Andrew Rose, Mark Spiegel, 03 October 2009

The 2008 financial crisis is sometimes characterised as one where financial difficulties in the US spread to the rest of the world. But is there clear evidence of such international contagion? This column reports research indicating that neither financial nor trade linkages to the US help explain the cross-country incidence of the crisis. If anything, countries more exposed to the US seem to have fared better.

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

How much stimulus does spending provide? This column says that fiscal multipliers are much weaker in countries that have high debt, lower income, flexible exchange rates, and greater international openness. Policymakers should consider these characteristics when evaluating the benefits of any fiscal stimulus package.

Dirk Bezemer, 30 September 2009

Did economists not see this crisis coming? This column says that analysts who used models featuring a distinct financial sector issued fairly detailed, well reasoned, and public warnings of imminent finance turmoil. It argues that mainstream models missed the crisis because they use a “reflective finance” view in which financial variables are wholly determined by the real sector. “Flow of funds” models may be the way forward for anticipating finance-induced recessions.

Urban Jermann, Vincenzo Quadrini, 29 September 2009

The financial crisis has made it clear that macroeconomic models need to allocate a more prominent role to financial frictions. This column provides a framework where the financial sector can be the “source” of business cycle fluctuations. The model suggests that credit shocks have played an important role in all major recessions experienced by the US economy during the last two and a half decades.

Thorvaldur Gylfason, 26 September 2009

The Icelandic collapse revealed shortcomings in the international community’s ability to respond to such an event. This column examines the IMF’s central role and recommends that it formulate rules to address potential conflicts between its own lending and external bilateral creditors. It should also establish a mechanism for international investigation when a country’s banks impose severe financial losses on their foreign creditors.

Paul De Grauwe, 24 September 2009

A key issue at the G20 is coordinating exit strategies. Empirical research suggests that demand spillovers from fiscal policy are sufficiently small that uncoordinated exits from fiscal stimulus are unlikely to threaten global demand. This column argues that research is flawed as it was based on data and theory for economies near full employment – not today’s situation. G20 leaders need to address fiscal and monetary stimulus coordination exit strategies.

Antonio Spilimbergo, Paola Giuliano, 25 September 2009

Economic events can have long-lasting non-economic effects. This column shows how economic circumstances affect individuals’ life-long beliefs. Individuals growing up during recessions tend to believe that success in life depends more on luck than on effort and support more government redistribution, but they are less confident in public institutions. The current severe recession may be forming a generation that is more risk-averse and believes more in redistribution.

Paul Klemperer, 25 September 2009

The crisis set policymakers scrambling for appropriate mechanisms to respond to financial turmoil. This column proposes a new auction design that can be used for toxic asset purchases and central bank liquidity auctions in a credit crunch.

Simon Evenett, 24 September 2009

Simon Evenett of the University of St Gallen talks to Romesh Vaitilingam about ‘Broken Promises’, the latest report from Global Trade Alert, which collates information on state measures taken since last November that discriminate against foreign commercial interests, and reveals how the G20 countries have broken their 'no protectionism' pledge. The interview was recorded in Geneva at the inaugural Thinking Ahead on International Trade conference in September 2009.

Gilles Saint-Paul, 19 September 2009

Has economics failed us? Should economists have seen this crisis coming? This column offers a defence of contemporary economics against those demanding forecasts of crises and complaining about the profession’s mathematical intensity. It says that the economy’s extraordinary complexity necessitates that economists remain modest, not that they abandon their training for a multidisciplinary melting pot.

Simon Evenett, 17 September 2009

The 2nd Report from Global Trade Alert reveals how the G20 countries have broken their 'no protectionism' pledge

Peter Heller, 18 September 2009

At the Global Economic Symposium in Schleswig-Holstein in September 2009, Peter Heller of Johns Hopkins University spoke at a session on ‘dealing with the new social divides’. Afterwards, he talked to Romesh Vaitilingam about the challenges of restoring sustainable public finances after the fiscal stimulus – and the potential impact on growth in the developing countries and on the ageing populations of the industrial countries.

Xiaojing Zhang, Tao Sun, 12 September 2009

Emerging economies have been hit hard by the global crisis. This column assesses the nature and severity of China and Hong Kong’s vulnerability to the turmoil originating from the US. It warns that China cannot decouple from US financial and monetary conditions, so it must participate in coordinating international policy and manage its capital account openness.

Keiichiro Kobayashi, 24 August 2009

Do the US and Europe risk repeating Japan’s lost decade? This column warns that if the US or European financial clean-ups falter, they will be vulnerable to recurring financial crises. It argues that macroeconomic models should not treat finance as an innocuous veil and calls for a new approach that places financial intermediaries at the centre of its models.

Luigi Spaventa, 12 August 2009

In the past year or so, bashing economists has become a fashionable sport. This CEPR Policy Insight looks at the lessons to be learned from the crisis for economics as a discipline and for its practitioners.

Luigi Spaventa, 12 August 2009

This column outlines tough questions about economics and economists raised by the global crisis.

Guido Tabellini, 17 July 2009

What should we conclude about the implications of the global crisis for the future of the world economy? This column, the second of a two-part series, outlines the exit strategies required for fiscal and monetary policy. It says that the crisis ought to be seen as a temporary period of turmoil, rather than a paradigm-shifting event.

Rebecca Hellerstein, Jeffrey Shrader, William Ryan, 14 July 2009

This column introduces timelines, produced by the New York Fed, that organise and illustrate policymakers’ responses to the global financial crisis.

Joaquim Oliveira Martins, Sónia Araújo, 08 July 2009

What’s driving the unprecedented collapse in global trade flows? This column shows that the magnitude of the global decline reflects greater synchronisation of trade flow declines across countries. Globalisation has brought the world in sync.

Simon Evenett, Bernard Hoekman, 06 July 2009

For most nations in the world, this is a trade crisis. Leaving China and India aside, income of developing nations is expected to drop 1.6% this year, even though these nations had nothing to do with subprime assets or the financial shenanigans that triggered the crisis. A new CEPR-World Bank e-book reports that protectionism is not yet a problem, but argues that the “fateful allure of protectionism” is a threat. To counter the threat, four concrete steps should be taken to reinforce the global trade and financial architecture.



CEPR Policy Research