Masayuki Morikawa, 10 February 2020

Although long-term macroeconomic forecasts substantially affect the sustainability of government debt and the social security system, they cannot avoid significant uncertainty. This column assesses whether academic researchers in economics make accurate long-term growth forecasts, comparing ten-year growth forecasts made by Japanese economists in 2006–2007 with the realised figures. Even excluding the years affected by the Global Crisis, the results show that forecasts tend to be biased upwards and involve significant uncertainty, even for economics researchers specialising in macroeconomics or economic growth.

Mariarosaria Comunale, Francesco Paolo Mongelli, 27 January 2020

Over the past 30 years, euro area countries have undergone significant changes and endured diverse shocks. This column assembles a large set of variables covering the years 1990-2016 and investigates possible links to fluctuations and differences in growth rates. The findings suggest a significant positive role for institutional integration in supporting long-run growth, particularly for periphery countries. Competitiveness and monetary policy also matter for sustained growth in the long run, while higher sovereign stress, equity price cycles, loans to non-financial corporations and debt over GDP have either mixed or negative effects in core and periphery countries.

Piritta Sorsa, Jens Arnold, Paula Garda, 13 January 2020

Economic growth in Latin America has been persistently lower and more erratic than the emerging economies of Asia, largely due to low productivity borne out of both weak competition and a large informal economy. This column analyses the various factors that have caused these conditions to exist in several Latin American countries, and how policies to counteract them have fared. For significant progress, a detailed strategy of simplifying regulations, easing administrative burdens, encouraging market entry, and reducing trade barriers is required to formalise workers and encourage market competition.

Jakub Growiec, Peter McAdam, Jakub Mućk, 24 June 2019

The worldwide decline of the labour share is worrying, because the labour share is thought to be too low. This column attempts to derive an estimate of the socially optimal labour share. The calibration implies that the socially optimal share is 17% higher than the historical average. 

Marco Tabellini, 25 May 2019

Recent waves of immigration in the US and Europe have triggered debate around the economic and political impact. This column uses evidence from migration of Europeans to the US in the first half of the 20th century to show that large cultural differences can incite anti-immigrant sentiment despite their positive economic impact. Therefore, policymakers should give due attention to cultural assimilation and cohesion policies.

Jörg Baten, Alexandra de Pleijt, 11 February 2019

Empirical evidence suggests a positive relationship between gender equality and long-term economic growth, but establishing the direction of causality has been hampered by a lack of consistent data. This column uses historical evidence on dairy farming to examine the growth effects of gender equality. Countries with greater female autonomy allowed women to contribute more to human capital formation and prosperity, leading to greater economic development in the long run.

Emanuel Ornelas, Marcos Ritel, 08 November 2018

Generalised System of Preferences programmes, a form of nonreciprocal tariff cuts, have proliferated since the 1970s. Using a well-documented dataset of international trade agreements, this column studies the effectiveness of the system on beneficiaries’ aggregate exports. It finds that nonreciprocal tariff preferences can have a strong positive effect on the exports of least-developed countries, provided that they are WTO members. Conversely, other developing economies enjoying nonreciprocal preferences are able to increase exports only if they are not WTO members. 

Gail Cohen, Prakash Loungani, 23 October 2018

At first glance, emissions and economic activity appear to be positively linked. This column refutes this by re-examining emissions and real GDP data using trend/cycle decompositions. The evidence clearly demonstrates decoupling of emissions and real GDP in many richer nations. Furthermore, although decoupling does not yet appear in emerging markets, data from China show that trend elasticities initially increase with per capita real GDP but then decline, thus holding out the hope that the relationship between emissions and GDP growth will weaken as emerging market countries get richer.

Nikolaus Wolf, 11 June 2018

Ambrogio Cesa-Bianchi, M. Hashem Pesaran, Alessandro Rebucci, 24 April 2018

During 2016-17, market analysts and policymakers grappled with the puzzling coexistence of subdued market volatility and heightened policy uncertainty and geopolitical risk. The rise in world growth expectations can explain some but by no means all of the decline in market volatility during this period. This column argues that excess optimism about future growth prospects might have fuelled the decline in volatility. This would imply that gradual unwinding of such expectations could bring more bursts of market volatility, as we have begun to witness since the start of 2018.

Eduardo Cavallo, Andrew Powell, 19 April 2018

The rate of economic growth in Latin America and the Caribbean in coming years is predicted to be below that of the rest of the world and substantially below that of the fast-growing countries of emerging Asia. This column looks at the drivers behind these growth gaps. To converge more rapidly to higher-income status, the region needs not only to boost investment but critically to raise investment efficiency.

Diego Comin, 04 April 2018

Europe currently faces multiple challenges on economic, demographic, and environmental fronts. All of these can be addressed by innovations in technology and process. This video discusses some of the outcomes of the EU-FRAME mid-term conference, outlining ways in which innovation policy can be designed so as to best serve welfare and productivity across all actors. This conference took place in March 2018 at ZEW, Mannheim.

CEPR is a partner of the FRAME Project, which is coordinated by ZEW. The CEPR team is led by Diego Comin, a Research Fellow in its Macroeconomics and Growth Programme. The FRAME project has received funding from the European Union's Horizon 2020 Research and Innovation Programme under the grant agreement No #727073.

Susanne Frick, Andrés Rodríguez-Pose, 14 February 2018

Urban concentration is typically deemed to lead to greater national economic growth. This column challenges this view, using an original dataset covering 68 countries over the past three decades. Urban concentration levels have decreased or remained stable on average, though these averages hide widely diverging trends across countries. Although concentration has been beneficial for high-income countries, this hasn’t been the case for for developing countries.

Michael Clemens, 03 January 2018

Does financial aid contribute to economic growth? In this video, Michael Clemens argues it has, on average, positive effects on growth but the investment has diminishing returns. This video was recorded at the Royal Economic Conference held in London in April 2013.

Theresa Finley, Raphael Franck, Noel Johnson, Stelios Michalopoulos, 02 December 2017

Political revolutions often bring swift regime change leading to short-run economic change, but the long-term consequences are less clear. Some argue that revolutions pave the way for capitalist market growth, while others argue they are only political in nature with limited economic consequence. This column uses extensive evidence from the French Revolution to show that the effects vary across the country and over time. The analysis speaks to questions of concern to developing countries regarding the relationship between institutional change, inequality, and long-run economic development. 

Bruno Pellegrino, Luigi Zingales, 28 November 2017

Italy stands out among developed countries for its large public debt and chronically low productivity growth. The country’s productivity growth disease cannot be addressed without understanding why aggregate labour productivity abruptly stopped growing around 1995. This column argues that the most likely cause is Italian firms’ non-meritocratic managerial practices, which meant they failed to capitalise on the ICT revolution.

Thomas Andersen, Jeanet Bentzen, Carl-Johan Dalgaard, Paul Sharp, 23 October 2017

Examples of the interaction of religious influence and economic performance have occurred throughout history, most notable Weber’s argument of the ‘Protestant ethic’. This column uses an earlier example, of the Cistercian Catholic Order, to show that religious values did influence productivity and economic performance in England and across Europe. The effect of this historic influence has persisted to today.

Susanne Frick, Andrés Rodríguez-Pose, 20 October 2017

Big cities have historically been seen as an important prerequisite for a country’s economic growth. In recent decades, however, developing countries have rapidly urbanised, and large cities are increasingly found in relatively poor countries. This column uses a new dataset to revisit the relationship between city size and economic growth. It finds that relatively small cities (with populations under three million) have been more conducive to economic growth, while very large cities are only growth-enhancing in countries with a very large urban population.

Tomoya Mori, 25 August 2017

The population sizes of cities are highly indicative of their industrial structure. This column identifies the cities in Japan in which manufacturing industries have significant agglomeration, and reveals that the number of these agglomeration cities differs widely across industries, with industries that are located in a smaller number of cities being found in larger cities. There is also considerable churning of population and industrial activities among Japanese cities, with population growth reflecting the development of highway and high-speed railway networks.

Christiane Baumeister, Lutz Kilian, 18 May 2017

The sluggish growth of the US economy after the 2014-2016 decline in the oil price surprised many economists. This column argues that it should have been expected. The modest stimulus to private consumption and non-oil business investment was largely offset by a large decline in investment by the oil sector. Growth was further slowed by a simultaneous global economic slowdown, reflected in lower US exports. 

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