Global governance

Alan J Auerbach, Yuriy Gorodnichenko, 10 May 2015

The impact of fiscal policy on exchange rates is of key interest to policymakers. This column argues that unexpected government spending instantly affects exchange rates. The finding, based on daily data reporting of the US Defence Department, may suggest that unexpected government spending has broader macroeconomic effects as well. The results, however, do not hold is low-frequency data are used instead.

Deborah Lucas, 05 December 2014

Governments run the world’s largest financial institutions. The size of government activities has grown in recent decades but comprehensive estimates are unavailable. This column presents new evidence on the costs of government credit support. It argues that governments tend to understate credit costs and the consequences of that could be considerable. Cost underreporting may lead to overinvestment and capital misallocation, could encourage the over-reliance on credit, reduce transparency, and cause a build-up of financial risk.

Ian Goldin, 21 November 2014

Global hyperconnectivity and increased system integration have led to vast benefits in terms of income, education, innovation and technology. Yet globalisation has also created serious concerns about how local events can so easily cascade over national borders to become crises that affect everyone. This Vox Talk discusses the widening gap between systemic risks and their effective management. Goldin argues that the new dynamics and complexities of globalisation are endemic and will potentially destabilise our societies unless they are addressed immediately and more effectively.

Jayant Menon, 27 September 2014

The Association of Southeast Asian Nations is the most successful regional grouping in the developing would. Its latest project is to establish an ASEAN Economic Community by 31 December 2015, consisting of economic, political-security, and social cultural components.  This column argues that giving commitments more teeth is the key challenge to be overcome in realising the ASEAN Economic Community if it is to be more than a political exercise in solidarity. 

James Boughton, 15 September 2014

The international financial system is not working fine and reforms of regional and global institutions are much needed. This column discusses some of the transformations that the IMF could implement in order to keep pace with the changes in the world economy. One problem for the credibility of the IMF is the G20 in its current design and organisation. Institutional reforms, however, should be combined with advances in economic policy in order to promote economic growth and financial stability.

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