Nauro Campos, Fabrizio Coricelli, 03 February 2015

Britain eschewed EU membership in the late 1950s but changed its mind in the early 1960s, only to be rebuffed by Charles de Gaulle. Membership came only in the early 1970s. This column argues that, among others, Britain joined the EU as a way to avoid its economic decline. The UK’s per capita GDP relative to the EU founding members’ declined steadily from 1945 to 1972. However, it was relatively stable between 1973 and 2010. This suggests substantial benefits from EU membership especially considering that, by sponsoring an overpowered integration model, Britain joined too late, at a bad moment in time, and at an avoidably larger cost.

Philip Bunn, May Rostom, 12 January 2015

A number of US studies have found a link between high pre-crisis debt and weak consumption after the recent financial crisis. This column investigates the relationship between household debt and consumption in the UK. Spending cuts associated with debt are estimated to have reduced the level of aggregate private consumption by around 2% after 2007, unwinding the faster growth in spending by highly indebted households, relative to other households, before the financial crisis.

Michael Joyce, Zhuoshi Liu, Ian Tonks, 03 January 2015

Central banks in advanced economies implemented quantitative easing (QE) as a response to the Global Crisis. A key transmission mechanism of QE, emphasised by policymakers, has been the ‘portfolio balance’ channel. This column describes behaviour of insurance companies and pension funds using sectoral and micro-level data from the UK. The results show that investors shifted their portfolios away from government bonds towards corporate bonds. But portfolio rebalancing has been limited to corporate bonds and did not extend to equities. 


CEPR Policy Research