News & Commentary:

Articles/Commentary

How central banks can tackle climate change
FT View Nov 1, 2019
Policymakers must address the financial risks stemming from a warmer planet.

Fed caught between political factions over repo
Philip Stafford (FT) Nov 1, 2019
Market dislocation triggers calls for looser banking rules.

ASEAN needs bigger voice in US-China rivalry
Adam Schwarz (AT) Nov 1, 2019
Superpower competition threatens to polarize rather than unite the regional grouping at this weekend's summit in Bangkok.

Why China gets it wrong in SE Asia
David Hutt (AT) Nov 1, 2019
China's increasingly strained relations with its neighboring region will be in the spotlight at this weekend's ASEAN summit.

Fuel Subsidies Fan the Flames in Latin America
Bloomberg Opinion Nov 1, 2019
High energy prices have brought unrest across the continent. Blame misguided antipoverty measures.

The Global Outlook Could Be Worse Than ‘Low for Long’
Roberto Azevedo (Bloomberg Opinion) Nov 1, 2019
Tensions over trade are the single biggest threat to the world economy.

The 1950s Are Greatly Overrated
Noah Smith (Bloomberg Opinion) Nov 1, 2019
Yes, growth was strong then, but life is much better today.

The United States, Japan, and the Global Economy
Richard H. Clarida (FRB Board) Nov 1, 2019
I will discuss several of the global factors that are relevant to the outlook for both economies. First, I will review the current U.S. outlook and some key global risks to that outlook that we are monitoring at the Federal Reserve. I will next elaborate on the channels through which global factors affect domestic economic conditions in the United States and, in some cases, also Japan. I will conclude with some remarks about the monetary policy decision we announced on Wednesday.

Revolutions for Whom?
Kristen R. Ghodsee and Mitchell A. Orenstein (Project Syndicate) Nov 1, 2019
As liberal elites both East and West commemorate the peaceful end of the Cold War and celebrate the successes of the last three decades, it is important to recognize how painful the post-communist transition was – and, for many, continues to be. That is why nostalgia for the economic security and social stability of the authoritarian past is growing.

The Case for International Civil Servants
Kemal Dervis (Project Syndicate) Nov 1, 2019
Cooperation among nation-states is still the most important element of global governance. But organizations and civil servants that serve the world as a whole are an indispensable source of support for necessary collective action to address major opportunities and threats.

What to Expect from the India-China High-Level Trade Dialogue
Priyanka Pandit (Diplomat) Nov 1, 2019
The Sino-Indian trade deficit is both an economic and a political problem.

Pragmatism with a long-term vision should prevail in euro reform
Heikki Oksanen (VoxEU) Nov 1, 2019
Preparations for reforming the euro area have stalled, with experts disappointed that politicians have not heard their proposals. This column, however, is optimistic that the euro area can be reformed via a pragmatic reorientation without high-profile changes to the EU Treaty. The reforms must cover a reorientation of fiscal policy towards a long-term vision and entail revamping the Eurosystem to allow it to perform its proper role as a central bank.

The Unwinnable Trade War
Weijian Shan (FA) Nov 1, 2019
Everyone loses in the U.S.-Chinese clash—but especially Americans.

Open Borders Are a Trillion-Dollar Idea
Bryan Caplan (FP) Nov 1, 2019
Tearing down all barriers to migration could lead to a global economic boom.

The Time Is Right for African Nations to Break the Resource Curse
Zuhumnan Dapel (FP) Nov 1, 2019
Conditions are ripe for oil-rich African countries to end their economies’ dependence on oil revenue.

Look to credit, not stocks, for signs of nerves
Michael Mackenzie (FT) Nov 2, 2019
Equity markets party on central bank support, but worries fester in debt.

Could the UK trade more financial services with Asean after Brexit?
Lutfey Siddiqi (FT) Nov 2, 2019
The potential is there but several barriers must be overcome.

China’s median age will soon overtake America’s
Economist Nov 2, 2019
Demography may be the Chinese economy’s biggest challenge.

The Happy, Healthy Capitalists of Switzerland
Ruchir Sharma (NYT) Nov 2, 2019
Forget Scandinavia. Switzerland is richer and yet has a surprisingly equal wealth distribution.

The Money Farmers: How Oligarchs and Populists Milk the E.U. for Millions
Selam Gebrekidan, Matt Apuzzo & Benjamin Novak (NYT) Nov 2, 2019
The European Union spends $65 billion a year subsidizing agriculture. But a chunk of that money emboldens strongmen, enriches politicians and finances corrupt dealing.

The “Eurozone Soviet”
Tomas Casas i Klett (Globalist) Nov 2, 2019
Negative interest rates have a pernicious effect on human beings. They corrode the structures of society, culture and people’s mindsets, triggering widespread resignation and even nihilism.

Africa's Socialism Is Keeping it Poor
Germinal G. Van (Mises Wire) Nov 2, 2019
Socialism was sold to Africans as the antidote to the legacy of colonial occupiers. But it was the African countries that most resisted socialism that experienced the greatest gains in standards of living.

Putting on the Squeeze Won’t Tame India’s Twin Crises
Andy Mukherjee (Bloomberg Opinion) Nov 2, 2019
Credit turmoil and a fiscal hole are undermining the economy. Killing the telco golden goose can’t help.

Don’t Just Expose Shadow Banks, Regulate Them
Satyajit Das (Bloomberg Opinion) Nov 2, 2019
We know much more now about the operations of such financial institutions. We’re no closer to reining in the risks they pose.

Central banks and the sterilisation of capital flows in the first era of globalisation
Guillaume Bazot, Eric Monnet, and Matthias Morys (VoxEU) Nov 2, 2019
The gold standard (1880s-1913) is usually portrayed as the exemplary case of the total submission of central banks’ monetary policy to the constraints of international finance. This column challenges this view by showing that central banks’ balance sheets stood as a buffer between their respective domestic economies and global financial markets. By contrast, autonomy was much more limited in the US, a country with fixed exchange rates but no central bank before 1913.

We need to admit the euro was a mistake
Gyorgy Matolcsy (FT) Nov 3, 2019
Hungarian central bank governor calls for an exit mechanism.

Here is what’s going on with the yield curve
Gavyn Davies (FT) Nov 3, 2019
Bond markets are not convinced that the Federal Reserve has done enough.

Lessons for pro-Europeans in the failed Remain cause
Wolfgang Münchau (FT) Nov 3, 2019
The anti-Brexit movement wasted energy on negative campaigning and parliamentary wrecking tactics.

‘Chile Woke Up’: Dictatorship’s Legacy of Inequality Triggers Mass Protests
Amada Taub (NYT) Nov 3, 2019 ‘America First’? Kill the Jones Act
WSJ Nov 3, 2019
Puerto Rico is importing Russian natural gas, due to this outdated law.

The Truth About Income Inequality
Phil Gramm and John F. Early (WSJ) Nov 3, 2019
The census fails to account for taxes and most welfare payments, painting a distorted picture.

What can we expect from this year’s East Asia Summit?
Melissa Conley Tyler and Rhiannon Arthur (EAF) Nov 3, 2019
the EAS's inclusive membership and broad remit give it the potential to be a central regional forum. Its membership includes a mix of Western powers, rising Asian powers and smaller powers who together represent 54 per cent of the world's population and 58 per cent of global GDP.

U.S.-China Truce Shouldn’t Sacrifice the Rest of Us
Mihir Sharma (Bloomberg Opinion) Nov 3, 2019
A proposal by Nobel economists to resolve the trade war ignores the whole point of having a global trading system.

Democracy Is on the March, Not in Retreat
Pankaj Mishra (Bloomberg Opinion) Nov 3, 2019
Mass protests in country after country show how powerful the demand for social equality remains.

Impact of the US-China trade war on Japanese multinationals
Chang Sun, Zhigang Tao, Hongjie Yuan, and Hongyong Zhang (VoxEU) Nov 3, 2019
The trade war between the US and China has had impacts on other countries – including Japan, one of the most important trading partners of both countries. The column uses quarterly sales data and stock market returns to show that the operations in China of Japanese MNCs have been negatively affected by the trade war, especially when Chinese affiliates rely heavily on trade with North America. This has led to a reduction in their stock prices.

There is no such thing as a ‘clean break’ Brexit
FT View Nov 4, 2019
Nigel Farage’s call to ditch an EU withdrawal agreement is a delusion.

Free trade area is best chance to remake Africa
FT View Nov 4, 2019
The deal should energise a continent of 1.2bn people and $3tn output.

Alternative risk premia will be tested in the next downturn
Amin Rajan (FT) Nov 4, 2019
About half of European institutional investors have embraced the rules-based strategies.

Can the EU’s failed Capital Markets Union be revived?
Patrick Jenkins (FT) Nov 4, 2019
Some of the EU’s key economies have been trying to shock the project back to life.

Progress toward sustainable development is seriously off-track
António Guterres (FT) Nov 4, 2019
Hunger is rising, half the world lack basic education and healthcare, women face discrimination.

The politics of fiscal stimulus are problematic
Megan Greene (FT) Nov 4, 2019
Central banks do not have the tools to tackle the supply side shocks facing the global economy.

Africa should look to India for digital inspiration
Aubrey Hruby (FT) Nov 5, 2019
Governments must invest in infrastructure and skills.

Saudi Arabia Is Changing Fast
Karen Elliott House (WSJ) Nov 4, 2019
Social liberalization has outpaced economic reform, but there doesn’t seem to be any turning back.

Why are so many countries witnessing mass protests?
Economist Nov 4, 2019
Blame economics, demography, a sense of powerlessness...and social media.

5G policy 'biggest strategic disaster in US history'
David Goldman (AT) Nov 4, 2019
Trump urged to take radical action to ensure the US doesn't fall further behind.

Building on South Asia's Economic Success
IMF Nov 4, 2019
South Asia is poised to play a key role in the global economy, building on the steady economic progress and reform process over the last few decades. Despite the recent global economic slowdown, India remains among the fastest-growing large economies, and South Asia’s contribution to global growth is set to increase, while those of more mature economies around the world decelerate.

Politics, not policy will help Lagarde save the eurozone
Guntram B. Wolff and Rebecca Christie (Bruegel) Nov 4, 2019
Her success at helm of Europe’s central bank will depend on her ability to mend fences with hawkish policymakers.

Will Farmers Gain from the New US-China Trade Truce?
Jeffrey J. Schott (PIIE) Nov 4, 2019
The US-China trade truce reached in October 2019 reportedly calls for China to purchase US farm goods of up to $50 billion annually within two years. That’s a lot of soybeans, cereals, frozen fish, and pork, the main US agricultural exports to China. The so-called phase 1 announcement was touted with typical understatement by President Donald Trump as “the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country.”

Will Brexit Be With Us Forever?
Denis MacShane (Brink) Nov 4, 2019
Many think that the Brexit process will soon be over, but that is not the case. Whatever the final settlement looks like, all of the new regulations mean that Brexit will be a significant issue for businesses for years to come. How they will remain relevant for years beyond its settlement.

Spotlight on High Yield Credit Amid Declining Yields in Fixed Income Markets
Sonali Pier and Matthew Livas (PIMCO) Nov 4, 2019
The pitfalls and opportunities we see in high yield markets highlight the importance of active portfolio management, rigorous credit analysis, and taking a cautious and selective approach.

Yes, Cut the Loose Talk and Close This Rescue
Andy Mukherjee (Bloomberg Opinion) Nov 4, 2019
The troubled Indian bank isn’t doing itself any favors by feeding premature speculation.

Millennials Should Be Happy They Are Stuck Renting
Gary Shilling (Bloomberg Opinion) Nov 4, 2019
They complain about being stuck renting, but history shows that makes more sense than owning.

The Hardening of Soft Power
Zaki Laïdi (Project Syndicate) Nov 4, 2019
For decades, the distinction between hard and soft power offered a framework for dividing the world between governments seeking mutually beneficial cooperation and those bent on zero-sum gains. But now that the traditional tools of soft power are increasingly being used as a means of coercion, the old rules no longer apply.

Why America’s CEOs Are Talking About Stakeholder Capitalism
Mark Roe (Project Syndicate) Nov 4, 2019
When the US Business Roundtable recently renounced shareholder primacy, the shift – by an organization representing companies with combined annual revenue of more than $7 trillion – prompted a wide range of reactions, from welcoming to dismissive. But the move is primarily an attempt to keep activist shareholders and populist politicians at bay.

Britain’s Post-Brexit Choices
Ngaire Woods (Project Syndicate) Nov 4, 2019
Assuming that the United Kingdom does eventually leave the European Union, its next government will need to negotiate new relationships with the rest of the world. That will involve tough choices, not least whether the UK should align its regulations in key economic sectors with those of the EU or the United States.

Is the Global Dollar in Jeopardy?
Simon Johnson (Project Syndicate) Nov 4, 2019
The US Federal Reserve is right to be concerned, if not worried, about the greenback's dominance of international trade and finance. Fortunately for consumers, growing potential competitive pressure – call it the Libra effect – creates an incentive to make the existing system work better.

Liquidity linkages in European sovereign bond markets can amplify fundamental economic shocks
Daragh Clancy, Peter G Dunne, and Pasquale Filiani (VoxEU) Nov 4, 2019
Stable sovereign bond markets are crucial to a well-functioning economy and financial system. But despite the importance of amplifications of sovereign bond market tensions related to flights-to-safety and sudden liquidity contractions, there is little direct empirical evidence of the transmission channels through which such catalysts for amplification operate. This column documents significant own- and cross-market interdependencies between liquidity and tail risks that amplify shocks likely attributable to economic fundamentals. The findings demonstrate the potential for the provision of liquidity across sovereign markets to be vulnerable to sudden fractures, with possible implications for euro area economic and financial stability.

Automation and its enemies
Carl Benedikt Frey and Ebrahim Rahbari (VoxEU) Nov 4, 2019
Mechanisation during the Industrial Revolution accelerated economic growth and prosperity in the long term, but it was fiercely opposed by workers who did not share in its short-term gains. This column argues that similar forces are at play today. A new revolution in automation is eliciting resistance since it threatens to render jobs redundant. The column proposes policy interventions to raise productivity and prosperity in the short term, to reap the benefits of the new technologies in the long term.

The mobilisation effects of multilateral development banks
Giulia Lotti and Andrea Presbitero (VoxEU) Nov 4, 2019
Filling the investment gap to achieve the sustainable development goals is one of the most important development challenges. Multilateral development banks can play an important role through a stronger engagement to attract additional resources from the private sector. This column uses data on syndicated lending to a large set of developing countries and shows that MDBs are able to crowd in bank credit to sectors to which they lend. The role of MDBs could be relevant, as they can mobilise up to seven dollars in bank credit for each dollar invested.

What We Talk about When We Talk about Stock Market Crashes
Robert Shiller (Yale Inights) Nov 4, 2019
How the stock market rise of the 1920s, the crash of 1929, and the Great Depression that followed came to be seen as a tale of recklessness and divine punishment—and how that narrative still shapes our understanding of the stock market.

Are U.S. Auto Tariffs Still a Risk?
Erik Nelson (WF) Nov 4, 2019
In May, the Trump Administration delayed by six months a decision on whether to impose tariffs on auto imports from the E.U., Japan and other key trading partners. Nearly six months later, the risk of the U.S. imposing those auto tariffs, specifically on the E.U. and Japan, has lessened.

Is Rising Concentration Hampering Productivity Growth?
Peter J. Klenow, Huiyu Li, and Theodore Naff (FRBSF Econ Letter) Nov 4, 2019
U.S. productivity is growing slower than in the past. Meanwhile, sales have become increasingly concentrated in the largest businesses. Analysis suggests that IT innovation may have facilitated the rise in concentration by reducing the cost for large firms to enter new markets. This contributed to booming productivity growth from 1995 to 2005. Though large firms are more profitable, their expansion may have increased competition and reduced profit margins within markets. Lower profit margins in a given market could have deterred innovation, eventually lowering growth.

Brexit is a warning to Germany’s ECB-bashers
FT View Nov 5, 2019
The country is not immune to the disease of mendacious Euroscepticism.

A third way for Argentina: reprofiling
Carlos Abadi (FT) Nov 5, 2019
With its debt neither sustainable nor unsustainable, Argentina meets the test for maturity extensions.

Why investors should temper optimism over a China trade rally
Alicia García Herrero (FT) Nov 5, 2019
Economy is in worse shape than in 2015 and policies to boost growth are not as effective as they once were.

Trump just gave the Chinese a major trade victory
Brian Klaas (WP) Nov 5, 2019
The United States was effectively missing in action at the Southeast Asian summit on a new trade bloc.

Symphony of strife echoes through trade talks
Gordon Watts (AT) Nov 5, 2019
A US-China deal might be signed off but the broader issues will simply not fade away like an old melody.

The RCEP train left the station, and India, behind
Pepe Escobar (AT) Nov 5, 2019
Biggest story at ASEAN was convergence of moves toward Asia integration, leaving Delhi out for now.

The Bank of Japan Shrinks the Pocket Money of Japanese ‘Salarymen’
Gunther Schnabl and Taiki Murai (Mises Wire) Nov 5, 2019
Abenomics, Japanese Keynesianism on steroids, has made the rich richer, and all others poorer.

President Trump Exaggerates the US Dollar’s Impact on the US Economy
Christopher G. Collins and Edwin M. Truman (PIIE) Nov 5, 2019
Presidents have for decades touted a strong dollar as a sure sign of American economic strength. President Donald Trump has departed from that tradition. “As your President, one would think that I would be thrilled with our very strong dollar,” he has tweeted. “I am not!” Trump’s objective of a weak dollar, measured against the currencies of US trading partners, is to boost US exports and discourage US imports. He blames the Federal Reserve for not helping.

Bridging the productivity gap
Elwyn Davies, Hilda Shijaku, and Christoph Ungerer (Brookings) Nov 5, 2019
Diagnostics of firm-level productivity data uncover staggering performance differentials in country after country—indicating the vast untapped economic potential of bridging the productivity gap. This applies not just to a comparison of productivity across countries. Even comparing firms operating in the same country and in the same sector, gaps are large.

China Has a Glass-Bridge Bubble
Adam Minter (Bloomberg Opinion) Nov 5, 2019
What seemed like a can’t-miss tourist attraction now looks like a dangerous and debt-fueled mistake.

India Turns Its Back on Freer Trade
Mihir Sharma (Bloomberg Opinion) Nov 5, 2019
Refusing to join a massive, regionwide pact is a sign that the country now fears the world rather than embracing it.

Asia’s Big Trade Pact Will Hurt the Global Economy
David Fickling (Bloomberg Opinion) Nov 5, 2019
The China-backed regional deal that India has declined to join accelerates a trend toward rival blocs.

Will Christine Lagarde Do ‘Whatever It Takes’ to Save Earth?
Ferdinando Giugliano (Bloomberg Opinion) Nov 5, 2019
The ECB and the Bank of England need to tread carefully on global warming. This is a problem for democratically elected politicians to solve.

Inequality Isn’t Always a Bad Thing
Mark Buchanan (Bloomberg Opinion) Nov 5, 2019
It can help everyone when more productive people make more money.

U.S. Needs More Skilled Immigrants From Two Countries
Noah Smith (Bloomberg Opinion) Nov 5, 2019
Some of the most ambitious and talented people from India and China want to be Americans.

Can Guyana Survive Striking It Rich?
Mac Margolis (Bloomberg Opinion) Nov 5, 2019
Pro tips for dealing with a near-doubling of your economy in one year.

Rethinking Productivity
Diane Coyle (Project Syndicate) Nov 5, 2019
Today, about four out of every five dollars spent in the OECD economies purchases services or intangible goods. This “dematerialization” of economies demands a more nuanced understanding of what drives productivity.

China Needs Economic Stimulus
Yu Yongding (Project Syndicate) Nov 5, 2019
China’s GDP growth has been slowing steadily since the first quarter of 2010, and the prospect of slower growth has gained widespread acceptance, both within and outside China. But the downward trend is riskier than many observers seem to realize.

Don’t Count on Oil to Reignite Latin America
Mauricio Cárdenas (Project Syndicate) Nov 5, 2019
Some regard Latin America as the world’s new oil frontier, and think that the region could potentially add three million barrels per day to global output during the next decade. But, although Brazil is well placed to ramp up production, Mexico and Venezuela seem unlikely to reverse declining production anytime soon.

Waterbed effects of macroprudential policies
Aerdt Houben, Janko Cizel, Jon Frost, and Peter Wierts (VoxEU) Nov 5, 2019
Macroprudential policies are being implemented around the globe. A key question is whether these policies prompt substitution toward the non-bank financial sector. This column presents compelling evidence of such ‘waterbed effects’ after macroprudential policy action. Substitution towards non-bank credit is stronger when policy measures applied to banks are binding and are implemented in countries with well-developed financial markets. While systemic risks may nonetheless decline, waterbed effects highlight the importance of developing macroprudential policies beyond banking.

Anchored or de-anchored? That is the question
Francesco Corsello, Stefano Neri, and Alex Tagliabracci (VoxEU) Nov 5, 2019
Concerns about the anchoring of long-term inflation expectations to the ECB Governing Council’s aim have re-emerged since early 2019. Using data from the ECB’s Survey of Professional Forecasters, this column argues that long-term inflation expectations have de-anchored from the ECB’s inflation objective. They have not returned to the levels that prevailed before the 2013-14 period of disinflation, and their distribution is still skewed towards lower inflation levels. Moreover, long-term expectations have become sensitive to short-term ones and to negative inflation surprises.

How Exposed Are Services to Goods Sector Weakness?
Jay H. Bryson, Azhar Iqbal, and Sarah House (WF) Nov 5, 2019
A solid October jobs report eased fears about an impending U.S. recession, but activity in the goods sector continues to flounder. In this report, we investigate what is needed for a goods sector decline to spill into services and where the cracks in the service sector might appear first.

Germany will consider EU-wide deposit reinsurance
Olaf Scholz (FT) Nov 6, 2019
We understand that compromises are necessary to complete banking union.

Aluminium market tells a sorry tale of demand
Neil Hume (FT) Nov 6, 2019
Price of industrial metal has ground steadily lower over the past year and a half.

Repo ructions show failure of post-crisis policies
Karen Petrou (FT) Nov 6, 2019
The old ‘Greenspan put’ is now a Powell promise: fear not, the Fed is there for you.

The fool’s gold of emerging market valuations
Lawrence Hamtil (FT) Nov 6, 2019
Where does the EM discount come from?

China and the US should prepare for ‘co-opetition’
Fu Ying (FT) Nov 6, 2019
The countries must maintain a mutually beneficial collaboration while managing a benign rivalry.

Fact or fiction? Xi’s Shanghai claims
Gordon Watts (AT) Nov 6, 2019
The US-China trade war has certainly accelerated Beijing’s ‘opening up’ policy but more needs to be done

Europe: Facing Spillovers From Trade and Manufacturing
IMF Nov 6, 2019
As in the rest of the world, European trade and manufacturing have weakened. There are some signs that this slowdown is spreading into the rest of the economy. While services and consumption have remained relatively resilient in line with strong labor markets, investment is starting to lose steam.

What could a Lagarde-Scholz alliance do for Europe?
Brian Caplen (Banker) Nov 6, 2019
The German finance minister is talking about European deposit insurance. The president of the ECB has the political clout to press for Eurozone reform. At last, writes Brian Caplen, the Eurozone could move forward.

The Feds Spend More on National-Debt Interest Than You Think
Mark Brandly (Mises Wire) Nov 6, 2019
As the government continues to pile up trillion dollar deficits, when interest rates return to a historical norm, interest payments on the national debt may exceed payments to Social Security recipients.

Why investors should temper optimism over a China trade rally
Alicia García-Herrero (Bruegel) Nov 6, 2019
The economy is in worse shape than in 2015 and policies to boost growth are not as effective as they once were.

China’s growing presence on the Russian market and what it means for the European Union
Alicia García-Herrero and Jianwei Xu (Bruegel) Nov 6, 2019
The European Union’s relationship with Russia is strained, but the two economies are nevertheless highly intertwined. A huge share of Russia’s exports go to the EU, while in the early 2000s, EU countries supplied more than half of Russia’s imports. The EU is also a major investor in, and lender to, Russia.

China Risks Overplaying Its Hand on Trade
David Fickling (Bloomberg Opinion) Nov 6, 2019
Trump has little incentive to accept a deal that would be seen as a humiliation.

Where Russia’s Foreign Investment Really Comes From
Leonid Bershidsky (Bloomberg Opinion) Nov 6, 2019
A United Nations economist has figured out a way to make the data on money inflows more realistic.

Europe’s Trade With Iran Is Worth Saving
Esfandyar Batmanghelidj (Bloomberg Opinion) Nov 6, 2019
Despite U.S. sanctions, the EU exports billions of dollars in industrial goods to the Islamic Republic.

Germany Sticks to Its Red Lines on Banking Union
Ferdinando Giugliano (Bloomberg Opinion) Nov 6, 2019
The German finance minister's opening up on a banking union is welcome. But a look at the fine print should temper any optimism.

Fed Interest Rates Can Be the Wrong Tool
Conor Sen (Bloomberg Opinion) Nov 6, 2019
Raising them does fight inflation, but they don’t reduce risk in the financial system.

Using Digital Technology to Narrow the Opportunity Gap
Shang-Jin Wei (Project Syndicate) Nov 6, 2019
Digital technology was not invented to tackle inequality, and there is even a risk that it could widen existing economic and social disparities. But, as the case of China illustrates, new platforms also offer many possible ways to narrow the opportunity gap.

The New Anti-Capitalism
Harold James (Project Syndicate) Nov 6, 2019
It should not be surprising that our era of rapid technological change has coincided with renewed skepticism of capitalism across Western countries. Yet this time is different, not least because of the rise of winner-take-all markets and a shift in the geographic center of the global economy.

Can Investment Incentives Crowd Out Innovation? Evidence from China
Shaowei Ke, Yao Lu, Xinzheng Shi, and Yeqing Zhang (VoxChina) Nov 6, 2019
The Chinese government has been using strong fiscal stimuli to encourage investment. While these fiscal policies, such as investment tax credits, often encourage firm investment, we find that investment tax incentives may generate an unintended reduction of firms’ innovation. Moreover, the crowding-out effect is non-monotonic in the level of financial constraints.

A digital euro to save EMU
Thomas Mayer (VoxEU) Nov 6, 2019
The desire to avoid credit and investment boom-bust cycles has led some to advocate replacing money creation through bank credit extension with direct money issuance by the central bank or a private entity, or linking money to an existing asset. This column, part of the Vox debate on euro area reform, argues that relaunching the euro as digital central bank currency could help reduce the debt of the euro states and end the sovereign-bank doom loop. It would also create a formidable competitor for other global digital currencies likely to emerge in the intermediate future.

East Asian value chains, exchange rates, and regional exchange rate arrangements
Willem Thorbecke (VoxEU) Nov 6, 2019
As the trade surpluses of East Asian countries have continued to exist in regional value chains despite the US-China trade war, one possible tool such economies could employ are currency appreciations. This column shows how exchange rates in upstream countries affect China’s exports. No single economy wants to appreciate its currency against the US dollar for fear of losing competitiveness, but a concerted effort to prioritise regional currencies could benefit the set of countries as a whole.

20 Years of European Economic and Monetary Union: Selected takeaways from the ECB’s Sintra Forum
Philipp Hartmann and Glenn Schepens (VoxEU) Nov 6, 2019
On the occasion of the 20th anniversary of the euro, the experiences with EMU so far and crucial factors for its success going forward were at the core of ECB’s 2019 Sintra Forum on Central Banking. In this column two of the organisers highlight some of the main points from the discussions, including the diverse progress with economic convergence and how it may relate to the geographic agglomeration of industries, the role of fiscal policies relative to monetary policy for macroeconomic stabilisation in the still incomplete monetary union, and selected key determinants of future growth in the euro area.

Is China a Financial Risk to the Global Economy?
Jay H. Bryson, Michael Pugliese, and Hop Mathews (WF) Nov 6, 2019
China's importance in the global economy has risen significantly over the past few decades. Although the country's financial interactions with the rest of the world have grown meaningfully, China does not have the same heft in the global financial system as it does in the global economic system.

Scholz’s banking plan is a chance to move forward
FT View Nov 7, 2019
Eurozone can improve on German finance minister’s opening gambit.

US curbs on tech exports to China risk falling flat
FT View Nov 7, 2019
Washington needs to develop a more coherent strategy and message.

France is a big loser from Brexit
Philip Stephens (FT) Nov 7, 2019
When Britain leaves, the power imbalance between Berlin and Paris will be laid bare.

How to talk on WTO terms (aka gibberish)
Robert Shrimsley (FT) Nov 7, 2019
The phrase has crept into the public discourse, although no one has any idea what it means.

Dose of fiscal stimulus can lift Germany out of the doldrums
Jim McCormick (FT) Nov 7, 2019
Loose monetary policy has not stopped the country’s industrial sector weakening.

Free Trade deal can make Africa the global manufacturing hub
Geoffrey White (FT) Nov 7, 2019
Successful implementation could see 80m jobs transferred from Asia.

Junk investors could soon be kicking themselves
Robin Wigglesworth (FT) Nov 7, 2019
Sweet spot for corporate debt will turn sour for holders of lower-rated credit.

Italy counts the cost of its brain drain
Renée Kaplan (FT) Nov 7, 2019
The young and talented are leaving the country in search of professional opportunities.

Fiscal stimulus can lift Germany out of the doldrums
Jim McCormick (FT) Nov 7, 2019
Loose monetary policy has not stopped the country’s industrial sector weakening.

The U.S.-China trade war is cooling off. But the tech war is heating up.
David Ignatius (WP) Nov 7, 2019
The stakes are high as artificial intelligence enters the picture.

Lebanon’s Richest Need To Take a Haircut
Dan Azzi (Bloomberg Opinion) Nov 7, 2019
Those who benefited from sky-high interest rates have to give up some of their millions.

America’s War on Chinese Technology
Jeffrey D. Sachs (Project Syndicate) Nov 7, 2019
In the run up to the Iraq War, then-US Vice President Richard Cheney declared that even if the risk of weapons of mass destruction falling into terrorist hands was tiny, say 1%, we should act as if it were certain by invading. The US is at it again, creating a panic over Chinese technologies by exaggerating tiny risks.

How to Get Past the US-China Trade War
Dani Rodrik (Project Syndicate) Nov 7, 2019
China and the United States, like all other countries, should be able to maintain their own economic model. But international trade rules should prohibit national governments from adopting “beggar-thy-neighbor” policies that provide domestic benefits only by imposing costs on trade partners.

The return to protectionism
Pablo Fajgelbaum, Pinelopi Goldberg, Patrick Kennedy, and Amit Khandelwal (VoxEU) Nov 7, 2019
The 2018 tariff hikes reversed a decades-long push by the US for lower global trade barriers around the world. This column examines the impact of the resulting trade war on the US economy. It estimates a $51 billion annual loss to US consumers and firms from higher import prices, with an aggregate annual loss of $7.2 billion when producer gains and tariff revenues are factored in. It also argues that US tariffs protected politically competitive counties, whereas retaliations by other nations targeted strongly Republican counties.

A challenging path ahead: The Commission’s Autumn 2019 forecast
Reuben Borg, Marco Buti, Oliver Dieckmann, Björn Döhring, and Alexandru Zeana (VoxEU) Nov 7, 2019
The current weakness of GDP growth and low inflation in the euro area are unlikely to be reversed, by themselves, in the next two years. The near-term outlook will much depend on whether the rest of the economy, in particular the services sector, will remain resilient to the persistent slowdown in manufacturing, and on the continued robustness of employment. This column introduces the European Commission’s Autumn 2019 Forecast, which suggests that while a recession is not in the cards unless major risks were to materialise in the near future, a prolonged period of very low growth and inflation might loom for the medium term. A more supportive economic policy mix is needed to stabilise the economy in the near term, to prevent the risk of protracted sluggishness in the medium term, and to provide impetus to the transition towards an environmentally and socially sustainable economy.

Global Economy Struggles With Negative Rates
Will Hickey (YaleGlobal) Nov 7, 2019
Japan and the EU use negative interest rates to maintain feeble economic growth, but such low rates for the US could destabilize the banking system

Trump Must Put Real Pressure on Cameroon
Chris W.J. Roberts (FP) Nov 7, 2019
Symbolic half-measures like revoking preferential trade status are not enough to force the repressive regime of Paul Biya to change. Canceling IMF loans and military aid would show that the White House is serious.

Germany’s eurozone gambit could meet a swift death
Tony Barber (FT) Nov 8, 2019
Building a more effective, closely united Europe has never presented a bigger challenge.

The US-China supply chain shock
Gillian Tett (FT) Nov 8, 2019
Despite a thaw in trade tensions, many American companies plan to shift production.

Modi must position India as a China alternative
Duvvuri Subbarao (FT) Nov 8, 2019
Labour laws make it hard to attract global companies relocating in the wake of trade tensions.

Time for a US-Georgia free trade pact
James Bacchus (FT) Nov 8, 2019
The imperatives are strategic, commercial and moral.

The roots of Chile’s social discontent
Esteban Jadresic (FT) Nov 8, 2019
Rather than inequality, the causes lie in an extreme disconnect between the public and the political system.

If People Were Paid by Ability, Inequality Would Plummet
Jonathan Rothwell (NYT) Nov 8, 2019
Some may argue that top earners are simply super skilled, but that’s not what the evidence suggests.

How German reunification could change global capitalism today
Dennis Snower and Markus Engels (Brookings_) Nov 8, 2019
Thirty years ago, the Berlin Wall fell. Powerful images come to mind from those heady days of 1989: people dancing on walls. People assumed that from now on freedom would reign around the world. Global capitalism had prevailed over the state-run socialist model, and people spoke of the “end of history.” Today, this euphoria has given way to a more sober mood, not least because Francis Fukuyama‘s prophecy proved wrong on many levels.

Lagarde's Political Agenda Is a Risk for the ECB
Jim Bianco (Bloomberg Opinion) Nov 8, 2019
Using a central bank as a blunt instruments to force government spending is not a good idea.

This Trade Rally Is One Tweet Away From a Crash
David Fickling (Bloomberg Opinion) Nov 8, 2019
If an agreement were really in the works, you’d see more proof in China’s data.

Boris Johnson Wants the Hardest of EU Trade Deals
Therese Raphael (Bloomberg Opinion) Nov 8, 2019
The U.K. can either have a quick trade deal with the EU or it can have one that cuts some of the costs of Brexit. It can’t have both.

OPEC Looks Ahead and Sees Oil's Plateau
Nathaniel Bullard (Bloomberg Opinion) Nov 8, 2019
Climate concerns and the rise of renewables are weighing on the cartel’s forecast for demand growth in the coming decades.

The Next Great Transformation
James K. Galbraith (Project Syndicate) Nov 8, 2019
The world's ability to manage global crises such as climate change depends on our ability to achieve broad-based economic prosperity and stability. Unfortunately, there is overwhelming evidence to suggest that policymakers and the economists on whom they rely have completely misread current macroeconomic trends.

Early 20th century American exceptionalism
Dong Cheng, Mario Crucini, Hyunseung Oh, and Hakan Yilmazkuday (VoxEU) Nov 8, 2019
As the current narrative goes, the loss of US manufacturing jobs is due to competition from China and one way to get the jobs back is by running tariffs up the proverbial flagpole. This column argues that in the case of the automobile industry, history shows exactly the opposite occurred. In the early 20th century, the US achieved exceptionalism in innovation, production and trade in automobiles without domestic tariff protection, while foreign nations languished behind high tariff walls designed to protect their fledgling domestic automobile industries.

Is China Actually Stealing American Jobs and Wealth?
John L. Graham and Benjamin Leffel (HBR) Nov 8, 2019
It’s a political talking point, so let’s look at the data.

Look Within for China’s True Growth Threat
Christopher Balding (Bloomberg Opinion) Nov 9, 2019
Weakness in domestic demand is a bigger danger to the global economy than the trade war with the U.S.

The costs of using a regional trade agreement
Kazunobu Hayakawa, Naoto Jinji, Toshiyuki Matsuura, and Taiyo Yoshimi (VoxEU) Nov 9, 2019
Why don’t all firms utilise regional trade agreement schemes that offer lower tariff rates? This column argues that firms need to incur both variable and fixed costs to comply with rules of origin, which isn’t always worth the benefits. It develops a simple new method to quantify these costs, and finds that reducing fixed costs can be more effective and feasible in enhancing the utilisation of regional trade agreements than a decrease in variable costs.

Can markets repeat the 2016-18 boom?
Gavyn Davies (FT) Nov 10, 2019
As global activity stabilises, risk assets have started to recover.

More foreign capital is a mixed blessing for China
Michael Pettis (FT) Nov 10, 2019
This would be a dangerous way of trying to fix an unstable banking system.

Trade War Frontlines Are Friendlier Than You Think
Daniel Moss (Bloomberg Opinion) Nov 10, 2019
On an island between Japan and South Korea, it’s clear that centuries-old ties between the nations can't be unwound by political rhetoric.

Investors’ Global Turn Depends on Shaky Policy Hopes
Mohamed Aly El-Erian (Bloomberg Opinion) Nov 10, 2019
Rewards for shifting into emerging-market and European stocks could be short-lived.

Does the inflow of precious metals from the New World really explain the 'Great Inflation' in renaissance Europe?
Anthony Edo and Jacques Melitz (VoxEU) Nov 10, 2019
Economists mostly argue that the Great Inflation in renaissance Europe was caused by an inflow of silver. Historians counter that it was caused by population growth. The column uses long-run economic data to argue that the historians' position is credible for England's economy. On this evidence, both contributed equally to inflation during this period. Economists mostly argue that the Great Inflation in renaissance Europe was caused by an inflow of silver. Historians counter that it was caused by population growth. The column uses long-run economic data to argue that the historians' position is credible for England's economy. On this evidence, both contributed equally to inflation during this period.

Central banks must join fight against climate change
Isabelle Mateos y Lago (FT) Nov 11, 2019
There is now a settled consensus that global warming is a financial stability threat.

Is digitisation the fourth stage of the hydrocarbon revolution?
Nick Butler (FT) Nov 11, 2019
Why oil and gas 4.0 is really better described as oil and gas 1.4

The Euro Area's Fiscal Ability to Handle Another Recession Is Limited
Jean Pisani-Ferry (PIIE) Nov 11, 2019
With a possible recession looming, the euro area would normally be preparing to mobilize monetary and fiscal policies to cushion the shock. The problem is that, as previously detailed , there is no room for further monetary easing in the euro area. There does seem to be significant room for fiscal action, but the nonunified status of the euro area severely limits the actual scope for discretionary stabilization. This post assesses the margin of maneuver within the EU rules.

India’s Economy Needs More Than Prayers
Mihir Sharma (Bloomberg Opinion) Nov 11, 2019
After victory in the Ayodhya dispute, Modi has delivered on most of his social agenda. Now’s the time to risk real reforms.

Do 125,000 Farmers Deserve $14.3 Billion?
Lionel Laurent (Bloomberg Opinion) Nov 11, 2019
The EU's system of agricultural subsidies needs reform. A greener approach is a small, but worthwhile, step.

America’s Economy Has Recovered. When Will Jobs?
Karl W Smith (Bloomberg Opinion) Nov 11, 2019
Prime-age employment in the U.S still lags behind that of Germany, Japan and the U.K.

Will China Confront a Revolution of Rising Expectations?
Barry Eichengreen (Project Syndicate) Nov 11, 2019
Amid much discussion of the challenges facing the Chinese economy, the line-up of usual suspects typically excludes the most worrying scenario of all: popular unrest. While skeptics would contend that widespread protest against the regime and its policies is unlikely, events elsewhere suggest that China is not immune.

The High Stakes of the Coming Digital Currency War
Kenneth Rogoff (Project Syndicate) Nov 11, 2019
Just as technology has disrupted media, politics, and business, it is on the verge of disrupting America’s ability to leverage faith in its currency to pursue its broader national interests. The real challenge for the United States isn't Facebook's proposed Libra; it's government-backed digital currencies like the one planned by China.

When does politics work for development?
Saad Gulzar and Benjamin Pasquale (VoxDev) Nov 11, 2019
Political interference in the bureaucracy is generally viewed with suspicion. However, in India bureaucrats implement MNREGA much better in places where politicians are able to claim credit for improvements.

How the iPhone widens the US trade deficit with China
Yuqing Xing (VoxEU) Nov 11, 2019
In order to pursue ‘fair trade’, the Trump administration has imposed a punitive 25% tariff on $250 billion’s worth of Chinese goods. However, conventional trade statistics greatly exaggerate the US trade deficit with China. This column uses the iPhone as an example to demonstrate how the trade deficit is inflated and why value-added should be used to assess the bilateral trade balance. If multinational enterprises, including Apple, shift part of their value chains out of China, China may no longer play a central role in global value chains targeting the US market. Depreciation of the yuan will be insufficient to counter the effect.

The Real Immigration Crisis
Charles Kenny (FA) Nov 11, 2019
The problem is not too many, but too few.

Trade wars send manufacturers scurrying back home
John Redwood (FT) Nov 12, 2019
Economies of China and Germany look exposed as growth shifts.

5 Global Trends Shaping Our Climate Future
Brad Plumer (NYT) Nov 12, 2019
Here's how the next 20 years are shaping up in terms of energy, and what it means for global warming.

Sinophobia simmers across Central Asia
Alexander Kruglov (AT) Nov 12, 2019
In the 'Stans, BRI debt traps, broken promises, corruption and Xinjiang persecution generate resentment and violence.

Upbeat outlook from Chinese banks’ profits masks growing problems for small banks
Alicia García-Herrero and Gary Ng (Bruegel) Nov 12, 2019
The performance of Chinese banks has been resilient so far, despite decelerating growth. While the performance of large banks remained steady, the rebound came from small banks. Why have small banks rebounded and is the rebound sustainable?

Even the Fed's Own Research Shows Rates Are Too High
Timothy A Duy (Bloomberg Opinion) Nov 12, 2019
A new model based on global rather than U.S.-centric inputs has the potential to upend large parts of the financial markets.

Argentina’s New President Faces a Country in Crisis. Where Will He Begin?
Peter Schechter (Brink) Nov 12, 2019
Argentina has, once more, elected a populist Peronist to power, but how he will govern remains a mystery. On December 10, Alberto Fernández takes the helm of a country facing its worst stock market rout in decades, 55% inflation, a deep economic recession, rising poverty and a plunging currency. Peter Schechter, host of the Altamar podcast on global issues, contemplates Argentina's trajectory with Mr. Fernández as the country's leader. Learn more »

Monetary Policy, Price Stability, and Equilibrium Bond Yields: Success and Consequences
Richard H. Clarida (FRBG) Nov 12, 2019
The decline in long-term interest rates and the role of monetary policy.

Millennials on the Cusp of Middle Age Missed Their Boom
Noah Smith (Bloomberg Opinion) Nov 12, 2019
Too many economic forces were against them when they came of age.

When Markets and Mobility Collide
Ricardo Hausmann (Project Syndicate) Nov 12, 2019
Many people, including economists, wonder why a scheduled 3% fare increase on the Santiago metro triggered mass protests that paralyzed the entire country. In fact, the popular response should come as no surprise, and understanding it is crucial to devising better policy solutions.

Is Economic Winter Coming?
Raghuram G. Rajan (Project Syndicate) Nov 12, 2019
Now that the old rules governing macroeconomic cycles no longer seem to apply, it remains to be seen what might cause the next recession in the United States. But if recent history is our guide, the biggest threat stems not from the US Federal Reserve or any one sector of the economy, but rather from the White House.

Why US Inequality Is Higher Than Europe’s
Thomas Blanchet, Lucas Chancel, and Amory Gethin (Project Syndicate) Nov 12, 2019
Since 1980, income inequality has exploded in the United States, while remaining much less extreme in Europe. Yet each side of the Atlantic could learn from the other in tackling the problem, which is as much about predistribution policies as it is about redistribution.

Resolving the missing deflation and inflation puzzles
Jesper Lindé and Mathias Trabandt (VoxEU) Nov 12, 2019
The alleged breakdown of the Phillips curve has left monetary policy researchers and central bankers wondering if we need to develop completely new models for price and wage determination. This column argues that a relatively small alteration of the standard New Keynesian model, combined with using the nonlinear instead of the linearised solution, is sufficient to resolve the two puzzles – the ‘missing deflation’ during the recession and the ‘missing inflation’ during the recovery – underlying the supposed breakdown.

The political colour of fiscal responsibility
Fabrizio Zilibotti, Andreas Müller, and Kjetil Storesletten (VoxEU) Nov 12, 2019
The growth of the US national debt during the Trump presidency is particularly remarkable given its overlap with a period of economic expansion. But in this regard if few others, the Trump administration is no outlier. This column challenges the claim that Republicans adhere to fiscal conservatism in debt policy. Instead, it shows that Republican administrations since WWII have been more prone to expand government debt than their Democratic counterparts. And broadly speaking, the same pattern emerges in a panel of OECD countries.

How the US should deal with China
Martin Wolf (FT) Nov 13, 2019
Washington is in danger of throwing away the leverage its allies could have given it.

US manufacturers hit harder than China’s in trade war
Hudson Lockett (FT) Nov 13, 2019
PMI data support findings of Harvard study into impact of tariffs

Tech economy offers hope to India’s aspirational classes
Henny Sender (FT) Nov 13, 2019
Delivery services such as Zomato create jobs but millions join workforce every year.

US trade war exposes cracks in China’s economy
Gordon Watts (AT) Nov 13, 2019
Premier Li Keqiang warns of ‘mounting downward pressure' as overseas risks become 'even more challenging’.

The Case for Free-Market Liberalism in Africa
Germinal G. Van (Mises Wire) Nov 13, 2019
The African continent is exceedingly rich in natural resources, yet the living standard of Africans is very low. The most plausible explanation for this discrepancy is the lack of a system that protects private property.

The US Dollar's Strength Is Not at Historical Highs
Christopher G. Collins and Edwin M. Truman (PIIE) Nov 13, 2019
When President Trump said he was not thrilled about a very strong US dollar, he departed from a long tradition. Trump wants a weaker dollar relative to currencies of US trading partners to boost US exports. But the dollar has actually not strengthened much over the past four years.

India Imperils Foreign Investment With Telecom Cash Grab
Andy Mukherjee (Bloomberg Opinion) Nov 13, 2019
Century-old Birla empire and Vodafone feel the state’s fickle hand — again.

Wall Street Is Wrong About Negative Interest Rates
Ferdinando Giugliano (Bloomberg Opinion) Nov 13, 2019
There's little evidence in Europe that the policy is harmful. Indeed, it might be more effective if sub-zero rates were passed on to more customers.

Missing the Big Picture on Poverty Reduction
Yuen Yuen Ang (Project Syndicate) Nov 13, 2019
China’s experience lifting hundreds of millions of people out of poverty in just a few decades holds important lessons. First and foremost, while randomized controlled trials and the types of targeted programs they assess may have a role to play in fighting inequality, the most powerful poverty-reduction tool is economic growth.

Global Trade’s Bright (Green) Future
Pascal Lamy (Project Syndicate) Nov 13, 2019
Keeping climate change in check will require reducing the carbon footprint associated with global shipping, which accounts for the bulk of world trade. With governments and the shipping industry already moving in the right direction, the challenge will be to agree on policies that are adequate to the scale of the crisis.

The Fall of the Berlin Wall and Social Democracy
Daron Acemoglu (Project Syndicate) Nov 13, 2019
The fall of the Berlin Wall heralded not only the collapse of communism in Europe, but also the destruction of a broader – and far more constructive – social-democratic compact. To prevent a return to extremism and instability, that compact must be refashioned for the twenty-first century.

The Digital Money Revolution
Huw van Steenis (Project Syndicate) Nov 13, 2019
The rapid pace and sheer scale of innovation in digital currencies and mobile payments indicates that a monetary revolution is forthcoming. The choice for governments and central banks is whether to stand in front of a train that is gaining steam, or get on board and reap the benefits.

The Effect of the China Connect
Chang Ma, John Rogers, and Sili Zhou (VoxChina) Nov 13, 2019
We study the effect on Chinese firms of the Shanghai (Shenzhen)–Hong Kong Stock Connect. The Connect, introduced in the mid-2010s by the government, provided important capital account liberalization. It created a channel for cross-border equity investments into a select set of Chinese stocks while the overall capital controls policy remained in place. Using a difference-in-difference approach, we find that mainland Chinese firm-level investment is negatively affected by contractionary US monetary policy shocks and that firms in the Connect are more adversely affected than those that remained outside of it. These effects are economically large, robust, and stronger for firms with higher leverage, higher dependence on equity financing, a higher share of foreign sales, and those operating in the non-tradable sector, which is all consistent with a financial channel or balance sheet effect. Because firms would try to stay out of the Connect if increased sensitivity to external shocks were the only effect, we broaden our analysis. We find that firms in the Connect hold more cash, enjoy lower financing costs, and earn higher profits than unconnected firms. The implications of our results contribute to the debate on capital controls.

Quantifying the unemployment effects of Trump’s protectionist policies
Céline Carrère, Anja Grujovic, and Frédéric Robert-Nicoud (VoxEU) Nov 13, 2019
Unemployment is absent from most quantitative trade models in the academic literature. Using a trade model that also includes unemployment and data between 2001 and 2008, this column shows that repealing NAFTA and the imposition of 20% bilateral tariffs between the US and Mexico in all sectors would reduce welfare by 0.31% in the US and by 6.6% in Mexico. An US increase of trade barriers on motor vehicles against imports from all countries bar Mexico and Canada would lead to a decrease in long-run welfare and employment in both Mexico and the US as well as in major car-producing countries.

On the decline of R&D efficiency
Tsutomu Miyagawa and Takayuki Ishikawa (VoxEU) Nov 13, 2019
Following the Global Crisis, some countries increased expenditures on research and development (R&D) to address secular stagnation. This column investigates how successful this rise in R&D scale was in supporting productivity growth in Japan and other advanced economies. It argues that R&D efficiency has declined in many of these countries in the past decade, compared to the preceding ten years. This suggests that increasing R&D spending is not enough to foster growth, and that countries need to do more to support innovation and collaboration in carefully chosen sectors.

Trade rules for a new age of cybersecurity and digital commerce
Joshua Meltzer (Brookings) Nov 13, 2019
Many countries are adopting policy measures to respond to the growing cyber-security threat to critical infrastructure, such as telecommunications, transport and healthcare. The importance of developing new cybersecurity-specific trade rules that meet the demands of a changing digital landscape.

Five market axioms that can no longer be relied upon
Mohamed El-Erian (FT) Nov 14, 2019
Many economic, financial and political ‘unthinkables’ have become facts.

What we can learn from the 2020 shipping fuel switch
Maurice Berns and Jamie Webster (FT) Nov 14, 2019
The IMO energy transition, with its clear date and standards, provides valuable lessons.

A recession could fuel a new crypto boom and bust
Adam Reese (FT) Nov 14, 2019
Be wary of jumping into digital currencies as the global economy slows.

Election promises collide with economic reality
Martin Wolf (FT) Nov 14, 2019
Employment is buoyant, but sluggish investment is holding Britain back.

America’s yield curve is no longer inverted
Economist Nov 14, 2019
So, no need to worry about recession? Hmm, maybe.

Some Chinese firms turn out to have lied about their state pedigree
Economist Nov 14, 2019
Being owned by the government goes down well when you are looking for a loan.

Yes, Robots Are Stealing Your Job
Andrew Yang (NYT) Nov 14, 2019
Self-driving trucks will be great for the G.D.P. They’ll be terrible for millions of truck drivers.

Trump can’t let up on China now
Henry Olsen (WP) Nov 14, 2019
It might not be economically popular, but the United States should stay its course against China.

This Shale Oil Deal Puts the ‘Pit’ in ‘Capitulation’
Liam Denning (Bloomberg Opinion) Nov 14, 2019
Frackers are going to consolidate, whether they like it or not.

U.S. Doesn’t Need to Break Up With China
Scott Kennedy and Jude Blanchette (Bloomberg Opinion) Nov 14, 2019
The Trump administration’s policies are drawing the two nations toward a self-destructive decoupling. There’s a better way.

France Tried Soaking the Rich. It Didn’t Go Well.
Noah Smith (Bloomberg Opinion) Nov 14, 2019
A wealth tax and sky-high rates on top incomes didn’t yield much revenue.

Stock Investors Could Use a Refresher on the Basics
Nir Kaissar (Bloomberg Opinion) Nov 14, 2019
Profits, governance and price should always be in vogue.

No, Germany Doesn't Need Stimulus After All
Leonid Bershidsky (Bloomberg Opinion) Nov 14, 2019
Domestic demand and government support for the labor market have compensated for industrial weakness.

Brazil’s Politics and Economics Are Splitting Apart
Mac Margolis (Bloomberg Opinion) Nov 14, 2019
Can a government divided against itself still stand?

Green Markets for Equitable Growth
Graciela Chichilnisky and Peter Bal (Project Syndicate) Nov 14, 2019
The only realistic solution to the climate crisis is to replace fossil-fuel-based energy with renewables quickly and cost-effectively enough to keep the engines of economic growth running. A global carbon market would do just that.

Can Fernández Fix Argentina?
Leandro Mora Alfonsín (Project Syndicate) Nov 14, 2019
By voting President Maurico Macri out of office, Argentinians have signaled that they will no longer tolerate continued economic crisis, much less policies that appear to make matters worse. But, because solutions to Argentina's problems are not mutually compatible, the new government will likely face similar challenges.

A Living Wage for Capitalism
Jim O'Neill (Project Syndicate) Nov 14, 2019
Higher nominal wages for low-paid workers can boost real earnings, increase consumer spending, and help make housing more affordable. And insofar as raising the minimum would increase companies’ wage bill, it would create a stronger incentive to replace labor with capital, which could lay the foundation for renewed productivity growth.

A Green Industrialization Strategy for Africa
Tariye Isoun Gbadegesin (Project Syndicate) Nov 14, 2019
African countries cannot abandon “brown” industries – those that depend on oil, gas, and minerals – and create a green economy overnight. But they can use them as a tool to achieve a clean, sustainable economy.

Why the Hong Kong Protests Have Gone Global
Dawn Brancati and Nathan Law (YaleGlobal) Nov 14, 2019
Democracy protests have unleashed global concerns about the implications of China’s rise

Taxing wealth should be left as a last resort
FT View Nov 15, 2019
The super-rich need to pay more but punitive policies could misfire.

The inverted yield curve is overrated
Gillian Tett (FT) Nov 15, 2019
Financial cycle measures like property prices are better predictors of recession.

Credit market fears have not been realised
Joe Rennison (FT) Nov 15, 2019
More supportive central bank policy has provided a prop as leveraged companies hold back.

Fiscal rethink poses risk to market foundations
Michael Mackenzie (FT) Nov 15, 2019
Calls for spending splurge could seriously disrupt equity valuations.

Singapore imagines a brave new fintech future
Nile Bowie (AT) Nov 15, 2019
Forward-looking city-state is fast emerging as Southeast Asia's financial technology hub.

Trade war turns into a game of chicken
Gordon Watts (AT) Nov 15, 2019
Beijing’s move to lift the ban on US poultry will help reinvigorate trade talks with Washington.

India Can’t Get By Without a Big Bang
Dhiraj Nayyar (Bloomberg Opinion) Nov 15, 2019
The government desperately needs to revive investment. Piecemeal reforms aren’t enough to lift animal spirits.

The Only Word You Need to Understand Emerging Markets
John Authers (Bloomberg Opinion) Nov 15, 2019
China. Its fear of a Minsky Moment is driving a tectonic shift in the availability of money.

Germany Should Prod Its Savers to Take a Few Risks
Leonid Bershidsky (Bloomberg Opinion) Nov 15, 2019
Not even negative interest rates have emboldened Germans to invest in stocks and bonds.

Mind the Learning Gap
M Niaz Asadullah (Project Syndicate) Nov 15, 2019
In setting global targets for closing the gender gap and achieving universal education by 2030, governments and development advocates tend to focus on the need to build more schools and increase enrollment rates for women and girls. But while these objectives cannot be ignored, Afghanistan's experience shows why they are not enough.

Germany Can Reduce Its External Surplus
Dalia Marin (Project Syndicate) Nov 15, 2019
For years, Germany's ballooning current-account surplus has rankled the rest of the world, and German policymakers have thrown up their hands as if powerless to do anything about it. But the external imbalance is a result of policies that are fully within the government's power to change.

Abolish the Billionaires?
Edoardo Campanella (Project Syndicate) Nov 15, 2019
With the richest people in the world continuing to amass ever more wealth, few would dispute that economic inequality is on the rise, or that current disparities will keep growing in the absence of more progressive taxation. But while tax reform is certainly necessary to solve the problem, it is not sufficient.

Exposure to frequent price changes shapes inflation expectations
Francesco D'Acunto, Ulrike Malmendier and Michael Weber (VoxEU) Nov 15, 2019
Policymakers seek to manage inflation expectations, but we understand little about how households form and update their expectations of inflation. The column tests Lucas's conjecture that the price changes households observe, rather than all price changes, drive expectations. A measure of individual household consumption weighted by the frequency of purchase is a statistically and economically significant driver of households' expectations. This challenges the modelling assumptions that central bank policymakers currently make.

International Trade and the Dynamics of Manufacturing Activity
Matthew Famiglietti and Fernando Leibovici (FRBSL Econ Synopses) Nov 15, 2019
New orders for U.S. exports are down. Will that affect output and employment? This essay looks at the depth and timing of possible ripple effects in U.S. manufacturing

China's Growing Real Estate Bubble
Trieu Nguyen (Mises Wire) Nov 16, 2019
Thanks to huge amounts of fiscal and monetary stimulus, China is in the midst of a very large housing bubble, with predictable results for housing affordability.

India Has People. It Needs Consumers
Andy Mukherjee (Bloomberg Opinion) Nov 16, 2019
Supply shocks are no longer the problem. Getting the economy on track needs ordinary people to spend.

“Trumping” the World: Rising Powers Eye a Post-American Global Order
Sreeram Chaulia (Globalist) Nov 17, 2019
As the U.S. steps back from shaping the world order, there is no reason to despair. It presents a historic opportunity for regional powers to fill the vacuum.

China's Industrial Policies Work. So Copy Them
Gabriel Wildau (Bloomberg Opinion) Nov 17, 2019
Washington’s focus on ending Beijing’s subsidies is illogical and self-defeating.

Can automatic fiscal stabilisers replace monetary policy?
Gavyn Davies (FT) Nov 17, 2019
The measures could be effective but will be politically difficult to implement.

Lagarde must resist pressure on inflation target
Wolfgang Münchau (FT) Nov 17, 2019
The new president should ensure governments grasp the interaction of fiscal and monetary policy.

Trump Isn’t the First President to Make War on the Federal Reserve
Amity Shlaes (NYT) Nov 17, 2019
Nixon bullied his Fed chair into lowering interest rates — a political move that wrecked the economy for years.

Pelosi hints that a USMCA deal might be near. It’s a wise move for Democrats.
WP Nov 17, 2019
Once that’s completed, then move right along to other business, including impeachment.

Europe is quietly drifting toward a recession. It might be bad news for us all.
Robert Samuelson (WP) Nov 17, 2019
New European Central Bank President Christine Lagarde finds herself in a bind.

Tokyo’s Trumpian trade troubles
William Pesek (AT) Nov 17, 2019
Abe may have outmaneuvered an in-a-hurry Trump with their FTA, but looking forward, risks remain high.

Rising share prices mask troubled global economy
FT View Nov 18, 2019
Trade war, Brexit and high levels of corporate debt are all unresolved.

Hong Kong is Xi Jinping’s failure
Gideon Rachman (FT) Nov 18, 2019
The revolt raises questions about the Chinese president’s entire project.

Why global capital flows could wreck the bond rally
Miranda Carr (FT) Nov 18, 2019
Money should spill out of dollar assets as China’s economy shifts.

Turn the euro into a stablecoin to save it
Thomas Mayer (FT) Nov 18, 2019
A bond-backed currency would overcome problems created by incomplete monetary union.

Rise of sub-zero bond yields turns economic logic on its head
Tommy Stubbington (FT) Nov 18, 2019
Even Greece now issues negative yielding debt as number of countries paid to borrow grows.

Globalist-Endorsed War on Cash May Be China's Next Terrifying Weapon
Tho Bishop (Mises Wire) Nov 18, 2019
Transitioning to a cashless society is a natural fit for the authoritarian regime in Beijing — and one that has long been sold as “benign” by the more “liberal” globalist elite.

Inflation Inequality Creates Winners and Losers
Tyler Cowen (Bloomberg Opinion) Nov 18, 2019
Technological progress is making life cheaper — but mostly for people who like new stuff.

How to Overcome Losing 600,000 People a Year
Daniel Moss (Bloomberg Opinion) Nov 18, 2019
South Korea’s population is rapidly aging and set to start shrinking. More needs to be done to replenish the workforce.

Institutional change and development in lagging regions in Europe
Andrés Rodríguez-Pose and Tobias Ketterer (VoxEU) Nov 18, 2019
Institutions are an important ingredient for economic growth. Using data from European regions for the period 1999-2013, this column shows that government quality matters for regional growth, and that relative improvements in the quality of government are a powerful driver of development. One-size-fits-all policies for lagging regions are not the solution. Government quality improvements are essential for low-growth regions, and in low-income regions, basic endowment shortages are still the main barrier to development.

Riders on the Storm
Òscar Jordà and Alan M. Taylor (FRBSF Econ Letter) Nov 18, 2019
A country’s interest rate often reflects more than just the policy stance of its central bank. Movements in the global neutral rate of interest and the domestic neutral rate also play a significant role. Estimates from international models for Japan, Germany, the United Kingdom, and the United States show that central bank policy explains less than half of the variation in interest rates. The rest of the time, the central bank is catching up to trends dictated by productivity growth, demographics, and other factors outside of its control.

UK politicians must set out the future for finance
FT View Nov 19, 2019
The City is owed an explanation of how Britain will trade with the EU.

Finance has resisted the push towards deglobalisation
John Plender (FT) Nov 19, 2019
Cross-border capital flows have been supported by a relentless hunt for yield.

Too much debt is being lavished on fossil fuel companies
Pauline Skypala (FT) Nov 19, 2019
Bondholders have been slow to use their muscle to promote sustainable investment.

The great haul of China, illustrated
Steve Johnson (FT) Nov 19, 2019
Beijing is the leading goods supplier to most countries, even as some see signs of a peak.

Trump's December Tariffs Aim at Electronics and Manufacturing, Mostly from Multinational Companies
Mary E. Lovely and Yang Liang (PIIE) Nov 19, 2019
Before September 2019, President Trump’s tariffs on China avoided targeting final consumer goods—and potential consumer backlash. That is about to change.

Macron Wants to Slam the Door on EU Expansion
Leonid Bershidsky (Bloomberg Opinion) Nov 19, 2019
The enlargement process doesn’t need his “reforms,” and dragging it out creates unnecessary risks.

Christine Lagarde Can Face Down the ECB Skeptics
Ferdinando Giugliano (Bloomberg Opinion) Nov 19, 2019
She inherited a governing council riven by political differences. But there's more the European Central Bank can do to boost growth if it wants to.

Stocks Are Getting Some Love, But Can It Last?
Mohamed Aly El-Erian (Bloomberg Opinion) Nov 19, 2019
The immediate outlook is solid, but long-term uncertainty remains.

Zero Real Yields Are Tripping Up Investors
Gary Shilling (Bloomberg Opinion) Nov 19, 2019
Many are still far from recognizing and adapting to the new reality.

No, Corruption Is Not the Root of the Arab World’s Problems
Amr Ismail Ahmed Adly (Bloomberg Opinion) Nov 19, 2019
The real sin of ruling elites is not the capture of state resources, but failing to create enough.

Trump’s Tax Cuts Were Working Until He Started His Trade War
Karl W Smith (Bloomberg Opinion) Nov 19, 2019
The debate about whether the cuts increased business investment misses some crucial points.

Climate Change Is a Financial Crisis, Too
Graham Steele, and Gregory Gelzinis (Bloomberg Opinion) Nov 19, 2019
Regulators must act to prepare the system.

Building a Euro-Japanese Alliance of Hope
Anders Fogh Rasmussen (Project Syndicate) Nov 19, 2019
Faced with Chinese revisionism and the global retreat of the United States, Europe lacks the geopolitical strength and unity to assume America’s mantle as defender of the rules-based multilateral order. Europe therefore needs friends like Japan, and it is now time to take the bilateral relationship up a gear.

Is Sri Lanka the Next Argentina?
Arvind Subramanian (Project Syndicate) Nov 19, 2019
Sri Lanka has long been prone to macroeconomic instability as a result of its deep social and political divisions. If the country's newly elected president, Gotabaya Rajapaksa, pursues policies that perpetuate these divisions, macroeconomic stability will remain elusive.

How the IMF Can Battle Gradual Irrelevance
Mohamed A. El-Erian (Project Syndicate) Nov 19, 2019
These days, the International Monetary Fund’s policy recommendations – especially as they pertain to the advanced economies – have little impact. Although this is partly a consequence of more inward-looking national politics in richer countries, the Fund itself is not blameless.

The US-China trade war is harming communities in the US
Michael Waugh (VoxEU) Nov 19, 2019
Consumers expect to bear the costs of trade wars through higher prices and reductions in variety. This column examines a different hardship of the US-China trade war: the retaliatory tariffs that affect income and production opportunities for directly impacted farmers and workers. Unlike price effects, which are spread across the population, this ‘labour income channel’ is concentrated and differs across US counties. Those who lost their position of comparative advantage for the Chinese market due to tariffs bear this burden of the trade war alone.

The fight to halt the theft of ideas is hopeless
Martin Wolf (FT) Nov 20, 2019
China will not accept inferiority — and the west should not want it to.

Easy money is papering over big cracks in India
Henny Sender (FT) Nov 20, 2019
Local industrialists and investors grumble as foreign investors pick off assets.

The Euro Area Is Not (Yet) Ready for Helicopter Money
Olivier Blanchard and Jean Pisani-Ferry (PIIE) Nov 20, 2019
With dangerously few monetary and fiscal stimulus options available to avert a possible recession in the euro area, policymakers and economists have started discussing a proposal that sounds both exotic and straightforward: If consumer and business investment demand are too low, why not have the central bank issue and send, say, €500 to every man, woman, and child in the euro area? They will spend it, and the economy will recover.

President Xi's Claims of China's Openness to Imports
Gary Clyde Hufbauer (PIIE) Nov 20, 2019
At a time when openness to trade has become too toxic for most world leaders to swallow, President Xi Jinping recently repeated a plea for China to welcome more imports. Speaking at the second China International Import Expo (CIIE), hosted in Shanghai November 5–10, Xi not only called for China to import more, he extolled the World Trade Organization (WTO) and likened globalization to a mighty river, unstoppable despite many shoals.

Malaysia's Window of Opportunity Is Closing Fast
Daniel Moss (Bloomberg Opinion) Nov 20, 2019
Mahathir Mohamad promised a fresh start. Articulating a clear succession plan should be a top priority.

Germany’s Cities Aren’t Ready for the Future
Leonid Bershidsky (Bloomberg Opinion) Nov 20, 2019
A new report shows that municipalities, not digital infrastructure or railroads, are where the biggest investment gap lies.

Two Risks to Stability Are Building Amid Short-Term Calm
William C Dudley (Bloomberg Opinion) Nov 20, 2019
Low Treasury bond yields won’t last, and companies continue to pile on debt that could become junk in a bust.

Trump and Powell Actually Agree About Monetary Policy
Karl W Smith (Bloomberg Opinion) Nov 20, 2019
Their statements about their most recent meeting may be a sign that they realize they have a shared goal.

Andrew Yang’s Math on the Robot Takeover Doesn’t Check Out
Noah Smith (Bloomberg Opinion) Nov 20, 2019
The data don't support the argument that machines are displacing people.

China’s Burst of Small-Business Lending Is a Sham
Shuli Ren (Bloomberg Opinion) Nov 20, 2019
The new “inclusive financing” metric doesn’t include as much as before. The statistics sure look better.

What Next for Unconventional Monetary Policies?
Stephen Grenville (Project Syndicate) Nov 20, 2019
Although interest-rate cuts and central-bank asset purchases were highly effective in resolving the 2008 financial crisis, they have proved utterly disappointing in the years since. At this stage, it should be clear that the sustained weakness of private-sector investment is not a problem central bankers can fix on their own.

Why Financial Markets’ New Exuberance Is Irrational
Nouriel Roubini (Project Syndicate) Nov 20, 2019
Owing to a recent easing of both Sino-American tensions and monetary policies, many investors seem to be betting on another era of expansion for the global economy. But they would do well to remember that the fundamental risks to growth remain, and are actually getting worse.

A Green Light for Public Investment
Robert Habeck and Jesse Klaver (Project Syndicate) Nov 20, 2019
Europe urgently needs a fiscal-stimulus package aimed at bringing about much-needed economic transformation. But while the economic conditions for such an approach are favorable, the political conditions are less so, owing to the German and Dutch governments' misguided insistence on running large budget surpluses.

WTO dispute settlement and the Appellate Body crisis
Matteo Fiorini, Bernard Hoekman, Petros Mavroidis, Maarja Saluste, and Robert Robert Wolfe (VoxEU) Nov 20, 2019
The WTO dispute settlement system is in crisis, endangering the future of the organisation. The proximate reason for alarm is the dwindling number of Appellate Body members, the result of the US blocking new appointments as the terms of sitting members expire. The crisis usually is presented as the US against the world. This column reports on the results of a recent survey of WTO Members’ perceptions of the Appellate Body and the role it plays (or should play). Responses reveal strong support for the basic design of the dispute settlement system, but also that the US is not alone in perceiving that the Body has gone beyond its mandate.

Trade effects of WTO
Mario Larch, José-Antonio Monteiro, Roberta Piermartini, and Yoto Yotov (VoxEU) Nov 20, 2019
Though economic theory clearly makes the case for WTO trade rules, the empirical evidence of their effect is mixed. This column argues that previous studies may have underestimated the positive role of GATT/WTO membership by not taking into account the non-discriminatory nature of their agreements. Besides market access, the agreements provide greater transparency and predictability that benefit WTO members and non-members alike. Taking these effects into account suggests that, on average, GATT/WTO membership has increased trade between Members by 171% and trade between member and non-member countries by about 88%.

India and Japan Eye the Dragon in the Room
Aman Thakker and Elliot Silverberg (FP) Nov 20, 2019
Expanded cooperation between Japan and India is essential to their ability to counter China’s rising influence in Asia.

Abenomics provides a lesson for the rich world
FT View Nov 21, 2019
Japan is not alone in struggling with low growth and little inflation.

Bond markets no longer care about deficits
Tommy Stubbington (FT) Nov 21, 2019
Investors describe a pivot to fiscal policy as central banks seem to be out of ammo.

The road toward Greater Eurasia
Pepe Escobar (AT) Nov 21, 2019
Kazakhstan's first president has road map for 21st century: global alliance of leaders for nuclear-free world.

Hong Kong’s Economy is in Danger of Further Contraction
Alicia García-Herrero (Bruegel) Nov 21, 2019
Approaching the end of a volatile year, Hong Kong continues to face the triple whammy of slower growth in mainland China, the trade war uncertainty and social unrest.

How Can Asia’s ‘Miracle Economies’ Be Replicated?
Reda Cherif and Fuad Hasanov (Brink) Nov 21, 2019
The odds of poor or middle-income countries achieving the stardom of the “Asian miracles” within a generation or two are small. The miracles, such as Hong Kong SAR, Korea and Singapore, veered from the standard growth recipes and instead aimed high. What these countries did differently to create wild economic success.

China Is Out of Economic Ammo Against the U.S.
Noah Smith (Bloomberg Opinion) Nov 21, 2019
It has maxed out tariffs and other trade barriers, and selling Treasuries is ineffective.

Haircuts for Indian Finance — Bald or Bold?
Andy Mukherjee (Bloomberg Opinion) Nov 21, 2019
Bankruptcy reforms will be put to an unexpected test by collapse in the shadow banking sector.

Stocks Care About the Trade War. But Not That Much
John Authers (Bloomberg Opinion) Nov 21, 2019
It’s surprisingly hard to map trends in markets to developments in the U.S.-China conflict.

Italy’s Playing a Dangerous Game With the Euro
Ferdinando Giugliano (Bloomberg Opinion) Nov 21, 2019
The country risks replacing Germany as the biggest impediment to greater European financial integration. And it has the most to lose.

Economists Join Congress in Not Worrying About the Deficit
Karl W Smith (Bloomberg Opinion) Nov 21, 2019
Two emerging schools of thought favor more government debt — but for very different reasons.

A Model Economy Stops Drinking Its Own Kool-Aid
Daniel Moss (Daniel Moss) Nov 21, 2019
Australia is moving closer to embracing what was once unthinkable: the crisis tool of quantitative easing.

The CLO Market Is Sending a Quiet Warning
Mark Gongloff (Bloomberg Opinion) Nov 21, 2019
Investors are shedding riskier debt in fear of a slowdown.

Interpreting rotating global current account surpluses
Menzie Chinn and Hiro Ito (VoxEU) Nov 21, 2019
Global imbalances have reappeared, somewhat transformed, and relocated. Using data from developing and industrialised countries covering 1972-2016, this column shows that fiscal factors, rather than savings glut variables, have accounted for a noticeable share of the recent variation in imbalances, including in the US and Germany. The contribution of demographic factors is large for industrialised countries but not for emerging markets. Net official flows shape global imbalances in both developing and industrialised countries.

Chinese Companies Are Worse at Business Than You Think
Sagatom Saha (FP) Nov 21, 2019
A failed luxury development in Malaysia shows the downsides of dealing with Beijing.

Is Corporate Debt About to Rear Its Ugly Head?
Jay H. Bryson (WF) Nov 21, 2019
As we have written in previous reports, several metrics suggest that the financial health of the non-financial corporate (NFC) sector has deteriorated over the past few years. While it may not be the catalyst of the next recession, the build up of debt in the NFC sector could exacerbate the next downturn.

Investment outlooks hinge on conflicting signals
Michael Mackenzie (FT) Nov 22, 2019
Fund managers must cut through clashing noises from different markets.

Under the radar: the EM bond market rally
Jan Dehn (FT) Nov 22, 2019
Much of the money that fled EM for US stocks and European bonds has yet to return.

Nigeria stands to gain from better trade links with rest of Africa
Andres Schipani (FT) Nov 22, 2019
For such a large economy, business with continental neighbours remains remarkably small.

Market analysts assess Nigeria’s oil and non-oil economic prospects
Steve Johnson (FT) Nov 22, 2019
Investment experts discuss challenges of growth, stock market and security.

China’s tech rivalry with US fueling trade war
Gordon Watts (AT) Nov 22, 2019
Xi’s government plans to outspend the US and put the economy back on track.

How inclusive is growth?
Meagan Dooley and Homi Kharas (Brookings) Nov 22, 2019
Everyone is talking about “inclusive growth.” U.N. Secretary General António Guterres called for inclusive growth in a recent Financial Times op-ed. Former IMF Managing Director Christine Lagarde called for inclusive growth in her 2019 interview in The Economist magazine. The G-20 leaders added pursuit of inclusive growth to their mandate in 2016, pledging to work towards “strong, sustainable, balanced and inclusive growth.” Across the world, in advanced and developing countries, the narrative to explain electoral results and street protests revolves around whether growth has been inclusive. In this blog, we try to tease out the empirics of inclusive growth over the last three decades.

The United States Wins More WTO Cases than China in US-China Trade Disputes
Jeffrey J. Schott and Euijin Jung (PIIE) Nov 22, 2019
Trade wars are not good or easy to win, but the United States does generally win trade disputes, especially against China, in cases it brings to the World Trade Organization (WTO). Contrary to President Trump’s assertion that “We lose the lawsuits, almost all the lawsuits in the WTO,” US officials have won 20 times in their challenges to Chinese trade practices since the first US WTO case against China in 2004. None were lost, and three cases are still pending. Chinese officials have brought 16 complaints against the United States since 2002 and won five, lost one, and gotten a split decision on three, with seven cases pending.

ECB Issues a Partial Mea Culpa in Wake of Woodford and H2O
Mark Gilbert (Bloomberg Opinion) Nov 22, 2019
The central bank acknowledges that its policies are spurring investors to load up on riskier securities.

An Energy Transition with a European Touch
Javier Solana (Project Syndicate) Nov 22, 2019
Whereas the United States under President Donald Trump clearly will be unable to lead the fight against climate change, Europe aims to become the first carbon-neutral continent. And at the heart of the European climate agenda is the imperative of undertaking a “fair transition” to green economic growth.

Europe Needs Its Own Development Bank
Erik Berglöf (Project Syndicate) Nov 22, 2019
The European Union needs a development bank so that it can strengthen its capacity to respond to global and regional challenges – above all, to risks and opportunities in Africa. At a time of increasing uncertainty, growing international threats, and fundamental challenges to multilateralism, solid institutions are needed more than ever.

Dynamism, Innovation, and Germany’s Future
Edmund S. Phelps (Project Syndicate) Nov 22, 2019
Three decades after the fall of the Berlin Wall, Germany has become a "trading nation" with a debilitating aversion to the capitalist spirit of dynamism. Unless it can rediscover its tradition of innovation and groundbreaking contributions to the arts and sciences, it could end up falling ever further behind in the twenty-first century.

Migration and post-conflict reconstruction
Dany Bahar, Andreas Hauptmann, Cem Özgüzel, and Hillel Rapoport (VoxEU) Nov 22, 2019
The economic debate on immigration has focused on migration’s short-term labour market and fiscal effects. Less attention has been given to the long-run economic opportunities linked to migration. This column uses the case of refugees returning to the former Yugoslavia from Germany after the end of the Yugoslav wars to explore the role that returning migrants play in shaping the industrial development of their home country. The findings support the idea that migrants are drivers of knowhow and technology transfers between countries.

Service imports, workforce composition, and firm performance
Andrea Ariu, Katariina Nilsson Hakkala , J. Bradford Jensen, and Saara Tamminen (VoxEU) Nov 22, 2019
Global trade in services increased six-fold between 1990-2017, representing a threat for workers but a growth opportunity for firms that source these services at lowest cost. This column examines the changes in employment composition and performance of Finnish service importers. Firms that increased imports of service inputs reduced employment of low-skill service workers but increased employment of managers. They also improved their sales, assets, and service exports, and were more likely to survive.

Germany and France: The case for structural convergence in the euro area
Declan Costello, Annika Eriksgård Melander, and Martin Hallet (VoxEU) Nov 22, 2019
Over the past ten years there has been a substantial rise in income per capita differences between Germany and France.However, it is not a given that the German economy will continue to outperform the French one, and indeed the picture has changed during 2019. This column argues that structural divergences between member states in the euro area contributed to nominal and real divergences, and suggests what can be done to foster convergence between the two countries.

Does population growth cause conflict?
Daron Acemoglu, Leopoldo Fergusson, and Simon Johnson (VoxDev) Nov 27, 2019
Population surges tend to cause conflict and competition for resources if unaccompanied by productivity growth and unmediated by strong institutions.

Donald Trump’s America Can’t Fight Xi Jinping’s China
James Palmer (FP) Nov 22, 2019
U.S. President Donald Trump and his policies are too inept to stop Beijing’s rise.

Scraping the Bottom
Erik Nelson and Jen Licis (WF) Nov 22, 2019
Although the Eurozone economy has picked up in recent weeks, there are still signs that growth remains weak. In our view, the economy needs to show more concrete signs of stabilization before we call the "all clear" on recession risks.

Modi Finds His Inner Thatcher
Andy Mukherjee (Bloomberg Opinion) Nov 23, 2019
To succeed, India’s privatization program needs to be more than just a response to crisis.

Huawei Is a Paralyzing Dilemma for the West
Andreas Kluth (Bloomberg Opinion) Nov 23, 2019
Western democracies are struggling to balance the geopolitical challenge of China with their need for 5G technology. A common approach is essential.

Humanitarian aid and political motives
Christian Bommer, Axel Dreher, and Marcello Pérez-Alvarez (VoxEU) Nov 23, 2019
International humanitarian aid plays an important role in the response to natural disasters. This column argues that political motives play a role in the allocation of aid. Focusing on the allocation of US humanitarian assistance, it shows that disasters that affect the birth regions of leaders of recipient countries receive substantially more funding than other comparable disasters. This suggests that there is a ‘home bias’ in humanitarian aid.

How Tariffs Lead to More Tariffs
WSJ Nov 24, 2019
Steel makers asked for protection. A keg maker did next. Now brewers?

Abe’s lasting legacy?
Hugo Dobson (EAF) Nov 24, 2019
Abe may best be remembered for centralising decision-making authority within the prime ministerial executive.

Shinzo Abe: A legacy of his own
Sheila A Smith (EAF) Nov 24, 2019
Abe committed Japan to participation in the Trans-Pacific Partnership and went on to become its strongest regional proponent after the United States elected Donald Trump, who would abandon the idea. He went on to conclude the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11) as well as the Japan–EU Economic Partnership Agreement.

OPEC+ Is On Track to Hibernate
Julian Lee (Bloomberg Opinion) Nov 24, 2019
Trade wars. Political instability. Climate change. The world's major oil producers should think twice about doing nothing.

Foreign-born entrepreneurial human capital in the US
Michael Roach, Henry Sauermann, and John D. Skrentny (VoxEU) Nov 24, 2019
The propensity of foreign STEM talent to found or join startups in the US is widely recognised but little understood. Using unique longitudinal data from over 5,600 STEM PhDs, this column reveals that during graduate school, foreign students exhibit more entrepreneurial personality traits and career preferences than their native peers. After graduation, however, they are less likely to found companies or work in startups. These results suggest that US immigration policies may deter newly minted PhDs from participating in entrepreneurship.

The risks to sterling from the UK general election
Gavyn Davies (FT) Nov 24, 2019
There is talk of an impending currency crisis but how likely is that?

Complacency could yet threaten the eurozone
Wolfgang Münchau (FT) Nov 24, 2019
If the populists gain power in France and Italy, the future of the euro will be in their hands.

Brazil needs to keep up the reform momentum
FT View Nov 25, 2019
Jair Bolsonaro should back a controversial pro-growth package.

US energy independence has its costs
Nick Butler (FT) Nov 25, 2019
As the country exports more oil than it imports, global balances shift.

Gold is looking more and more attractive
Rana Foroohar (FT) Nov 25, 2019
Rising US liabilities for entitlements could undermine the dollar.

Emerging markets face wall of dollar debt
Caroline Grady (FT) Nov 25, 2019
Foreign currency redemptions over the next three years will add to fiscal stress.

Brexit has destabilised the Franco-German couple
Gideon Rachman (FT) Nov 25, 2019
Berlin used to rely on the UK to resist the expansion of the EU budget.

Is China's Growth Overstated? Don't Rely on Lower Tax Revenue Growth as Evidence
Nicholas R. Lardy and Tianlei Huang (PIIE) Nov 25, 2019
The growth of VAT collected may not be a good proxy for the pace of expansion of value added. China’s statistics may overstate growth, but the discrepancy between the growth of VAT revenues and value added provides inconclusive evidence.

A Major Step Toward Combating Money Laundering in Europe
Nicolas Véron and Joshua Kirschenbaum (Bruegel) Nov 25, 2019
Combating money laundering in Europe took a momentous step with finance ministers of France, Germany, Italy, Latvia, the Netherlands, and Spain putting forward a joint proposal.

After the US-China Trade War
Stephen S. Roach (Project Syndicate) Nov 25, 2019
Trade truce or not, a protracted Cold War-like conflict between the United States and China has already begun. That should worry the US, which, unlike China, is devoid of a long-term strategic framework.

Building on the Gains from the Long Expansion
Jerome H. Powell (FRBG) Nov 25, 2019
There are two areas where we have an opportunity to build on our gains: a sustained return of inflation to 2 percent, and spreading the benefits of employment.

Involuntary Part-Time Work a Decade after the Recession
Marianna Kudlyak (FRBSF Econ Letter) Nov 25, 2019
Involuntary part-time employment reached unusually high levels during the last recession and declined only slowly afterward. The speed of the decline was limited because of a combination of two factors: the number of people working part-time due to slack business conditions was declining, and the number of those who could find only part-time work continued to increase until 2013. Involuntary part-time employment recently returned to its pre-recession level but remains slightly elevated relative to historically low unemployment, likely due to structural factors.

China central bank warns over rising household debt levels
Tom Hancock (FT) Nov 26, 2019
Doubling of leverage among consumers since 2012 threatens economic growth.

Americans, not Chinese, pay Trump tariffs
Japan Times Nov 26, 2019
When the Trump administration imposed tariffs on Chinese imports last year, officials insisted China would pay the cost — implying Chinese firms would have to cut their prices to absorb import “taxes” of up to 25 percent when the goods hit U.S. shores.

Zombie banks are hard to kill
Brian Caplen (Banker) Nov 26, 2019
Failure to get to grips with small problem banks is hindering growth in both China and Europe.

Beneficial Policies Towards the Venezuela Crisis Depend on Development Finance
Jimmy Graham and Patrick Saez (CGD) Nov 26, 2019
The political and economic crisis in Venezuela has caused the biggest population movement in recent Latin American history. Last year, 5,000 people fled the country every day. As of October 2019, 4.6 million men, women and children have left, almost 15 percent of the population. The majority have settled in countries in the region, like Colombia, Ecuador, and Peru. While the initial response from these countries was positive (over two million residence and regular stay permits have been granted), recent policy changes have created a more restrictive environment.

Latin America's Troubles Prove that Economic Growth Does Not Guarantee Political Stability
Monica de Bolle (PIIE) Nov 26, 2019
The flames of political instability have lately consumed Peru, Ecuador, Chile, Bolivia, and Colombia, following upheavals earlier in Venezuela and Brazil. Economic factors have always played a role in igniting unrest, and many Latin American countries enjoyed prosperity resulting from a commodity boom that began in the early 2000s and went bust a few years ago. But something more complex better explains recent events in Latin America: the fact that economic growth did not bring social mobility in the rigidly segmented societies in Latin America.

Trump's trade war cost Republicans congressional seats in the 2018 midterm elections
Emily Blanchard, Chad P. Bown, and Davin Chor (PIIE) Nov 26, 2019
Just over a year ago, congressional Democrats took majority control of the US House of Representatives, flipping 40 previously Republican seats. [1] New evidence suggests that President Donald Trump’s trade policy played a role.

Markets Are Tempted to Renew Pressure on the Fed
Mohamed Aly El-Erian (Bloomberg Opinion) Nov 26, 2019
The challenge for investors continues to be how best to capture short-term upside while protecting against longer-term uncertainties.

India Must Clean Up or Clear Out Dodgy Brokers
Andy Mukherjee (Bloomberg Opinion) Nov 26, 2019
After the shadow banking crisis, regulators are sweeping their way into dark corners of the stockbroking industry.

Recession Is Edging Closer. Pass the Tequila
John Authers (Bloomberg Opinion) Nov 26, 2019
Mexico’s economy has contracted for two quarters. Does that portend trouble for the U.S.?

How World Bank Arbitrators Mugged Pakistan
Jeffrey D. Sachs (Project Syndicate) Nov 26, 2019
Thanks to the World Bank’s flawed and corrupt investment arbitration process, the rich are making a fortune at the expense of poor countries. The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global mining companies for an illegal project that was never approved or carried out.

The Economic Potential of Gender Parity for Africa
Acha Leke and Lohini Moodley (Project Syndicate) Nov 26, 2019
Although some African countries have made significant progress toward gender parity in various domains, the continent as a whole is falling behind. African policymakers, businesses, and community leaders need to step up their game in at least five priority areas.

Trump’s trade war cost Republicans congressional seats in the 2018 midterm elections
Emily Blanchard, Chad Bown, and Davin Chor (VoxEU) Nov 26, 2019
Just over a year ago, congressional Democrats took majority control of the US House of Representatives. This column examines the relationship between local exposure to President Trump’s trade war and US voting patterns, and suggests that the producer-side consequences of the trade war may have been responsible for five of the 40 seats lost by Republicans in the 2018 midterm elections. The combination of the trade war and attempts to repeal and replace the Affordable Care may have cost the Republicans as many as 15 House seats.

Global Economy Dodges Bullets, But Stuck in Mud
David Dapice (YaleGlobal) Nov 26, 2019
Leaders could revitalize growth by tackling inequality and climate change.

New Oil Finds Could Mean a Tripling of Guyana’s GDP
Morgan D. Bazilian and Paasha Mahdav (FP) Nov 26, 2019
New oil finds would put Guyana among the top 10 oil producers in the world, with a possible total revenue of close to $15 billion per year.

Unsettling precedents for today’s world
Martin Wolf (FT) Nov 27, 2019
Events evoke not the 1930s but the period before the first world war.

Poland sends mixed messages to foreign investors
James Shotter (FT) Nov 27, 2019
Commerzbank’s planned sale of Polish arm mBank will prove test case for ‘re-Polonisation’.

Seven lessons for Europe’s China policy
Martin Sandbu (FT) Nov 27, 2019
The EU must learn to see its peculiarities as strengths rather than weaknesses.

Why Indian groups are struggling to compete with China
Henny Sender (FT) Nov 27, 2019
Delhi’s decision to pull out of regional trade deal driven by protectionist instinct.

Busting the myth of China's New Silk Roads
Bertil Lintner (AT) Nov 27, 2019
Beijing draws on flawed history and appropriates modern misnomers to soft sell its Belt and Road Initiative.

The Power of Green Public Finance
Werner Hoyer (Project Syndicate) Nov 27, 2019
In addition to visionary leadership and a mobilization of businesses, citizens, and civil-society groups, confronting climate change will require massive investments. We cannot count on governments alone to put up the money; rather, we must use public finance to leverage the power of private capital.

East Asia’s Political Vulnerability
Lee Jong-Wha (Project Syndicate) Nov 27, 2019
East Asia has a long tradition of forward-thinking policymaking. At a time of serious economic, political, and social challenges, the region must uphold that tradition – or Latin America’s tumultuous present may be its future.

The Case for Old-Fashioned Tariff Cuts
Jeffrey Frankel (Project Syndicate) Nov 27, 2019
Had governments stood still on trade policy over the last three years, the world would be a lot better off than it is now. Today, policymakers could do worse than return to the post-World War II formula of negotiating the reciprocal elimination of tariffs.

Overpricing in China’s Corporate Bond Market
Yi Ding, Wei Xiong, and Jinfan Zhang (VoxChina) Nov 27, 2019
In China’s corporate bond market, the yield spread of newly issued bonds at their first secondary-market trade is on average 5.35 bps higher than the issuance spread. This overpricing is robust across bond issuances with different credit ratings, maturities, issuance types, and issuer status. Evidence suggests that competition among underwriters drives this overpricing through two specific channels—either through rebates to participants in issuance auctions or through direct auction bidding by the underwriters for themselves or their clients.

Europe needs its own Belt and Road Initiative
FT View Nov 28, 2019
A push to connect the continent will promote autonomy and growth.

Why the dollar doomsayers have it wrong
Joshua Zoffer (FT) Nov 28, 2019
The structure of the international financial system makes regime change difficult.

Lebanon urged to restructure debt as crisis deepens
Chloe Cornish (FT) Nov 28, 2019
Embattled government under pressure to use limited reserves for imports.

Bond ETFs are no menace to the financial system
Jennifer Kim (FT) Nov 28, 2019
Don’t worry about ‘liquidity mismatch’ between funds and their underlying assets.

Vested interests are dragging South Africa down
David Pilling (FT) Nov 28, 2019
Cyril Ramaphosa will be loath to take on the people who helped him to the ANC presidency.

Germany falls out of love with economic orthodoxy
Simon Tilford (FT) Nov 28, 2019
Growing numbers of policymakers and voters back increased investment at home.

The World Trade Organization Is Dying. What Should Replace It?
Lori Wallach (NYT) Nov 28, 2019
Two decades after Seattle, it has failed to deliver on its promises.

China Condemns U.S. Over Hong Kong. That Won’t Stop Trade Talks
Keith Bradsher, Javier C. Hernandez & Alexandra Stevenson (NYT) Nov 28, 2019
Legislation signed by Trump poses a direct challenge to Beijing’s rule, but trade and the softening Chinese economy present bigger problems.

The trading system’s referee is about to leave the field
Economist Nov 28, 2019
Disputes are bound to get nastier.

Inequality could be lower than you think
Economist Nov 28, 2019
But there is plenty to do to make economies fairer.

The Limits of Lagarde
Yanis Varoufakis (Project Syndicate) Nov 28, 2019
Mario Draghi deserves neither hostility nor adulation for his stewardship of the European Central Bank, where he proved adept at working within absurd constraints that forced him to do things that no central banker should ever do. What matters today is that his successor, Christine Lagarde, will have to labor within exactly the same ridiculous constraints.

Bipolar Economics
Andrés Velasco (Project Syndicate) Nov 28, 2019
Randomized controlled trials are the flavor of the month in development economics, with their keenest advocates having just been awarded the Nobel Prize. But can this experimental approach really be counted on to produce better economic policies?

Why some credit investors see higher risk in higher ratings
Joe Rennison (FT) Nov 29, 2019
Fund managers look for companies committed to protecting their balance sheet.

US tech imports crackdown is a sign of creeping distrust
Richard Waters (FT) Nov 29, 2019
Commerce department’s move over national security will affect US groups as well as China.

Stability has destabilised the macro hedge fund
Robin Wigglesworth (FT) Nov 29, 2019
Volatile markets may return but the industry has been forced to adapt.

The death of Chile’s pension promise
Benedict Mander (FT) Nov 29, 2019
Protesters urge overhaul of system once lauded as the ‘Mercedes-Benz’ of retirement provision.

Japan’s demographic time bomb is Asia’s warning
William Pesek (AT) Nov 29, 2019
Latest IMF advice is dire, but there are no easy answers to a trend that is morphing into a regional growth killer.

The Billionaire Problem
Simon Johnson (Project Syndicate) Nov 29, 2019
Writing in the 1830s, as the Industrial Revolution gathered pace, Honoré de Balzac anticipated the broader social concern: “The secret of great fortunes without apparent cause is a crime that has been forgotten, because it was properly carried out.” But today's billionaires make forgetting impossible.

Demographics and technology explain secular stagnation and more
Henrique Basso and Juan F Jimeno (VoxEU) Nov 29, 2019
Advanced economies will face large demographic and radical technological change in the next decades. This column shows how demographics and endogenous technological changes, which encompass both innovation and automation, can interact to limit the future prospects for growth and alter the factor income distribution. Due to a trade-off between innovation and automation, lower fertility and population ageing are likely to generate more automation, but also lead to a reduction in GDP per capita growth and the labour income share.

Optimal policy responses to the growing polarisation of occupations in space
Esteban Rossi-Hansberg, Pierre-Daniel Sarte, and Felipe Schwartzman (VoxEU) Nov 29, 2019
The increasing concentration of high-wage, cognitive non-routine occupations in larger cities in the US has not always benefited workers in other occupations. This column asks whether it is possible to re-allocate occupations across locations and benefit all workers. Drawing conclusions from a spatial equilibrium framework, it finds that a policy of city- and occupation-specific transfers can improve welfare for all workers and also allow the revitalisation of smaller cities. The policy would lead to every occupation having its own affordable and enjoyable hub.

Chile’s insurgency and the end of neoliberalism
Sebastian Edwards (VoxEU) Nov 30, 2019
In a few decades, Chile experienced dramatic economic growth and the fastest reduction of inequality in the region. Yet, many Chilean citizens feel that inequality has greatly increased. Such feelings of 'malestar' triggered the violent social unrest of October 2019. This paper explains this seeming paradox by differentiating ‘vertical’ (income) inequality from ‘horizontal’ (social) inequality. It argues that the neoliberalism that created Chile’s economic growth is no longer effective and that Chile may be headed towards adopting a welfare state model.