Research-based policy analysis and commentary from leading economists
Gian Maria Milesi-Ferretti, 24 January 2022
International travel and tourism collapsed during Covid-19. Gian Maria Milesi-Ferretti sets out the impact has this had on countries that depend most on tourism.
Read more about the research behind this and download the free DP:
Milesi-Ferretti, G. 2021. 'The Travel Shock'. CEPR
Ulrike Malmendier, 29 October 2021
When we live through a financial crisis, many of us think differently about money afterwards. Neuroscientists can show that the experience changes the physical structure of our brains, and Ulrike Malmendier tells Tim Phillips how this should also change the way that economists think about preferences for risk.
Read more about the research presented and download the free Discussion Paper
Malmendier, U. 2021. 'Experience Effects in Finance: Foundations, Applications, and Future Directions'.
Ulrike Malmendier, Leslie Sheng Shen, 15 March 2021
Economic crises have prolonged consequences on consumer behaviour, beyond effects captured by standard economic variables. Standard life-cycle consumption channels often fail to explain these lasting effects. This column argues that economic downturns ‘scar’ consumers in the long run. Consumers who have lived through times of high unemployment remain pessimistic about the future financial situation, spend less in future years, and accumulate more savings, controlling for income, wealth, and employment. These results suggest a novel micro-foundation of fluctuations in aggregate demand and imply long-run effects of macroeconomic shocks.
Mark Aguiar, 13 March 2018
In the traditional framework, sovereigns face default if they cannot repay maturing debt. Mark Aguiar discusses the concept of 'rollover crises', in which sovereigns can find new debt to pay off maturing debt - but at high spreads. He proposes a way to structure this ahead of time, that reduces the cost to the government. This video was published by the ADEMU Project in November 2016.
Gary Gorton, Guillermo Ordoñez, 27 March 2016
Credit booms are not rare and usually precede financial crises. However, some end in a crisis while others do not. This column argues that credit booms start with an increase in productivity, which subsequently falls much faster during ‘bad booms’. When this decline is severe enough, it changes the informational regime in credit markets, leading to a drying up of credit. A crisis may be the result of an exhausted credit boom and not necessarily of a negative productivity shock.
Carmen Reinhart, 09 July 2015
Contrary to the intent of the designers of what was to be an irreversible currency union, Greece may well exit the Eurozone. This column argues that default does not inevitably trigger the introduction of a new currency (or the re-activation of an old one). However, if ‘de-euroisation’ is the end game, then a forcible (or compulsory) currency conversion is likely to be a central part of that process, along with more broad-based capital controls.
