News & Commentary:

Articles/Commentary

Europe holds all the cards in the Brexit talks
Charles Grant (FT) Dec 1, 2017
EU negotiators are confident Britain will eventually accept a deal on their terms.

Bitcoin: an investment mania for the fake news era
Gary Silverman, Hannah Murphy and John Authers (FT) Dec 1, 2017
The cryptocurrency has attracted people who mistrust institutions — and those looking for a way to get rich quick.

Don’t Be Fooled by ‘Secular Stagnation’
Phil Gramm and Michael Solon (WSJ) Dec 1, 2017
American exceptionalism hasn’t come to an end, and we needn’t settle for 2% economic growth. What the U.S. needs is policies like Reagan’s, not Obama’s.

Why today's bitcoin bubble recalls tulip mania and the dot.com craze
Laurent Belsie and Michael Holtz (CS Monitor) Dec 1, 2017
The digital currency draws throngs in South Korea and Japan, and US regulators have OK'd bitcoin futures. But the bubble could end badly for investors, with uncertain ripple effects.

Why Canada Must Pursue a Trade Relationship with China
Fen Osler Hampson and Derek Burney (CIGI) Dec 1, 2017
The uncertain future of the North American Free Trade Agreement forces Canada to look for a "Third Option" trading partner. Given China's economic ascendancy and geopolitical influence, Fen Osler Hampson, director of CIGI's Global Security & Politics Program, and Derek Burney say the time is right for a Canada-China trade relationship.

The Risky Lure of Passive Investment Proxies
Mohamed Aly El-Erian (Bloomberg View) Dec 1, 2017
The strategy maintains a claim on the upside, but also offers the possibility of a quick exit.

Politics Isn't Blocking Mexico's Rate Cut. Now Trump Is.
Daniel Moss (Bloomberg View) Dec 1, 2017
Nafta looks imperiled, and the Mexican economy along with it.

Housing Is Safe From Washington
Gary Shilling (Bloomberg View) Dec 1, 2017
The rally in homebuilders' shares seems well-supported and may continue whatever happens to the mortgage interest deduction.

Four Ways to Beat HIV/AIDS
Heather Bresch (Project Syndicate) Dec 1, 2017
In 2016 alone, one million people died from HIV-related causes, while 1.8 million more became infected. Contrary to popular myth, the world has not turned the corner on AIDS – and has little chance of doing so without significant further progress on increasing the availability of low-cost treatments.

The Economics of China’s New Era
Justin Yifu Lin (Project Syndicate) Dec 1, 2017
With the age of Western global dominance coming to an end, it is China’s time to shine. The potential is certainly there, but to realize it, President Xi Jinping will have to confront serious challenges, from domestic supply-side reforms to expanding international responsibilities.

The US Is Exporting Obesity
Kenneth Rogoff (Project Syndicate) Dec 1, 2017
Left unchecked, rapidly rising obesity rates could slow or even reverse the dramatic gains in health and life expectancy that much of the world has enjoyed over the past few decades. And by forcing its food culture on countries like Mexico and Canada, the US is making the problem worse.

The impact of free trade on domestic industries
Shujiro Urata and Atsuyuki Kato (VoxEU) Dec 1, 2017
Many governments have engaged in free trade agreements to facilitate the growth of regional production networks and global value chains, but critics argue that such agreements damage domestic industries. This column uses Japanese evidence to show that free trade agreements can increase the significance of the domestic industry in a country’s supply chain networks through intra-firm trade, and restrain the hollowing-out of the domestic industry.

The twin peaks of export intensity
Fabrice Defever, Alejandro Riaño (VoxEU) Dec 1, 2017
Received wisdom suggests that the majority of exporters in a country sell most of their output domestically. This column presents recent research that casts doubt on this assumption. The distribution of export intensity varies substantially and in most countries there are ‘twin peaks’, with some firms exporting a lot of their output, and others a little. This would be consistent with a standard model of international trade if the model were adjusted to recognise that firms differ in the demand they face in each market.

Economic consequences of revolutions
Theresa Finley, Raphael Franck and Noel Johnson (VoxEU) Dec 2, 2017
Political revolutions often bring swift regime change leading to short-run economic change, but the long-term consequences are less clear. Some argue that revolutions pave the way for capitalist market growth, while others argue they are only political in nature with limited economic consequence. This column uses extensive evidence from the French Revolution to show that the effects vary across the country and over time. The analysis speaks to questions of concern to developing countries regarding the relationship between institutional change, inequality, and long-run economic development.

Waiting for Inflation
Helen Fessenden (FRB Richmond Econ Focus) Dec 1, 2017
When is inflation too low?

Brexit: harsh history lessons for Britain
Alex Barker (FT) Dec 3, 2017
Britain imagines it is an equal partner in the exit talks. But negotiations over its 1973 entry illustrate who has the upper hand.

China and the US must shape the high-tech future
Kai-fu Lee (FT) Dec 3, 2017
We need a global response to the huge job displacement AI is likely to cause.

Central banking has never looked more daunting
Charles Bean (FT) Dec 3, 2017
The line between fiscal and monetary policy is increasingly blurred.

The Coming Aluminum War
WSJ Dec 3, 2017
Trump and Wilbur Ross tee up tariff brawls for the New Year.

Managing risk and complexity: Legal entity identifier
Stephen Cecchetti and Kim Schoenholtz (VoxEU) Dec 3, 2017
The Global Crisis dramatically revealed the severity of ignorance about risk exposure in the global financial system. A major issue is the complexity of legal structures with webs of subsidiaries and a lack of consolidated information systems. This column describes efforts to address these failings through the launching of a global legal entity identifier. The initiative offers great promise for addressing the complex information problems. However, network externalities imply that its success will depend on participation and adoption incentives.

Stop worrying about Chinese debt
Chen Zhao (FT) Dec 4, 2017
Worries about credit expansion and a looming ‘Minsky moment’ are overblown.

Debt redemption wave of $1tn looms in 2018
Kate Allen (FT) Dec 4, 2017
Investors face challenge in replacing higher yielding bonds in their portfolios.

People, trust and government: Getting the measure
Lara Fleischer (OECD Insights) Dec 4, 2017
Is trust between people and their governments crumbling? What the great philosopher Jean-Jacques Rousseau called the social contract, whereby free citizens voluntarily agree to concede authority to the state in their own interest, could be in question. The OECD’s How’s Life? 2017 report finds that only 38% of people in OECD countries say they trust their government. In 2006, this figure was around 42%. Why is there such a “disconnect” between citizens and their elected representatives?

Addressing the Risk of Food Price Spikes at the WTO Ministerial
Ian Mitchell (CGD) Dec 4, 2017
With a decade since the beginning of the major food price spike in 2007, Ministers gathering at the WTO Ministerial in Buenos Aires this week can make a positive impact on people's lives—with an agreement that will reduce the likelihood and impacts of a food price spike.

The False Choice of Free Trade vs. Protectionism
William Reinsch (Brink) Dec 4, 2017
Most studies show that liberalized trade grows economies and improves productivity. But the gains of trade tend to be long term and diffuse while the losses are short term and specific. The magnitude and pace of change has left some people rudderless. And this is why the trade debate isn't really about trade or even jobs; it's about alienation.

Maybe China Can't Take Over the World
Christopher Balding (Bloomberg View) Dec 4, 2017
Some of its greatest advances depend heavily on local conditions.

How Not to Run a Sovereign Wealth Fund
Sony Kapoor (Bloomberg View) Dec 4, 2017
Poor governance has meant Norway's oil fund has squandered its advantages.

If Central Banks Issue Cash, They Can Issue Cryptocurrencies
Ferdinando Giugliano (Bloomberg View) Dec 4, 2017
Consumers want the anonymity that cash and digital currencies provide.

Artificial Intelligence Still Isn't a Game Changer
Leonid Bershidsky (Bloomberg View) Dec 4, 2017
Machines can beat humans at some things, but they remain one-trick ponies.

With OPEC Meeting Done, Economy Set to Drive Oil
Jason M Schenker (Bloomberg View) Dec 4, 2017
Oil demand is the most important driver of prices in the short term, and OPEC’s forecasts for demand in the year ahead are strong.

Four Ways That 2018 Could Be a Turning Point
Conor Sen (Bloomberg View) Dec 4, 2017
In the economy, in monetary policy, in the technology sector and in politics, it is shaping up to be the most consequential year of the decade.

Workers Get Nothing When They Produce More? Wrong
Noah Smith (Bloomberg View) Dec 4, 2017
But the trickier question is why don't they get the full benefit of rising output.

Government-Run Digital Currencies Could Disrupt U.S. Dominance
Leonid Bershidsky (Bloomberg View) Dec 4, 2017
Venezuela's plans to issue a cryptocurrency are an early warning of an attack on the Western-dominated global financial system.

Era of Low Volatility Will Unwind Formulaically
Dean C Curnutt (Bloomberg View) Dec 4, 2017
History shows an inevitable disruption.

The Elusive Benefits of Flexible Exchange Rates
Gita Gopinath (Project Syndicate) Dec 4, 2017
There is no denying that flexible exchange rates provide valuable monetary-policy independence. But, in a dollar-dominated global trade environment, the ability of a floating currency regime to support full employment is severely limited.

Europe’s Crisis Starts at Home
Mark Leonard (Project Syndicate) Dec 4, 2017
According to conventional wisdom, the biggest threat to the European project is "illiberal" saboteurs on the periphery of the European Union who have decided not to play by the rules. But what this narrative misses is the even deeper divide within EU member states, including bastions of liberalism such as France and Germany.

The Brexit Tragicomedy
Harold James (Project Syndicate) Dec 4, 2017
With the United Kingdom's withdrawal from the European Union looming on the horizon, party politics has become increasingly dysfunctional and divisive. But while Brexit will be bad for the EU, and even more so for the UK, it could also serve as a cautionary tale for other countries in need of a domestic political realignment.

China, the Digital Giant
Kai-fu Lee and Jonathan Woetzel (Project Syndicate) Dec 4, 2017
From retraining those displaced by automation to preventing the rise of tech monopolies, the shift into the digital age is rife with challenges. But the readiness of China's government to embrace the digital age, pursue supportive policies, and avoid excessive regulation has already placed the country at a significant advantage.

On the failure of central clearing counterparties
Vincent Bignon and Guillaume Vuillemey (VoxEU) Dec 4, 2017
To improve financial stability after the Global Crisis, regulators have mandated the use of central clearing counterparties for standardised derivatives. While they are designed to insulate investors against counterparty risk, the central clearing counterparties themselves can fail. This column uses historical data to discuss how this can happen. The results show the risks to financial stability when a central clearing counterparty starts gambling for its resurrection.

Aggregate productivity and the rise of mark-ups
David Baqaee and Emmanuel Farhi (VoxEU) Dec 4, 2017
Mounting evidence suggests that average mark-ups in the US economy have been increasing. This column argues that about half of measured aggregate productivity growth over the last 20 years can be accounted for by firms with higher mark-ups increasing their relative size. This implies that the slowdown in pure technology growth is even slower than suggested by aggregate productivity statistics. Eliminating mark-ups would increase the productivity of the US economy by about 40%.

Now or never for the Chinese economy
Derek Scissors (AEI) Dec 4, 2017
China has fundamental economic challenges, featuring sharp resource constraints, a rapidly aging workforce, and a terrible recent record of debt accumulation. These indicate a process of stagnation, not the continued GDP growth Beijing will of course report. China needs to return to the pro-market reform of 1978–2002, which was abandoned by 2009. Rural land ownership rights and less protection of state-owned enterprises are the key elements. Greatly improved rural education and systemic financial deleveraging would also improve China’s prospects. If Xi Jinping declines to start pro-market reform now, there is little prospect for China to become rich. By the time he is expected to fade from the scene in 2027, the population will have aged further, and China will likely still be wasting resources on state firms.

Brazilian Economy Back from the Brink
Eugenio J. Alemán, Erik Nelson & Shannon Seery (Wells Fargo) Dec 4, 2017
It took a very long time, by Brazilian historic economic standards, but the Brazilian economy is back from the brink and firing on key cylinders. Real personal consumption expenditures and real exports of goods and services are providing all the force they can, as we consider the still difficult political environment that has continued to affect Brazil.

Fix the roof while the sun shines on the world economy
Martin Wolf (FT) Dec 5, 2017
Now a recovery is under way economies need to deleverage.

Southeast Asia ready to embrace blockchain
FTCR Dec 5, 2017
Central banks are wary of cryptocurrencies but keen on the underlying technology.

What China Can Teach Developing Nations About Building Power
Justin Yifu Lin (NYT) Dec 5, 2017
China has embraced globalization, aiming to become an example for emerging economies.

Russian Central Bank: The System Is Stable
IMF News Dec 5, 2017
Russia recently rebounded from a two-year recession caused primarily by sanctions and a steep drop in oil prices. Today, inflation is close to its lowest for the post-Soviet period, the ruble has appreciated in value, and consumers and companies alike are benefiting from easier credit. We sat down with Ksenia Yudaeva, First Deputy Governor of the Central Bank of Russia, at the sidelines of the IMF’s 2017 Annual Meetings to talk about where the economy is headed and what challenges policymakers need to tackle to cement the recovery.

WTO, the Farm Bill, and Developing Countries: A Reading List for the Coming Months
Kimberly Ann Elliott (CGD) Dec 5, 2017
Members of the World Trade Organization will be meeting next week in Buenos Aires to discuss the future of agricultural and other trade policies that could have important implications for food security and jobs in developing countries (eventually). And members of the US House and Senate agricultural committees will be meeting through next year to craft a new five-year farm bill that will help shape global markets and determine how much and how quickly US food aid can be delivered to people in desperate need around the world.

Venezuela Cryptocurrency Scheme: No Way Out of Its Crises
Martin Chorzempa and Monica de Bolle (PIIE) Dec 5, 2017
Venezuela is being strangled by hyperinflation, joblessness, insolvency, corruption, and sanctions imposed by the US government. It has also been suspended from the South American trading bloc Mercosur over the undemocratic practices of the Nicolas Maduro government, among other reasons.

The Truth About Trade
Michael Lind (Brink) Dec 5, 2017
Much of what is called “free trade” today is neither free nor trade–it is transnational production, with its own host of political and economic problems all too often ignored by those who claim that "free trade" always benefits all sides. The shattering of American and European politics by bitter working-class rebellions, our author contends, are a high price to pay for slightly cheaper imports.

Zen and the art of Brexit wobbles
Brian Caplen (Banker) Dec 5, 2017
The Irish border issue shows how tortuous the Brexit process will be and how easily talks could collapse. Worried bankers should study a new report on what happens if there is no deal.

U.S. Can't Walk Away From the Global Migration Crisis
Bloomberg View Dec 5, 2017
Boycotting UN talks won't keep instability at bay.

New York Fed Inflation Gauge is Bad News for Bulls
Joseph G Carson (Bloomberg View) Dec 5, 2017
Real and financial asset values have become unhinged, rising markedly faster than the growth in nominal income.

Untimely Fiscal Stimulus Is a Bond Nightmare
Charles Lieberman (Bloomberg View) Dec 5, 2017
The tax-cut package could boost inflation, prompting faster rate hikes by the Fed.

Resetting the Africa-Europe Relationship
Ibrahim Assane Mayaki (Project Syndicate) Dec 5, 2017
Africa faces a broad range of development challenges, and overcoming them will require huge sums of foreign aid and investment. But as Africa develops, its people will also need partners who recognize that there are mutual benefits to engaging with the continent’s mobile and highly-educated base of human capital.

The Globalization of Our Discontent
Joseph E. Stiglitz (Project Syndicate) Dec 5, 2017
Globalization, which was supposed to benefit developed and developing countries alike, is now reviled almost everywhere, as the political backlash in Europe and the US in recent years has shown. The challenge is to minimize the risk that the backlash will intensify, and that starts by understanding – and avoiding – past mistakes.

China’s Solitary Development Model
Pranab Bardhan (Project Syndicate) Dec 5, 2017
China’s leaders believe their version of economic and political organization is superior to Western systems, and have begun advocating for a “new era” of non-democratic governance. But, for all its allure, the Chinese development model is deficient in fundamental respects, and not easily reproducible elsewhere.

New evidence on the effectiveness of macroprudential measures
Yener Altunbas, Mahir Binici, Leonardo Gambacorta and Andres Murcia (VoxEU) Dec 5, 2017
The main objective of macroprudential tools is to reduce systemic risks – in particular, the frequency and depth of financial crises. Most studies look at the impact of macroprudential measures on credit growth, focusing on country-wide data or bank-level information. This column presents new evidence using credit registry data at the bank-firm level to evaluate the impact on bank risk measures. Results show that macroprudential tools help stabilise credit cycles and contain bank risk.

Agriculture is the key to a prosperous Africa
Agnes Kalibata (FT) Dec 6, 2017
Only investment can replace imports that squander potential and drive the young away.

Business is becoming a battle of the giants
John Gapper (FT) Dec 6, 2017
The rise of Amazon, Facebook and Google means antitrust rules need to be rewritten.

WTO faces an identity crisis with Trump
Shawn Donnan (FT) Dec 6, 2017
The institution’s members are confronted by what many see as an assault on the postwar trading system.

We haven’t prepared for the aging monster
Robert J. Samuelson (WP) Dec 6, 2017
A warning from the OECD.

Canadian Free Trade Framework Mitigates a NAFTA Demise
John M. Weekes (Brink) Dec 6, 2017
There are several moving parts in play that should help mitigate the uncertainty hampering the investment climate in Canada, even now as the U.S. contemplates withdrawing from NAFTA. But businesses that might be affected by a withdrawal should start risk mitigation planning now.

Europe's Central Bank Is Right to Get Tough on Bad Loans
Ferdinando Giugliano (Bloomberg View) Dec 6, 2017
Politicians should support the supervisors' efforts, not oppose them.

The 2018 Outlook for Major Central Banks
Mohamed Aly El-Erian (Bloomberg View) Dec 6, 2017
The biggest risk to asset prices and the global economy would be if the biggest institutions reduce their monetary stimulus at the same time.

Europe's Yield Curve May Hold Key to Markets in 2018
Ben Emons (Bloomberg View) Dec 6, 2017
A narrowing gap between short- and long-term rate should provide a boost to risk assets and the economy.

Nafta Renewal Would Benefit Investors
Komal S Sri-Kumar (Bloomberg View) Dec 6, 2017
Canceling the trade pact could be followed by retaliatory action that hurts American exports.

The UK’s Multilateral Trade Future
Giancarlo Corsetti and Meredith A. Crowley (Project Syndicate) Dec 6, 2017
With Brexit looming, the UK has no choice but to redesign its future trading relationships. As a major producer of sophisticated components, its long-term trade strategy should focus on gaining deep and unfettered access to integrated cross-border supply chains – and that means adopting a multilateral approach.

A Better British Story
Jim O'Neill (Project Syndicate) Dec 6, 2017
Despite all of the doom and gloom over the United Kingdom's impending withdrawal from the European Union, key manufacturing indicators are at their highest levels in four years, and the mood for investment may be improving. While parts of the UK are certainly weakening economically, others may finally be overcoming longstanding challenges.

Whither the Multilateral Trading System?
Daniel Gros (Project Syndicate) Dec 6, 2017
The global economy today is dominated by three major players – China, the EU, and the US – with roughly equal trading volumes and limited incentive to fight for the rules-based global trading system. With cooperation unlikely, the world should prepare itself for the erosion of the World Trade Organization.

Cloth for Wine? The Relevance of Ricardo’s Comparative Advantage in the 21st Century
Simon Evenett (VoxEU) Dec 6, 2017
Two hundred years ago, with a simple yet profound example about England trading cloth for Portuguese wine, David Ricardo introduced the Principle of Comparative Advantage. In this eBook, leading trade policy analysts examine whether Ricardo’s insights remain valid in a world where services as well as good cross borders as does data and technology, where there is a rising China whose growth is heavily dependent on exports, and in the face of a backlash against globalisation.

Chinese Corporate Credit Ratings: Comparing Global and Domestic Agencies
Xianfeng Jiang and Frank Packer (VoxChina) Dec 6, 2017
When comparing the credit ratings of domestic and global agencies on Chinese corporations, because of the differences in ratings scales, it is best to focus on the domestic and global agency orderings of relative credit risk. Testing for differences in the determinants of ratings, we find that asset size is weighed more heavily as a positive factor by domestic agencies, while profitability and state-ownership are weighed more positively by global rating agencies, which also weigh leverage more heavily as a negative factor. In spite of these differences, both domestic and global ratings appear to be priced into the market values of rated bonds.

How different governance systems impact lives: Historical evidence from Vietnam
Melissa Dell, Nathaniel Lane, and Pablo Querubin (VoxDev) Dec 6, 2017
How major economic variances across Vietnam can be traced to differences in governance systems dating back to the 19th century.

Wealth, poverty, and inequality in colonial Jamaica
Trevor Burnard, Laura Panza and Jeffrey Williamson (VoxEU) Dec 6, 2017
Jamaica was considered to be exceptionally rich in the 18th century. Modern historians have tended to perpetuate this idea. This column uses novel methods to shed new light on living standards and inequality in colonial Jamaica. While the country was one of the most expensive places on the planet at the time, this wealth rested in the hands a very small white, slave-owning elite. The rest of the populace, many in slavery, lived at the very edge of subsistence.

A holistic approach to capital requirements under systemic stress
Natalia Tente, Natalja von Westernhagen and Ulf Slopek (VoxEU) Dec 6, 2017
Regulators are still debating the amount of capital needed to support bank losses in a financial crisis. This column presents a new, pragmatic stress-testing tool that can answer the question under macroeconomic stress scenarios. The method models inter-sector and inter-country dependence structures between banks in a holistic, top-down supervisory framework. A test of 12 major German banks as of 2013 suggests that while there is enough capital in the system as a whole, capital allocation among the banks is not optimal.

The New Language of European Populism
Rogers Brubaker (FA) Dec 6, 2017
Why "civilization" is replacing the nation.

It's Not the Technology
Dean Baker (Democracy) Dec 6, 2017
The winners and losers of technological advancement are determined by very deliberate policy choices--namely patents and copyright law--not the technology itself.

Don’t worry about bitcoin — at least not yet
FT View Dec 7, 2017
A bubble, yes, but not a dangerous one until leverage is piled on top.

Europe must create its own ‘big bazooka’ monetary fund
Jean-Pierre Landau (FT) Dec 7, 2017
It would be a mistake to ignore Wolfgang Schäuble’s idea for a second time.

Buoyant emerging markets face a testing 2018
James Kynge (FT) Dec 7, 2017
Big risks are stronger US dollar and a China slowdown that hits global demand.

Global Regulators Agree on Rules to Prevent Financial Crises
Jack Ewing (NYT) Dec 7, 2017
A decade in the making, the so-called Basel III rules would make banks less risky. But the United States is moving in the other direction.

China isn’t America’s rival — pinkie swear
Catherine Rampell (WP) Dec 7, 2017
The country wants you to think its attempt to dislodge the U.S. from its unipolar power perch is a “misunderstanding.”

EU, Mercosur Negotiators Aim for “Endgame” in Trade Talks
Bridges, Volume 21, Number 41 Dec 7, 2017
Negotiators from the European Union and the South American bloc Mercosur are ramping up their efforts to finalise a trade accord between them, with the hopes of announcing a political deal on the margins of the WTO’s Eleventh Ministerial Conference (MC11) in Buenos Aires, Argentina, next week.

Ministers Issue Policy Recommendations to Reduce Steel Overcapacity at Global Forum
Bridges, Volume 21, Number 41 Dec 7, 2017
The first ministerial-level meeting of the Global Forum on Steel Excess Capacity was held last week in Berlin, Germany, as that country’s G20 presidency was drawing to a close, with participants publishing a package of principle-based policy recommendations.

Canada, China Pledge to Ramp Up Trade Cooperation, Weigh Possible FTA Talks
Bridges, Volume 21, Number 41 Dec 7, 2017
Canadian Prime Minister Justin Trudeau and Chinese Premier Li Keqiang finished highly-anticipated meetings in Beijing this week, announcing “new joint partnerships” and a joint statement on climate change, while pledging to continue discussions over whether to launch negotiations for a free trade deal.

Europe Must Tackle Its Banks’ Sovereign Exposures
Nicolas Véron (PIIE) Dec 7, 2017
The euro area faces a year of opportunity for completing the job of fixing the flaws exposed by the past decade of banking and sovereign debt crisis. The crisis is almost certainly over, memories are still fresh, and complacency has not yet fully set in.

NAFTA Needs a Social Chapter
Edgardo Buscaglia (Brink) Dec 7, 2017
Improving the rule of law in Mexico will benefit more than just Mexican people and businesses. It will also attract investment from thousands of American small and medium businesses. These are the businesses that currently would never consider investing in Mexico. They’re frightened away by the country’s corruption and chronic insecurity, and they lack the resources or connections to purchase protection.

India's the Anti-Goldilocks Economy
Mihir Sharma (Bloomberg View) Dec 7, 2017
Growth isn't slow enough to justify crisis measures, nor fast enough to satisfy aspirations.

The Window for EU Reform Has Closed for Now
Leonid Bershidsky (Bloomberg View) Dec 7, 2017
Sorry, Jean-Claude Juncker: Merkel and Macron have other things to do.

Potential for ECB Surprise Boosts Euro's Appeal
Jason M Schenker (Bloomberg View) Dec 7, 2017
While the dollar could strengthen on expectations of more U.S. economic growth and tighter monetary policy, the euro zone is approaching escape velocity.

The Risk If Central Banks Get Trigger Happy in 2018
Daniel Moss (Bloomberg View) Dec 7, 2017
The Fed could respond to continuing growth by squeezing in at least one extra rate hike. And keep an eye on inflation pressures from China.

Does Deregulation Move Markets? Be Skeptical
Cass R Sunstein (Bloomberg View) Dec 7, 2017
To understand how a rollback of regulations might affect stock prices, listen to John Maynard Keynes.

Rage Against the Machine?
Laura Tyson (Project Syndicate) Dec 7, 2017
Almost every aspect of our economies will be transformed by automation in the coming years. But history and economic theory suggest that fears about technological unemployment, a term coined by John Maynard Keynes nearly a century ago, are misplaced.

Europe’s Chance to Lead on Robotics and AI
Guy Verhofstadt (Project Syndicate) Dec 7, 2017
Artificial intelligence could be either the best or the worst thing that ever happened to mankind. To prepare for the profound changes to lives and livelihoods that lie ahead, the European Union should start establishing rules to protect all Europeans – and give the rest of the world a model to follow.

Benign effects of automation: New evidence
Katja Mann and Lukas Puttmann (VoxEU) Dec 7, 2017
Researchers disagree over whether automation is creating or destroying jobs. This column introduces a new indicator of automation constructed by applying a machine learning algorithm to classify patents, and uses the result to investigate which US regions and industries are most exposed to automation. This indicator suggests that automation has created more jobs in the US than it has destroyed.

The fiscal impact of empowering the voters of tomorrow
Graziella Bertocchi, Arcangelo Dimico, Francesco Lancia and Alessia Russo (VoxEU) Dec 7, 2017
Voter turnout in modern democracies tends to be lowest among the young, and politicians are likely to be less responsive to their demands as a result. This column focuses on preregistration, a reform aimed at facilitating voter registration among young Americans. Examining the link between the political participation of various age groups and policy decisions, it shows that adopting preregistration has shifted government spending toward higher education and increased student financial aid, and has promoted an episode of youth enfranchisement.

Brexit passes the first hurdle with divorce deal
FT View Dec 8, 2017
Theresa May has done well to broker an agreement but it is on the EU’s terms.

Brexit has brought the Irish problem back
Anne Applebaum (WP) Dec 8, 2017
And the answer, for now, is a “fudge.”

NAFTA: Scenarios for a Trade Deal in Crisis
Jesse Wheeler and Tim Cooper (Brink) Dec 8, 2017
Even now, NAFTA is likely to emerge from negotiations relatively unscathed, our authors say, citing support from U.S. business leaders and Congress for the pact. But should the U.S. withdraw, it will cause economic damage—especially to Mexico—and undermine the rules-based global trading system.

There Is No Inflation Puzzle—Japan Edition
Joseph E. Gagnon (PIIE) Dec 8, 2017
A previous post showed that current low inflation in the United States does not contradict a standard Phillips curve model adapted to accommodate downward wage and price rigidity. Some readers may wonder whether the Japanese experience also is consistent with such a Phillips curve.

China Goes All In on the Transit Revolution
Nathaniel Bullard (Bloomberg View) Dec 8, 2017
Just one city's fleet of electric buses is bigger than the five largest North American bus fleets combined.

Inequality and the Coming Storm
Edoardo Campanella (Project Syndicate) Dec 8, 2017
In recent decades, the wealth gap between a narrow upper class and the rest of the human population has become a gaping chasm, with far-reaching implications for most countries around the world. Rising inequality may be the greatest economic challenge of our time, but it’s not the first time human civilization has faced it.

Everyone in the world should be taxed on their energy footprint
Iason Athanasiadis (Aeon) Dec 6, 2017
Is it time for a global tax based on intense monitoring of out personal energy footprint?

Assessing the impact of exchange rate movements
Filippo di Mauro, Vlad Demian and Jan-Paul van de Kerke (VoxEU) Dec 8, 2017
It is well-established in theoretical and empirical models that an exchange rate movement affects exports, but we are far from a consensus on the size and relevance of this effect. Macro-based analyses tend to yield very low values for the elasticity of exports to the exchange rate, while micro- or sectoral-based estimations tends to be higher. This column shows that one reason for the disagreement is that macro estimations fail to incorporate the characteristics of the underlying distribution of firm productivity and its asymmetries. Doing so generates higher elasticity estimates than the macro estimations, and greater country-level diversification.

The Commission's "Saint Nicholas" EMU package - no real surprises
Kevin Körner (DB Research) Dec 8, 2017
No real surprises hidden in the “Saint Nicholas” reform package from Brussels, a detailed set of reform proposals and communications that the European Commission published as a “roadmap” for deepening EMU. The proposals build on Commission President Juncker’s September State of the Union speech and, in essence, match closely with the French vision of more stabilization and risk-sharing in the EU, while they also try to meet German demands for better supervision of fiscal rules. The strong focus on anchoring any further integration of the Monetary Union - such as the reform of the ESM and the introduction of a Eurozone budget - in the institutional framework also illustrates the wariness in Brussels of being sidelined in its fiscal competencies and to allow the euro area to further develop on its own.

The WTO: Useless for Trade, Useful for the State
Carmen Elena Dorobat (Mises Wire) Dec 9, 2017
The WTO's end seems nearer now, but governments have a few reasons to keep it alive.

China’s productivity performance revisited
Harry Wu and David T. Liang (VoxEU) Dec 9, 2017
It has been claimed that over 40% of China’s post-reform GDP growth could be attributed to growth in total factor productivity. This column argues that this claim is based on a mis-specified model applied to misused aggregate data. Using a growth accounting framework, it shows that Chinese ICT-producing and ICT-using manufacturing industries were the most important drivers of productivity growth between 1981 and 2012, enabling the economy to compensate for heavy productivity losses caused by misallocation of capital and government interventions.

US economy faces a comedown from a sugar high
Lawrence Summers (FT) Dec 10, 2017
Signs of strength are largely unrelated to government policy.

Sneaking back into Europe’s single market
Wolfgang Munchau (FT) Dec 10, 2017
The Brussels agreement represents a powerful reminder that Britain is leaving the EU.

Invest in workers to boost US productivity
Rana Foroohar (FT) Dec 10, 2017
Too often labour has been viewed as a balance sheet cost rather than as an asset.

How Saudi Aramco is preparing for life after oil
Anjli Raval and Andrew Ward (FT) Dec 10, 2017
The IPO is likely to be the biggest in history, but what will investors be buying?

Democracy Is Far From Dead
Bruce Jones and Michael O’Hanlon (WSJ) Dec 10, 2017
In 12 years, the share of the world’s people who live in ‘free’ countries has risen.

Don’t Believe China’s Trade Hype
Greg Rushford (WSJ) Dec 10, 2017
Beijing runs with the G-33—poorer, protectionist-minded WTO laggards.

Protectionism Is a Negative-Sum Game
Nancy McLernon (WSJ) Dec 10, 2017
Foreign companies operating in the U.S. employ some seven million Americans.

Balancing US–China interests in the Trump–Xi era
David Lampton (EAF) Dec 10, 2017
The United States brokered the regime that contributed to global growth and the avoidance of great power war in the postwar world. In doing so, it fostered the rise of a new constellation of powers, China notable among them, with which it must now deal. If the United States wants to see its interests met, Washington must win Beijing's cooperation rather than try to compel it.

Venezuela lurches further towards dictatorship
FT View Dec 11, 2017
It is vital the international community keeps the pressure on Maduro’s regime.

Brexit is turning into a civilised divorce
Gideon Rachman (FT) Dec 11, 2017
Britain and the EU both want to re-establish an amicable relationship.

Why a long Brexit transition is in everyone’s interest
Janan Ganesh (FT) Dec 11, 2017
London and Brussels should aspire to a trade deal but take their sweet time about it.

Leftovers of emerging markets stocks may leave a bad taste
James Kynge (FT) Dec 11, 2017
Bargain hunters can find cheap shares, but they could be cheap for a good reason.

Asia braces for the end of easy money
Motonao Uesugi (FT) Dec 11, 2017
Higher foreign exchange reserves should help avoid a ‘taper tantrum’ but other risks remain.

The decline of the Swiss private bank
Ralph Atkins and Laura Noonan (FT) Dec 11, 2017
A clampdown on tax evasion is forcing the closure of many institutions.

Britain Opts for "Brexit in Name Only"
Jacob Funk Kirkegaard (PIIE) Dec 11, 2017
The agreement reached on December 8 between the United Kingdom and the Europeans on phase 1 of the British exit from the European Union (EU) reveals a familiar chorus just in time for the holidays.

Modi's Wake-Up Call
Mihir Sharma (Bloomberg View) Dec 11, 2017
India needs a laserlike focus on policies that create jobs.

4 Developments to Watch in Global Economy
Mohamed Aly El-Erian (Bloomberg View) Dec 11, 2017
Some overlooked events last week reinforced the prospects for better growth.

Markets Risk Overvaluing Earnings Repatriation
Gary Shilling (Bloomberg View) Dec 11, 2017
Domestic plant and equipment spending isn’t being held back by a lack of money.

Expect the Fed to Stand By Its 2018 Outlook
Timothy A Duy (Bloomberg View) Dec 11, 2017
Financial markets see that solid growth will prompt the central bank to stick to three rate hikes despite low inflation.

A Truly Global Response to Climate Change
Akinwumi Adesina, Suma Chakrabarti, Bandar M. H. Hajjar, Werner Hoyer, Kundapur Vaman Kamath, Jim Yong Kim, Jin Liqun, Luis Alberto Moreno and Takehiko Nakao (Project Syndicate) Dec 11, 2017
Securing a smooth transition to low-carbon and climate-smart development will require effective global partnerships that mobilize funding and track its impact around the world. That is where the world’s multilateral development institutions come in.

Does Europe Really Need Fiscal and Political Union?
Dani Rodrik (Project Syndicate) Dec 11, 2017
There is a growing sense in Europe, among conservatives and progressives alike, that fiscal and eventual political union is necessary to maintain the euro without damaging economic performance or democratic values. But there is also an alternative, much less ambitious view, according to which only banking union is needed.

Vocational education, manufacturing, and income distribution
Joshua Aizenman, Yothin Jinjarak, Nam Ngo and Ilan Noy (VoxEU) Dec 11, 2017
The Global Crisis and its aftermath has focused attention on increasing inequality, and specifically on declining real incomes of the working poor. Comparing the US to Germany, this column argues that pushing more students to degree-granting colleges may no longer be the most efficient way to deal with the challenges caused by the decline in manufacturing employment affecting, in particular, lower-income households. Well-resourced, well-targeted vocational training can prove to be a better long-term investment in skill acquisition to help ameliorate the difficulties faced by workers whose prospects look to be quite bleak.

A fresh approach to complete the banking union in the Eurozone
Stefano Micossi (VoxEU) Dec 11, 2017
Negotiations on the banking union in the Eurozone have been stuck ever since the Italian government assembled a blocking minority opposing further discussions on proposals to reduce legacy risks in banks’ balance sheets. This column argues that completing the banking union should once again be given priority, and that the European deposit insurance scheme could move forward immediately by providing in its early phase that the ESM would offer a liquidity line to national deposit guaranty schemes that had exhausted their funds, with no sharing of losses.

Trade Liberalization and the Performance of China’s Manufacturing Sector
Loren Brandt, Johannes Van Biesebroeck, Luhang Wang and Yifan Zhang (VoxChina) Dec 11, 2017
China’s entry into WTO resulted in a significant reduction in tariffs on imported manufactured goods into China. We examine the effects of market liberalization on firm and industry performance. Tariff cuts on outputs and intermediates had highly complementary effects on productivity, and explain in upwards of forty per cent of the productivity gains between 1998-2007. The effects on mark-ups were largely offsetting, however lower tariffs on inputs helped to provide additional resources for productivity-enhancing investments.

Nicolás Maduro’s Accelerating Revolution
Jon Lee Anderson (New Yorker) Dec 11, 2017
Venezuela’s President has outmaneuvered his opponents. Can he survive an economy in free fall?

Unhelpful ways in which Britain views productivity
Sarah O'Connor (FT) Dec 12, 2017
The UK needs to invest more in workplace training, technology and infrastructure.

Conventional wisdom on Japan is wrong
Martin Wolf (FT) Dec 12, 2017
The real issue is that Tokyo’s deficits are the mirror image of huge private sector surpluses.

The happiness industry is a symptom of the sad state of society
Lynne Segal (Prospect) Dec 12, 2017
Smile or die.

The great globalisation lie
Dani Rodrik (Prospect) Dec 12, 2017
Third way evangelists presented globalisation as inevitable and advantageous to all. In reality, it is neither, and the liberal order is paying the price.

Brazil Is Turning Its Fiascoes Into a Much-Needed Win
Daniel Moss (Bloomberg View) Dec 12, 2017
Latin America's largest economy was used to corruption and inflation. How will it handle good news?

Why China's Freezing
Christopher Balding (Bloomberg View) Dec 12, 2017
A well-meaning anti-pollution push turned into a debacle.

Two Myths About Automation
Barry Eichengreen (Project Syndicate) Dec 12, 2017
While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the US and across the advanced-country world.

How foreign trade distortions hold back European exporters
Simon Evenett and Johannes Fritz (VoxEU) Dec 12, 2017
The focus of much of the literature on the trade impact of crisis-era protectionism on import restrictions is misplaced. This column introduces the latest Global Trade Alert report, which shows that while import restrictions played their part in holding back European exporters, trade-distorting subsidies were more important.

The changing geography of US manufacturing during the 20th century
Nicholas Crafts and Alex Klein (VoxEU) Dec 12, 2017
The geography of industrial production changed dramatically during the 20th century both across and within countries. This column provides new estimates of changes in the spatial concentration of US manufacturing from 1880 to 1997. The average level across all industries fell by more than half over the period. Although creative destruction has had a strong spatial component, almost all industries can be described as significantly spatially concentrated at all times.

The European trust crisis and the rise of populism
Yann Algan, Sergei Guriev, Elias Papaioannou and Evgenia Passari (VoxEU) Dec 12, 2017
A wave of populism has been gaining ground in the West since 2012. This column uses regional data for 26 European countries to explore how the impact of the Great Recession on labour markets has affected populist voting, political attitudes, and trust. The results indicate a strong link between unemployment and voting for non-mainstream (especially populist) parties. Unemployment is also correlated with increasing distrust of national and European parliaments.

Manufacturing revolutions: The role of industrial policy in South Korea’s industrialisation
Nathaniel Lane (VoxDev) Dec 12, 2017
South Korea’s industrial policy in the late 1970s played a critical role in forging its modern economy. Are there lessons for the developing world?

The Fate of Social Democracy Is Being Decided in Germany
Erik Jones and Matthias Matthijs (FP) Dec 12, 2017
Germany's center-left has is considering another bargain with Chancellor Angela Merkel, with the EU — and its own survival — changing in the balance.

Confronting the Power of Finance: Towards De-financialisation
David Spencer (EFR) Dec 12, 2017
Financialisation has created barriers to investment and a source of crisis. It is also connected to the vicious cycle of low productivity, low investment, and low wages now apparent in countries such as the UK

China’s ‘new era’ presages a golden age — or risks chaos
Jeanne-Marie Gescher (FT) Dec 13, 2017
Xi Jinping seeks to turn dynastic power cycles to his advantage.

China faces family business succession crisis
Naomi Rovnick (FT) Dec 13, 2017
Lack of enthusiasm for the family firm could result in drop in productivity or rise in innovation.

America’s unique selling points are at risk
Dambisa Moyo (FT) Dec 13, 2017
Entrepreneurship, educational institutions and capital markets all face challenges.

Asean economies ill-prepared for old age
FTCR Dec 13, 2017
Southeast Asians believe they will to have to work after retirement age.

Europe’s leaders struggle to contain populist wave
Anne-Sylvaine Chassany and Guy Chazan (FT) Dec 13, 2017
How far-right parties are influencing immigration policy even after losing elections.

British concessions to the EU last week are a matter of grave concern
Owen Paterson (Prospect) Dec 13, 2017
The ECJ should have no role post-Brexit, and “alignment” must not be used to keep us in the Single Market.

Bond Markets Really Are Signalling a Slowdown
Lakshman Achuthan and Anirvan Banerji (Bloomberg View) Dec 13, 2017
Analysts shouldn’t dismiss the yield curve’s message just because inflation expectations have been declining in recent years.

Yellen's Legacy Is Trickier Than It Looks
Bloomberg View Dec 13, 2017
At some point, the Fed's blueprint for normalizing monetary policy may have to change.

Bitcoin and European Bonds Have a Lot in Common
Mark Grant (Bloomberg View) Dec 13, 2017
Economically, sovereign debt yields make no sense and the reckoning may soon be at hand.

Productivity Is Rising If You Know Where to Look
Neil Dutta (Bloomberg View) Dec 13, 2017
Recent capacity growth has been understated.

Can Europe Sustain the Macron Moment?
Carl Bildt (Project Syndicate) Dec 13, 2017
The European Union's political and economic outlook improved dramatically in 2017, following a year in which the bloc reeled from the United Kingdom's Brexit referendum and Donald Trump's election in the United States. But European leaders must not become complacent in 2018, or the EU could be thrown into crisis yet again the following year.

Financial Investors’ Wish List for 2018
Mohamed A. El-Erian (Project Syndicate) Dec 13, 2017
Given how well investors have been doing lately, many are probably hoping for more of the same in the coming year. But what they should really be wishing for is that economic and policy fundamentals improve to the point that they validate existing asset prices, while laying a foundation for greater gains.

How US Corporate-Tax Reform Will Boost Growth
Robert J. Barro (Project Syndicate) Dec 13, 2017
Now that the Republican-led US House of Representatives and Senate have each passed bills to overhaul the tax system, we can start to see what effect the coming changes will have on the US economy. By reducing the costs of investments and cutting the tax rate on corporate profits, the final plan that emerges will likely boost growth substantially.

The Signaling Effect of Offshore Debt Issuance on China’s Domestic Market
Qing Ba and Frank M. Song (VoxChina) Dec 13, 2017
The role of offshore debt issuance in the improvement of Chinese issuers’ creditability and transparency. China has the third largest bond market in the world. However, the absence of an accurate local rating and pricing system deepen the risks in domestic debt sectors. Our recent research finds that after Chinese corporates issue bonds in the offshore market, thus binding themselves to stricter market discipline and information disclosure requirements, the rating and disclosed information from offshore issuance may be of a greater reference value in the assessment of Chinese corporates’ credibility. This in turn leads to a signaling effect on their subsequent domestic debt financing. In addition to providing cheap funding, offshore debt issuance could bring about improvements in the creditability and transparency of Chinese issuers. This is of critical importance in pricing China’s credit risk and enhancing the soundness of China’s bond market.

Analysing the exposure of UK exports to EU tariffs, quotas and antidumping under ‘no deal’
Meredith Crowley, Giancarlo Corsetti, Lu Han and Oliver Exton (VoxEU) Dec 13, 2017
As the recent UK Parliament Select Committee hearing revealed, there is a dearth of analysis of the sector-level risk to exports of a ‘no deal’ Brexit scenario. This column presents an analysis by sector and product, and delivers both good and bad news. In a scenario where trade reverts to WTO rules, the good news is that one-third of UK exports to the EU will remain tariff-free. The bad news is that one-quarter of exports will face high tariffs and/or the risk of restrictive quotas or antidumping duties.

The safe asset shortage, the rise of mark-ups, and the decline in the labour share
Ricardo Caballero, Emmanuel Farhi and Pierre-Olivier Gourinchas (VoxEU) Dec 13, 2017
The US has seen a fall in real interest rates but stable real returns on productive capital in the last few decades. This column argues that these divergent trends are inherently interlinked, and arise from a combination of a rise in the capital risk premium, an increase in monopoly rents from mark-ups, and capital-biased technical change. With these secular trends unlikely to reverse anytime soon, we are likely to live in a prolonged era of low interest rates, high capital risk premia, and low labour share.

Industry growth through spinoffs and start-ups
Atsushi Ohyama (VoxEU) Dec 14, 2017
The length of time industries prosper varies significantly. This column examines why some industries grow and prosper for a long period of time through the lens of submarket creation and destruction. Using data from the Japanese Census of Manufacture, it shows that the creation and the destruction of products allow an industry to continue attracting new entrants, that start-up and spinoff firms are more likely to enter a newly created submarket than incumbent firms, and that new entry is encouraged when unrealised business opportunities are reallocated smoothly.

Why is Lloyd’s of London Insuring American Guns?
Martin de Bourmont (FP) Dec 13, 2017
The iconic British insurance market is good at pooling risk. But critics fear the policies it underwrites could fuel gun violence.

Why Europe need not kowtow to China
Philip Stephens (FT) Dec 14, 2017
With a modicum of confidence, EU nations can set the terms of the relationship.

Investing for good and market returns
Gillian Tett (FT) Dec 14, 2017
Charity is now about trying to harness capitalism and capital markets to promote change.

Britain has more illusions to shed on Brexit
Martin Wolf (FT) Dec 14, 2017
Agreeing a final deal will be complex and probably take years.

How the Brexit divorce deal was struck
Alex Barker and George Parker (FT) Dec 14, 2017
As the talks neared conclusion, mishaps over an agreement for Northern Ireland almost brought Theresa May’s government crashing down.

The U.S. Is Left Behind on Trade
WSJ Dec 14, 2017
The new Japan-EU deal will hurt a slew of American exporters.

The Fed's Inconsistent Numbers
Joseph E. Gagnon (PIIE) Dec 14, 2017
As was widely expected, the Federal Open Market Committee (FOMC) raised its short-term interest rate target one-quarter of a percentage point on December 13 to a range of 1.25 to 1.50 percent. The statement accompanying this decision was little changed from the November meeting.

Simply Adjusting To Lower Oil Prices Will Not Be Enough For Gulf Oil Producers
IMF News Dec 14, 2017
Oil revenues have diminished, resulting in large budget deficits and slower growth, at a time when more jobs are needed to employ the young local population. In a nutshell, that’s the economic challenge facing the six countries in the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In response, these countries are seeking to reduce their reliance on oil, strengthen their budgets, and encourage a more vibrant private sector than can create job opportunities for more people.

The Jones Act Serves No Purpose
Bloomberg View Dec 14, 2017
If the shipping law worked as intended, its costs might be forgiven. But it doesn't.

Latin America Needs a China Strategy
Mac Margolis (Bloomberg View) Dec 14, 2017
Because China definitely has a Latin America strategy.

U.S. Could Give Exporters a Helping Hand
Noah Smith (Bloomberg View) Dec 14, 2017
Certain subsidies are legal, cheap and could help free trade.

Fault Lines Are Growing at the Fed
Daniel Moss (Bloomberg View) Dec 14, 2017
The outlook for inflation could deepen divisions among policy makers.

The Dangerous Delusion of Price Stability
William White (Project Syndicate) Dec 14, 2017
Since the hyperinflation of the 1970s, which central banks were right to combat by whatever means necessary, maintaining positive but low inflation has become a monetary-policy obsession. But, because the world economy has changed dramatically since then, central bankers have started to miss the monetary-policy forest for the trees.

Complacency Will Be Tested in 2018
Stephen S. Roach (Project Syndicate) Dec 14, 2017
Despite seemingly robust indicators, the world economy may not be nearly as resilient to shocks and systemic challenges as the consensus view seems to believe. In particular, the absence of a classic vigorous rebound from the Great Recession means that the global economy never recouped the growth lost in the worst downturn of modern times.

Africa’s Must-Do Decade
Li Yong (Project Syndicate) Dec 14, 2017
In recent decades, some developing countries – mainly in Asia – have managed to industrialize. For African countries to achieve sustainable development, they, too, will have to increase substantially the share of industry – especially manufacturing – in their national investment, output, and trade.

Trade openness and macroeconomic volatility
Francesco Caselli (VoxDev) Dec 14, 2017
Contrary to widely held views, trade can decrease GDP volatility through sectoral specialisation and country-wide diversification.

EU-UK Agreement Kicks Brexit Can Down the Road
Jolyon Howorth (YaleGlobal) Dec 14, 2017
EU and UK leaders demonstrate a willingness to cooperate with Brexit agreement, but uncertainty remains.

The challenges looming for central banks in 2018
FT View Dec 15, 2017
Monetary policy may soon become less predictable for investors.

Rapid changes in the climate for investing in oil
John Plender (FT) Dec 15, 2017
The Paris agreement has quickened the move to a greener economy.

Britain’s New Path to Brexit
WSJ Dec 15, 2017
The choices now are ‘soft’ Brexit or major domestic reforms.

Amendment seven: has parliament finally taken back control on Brexit?
Sionaidh Douglas-Scott (Prospect) Dec 15, 2017
Yes—but too late.

Tackling Migration and Driving Development Through Innovation and Partnerships
Katelyn Gough (CGD) Dec 15, 2017
Countries have seized a window of opportunity to address migration realities now and in the future—and next year is crunch time. An ambitious, non-binding process (political, not legal), the Global Compact marks an opportunity for states to commit to new, fresh thinking and renewed assurances around safe, orderly, and regular migration.

US, India Undermine Multilateralism at WTO Ministerial
Kimberly Ann Elliott (CGD) Dec 15, 2017
Expectations were low for the eleventh World Trade Organization (WTO) ministerial meeting in Buenos Aires, and on most accounts it still managed to under-deliver. This time around, US and Indian negotiators refused to compromise in service of achieving a consensus agreement in any area. Roughly three quarters of WTO members endorsed a precedent-setting, albeit hortatory, declaration on women and trade; the United States and India did not. And there were statements from varying groups of “like-minded” countries to pursue work in areas that could eventually lead to “plurilateral” agreements. Still, it is not clear these efforts are any more likely to overcome the sharp differences that have prevented compromise among the broader membership. And if they do, they could end up marginalizing smaller, less powerful developing countries.

Fifteen Years Isn’t That Long: The SDGs and Holistic Development
Charles Kenny (CGD) Dec 15, 2017
Do the fifteen year targets of the SDGs stand in the way of their vision of integration and sustainability? If you wanted to achieve long term development progress, you’d probably focus on technology change, learning and innovation in policies, and improving institutional functioning. If you wanted to improve outcomes in fifteen years, you’d probably focus on throwing money at technical solutions. The problems with the second approach include that we don’t have the money, and the technical solutions won’t necessarily work best over the long term.

Why We Should Worry About China
Daniel Lacalle (Mises Wire) Dec 15, 2017
The Japanese growth miracle was built on a massive debt bubble. China presents many similarities in its economic model.

The Foundations of Technological Transformation in Africa
Christine Lagarde (IMF) Dec 15, 2017
On the impact of technology for the economies of Africa and the new opportunities being created for the next generation.

Are Emerging Markets Still on High Ground?
Gene Frieda (PIMCO) Dec 15, 2017
A recent performance setback in local bond markets has led some investors to fear that the recovery cycle may be short-circuiting.

Basel III Is Too Kind to Europe's Banks
Bloomberg View Dec 15, 2017
The new standards for capital have been watered down to win over the EU.

Europe Is Not Ready for the Next Migration Surge
Leonid Bershidsky (Bloomberg View) Dec 15, 2017
The refugee crisis is subsiding. The political crisis is still going strong.

The Euro Zone Needs More Than a New Roadmap
Ferdinando Giugliano (Bloomberg View) Dec 15, 2017
It will take European capitals, not plans from Brussels, to reform monetary union.

Europe's Sovereign-Bank 'Doom Loop' Can't Be Broken
Sony Kapoor (Bloomberg View) Dec 15, 2017
The European Union's effort to break the link between banks and government debt may make things worse.

Europe's Central Bank Faces Decision Time in 2018
Daniel Moss (Bloomberg View) Dec 15, 2017
Next summer Mario Draghi will need to decide whether to end quantitative easing ... and what to do next.

Stocks and Bonds Are Sending the Correct Signals
Lena Komileva (Bloomberg View) Dec 15, 2017
Although the economy is not about to fall into recession, it is close to the peak for the current growth cycle.

The Fed's Long-Awaited Wage Inflation Is at Hand
Danielle DiMartino Booth (Bloomberg View) Dec 15, 2017
Producer prices are accelerating at the fastest pace since 2012. That has begun to seep through to wages.

Inequality in the Twenty-First Century
Kaushik Basu (Project Syndicate) Dec 15, 2017
As inequality continues to deepen worldwide, we do not have the luxury of sticking to the status quo. Unless we confront the inequality challenge head on – as we have just begun to do with another existential threat, climate change – social cohesion, and especially democracy, will come under growing threat.

Labour clauses in trade agreements promote Southern exports to the North
Céline Carrère, Marcelo Olarreaga and Damian Raess (VoxEU) Dec 15, 2017
Protecting workers through the inclusion of labour clauses in trade agreements has become more common since the first such causes were included in NAFTA, but some argue that by increasing labour costs in developing countries, they represent a form of protectionism. This column uses new data to argue that there is no evidence for adverse effects on trade from labour clauses. When such clauses are strong, and if they emphasise cooperation in their implementation, they have a positive effect on the commercial interests of developing countries.

Confidence, uncertainty and macroeconomic fluctuations
Laura Nowzohour and Livio Stracca (VoxEU) Dec 15, 2017
At an intuitive level, economists and non-economists alike find it plausible that economic sentiment and economic developments are related. This column surveys recent theoretical and empirical work on the role of sentiment as a driver of the business cycle. Sentiment measures are found to be weakly correlated at the country level, but highly correlated across countries. Further, sentiment seems most closely correlated with economic and financial variables, and tends to be forward looking.

Half a Century of Anti-tax Orthodoxy Is Wrong
Felicia Wong (Boston Review) Dec 15, 2017
Taxation is at the heart of any serious economic growth policy.

A Billionaire, a Minority Government, and a Few Communists Walk Into Parliament...
Emily Tamkin (FP) Dec 15, 2017
Yet another billionaire promising to run the country like a business ... bu this one has to get past parliament.

Global Chartbook: December 2017
Jay H. Bryson, Michael Pugliese, Abigail Kinnaman and Shannon Seery (WF) Dec 15, 2017
The global economic rebound that has taken place in 2017 has carried its momentum into the final quarter of the year, creating a 'rising tide' effect that has helped lift growth in much of the world. We continue to expect real global GDP growth to register 3.5 percent in 2017, up from 3.2 percent in 2016.

Can the Trump boom last?
Economist Dec 16, 2017
America’s president is not the architect of the economy’s strength. But for the time being things will go his way

Making the Most of the Brexit Deal
Jean Pisani-Ferry (Project Syndicate) Dec 16, 2017
A chaotic Brexit, in which key questions about the relationship between the UK and the EU are left unanswered, may be avoided, but severe political and economic harm could still await both sides. What, then, accounts for the evident lack of urgency in taking the necessary steps to avoid such a scenario?

The economics of the Bitcoin payment system
Gur Huberman, Jacob Leshno and Ciamac C. Moallemi (voxEU) Dec 15, 2017
Cryptocurrencies have caught the attention of industry, academia, and the public at large. This column analyses an economic model of a cryptocurrency system featuring user-generated transaction fees, focusing on Bitcoin as the leading example. The Bitcoin system requires significant congestion to raise revenue and fund infrastructure or risk collapse in the long term. Moreover, the current design of the system – specifically the processing of large but infrequent blocks of transactions – makes it less efficient at raising revenue.

Democracy and economic growth: New evidence
Daron Acemoglu, Suresh Naidu, James Robinson and Pascual Restrepo (VoxDev) Dec 15, 2017
Democracy sees higher GDP due to greater civil liberties, economic reform, increased investment and government capacity, and reduced social conflict.

Pre-Designated Potential: Golden Eggs and Invisible Shadows
Jeaneth Johansson, Malin Malmström and Joakim Wincent (EFR) Dec 15, 2017
Financial inclusion is a core issue in the global economy as a key driver of economic growth and sustainable development. Finance is a vital factor for venture success, however, gaining access to that finance is particularly challenging for women entrepreneurs facing social barriers.

Bitcoin, Cryptos and Financial Asset Bubbles
Jack Rasmus (EFR) Dec 15, 2017
At less than $1000 per coin in January, Bitcoin prices surged past $11,000 this past November. It then corrected back to $9,000, only to surge again by early December to more than $15,000. Given the forces behind Bitcoin, that scenario is likely to continue into 2018 before the bubble bursts.

Outook 2018: Robust growth - fragile politics
Barbara Böttcher, Sebastian Becker, Dieter Bräuninger, Eric Heymann, Jochen Möbert, Marc Schattenberg and Stefan Schneider (DB Research) Dec 28, 2017
With a growth rate of probably 2.3% in 2017, Germany delivered the main positive surprise in the industrial world. In 2018, German GDP looks set to expand by 2.3% again. If this forecast materialises, Germany will grow at an above-potential rate for the fifth year in a row. The upcoming wage round and resilient demand combined with the global decline in free capacities might, however, push up prices more strongly than currently expected. We already voiced concerns ahead of the Bundestag elections that the new government (just like its predecessor) might not pay sufficient attention to urgent challenges such as digitalisation, demographics and globalisation as the labour market situation is favourable. Now that forming a government has turned out to be unexpectedly difficult our concerns have increased.

Straight Talk on Trade, by Dani Rodrik
Shawn Donnan (FT) Dec 17, 2017
A call for change from an economist critical of governments’ embrace of free trade.

European businesses demand clarity on Brexit
Bernard Spitz (FT) Dec 17, 2017
It is astonishing the UK has waited so long to talk about where it wants to end up.

Trade tussle with China tests the global system
FT View Dec 17, 2017
US, EU and Japan bump up against its entrenched political economy.

Eurozone reform outranks Brexit as a threat to EU
Wolfgang Munchau (FT) Dec 17, 2017
The cyclical recovery has deflected attention from a series of unresolved issues.

The real price of Brexit begins to emerge
Chris Giles (FT) Dec 17, 2017
The weekly hit to the British economy could be the same £350m that Leave campaigners promised to claw back.

Ramaphosa’s chance to change South Africa
FT View Dec 18, 2017
Rooting out corruption and improving education are top priorities.

Why the Germans are right about economics
Gideon Rachman (FT) Dec 18, 2017
Policy must be about justice as well as growth, as mainstream politics has learnt.

The Bitcoin Boom: In Code We Trust
Tim Wu (NYT) Dec 18, 2017
Bitcoin may be in a bubble, but it is part of a much bigger trend that is here to stay: a shift in trust from government to technology.

Bitcoin is big. But fedcoin is bigger.
Campbell R. Harvey (WP) Dec 18, 2017
Just imagine if central banks adopted blockchain technology.

Why is America more tolerant of inequality than many rich countries?
Economist Dec 18, 2017
Ignorance about the scale of the problem is part of the answer.

What 2018 has in store for the markets
Economist Dec 18, 2017
Investors are very optimistic. But two analysts think they may be ignoring a big risk.

The United States Wins from Trade Agreements
Caroline Freund (PIIE) Dec 18, 2017
President Trump argues that the United States is losing in the World Trade Organization (WTO) because our tariffs are lower than other countries. He also claims that the United States loses in free trade agreements because we get bad deals and make more concessions than our trade partners.

AIIB Growing Pains and Opportunities: Three Takeaways
John Hurley (CGD) Dec 18, 2017
Last week the Asian Infrastructure Investment Bank’s (AIIB) board of directors approved financing for three projects, including, for the first time, a project in China. Looking back at AIIB operations to date, these are my three takeaways.

The World Still Needs the WTO
Bloomberg View Dec 18, 2017
But it can't succeed unless the U.S. commits to free trade.

Let China's Workers Roam Free
Michael Pettis (Bloomberg View) Dec 18, 2017
Clamping down could make the struggle against debt much harder.

Populism Looms Over Latin America's Election Year
Shannon O'Neil (Bloomberg View) Dec 18, 2017
Rage at the ballot box may set back the region's fight against corruption.

Tax-Cut Benefits Would Be Erased by Damage From Trade Policies
Komal S Sri-Kumar (Bloomberg View) Dec 18, 2017
Stocks will be hit if restrictive measures result in foreign retaliation.

Cryptocurrencies Are Starting to Affect the Real Economy
Conor Sen (Bloomberg View) Dec 18, 2017
Be afraid.

A New Growth Model for Europe’s Neighborhood
Sergei Guriev (Project Syndicate) Dec 18, 2017
Countries in Europe and its broader neighborhood cannot base long-term growth on their low-wage comparative advantage. Instead, they must lay the foundations of future-oriented growth models, including by improving governance, investing in infrastructure, and promoting environmental sustainability.

An Economic Agenda for South Africa’s Next Government
Andrew Donaldson (Project Syndicate) Dec 18, 2017
Since the 2008-2009 recession ended a period of strong gains in investment, employment, and revenue, South Africa's economy has stagnated, held back by leadership failures and plummeting confidence. So what must the next government do to restore growth and ensure social progress in Africa’s lagging economic powerhouse?

Is Another Debt Crisis On the Way?
Kemal Dervis (Project Syndicate) Dec 18, 2017
The world does not seem to face much risk in the short term. But in the medium to long term, rising income inequality, exacerbated by the mismatch between skills and jobs in the digital age, will become a significant impediment to growth, unless policymakers implement a wide array of difficult structural reforms.

International tax reforms with flexible prices
Assaf Razin and Efraim Sadka (VoxEU) Dec 18, 2017
The ongoing advance of globalisation has created a genuine need for international tax reforms. This column explores potential reforms and their likely effects, using a model with flexible prices. Residence-based income taxation is shown to have welfare advantages over source-based taxation, though at the cost of a larger trade deficit. Non-transitory border taxes are shown to be ineffective at reducing this deficit.

Portugal Has Emerged as Europe’s Booming Anti-Germany
Paul Hockenos (FP) Dec 18, 2017
Lisbon got its economy back on track by ditching austerity, and now Berlin is eating crow.

Monetary Policy and the Economic Outlook: A Fine Balancing Act
John C. Williams (FRBSF Econ Letter) Dec 18, 2017
The economy is in a good place. Unemployment is low and confidence is high. The challenges to address are good ones: keeping the expansion going, bringing inflation up to its 2% target, and using this period to normalize monetary policy in general and interest rates in particular. The years ahead will require a balanced approach, guided by the data.

Indian Growth Has Strengthened. Can It Do Better?
Jay H. Bryson and Michael Pugliese (WF) Dec 18, 2017
Continued strong growth in the working age population over the next few decades is positive for India's long-term prospects for economic growth. In addition, the country has made progress in improving its notoriously poor infrastructure. But, for us to get really bullish on Indian growth prospects, we would need to see evidence of a sustained rise in the country's savings and investment rates.

West grows wary of China’s influence game
Jamil Anderlini and Jamie Smyth (FT) Dec 19, 2017
Governments are worried about Beijing’s efforts to shape opinion of its authoritarian system.

The New Era of Global Stability
Arthur Herman (WSJ) Dec 19, 2017
The grand ideological conflicts that began in 1917 are giving way to old-fashioned geopolitics.

Troubling Complacency among the World’s Trade Ministers
Jeffrey J. Schott (PIIE) Dec 19, 2017
Trade ministers of member countries of the World Trade Organization (WTO) met in Buenos Aires in early December at a time when the cause of liberalizing trade rules is under unprecedented attack. Their complacency in the face of challenges to the system was troubling.

Is the Idea of Counting Dollars of Illicit Financial Flows Undermining Action Where It Counts?
Maya Forstater (CGD) Dec 19, 2017
The Sustainable Development Goals (SDGs) include a target to “significantly reduce illicit financial flows (IFFs).” While there is no global consensus about what this means, working definitions point to funds that are “illegally earned, transferred, and/or utilized.” The term is thus generally seen as an umbrella for a wide variety of “dirty money” including funds associated with drug, arms, and human trafficking; wildlife and natural resource crime; state capture and illicit enrichment; the financing of terrorism; and the evasion of taxes and tariffs.

Europe’s Crisis of Faith
Timothy Less (Brink) Dec 19, 2017
Europe’s history offers various examples of unions that are built on a belief system and that collapse when the people lose their faith in that system. The European Union, should it continue on its current trajectory, will be no exception to this.

Sweden's Central Bank Poised to Give the Krona a Boost
Lars Christensen (Bloomberg View) Dec 19, 2017
The rhetoric coming from the Riksbank suggests the odds of interest-rate hikes have increased.

Investors Double Down on Flight From Coal
Nathaniel Bullard (Bloomberg View) Dec 19, 2017
As companies feel the pressure to respond to climate change, coal production is falling -- and oil isn't immune.

Venezuela Is Living a Hyperinflation Nightmare
Noah Smith (Bloomberg View) Dec 19, 2017
The country has the world's largest oil reserves and should be fabulously wealthy. Instead, children are starving.

Another Look at Tax Reform and Economic Growth
Michael J. Boskin (Project Syndicate) Dec 19, 2017
With the Republican tax package now finalized and coming to a vote in both houses of Congress, a debate has been raging over the bill's possible growth effects. In that debate, those who oppose the package seem to be underestimating the outsize impact of equipment investments.

Europe’s Chance in 2018
Ana Palacio (Project Syndicate) Dec 19, 2017
With no looming crisis and only one major election in 2018, the coming year is on track to be one of relative calm for Europe, providing a rare opportunity for the European Union to make progress on long-term challenges, from climate leadership to migration. Three areas, in particular, stand out.

Exposure to Brexit in regions on both sides of the Channel
Wen Chen, Bart Los, Philip McCann, Raquel Ortega-Argiles and Mark Thissen (VoxEU) Dec 19, 2017
Analyses of the impact of various types of Brexit at the national level hide a lot of regional economic heterogeneity. This column deploys a new interregional dataset to quantify the shares of regional labour income that are exposed to the implications of Brexit for trade, taking into account the indirect effects of supply chain relations. The results show that much more is at stake for UK regions than for the rest of the EU, with the exception of Ireland.

Stationary bandits, taxation, and the emergence of states
Raul Sanchez de la Sierra (VoxEU) Dec 19, 2017
We have theories of why states form, but until now no systematic data on the process. This column uses a new dataset on 650 locations in the Democratic Republic of the Congo to explain why armed actors may create the functions of a state. When a village's output was valuable but could not easily be taxed, armed actors developed sophisticated fiscal and legal administrations to extract revenue. Household welfare improved only when these stationary bandits had ties to the population.

Globalisation may soon accelerate again – time to get domestic policies right
Richard Baldwin and Vesa Vihriälä (VoxEU) Dec 19, 2017
Despite the setbacks globalisation has faced in recent years from reactionary politics, the advent of artificial intelligence and robotisation are set to ensure its continuation. Domestic policy must therefore be designed in such a way as to reap the rewards of globalisation while avoiding its pitfalls. This column uses the case of Finland to show how this can be done. Finland has grown faster than its peers over two waves of globalisation, despite enduring substantial setbacks. In both its successes and challenges, it is an important example of the need for deliberate policies to prepare for future disruptions.

China’s Anti-Corruption Bill Exposes the Achilles’ Heel of Xi’s Legal Reforms
Ge Chen (YaleGlobal) Dec 19, 2017
Xi Jinping’s drive to introduce legal accountability in China is undermined by the Communist Party’s absolute control.

Banks will flirt with Frankfurt and Paris till Brexit is resolved
Kate Burgess (FT) Dec 20, 2017
Phil and Kirstie help City institutions find a ‘forever home’ in Europe.

America is right about the WTO, but for the wrong reasons
Robert Wolfe (FT) Dec 20, 2017
It sees the organisation just as a place where countries pursue their interests

Could a ‘Multi-Tier’ Europe Be a Stronger Europe?
Benjamin Zeeb (Brink) Dec 20, 2017
As mounting risks pull at the fabric of the European Union, one popular scenario envisions the formation of "coalitions of the willing" around different policy areas, with no penalty for those who decide to stay out. But what would a more flexible Europe mean for the bloc's effectiveness and international standing?

Japan Has Figured Out Factories
Michael Schuman (Bloomberg View) Dec 20, 2017
Countries hoping to revive manufacturing should look east for answers.

Japan's Bounce Is a Parable of These Economic Times
Daniel Moss (Bloomberg View) Dec 20, 2017
The central bank is easing off stimulus, as confidence and exports rise and companies begin to spend.

Populism Is a Problem. Elitist Technocrats Aren’t the Solution.
Sheri Berman (FP) Dec 20, 2017
The problem isn’t too much democracy — it’s too little.

The concerning fiscal and external trajectories of the US
Emmanuel Farhi and Matteo Maggiori (VoxEU) Dec 20, 2017
The US has been leveraging itself in recent decades, piling up public and external debt – a trend that could jeopardise the special position the dollar occupies in the international monetary system. This column argues that the US is risking another ‘Triffin’ event, in the form of a confidence crisis and a run on the dollar. The current situation echoes that of the UK in the 1920s and the US in the 1960s. The crises that ended both episodes marked dramatic turning points in the history of the international monetary system.

Our Favorite Charts of 2017
Wells Fargo Dec 20, 2017
Alice Munro won the Nobel Prize in Literature in 2013 for her work as "a master of the contemporary short story." The first short-story writer to receive this award, Munro captures the revelatory details of human life with no word wasted, giving her stories in just 30 pages the reach of novels. Here, we attempt to tell the economic story of 2017 with the brevity and insight of Alice Munro. In the charts and explanations enclosed, we focus on the trends that have shaped the economy this year, and the data that is most revealing of forces underlying these developments.

The fiscal surplus that Germany should spend
FT View Dec 21, 2017
Better infrastructure, not lower debt, would serve the country best.

Theresa May’s great global nation faces Brexit reality
Chris Giles (FT) Dec 21, 2017
The UK will bear the consequences next year of its decision to leave the EU.

Take the very long view on asset prices
Gillian Tett (FT) Dec 21, 2017
Today’s low-interest rate world only looks bizarre on an edited account of history.

Is the Prospect of a Trade Deficit Reduction an Accounting Illusion?
Joseph E. Gagnon (PIIE) Dec 21, 2017
Will the new US tax overhaul passed by Congress reverse a longstanding incentive that causes multinational corporations to shift profits away from their US operations into affiliates in low-tax jurisdictions?

“America First” Wakes Up the EU
Elmar Brok (Project Syndicate) Dec 21, 2017
Donald Trump won’t be president forever, and the ties that bind the US and Europe will far outlast his destructive leadership. But, in the meantime, the EU needs to do what it takes – with or without the US – to protect its interests on the world stage.

Xi Unbound?
Minxin Pei (Project Syndicate) Dec 21, 2017
By all conventional measures, Chinese President Xi Jinping has emerged from 2017 more powerful than ever. The question now is whether he can use that power to turn his vision for China – particularly for its economy – into reality.

Will Monetary Policy Trigger Another Financial Crisis?
Alexander Friedman (Project Syndicate) Dec 21, 2017
Sustained unconventional monetary policies in the years after the 2008 global financial crisis created the conditions for the second-longest bull market in history. But they also may have sown the seeds of the next financial crisis, which might take root as central banks continue to normalize their policies and shrink their balance sheets.

Stealing the Populists’ Clothes
Radek Sikorski (Project Syndicate) Dec 21, 2017
The populist wave that gained momentum in Poland in 2015, and spread to the United Kingdom and the United States in 2016, will still be with us in the coming year. Populism is an age-old problem for democracies, and only by recognizing what drives can we understand how to combat its appeal.

Short-Term Gains, Long-Term Hazards
Maurice Obstfeld (Project Syndicate) Dec 21, 2017
The year 2017 appears to be ending on a high note, with GDP growth in much of the world continuing to rise, marking the broadest cyclical upswing since the start of the decade. But unless policymakers seize the current opportunity and reform while they still can, the inevitable future slowdown may be closer than we think.

The World Economy in 2018
Michael J. Boskin (Project Syndicate) Dec 21, 2017
In the tenth year since the start of the global financial crisis, the US economy reached a new high-water mark, and the global economy exceeded expectations. But whether these positive trends continue in 2018 will depend on a variety of factors, from fiscal and monetary policymaking to domestic politics and regional stability.

Universal Education’s Moment of Truth
Gordon Brown (Project Syndicate) Dec 21, 2017
Article 26 of the Universal Declaration of Human Rights states that every child should have access to free primary education. Yet, 69 years after that pledge, a record number of children – some 70 million – are caught in the crossfire of humanitarian crises that are denying them schooling and placing their futures in jeopardy.

Preventing the Next African Famine
Stephanie Hanson and Whitney McFerron (Project Syndicate) Dec 21, 2017
After years of steady decline, the pace of global hunger is creeping up, and parts of Africa today are in the midst of the worst food crisis since World War II. Averting future famines on the continent is possible, but only if regional and global donors make the development of smallholder farming a high priority.

The rise in nonbank finance and monetary policy transmission
Luis Brandao-Marques and Gaston Gelos (VoxEU) Dec 21, 2017
Some have speculated that the rise in nonbank financing has weakened the transmission mechanism of monetary policy. This column used international data to investigate this claim. Overall, the evidence suggests that nonbanks tend to respond more strongly to monetary policy than banks. Although monetary policy remains potent in an environment with more nonbank intermediation, it will need to continuously adapt to changes in the transmission mechanism.

A new approach to global poverty: Measuring absolute and relative income
Martin Ravallion and Shaohua Chen (VoxDev) Dec 21, 2017
A new poverty measure reveals that in the past 25 years, global poverty has declined but relative poverty has increased in developing countries.

Growing Inequality Dulls India’s Sheen
Riaz Hassan (YaleGlobal) Dec 21, 2017
India’s economy surges, but inequality threatens democracy, culture and security with 80 percent of wealth in the hands of 10 percent.

An ageing population and the end of inheritance
Bronwen Maddox (FT) Dec 22, 2017
Taboos about where the burden of elderly care falls will have to be tackled soon.

Cyril Ramaphosa, a leader’s long wait to save South Africa
Alec Russell (FT) Dec 22, 2017
This trade union chief turned tycoon has the wiles to reverse a decade of drift.

China, Europe and the Belt and Road Initiative
Mark Briskey (Brink) Dec 22, 2017
Hungary and a number of other Central and Eastern European states will not disrupt the Chinese narrative that promotes the Belt and Road Initiative as not only advantageous but also a benign and altruistic program. It is this potentiality of BRI to initiate fractures and wedges in the EU, bypassing EU member states’ obligations and providing attractive economic incentives through bilateral relationships, that has Western Europe concerned.

Why President Trump’s Blunt Threats to Cut Off US Foreign Aid Are Unique and Counterproductive
Cindy Huang and Kate Gough (CGD) Dec 22, 2017
Given that US foreign aid has always been linked to national security, how much of a departure is President Trump’s approach from that of previous administrations? And what should we expect to happen to the 128 countries that voted to express “deep regret” over recent decisions on the status of Jerusalem?

Monetary-Policy Normalization in Europe in 2018
Carmen M. Reinhart (Project Syndicate) Dec 22, 2017
As the European Central Bank pursues monetary-policy normalization in 2018, it should proceed with caution. It will need to balance mounting pressure from Germany for faster normalization with a realistic assessment of the durability and breadth of the unfolding recovery.

Market reforms give anticorruption reforms more traction
Chen Lin, Randall Morck, Bernard Yeung and Xiaofeng Zhao (VoxEU) Dec 22, 2017
Chinese stocks rose sharply overall on news of President’s Xi’s 2012 policy cracking down on corruption, but non-state-owned enterprises in the country’s least liberalised provinces actually lost value. This column argues that China has taught the world something interesting – that prior market liberalisation makes anticorruption reforms more valuable. Once market forces are activated, bribe-hungry officials no longer grease the wheels but instead become pests and invite eradication.

If You’re Not a Democracy, You’re Not European Anymore
Jan-Werner Mueller (FP) Dec 22, 2017
The EU is finally declaring it's a club with rules — and that countries like Poland might not belong.

The social origins and IQ of inventors
Philippe Aghion, Ufuk Akcigit, Ari Hyytinen and Otto Toivanen (VoxEU) Dec 23, 2017
Innovation is a crucial element of modern societies, but who becomes an inventor? This column shows that parental income affects the probability of someone becoming an inventor, but that this impact is greatly diminished once parents’ socioeconomic status, parents’ education, and the individual's IQ are controlled for. Overall, the results suggest a prominent role for parental education and for IQ in explaining an individual’s probability of inventing.

Goldilocks and the three bears in Japan
Masahiko Takeda (EAF) Dec 24, 2017
Despite the looming challenges, the Japanese economy is in very good shape and everything seems just right.

How exposure to innovation influences who becomes an inventor
Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova and John Van Reenen (VoxEU) Dec 24, 2017
Relatively little is known about the factors that induce people to become inventors. Using data on the lives of over one million inventors in the US, this column sheds light on what policies can be most effective in increasing innovation. In particular, it shows that increasing exposure to innovation among women, minorities, and children from low-income families may have greater potential to spark innovation and growth than traditional approaches such as reducing tax rates.

How to Defund the U.N.
John Bolton (WSJ) Dec 25, 2017
A few of its agencies do useful work. American taxpayers shouldn’t pay for the many that don’t.

Zombie companies stalk a broken monetary system
Chris Watling (FT) Dec 26, 2017
A return to an anchored environment, while painful, should bring about income growth.

Breaking the Sovereign-Debt Doom Loop
Bloomberg View Dec 26, 2017
There's another bit of unfinished business in the new Basel III bank-capital rules.

This May Be Bitcoin's Moment of Truth
Mohamed Aly El-Erian (Bloomberg View) Dec 26, 2017
The market is at a crucial juncture in the waning days of 2017.

Bond Market Crosscurrents to Make for Tricky 2018
David A Ader (Bloomberg View) Dec 26, 2017
The bull market for fixed-income may be over, but we don’t seem to have entered a major bear trend.

Hard times for humble savers in the years ahead
FT View Dec 26, 2017
Loose monetary policy has made life difficult for young investors.

The battles of ideology that will define our age
Martin Sandbu (FT) Dec 26, 2017
Liberals must urgently show that the rules-based world order works for everyone.

Into the Brexit Abyss
Dominique Moisi (Project Syndicate) Dec 26, 2017
For the UK, anything short of complete separation from the EU would be akin to the situation in which France found itself after withdrawing from NATO’s military command in 1966. Until France reversed that decision in 2009, it remained bound by the constraints of other NATO members, but lacked any say in political or military decisions.

Rescuing Europe’s Illiberal Democracies
Danuta Hübner (Project Syndicate) Dec 26, 2017
Brexit and the rise of xenophobic populism in many EU countries have exposed a strain of European politics that many complacently assumed had been eradicated three decades ago. To turn back illiberal forces, EU leaders need to muster a stronger defense of EU values, starting with the rule of law and good-faith engagement.

The Challenges Confronting China’s Digital Economy
Andrew Sheng and Xiao Geng (Project Syndicate) Dec 26, 2017
If China is to ensure the continued development of its digital economy, while containing the risks associated with disruption, its leaders will need to implement smart regulations. And that will require careful consideration of the factors that have contributed to – and impeded – its progress so far.

Corruption Is Mexico’s Original Sin
Luis Rubio (FP) Dec 26, 2017
Personal enrichment has always been central to Mexico's political system — and only a revolution can change that.

Russia and Northeast Asia: Pursuing Strategic and Economic Goals
Liudmila Zakharova (Global Asia) Dec 26, 2017
Why Moscow has chosen to look East.

Asia’s Trump Peril: Reckoning with Economic Conflict
Miles Kahler (Global Asia) Dec 26, 2017
Trump threatens to overturn, or at least radically alter, the longstanding role of the US as an open market for Asian exports.

A Saudi reform drive that is fraught with risk
David Gardner (FT) Dec 27, 2017
The crown prince’s liberalisation is breathing fresh air into a stifled society.

China’s ancient strategies create a challenge
James Kynge (FT) Dec 27, 2017
Beijing’s authoritarian system shows it is able to nurture world-class industries.

China Bets on More State Control for 2018
Christopher Balding (Bloomberg View) Dec 27, 2017
As the economy confronts greater pressures and risks, Beijing tightens its grip.

Bitcoin Is an Implausible Currency
Megan McArdle (Bloomberg View) Dec 27, 2017
It's not competitive as a payment system, so maybe its value is as money. But it makes terrible money.

The Great Trade War That Didn't Happen in 2017
Daniel Moss (Bloomberg View) Dec 27, 2017
What if globalization is just getting started?

Why Has Latin America Turned Away from the Left?
Andrés Velasco (Project Syndicate) Dec 27, 2017
In Argentina and Brazil, one cannot understand recent political changes without reference to the corrupt antics of populist and semi-populist operatives. But that simple explanation does not fit Chile, where outgoing President Michelle Bachelet misdiagnosed the public mood.

Improving African Women’s Health Through Financial Inclusion
Carl Manlan (Project Syndicate) Dec 27, 2017
Financial inclusion is a proven pathway to improving people’s health, especially the health of women in developing countries. To capitalize on this synergy, efforts to bring digital banking solutions to Africa’s poorest should be combined with programs that aim to expand e-health care on the continent.

Europe Is Shocked — Shocked — By Libya’s Slave Markets
Nanjala Nyabola (FP) Dec 27, 2017
Europe is finally admitting what it has known all along: that its migration policies are complicit in crimes against humanity.

Winners and losers in the sharing economy
Brooke Masters (FT) Dec 28, 2017
We are entering an era in which consumers will value access over ownership.

What Will Cause The Next Recession?
Daniel Lacalle (Mises Wire) Dec 28, 2017
The next recession is going to be caused by making the same mistake of the previous ones: denying the the level to which we've accumulated risk.

Chinese Consumers Now Rule the World. Get Used to It
Tracy Chen (Bloomberg View) Dec 28, 2017
It's no longer the "world's factory" as Singles' Day blows away Black Friday.

Misery Loves Inflation Targeters’ Company
Koichi Hamada (Project Syndicate) Dec 28, 2017
Inflation targeting is a means to an end – to facilitate full employment and higher GDP growth – and, at least in Japan, substantial progress has been made toward achieving it. So, if faster price growth, like higher unemployment, implies economic and social costs, why should the Bank of Japan remain obsessed with bringing it about?

A healthy economy is a risk for stock markets
FT View Dec 29, 2017
If Trump’s US tax cuts work, rates will rise and liquidity decrease.

A protectionist advance is far from inevitable
FT View Dec 29, 2017
Trump will huff and puff. The rest of the world will limit the damage.

The Uniqueness of Western Law
Richard Storey (Mises Wire) Dec 29, 2017
The study of Western Civilization has been all but eradicated. This was no accident.

Return of Volatility Foreshadowed In Economic Data
Ben Emons (Bloomberg View) Dec 29, 2017
History shows that divergences between economic and financial market volatility only last for brief periods.

China, the Innovation Dragon
Simon Johnson and Jonathan Ruane (Project Syndicate) Dec 29, 2017
Given its own policies, and those of the US, China is on track to become the world’s innovation leader. By the end of 2018, it will likely be apparent to all just how quickly and easily this latest chapter in the Chinese success story will be written.

2017 Was the Year of False Promise in the Fight Against Populism
Yascha Mounk and Martin Eiermann (FP) Dec 29, 2017
The populist wave seems like it may have crested. The data proves otherwise.

Is Trump’s America the ‘dispensable’ power in Asia?
David Camroux (EAF) Dec 31, 2017
Once the United States could once have plausibly been described as the world's indispensable power. Perhaps thirty years from now we will look back on US President Donald Trump's first official visit to East Asia as the moment when the United States abandoned a superpower role in Asia and grudgingly accepted that hegemonic power in the region would be shared with China.