The UK government is the latest to consider incorporating measures of happiness in its policymaking. This column takes stock of what we know from investigations into people’s wellbeing. It concludes that there is still much to resolve before a measure of gross national happiness is possible – or indeed desirable.
The debt crises in the Eurozone and the US are reminders that all government expenditures must eventually be financed by tax revenues. This column analyses the effect of the US fiscal stimulus programme and argues that abstracting from financing decisions presents a skewed version of the net benefits to society.
The EU is redesigning its rules on preferential trade access for developing and emerging economies. This column outlines the likely winners and losers and argues that in order to help developing countries integrate into the world economy much more creative policies are needed.
On 21 July 2011, the Council of the EU agreed to a second bailout for Greece. The deal was predicated on “private-sector involvement”. This column explores what this actually means. It estimates that the haircut for private bondholders may well be one-third of the figure initially proposed. It stresses that such uncertainties could spell more trouble for Greece and Europe as a whole.
The first Global Economic Symposium (GES) took place in the early autumn of 2008. Dennis Snower, President of the Kiel Institute for the World Economy and GES Director, talks to Romesh Vaitilingam about its continuing efforts to bring together people from many professions, nations and cultures to develop solutions to a wide range of global challenges, including financial crises, climate change, poverty and such ‘tragedy of the commons’ phenomena as deforestation and overfishing. The interview was recorded in July 2011.
International trade flat-lined in the immediate aftermath of the global crisis, and many practitioners suggested that trade finance played an important role. Yet research has lagged behind policymaking, largely due to a lack of data detailing the financing of international transactions. This columns explores a US poultry exporter's trade-finance practices to pluck out some policy recommendations.
Transparency in accounting standards is essential for global financial integration. Yet when the concepts are so complicated and the financial stakes so high, the debate is ripe for capture by special interests. This column suggests ways to stop this, drawing lessons from the debate over International Financial Reporting Standards.
With the Doha Round of multilateral negotiations stuck in a rut, this column argues that preferential trade agreements may provide the necessary versatility to navigate the next frontier of trade liberalisation.
Last week, the European heads of government added €109 billion to the existing €110 billion rescue plan for Greece. As Europe’s financial sector would have otherwise taken a huge hit, this column address the question: How did the financial sector manage to negotiate such a gigantic wealth transfer from the Eurozone taxpayer and the IMF to the richest 5% of people in the world?
On the back of the global crisis came the global trade collapse, as international trade fell 15% between 2008 and 2009. Was this a result of credit lines being cut or did demand simply disappear? This column uses Peruvian export data to argue that bank credit played a smaller role than suggested by previous estimates.
Sovereign credit risk has emerged as the main challenge to global financial stability. This column explains how a deterioration in sovereign creditworthiness can damage bank funding conditions before discussing possible options for mitigating these effects. It argues that banks can only do so much and that the policymakers have a critical role.
The Eurozone crisis is far from over. Greece still needs substantial reforms if it is to regain competitiveness and survive without support. This column argues that the pain of doing so will be unbearable for Greek society. It claims that the best solution for all concerned is if Greece temporarily leaves the euro.
Global imbalances loom large in G20 and IMF discussions, but are they to blame for the global crisis? This column argues that the emphasis on current-account imbalances is unhelpful and diverts attention from the monetary and financial factors that really sowed the seeds of the crisis.
Bank stability and economic stability are intimately linked – as the last few years can attest. This column finds that the market, regulatory, and institutional framework in which banks operate has a significant impact on the relationship between bank competition and fragility, with widespread implications for the broader economy.
Malaria is still a public-health nightmare in many African countries. This column argues for greater coherence between trade, foreign investment, and other malaria-related policy initiatives. In particular, technical assistance should prioritise the removal of "killer tariffs" on mosquito nets.
Has the global financial crisis been bad news for the world’s reserve currency? This column argues that it needn’t be, citing the rise of sterling as a global currency after the financial crisis of 1866.
Thursday's EU summit in Brussels announced new plans for tackling the Eurozone crisis. This column says that the agreement reached on a new financing package for Greece, including some debt relief, will not reduce Greece's debt to sustainable levels. It suggests additional financial support contingent on larger haircuts.
Simon Evenett of the University of St Gallen talks to Viv Davies about the 9th Global Trade Alert report, which suggests that G20 governments’ resolve to resist protectionism has faltered since the Seoul summit. Evenett describes murky protectionism, the impact of the crisis on the BRICs and the least developed countries, and how WTO rules are being circumvented. The interview was recorded in London on 18 July 2011. [Also read the transcript.]
Before the industrial revolution, economists considered output to be fundamentally constrained by the limited supply of land. This column explores how the industrial revolution managed to break free from these shackles. It describes the important innovations that made the industrial revolution an energy revolution.
Preferential trade agreements are now a prominent feature of the global trading system. This column introduces the WTO's new World Trade Report that explores why deep regionalism is gaining momentum. It also proposes a number of options for increasing coherence between such agreements and the multilateral trading system.
How much of our health in adulthood and old age is determined by our childhood? Using decades of data from the US and England, this column shows that the US excess in disease is common throughout the age distribution of the population. Moreover, poor childhood health tends to worsen adult health more in the US.
Are hospitals better run by former doctors or by specialist managers? This column looks at the top-ranking hospitals in the US and finds that hospital-quality scores are about 25% higher in physician-run hospitals than in the average hospital.
Despite the public commitments made at the Seoul G20 summit, this year protectionism has slipped off the work programme of G20 nations. The latest evidence published in the 9th Report of the Global Trade Alert, summarised here, shows that government resolve against protectionism has weakened as global economic prospects have dimmed. The global trading system is not out of the protectionist woods.
The sovereign-debt crisis spreading through Europe is threatening the existence of the single currency. Meanwhile in the US, debt has been a problem for many states without threatening the US itself. This column proposes a way of preventing future crises in Europe by learning how policymakers in the US achieve fiscal prudence without loss of sovereignty.
The Eurozone crisis is coming to a head. This column is an open letter to European leaders imploring them to take decisive action this week. Any more delays could mark the end of the Eurozone as we know it.
The Eurozone crisis now extends to Italy. Markets' pricing of credit default swaps shows that Italy’s troubles are home-baked and that matters are rapidly coming to a head. The risk of default has now become concentrated on the very short run. This suggests that Eurozone leaders may be rapidly punished by markets if they fail to take convincing steps this week.
The debate over TARGET balances and whether there is an ongoing stealth bailout in the Eurozone has attracted attention from top economists and journalists in the past month. This column argues that the reason why the arguments keep dragging on is the lack of a clear framework for the discussion, something this column aims to provide.
The global crisis has forced a root-and-branch rethink of financial regulation. This column discusses the international dimensions. It presents new evidence to suggest that non-banks tend to borrow more abroad when domestic regulation is tight.
Labour-market policy can try to make it easier to get hired or harder to get fired. This column asks which of these approaches policymakers should prioritise. Focusing on the UK, it finds that while job-finding rates could be improved, policies aimed at reducing the amount of job losses during a recession play an equally important role despite being less in vogue.
The recent crisis has not only been a painful reminder of the importance of financial cycles, but it has also exposed our limited knowledge of them. This column explores two key questions on financial cycles: What are their main features and what happens when cycles in different financial markets coincide?
If you lose your job, can you find a new one with a little help from your friends? This column presents evidence that displaced Italian workers with more employable friends and social contacts are unemployed for a shorter period of time.
“Many of the wars of this century were about oil, but those of the next century will be over water”. So said Ismail Serageldin, a senior environmentalist at the World Bank, in an interview with Newsweek in 1995. This column explores whether nationalising the provision of water can help avoid the sort of desperation that might make this statement come true.
Tim Hatton of the Australian National University talks to Viv Davies about his book on asylum policy, which assesses what asylum policies have achieved and argues that policy towards asylum seekers should be based on historical insight, quantitative evidence and a realistic view of the political economy of asylum policy. Hatton presents the case for a fully integrated Europe-wide asylum policy. The interview was recorded on 13 July 2011. [Also read the transcript.]
When did America begin its gallop towards economic supremacy? Was it only after the American civil war? Did it start earlier during the antebellum period or even before 1776? This column digs up new evidence from the archives to find out.
The Eurozone crisis is tearing Europe apart. This column argues that Eurozone leaders must (i) agree to create European-level institutions to monitor national budget and banking policies and (ii) draw a line between solvent and insolvent Eurozone nations before the markets do it for them. It adds that we are now discovering that a loss of sovereignty became inevitable the day we decided to create the single currency.
Many argue that Greece should drop the euro like Argentina dropped the dollar in 2002. In this column, Domingo Cavallo – who was Argentina's finance minister during the heart of its crisis – argues that exiting the euro would be wrong. Argentina’s growth recovery after it de-pegged the peso was due to exogenous developments in global commodity prices – not to the peso devaluation. He also suggests steps for an orderly restructuring of Greek debt.
For a while now, analysts have been arguing there is a bubble in China’s property market. Using records from 35 major cities this column finds evidence of a housing bubble. It compares house prices to cointegrated fundamentals and finds that property in China is in general overvalued by around 20% – and even more so in the boom towns.
What to do about Greece? The face value of Greek sovereign debt is now around 150% of GDP and rising. This column proposes a debt buyback scheme and outlines how it could be achieved to the benefit of the whole of Europe.
Asylum is a controversial and politically fraught topic. For the people involved it can be a matter of life or death. This column introduces a new CEPR report arguing that it is high time the EU adopts an integrated policy on asylum based on historical insight, quantitative evidence, and a realistic view of the politics involved.
Last year’s European bank stress tests were faulty to say the least. For example, those tests failed to find problems with any of the Irish Banks that soon afterwards dragged Ireland into its current crisis. While the soon-to-be-released stress tests may do better, the previous shortcomings suggest that a broader, more transparent evaluation is needed. This column proposes a new way of assessing systemic risk using publicly available stock price data and financial statement information.
Many discussions of official development assistance express concerns about China's growing investment and involvement in Africa economies. This column, summarizing the 2011 African Economic Outlook report, emphasizes the benefits of emerging economies' increasing presence in Africa, including the opening of African policy space due to Western donors' decline in relative influence.
Is the euro doomed? This column argues that economic differences within Europe, clearly exposed by the current crisis, are reasons to doubt the sustainability of the single currency.
22 July marks the first anniversary of the signing of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, the most comprehensive US regulatory effort for financial markets since the 1930s. This column introduces an eBook analysing where the regulatory process stands after one year and where it is headed.
What new policies should be included in financial and regulatory reforms? This column argues that banks are under-taxed along many dimensions and analyses a proposed broad tax on financial-sector income.
If economic crises make the short-run pains of reforms easier to bear, then crises could yield considerable long-run benefits. But this column argues that the recent global financial crisis has been wasted thus far. It suggests that it is political crises – and not economic turmoil – that actually bring about reforms.
In the US, more people work in private security than in all police forces combined, yet public debate about crime prevention typically looks at the use of public resources to deter, incapacitate, or rehabilitate criminals. This column calls for more discussion of how private action can make policing more effective and reduce the profitability of crime. One such experiment – “business improvement districts” in Los Angeles – has generated remarkable social benefits.
Trade barriers that delay transactions are like sand in the wheels of a global economy in which firms trade frequently and international production is fragmented. This column presents evidence showing how the elimination of border controls and customs procedures within the EU has contributed to faster trade, lower trade costs, and larger cross-country trade.
Pharmaceutical price regulations make drugs more accessible to consumers – if the products are brought to market. This column explores how price regulation affects the diffusion of pharmaceutical treatments. It finds that more regulated, lower-price markets experience the longest delays in launching new medications.
Paul Collier of Oxford University talks to Romesh Vaitilingam about how low-income countries that are rich in natural resources can harness the opportunity for development in a way that benefits all their citizens. The interview was recorded in June 2011 after a ‘blue-sky’ conference on development policy-making organised by CAGE, the Centre for Competitive Advantage in the Global Economy at the University of Warwick. [Also read the transcript]
Potential victims often ward off crime by taking appropriate precautions. This column argues that government policy targeted at strengthening the precautionary response of potential victims can make a big difference. It shows that mandating the installation of burglar-resistant features in residential construction in the Netherlands reduced burglary risk by 26%.
Most analysts agree that Greece is insolvent. This column argues that the issue is whether Greece’s troubles are contagious.
Economists and policymakers alike tend to assume that capital should flow from rich to poor countries, but in recent years the opposite has happened. This column explains why and warns that developing countries should not assume they can or should run large current deficits simply because they are poor.
In the aftermath of the global crisis and as the turmoil in the sovereign debt market continues, this column argues that policymakers need to get the shadow-banking sector in order if they are to restore confidence in global markets.
In the debate over the pros and cons of government spending, the efficacy of public investment is a point on which many conclusions hinge. This column introduces a new Public Investment Management Index that benchmarks the quality and efficiency of the investment process across 71 developing and emerging countries.
Gender inequality is an old story. This column presents new evidence to suggest it may be as old as the horse and plough. It says there is a robust negative relationship between historical plough-use and unequal gender roles today. Traditional plough-use is positively correlated with attitudes reflecting gender inequality and negatively correlated with female labour force participation, female firm ownership, and female participation in politics.
László Halpern of the Institute of Economics of the Hungarian Academy of Sciences talks to Viv Davies about a forthcoming report on the impact of the crisis on European business. The report finds considerable heterogeneity across countries and firms - for example, exporters contracted more than non-exporters, while importers suffered less of a decline - and highlights the policy trade-off between the benefits of export-oriented strategies versus outsourcing. The interview was recorded in Nottingham on 7 June 2011. [Also read the transcript.]
Fiscal policy in EU countries is suffering from a calamity of credibility. The fiscal figures get steadily worse as governments move from planning to implementation to retrospective reporting. In order to regain its reputation, this column argues that the EU should improve its fiscal institutions and the EU countries should take more ownership of EU fiscal rules.