Kathryn Judge, Anil Kashyap, 21 July 2021

That a shock the size of the Covid-19 pandemic would trigger distress in financial markets is far from surprising. What is surprising is how much of the distress arose in domains that could have been identified posing a potential threat to stability well before the pandemic hit. This column explores how the US financial regulatory regime is falling short and proposes reforms to increase the likelihood that policymakers will identify and address threats to stability – before they harm the real economy. 

Laurent Ferrara, Valérie Mignon, 17 July 2021

Identifying the peaks and troughs of recessionary episodes helps economists to understand the conditions surrounding crises. But deciding when a recession starts or finishes is not straightforward, and several methods exist. This column presents the dating specification for the French Business Cycle Dating Committee, describing how the group identifies key phases in France’s economic performance based on a quantitative and a qualitative pillar. The committee has dated the peak of the recession linked to the recent Covid-19 pandemic to the last quarter of 2019, it is still too early to identify the exit date of this recession, which is unprecedented in its source and profile. 

Elliott Ash, 03 July 2021

Faced with extreme old age and even dementia among its judges, some US states have imposed a mandatory retirement age. But this policy may remove experienced judges who are still productive in their jobs. This column examines the overall effect of mandatory retirement on court productivity in US states during 1947–1994 and finds that court productivity increased by more than 25% after the introduction of mandatory retirement. There may even be a team effect of ageing whereby the presence of older judges slows down the pace of work in the court.

Giovanni Cespa, Xavier Vives, 01 July 2021

Over the past two decades, governments and regulators have worked to foster competition among trading venues, leading to market fragmentation and contributing to a drastic reduction in the cost of trading. But this also led exchanges to heighten their reliance on revenue generating activities such as the sale of market data, co-location space, and fast connections to matching engines. This column argues that a connectivity fee or entry regulations could work well from a regulatory perspective, and highlights the important role of exchanges’ technological capacity decisions as a driver of liquidity.

Joan Costa-Font, 29 June 2021

Covid-19 vaccines exert large positive spillover effects beyond their protective effects for individuals, and thus their value far exceeds their costs. But these benefits are only realised if enough people receive both doses, so policymakers need to ensure appropriate incentives are in place to mitigate vaccine hesitancy. This column explores the potential of different incentives, arguing that creating a narrative of social esteem around being vaccinated may be the most effective way to ensure widespread uptake.

Martha J. Bailey, Shuqiao Sun, Brenden Timpe, 06 June 2021

Preschool attendance in the US is largely funded by parents, which means that the children of more affluent and educated parents are more likely to attend.  This column looks at the impact of Head Star, a large-scale preschool programme that serves roughly 1 million children annually in the US. The results show that children age-eligible for Head Start went on to achieve substantially higher levels of education. Head Start also led to improvements in adult economic self-sufficiency. Overall, the findings suggest that a large-scale preschool programme – even one with less per-child expenditures than model preschools – can deliver long-run benefits to students.

Ian Goldin, Pantelis Koutroumpis, François Lafond, Julian Winkler, 31 May 2021

Labour productivity is a key determinant in improving living standards. But in recent years, productivity has stagnated, if not declined, in many countries around the world. This column re-evaluates the various reasons as to why this might be, applying three criteria to the existing explanations for the slowdown. It finds that the slowdown in productivity can be attributed to numerous factors, ranging from mismeasurement to changes in trade patterns.

Charles Angelucci, Julia Cagé, Michael Sinkinson, 21 May 2021

Local journalism is disappearing in the US, with a quarter of all newspapers shut down in the past 15 years. Using the case of television expansion in the mid-20th century US, this column investigates how a more competitive national news market affects local news provision and, in turn, voting behaviour. After the entry of television, circulation for local newspapers and the total number of original local news stories published decreased. Because of television’s more national focus, this points to a strong shift towards more national news diets. Crowding out of local information led to less split-ticket voting, implying the nationalisation of local politics.

Christian Bayer, Benjamin Born, Ralph Luetticke, 20 May 2021

Debt-financed fiscal expansions have been a critical feature in many countries’ policy response to Covid-19. This column revisits the role of public debt in stimulating economic recovery. The authors identify both short-run and long-run effects, highlighting that higher public debt has small effects on the capital stock but leads to a sizable decline of the liquidity premium, which increases the fiscal burden of debt. Further, the revenue-maximising level of public debt is positive and has increased to 60% of GDP post-2010.

Kris Mitchener, Kevin O'Rourke, Kirsten Wandschneider, 19 May 2021

The Trump administration’s pursuit of protectionist trade policies was predicated to some extent on the belief that America was too lucrative a market to face retaliation. Using the most detailed data set of bilateral trade flows constructed to date for the interwar period, this column shows that in fact the US faced substantial and widespread retaliation from trade partners in response to protectionist measures employed in the wake of the Great Depression. Exports to retaliating countries fell by as much as 33%.

Gabriel Felbermayr, Aleksandra Kirilakha, Constantinos Syropoulos, Erdal Yalcin, Yoto Yotov, 18 May 2021

While the world experienced a golden age of international economic integration in the 1990s and the 2000s, in the more recent past there has been an emergence of interstate political conflicts, political polarisation, and extensive use of coercive sanctions intended to limit the international movement of goods, assets, and people. This column presents findings from the newly updated Global Sanctions Data Base, which now includes the years of the Trump presidency and provides a more comprehensive coverage of 1,101 sanction cases in the years from 1950 to 2019.

John O'Hagan, 04 May 2021

The presence of prize-winning young economists among faculty can be seen as a marker of a university’s status in the field of economics, particularly when awards are given on the basis of researchers being published in ‘top’ journals. This column examines where recent young economist prize winners studied for their doctorates and identifies a clear pattern of dominance, with the US – particularly Boston – the clear frontrunner.

Chad Bown, 30 April 2021

If you had trouble in the last four years keeping up with what was happening in the trade war, you're not alone. Chad Bown tell Tim Phillips about his new paper that explains what happened, when, what it meant - and what happens next.

Abigail Adams-Prassl, Teodora Boneva, Marta Golin, Christopher Rauh, 27 April 2021

Women, the young, and the less educated have borne the brunt of the economic damage caused by the Covid-19 pandemic and lockdowns in terms of job and earnings losses. As this column reports, women have also suffered far more from social distancing measures than men in terms of their mental health. Evidence from the Spring 2020 ‘stay-at-home’ orders in US states indicates that this widening gender gap in mental health cannot be explained by respondents earning less than usual, working less than usual, losing their job, struggling to pay their bills, or changing their work patterns or number of hours spent on childcare. 

Assaf Razin, 23 April 2021

Concerns associated with the Covid-19 pandemic have led to new rationales of protectionism, with renewed emphasis on domestic production and sourcing. This column compares the current economic crisis brought on by the pandemic to previous major economic crises and examines what this could mean for the future of various aspects of globalisation.

Shamena Anwar, Patrick Bayer, Randi Hjalmarsson, 23 April 2021

In the justice system, the jury is meant to be representative of the community. Yet, juries across the US are often highly unrepresentative, especially for racial minority populations. Using data from Harris County, Texas, this column examines how unequal representation impacts verdicts and sentences. Many zip codes with the highest proportion of white residents are overrepresented on juries. If the jury pool were more reflective of the county, the average sentence would fall by almost 15 years for Black defendants and the likelihood of a life sentence by more than 50%. Policy responses could include expanding the jury source list and oversampling residents from underrepresented neighbourhoods in calls for jury duty.

Stefano Filauro, Georg Fischer, 17 April 2021

Inequality in the EU has traditionally been analysed either at the individual country level or in terms of the average of country trends, but attention is now shifting to the analysis of inequality between all citizens across individual member states. Using income survey data, this column shows that that inequality among EU citizens is significantly lower than among US citizens, but slightly higher than in countries with established welfare models such as Australia and Japan. This and other findings may be useful in identifying the most effective policy path to address inequality at the EU level.

Gabriel Felbermayr, Yoto Yotov, 14 April 2021

Whether or not large bilateral trade imbalances are a signal of non-reciprocal (or ‘unfair’) trade costs has been the subject of debate for some time, and was brought to the fore during President Trump’s time in office. This column argues that if the trading partners’ average trade costs with the whole of the world are taken into account, then the ‘unfair trade’ argument does not hold up. Using standard gravity modeling, the authors find that up to 88% of the variance in bilateral balances can be explained without making any reference to asymmetries in bilateral trade costs.

Robert Gilhooly, Carolina Martinez, Abigail Watt, 13 April 2021

Emerging markets will be shaped by the US and Chinese policy stances in 2021. This column considers how the latest US fiscal package will interact with China’s policy normalisation and concludes that while President Biden’s American Rescue Plan should dominate a less expansionary stance in China, the boost to the global economy will be much more modest than one would typically expect. Specifically, the normalisation of goods consumption in developed markets and less import-intensive Chinese growth will curtail global goods trade, a key determinant of emerging market growth.

Joshua Aizenman, Hiro Ito, Gurnain Kaur Pasricha, 08 April 2021

Facing acute strains in the offshore dollar funding markets during Covid-19, the Federal Reserve implemented measures to provide US dollar liquidity. This column examines how the Fed reinforced swap arrangements and established a ‘financial institutions and monetary authorities’ repo facility in response to the crisis. Closer pre-existing ties with the US helped economies access the liquidity arrangements. Further, the announcements of the liquidity expansion facilities led to appreciation of partner currencies against the dollar, as did US dollar auctions by foreign central banks. 

Pages

Events

CEPR Policy Research