Economists tend to focus on reforms that came after 1979 when explaining China’s soaring economic growth. This column argues that they shouldn’t. Mao’s policies also had a huge effect and should not be ignored. Economists and policymakers would do well to look further back in history. A long-term perspective might also help them bust a few myths along the way.
The risk that asset price bubbles pose for financial stability is still not clear. Drawing on 140 years of data, this column argues that leverage is the critical determinant of crisis damage. When fuelled by credit booms, asset price bubbles are associated with high financial crisis risk; upon collapse, they coincide with weaker growth and slower recoveries. Highly leveraged housing bubbles are the worst case of all.
A nation’s hard power is based on its ability to coerce, while its soft power depends on the attractiveness of its culture, political ideals, and policies. This column shows that a country’s soft power has measureable effects on its exports. Countries that are admired for their positive global influence export more, holding other things constant.
Clinton. Bush. Kennedy. Political family dynasties have survived the establishment of democracies in the developed and developing world and, in some cases, are strengthening. This column argues that political dynasties are still with us, and that it’s fairly easy to see why. Whoever said that elections are the only time that the vote of the richest citizen is equivalent to that of the poorest needs to start rethinking whether this still holds true.
The Eurozone crisis continues to take centre stage. This column discusses how deep the EZ crisis is, how long it will last, and what should be the policy priorities. A number of findings emerge. First, the difference in labour market performance between the US and the Eurozone is one of degree but not of kind. Second, the economic consequences of the sovereign debt crisis will be mostly gone by 2018, but the political crisis will continue. Third, enforcing fiscal rules via political arm twisting is a recipe for disaster. Market discipline must instead be brought back, but without financial fragmentation. Limited and conditional Eurobonds are the best way to do so.
Other Recent Columns:
- Bad behaviour and early school leaving
- Economic prosperity breeds trust
- Central bank independence before and after the Great Recession
- Competition alone will not eliminate discrimination
- Learning by exporting: Japanese firm-level evidence
- Depreciations without exports
- Africa at a fork in the road: Taking off or disappointment once again?
- Three questions (and answers) about finance and firms
- Back from the brink: Policy reform and debt relief in Greece
- What the general public knows about monetary policy
- Consumer spending and property taxes
- Estimating the financing gap of small and medium-sized enterprises
- A short-run view of what computers do
- Pricing genius
- Media, markets and institutional change: Evidence from the Protestant Reformation
- Wealth and income distribution: New theories needed for a new era
- Immigrants’ impact on labour markets: New evidence
- Strength of the dollar and emerging markets’ growth
- Low inflation in the Eurozone
- Consumption and transfers: Evidence from Italian earthquakes