One year and 444 columns later, Vox celebrates its first birthday by introducing new features including audio interviews with Vox authors, a conference and workshop listings service, and a weekly newsletter.
In this inaugural Vox Talks audio interview, Vox Editor-in-Chief Richard Baldwin and editorial board member Romesh Vaitilingam discuss the achievements of Vox in its first year, some of the ‘greatest hits’ and plans for the future.
Food riots, starvation, malnutrition, and supply-driven inflation – the global food crisis is upon us. Here one of the world’s leading development economists discusses short-, medium-, and long-run solutions.
Stephen Cecchetti, Vox’s most widely read columnist, talks to Romesh Vaitilingam about monetary policy responses to the financial crisis of 2007-2008.
John Taylor of Stanford University talks to Romesh Vaitilingam about ‘better living through monetary economics’. The interview was recorded at the American Economic Association meetings in New Orleans in January 2008 and based on a paper in which he discusses the links between the ‘great awakening’ in monetary theory, the ‘great regime shift’ in monetary policy and the ‘great moderation’ in macroeconomic volatility over the past 30 years.
In an interview recorded at the American Economic Association meetings in New Orleans in January 2008, Michael Woodford talks to Romesh Vaitilingam about the communication strategies of central banks and their importance for the effectiveness of monetary policy.
Charles Wyplosz talks to Romesh Vaitilingam about the freezing of the interbank market as the commercial banks went from high-risk strategies to extreme caution, without taking any responsibility for their crucial role in the operations of the market and the wider economy.
Critics allege that many new drugs are borne more from marketing efforts than medical innovation. This column discusses new research showing that the average new drug extends life.
Publishing in economics journals is a long and arduous process. Rejection can’t be made painless, but this column suggests that it could be quicker. Using confidential data on a decade of submissions to the Journal of International Economics, the authors find that the editors usually make the right decision but take nearly half a year to do so when they could reject almost 40% of papers without consulting referees.
Baghdad was a wonder of the world in the year 800 while London was an economic backwater. By 1800, London was the largest city in the world while Arab cities languished. Recent research attributes this ‘trading places’ to institutional differences: Arab cities were tied to the fate of the state while European cities were independent growth poles.
Hard research on a soft topic shows that terroir doesn’t matter (except for the price) and the opinions of wine ‘experts’ don’t help predict a wine’s long-term value.
Housing booms associated with credit booms are particularly damaging, but the ECB’s one-size-fits-all monetary policy is useless in pricking national bubbles. Euro area governments should use national banking regulations to dampen national bubbles and countercyclical housing taxes to prick bubbles that arise.
Central banks are increasingly transparent but is the spotlight is stifling? Analysis of FOMC transcripts before and after Committee members knew that they would be published shows how transparency deadened the debate and reduced the number of challenges to Greenspan’s position.
Veiled or explicit anti-Irish threats will swing some ‘yes’ voters to the no-camp in a second referendum. If Europe's leaders want the Lisbon Treaty, they must unambiguously commit to respecting the results of a second Irish referendum. This would deprive the no campaign of convincing arguments and help restore the EU’s tarnished image across Europe.
Central bank independence can have marvellous effects on inflation, but not always. This column reviews evidence of a U-shaped interaction between policy reform and general political institutions; independence can be undermined in nations with poor political institutions, while it is less necessary in nations with excellent institutions. A ‘seesaw’ effect is also identified whereby fiscal policy deteriorates following central bank independence.
Central banks cannot achieve price and financial stability with one instrument (interest rates). A counter-cyclical regulatory system is needed to dampen asset booms and to smooth busting bubbles. To use such macro-prudential instruments effectively, regulators need courage, quantitative triggers, and independence; they will be criticised by lenders, borrowers and politicians in both booms and busts.
The ECB and the Fed are pursuing very different policies on inflation fighting and the use of monetary aggregates in guiding policy. One of Italy’s leading economists argues that either the ECB or the Fed is making a mistake.
This column argues that the Lisbon Treaty is a Trojan horse where better rules of government (a good thing) are associated with fears of their misuse (excessive centralization). No wonder voters won’t open the gates. EU leaders need to dispense with schemes designed to bypass the will of the people and focus instead on fundamentally rethinking the goals and processes of political integration. Until this is clarified, European electorates will be confused, fear the “Eurocrats” and vote no.
Do children do better if they start school later? Contrary to the great concerns of many parents, this column says that the age at which kids start school matters little.
This column shows that the flow of EU decision-making has slowed. The Lisbon Treaty could bolster decision-making efficiency and democracy by reinforcing the three main elements of representative democracy, namely elected representatives that fight for their constituencies’ interests, compete with other such representatives, and are accountable to voters. But that still leaves open the question of implementation.
Public opinion is hostile to people flows. But new research shows that immigration would be even scarcer if the median voter determined policy. Pro-immigration interest groups have some policy sway.
Here, one of the world’s leading macroeconomists argues that the explosion of commodity prices is the result of a very real global financial storm associated with excess liquidity in several non-G7 countries and nourished by the low interest rates set by G7 central banks. The commodity price explosion is a harbinger of future inflation.
Only the top 10% of US earners have seen their incomes grow faster than productivity since 1966. Part of the top-earner income growth is driven by market forces (superstar economics); the only feasible pro-equality policy here is more progressive taxation. For top corporate executives, however, non-market forces (CEO-Board complicity in pay setting) are important, so other policies are warranted. Increased disclosure and improved corporate governance would distribute economic gains more evenly across society and boost firms’ value.
With the world on the brink of a recession and the US exporting inflation, Asian macro policies are seriously misaligned. Here one of the world’s leading international economists argues that Asia needs tight money, appreciated exchange rates, and fiscal stimulus.
The IMF needs a new job. This column makes the case for the bold proposal that the IMF should manage a significant part of the new surplus countries’ sovereign wealth funds.
European politicians fear embracing reform means losing elections. This column reviews the evidence that rejects this and considers how well-functioning financial markets could front-load reform benefits thereby reducing political opposition. Financial reform may be an essential part of structural reform packages.
Incentives are extremely misaligned when a small-nation electorate can punish ‘Brussels’ and its own political class at little or no cost. Ireland represents 1% of the EU, so 99% of the cost of the ‘no’ falls on other members. This column proposes a radical solution – the other EU members should propose to leave the old EU and create a new one with the Lisbon Treaty as its founding document. The Irish would then have to decide whether they’re in or out.
Encouraging democracy is one goal of most industrialised nations’ foreign economic policies. Formulating such policies requires an understanding of the political-economy logic governing democratic transitions. This column describes an important recent advance in theoretical thinking on the military’s role.
The Irish ‘no’ – like the 2005 French ‘non’ – shows a clear poor/rich and urban/rural divide. Working-class and rural voters are systematically voting against further European integration. European leaders should take note.
Russia has enjoyed impressive economic performance in recent years. This column takes stock of its success, identifies its growth drivers, and highlights the need for microeconomic and structural reforms.
Research using a novel empirical technique suggests that import competition from low-wage countries dampens US producer price inflation for manufactured goods by more than 2 percentage points annually.
To pay for its current account deficit and capital exports, the US needs $2 trillion of additional foreign investment in 2008. Recent research shows that the quality and depth of US capital markets are key to attracting such investment, but the subprime crisis has raised doubts. A judicious regulatory reaction to the subprime crisis will thus be critical to the value of the dollar. If the US imposes a massive increase in poorly thought-out regulation, the dollar could quickly return to its downward spiral.
High oil prices are back – more than $125 per barrel. Such prices are associated with the macroeconomic pains of the 1970s, but this column argues that the recent surge may actually be good news for developed economies’ industries. The logic lies in the difference between demand shocks and supply shocks.
Economists have moved from general, game-theoretic descriptions of armed conflicts to detailed investigations of the short-run dynamics of violent conflict. This column describes recent research on the impact of Israeli violence on Palestinian violence and vice versa as well as the impact of violence on Palestinian public support for radical factions and the peace process.
One the world’s leading environmental economists argues that the economic case for prompt and powerful measures to mitigate climate changes is overwhelming once discounting and equity concerns are properly modelled.
Recent results based on a large German micro data set show that tobacco and alcohol are complements. Smoking bans are thus likely to reduce alcohol consumption too, but not by much. One cigarette less per day reduces drinking by 1% of a half-pint of beer. Smoke-free pubs are not in danger of becoming alcohol-free too.
North Korea may be on the brink of famine. This column explains the crisis.
Norwegians enjoy a very high standard of living. Is it due to their oil? This column describes the country’s impressive economic development during the twentieth century and highlights lessons from Norway’s management of its oil wealth.
Sovereign wealth funds have raised fears in developed countries, but development economics suggests a number of legitimate motives for such investment vehicles. This column explains why there is no need for suspicion – only level-headed policy responses.
The credit crunch has produced significant volatility in the stock market. This column argues that the wave of uncertainty troubling the markets will likely induce a recession – and render policy instruments powerless to prevent it.
What easy money brought forth in the new century, tight credit will take away in the years to come. Here one of France’s leading economists explains the origins of the subprime crisis and why it is likely to continue to unfold.
Editor's Note: Originally posted 2 June 2008. There has been a persistent spread between the rate at which banks lend each other money and government-backed securities yields in recent months. This column describes hypotheses explaining the spread – including the possibility that banks aren’t lending in order to bankrupt acquisition targets.
As the United Kingdom debates immigration and assimilation, what does it mean to be British? This column explores the formation of British identity during the early twentieth century, when British multinational enterprises constituted an informal empire engaging many foreign cultures. History shows a far more complicated sense of “Britishness” than some assume.
Patent-based measures of innovation are often accused of reflecting the propensity to patent rather than actual research productivity. This column presents a better measure of patenting that reflects research productivity and identifies policies that affect research productivity and the propensity to patent.