Andrew Powell, 25 November 2017

The recent interest rate rise in the UK occurred despite negative economic news. This is not what conventional inflation-targeting policy would imply. This column argues that recent Latin American experience suggests the theory underlying inflation targeting may need to be reconsidered. Specifically, for small open economies, the role of the exchange rate and inflation expectations should be considered when deciding how to react. 

Patrick Kennedy, Andrea Prat, 25 November 2017

Real news is an antidote to fake news, but how much political information do we access and where does it come from? Based on an analysis of news consumption in 18 countries, this column shows that low-income, low-education voters use fewer information sources. This pattern is reflected at the aggregate level, with countries with high income inequality also demonstrating high information inequality. News sources that cater to information-poor audiences have greater ‘media power’, and there is no evidence that public service broadcasting reduces information inequality.

Christian Helmers, Henry Overman, 25 November 2017

Highly localised research infrastructure investment, such as in the Large Hadron Collider, often leads to major scientific breakthroughs, but there is little evidence on the longer-term and wider geographical impacts on scientific output. This column uses the example of the UK’s Diamond Light Source to study the impact of large facilities on where scientific research is conducted. Not only do such investments substantially increase directly related research in the local area, they also create spillovers on unrelated research through knowledge sharing.

Sijbren Cnossen, Arjan Lejour, Maarten van ’t Riet, 24 November 2017

Some US multinationals have displayed a willingness to relinquish their American nationality and move their headquarters abroad. Such ‘inversions’ generally aim to avoid and minimise taxes. This column argues that the new Trump tax plan is likely to halt tax inversions by US multinationals. However, the plan will increase treaty shopping, incentivising multinationals to redirect dividends through third-party countries with generous tax treaties.

Anna Chorniy, Janet Currie, Lyudmyla Sonchak, 24 November 2017

Diagnoses of asthma and ADHD among children in the US have increased over recent years. This column argues that one contributor to this increase has been a change in Medicaid from a fee-for-service model to a managed care model. This change created incentives that reward higher diagnosis and prescription rates, while not necessarily improving health outcomes.

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