It seems that there will be no agreement between Greece and its Eurozone partners. Short of cash, the Greek government will have no choice but to suspend payment of its maturing debts. This column looks at what happens next. In brief, it will be very much up to the ECB to decide.
Taxing high earners is an issue of growing importance in many nations. One concern is that raising rates will lead high earners to move elsewhere. This column suggests that top-tier inventors are significantly affected by top tax rates when deciding where to live. The loss of these highly skilled agents could entail significant economic costs in terms of lost tax revenues and less overall innovation.
Newspapers report good and bad news, but the reporting doesn’t always match reality. This column presents evidence from turn-of-the-century America that news reports of typhoid tracked mortality patterns, but the reporting was biased. Spikes in death rates led to bigger jumps in media coverage when death rates were low. This could be due to the idea that deviations from Kahneman and Tversky’s ‘reference points’ are more newsworthy, or due to the possibility that bad news is more valuable to readers when things seem to be going well.
In the aftermath of the Global Crisis, many countries increased their central banks’ involvement in financial supervision. This column uses a novel dataset to argue that financial crises episodes significantly increase the probability of reforms in the financial structure. More interestingly, the authors find evidence of a ‘bandwagon effect’ by showing that politicians are more likely to undertake reforms when their peers do so.
Regulators and financial institutions increasingly depend on statistical risk forecasting. This column argues that most risk modelling approaches are highly inaccurate and confidence intervals should be provided along with point estimates. Two major approaches, value-at-risk and expected shortfall are compared, and while the former is found to be superior in practice, it is also easier to be manipulated by forecasters.
Other Recent Columns:
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- Lenders’ incentives to avoid fire sales
- The preferences of FOMC members
- Secular Stagnation in the US
- Debt supercycle, not secular stagnation
- Value vs growth stocks in normal and crisis times
- Basel’s countercyclical capital buffer: The third nation issue
- Rethinking macroeconomic policy: Introduction
- The role of trade credit financing in international trade
- How immigrants and job mobility help low-skilled workers
- Explaining the dearth of private investment
- Types of EZ convergence: Nominal, real and structural
- From constitutional reform to fortified democracy
- Economic integration in Europe: Insights from a new index
- New CEPR Report: A New Start for the Eurozone: Dealing with Debt
- Exports, offshoring and pay: New French evidence
- Economic consequences of gender identity
- Lessons from the 1982 Mexican Debt Crisis for Greece
- A historical look at deflation
- Securities trading and credit supply