Recent studies have established a causal link between trade and rising wage inequality. This column suggests there is also a pro-poor bias of trade. In moving from autarky to trade, the relative prices of goods consumed intensively by the poor, such as food, fall more. The gains from opening to trade are estimated at 63% for the 10th percentile of the income distribution and 28% for the 90th percentile.
The fallout from the Global Crisis and its aftermath has been deeply damaging for European output. This column uses a growth accounting framework to explore the pre-Crisis and post-Crisis growth dynamics of several European countries. The weakness of post-Crisis real GDP in the Eurozone manifested itself in a decline in employment and average hours worked. However, decomposing growth for the Eurozone as a whole conceals significant differences across European countries, in both real GDP growth and its factor inputs.
Central bank independence was supposed to end politically driven monetary policy. This column discusses new evidence showing a sizeable spike in the growth rate of cash and overnight bank deposits centred on election days. The spike is present in countries with weak political institutions, but not in OECD countries. The cycle seems to be related to the cash demand created by systemic vote buying.
Douglass C. North was among the most important and influential economic historians and economists of the late 20th century. This column highlights four of his major contributions: his pioneering work in quantitative economic history, or ‘cliometrics’; his similarly fundamental work using neoclassical economics to understand institutions; his critique of theory for explaining long-term economic and institutional change; and the distinction he drew between institutions and organisations.
Economists often disagree on China’s prospects. This column provides the results from a survey of top UK-based macroeconomists by the Centre for Macroeconomics (CFM). It turns out that three quarters of the experts believe that China’s annual growth rate will be less than 6% over the next ten years or so. But the panel is divided on whether the slowdown will have a significant impact on the UK economy.
Other Recent Columns:
- Douglass North, an economist’s historian
- Macro effects of capital inflows: Capital type matters
- Evidence that low real rates will persist
- Gender and monetary policymaking
- Iceland’s seven meagre years
- The UK productivity puzzle: The Trojan horse
- Central bankers as policymakers of last resort
- Immigration, residential concentration and employment
- The anti-poor effects of large exchange rate devaluations
- A new historical database on economic freedom in OECD countries
- The challenge of trade adjustment in Greece
- The political aftermath of financial crises: Going to extremes
- EZ Crisis: A consensus narrative
- A new historical database on world human development
- A blueprint for overcoming systemic risk
- Distance to frontier, productivity distribution and travelling waves
- IMF programmes: Greece vs Iceland
- Why Turkish growth ended
- India’s energy efficiency
- How SME funding risk is allocated