VoxEU & CEPR Coverage of the Covid-19 Global Pandemic

Joseph Stiglitz, Hamid Rashid, 03 August 2020

From Latin America’s lost decade in the 1980s to the more recent Greek crisis, there are plenty of painful reminders of what happens when countries cannot service their debts. This column argues that a global debt crisis today would likely push millions of people into unemployment and fuel instability and violence around the world, and proposes a multilateral sovereign debt buyback facility which could be managed by the IMF.

Carlo Altavilla, Refet Gürkaynak, Roberto Motto, Giuseppe Ragusa, 03 August 2020

Mapping the impact of central bank policy communications onto yield curve changes  is important but challenging. This column studies policy communications of the ECB and maps these communications onto yield curve changes by studying the information flow on days when a monetary policy decision is communicated. Using the now publicly available Euro Area Monetary Policy Event-Study Database,it finds that different monetary policy measures affect different segments of the interest rate term structure, with policy rate changes mostly influencing the short end of the curve, quantitative easing measures more the long end, and forward guidance policies affecting intermediate maturities. 

Henrique Basso, Omar Rachedi, 03 August 2020

Advanced and developing economies are experiencing a swift process of population ageing that will shape both long-run macroeconomic trends, such as economic growth, as well as short-term business cycle fluctuations. Although the implications of population ageing on countries’ fiscal capacity have been extensively analysed, this column argues that secular shifts in demographics can also influence the effectiveness of fiscal policy as a demand-management tool. Using a New Keynesian model with a lifecycle structure,  it shows that output fiscal multipliers are larger in younger economies.

Nauro Campos, Vera Eichenauer, Jan-Egbert Sturm, 03 August 2020

Economists have long assumed a virtuous cycle between integration and reforms. Implementing structural reforms helps maximise gains from integration, while the deepening of integration would foster reforms. This column discusses new research on European integration, its relationship with reforms and economic growth. It finds that integration triggered product market, but neither labour nor financial market, reforms. It also shows that, to understand the effects of reforms on economic growth, sectoral differences are less important than country heterogeneity. 

Eric Hanushek, Lavinia Kinne, Philipp Lergetporer, Ludger Woessmann, 02 August 2020

Differences in student achievement are strongly related to both future individual earnings and national economic growth. Cultural traits that underlie intertemporal decision-making may affect how much students learn. Using data for close to two million students across 49 countries during 2000–2018, this column looks at levels of patience and risk-taking and its effect on student performance. A positive effect of patience and a negative effect of risk-taking can account for two-thirds of the cross-country variation in student achievement. Among migrant students, patience and risk-taking levels of the students’ countries of origin had remarkably similar effects on educational performance in the host country.

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