Global economy

Barry Eichengreen, Donghyun Park, Kwanho Shin, 17 September 2015

Productivity growth is slowing around the world. The question is what lies behind this trend and whether it can be arrested. This column takes a historical perspective on total factor productivity growth slowdowns. International factors that heighten the risk of TFP slumps include global interest rate shocks, global oil price shocks and rising global risk aversion. Country-specific factors working in the same direction include low educational attainment, weak political systems, and overly high levels of investment. Investing in education, political development and rebalancing can mitigate the risk of TFP slumps but are unlikely to eliminate them entirely.

Andrew K Rose, 01 September 2015

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.

Kaoru Hosono, Daisuke Miyakawa, Miho Takizawa, 27 August 2015

‘Learning by exporting’ refers to productivity gains experienced by firms after they commence exporting. Such gains are argued to be due to access to new knowledge and resources. This column explores some of the preconditions for learning-by-exporting effects, using data on the overseas activities and affiliations of Japanese firms. Firms that enter markets in which they don’t have affiliates or subsidiaries are found to enjoy the most learning-by-exporting productivity gains. These findings have implications for the timing of new market entry.

Markus Brückner, Daniel Lederman, 07 July 2015

The relationship between aggregate output and income inequality is central in macroeconomics. This column argues that greater income inequality raises the economic growth of poor countries and decreases the growth of high- and middle-income countries. Human capital accumulation is an important channel through which income inequality affects growth. 

Daniel Gros, 03 July 2015

Two financial crises at the ‘sub federal’ are currently taking place – one in the Commonwealth of Puerto Rico, and the second one in Greece. This column highlights some surprising similarities between them, as well as the main differences. The Eurozone is a voluntary union of states which remain sovereign. But if Greece were part of the US, it could not hold a referendum, and its budget would be drawn up by a federal bankruptcy court. The key political difference is not austerity, but the fact that Greece’s debt is mainly to official creditors, who are ideal targets for political pressure. 

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