The British government has placed productivity at the centre of its economic growth agenda. Yet, despite the economy recovering to pre-Crisis levels, productivity has slowed. This column argues that we mustn’t lose sight of investing in productivity as a sure-fire and long-term guard against slow growth, outlining a range of strategies to get to a healthy level of investment.
Central banks around the world have been shouldering ever-increasing policy burdens beyond their core mandate of stabilising prices. This column considers the social welfare implications when central banks take on additional mandates that are usually the domain of other policymakers. Additional mandates are shown to worsen trade-offs faced by the central bank, while distorting the incentives of other policymakers. Central bank ‘mandate creep’ may be detrimental to welfare.
How a host country can best assimilate immigrants is understandably on Western European governments’ minds. This column presents new evidence suggesting that immigrants in Italy who live in neighbourhoods with a large share of non-Italians are significantly less likely to be in employment than their counterparts in less segregated areas. The data suggests that policymakers should note that the negative effect of a large migrant share on employment is magnified by the presence of illegal immigrants.
Large exchange rate swings remain a prominent and recurring feature of the world economy. This column uses household consumption patterns to examine the distributional impact of the devaluation of the peso during Mexico’s ‘Tequila Crisis’. Cost of living increases are found to be 1.25 to 1.6 times higher for the poor compared to the rich. In the interests of equity, exchange rate policy should take account of such distributional impacts.
Indices of economic freedom refer mostly to the recent past, making policy prescriptions difficult to draw. This column presents a new historical index of economic liberty covering 21 OECD countries for the period 1850-2007. Over time, progress in economic liberty has derived from different factors, but improvements in legal structures and property rights emerge as the main forces behind the long-term gains.
Other Recent Columns:
- 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
- IMF programmes: Greece vs Iceland
- Distance to frontier, productivity distribution and travelling waves
- Why Turkish growth ended
- India’s energy efficiency
- How SME funding risk is allocated
- The IMF’s analysis of the Irish bailout
- Mass layoffs and local labour market exit
- Local economy impact of fracking
- Estimating the equilibrium real interest rate
- Firms’ organisational choices along value chains
- Past Vox columns on terrorism and terrorists
- Migration’s response to increasing temperatures
- Black names: Past, present, and future
- Alternative measures of government indebtedness
- Voluntary disclosure of offshore tax evasion