Global crisis

Jean-Charles Bricongne, Juan Carluccio, Lionel Fontagné, Guillaume Gaulier, Sebastian Stumpner, 27 July 2022

It is important to understand the micro drivers of the economy’s reaction to large macro shocks. This column uses French firm-level data from 1993-2020 to study the contribution of the largest exporters to aggregate export fluctuations. The authors find that top exporters explained over 40% of aggregate fluctuations and drove the export collapses during the Global Crisis and the pandemic. Moreover, the 2020 collapse of French exports was driven by the higher sensitivity of large firms to demand shocks rather than disruptions to global value chains.

Luigi Guiso, Massimo Morelli, Tommaso Sonno, Helios Herrera, 07 July 2022

Financial crises have severe economic costs. This column shows that they also entail major political costs. It argues that the global financial crisis, and associated Great Recession, represents a watershed for populism in Europe, changing people’s views and the rhetoric of all parties. The crisis brought economic insecurity to  the middle classes, which had largely remained untouched by the globalisation and immigration shocks. Disillusionment with the status quo prompted parties to enter the political arena on populist platforms.

Tomohiro Hirano, Joseph Stiglitz, 28 June 2022

Standard macro models with rational expectations struggle to explain the 2008 global crisis. This column provides a theoretical foundation for recurrent booms and busts within a dynamic rational expectations model with capital and land. The interaction between capital and land prices generates endogenous ‘phase transitions’, which lead to macroeconomic fluctuations. Furthermore, it shows that appropriately designed government policy, for example by guaranteeing a certain return on capital, can ensure stability and increase social welfare.

Yoshiyuki Arata, Daisuke Miyakawa, 11 June 2022

Previous studies report the propagation of shocks via supply chains downstream, but little is known about the propagation from customers to suppliers driven by demand shocks. This column uses Japanese firm-level input-output data to fill this gap. The authors find that negative demand shocks only propagated from large exporters to larger suppliers during the global financial crisis, but were transmitted from small customers even to their small suppliers during the COVID-19 pandemic. Identifying the propagation route helps in the design of targeted policies.

Matteo Pinna, 15 April 2022

At the height of the Covid-19 pandemic, some cable news hosts cast doubt on the effectiveness of vaccines. Matteo Pinna tells Tim Phillips about his research on the impact of Fox News on vaccination rates.

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