Global economy

Jongrim Ha, M. Ayhan Kose, Franziska Ohnsorge, 30 March 2022

The recent commodity price surge, in the wake of Russia’s invasion of Ukraine, has exacerbated already elevated inflationary pressures. A new CEPR Policy Insight argues that over the medium term, as recent shocks unwind, inflation is expected to ease back towards targets, but the Great Inflation of the 1970s is a reminder of the material risks to this outlook. As inflation remains elevated, the risk is growing that, to bring inflation back to target, advanced economy central banks will once again need to undertake a much more forceful policy response than currently anticipated. 

Olivier Blanchard, Jean Tirole, 21 March 2022

A report generated by a commission of 24 distinguished economists focuses on three structural challenges for the global economy. The column sets out some of the conclusions. While the challenges of climate change, inequality and demographic change are significant, solutions – though sometimes expensive or unpalatable – exist.

Oya Celasun, Niels-Jakob Hansen, Mariano Spector, Aiko Mineshima, Jing Zhou, 16 March 2022

The Covid-19 pandemic has led to strong increases in goods demand and concurrent supply disruptions to production and distribution. This column uses data from 30 countries to show that in 2021, supply shocks had a negative impact on manufacturing output, while demand shocks had a positive impact. In contrast, both contributed to higher manufacturing goods prices. Furthermore, there is substantial diversity in the magnitude of these effects across countries and sectors. Policymakers should seek to address specific supply bottlenecks and minimise the scarring from prolonged weakness to manufacturing activity. 

Isabelle Mejean, 04 March 2022

China's Covid lockdown in early 2020 shocked the business world. How did this surprise disruption affect the firms that rely on imported Chinese products? Isabelle Mejean tells Tim Phillips about the economic impact in France, and which firms were most resilient. 

Alessandro Borin, Michele Mancini, Daria Taglioni, 01 March 2022

Environmental, political, economic, and health disruptions in recent years have helped fuel concerns that too much interdependence through global value chains may be a problem. This column compares the relative effects of a domestic demand shock to those of a global value chain-related shock and concludes that engagement in global value chains allows unexpected shocks to demand to be managed better than in a world of predominantly domestic production, traditional trade, or regional value chains. Global value chain participation dampens exposure to risk, as idiosyncratic shocks are mitigated by a higher market differentiation.

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