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.
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.
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.
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.
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.
Other Recent Columns:
- Population ageing reduces the government spending multiplier
- Integration and reforms
- Patience, risk-taking, and international differences in student achievement
- Organized crime’s infiltration in legal economy
- Burden of proof: Measuring and understanding crime
- The effectiveness of lockdowns: Learning from the Swedish experience
- Growth, sustainability, and the measurement of global gross product
- The proximate determinants of economic development since 1913
- Robots and the rise of European superstar manufacturers
- Excuses for prejudice
- Mutual fund performance and flows under COVID-19
- Race and the COVID-19 pandemic
- The microeconomics of cryptocurrencies
- Consumers should own their data
- Sick leave generosity and (unhealthy) returns to work
- Reading between the lines of the ECB's introductory statements
- Demand versus supply: Price adjustment during the Covid-19 pandemic
- Quantitative easing and helicopter money: Not so distant cousins
- Transfer pricing of intangible assets with the arm’s length principle
- Real-time inflation measurement during COVID-19
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3 - 4 September 2020 / Blavatnik School of Government at University of Oxford (Oxford, UK) / Government Outcomes Lab, Blavatnik School of Government, University of Oxford.
