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. 

Franziska Ohnsorge, Shu Yu, 16 May 2017

Since the Global Crisis, private credit has risen sharply in several emerging market and developing economies as well as advanced economies. This column examines the role of investment alongside these credit booms, and how output growth has been affected. These booms have been unusually ‘investment-less’ in comparison to previous episodes, which were accompanied by investment surges. The absence of investment surges during credit booms is accompanied by lower growth, especially once the credit boom unwinds.

Elias Masilea, 15 March 2017

South Africa has had a growth programme that hasn't generated jobs. In this video, Elias Masilea discusses the importance of higher-quality jobs to change the balance of labor supply and demand. This video was recorded at the UNU-WIDER Conference in Pretoria in December 2016.

Felix Hufeld, Ralph Koijen, Christian Thimann, 30 January 2017

Despite the importance of insurance, discussions about the macroeconomic role and the risks of insurance markets have been surprisingly limited. This column explores some of the key theoretical and conceptual questions still unanswered in this field, and suggests that a two-fold approach combining a focus on individual firms and an activity-based approach across the sector is needed to tackle systemic risk within the insurance industry.

Elisa Gamberoni, Claire Giordano, Paloma Lopez-Garcia, 13 December 2016

An efficient allocation of inputs across firms is a necessary condition to boost TFP growth. This column presents evidence that in large Eurozone economies, capital misallocation trended upwards in the period 2002-2012 while labour misallocation dynamics were flatter. Uncertainty and credit market frictions were strongly associated with the observed developments in capital misallocation, whereas the overall deregulation in the product and labour markets contributed to dampening input misallocation dynamics. 

Stephen Cecchetti, Kim Schoenholtz, 07 December 2016

The Bank of Japan has recently implemented one of the largest central bank policy shifts in modern times, raising its inflation target explicitly to 2% and kicking off the most rapid balance sheet expansion among the leading central banks. This column assesses this policy decision and its potential pitfalls, and compares it to similar policies enacted in the past. Unless policy has a significantly larger impact on financial conditions going forward than it has to date, the revised framework will likely be insufficient to achieve the Bank’s inflation target any time soon.

Marco Buti, Helene Bohn-Jespersen, 25 November 2016

The actions taken in 2008-09 by the G20 avoided an outright depression during the financial crisis, but questions remain over its ability to evolve from a short-term crisis response forum to effectively addressing more long-term challenges. This column argues that to ‘win the peace', G20 members as well as G20 Presidencies have to redesign international economic policy coordination, and ensure that the focus is kept on a limited number of deliverables to which all G20 members can agree.

Maria Balgova, Alexander Plekhanov, 18 November 2016

The major increase in the volume of non-performing loans as a result of the recent financial crisis was predictable, but the persistence of this bad debt is a cause for concern. Using a sample of 100 countries, this column compares economic outcomes in three different scenarios following a rise in non-performing loans. Reducing these loans has an unambiguously positive medium-term effect, with countries that experience an influx of fresh credit growing the fastest. Allowing high levels of non-performing loans to persist, on the other hand, can cost more than two percentage points of economic growth annually.

Bruce Kasman, Joseph Lupton, 03 November 2016

Over the past two years, a significant disinflationary impulse has dampened nominal activity around the world. As this disinflationary impulse fades, however, both nominal and real growth should normalise. Indeed, as this column highlights, the latest signs show inflation and inflation expectations rising, profits stabilising, and capital expenditure inching up.

Joshua Aizenman, Yothin Jinjarak, Huanhuan Zheng, 24 October 2016

The booms and busts of real estate prices echo those of the real business cycle. This column looks at the relationship between house price valuations and economic growth in an international context. Taking account of heterogeneity in housing policies across countries, large house price depreciations are found to be positively associated with economic growth. This positive relationship is more pronounced in countries with civil law legal systems.

Julia Ruiz Pozuelo, Amy Slipowitz, Guillermo Vuletin, 30 September 2016

The debate over whether democracy causes economic prosperity and growth dates back millennia. Recent empirical results suggest that democratisation has a sizable positive effect on economic growth, but endogeneity and reverse causality may be driving these results. This column uses new data from surveys of democracy experts to solve the endogeneity puzzle. The positive association between democracy and economic growth is a reflection of economic turmoil causing the emergence of democratic rule, rather than democracy causing more economic growth.

Guglielmo Barone, Francesco David, Guido de Blasio, 10 September 2016

EU regional policies aim to lead regions onto a path of self-sustaining growth. Fully successful interventions should imply a higher growth rate, not only during the treatment (when the region benefits from the transfers), but also after the expiry of the programme (when the financing terminates). This column uses evidence from the Abruzzi region in Southern Italy to document that when the party is over and the funding ends, growth may slow down significantly. 

Philippe Aghion, Ufuk Akcigit, Julia Cagé, William Kerr, 29 August 2016

The relationship between taxation and economic growth is complex, and relies in large part on the efficiency with which taxes are used. This column examines the impact of corruption on this relationship. The boost to welfare from reducing corruption is substantially larger than the marginal gains from optimising the tax rate for an existing level of government efficiency.

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