Willem Thorbecke, 06 November 2019

As the trade surpluses of East Asian countries have continued to exist in regional value chains despite the US-China trade war, one possible tool such economies could employ are currency appreciations. This column shows how exchange rates in upstream countries affect China’s exports. No single economy wants to appreciate its currency against the US dollar for fear of losing competitiveness, but a concerted effort to prioritise regional currencies could benefit the set of countries as a whole.

Owen Thompson, 01 November 2019

Fertility rates among African American women have exceeded those of white women for as long as fertility statistics have been collected, while disparities in the economic outcomes of black and white Americans have persisted. This column investigates the relationship between racial inequality and fertility differentials. It finds that not only were fertility choices responsive to changes in discriminatory policies made during the Civil Rights era, but that African Americans born in the years immediately following, when the relative fertility of black southern women declined markedly, exhibited rapid improvements in test scores and adult outcomes.

Anil Kashyap, Benjamin King, 28 October 2019

There are still remarkable gaps in the data available on the overall structure of the financial systems of major economies. This column presents rough estimates for the UK and the US that suggest some surprising structural differences between the two systems and which point to areas where better measurement is needed. The authors note that there is a strong case for policymakers to think about the system as an interconnected whole, rather than as a set of distinct sectors to be regulated in isolation.

Jennifer Hunt, Ryan Nunn, 17 October 2019

Over the last five decades, middle-wage jobs diminished in the US as wage inequality increased. This column investigates the relationship between these two phenomena, and finds no evidence that either computerisation or automation (often cited as a source of both trends) produced employment polarisation or increased wage inequality. By examining wages at the individual level (rather than occupation-average wages), the column suggests that the evolution of wages can be better explained by distinct causes—ranging from changing labour market institutions to globalisation—than by observable demographic factors. 

Xavier Jaravel, Erick Sager, 16 October 2019

International trade creates both winners and losers. Using comprehensive price data, this column estimates the US price effects of the China shock from 2000 to 2007. It finds that US consumers benefited from large price declines in product categories in which imports from China increased, as increased trade with China eroded the market power of US producers. The positive impact of the China shock on the purchasing power of US consumers is large in comparison to its negative impact on US jobs.

Stefania Garetto, Lindsay Oldenski, Natalia Ramondo, 08 October 2019

Multinational enterprises play an important role in coordinating production around the globe. This column presents a dynamic quantitative model of multinational enterprise expansion that can be used to analyse the effects of policies that affect the cost of the operations of such firms. It uses this model to estaimte the impact of potential implementations of Brexit.

David Keiser, Joseph S. Shapiro, 05 October 2019

The Trump administration recently repealed the US Clean Water Rule, which sought to extend federal water quality protection to cover most rivers and streams. This column seeks to better understand the effectiveness of such laws that govern US surface and drinking water quality, the efficiency of these laws, and the state of economic research on water quality. It finds that regulations governing surface water quality are more likely to fail cost-benefit tests compared to drinking water and air pollution regulations, possibly due to an underestimation of the benefits of surface water pollution control.

Fabian Eckert, Sharat Ganapati, Conor Walsh, 26 September 2019

In recent years, wages for highly skilled workers have grown rapidly. Using US data between 1980 and 2015, this column studies a group of service industries that are skill-intensive, widely traded, and have recently seen explosive wage growth. It shows that, unlike any other sector, the wage growth in these industries was strongly biased toward the densest local labour markets and the highest-paying firms. These developments alone explain 30% of the increase in inequality between the 50th and 90th percentiles of the wage distribution. 

Kacie Dragan, Ingrid Gould Ellen, Sherry Glied, 19 September 2019

The pace of gentrification in US cities has accelerated, but little evidence exists on its impact on low-income children. This column uses Medicaid claims data to examine how gentrification affects children’s health and wellbeing in New York City. It finds that low-income children born in areas that gentrify are no more likely to move than those born in areas that don't gentrify, and those that do move tend to end up living in areas of lower poverty. Moreover, gentrification does not appear to dramatically alter the health status or health-system utilisation of children by age 9–11, although children growing up in gentrifying areas show somewhat elevated levels of anxiety and depression.

Scott Baker, Nicholas Bloom, Steven Davis, 17 September 2019

Tariff threats, hikes, and retaliations have become a major source of economic uncertainty and stock market volatility. This column draws on three initiatives to demonstrate that recent rise in trade policy uncertainty, driven by the US withdrawal from the Trans-Pacific Partnership, tariff hikes on US steel and aluminium imports, ongoing Brexit uncertainty, and escalating US-China trade tensions, is extraordinary by several metrics. 

Johannes Eugster, Florence Jaumotte, Margaux MacDonald, Roberto Piazza, 10 September 2019

Bilateral trade balances have come under scrutiny recently, with some policymakers concerned that their large and rising size may reflect asymmetric obstacles to trade. This column argues that macroeconomic factors – rather than bilateral tariffs – have been the key drivers of the evolution of bilateral trade balances. While tariffs have played a modest role in the evolution of bilateral balances, declines in tariffs have lifted productivity by allowing a greater international division of labour, including through participation in global value chains. A sharp increase in tariffs would therefore create significant spillovers, leaving the global economy worse off. 

Daniel Gros, 09 September 2019

Traditional analysis of tariffs in a partial equilibrium setting can tell us much about the welfare consequences of the US-China trade war. The column argues that, as tariffs ratchet up, welfare costs for both sides increase disproportionately. The cost of trade diversion in the US to less-efficient suppliers likely overwhelms any terms-of-trade gain the US might enjoy. In all cases, exporters in the rest of the world benefit.

Marco Di Maggio, Ankit Kalda, Vincent Yao, 07 September 2019

Rising student debt is considered one of the creeping threats of our time. This column examines the effect of student-debt relief on individual credit and labour market outcomes. Following debt relief, distressed borrowers reduce their indebtedness by 26% and are 11% less likely to default on other accounts. After the discharge, the borrowers’ geographical mobility and probability of changing jobs increase. Ultimately, their income increases by about $3,000 over a three-year period. 

Alan Bollard, 05 September 2019

The World Wars precipitated unprecedented economic problems in all countries. This column, part of a Vox debate on the economics of WWII, describes how economists played a larger role in WWII than in any previous conflict. They advanced the methods of public finance and influenced the directions of the war effort. By the end of the war, economists were widely embedded in government and policymaking.

Robert J. Gordon, Hassan Sayed, 29 August 2019

Since 2005, productivity growth in the US and Europe has dipped below 1%. Using new industry-level from the US and ten EU countries, this column shows that that the industrial composition of the slowdown was similar in Europe and the US. Falling multifactor productivity growth explains both the magnitude and composition of falling productivity growth on both sides of the Atlantic. Decelerating technical change, rather than slowing investment, was the primary driving force in the transatlantic slowdown. 

Michael Reich, 23 August 2019

The US has an epidemic of "deaths of despair". Michael Reich tells Tim Phillips that new research implies that a $15 minimum wage doesn't just cut poverty, it also saves lives. But is Congress listening?

Bernard Hoekman, Petros Mavroidis, 26 August 2019

In December 2019, the WTO Appellate Body will cease to operate unless the US stops blocking new appointments. This column argues that the Appellate Body should stick to the mandate that was agreed in 1995 and not overstep it, as requested by the US. At the same time, the WTO adjudication process should be reformed by increasing the use of economics in panel reports, by improving the quality of panellists and Appellate Body members, by reducing the politicisation of appointments, and by changing the modus operandi of dispute settlement. 

Shari Eli, Trevon Logan, Boriana Miloucheva, 20 August 2019

The mortality gap between blacks and whites in the US has been well documented, but there is still considerable debate over why the gap has remained so large and why it has persisted over the last century. This column explores these questions using unique data on black and white Civil War veterans to measure one of the earliest known incidences of physician bias against African Americans. It shows that physician bias had large effects on income and longevity of blacks relative to whites and considers the ways in which doctor attitudes still contribute to the racial mortality gap today. 

Marcus Miller, Lei Zhang, 16 August 2019

Externalities can have a powerful effect on financial stability. This column studies the amplification effect that can operate despite value at risk regulation, which suffers from the ‘fallacy of composition’. It shows that the magnitudes of booms and busts are amplified by two significant externalities triggered by aggregate shocks: the endogeneity of bank equity due to mark-to-market accounting and of bank liquidity due to 'fire-sales' of securitised assets. In addition to economic models, legal and political factors should also be considered. 

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