March 2008

Vives, 31 March 2008, 26049 reads

The current crisis is a modern form of a traditional banking crisis. The 125-year-old Bagehot's doctrine tells us how governments should react – lend to solvent but illiquid financial institutions. While easy to state, the doctrine is hard to apply. The key question to assess the future consequences of current central bank policy is whether the subprime mortgage crisis arises in the context of a moderate or a severe underlying moral hazard problem.

Fontagné, Gaulier, Zignago, 28 March 2008, 24978 reads

China and Germany have nearly the same export profile in terms of breadth, but the prices and quality of their exports differ greatly. Here are some of the policy implications of international specialisation across varieties within products.

Suarez, 27 March 2008, 15756 reads

Lender of Last Resort interventions aren’t working. It is time for more radical thinking. This column argues for the creation of a “Emergency Bank Debt Insurance Mechanism” that would go beyond Lender of Last Resort interventions. It would short-circuit the panic logic by temporarily providing full coverage to any short-term lending explicitly supported by the insurer.

Cabrales, Zenou, 26 March 2008, 15659 reads

Producing research is an increasingly collaborative and social effort. This column summarises a model of production that may explain how academic researchers find co-authors – and segregate amongst themselves.

Frankel, 25 March 2008, 79343 reads

The standard story for high commodity prices is rapid growth by China, India and company. But world growth is slowing, while commodity prices still hit new highs. This column suggests that the key may be low real interest rates.

Campos, Kinoshita, 24 March 2008, 20796 reads

What policy reforms can emerging economies adopt to attract foreign investment? This column presents evidence that financial reforms may be the most important, even though foreign investors are not financially constrained.

Goldman , Romley, 21 March 2008, 36919 reads

In choosing their hospital, patients are concerned with both quality of care and amenities such as comfortable rooms. This column summarises recent research showing that patients value amenities and more productive hospitals compete for patients by supplying higher quality. We need to assess the value of amenities in relation to other hospital benefits, since improving amenities is more costly than improving care.

Monacelli, 20 March 2008, 39069 reads

Inflation is rising. This column identifies three sources of inflation and argues that it is very important for central banks to tame inflation now, before we face a vicious cycle of rising inflation and expected inflation.

Tabellini, 19 March 2008, 16696 reads

The recent financial trouble has prompted much examination of private financial institutions, but few have asked why regulatory supervision did not prevent the crisis. This column argues that supervisory failure was also due to regulatory competition between national authorities and calls for a consolidated EU authority.

Frankel, 18 March 2008, 111434 reads

One of the world’s leading international economists explains how the euro could surpass the dollar as the premier international currency and examines the geopolitical implications of such a shift.

Murnane, 17 March 2008, 40763 reads

The poor state of America’s urban public school systems is one of the nation’s most pressing domestic policy problems. Two improvement approaches vie for attention in policy circles: changing central office management strategies, and improving incentives. While the two approaches compete for influence, they are in fact complementary. Alone, neither one will make much of a difference. Together they can improve urban school systems.

Reinhart, 15 March 2008, 118643 reads

We may just have started to feel the pain. Asset price drops – including housing – are common markers in all the big banking crises over the past 30 years. GDP declines after such crises were both large (-2% on average) and protracted (2 years to return to trend); in the 5 biggest crises, the numbers were -5% and 3 years. This column, based on the author’s testimony to the Congress, picks through the causes and consequences. It argues that when it comes to ‘cures,’ it would be far better to get the job done right than get the job done quickly.

Ben-David, 14 March 2008, 38041 reads

This second column on Israeli academic migration to the United States examines the differences in higher education policies that are driving the brain drain.

Buiter, 13 March 2008, 14810 reads

Loan defaults create financial losers and winners, but the losses are highly concentrated in highly visible financial institutions while the winners are dispersed among millions of mortgage-holders that have been written down or written off. Here is a discussion how the subprime crisis has created winners and what it means for analysis of this unfolding situation.

Ben-David, 13 March 2008, 15754 reads

This column introduces a two-part series on how differences between universities are inducing a massive academic migration from Israel to the United States. The magnitude of this scholarly brain drain is unparalleled in the western world.

Assenmacher-Wesche, Gerlach, 12 March 2008, 51987 reads

Many observers have argued that central banks should use monetary policy to prevent the rise of asset price bubbles. Recent research shows that monetary policy is too costly and too slow to serve such a role.

Dolado, 11 March 2008, 11244 reads

The conservative opposition party sought to fight Spanish election on issues of tax cuts and immigration. This backfired since there are no substantial differences between the parties’ agendas and the ruling Socialists had proved better in practice, especially concerning their immigration reform that had full support of employers and trade unions.

Acharya, Johnson, 11 March 2008, 18944 reads

Suspicious trading activities ahead of major mergers and acquisitions have raised concerns about insider trading in recent years. New research attributes the rise in insider trading to the growing number of insiders involved in big deals.

O'Rourke, Findlay, 10 March 2008, 61714 reads

Globalisation is fundamentally political, not technological. This is the lesson from a new book tracing 1000 years of international trade history. Here the authors use lessons from the past to identify challenges for globalisation in the 21st century.

Drechsler, Jütting, 07 March 2008, 103896 reads

Discrimination against women significantly hampers the economic development of many poor countries. This column introduces two new OECD Development Centre efforts to assess and reduce gender discrimination, including a new portal

van Pottelsberghe de la Potterie, 06 March 2008, 12911 reads

Europe isn’t increasing its R&D intensity. Professor Pottelsberghe, former Chief Economist of the European Patents Office, identifies why Europe is missing its targets and looks to the R&D leaders – the US and Sweden – for policy lessons.

Buiter, 05 March 2008, 17476 reads

This second column on the Treasury Committee’s report on lessons from Northern Rock discusses the institutional arrangements needed to cope should a bank of non-trivial size fail.

Buiter, 04 March 2008, 19911 reads

The UK Treasury Committee recently released a report on the lessons from the plight of Northern Rock. In the first of a two-column series, Willem Buiter analyses the shortcomings of the report’s recommendations for reducing problems in the banking and ‘shadow banking’ sectors.

Kopecky, Greenwood, 03 March 2008, 39626 reads

Since 1900, consumers have enjoyed a dramatic explosion in the number and quality of goods available. This column discusses a simple method for quantifying welfare gains from the introduction of new goods into the economy and their subsequent quality improvements using the personal computer as an example.