Orkun Saka, Yuemei Ji, Paul De Grauwe, 13 November 2020

Financial crises invariably lead governments to intervene in one way or another, whether to ease the damage to middle-class voters, to respond to the anti-finance sentiment, or to introduce new policies favouring the financial industry. This column traces policy interventions back to policymakers’ incentives. Financial crises lead governments to re-regulate financial markets only in democratic settings. Politicians who are facing a term limit are substantially more likely to re-regulate financial markets after crises in ways compatible with their private incentives. These privately motivated interventions operate via controversial policy domains and favour incumbent banks in countries with more revolving doors between political and financial institutions.

Rabah Arezki, Simeon Djankov, Ha Nguyen, Ivan Yotzov, 24 August 2020

It is often argued that democracy is the least imperfect form of government mainly because of the existence of a ‘self-correcting’ mechanism stemming from voice and accountability embedded in democracies. Using text analysis from about a billion newspaper articles in 28 languages, this column shows that the intensity of reform chatter increases during economic downturns and that the increase is more significant in democracies. During downturns, democracies appear to benefit disproportionately from changing popular attitudes translating into actual reforms.

Maria Petrova, 14 August 2020

Xenophobic attacks are on the rise around the world. Does social media help cause them? Maria Petrova tells tim Phillips about shocking new research from Russia.

Joshua Aizenman, Hiro Ito, 07 August 2020

The political-economy trilemma, introduced by Dani Rodrik (2000), asserts that the three policy goals of national sovereignty, democracy, and globalisation, cannot all be achieved to the full extent simultaneously. This column investigates this trilemma by developing indexes that measure the extent of attainment of the three factors during 1975-2016. It finds that there is a linear relationship between globalisation and national sovereignty (i.e. a dilemma) for industrialised countries, while all three indexes are linearly correlated (i.e. a trilemma) for developing countries.

Jean Lacroix, Pierre-Guillaume Méon, Kim Oosterlinck, 18 July 2020

Rising populism has raised concerns that democracies may give in to authoritarian pressure. On 10 July 1940, exactly 80 years ago, the French parliament passed an enabling act granting full power to Marshal Philippe Pétain. Analysing how the Members of Parliament voted, this column shows that MPs belonging to a pro-democratic dynasty were more likely to oppose the act. Dynastic politicians may contribute to stabilising democracies by better resisting peer pressure.

Ulrich J. Eberle, Vernon Henderson, Dominic Rohner, Kurt Schmidheiny, 09 July 2020

Urbanisation is a major driver of economic development. Agglomeration forces that make cities productive and dispersion forces that limit their growth have been extensively studied, but the effect of ethnolinguistic diversity has been largely overlooked. This column shows that more diverse regions tend to experience more social tensions and conflict, less urbanisation, less urban concentration, and hence potentially less economic growth. This effect is however more confined to intermediate political regimes like fragile democracies, whereas a mature degree of democracy helps to defuse the negative impact of diversity on urbanisation.

Thorvaldur Gylfason, 19 February 2020

Ruben Enikolopov, Alexey Makarin, Maria Petrova, 17 December 2019

Social media has been labelled a ‘liberation technology’ that empowers ordinary citizens, makes politicians more accountable, and leads to faster democratisation in authoritarian countries. This column estimates the causal effect of social media on politics in a non-democratic environment, using the case of Russia during 2011–2012, a period with the largest wave of anti-government protests since the fall of the Soviet Union. It exploits quasi-random variation in the spread of VKontakte, the most popular social network in Russia, across cities and finds that VKontakte penetration affected both the incidence and the size of the demonstrations by reducing the costs of collective action. 

Thomas Maissen, Ernst-Ludwig von Thadden, 21 June 2019

Markus Eberhardt, 28 April 2019

Recent evidence suggests that a country switching to democracy achieves about 20% higher per capita GDP over subsequent decades. This column demonstrates the sensitivity of these findings to sample selection and presents an implementation which generalises the empirical approach. If we assume that the democracy–growth nexus can differ across countries and may be distorted by common shocks or network effects, the average long-run effect of democracy falls to 10%.  

Gilles Saint-Paul, 07 March 2019

Macroeconomic populism typically leads to higher levels of public debt, public spending, deficits, and crises. Nevertheless, this column argues that it is rational for groups of voters to vote for a populist who reflects their interests, because they will be favoured when a fiscal adjustment occurs. The greater the fiscal adjustment required, the more likely voters are to elect a populist who will discriminate between groups. 

Lubos Pastor, Pietro Veronesi, 28 September 2018

The vote for Brexit and the election of protectionist Donald Trump to the US presidency – two momentous markers of the ongoing pushback against globalisation – led some to question the rationality of voters. This column presents a framework that demonstrates how the populist backlash against globalisation is actually a rational voter response when the economy is strong and inequality is high. It highlights the fragility of globalisation in a democratic society that values equality.

Shqiponja Telhaj, 09 July 2018

The social benefits of higher education are as important as the improved job opportunities and lifetime earnings it might provide. Shqiponja Telhaj explains how higher education is linked to improved economic growth, health, and wellbeing - with the benefits spilling over from those that received higher education to those that did not.

Paul Tucker, 18 June 2018

The last few decades have seen a shift of power from elected to unelected officials - inlcuding central bankers, regulators, and the judiciary. Sir Paul Tucker introduces his research on how the broad mandate given to independent policymakers is at odds with their ability to retain power when their policies fail. This video was recorded at the Imperial College Business School.

Simon Wren-Lewis, 28 May 2018

Giacomo Ponzetto, 13 September 2017

What is the link between citizens, insitutions and globalisation? In this video, Giacomo Ponzetto underlines the relevance of psychology and availability of information. This video was recorded at the Barcelona Graduate School of Economics in November 2016.

Ernesto Dal Bó, Frederico Finan, Olle Folke, Torsten Persson, Johanna Rickne, 26 April 2017

Ancient Athenians drew lots to determine who served in public office, but oligarchs at that time (and ever since) have argued that there is a trade-off between competence and fair representation. This column uses Swedish population data on cognitive and leadership ability to argue that democracy in Sweden has created government by competent people who are representative of all walks of life. Sweden’s inclusive meritocracy suggests that electoral democracy can help us avoid the tension between representation and competence.

Klaus Desmet, Joseph Flavian Gomes, Ignacio Ortuño-Ortin, 17 March 2017

Diverse countries tend to have more conflict, lower development, and worse public goods, possibly due to antagonism between groups. Based on recent research mapping local linguistic diversity across the entire globe, this column argues that local interaction with people of other ethnolinguistic groups can mitigate the negative effect of overall diversity on a country’s outcomes in health, education and public goods. This finding lends support to policies that influence the local mixing of ethnolinguistic groups.  

Manthos Delis, Iftekhar Hasan, Steven Ongena, 22 February 2017

The positive relationship between democratic development and economic outcomes is well established. Using three decades of international data, this column identifies a new channel for this effect – the cost of credit to corporations. It also analyses loan pricing in Turkey to reveal a substantial rise in the average cost of lending after the attempted coup d’etat in July 2016. Together, these results highlight how efficiency in loan pricing results in a comparative advantage for firms in democratic countries over those in less democratic or authoritarian countries.


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