Carlo Favero, 18 November 2009

Today’s global crisis has been compared to the Great Depression in terms of world output, trade, and stock market value. To extend the comparison, this column proposes a new, historically comparable measure of economic uncertainty. The evolution of uncertainty in this crisis has been much less dramatic than in the 1930s.

Richard Baldwin, Daria Taglioni, 14 November 2009

Global imbalances are shrinking at a fabulous rate. This column argues that these improvements are mostly illusory – the transitory side-effect of the greatest trade collapse the world has ever seen. A global recovery will almost surely return the US, Germany, China and others to their old paths.

Pradumna Rana, 14 November 2009

Will the faster-than-expected recovery from the global crisis cause governments to avoid much-needed reforms? This column says it shouldn’t, as important developing countries can now drive reforms via the G20. It suggests how Asia could leverage its growing economic weight into more effective G20 participation.

Enrique Mendoza, Vincenzo Quadrini, 14 November 2009

Can we blame financial globalisation for the severity of the current crisis? This column says that financial integration spread the negative banking shock that originated in the US across countries, thereby making the US better off at others’ expense.

Andrei Levchenko, Julian di Giovanni, 11 November 2009

Output and trade flows both collapsed during the crisis, but the causal relationship is not clear. This column analyses trade flows at the sectoral level and finds that international trade transmits shocks across countries. Such spillovers raise the importance of fiscal policy coordination.

Michael Melvin, Mark Taylor, 06 November 2009

The timing of the subprime crisis that became the global crisis is well known. Its impact on the foreign exchange markets has been much less discussed. This column fills that void. Its findings suggest that foreign exchange portfolio managers could have protected their portfolio by an appropriate risk control strategy using market stress indicators.

Daria Taglioni, Lionel Fontagné, Guillaume Gaulier, Vincent Vicard, Jean-Charles Bricongne, 05 November 2009

Global trade contracted quickly and severely during the crisis. This column, using data on French firms, shows that both small and large exporters were similarly hurt, but the impact of the crisis varied across industries. Intermediate goods, equipment, and the automotive industry were hit hardest. Sectors more dependent on external finance suffered larger export drops.

Richard Baldwin, 04 November 2009

Policymakers and macroeconomists often remind us that banking crises are nothing new. This column, based on recent papers by Columbia professor Charles Calomiris, looks at the long-term record of banking crises and draws lessons for today.

Aviram Levy, Fabio Panetta, 03 November 2009

In December 2009, government guarantees on the issuance of bank bonds will close to new issuance in many EU countries. This column argues that the guarantees have been effective and should be extended into 2010, despite improved market conditions and bank profitability. In doing so, governments should correct the schemes for some distortionary effects and develop a careful exit strategy.

Charlotte Emlinger, Antoine Berthou, 02 November 2009

The volume of world trade has plummeted with the global crisis. This column says that high-quality imports are more responsive to income changes than low-quality imports. This explains why world trade value fell faster during the crisis than world trade volume, which fell faster than GDP.

Phillip Levine, Courtney Coile, 31 October 2009

Since the crisis began, the economy has shed millions of jobs. This column explains how stock, housing, and labour market fluctuations affect retirement decisions. While wealthier workers will delay retirement, a larger number of workers will be forced into retirement because of their inability to find new jobs. This increased involuntary retirement will likely exceed any work-seeking effect of diminished stock market wealth by 50%.

Robert Barro, Charles Redlick, 30 October 2009

The recent global recession has made the efficacy of fiscal-stimulus packages one of the most prominent policy debates in economics today. This column finds that the multiplier of defence spending falls in a range of 0.6 to 0.8 and argues that non-defence multipliers are unlikely to be larger. It says we should be sceptical when policymakers claim government-spending multipliers in excess of one and suggests tax cuts may be preferable to spending increases.

Stephen Cecchetti, Marion Kohler, Christian Upper, 28 October 2009

Is the current turmoil unique? This column examines three decades of financial crises and says that it stands out. But the variation in past experiences suggests that the major economies may regain their pre-crisis levels of output by the second half of 2010.

Guillermo Calvo, 27 October 2009

How did turmoil in the US subprime mortgage market ignite a global crisis? This column explains how emerging markets’ voracious appetite for international reserves coupled with record-low US policy interest rates and lax financial regulation to produce the large-scale creation of quasi-money subject to self-fulfilling-expectations runs. The theory suggests significant changes in Fed and regulatory policy are needed.

Luis Jácome HG., 20 October 2009

Latin American central banks seem to have weathered the global crisis quite well. This column describes their policy responses and says they succeeded in lowering inflation, averting banking crises, and shortening the recession. It attributes their success to past reforms that created strong institutional foundations and effective policy frameworks.

Kent Cherny, Yuliya Demyanyk, 17 October 2009

The global crisis is said to have originated in the US subprime mortgage market. This column argues that many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths.

Eduardo Levy Yeyati, Piero Ghezzi, Christian Broda, 16 October 2009

Many expect the dollar to continue to depreciate over the foreseeable future. This column suggests that it may strengthen in 2010 if the Federal Reserve exits quantitative easing sooner than its counterparts and the US economy enjoys a strong rebound.

Harald Uhlig, 15 October 2009

The recent crisis was like a bank run, but it didn’t quite fit. This column describes six features that a model of the recent crisis ought to capture and describes a new theory with which we might analyse the crisis and policy responses.

Joshua Aizenman, Sun Yi, 15 October 2009

Emerging markets accumulated massive international reserves over the last decade. This column explores how they used them to respond to the crisis. Economies that accumulated reserves for trade concerns drew them down in response to the shock, while economies driven by financial factors showed a “fear of depleting”.

Enrique Mendoza, Carlos Vegh, Ethan Ilzetzki, 01 October 2009

Economists do not agree on one question crucial to evaluating governments' responses to the crisis: how much stimulus does spending provide? CEPR Policy Insight No.39 examines how the characteristics of an economy impact on the size of fiscal multipliers.



CEPR Policy Research