The reasons why a country would comply with international standards of transparency in the face of sizeable returns in the tax haven business are unclear. This column highlights fundamental coordination problems in the fight against offshore secrecy regimes and their implications for optimal policies, and explores whether the fight will be successful or not.
Free trade is under fire, with evidence documenting the distributional impacts and labour adjustment costs of trade liberalisation mounting. This column instead presents new evidence on the benefits of freer trade in terms of growth and innovation. It points to gains that could be lost if support for globalisation is not maintained.
The recent deceleration of world trade has been widely discussed, and many argue the relationship between trade and GDP growth is undergoing a fundamental shift. This column presents a novel framework to account for changes in the import intensity of global demand. Import intensity rose between 2000 and 2008 due to high demand for durables and to international production fragmentation. After 2011, fragmentation stopped and demand shifted to services, in particular in China. Low trade ratios are likely to persist in the near future.
In the wake of the Great Recession, the Federal Reserve took unprecedented measures to stem economic decline. This column uses the Fed’s open-market operations in 1932, another period of short-term rates near the zero lower bound, as a comparison for the QE1 operation of 2008-09. Although the 1932 policy boosted output and inflation, if the Fed had announced the operation in advance and carried it out for a full year, the Great Depression could have been attenuated considerably earlier.
A key driver of productivity is ease of resource allocation. This column uses firm-level data for France to show that misallocation has a spatial dimension: resource allocation and the associated effect on productivity are related not only to firms’ characteristics, but also to the environment in which they operate. Denser commuting zones seem to offer a better match between employers and employees, leading to more productive firms.
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7 - 8 December 2016 / Massachusetts Institute of Technology, Cambridge, MA, USA / Harvard University, Massachusetts Institute of Technology (MIT) and Stanford University
