Global crisis

Matthew O. Jackson, Brian Rogers, Yves Zenou, 06 March 2015

Understanding our increasingly interconnected world requires tools from the rapidly growing field of network science. This column discusses guiding principles that are emerging from that science and helping to understand human behaviour – ranging from disease propagation and financial contagion to criminal behaviour.

Anusha Chari, Peter Blair Henry, 06 March 2015

In the wake of the Great Recession, a contentious debate has erupted over whether austerity is helpful or harmful for economic growth. This column compares the experiences of the East Asian countries – whose leaders responded to the East Asian financial crisis with expansionary fiscal policy – with those of the European periphery countries during the Great Recession. The authors argue that it was a mistake for the European periphery countries to pivot from fiscal expansion to consolidation before their economies had recovered.

Victor Kümmritz, 05 March 2015

Global value chains (GVCs) clearly promote trade and investment but their impact on domestic value-added is less clear. This column discusses new evidence showing that GVCs participation stimulates domestic value, but not for all nations. It is necessary for low- and middle-income countries to increase their absorptive capacities if they are to reap benefits from GVC participation.

Kristian Behrens, Théophile Bougna, Mark Brown, 05 March 2015

Transport costs fell precipitously during the last century leading many observers to posit that the world has ‘become flat’. If this were true, the costs of transporting goods should no longer have much bearing on firms’ location choices and the spatial structure of economic activity. This column, using manufacturing data for Canada from 1990 to 2008, argues that despite a decline in geographical concentration of industries, location patterns still change with fluctuations in transport costs.

Piotr Danisewicz, Dennis Reinhardt, Rhiannon Sowerbutts, 05 March 2015

In a global financial system, macroprudential policies may create international spillovers. This column presents new evidence on how the organisational structure of a bank affects the magnitude of these spillovers. An increase in capital requirements at home causes foreign branches to reduce their lending growth to other banks operating in the UK more than foreign subsidiaries do. Seemingly, this is because branches are an integral part of the parent company.

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