Ethnic divisions have been shown to adversely affect economic performance and political stability, particularly in Africa. However, the underlying mechanisms remain poorly understood. Using experimental data from Kenya, this column studies whether one potential mechanism – co-ethnic bias – affects altruism. Strikingly, most tests yield no evidence of co-ethnic bias, suggesting that other mechanisms must be driving the negative association between ethnic diversity and economic and political outcomes in Africa.
The business cycles of countries with greater bilateral trade and multinational production linkages are more closely correlated. But the meaning of this empirical relationship is not well understood. Some contend that these linkages allow for the transmission of shocks across countries, while others argue that countries that trade more with each other are similar in other ways and are thus subject to common shocks. Using data from France, this column examines the properties of international co-movement at the firm level. Even after controlling for common shocks, there is still substantial evidence of transmission of shocks through trade and multinational linkages. Furthermore, trade linkages matter more than multinational ones, especially when it comes to the aggregate impact.
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.
Other Recent Columns:
- Tax reform and corporate behaviour: Evidence from the UK
- Digitally disrupted GDP
- 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
- Institutions and social networks
- Job characteristics and offshoring: Evidence from Germany
- Identifying the risks from corporate currency mismatches in emerging economies
- American productivity growth during the Great Depression
- China’s growth prospects
- Evaluating access to universal digital highways
- Clubs and the WTO post-Nairobi
- The nature and effectiveness of central-bank communication
- US immigration’s electoral impact: New evidence
- Floating-rate loans and the impact of monetary policy
- 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