Hiau Looi Kee, Alessandro Nicita, 22 October 2017

More than a year has passed since the UK voted for Brexit. This column analyses the short-term fallout of trade in goods due to potential changes in trade policies. It argues that if the UK fails to secure a new trade deal with the EU and must face tariffs with no preferences, total UK's exports to the EU would drop by at most 2%. The impact is small because the EU's import demand for UK exports is fairly inelastic, especially for products that that may face higher tariffs.

Gill Wyness, Richard Murphy, Judith Scott-Clayton, 21 October 2017

The question of who should pay for higher education continues to be hotly debated across the world. This column uses the case of the English higher education system to examine whether it is possible to charge relatively high tuition fees and at the same time protect enrolments, access, and university quality. The analysis shows that since the move from a free higher education system to a high-fee, high-aid system, university enrolment has increased substantially, with students from the poorest backgrounds experiencing the fastest increases in participation. Moreover, university funding per head has recovered dramatically since the introduction of fees.

Masayuki Morikawa, 21 October 2017

Studies predicting a substantial impact of the 2020 Tokyo Olympic games on the Japanese economy have tended to overlook substitution effects in spending as well as the characteristics of those who are expected to increase their spending. This column uses a survey of 10,000 consumers across Japan to examine the net impact on consumer spending. While the majority expect no significant change in their consumption expenditures, a greater share of respondents expect a net increase than a net decrease. In general, people in their 20s and 30s, high-income earners, those with higher educational attainment, and households with at least one pre-school child expect a net increase in consumption expenditures.

Martin Ellison, Andrew Scott, 20 October 2017

A new dataset for the market value of British government debt makes a long-run analysis of fiscal sustainability and debt management possible. It shows that the 20th century saw a shift to financing debt by inflation and low bondholder returns, rather than through fiscal surpluses. This column uses a counterfactual analysis to show that long bonds have been an expensive way of financing debt, especially after a financial crisis. Had the government issued only three-year bonds since 1914, the level of debt in 2017 would have been lower by 28% of GDP.

Susanne Frick, Andrés Rodríguez-Pose, 20 October 2017

Big cities have historically been seen as an important prerequisite for a country’s economic growth. In recent decades, however, developing countries have rapidly urbanised, and large cities are increasingly found in relatively poor countries. This column uses a new dataset to revisit the relationship between city size and economic growth. It finds that relatively small cities (with populations under three million) have been more conducive to economic growth, while very large cities are only growth-enhancing in countries with a very large urban population.

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