rising, and that is a bad omen for growth
Hites Ahir, Nicholas Bloom and Davide Furceri (VoxEU) Nov 29, 2018
The global economy is growing, but so is uncertainty. This column presents a new quarterly index of uncertainty for 143 countries. The World Uncertainty Index reveals how uncertainty in the world has evolved over time, whether it is synchronised across countries, and how it compares across income groups and political regimes.

How have banks responded to changes in the yield curve?
Thomas B. King and Jonathan Yu (FRB Chicago Fed Letter) Nov 29, 2018
Between December 2015 and September 2018, a cumulative increase in the federal funds rate of 200 basis points was accompanied by a compression of 125 basis points in the difference between the yields on three-month and ten-year U.S. Treasury securities. In this Chicago Fed Letter, we examine some of the effects of the flatter yield curve on the banking sector and how they compare with the effects of similar interest rate configurations in the past.

China should take steps to bolster private sector
FT View Nov 30, 2018
Slowing economy weakens Beijing’s ability to withstand US pressure.

Trump’s battle with the Fed is far from finished
FT View Nov 30, 2018
Jay Powell’s underlying stance on interest rates has not changed.

Trump’s attack on the Fed is just a distraction
Gillian Tett (FT) Nov 30, 2018
The US president diverts attention away from the slowing economy and ballooning deficit.

Be wary of ‘gradual, then sudden’ cracks in credit
Michael Mackenzie (FT) Nov 30, 2018
The excesses of corporate borrowing will come home to roost for unsuspecting investors.

Big is rarely beautiful when it comes to M&A
Amin Rajan (FT) Nov 30, 2018
Innovation is the key to success but dinosaurs will die no matter how large they are.

Oil forecasts will continue to be wildly off the mark
Neil Collins (FT) Nov 30, 2018
Further price surprises loom while fossil fuel groups are set to endure for decades.

Powell’s dovish tone points to one eye on next recession
Laurence Mutkin (FT) Nov 30, 2018
Fed chairman could be trying to engineer a future in which QE will not be needed again.

Eyes down for a game of Brexit bingo
Gideon Rachman (FT) Nov 30, 2018
Pundits and politicians unearth bewildering analogies from Britain’s past.

The Stock Market’s Dangers Are Easier to See Now
Jeff Sommer (NYT) Nov 30, 2018
When the pros and cons for stocks and the economy over the next year or two are weighed, the risks appear to be dominant, our columnist says.

New Nafta’s Bad Omens
WSJ Nov 30, 2018
Democrats and unions are already demanding changes.

China looks for digital key to inclusive growth
Chen Long and Michael Spece (AT) Nov 30, 2018
Digital technology, especially when applied to e-commerce, can play strong roles in fostering inclusive growth patterns in developing economies

How Private Banks Create Bubbles — with the Help of Central Banks
Frank Shostak (Mises Wire) Nov 30, 2018
Recessions emerge when the central bank reverses its loose monetary stance. But the seeds of recession were sown earlier by private lending practices that grew out of central-bank money creation.

Many Countries Have Unsustainable Pension Systems. These Reforms Can Help.
David Knox (Brink) Nov 30, 2018
Most countries are grappling with the social and economic effects of aging populations. Which countries and which pension systems have best adapted to the demographic shift—and which are least prepared for the changes to come?

Coal Is the Junk Food of Global Energy
Liam Denning (Bloomberg View) Nov 30, 2018
Some nations just want cheap fixes – though the healthier choices keep getting cheaper.

Trump’s War Against the WTO
Simon Johnson (Project Syndicate) Nov 30, 2018
If US President Donald Trump's talks with Chinese President Xi Jinping at the G20 summit in Buenos Aires do not go well, he could make good on his threat to increase US tariffs on a wide range of Chinese goods. But the stakes are even higher than that.

China Deserves its Economic Success
Zhang Jun (Project Syndicate) Nov 30, 2018
In 1995, the late economist Gustav Ranis wrote that, “If there is one key to developmental success, it is avoiding the encrustation of ideas,” which is achieved through policymakers' “ever-increasing reliance on the responsiveness of large numbers of dispersed decision-makers.” That description suits China perfectly.

Populism Is Rooted in Politics, not Economics
Andrés Velasco (Project Syndicate) Nov 30, 2018
Some one billion people around the world are now being ruled by populists of one sort or another. That number will continue to grow if we continue to view populism as the result of economic rather than political dysfunction.

The Great Macro Divergence
Jean Pisani-Ferry (Project Syndicate) Nov 30, 2018
Ten years ago, nearly all advanced economies fell off the cliff simultaneously. Nowadays, they are neither structurally nor cyclically aligned, and they are unevenly vulnerable to recession, which makes international policy coordination both more necessary and more difficult.

From Brexit to Eternity
Chris Patten (Project Syndicate) Nov 30, 2018
British Prime Minister Theresa May is now confronting Parliament with a vexing choice between an unsatisfying Brexit deal and crashing out of the European Union. But, because no compromise with the EU is acceptable to hard-line Brexiteers, the argument that another referendum would be divisive is beside the point.

The Real Economics of Migration
Ian Goldin and Benjamin Nabarro (Project Syndicate) Nov 30, 2018
Throughout the West, populists and nationalists have hijacked the migration debate by framing the issue solely in terms of cultural identity. Their strategy, while often electorally successful, is laying a foundation for weaker growth and higher levels of inequality across the world’s aging advanced economies.

Political connections, innovation, and firm dynamics
Ufuk Akcigit, Salome Baslandze and Francesca Lotti (VoxEU) Nov 30, 2018
Corruption, especially rent-seeking behaviour by politicians and firms, has adverse consequences for competition and ultimately growth. This column explores how political connections influence firms’ outcomes in Italy. The results point to a ‘leadership paradox’, whereby market-leading firms are more likely to be politically connected than their competitors, but less likely to innovate. At the aggregate level, political connections tend to be associated with worse industry dynamics, including lower entry, reallocation, growth, and productivity.

A more stable EMU does not require a central fiscal capacity
Michel Heijdra, Tjalle Aarden, Jesper Hanson and Toep van Dijk (VoxEU) Nov 30, 2018
A central fiscal capacity is a recurring topic in discussions on reform of the Economic and Monetary Union, but no consensus on the usefulness and necessity of a such a capacity has been reached. This column, part of the Vox debate on euro area reform, argues that the potential stability benefits of a central fiscal capacity can be achieved through stronger financial market risk sharing and more effective use of fiscal stabilisers, without any additional fiscal risk sharing.

How multinational banks transmit shocks
José L. Fillat, Stefania Garetto and Arthur V. Smith (VoxEU) Nov 30, 2018
How relevant are global banks in the transmission of shocks across countries? This column discusses the effects that the presence of foreign banking institutions has on the transmission of shocks during crises. Using a model that microfounds a bank’s decision on whether and how to expand into foreign markets, it quantifies the extent of shock transmission and examines the effects of counterfactual regulatory and monetary policies across borders.

What's Next for Italy's Budget?
Michael Pugliese, Erik Nelson and Nick Bennenbroek (WF) Nov 30, 2018
In this report, we update our readers on developments in Italy, lay out next steps and provide three potential scenarios for how things play out. In our view, the most likely outcome is that an eventual compromise will be reached before financial penalties are imposed on Italy, though it could take several months before a resolution is realized.