The Global Crisis was a watershed, not just for economies around the world, but for economics as a discipline. This column introduces a special issue of Economic Policy that collects key papers on the Global Crisis published in its aftermath between 2009 and 2014. The papers chart the evolution of economists’ thinking on the causes of and cures for the Global and EZ Crises.
Macroprudential policies are meant to reduce procyclicality in financial markets and associated systemic risks. However, empirical evidence on which policies are most effective is still preliminary and inconclusive. This column documents the use of macroprudential policies by a large set of countries over an extended period, and covering many instruments. It shows which policies are most effective in reducing the growth rates of overall credit and household and corporate sector credit, and explores differences across countries, degrees of avoidance, and whether policies work better during booms or busts.
With the rise of global value chains, trade in intermediates now accounts for more than two-thirds of total trade. This column provides evidence that trade in parts and components of capital goods between new and old EU countries is driven by wage differences across countries. It further shows that wage differences play an important role in the ex ante investment decision to establish a new production network.
Many countries exempt foreign-sourced income from taxation at home, with income taxed only in the source country. In 2009, the UK moved from a system of tax credit to a system of tax exemption of foreign-earned income of firms. This column looks at the effects of this reform on firm behaviour. Immediately following the reform, firms were induced to pay significantly more dividends to the UK and decreased their investments. But neither effect persisted in the long run.
Digital technologies are having dramatic impacts on consumers, businesses, and markets. These developments have reignited the debate over the definition and measurement of common economic statistics such as GDP. This column examines the measurement challenges posed by digital innovation on the economic landscape. It shows how existing approaches are unable to capture certain elements of the consumer surplus created by digital innovation. It further demonstrates how they can misrepresent market-level shifts, leading to false assessments of production and growth.
Other Recent Columns:
- Expecting the unexpected: Why the oil price keeps surprising us
- World trade, 1800-2015
- Socially disadvantaged groups and microfinance in India
- Making agglomeration ‘metabolised’ for innovation
- Job characteristics and offshoring: Evidence from Germany
- Institutions and social networks
- Identifying the risks from corporate currency mismatches in emerging economies
- American productivity growth during the Great Depression
- Evaluating access to universal digital highways
- China’s growth prospects
- The nature and effectiveness of central-bank communication
- Clubs and the WTO post-Nairobi
- Floating-rate loans and the impact of monetary policy
- US immigration’s electoral impact: New evidence
- Identifying prisoners of the middle-income trap
- Financial structure and growth revisited
- FDI ‘waves’ and cross-border acquisitions
- Internet access, voting patterns and government policy
- Replacing dual employment protection with a single labour contract
- Networks and macroeconomic shocks