Recent Popular Editors' choice   New-paradigm globalisation and networked FDI: Evidence from Japan Richard Baldwin, Toshihiro Okubo, 24 May 2012 New-paradigm globalisation – driven by lower coordination costs rather than trade costs – is changing the nature of international commerce, the political economy of trade liberalisation, the nature of trade agreements and much more. This column, using data on Japanese multinationls, presents evidence that the nature of FDI is also changing away from the traditional classification of ‘horizontal’ or ‘vertical’. When did the dollar overtake sterling as the leading international currency? Evidence from the bond markets Livia Chiţu, Barry Eichengreen, Arnaud Mehl, 23 May 2012 Conventional wisdom states that the dollar took over as the leading international currency after the Second World War. This column presents new evidence from the bond markets suggesting it was much earlier in the 1920s. This implies that inertia and lock-in effects in international currencies are not all they’re cracked up to be and that the shift to a multipolar currency system might happen sooner than commonly believed. Capital gains on international portfolios: New evidence from the Eurozone Sebnem Kalemli-Ozcan, Bent E. Sørensen, 23 May 2012 News reports today are full of negative stories on the Eurozone. This column presents evidence of a much-overlooked benefit. The common currency has led to increased financial integration and in turn increased risk sharing, which helps to significantly reduce output shocks. Those arguing for a break up of the Eurozone should take note. Is Europe ready for banking union? Nicolas Véron, 23 May 2012 Many policymakers and academics are now agreed that a banking union, together with some form of fiscal union, is needed if the Eurozone is to emerge from the crisis in one piece. This column argues that while the current proposals for a banking union still need to be fine tuned, the crisis calls for swift and bold action. Rethinking the ‘war on drugs’: Insights from the US and Mexico Ernesto Zedillo, 22 May 2012 Illegal drugs are one of the planet’s most pressing problems. They shatter hundreds of millions of lives and wreak untold social, economic and political damage in both consuming and producing nations. In this column, ex-President of Mexico Ernesto Zedillo introduces an eBook he edited on the issue that points very strongly in the direction of a serious reconsideration of drug policy. The age of equality Richard Pomfret, 22 May 2012 Politicians who rail against socialism or capitalism always adopt a more moderate stance after they come into office. This column argues this is because we are still experiencing the consequences of the industrial revolution. The current state of that process involves a widely accepted compromise between aggregate prosperity and distributional equality. How universities helped transform the medieval world Davide Cantoni, Noam Yuchtman, 21 May 2012 We like to think that we have moved on from the Middle Ages, but do universities from that period have something to teach us about the role of government in education? This column thinks so. Trade and inequality: New insights from Brazil Elhanan Helpman, Oleg Itskhoki, Marc Muendler, Stephen Redding, 20 May 2012 What is the effect of trade on inequality? This column presents a unique study examining wage inequality in Brazil after liberalisation. Starting from a closed economy, the column finds that wage inequality will initially rise as only some firms take advantage of the new opportunities. But as trade costs continue to fall and more firms start to trade, wage inequality peaks and begins to fall back. Germany should follow in the footsteps of China Kamil Yilmaz, 19 May 2012 Germany’s fiscal response to the crisis was timid compared with those of China and the US. This column uses business-cycle connectedness indices to show that Germany should follow in the footsteps of China and increase its domestic spending so that it will generate net positive connectedness to others. Germany was able to increase its exports thanks to the fact that countries like the US, China and Japan stimulated domestic spending significantly. Developing country and emerging market vulnerability to the Eurozone crisis Joshua Aizenman, Yothin Jinjarak, Minsoo Lee, Donghyun Park, 19 May 2012 The Eurozone debt crisis has emerged as the single biggest threat to the global outlook. Applying event study methodology, this column estimates the responsiveness of equity and bond markets in developing countries and emerging markets to crisis news between 2005 and 2011. Whereas global crisis news had a consistently negative effect on equities and bonds, the Eurozone crisis looks thankfully more mixed and limited, so far. Divorce rates help explain why Americans work more than Europeans Indraneel Chakraborty, Hans Holter, Serhiy Stepanchuk, 18 May 2012 It is no secret that Americans work more than Europeans – 30% more according to recent studies. Many economists point to higher taxes in Europe as a major cause. This column suggests that divorce rates also play a role, particularly for women's labour supply. Still standing: Global crisis and European firms Gábor Békés, László Halpern, Miklós Koren, Balázs Muraközy, 18 May 2012 One of the key problems in Europe is the lack of competitiveness. With this in mind, this column presents a report looking at how European firms responded to the global financial crisis of 2008 and 2009 and finds lessons for today’s troubles. Chief among them - there is no one-size-fits-all solution. The war of the sexes Paul Seabright, 18 May 2012 Paul Seabright talks to Viv Davies about his recent book titled "The War of the Sexes: how conflict and cooperation have shaped men and women from pre-history to the present”. Seabright explains how game theory can shed light on the complex dynamics that create both conflict and cooperation between the sexes. They discuss the connection between the rise of modern capitalism and the rise of feminism, monogamy and marriage and whether there will ever be sexual equality. Hume on hold? Consequences of not abolishing Eurozone national central banks Michael Burda, 17 May 2012 The EZ crisis reveals critical flaws in the Eurozone’s design. This column argues that failing to abolish national central banks left the door open for national interests to interfere with the natural workings of the financial system and Hume’s adjustment mechanism. This flaw – and the omission of a European Banking Authority with real teeth – will come back to haunt Europe in the months and years to come. Fiscal spending and growth: New evidence Céline Carrère, Jaime de Melo, 17 May 2012 It is not just the OECD countries where fiscal policy is the subject of fierce debate. This column presents results from an “event analysis” carried out on a database of 140 countries over the period 1972-2005. It suggests that, for developing countries at least, a fiscal stimulus can be effective – provided the rest of the economy is stable and the fiscal deficit is low. The Eurozone crisis: Fiscal fragility, external imbalances, or both? Pietro Alessandrini, Michele Fratianni, Andrew Hughes Hallett, Andrea F Presbitero, 16 May 2012 Unsustainable debt along Europe’s periphery is bringing the euro to breaking point. But this column argues that this is not simply the result of fiscal ill-discipline. After 2010, the Eurozone crisis went from a fiscal crisis to a balance-of-payments crisis – with different prescriptions for policy. Greece’s predicament: Lessons from Argentina Peter Kretzmer, Mickey Levy, 16 May 2012 Greece’s economic and financial crisis is quickly deteriorating and there is no strategy – or even a coalition government – to figure out what to do next. This column looks at the lessons from Argentina’s default in 2001 and argues that Greece’s road to necessary economic reforms, fiscal sustainability and recovery may be even more daunting. Greasing the wheel: Oil’s role in the global crisis Lucas Chancel, Thomas Spencer, 16 May 2012 Between January 2002 and August 2008, the nominal oil price rose from $19.7 to $133.4 a barrel. This column gathers evidence on the role of this rise in prices in the global crisis. It suggests that oil prices had a direct impact on household expenditure on gasoline and increased mortgage delinquency rates. It adds that it also had many indirect impacts, notably though interest rate increases due to monetary policy. Regional integration and natural resources: Who benefits? Céline Carrère, Julien Gourdon, Marcelo Olarreaga, 15 May 2012 Regional integration schemes that include natural-resource-abundant countries have by and large been unsuccessful. Part of the reason is the uneven distribution of gains when resource-poor and resource-rich countries integrate. This column presents new evidence suggesting that the slow progress of regional integration efforts in the Middle East and North Africa can be explained by the reluctance of resource-rich countries to enter into trade agreements that will hurt them. The housing market and the case for higher inflation targets in the US and the Eurozone Joshua Aizenman, Menzie D. Chinn , 15 May 2012 Might more inflation be good for the US and Europe? This column looks at the housing market in the US and argues that, with houses dropping in price, buyers are playing a waiting game. And as buyers keep delaying, the price drops further. Given the importance of property in many economies, the knock-on effects are severe. Yet one way to break this vicious cycle is with inflation.   A tale of two depressions: What do the new data tell us? February 2010 update Barry Eichengreen, Kevin H O’Rourke, 8 March 2010 This column updates the original Vox columns by Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression. The three previous columns have shattered all Vox readership records with over 450,000 views. This latest edition covers up to February 2010 showing that, while there is cause for optimism, there is no room for complacency. Views 713968 Educated in America: College graduates and high school dropouts James J. Heckman, Paul A. LaFontaine, 13 February 2008 Official statistics for US high school graduation rates mask a growing educational divide. This column presents research showing that a record number of Americans are going to university – while an increasing number are dropping out of high school. This poses major social challenges for the United States. Views 189649 Eurozone breakup would trigger the mother of all financial crises Barry Eichengreen, 4 May 2010 Originally posted 17 November 2007, this Vox column is more relevant than ever arguing that adopting the euro is effectively irreversible. Leaving would require lengthy preparations, which, given the anticipated devaluation, would trigger the mother of all financial crises. National households and firms would shift deposits to other Eurozone banks producing a system-wide bank run. Investors, trying to escape, would create a bond-market crisis. Here is what the train wreck would look like. Views 137673 Debt, deleveraging, and the liquidity trap: A new model Paul Krugman, 18 November 2010 Debt is the crux of advanced economies’ current policy debates. Some argue for fiscal expansion to avoid recession and deflation. Others claim that you can’t solve a debt-created problem with more debt. This column explains the core logic of a new model by Eggertsson and Krugman in which debt shocks and policy reactions can be examined. Relying on heterogeneous agents, the model naturally produces the paradox of thrift but also finds new supply-side paradoxes, those of toil and flexibility. The model suggests that most economists have been misthinking the issues and that actual policy in the US and EU is misguided. Views 100093 Five decades of evidence on financial crisis and recession: How long? How deep? Stijn Claessens, M Ayhan Kose, Marco E Terrones, 7 October 2008 The house and equity price busts on top of a credit crunch make this an unprecedented crisis for the modern US economy; its real economy effects are thus difficult to assess. This column provides insights based on evidence from 122 recessions in 21 advanced nations since 1960. Findings suggest recessions in such circumstances are much costlier and slightly longer. But the outcome can be affected by policy, and it’s high time that policymakers act swiftly and decisively. Views 96621 Subprime 'crisis': FAQs (revised & updated) Stephen Cecchetti, 15 August 2007 A revised and updated version of the 13 August column on the basic how's and why's of what the Fed has been doing to calm financial markets. Views 94777 Trade and inequality, revisited Paul Krugman, 15 June 2007 It’s no longer safe to assert that trade’s impact on the income distribution in wealthy countries is fairly minor. There’s a good case that it is big, and getting bigger. I’m not endorsing protectionism, but free-traders need better answers to the anxieties of globalisation’s losers. Views 87898 Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis Barry Eichengreen, Richard Baldwin, 9 October 2008 Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks. Views 87869 The euro could surpass the dollar within ten years Jeffrey Frankel, 18 March 2008 One of the world’s leading international economists explains how the euro could surpass the dollar as the premier international currency and examines the geopolitical implications of such a shift. Views 87294 Subprime crisis: causes, consequences and cures Carmen M Reinhart, 15 March 2008 We may just have started to feel the pain. Asset price drops – including housing – are common markers in all the big banking crises over the past 30 years. GDP declines after such crises were both large (-2% on average) and protracted (2 years to return to trend); in the 5 biggest crises, the numbers were -5% and 3 years. This column, based on the author’s testimony to the Congress, picks through the causes and consequences. It argues that when it comes to ‘cures,’ it would be far better to get the job done right than get the job done quickly. Views 86515 Slave trade and African underdevelopment Nathan Nunn, 8 December 2007 Slavery, according to historical accounts, played an important role in Africa’s underdevelopment. It fostered ethnic fractionalisation and undermined effective states. The largest numbers of slaves were taken from areas that were the most underdeveloped politically at the end of the 19th century and are the most ethnically fragmented today. Recent research suggests that without the slave trades, 72% of Africa’s income gap with the rest of the world would not exist today. Views 83065 Subprime ‘crisis’: FAQs Stephen Cecchetti, 13 August 2007 Here are the basic how's and why's of what the Fed has been doing to calm financial markets. Views 81518 How bad could the crisis get? Lessons from Iceland Jon Danielsson, 12 November 2008 Iceland’s banking system is ruined. GDP is down 65% in euro terms. Many companies face bankruptcy; others think of moving abroad. A third of the population is considering emigration. The British and Dutch governments demand compensation, amounting to over 100% of Icelandic GDP, for their citizens who held high-interest deposits in local branches of Icelandic banks. Europe’s leaders urgently need to take step to prevent similar things from happening to small nations with big banking sectors. Views 76232 Good news at last? The recession will be over sooner than you think Nicholas Bloom, Max Floetotto, 12 January 2009 A key source of the today’s economic weakness is uncertainty that led firms to postpone investment and hiring decisions. This column, by the authors whose model forecast the recession as far back as June 2008, report that the key measures of uncertainty have dropped so rapidly that they believe growth will resume by mid-2009. This means any additional economic stimulus has to be enacted quickly. Delaying to the summer may mean the economic medicine is administered just as the patient is leave the hospital. Views 76232 Krugman’s view on the dollar Richard Baldwin, 2 October 2007 As the dollar has started to slide, the question is: how far, how fast? This column, which is based on Paul Krugman’s recent Economic Policy article suggests the answers are: pretty far and pretty fast. Views 76087 Mother of all bailouts and what it means for Europe Daniel Gros, Stefano Micossi, 20 September 2008 The radical moves in the US have direct implications for European banks and indirect implications for European governments. This column discusses the likely channels and notes that several European banks are both too big to fail and may be too big to be saved by their national governments alone. Views 74540 Iceland’s banking collapse: Predicable end and lessons for other vulnerable nations Willem Buiter, Anne Sibert, 30 October 2008 In the first half of 2008, Buiter and Sibert were invited to study Iceland’s financial problems. They identified the “vulnerable quartet” of (1) a small country with (2) a large banking sector, (3) its own currency and (4) limited fiscal capacity – a quartet that meant Iceland’s banking model was not viable. How right they were. This column summarises the report, which is now available as CEPR Policy Insight No. 26 with an October 2008 update. Views 73104 Tennis, pressure and the gender wage-gap M Daniele Paserman, 26 June 2007 Female tennis players play more conservatively and commit more unforced errors when playing critical points. Does this explain the upper-echelons wage gap? Views 71230 Is the LIBOR-OIS spread due to predatory behaviour? Francesco Giavazzi, 2 June 2008 Editor's Note: Originally posted 2 June 2008. There has been a persistent spread between the rate at which banks lend each other money and government-backed securities yields in recent months. This column describes hypotheses explaining the spread – including the possibility that banks aren’t lending in order to bankrupt acquisition targets. Views 71141 Open Letter to European leaders on Europe’s banking crisis: A call to action Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz, Klaus F. Zimmermann, 1 October 2008 This is a once-in-a-lifetime crisis. Trust among financial institutions is disappearing; fear may spread. Last week’s US experience showed that saving one bank at a time won’t work. A systemic response is needed and in Europe this means an EU-led initiative to recapitalise the banking sector. Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath. Views 71037   The impossible hope of an end to austerity Charles Wyplosz, 14 May 2012 With French and Greek voters rejecting austerity, politicians are once again taking the government spending debate seriously. This column argues that the voters are right – it is a bad idea to tighten fiscal policy when growth is so feeble. But the column adds that, wherever one looks, the road away from austerity looks desperately blocked. Weekend elections: Democracy and the fiscal compact Francesco Daveri , 8 May 2012 Voters in France, Greece, Italy, and Germany rewarded politicians who opposed austerity. This column argues that attempts to fulfill campaign promises will run up against a hard constraint. The countries whose voters are calling for looser fiscal policies are those where public spending rose fastest since the birth of the euro. The only way out of today’s difficulties is to use the flexibility already in the fiscal compact and continue with bold implementation of the economic reforms that are under way. The European debate on bank capital is not just about Europe Nicolas Véron, 4 May 2012 Europe’s finance ministers are currently deciding on the legislation intended to implement the Basel III international agreement on bank capital, leverage, liquidity, and risk management. This column argues that many officials, within Europe and beyond, severely underestimate the importance of this debate for reaching a global standard for financial regulation. Have the US and European economies parted company? Domenico Giannone, Jasper McMahon, Lucrezia Reichlin, Saverio Simonelli, 2 May 2012 According to official statistics, the UK and Europe are heading for recession, while the US is recovering. This has led some to suggest that European economies are moving in the opposite direction to the US. This column, written by the co-founders of Now-Casting, presents new now-casting estimates that put Europe and the US even further apart. Fiscal austerity and policy credibility Marco Buti, Lucio R Pench, 20 April 2012 Most economists agree that European economies share the need to reduce public deficits and debts. This column stresses that while gradual consolidations are in general more likely to succeed than cold-shower ones, the superiority of a gradual strategy tends to evaporate for high levels of debt and is also less pronounced for consolidation episodes following a financial crisis. The EZ breakup contest: Take ignorance seriously Richard Baldwin, 10 April 2012 The five finalists of the £250,000 EZ breakup contest were announced last week; only one has a graduate degree in economics. This column argues that three are amateurish efforts full of economic and factual errors. European economists should take such ignorance seriously. Failure to do so in the US allowed odious ideas to gain respectability. Spending cuts to improve confidence? No, the arithmetic goes the wrong way J. Bradford DeLong, 6 April 2012 The Vox debate on austerity rages on. Here Brad DeLong draws on his recent research with Larry Summers to argue that unless long-term real borrowing costs in the Eurozone exceed 5%, the short-term contractionary effects of spending cuts are likely to erode rather than bolster the overall fiscal situation. The austerity question: ‘How’ is as important as ‘how much’ Alberto Alesina, Francesco Giavazzi, 3 April 2012 Europe’s embrace of austerity has sparked a debate among economists. This column argues that the debate has gone astray. Until the critical principle – ‘how’ is as important as ‘how much’ – is embraced, the austerity debate in Europe will continue to be completely out of line with the real economic trade-offs. ECB inflation-fighting powers remain intact Christian Thimann, 30 March 2012 A recent Vox column argued that with the three-year liquidity operations, the ECB has “hit a limit in its ability to prevent an acceleration of inflation”. This column explains why the ECB’s inflation-fighting powers remain intact – and why the risks of a sudden inflationary spike remain low. Wanted: A real budget for growth – Commentary on UK Budget 2012 John Van Reenen, 29 March 2012 The UK’s recent budget reflects tensions felt throughout Europe – how to stem massive budget deficits while not choking off growth. The UK is often held up as a model for voluntary austerity, but this column argues that its policies are a poor model for growth. It asserts that there is a deep intellectual vacuum at the heart of the budget and the government’s approach to economic growth in general. Financial repression: Then and now Jacob Funk Kirkegaard, Carmen M Reinhart, 26 March 2012 Rich nations worldwide have a problem with debt. In the past, such problems have been dealt with by several tactics, including 'financial repression'. This column explains how the tactic works and documents its resurgence in the wake of the global and Eurozone crises. The logic and fairness of Greece’s programme Olivier Blanchard, 23 March 2012 The Greek package has cheered up markets. In this column, the IMF’s Chief Economist Olivier Blanchard argues that the programme deals squarely with the two most fundamental issues facing Greece – high debt and low competitiveness. And it is also fair, asking for sacrifices of both Greece and its creditors. A tale of two depressions redux Barry Eichengreen, Kevin H O’Rourke, 6 March 2012 The debate over stimulus versus austerity continues unabated. This column shows that, while industrial production and trade recovered much more quickly than during the Great Depression, both series now appear to be slowing down. It suggests that, as St Augustine would have said had he been managing director of the IMF, there is a case for additional fiscal consolidation and monetary normalisation, but not yet. In the slipstream of the Greek debt exchange Mitu Gulati, Jeromin Zettelmeyer, 5 March 2012 One of the most interesting questions arising from the ongoing Greek debt restructuring is what it implies about the feasibility of voluntary debt restructurings. Indeed, why would anyone voluntarily take a debt-exchange offer that promises a large reduction in repayments? This column argues creditors might feel safer with new debt instruments issued under English law than with old Greek-law regulated ones. Right-wing political extremism in the Great Depression Alan de Bromhead, Barry Eichengreen, Kevin H O’Rourke, 27 February 2012 The enduring global crisis is giving rise to fears that economic hard times will feed political extremism, as it did in the 1930s. This column suggests that the danger of political polarisation and extremism is greatest in countries with relatively recent histories of democracy, with existing right-wing extremist parties, and with electoral systems that create low hurdles to parliamentary representation of new parties. But above all, it is greatest where depressed economic conditions are allowed to persist. Are economics graduates fit for purpose? Diane Coyle, 22 February 2012 The global crisis has plunged the economic profession into a state of anxiety, at least in some quarters. One question, among many, is whether the way economics is taught at universities needs to be rethought. This column summarises the range of views raised at a recent conference on this issue organised by the British government, the Bank of England, and the Royal Economic Society. The ECB’s trillion euro bet Charles Wyplosz, 13 February 2012 Spreads on public debts in the Eurozone – with the exception of Greece – are falling hard and fast. This column argues that this is in large part because the ECB is now effectively guaranteeing Eurozone government debts. But it cautions that in doing so, the central bank is taking enormous risks. The fiscal compact treaty: Keynes and the German taxpayer Jacob Funk Kirkegaard, 6 February 2012 Europe’s new fiscal compact is seen by some as the death of Keynesian government spending. This column argues that such analysis is simply wrong. It says that there is still room for government spending in extreme situations, but that there are now more safeguards to maintain stability, reduce contagion, and placate German taxpayers. The coming resolution of the Eurozone crisis Fred Bergsten, Jacob Funk Kirkegaard, 26 January 2012 Policy reactions to the Eurozone crisis are seen by many as short-sighted, incoherent, and driven by political expediency. This column disagrees. What we are seeing is a game of chicken among the key political and economic powers in Europe. As the crash looms ever closer, the right deals will be struck and Europe will emerge stronger and with its currency intact. Mispricing of sovereign risk and multiple equilibria in the Eurozone Paul De Grauwe, Yuemei Ji, 23 January 2012 Economists now agree that markets were wrong in placing the same risk premium on Greek bonds as on German bonds. But this column adds that today the same markets are also wrong in overestimating the risk that the periphery countries will default. Policymakers looking to calm such skittish markets should take note.

VoxEU Debates Has austerity gone too far? Moderated by Giancarlo Corsetti Lead Commentaries include Fiscal consolidation: Too much of a good thing? John Van Reenen Fiscal austerity and policy credibility Marco Buti, Lucio R Pench The austerity debate: Make haste slowly Carlo Cottarelli Too early to sound the alarm Manfred J M Neumann Spending cuts to improve confidence? No, the arithmetic goes the wrong way J. Bradford DeLong Join the Debate CEPR Policy Research Policy Insights and Reports The Crisis Aftermath: New Regulatory Paradigms The Editors This new CEPR eReport is devoted to exploring the general issue of the origins of excessive risk-taking in the banking industry. In doing so, it provides the analytical ammunition required to rigorously examine regulatory policy at a time when it is undergoing a complete metamorphosis. From vicious to virtuous: A five-point plan for Eurozone restoration Marco Buti, Pier Carlo Padoan In late 2011, the financial crisis had evolved dangerously into a vicious circle of sluggish growth, tensions in sovereign debt markets, and banking sector fragility. CEPR Policy Insight No. 61 looks at what measures are required to turn the economy around. Trade, Competition, and the Pricing of Commodities Simon J Evenett, Frédéric Jenny After several decades of quiescence, global commodity prices almost doubled in 2008 and, after a brief fall, rose again in 2011. The papers in this new CEPR eReport aim to identify and assess the importance of the factors responsible for the recent increases in the levels and volatility of commodity prices. Deep integration and production networks Gianluca Orefice, Nadia Rocha Do deep preferential trade agreements enhance the development of cross-border production networks? CEPR Policy Insight No. 60 examines new evidence on this relationship and finds that the link runs both ways: deep integration often leads to production-sharing, and the formation of production networks often lays bare the ‘gaps’ in governance and institutions that deep integration can address. Trade Tensions Mount: The 10th GTA Report Simon J Evenett The 10th GTA report documents several factors that together imply that the protectionist threat to the world trading system is probably as significant as it was in the first half of 2009, when such concerns were last at their peak. Unfinished Business? The WTO's Doha Agenda Will Martin, Aaditya Mattoo The Doha Development Agenda (DDA) is in limbo and negotiators face a difficult “trilemma”: to implement all or part of the draft agreements as they stand today; to modify them substantially; or to dump Doha and start afresh. At this critical juncture, this CEPR/World Bank volume aims to provide a better empirical basis for informed choices. The Future of Banking Thorsten Beck This new Vox eBook presents a collection of essays by leading European and US economists that offer solutions to the crisis and proposals for medium- to long-term reforms to the regulatory framework in which financial institutions operate. A framework for two macro policy instruments: Money and banking combined Hans Gersbach The way in which monetary policy, macroprudential policy, and microprudential regulation of banks should be organised and conducted is a major, as yet unresolved, issue. In CEPR Policy Insight No.58, the author outlines a policy framework for addressing this issue. Resolving the Eurozone crisis: Time for conditional eurobonds John Muellbauer While prominent observers are preparing the funeral rites for the Eurozone, the author of CEPR Policy Insight No. 59 argues that the faulty machinery of the Eurozone can be successfully retrofitted and that it can survive. Reforming the International Monetary System Emmanuel Farhi, Pierre-Olivier Gourinchas, Hélène Rey This CEPR report presents concrete proposals aimed at improving the international provision of liquidity in order to limit the effects of individual and systemic crises and decrease their frequency. Discussion Papers How can Bill and Melinda Gates increase other people's donations to fund public goods? Dean Karlan, John List With governments strapped for cash, charities are stepping up to provide public goods. But how can charities mobilise support from small donors to fund their work? CEPR DP8922 investigates whether altruists would donate more if they knew more about a charity’s quality. In the authors’ experiment, Bill and Melinda Gates matched donations to a particular charity. Small donors saw this as a signal of the charity’s quality – and donations soared. The role of speculation in oil markets: What have we learned so far? Bassam Fattouh, Lutz Kilian, Lavan Mahadeva What caused the price of oil to surge in 2003–08? CEPR DP8916 assesses – and finds little evidence for – the popular view that ‘speculation’ drives oil price shocks. Economic fundamentals, the authors argue, are still the main determinants. The dynamics of homeownership among the 50+ in Europe Viola Angelini, Agar Brugiavini, Guglielmo Weber In January the UK government launched an initiative to help the elderly downsize into smaller homes – and provoked the ire of pensioner groups nationwide. This reluctance to downsize to among the elderly perplexes economists, who maintain that leveraging housing wealth can help pensioners maintain a good standard of living on a fixed income. CEPR DP8889 investigates what is behind European pensioners’ puzzling housing decisions. Aid and agency in Africa: Explaining food disbursements across Ethiopian households, 1994–2004 Nzinga Broussard, Stefan Dercon, Rohini Somanathan Food aid can prevent starvation – but only if the neediest actually receive it. CEPR DP8861 examines how food aid in Ethiopian villages can be biased away from those who need it most. Households with greater local influence or groups targeted by international agencies often receive more than they need. Knowing more about these biases, the authors conclude, can improve distribution and save lives. Unhappiness and job finding Anne Gielen, Jan van Ours Much research has documented that unemployment makes people unhappy. But does unhappiness spur the unemployed to look harder for jobs? And if so, why do governments need to help them find work with active labour market policies? CEPR DP8842 finds that the unhappiest of the unemployed do search harder for jobs, but don’t find them faster – suggesting that even the most motivated jobseekers could benefit from activation policies. Gender differences in risk aversion: Do single-sex environments affect their development? Alison Booth, Lina Cardona Sosa Some blame women’s under-representation in high-level jobs on differences between the sexes in risk aversion and competitiveness. But are these differences in behaviour hardwired or learned? The authors of CEPR DP8690 tackled this thorny question with a controlled experiment in single-sex and co-educational classrooms. Women, they find, become far less timorous about uncertainty with the men out of the room. The long-run effect of 9/11: Terrorism, backlash, and the assimilation of Muslim immigrants in the West Eric D Gould, Esteban F Klor How does radical Islamic terrorism impact Muslim immigrants in the West? The backlash against Muslims in the US after the terrorist attacks of 9/11 damaged assimilation among Muslim immigrants, argue the authors of CEPR DP8797 – and they present strong evidence to prove it. Looking beyond the incumbent: The effects of exposing corruption on electoral outcomes Alberto Chong, Ana De La O, Dean Karlan, Léonard Wantchékon For democratic theorists, the notion that greater transparency improves accountability is axiomatic: when voters find out about political corruption, they punish the offending politicians by not voting for them again. But, the authors of CEPR DP8790 argue, many voters also respond to evidence of corruption by not voting at all – indicating that more transparency might not automatically result in a healthier democratic process. The role of central banks in financial stability: How has it changed? Willem Buiter The global crisis inaugurated a new era for central banks in the advanced economies, when their conventional role as interest rate-setters and lenders and market makers of last resort expanded. Central banks have become the custodians of stability for financial markets – a role for which they lack both democratic accountability and political legitimacy, argues Willem Buiter in DP8780. He decries the new “perverse division of labour” between central banks and fiscal authorities and appeals for a reassessment of this pathological arrangement. A series of unfortunate events: Common sequencing patterns in financial crises Carmen M Reinhart Financial crises often unfold according to common patterns, but the post-2007 contraction is in fact different from other post-WWII crises in its unusual severity, says Carmen Reinhart in CEPR DP8742. But the patterns of past crises may still provide clues on the future of housing, labour, and international financial markets. This paper outlines what that future might look like.