International finance

Marion Jansen, Joost Pauwelyn, Theresa Carpenter, 31 January 2018

International economic dispute settlement is under increased scrutiny. How are decisions made about the ‘fairness’ of national or foreign policies? How are damages to be paid by governments to private investors calculated? This column introduces a book with contributions from academics and practitioners that explore whether economists can be of use in addressing these and other contentious questions in international trade and investor–state disputes.

Barry Eichengreen, Arnaud Mehl, Livia Chiţu, 02 January 2018

Economists have provided detailed analyses of the economic basis of international currency status, but they have paid less attention to the geopolitical underpinnings.  This column sheds light on the geopolitical premium enjoyed by the US thanks to its security alliances and ‘dollar diplomacy’.

Marlene Amstad, Eli Remolona, Jimmy Shek, 28 October 2017

Global investors are assumed to differentiate between economies using economic fundamentals. This column uses returns on sovereign CDS contracts for 18 emerging markets and ten advanced countries to argue that fundamentals do not drive these decisions. Instead, most of the variation across sovereigns reflects whether or not the country is designated as an 'emerging market'. Investment strategies tend simply to replicate benchmark portfolios.

Sergei Guriev, Danny Leipziger, Jonathan D. Ostry, 17 October 2017

Globalisation and technological change present policymakers with tremendous challenges in sustaining benefits while containing the dislocations and polarisation that are plaguing many countries. This column argues that the answer is not to roll back these forces, but rather to redouble efforts to make globalisation genuinely inclusive. This involves thinking hard about the design and rules governing globalisation itself, including with respect to finance, but also with respect to trade. It also necessitates a recalibration of national economic policies that affect who benefits and who pays, and a host of complementary policies to mitigate exclusion and allow citizens to bounce back when dislocations occur.

Andrew Rose, 14 August 2017

Policymakers in small countries fear the ‘global financial cycle’ that is apparently driven by US fundamentals. This column argues, in contrast, that 25 years of financial data show that the global financial cycle has explained at most a quarter of the variation in capital flows in these countries. This result gives more wiggle room for small-economy policymakers, but it also means they cannot realistically blame the global financial cycle for domestic economic problems.

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