Holger Breinlich, Dennis Novy, 16 August 2019

As Brexit nears (again), are British firms choosing to invest in the UK or in other European markets? Are European firms investing in the UK to preserve access to its markets? And has "global Britain" got off the drawing board yet? Holger Breinlich and Dennis Novy lead Tim Phillips through the numbers.

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. 

Brian Beach, Walker Hanlon, 04 August 2019

How economic factors shaped the historical fertility transition is well studied but the role played by cultural factors remains disputed, in part because establishing the direct effect of social norms is difficult. This column examines the relationship between England and Wales’s rapid fertility transition in the late 19th century and media exposure to the 1877 Bradlaugh-Besant trial, which challenged existing censorship laws related to family planning. It finds that fertility declined more rapidly after 1877 in locations with greater exposure to newspaper articles about the trial.

Matthew Bevington, Jonathan Portes, 27 June 2019

Three years on from the referendum, it seems like a good time to take stock of whether the Brexit process so far has been good or bad for the UK, and its likely future impacts. This column does so based on four tests covering the economy, fairness, openness, and control. While the apocalyptic predictions of the Remain campaign have failed to materialise, the economic damage has nevertheless been significant. And although the UK may end up with considerably more control over a range of policies – trade, regulation, and migration – than at present, the difficult issue remains of what future governments will do to address the underlying discontent that, at least in part, drove the Brexit vote.

Simon Burgess, 25 June 2019

Simon Burgess of Bristol University discusses how, despite any tactics involved in parental selection, the key factor in a successful application to an oversubscribed school in the UK will still be how close to it you can afford to live.

Arun Advani, 20 June 2019

Last year, the UK failed to bring in £33 billion in tax. Arun Advani discusses the role tax audits can play in helping to bring this money in. 

Pascal Lamy, 14 June 2019

Thomas Cornelissen, Christian Dustmann, 08 June 2019

Primary education starts at age 6 or 7 in most OECD countries, but in the UK children start primary school at the age of 4 or 5. This column exploits local variation in school entry rules in the UK to investigate the effects of schooling at an early age on cognitive and non-cognitive development. It finds that early schooling boosts both cognitive and non-cognitive skills up until the age of 11. These effects tend to be strongest for boys from disadvantaged family backgrounds.

Roger Farmer, Giovanni Nicolò, 20 May 2019

The economies of many countries are operating close to full capacity, but unemployment and inflation are both low. Using data from the US, UK and Canada, this column compares differences in the macroeconomic behaviour of real GDP, the inflation rate and the yields on three-month Treasury securities in the three countries. It shows that the Farmer monetary model, closed with a belief function, outperforms the New Keynesian model, closed with the New Keynesian Phillips curve. The data fit the multiple equilibria emphasised in the Farmer model well, rather than the mean-reverting processes assumed by the New Keynesian model. 

Nicholas W. Papageorge, Victor Ronda, Yu Zheng, 04 May 2019

Socio-emotional skills are generally believed to improve labour market outcomes. Using British and US longitudinal datasets, this column studies externalising behaviour – usually linked to aggression and hyperactivity – and internalising behaviour – linked to anxiety and depression – and how they relate to an individual’s earnings over the long term. It shows that for both genders, externalising behaviour lowers educational attainment but is associated with higher earnings.

Terence Mills, Forrest Capie, Charles Goodhart, 18 April 2019

It is well known that the slope of the term structure of interest rates contains information for forecasting the likelihood of a recession in the US. This column examines whether the same is true for the UK. Focusing on three periods – the pre-WWI era, the inter-war years, and the post-WWII period – it finds strong support for the inverted yield curve being a predictor of UK recessions for both the pre-WWI and post-WWII periods, but the evidence is less conclusive for the inter-war years.

David Hendry, 12 December 2018

The Industrial Revolution has been of vast benefit to humanity, but it came at the cost of a global explosion in anthropogenic emissions of greenhouse gases. The UK was the first country into the Industrial Revolution. Now it is one of the first countries heading out, with annual CO2 emissions per capita back below the levels of the 1860s. This column presents an econometric model of UK emissions over the last 150 years to establish what has driven them down and reveal the impacts of important policies, especially the Climate Change Act of 2008. Even so, large reductions in all the UK’s CO2 sources are still required to meet its 2050 target of an 80% reduction from 1970 levels.

John Van Reenen, 07 December 2018

Ana Fernandes, L Alan Winters, 21 November 2018

Understanding the effect of exchange rate movements on international trade is a major issue for economists and policymakers. This column shows that Portuguese exporters absorbed little of the effect of the large and unanticipated depreciation of sterling following the Brexit referendum into their markups – the vast bulk of the effect of the depreciation was visited on UK users and consumers of Portuguese goods. The lesson for the UK as it contemplates life after Brexit is that it is, in the technical sense, a ‘small open economy’ and will have little ability to negotiate or otherwise achieve better trading terms.

Nicholas Bloom, Scarlet Chen, Paul Mizen, 16 November 2018

The majority of businesses in the UK report that Brexit is a source of uncertainty. This column uses survey responses from around 3,000 businesses to evaluate the level and impact of this uncertainty. It finds that Brexit uncertainty has already reduced growth in investment by 6 percentage points and employment by 1.5 percentage points, and is likely to reduce future UK productivity by half of a percentage point.

Barry Eichengreen, Rebecca Mari, Gregory Thwaites, 05 November 2018

In the UK’s 2016 referendum on EU membership, young voters were more likely than their elders to vote Remain. Applying new methods to a half century of data, this column shows that this pattern reflects both ageing and cohort effects.  Although voters become more Eurosceptical as they age, recent cohorts are also more pro-European than their predecessors, which will offset at least in part the ageing of the electorate going forward. However, the existence of large nationwide swings in sentiment that have little to do with either seasoning or cohort effects suggests that demographic trends are unlikely to be the decisive determinants of future changes in European sentiment. 

Ian Goldin, Benjamin Nabarro, 24 October 2018

Anti-migration sentiment has been rising across Europe. This column shows that the economic impact of migration is positive, but depends almost entirely on the policies implemented to ensure that migrants can be productive and the extent to which the positive economic consequences of migration are distributed across individuals. Unless the rhetoric of a perceived cultural and economic threat posed by migrants is countered effectively, economies stand to lose out substantially from the implementation of anti-immigration policies.

Jonathan Portes, 04 October 2018

A report by the UK Government’s independent Migration Advisory Committee draws on new research on the impact of immigration to the UK, particularly on migration, training, and the public finances. This column presents some of the findings from the report.

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