Global hyperconnectivity and increased system integration have led to vast benefits in terms of income, education, innovation and technology. Yet globalisation has also created serious concerns about how local events can so easily cascade over national borders to become crises that affect everyone. This Vox Talk discusses the widening gap between systemic risks and their effective management. Goldin argues that the new dynamics and complexities of globalisation are endemic and will potentially destabilise our societies unless they are addressed immediately and more effectively.
The ECB estimated that Eurozone banks would face a capital shortfall of €25 billion in a severe crisis. Earlier work by the authors estimated the shortfall to be 30 times higher. This column argues that this striking divergence can be explained by the ECB’s reliance on static risk-weights.
One frequently used argument in favour of secession is that there are economic benefits from independence. However, whether or not this is the case remains largely unexplored. This column addresses this question by examining the economic implications of secession in the case of the former Yugoslavia. The authors find that independence had no favourable economic impact. The way secession was achieved, however, mattered. Whereas secession without real conflict did not leave any noticeable economic impact, violent secession has, by contrast, led to a significant destruction of wealth.
The conventional thinking about foreign direct investment is that it may create jobs but also take away market opportunities from domestic firms. This column suggests another spillover to consider. If foreign firms require higher quality inputs, domestic firms who share suppliers with foreign firms gain access to better local inputs. It then argues that this spillover effect can explain a third of the productivity gains within Bangladeshi firms during 1999-2003.
Would the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the costs? Not according to an overwhelming majority of respondents to the monthly survey of the Centre for Macroeconomics (CFM), summarised in this column. A smaller majority of CFM experts do not accept the economic case for establishing 'English votes for English laws' with the same tax and spending powers as the Scottish Parliament.
Other Recent Articles:
- Currency carry trades are not what you think
- High-stakes school testing
- Market expectations and futures prices
- Growth, inequality, and social welfare
- Credibility of the AQR and bank stress test
- Increasing unemployment benefits for the young
- The future of Cocos
- Happier workers, higher profits
- TTIP is about regulatory coherence
- The career prospects of overeducated Americans
- High marginal tax rates on the top 1%
- Globalisation and the rise of the robots
- Why Keynes is important today
- A safe asset for Eurozone QE: A proposal
- Adverse selection and moral hazard in Japanese credit guarantees
- Sticky information and expectations of forecasters
- Bankers’ bonuses and performance sensitivity
- The Global Trade Disorder: New GTA data
- The price of rights: Key policy trade-offs towards migrant workers
- Contagion in the European sovereign debt crisis