September 2018

Cabral, Martins, dos Santos, Tavares, 30 September 2018

The labour market effects of import competition from China are becoming increasingly relevant. This column analyses both the direct and indirect labour market effects of rising international trade exposure to China, focusing on Portugal. It suggests that the wages and employment of Portuguese workers are negatively affected by China’s competition in third-country markets. Certain groups such as female, older, and less-educated workers, are particularly badly hit.

Costa-i-Font, Giuliano, Ozcan, 30 September 2018

Previous studies have shown that saving rates are influenced by, among other things, demographics and income, but much of the difference in saving rates across societies remains unexplained. This column uses data covering three generations of immigrants in the UK to demonstrate that culture is an important explanation for cross-country differences in saving behaviour. When designing incentives to save, culture should therefore be taken into account.

Apesteguia, Oechssler, Weidenholzer, 29 September 2018

Copy trading platforms, which allow traders on social networks to receive information on the success of other agents in financial markets and to directly copy their trades, have attracted millions of users in recent years. This column examines the implications of copy trading for investors’ risk taking. An experiment reveals that providing information on the success of others significantly increases risk taking, and that this increase is even greater when the option to directly copy others is present. The findings suggest that copy trading platforms may lead to excessive risk taking and reduce ex ante welfare.

Nunn, Qian, Wen, 29 September 2018

Cultural values and beliefs have an impact on social and economic development, but the interplay between culture and political institutions is still not well understood. This column examines the effect of trust on political stability in democratic and non-democratic regimes, specifically in the face of severe economic downturns. It finds that democratic regimes with high levels of trust are much less likely to experience leader turnover than low-trust countries, while there is no effect among non-democracies, and that countries with higher levels of trust experience faster economic growth in the years immediately following a recession. 

Pastor, Veronesi, 28 September 2018

The vote for Brexit and the election of protectionist Donald Trump to the US presidency – two momentous markers of the ongoing pushback against globalisation – led some to question the rationality of voters. This column presents a framework that demonstrates how the populist backlash against globalisation is actually a rational voter response when the economy is strong and inequality is high. It highlights the fragility of globalisation in a democratic society that values equality.

Aizenman, Jinjarak, Nguyen, Park, 28 September 2018

The upward trajectory of policy interest rates in OECD countries will impose growing fiscal challenges, testing their fiscal capacity for countercyclical policy and thus their resilience. This column compares fiscal cyclicality across countries and identifies measures of fiscal space. The results reveal a mixed fiscal scenery, where more than half of countries are characterised by limited fiscal space, and fiscal policy is either procyclical or acyclical.

Hufe, Kanbur, Peichl, 28 September 2018

Rising income and wealth inequality have come into sharp focus since the Global Crisis. Using US and European data, this column explores the factors contributing to unfair inequality, focusing on equality of opportunity and freedom from poverty. The results show that unfair inequality is greater in the US than anywhere in Europe, and that it has been increasing over time. The findings also show that relying solely on measures of equality of opportunity will severely underestimate unfair inequality. 

Fatás, 28 September 2018

The damage done by procyclical fiscal policy in the euro area between 2010 and 2014 is likely to be even larger than previous studies have suggested. The column argues that fiscal policymakers at the time created a 'doom loop', with unfounded pessimism feeding into policy, and the consequences of those policies increasing pessimism. This has created hysteresis, permanently reducing GDP. 

Comin, 28 September 2018

The FRAME Project was set up to find out the impact of innovation on macroeconomic outcomes such as productivity, job creation, and unemployment. Diego Comin of Dartmouth College is one of the leaders of the project, and he talks to Tim Phillips about what he and his colleagues have learned.

CEPR is a partner of the FRAME Project, which is co-ordinated by ZEW. The CEPR team is led by Diego Comin, a Research Fellow in its Macroeconomics and Growth Programme. The FRAME project has received funding from the European Union's Horizon 2020 Research and Innovation Programme under the grant agreement No #727073.

Bond, Crucini, Potter, Rodrigue, 27 September 2018

The Trump administration’s recent tariff increases have prompted comparisons to interwar tariff history. This column investigates tariffs during this period, drawing out lessons on their macroeconomic impacts for the US and its trade partners. The recessionary impact of recent tariffs is likely to be smaller and less widespread than those imposed during the interwar period, provided that tariff levels don’t escalate too dramatically through retaliation.

Alfaro, Bloom, Conconi, Fadinger, Legros, Newman, Sadun, Van Reenen, 26 September 2018

Economists have largely ignored the deep interdependency between integration and delegation. This column describes a new theory of integration and delegation choices aimed at shedding light on how these distinct elements of organisational design interact. Contrary to what is suggested by a naïve one-dimensional approach, the model predicts that delegation and outsourcing should be negatively correlated, a prediction that holds up well when the model is applied to data for thousands of firms across many industries and countries.

Alessi, Benczur, Campolongo, Cariboni, Manca, Menyhert, Pagano, 26 September 2018

Over recent decades, scholars and policymakers have been exploring how to make economies more resilient to potential shocks. This column investigates which EU members showed resilience during the Global Crisis and attempts to identify characteristics associated with resilience. The results reveal a lot of heterogeneity amongst countries, and those that are more resilient in the short run are not necessarily those with superior recoveries down the line. Further analyses show that social expenditures, political stability, and competitive wages are important for impact, medium-run, and ‘bounce forward’ resilience, respectively. 

Davies, Studnicka, 26 September 2018

Stock market returns provide a useful way of measuring investor expectations. The column uses stock return data following the Brexit referendum to show a persistent negative shift in sentiment towards multinationals with at-risk global value chains. In particular, even compared to others in the same industry, firms with a UK or EU focus underperform. This suggests the potential for targeted support policies.

Geiger, Schupp, 26 September 2018

In the low interest-rate setting, the Eurosystem’s accommodative monetary policy has been relying to a greater extent on non-standard measures and forward guidance on the future path of policy rates. This column examines how these measures have worked across the term structure and how market expectations have evolved during the phase of low interest rates.The results illustrate that the Eurosystem can continue to influence market participants’ interest rate expectations at the effective lower bound through unconventional monetary policy measures.

Burger, Warnock, Warnock, 26 September 2018

Analyses of capital flows often compare flows in a recent period to flows in some past period. But what level of capital flows should be characterised as ‘normal’? This column suggests there is a natural rate of portfolio flows, a longer-term baseline path around which actual flows fluctuate. The natural rate of portfolio flows allows observers to distinguish between movements toward the benchmark (back to ‘normal’) and movements away from the benchmark, which should be short-lived.

Bahaj, Reis, 25 September 2018

Swap lines between advanced economy central banks are a new and important part of the global financial architecture. This column analyses their role, from the perspective of central banks, in the transmission of monetary policy, and in the macroeconomic effects of policy. Results show that swap lines serve as liquidity facilities, that they put a ceiling on deviations from covered interest parity, and that they incentivise cross-border gross capital flows. 

Masciandaro, Profeta, Romelli, 25 September 2018

Women are increasingly represented in central banks, yet little is known about the role they play in monetary policymaking. Using a new global dataset on the presence of women on central bank monetary policy committees in 2002-2016, this column finds that for the same level of inflation, a higher share of women on the central bank board is associated with a higher interest rate. The findings suggest that women in central banks have a more hawkish attitude, and that heterogeneity of monetary policy committees can have an impact on monetary policy decisions.

Bell, Blanchflower, 24 September 2018

The most widely available measure of underemployment is the share of involuntary part-time workers in total employment. This column argues that this does not fully capture the extent of worker dissatisfaction with currently contracted hours. An underemployment index measuring how many extra or fewer hours individuals would like to work suggests that the US and the UK are a long way from full employment, and that policymakers should not be focused on the unemployment rate in the years after a recession, but rather on the underemployment rate.  

Egger, Strecker, Zoller-Rydzek, 24 September 2018

The OECD estimates that more than $100 billon is lost each year to tax avoidance by MNEs. One way that firms do this is by using their size and mobility to bargain for tax breaks. This column uses French data to identify the nature of such bargaining. It finds that the scale of the projected tax payment accounts for 41% of the tax break, and a credible threat to relocate accounts for the rest.

Tørsløv, Wier, 24 September 2018

Every year multinational companies reduce their tax bills by about $200 billion simply by shifting profits, legally, to tax havens. Governments criticise tax loopholes and promise to close them. But at the same time they also use them to attract these paper profits to their jurisdiction. Thomas Tørsløv and Ludvig Weir talk to Tim Phillips about where the missing profits of nations go, the effect of the missing billions on government policies, and how to create a fairer system of taxation for multinationals.

Díaz, Patacchini, Verdier, Zenou, 23 September 2018

Many policies to tackle youth involvement in crime have been suggested over the years. This column argues that being ‘socially’ close to criminal leaders strongly affects a person’s involvement in crime. Focusing on criminal activities in schools in the US, it shows that a policy that removes all criminal leaders from a school can, on average, reduce criminal activity by about 20% and the individual probability of becoming a criminal by 10%.

Straeter, Exton, 23 September 2018

Although money may be a taboo topic amongst friends, one’s social networks can offer help in times of personal financial straits. This column examines people’s willingness to borrow money from or lend to close friends for everyday purchases and finds that friends are much more willing to lend than to ask to borrow, and that this gap between borrower and lender widens as requests are repeated. Ensuring that there is occasion for reciprocation and using technological tools to regulate the peer-to-peer loan may help improve this suboptimal informal lending market.

Kuziemko, Pan, Shen, Washington, 22 September 2018

Despite women having surpassed men in earning college degrees, having children later than ever, and accumulating increasing amounts of on-the-job experience, convergence in labour force participation between men and women has stalled. This column argues that one reason for this is women failing to anticipate the effect that children will have on their careers. The findings also suggest that the employment costs of motherhood have risen unexpectedly, and especially so for educated mothers.

Richter, Schularick, Shim, 21 September 2018

Central banks have increasingly relied on macroprudential measures to manage the financial cycle, but their effects on the core objectives of monetary policy to stabilise output and inflation are largely unknown. This column shows that the output costs of changes in maximum loan-to-value ratios are rather small, especially in advanced economies. At the same time, such policies successfully reduce household and mortgage credit growth. The results suggest that central banks could be in a position to use macroprudential instruments to manage financial booms without interfering with the core objectives of monetary policy in a major way. 

Pekkala Kerr, Kerr, 21 September 2018

There is a contentious global debate surrounding the impact of immigrants on local labour markets. One less contentious aspect has been the notion that immigrant entrepreneurs can have major positive effects for the host economy. This column uses novel US data to explore how immigrant entrepreneurs affect local labour markets and compare with native entrepreneurs. Key findings include substantial geographic variation in immigrant startup rates, lower hiring and salaries, and slightly higher female ownership in immigrant-owned firms. 

Ferreira, 21 September 2018

Despite a considerable premium on equity compared to risk-free assets, many households do not own any financial investments. Personal risk preferences play a crucial role in understanding this economic behaviour. This column analyses financial risk attitudes across 15 countries and identifies relevant factors that affect the willingness to take risky investment decisions. The results reveal a significant heterogeneous attitude of risk-aversion in all countries and suggest that standard portfolio-investment theory does not always hold. 

Molinder, Enflo, Karlsson, 20 September 2018

Conflicts in the labour market are detrimental to economic growth and welfare. Sweden was among the countries with the highest incidents of industrial disputes in the 1920s, but experienced declining levels from the 1930s onward. Using Swedish data from 1919 to 1938, this column shows that towns with both powerful unions and strong Social Democratic presence experienced labour market peace. The results point toward the importance of labour market peace for strategic political reasons, rather than to politicians offering tangible concessions via municipal governmental power.

Faia, Laffitte, Ottaviano, 20 September 2018

There is a general consensus that lax monetary policy and banking globalisation were two critical factors behind the Global Crisis. This column explores how banks’ decisions to enter foreign markets impacted their individual and systemic risk. Results from a sample of European banks suggest that banks’ foreign expansions decreased risk from both an individual and systemic viewpoint. The findings cast doubt on the idea that banking globalisation was one of the culprits behind the crisis.

Berlingieri, Calligaris, Criscuolo, 19 September 2018

The evidence that bigger firms pay higher wages and have higher productivity is mainly based on manufacturing, which nowadays accounts for a small share of the economy. Drawing on a unique micro-aggregated dataset, this column reveals that while the size premia for both wages and productivity are significantly weaker in market services than in manufacturing, the link between wages and productivity is stronger – the most productive firms at the top are not necessarily the largest ones in terms of employment, but they do pay the best. This increases the likelihood of productivity and wage gains being shared with fewer workers, a further challenge to achieving inclusive growth in the new service economy.

Burger, Warnock, Warnock, 19 September 2018

A large share of Turkey’s bonds are denominated in foreign currencies, and the Turkish lira has depreciated. This recalls the currency mismatches that contributed to many crises in the 1990s. The column argues that many emerging economies like Turkey's are better able to avoid these crises thanks to improved policies, such as inflation targeting, that have helped foster local currency bond markets. Emerging markets policymakers must not backslide on this progress if they want to maintain financial stability.

Freeman, Pienknagura, 19 September 2018

The negotiation of trade deals among distant trade partners is hot on policymakers’ agendas as a means to facilitate integration into global supply chains. This column examines the impact of trade agreements at varying levels of distance across product types. Granular bilateral trade data show that the boost from trade agreements is smaller over longer distances, and that this is primarily driven through the channel of intermediate goods.

Rose, 18 September 2018

The export consequences of a country’s leadership style are one manifestation of ‘soft power’.  This column uses Gallup’s World Poll data and a gravity model of trade to examine the link between the attractiveness of the US to foreigners under the Trump administration and US exports. The results suggest a decline in foreign approval of US leadership between 2016 (Obama’s last year) and 2017 (Trump’s first year) may have lowered US exports by at least 0.2% or, over $3 billion.

Cerutti, Claessens, Laeven, 18 September 2018

The Global Crisis was a catalyst for the adoption of macroprudential policies around the world. Using newly updated data, this column examines the adoption of macroprudential policy instruments from 2000 to 2017. Since 2015, advanced economies have on average been using more instruments than emerging economies and low-income countries. While some instruments seem to be effective, it remains to be seen whether this suite of policies can deliver overall financial stability.

Bergbauer, Hanushek, Woessmann, 18 September 2018

School systems increasingly use student assessments for accountability purposes. By combining accountability reforms with international student achievement data over the past 15 years, this column shows that the expansion of standardised testing with external comparisons has improved student achievement in maths, science, and reading, while internal testing or teacher inspectorates without external comparisons have not. 

Farmer, 17 September 2018

Originally published in February 2009, this column proposes a new paradigm to reconcile Keynesian economics with general equilibrium theory. It suggests that, just as it sets the fed funds rate to control inflation, the Fed should set a stock market index to control unemployment. This would not let every manufacturing firm and every bank fail at the same time “as a result of speculative movements in markets that serve no social purpose.”

Debortoli, Kim, Lindé, Nunes, 17 September 2018

Previous studies have suggested that for central banks, a focus on inflation stabilisation is enough to stabilise other macroeconomic variables, and that focusing on economic activity can even be harmful. Using a model similar to those in use at central banks, this column studies the welfare implications of increasing the weight on economic activity in the central bank’s objective. The results suggest that stabilising measures of economic activity should be one of the primary objectives of central banks, as important as or even more important than stabilising inflation around its target. 

Demir, Javorcik, 17 September 2018

Smuggling, along with other forms of border tax evasion, is a substantial problem around the world. This column uses Benford’s Law, which suggests that the leading digits in various types of numerical data are not uniformly distributed, to identify suspicious import flows. Results using Turkish data suggest that deviations from Benford’s Law are consistent with higher rates of tax evasion. The approach could be employed by authorities to identify shipments that merit greater scrutiny. 

Brynjolfsson, Hui, Liu, 16 September 2018

Recent years have seen dramatic progress in the predictive power of artificial intelligence in many areas, including speech recognition, but empirical evidence documenting its concrete economic effects is largely lacking. This column analyses the effect of the introduction of eBay Machine Translation on eBay’s international trade. The results show that it increased US exports on eBay to Spanish-speaking Latin American countries by 17.5%. By overriding trade-hindering language barriers, AI is already affecting productivity and trade and has significant potential to increase them further.

Glaeser, Lu, 15 September 2018

Comparing China’s per-capita GDP growth to the growth in years of schooling suggests a large role for human capital externalities. This column uses changes in the location of Chinese university departments in the 1950s to estimate that an extra year of schooling has been associated with 22.0% higher hourly wages across cities. Even so, the growth of Chinese education cannot explain the country’s massive increase in earnings.

Eichengreen, Baldwin, 14 September 2018

Original teaser from the column posted on 9 October 2008: Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks.

Deroose, Carnot, Pench, Mourre, 14 September 2018

There is a widespread perception that fiscal rules in the EU are inadequate and overly complex. This column argues that the fiscal performance under the Stability and Growth Pact is perhaps better than is sometimes credited, taking into account unusually difficult economic circumstances in the 2010s. The complexity of the framework is undisputable, but there are deeper causes of this complexity which reflect the specificities of the EU governance setting.

Weber, 14 September 2018

English is the most widely-spoken language in Europe, but after Brexit it will cease to be an official language of the EU. Tim Phillips speaks to Shlomo Weber about which languages will become more important as a result, and the long-term implications for the English language — and the people who speak it. 

Rosolia, 14 September 2018

Given the role firms play in the transmission of monetary policy decisions, it is useful to understand how they form their inflation expectations. The column uses data from Italy to show that firms are attentive to the economic environment, even if they are not completely aware of the latest developments. They are also able to extract relevant information to update their expectations from ECB communications.

Teulings, 13 September 2018

The decade following the Lehman Brothers bankruptcy was a traumatic period for the euro area. Though the financial crisis originated in the US, the recovery there was quicker than in the euro area, and the output loss in the euro area appears to be about 15% compared to ‘only’ 10% for the US. This column argues that the imbalance between monetary and fiscal integration seems to have been an important factor behind the euro area being hit more severely than the US. A revision of the fiscal rules is needed.

Tabakovic, Wollmann, 13 September 2018

When public sector employees end up working for the private firms which they monitored, regulated, and even disciplined, a clear conflict of interest arises. However, little is known about the the scale and scope of this ‘revolving door’ problem. This column presents evidence from patent examiners employed by the US Patent and Trademark Office, and shows that examiners grant considerably more patents to the firms that ultimately hire them, and that the most likely explanation is that examiners are ‘captured’. This leniency lowers the quality of patents coming out of the agency. 

Cette, Lopez, Mairesse, 13 September 2018

Although many product and labour market reforms have been implemented in OECD countries during the last two decades, further reforms are still frequently promoted to increase competitiveness, restore economic growth, and improve workers’ purchasing power. This column uses new cross-country and cross-industry measures to explore how deregulation affects these markets. The results confirm that product market deregulation may reduce rent creation, but that labour market deregulation may have two opposing effects on rent sharing – a negative impact on wages and a positive impact on hours worked.

Bofinger, 13 September 2018

Two proposals for reforming the euro area’s fiscal framework were published on Vox yesterday. This column describes how, in essence, the proposal from the French economists is based on discretionary policy decisions while their German counterparts propose a largely rules-based approach. It also argues that with its assumption that the medium-term goals of fiscal policy cannot be determined by simple formulas, the French proposal is closer to the status quo than the German concept and has a greater likelihood of resulting in good fiscal policy.

Danielsson, Macrae, 12 September 2018

Financial policy is determined in multiple domains by separate government authorities. This column explores the hierarchical ranking of these domains and authorities. On top is the authority in charge of fiscal policy, followed by those running monetary, microprudential, and finally macroprudential policies. This ranking can cause conflicts in terms of policy effectiveness and legitimacy.

Feld, Schmidt, Schnabel, Wieland, 12 September 2018

Simplicity and transparency are essential to strengthen the effectiveness of fiscal rules and to ensure sustainable public finances; thus the German Council of Economic Experts has criticised recent reforms of the European fiscal framework for exacerbating their complexity. This column proposes a redesign of the existing fiscal framework together with a drastic reduction in exception and escape clauses. The reformed framework employs a modified expenditure benchmark as an annual operational target. In addition, it implements the structural deficit rule as its medium-term target through a multi-purpose adjustment account, and a pre-specified debt ratio as its long-term limit achieved with a debt-correction factor.

Darvas, Martin, Ragot, 12 September 2018

Proposals for reforming the euro area back on the agenda. An overhaul of the European fiscal rules should be on high on this agenda, because the current fiscal framework has not worked well. This column proposes substituting the numerous and complex present rules with a new, simple rule focused on limiting annual growth rate of expenditures.

De Gregorio, Eichengreen, Ito, Wyplosz, 11 September 2018

Two decades ago the four authors of the CEPR's first Geneva Report on the World Economy examined the future of the IMF. This year, for the 20th report, they returned to see what progress has been made. Tim Phillips talks to Barry Eichengreen, Charles Wyplosz, José De Gregorio, and Takatoshi Ito about how the IMF has evolved, and the threats both to the IMF and the entire multilateral financial system.

De Gregorio, Eichengreen, Ito, Wyplosz, 11 September 2018

Twenty years ago, ICMB and CEPR published the first Geneva Report on the World Economy. Over these last two decades, the world of international finance has changed and so too has the IMF. This column introduces the latest report, in which the same team of authors highlight seven key developments affecting the monetary and financial environment and their implications for the Fund. 

Bouvatier, Capelle-Blancard, Delatte, 11 September 2018

Tax havens are estimated to concentrate 8% of global private financial wealth, reducing annual global tax revenues by about $200 billion. This column uses new country-by-country regulatory data on the foreign commercial presence of EU banks and compares it against gravity model predictions to examine the contribution of EU banks to tax evasion. It finds that bank activity in tax havens is three times larger than what is predicted by the gravity model, and that British and German banks are particularly present in tax havens. 

Martin, Moral-Benito, Schmitz, 11 September 2018

Housing bubbles may crowd out credit from other sectors, but they may also have a crowding-in effect by providing collateral to real estate-owning firms or generating attractive assets which banks can securitise and use to increase their credit supply. This column applies data from the Spanish housing bubble to a simple model of a closed economy to show that both effects were present. At first, the crowding-out effect dominated, but then crowding in occurred. This model can be applied to similar positive shocks in other sectors.

Smid, Soederhuizen, Teulings, 10 September 2018

The transition to a European banking union is not straightforward. A key issue is how to prioritise risk sharing and risk reduction. This column examines three possible approaches, describing the respective transition scenarios and analysing the consequences for banks during the transition phase. None of the scenarios is optimal for all countries, but waiting too long may lead to solutions needing to be found under the pressure of a new crisis.

Longden, 09 September 2018

During the last 15 years, various regions around the world have been struck by some very strong heatwaves. This column uses examples of heatwaves in Australia to argue that a lack of acclimatisation is a key factor that influences how deadly these extreme temperature events are, and identifies thresholds for hotter temperatures that capture the temperature-related mortality relationship for such events. 

Corman, Dave, Reichman, 08 September 2018

The 1996 welfare reform in the US was a major policy shift that sought to reduce dependence of single parents on government benefits by promoting work, encouraging marriage, and reducing non-marital childbearing. This column describes how the reform led to a decline in illicit drug use among women at risk of relying on welfare, a decrease in female arrests for property crime, and smaller declines in voting for women exposed to the reform compared to several similar comparison groups. The findings offer evidence that limiting cash assistance and encouraging work can lead to reductions in socially undesirable behaviours and increases in prosocial community behaviours.

Bughin, Manyika, 07 September 2018

As artificial intelligence technologies become more effective and are rolled out across economies, it is important to assess how their diffusion will affect different economic stakeholders. This column argues that an AI divide may open up on three levels: individuals (workers), companies, and countries. Unless the transition to the new economics of the future is managed effectively, these divides may create a backlash against the adoption of AI technologies, despite their significant potential long-term benefits.

Algan, Beasley, Cohen , Foucault, 07 September 2018

The 2017 French presidential election is but one example of the move away from the traditional left-right political axis. This column argues that subjective variables are key to understanding this shift. Votes on the traditional left-right axis are correlated with views on redistribution and predicted by socioeconomic variables such as income and social status. Votes in the 2017 election in France, however, appear to have been driven by individual and subjective variables, with low well-being associated with ‘anti-system’ opinions (on the left or the right) and low interpersonal trust associated with right-wing populism.

González Rozada, Levy Yeyati, 07 September 2018

It is often assumed that the gender wage gap is driven by a demand bias. Using a large new dataset of job applications in Argentina, this column demonstrates that there is also supply bias – women ask for less pay than men for the same exact job. The analysis shows that this ‘ask gap’ is related to the job’s level, the occupation’s degree of female/male dominance, and the applicant’s age, and suggests that women may be acting on internalised stereotypes of the labour market.

Thewissen, van Vliet, 06 September 2018

The recent revival of protectionism has prompted further interests in the domestic employment effects of imports, in particular from China. This column examines the association between Chinese imports and domestic employment effects in 17 sectors across 18 OECD countries with diverse labour market institutions. The results indicate that employment fell in sectors that are more exposed to imports from China, especially among low-skilled workers. 

Bayer, Kim, Kriwoluzky, 06 September 2018

Investors fret that Italy may exit the euro. One reason to worry is redenomination risk, driven by the prospect of a country allowing a new currency to depreciate against the euro. This column compares two types of Italian bond yield curves to estimate such risk, and finds that the yield premium due to it peaked at 7% during the sovereign debt crisis. Redenomination risk also affects interest rates in strong economies, which implies a redistribution between savers and borrowers throughout the euro area.

Liu, Tsyvinski, 06 September 2018

Cryptocurrencies have received a substantial amount of attention over the past year. This column uses textbook asset-pricing methods to explore how cryptocurrency returns compare with those of traditional asset classes. Results show that cryptocurrency returns do not co-move with traditional assets, but that some cryptocurrency-specific factors – namely, momentum and investor attention – strongly predict their performance. 

Garbinti, Goupille-Lebret, Piketty, 05 September 2018

France is often considered to be an equalitarian country with a low level of inequality. Of course, this is true when compared to the United States, where inequality has skyrocketed recently. But the fact remains that France has also experienced a sharp rise in inequality. This column combines data from different sources to construct distributional national accounts and show the limits of the French myth of egalitarianism.

Itskhoki, Moll, 05 September 2018

From a neoclassical perspective, export promotion and comparative advantage policies are unambiguously detrimental. This column extends the standard growth model with financial frictions to explore how such policies affect a country’s development trajectory. Results show that the presence of financial frictions opens the door for welfare-improving government interventions in product and factor markets. Optimal development policy interventions feature a pro-business tilt early on, but change towards a more redistributive pro-labour stance as the economy accumulates financial wealth.

Ahlfeldt, Roth, Seidel, 04 September 2018

While there is a large and controversial literature on the implications of minimum wages for employment and the distribution of income, little is known about the consequences across regions. This column describes how the implementation of a minimum wage in Germany in 2015 has raised incomes in the lower part of the wage distribution without affecting employment of low-wage workers. However, there is no clear evidence that the minimum wage has led to a net in-migration or out-migration in poorer German counties.

Barwick, Li, Rao, Zahur, 04 September 2018

Air pollution is a serious concern for China. National levels of fine particular matter are well above recommended standards, and the average concentration across China’s thirteen largest cities is 30% higher than the national average. This column examines the relationship between health spending in China and air pollution, showing that health spending increases significantly during the two months following exposure to air pollution. A reduction of fine particular matter by about 20% from the current level could result in annual savings of 60 billion yuan in healthcare expenditure.

Crescenzi, de Blasio, Giua, 03 September 2018

The smart specialisation strategy quickly became popular in the European policy market as a new approach to innovation policy. However, to date there has been little empirical evidence on the effectiveness of the approach. This column sheds light on the question by examining a precursor programme of subsidies in Italy between 2007 and 2013. Results suggest that collaborations that are not the result of an open and unconstrained search for the best partners – that is, those that are induced by public policy incentives – fail to generate positive impacts.

Bertrand, Bombardini, Fisman, Trebbi, 03 September 2018

Special interests use donations to influence the political process. This column shows that philanthropic efforts in the US are targeted, at least in part, to influence legislators. Districts with influential politicians receive more donations, as do non-profits with politicians on their boards. This is problematic because, unlike PAC contributions and lobbying, influence by charity is hard for the public to observe.

Bindler, Hjalmarsson, 02 September 2018

A growing body of research indicates that judge and jury decisions are affected by a number of external factors, including media exposure and jury demographics. This column looks at jury verdicts at London’s Old Bailey during the 18th century to examine another possible factor – the verdict and characteristics of the previous case. A previous guilty verdict is found to increase the chance of a subsequent guilty verdict by between 6.7% and 14.1%. Despite the historical context, the findings are relevant to many situations today involving sequential decisions.

Hilt, Rahn, 02 September 2018

Political pundits have argued that owning financial assets induces households to support business-friendly political parties. This column analyses how ownership of liberty bonds – mass marketed to US households during WWI – affected voting behaviour in the 1920s. Voters responded to fluctuations in the value of the bonds by punishing incumbents when their value fell, and rewarding them when bond values recovered. Although liberty bonds contributed significantly to Republican margins in the 1920s, they don’t appear to have been decisive. 

Leeson, 01 September 2018

President Trump frequently refers to Special Counsel Robert Mueller’s investigation into possible Russian collusion during the 2016 presidential election as a 'witch hunt'. This column argues that competition might be behind both this current ‘witch hunt’ and Europe’s ‘witch craze’, which between 1520 and 1700 claimed the lives at least 40,000 people. Today it is competition between Democrats and Republicans; in 16th and 17th century Europe, it was competition between Catholicism and Protestantism in post-Reformation Christendom.

Ito, 01 September 2018

With protectionism on the rise around the world, the question of why politicians often call for protectionist trade policies in their election campiagnsis becoming more important than ever. This column introduces empirical evidence from Japan to show that politicians from constituencies facing a substantial increase in imports, and therefore stronger electoral pressure, are more likely to advocate protectionist trade policies.

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