Tamim Bayoumi, Barry Eichengreen, 27 March 2017

Asymmetric aggregate supply and demand disturbances across its regions prevent the smooth functioning of a currency union. This column argues that the disturbances in peripheral regions of the US show more symmetry with those in the anchor region than is the case for the Eurozone. Moreover, disturbances to the GIPPS, which previously were in Europe’s periphery, have become more correlated with disturbances to the anchor (Germany) compared to other Eurozone countries. Hysteresis operating via the financial sector may provide an explanation for this development.

Kazutaka Takechi, 05 February 2017

The trade patterns of agricultural products, which are traded inter-regionally on a daily basis, are quite volatile, with trade often not taking place at all. Using daily data on the carrot trade in Japan, this column shows how supply and demand shocks and trade costs can cause frequent changes in supply patterns. Policies to reduce fixed trade costs, such as improving inventory management or traffic control, are needed even in a country with sufficient transport infrastructure such as Japan.

Daron Acemoğlu, Ufuk Akcigit, William Kerr, 30 January 2016

How shocks reverberate throughout the economy has been a central question in macroeconomics. This column suggests that input-output linkages can play an important role in this issue. Supply-side (productivity) shocks impact the industry itself and those consuming its goods, while a demand-side shock affects the industry and its suppliers. The authors also find that the initial impact of an industry shock can be substantially amplified due to input-output linkages. 

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