Yusuf Soner Baskaya, Julian di Giovanni, Sebnem Kalemli-Ozcan, Mehmet Fatih Ulu, 01 September 2017

Most models assume capital flows are endogenous to the business cycle, and that inflows increase during an economy’s ‘boom’ periods. This column shows that the international no-arbitrage condition in fact does not hold, and that capital flows are pushed into an economy due to high global risk appetite. Controlling for domestic monetary policy responses to capital flows and changes in the exchange rate, exogenous capital inflows lower real borrowing costs and fuel credit expansion.

Asli Demirgüç-Kunt, Bálint Horváth, Harry Huizinga, 06 July 2017

Monetary policies pursued by lending countries may have negative spillovers for financial stability in emerging markets, because monetary policy is transmitted through its effect on the aggregate supply of cross-border loans. This column uses data on the international syndicated loan market to argue that foreign bank ownership in a borrower country reduces the negative impact of lender-country monetary policy on cross-border syndicated loan supply. This suggests that countries could stabilise their cross-border credit supply by reducing restrictions on foreign bank entry into local markets.

Randolph Bruno, Nauro Campos, Saul Estrin, 25 May 2017

The economic effects of foreign direct investment are generally expected to be positive for the host economy. However, this is usually conditional on certain thresholds of development being met, for instance in terms of human capital or institutional quality. This column argues that the economic impact of foreign direct investment is less ‘conditional’ than commonly thought, perhaps because below the thresholds, the difference between private and social returns is substantial, while above them it is smaller.

M. Ayhan Kose, Csilla Lakatos, Franziska Ohnsorge, Marc Stocker, 27 February 2017

A growth surge in the world’s largest economy could provide a significant boost to global activity. In contrast, uncertainty about the direction of US policies could have the opposite effect. This column investigates spillover channels linking the US and the global economy. An acceleration in US growth would have positive effects for the rest of the world if not counterbalanced by increased trade barriers. However, policy uncertainty could hamper global growth, and could have particularly bad effects on investment growth in emerging and developing economies.

Daron Acemoğlu, Ufuk Akcigit, William Kerr, 20 January 2017

Innovation is typically seen as a cumulative process, with new technologies building on existing knowledge - but our knowledge of how progress in a specific area is influenced by knowledge in other, ‘upstream’ areas is limited. Using US patent data, this column identifies a stable ‘innovation network’ that serves as a conduit for cumulative knowledge development. Technological advances in one field can advance progress in multiple neighbouring fields, but will have a stronger influence on more closely related areas.

Ralph De Haas, Steven Poelhekke, 22 September 2016

The extraordinary expansion in global mining activity over the last two decades, and its increasing concentration in emerging markets, has reignited the debate over the impact of mining on local economic activity. This column analyses how the presence of nearby mines influences firms in eight countries with large manufacturing and mining sectors. Mines are found to out-compete local manufacturing firms for inputs, labour, and infrastructure. However, mining activity is found to improve the business environment on a wider geographic scale.

Jan in 't Veld, 09 September 2016

The spillover effects of a fiscal stimulus in normal times are likely to be small, at best. This column argues, however, that when interest rates are stuck at the zero lower bound and monetary policy does not offset the expansion, public investment in surplus countries could have significant positive GDP spillovers to the rest of the Eurozone. Given current low borrowing costs, the increase in government debt for surplus countries would be modest, while debt ratios in the rest of the Eurozone could be improved.

Gaston Gelos, Jay Surti, 19 August 2016

International financial spillovers from emerging markets have increased significantly over the last 20 years. This column argues that growing financial integration of emerging economies is more important than their rising share in global trade in driving this trend, that firms with lower liquidity and higher borrowing are more subject to spillovers, and that mutual funds are amplifying spillover effects. Policymakers in developed economies should pay increased attention to future spillovers from emerging markets, particularly from China.

Alessandro Maffioli, Carlo Pietrobelli, Rodolfo Stucchi, 14 June 2016

Cluster development programmes (CDPs) aim to support industrial clusters of agglomerated firms to achieve higher productivity and sustainable development. Such programmes have been prominent in Latin America over the past decade, but there have been few impact evaluations. This column presents the findings from an evaluation of Latin American CDPs. Various case studies show positive medium-term effects of the programmes on employment, exports, and wages. CDPs are also found to have positive spillover effects on untreated firms, and to improve the network connectivity and technology-transfer ties between firms.

Rune Fitjar, Andrés Rodríguez-Pose, 11 April 2016

Geographic proximity between innovating actors has been shown to facilitate knowledge transfers and spillovers. However, the degree to which these effects are driven by serendipitous encounters has yet to be examined. This column explores this issue for a sample of Norwegian firms. Of the relationships that help firms innovate, fewer than 10% are formed in purely casual circumstances. The results imply that knowledge isn’t so much ‘in the air’; transfers usually result from purposeful search.

Rui Albuquerque, Miguel Ferreira, Luis Marques, Pedro Matos, 17 January 2016

Previous research has shown that the corporate governance practices of firms are constrained by the legal standards of their country of incorporation. This column explores how an active international market for corporate control can substitute for weak institutions in a host country. Using firm-level data from 22 countries, it shows how cross-border M&A activity improves the governance of non-target firms in the same industry, via peer pressure. These findings provide evidence for corporate governance improvements as a novel positive spillover from FDI.

Adriana Kugler, Maurice Kugler, Juan Saavedra, Luis Herrera, 28 January 2016

Vocational training programmes offer a second chance to those who drop out of the formal education system. Most studies of the success of such programmes, however, typically only analyse outcomes directly after participation. This column examines the medium- and long-term outcomes of a vocational training programme in Colombia. Results suggest that vocational training and formal education are complementary investments and that there are educational spillover effects for family members, in particular among applicants with high baseline educational attainment.

Yuriy Gorodnichenko, Jan Svejnar, 26 September 2015

While there is substantial evidence that multinationals are more productive than domestic firms, the evidence on productivity spillovers remains mixed. This column estimates the effects of foreign presence on the innovation of local firms. It suggests that spillovers from foreign firms to domestic firms are limited to domestic firms immediately connected to foreign firms. Requirements for foreign firms to have significant local content may therefore be justified.

Aida Caldera, Mikkel Hermansen, Oliver Röhn, 19 September 2015

The Global Crisis and its high costs have revived interest in early warning indicators of economic risks. This column presents a new set of indicators to detect vulnerabilities and assess country-specific risks of suffering a crisis. The empirical evidence confirms the usefulness of the vulnerability indicators in warning of severe recessions and crises in OECD countries. But indicators are no silver bullet and should be complemented with other monitoring tools, including expert judgement.

Neil Lee, Andrés Rodríguez-Pose, 17 February 2015

Creativity is assumed to be the mother of invention, but research testing whether this is the case is surprisingly rare. This column addresses this gap in the literature by assessing whether firms in creative industries in the UK are more innovative than firms outside creative industries. The authors also examine whether the location of creative-industry firms in creative cities – and the size of creative cities – matters for the innovative capacity of these firms.

Plamen Iossifov, Jiří Podpiera, 16 February 2015

The ongoing, synchronised disinflation across Europe raises the question of whether non-Eurozone EU countries are affected by the undershooting of the Eurozone inflation target, by other global factors, or by synchronised domestic, real sector developments. This column argues that falling world food and energy prices have been the main disinflationary driver. However, countries with more rigid exchange-rate regimes and/or higher shares of foreign value added in domestic demand have also been affected by disinflationary spillovers from the Eurozone.

Hiroyasu Inoue, Kentaro Nakajima, Yukiko Saito, 11 February 2015

Despite vast improvements in information and communications technology, the tendency of firms in related industries to cluster together hardly changed between 1985 and 2005. This column examines the relationship between geographic clustering and innovation using establishment-level data from Japan. Research establishments – especially those in high-technology industries – are more localised than average. The degree of localisation is greater when establishments are weighted by their creativity, as measured by the number of patents created and the number of citations received.

Hiau Looi Kee, 21 November 2014

The conventional thinking about foreign direct investment is that it may create jobs but also take away market opportunities from domestic firms. This column suggests another spillover to consider. If foreign firms require higher quality inputs, domestic firms who share suppliers with foreign firms gain access to better local inputs. It then argues that this spillover effect can explain a third of the productivity gains within Bangladeshi firms during 1999-2003.

Dennis Reinhardt, Cameron McLoughlin, Ludovic Gauvin, 05 November 2014

In the aftermath of the Global Crisis, policymakers and academics alike discussed how uncertainty surrounding macroeconomic policymaking has impacted domestic investment. At the same time, concerns regarding the spillover impact of monetary policy in advanced economies on emerging market economies featured strongly in the international policy debate. This column draws the two debates together, and examines how policy uncertainty in advanced economies has spilled over to emerging markets via portfolio capital flows. It finds remarkable differences in the spillover effects of EU vs. US policy uncertainty.

Aleksi Aaltonen, Stephan Seiler, 31 October 2014

Many organisations are developing open platforms to create, store, and share knowledge. This column analyses editing data by Wikipedia users to show how content creation by individuals generates significant ‘spillover’ benefits, encouraging others to contribute to the collective process of knowledge production.