The past decade has seen rapid growth in an interdisciplinary body of research examining the legacy of war on social and political behaviour. This column presents a meta-analysis and synthesis of this research. Evidence from surveys and experiments from over 40 countries reveals a stylised fact: individual exposure to war-related violence tends to increase social cooperation, community participation, and pro-social behaviour. However, these changes are mainly directed towards people from the same community.
The effects of of globalisation on income distributions in rich countries have been studied extensively. This column takes a different approach by looking at developments in global incomes from 1988 to 2008. Large real income gains have been made by people around the median of the global income distribution and by those in the global top 1%. However, there has been an absence of real income growth for people around the 80-85th percentiles of the global distribution, a group consisting of people in ‘old rich’ OECD countries who are in the lower halves of their countries’ income distributions.
Despite facing many of the same challenges, Germany’s current macroeconomic policy is substantially different to those of other countries, in part due to the economy legacy of Walter Eucken. This column considers the economic policy of Hjalmar Schacht, whose ‘MEFO-bills’ monetary solution ended the years of economic struggle caused by the Treaty of Versailles’ reparations commitments. By tying the bills to output, Schacht was able to stimulate output, and eliminate unemployment. This historical implication has clear modern-day implications, with parallels to ‘helicopter money’ policy and Italy’s recent ‘fiscal money’ proposal.
The Trans-Pacific Partnership has renewed interest in understanding the impact of trade agreements. This column employs a new approach – synthetic controls– to understand the impact of past trade agreements. The results show that trade agreements can generate substantial gains: on average, an increase of exports by 80 percentage points over ten years. The export gains are higher when emerging markets have trade agreements with advanced markets. Interestingly, all the countries in NAFTA have gained substantially due to the agreement.
In April 2016, Italian banks set up an equity fund intended to recapitalise troubled financial institutions in a ‘private bail-out intervention’ scenario, with a view to avoiding a bail-in under the European Bank and Recovery Resolution directive. This column analyses the main differences between a bail-in and a bail-out scenario. In particular, it compares contagion effects, and thus the total default probabilities of financial institutions in these two circumstances, in order to establish which banks would benefit more from a bail-out rather than a bail-in.
Other Recent Columns:
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- An early assessment of the Single Supervisory Mechanism
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- Real effects of shocks to bank balance-sheets: Evidence from Italy
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- Factoryless goods producers in Japan
- On East Asia’s financial future
- Inequality in Germany: How it differs from the US
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