The vote for Brexit was a watershed moment in European politics. This column investigates the causal drivers of differences in support for the Leave campaign across UK regions. Globalisation in the form of the ‘Chinese import shock’ is found to be a key driver of regional support for Brexit. The results suggest that policies are needed that help to redistribute the benefits of globalisation across society.
The spread of financial shocks globally has caused some to argue that capital accounts should be more closed, thereby shrinking the opportunities available to global savers and borrowers alike. That would put further downward pressure on interest rates in surplus economies, and upward pressure on borrowing costs in economies where the greatest opportunities lie. This column argues that by acting in their local interest, domestic macroprudential policymakers can safeguard against the risk of financial instability spilling across borders, while continuing to allow capital to flow to where it is of most use.
Bid preferences and set-asides are popular discriminatory practices in US public procurement, but are prohibited in the EU. This column argues that discrimination can be cost-reducing provided it is targeted to favour those firms whose participation is more responsive to the auction procedure. Situations when set-asides may be cost-reducing are also discussed.
The reasons why a country would comply with international standards of transparency in the face of sizeable returns in the tax haven business are unclear. This column highlights fundamental coordination problems in the fight against offshore secrecy regimes and their implications for optimal policies, and explores whether the fight will be successful or not.
The Global Crisis has led to a new wave of regulation. This column argues that improved capital requirements, liquidity requirements, bank resolution and cross-border regulatory cooperation are welcome, but that unresolved problems remain. Specifically, regulation may become too complex, focus too little on macroprudential risks, be inadequate to deal with crises in global financial institutions, or fail to cope with financial innovation.
Other Recent Columns:
- Production fragmentation and the global trade slowdown
- How trade liberalisation fosters global innovation
- Why denser areas are more productive
- Comparing the 1932 open market purchases and quantitative easing
- Dealer information sharing in US Treasury auctions
- Econometrics and its consequences for human beings
- The economic impact of reducing non-performing loans
- A higher global risk premium and the fall in equilibrium real interest rates
- Unwinding of the pound carry trade
- Improving people’s financial decision-making
- A realistic proposal to end Greece’s debt overhang
- Nascent stock exchanges: Explaining success and failure
- A Rorschach test for US monetary policy
- Diversity and economic development
- Effects of retirement timing uncertainty
- US and EU immigration pressures in the long run
- Reforming mutual funds: A proposal to improve financial market resilience
- Highlights from the 1st ECB Annual Research Conference
- Financial globalisation and monetary policy effectiveness
- Private shareholders, governance rules, and central bank financial behaviour
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19 - 22 April 2017 / Budapest, Hungary / Central European University
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7 - 8 December 2016 / Massachusetts Institute of Technology, Cambridge, MA, USA / Harvard University, Massachusetts Institute of Technology (MIT) and Stanford University
