Global economy

Olivier Blanchard, 20 April 2015

This year’s IMF conference, “Rethinking Macroeconomic Policy III”, gathered many of the world’s greatest economists to reflect on the state of post-Global Crisis macroeconomics. This column, which presents remarks by the IMF’s Chief Economist Olivier Blanchard, argues that much detailed work has been done. The trenches are being dug, but we still do not have a good sense of their final destination. 

Katharina Eck, Martina Engemann, Monika Schnitzer, 20 April 2015

Credits extended bilaterally between firms, so called trade credits, are particularly expensive yet many firms use it, especially for international transactions. This column argues that such cash-in-advance financing serves as a credible signal of quality. Data from a unique survey of German firms show that it fosters export participation in particular for firms that tend to have the greatest difficulties in entering foreign markets.

Mette Foged, Giovanni Peri, 19 April 2015

The inflow of low-skilled migrants may encourage natives to upgrade their skills, taking advantage of immigrant-native complementarity. This column uses exogenous dispersion of refugees in Denmark to investigate this issue. The findings confirm that for low-skilled native workers, the presence of refugee-country immigrants spurred mobility and increased specialisation into complex jobs.

Aqib Aslam, Samya Beidas-Strom, Daniel Leigh, Seok Gil Park, Hui Tong, 18 April 2015

Business investment in advanced economies contracted sharply during the global crisis and has recovered little since. This column argues that the main factor holding back investment is overall economomic weakness. In some countries other contributing factors include financial constraints and policy uncertainty. Fixing the investment dearth will require fixing the general weakness in economic activity.

Marco Buti, Alessandro Turrini, 17 April 2015

An oft expressed view is that the Eurozone is a straitjacket on periphery members and income convergence has slowed, halted or reversed.  This column argues that EZ convergence never stopped. What changed was the type of convergence. Today’s convergence is neither nominal nor real, it is structural.  Structural convergence presents a basis for renewed real convergence. However, for this to happen, the right institutions and policies need to be in place at both European and national levels.

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