International trade

Samya Beidas-Strom, Andrea Pescatori , 20 December 2014

The recent dramatic fall in oil prices has renewed the interest in the importance of shocks in the oil price volatility. This column presents results from new research on the role of shocks and speculation on oil prices. The authors find that when speculation is short in duration, it has the weakest impact on oil prices and demand shocks have the largest. However, when speculation is allowed to have short- and long-term effects, it is the main contributor to the volatility of oil prices.

Nauro F Campos, 20 December 2014

Argentina is the only country in the world that was 'developed’ in 1900 and ‘developing’ in 2000. Various explanations highlight the roles of trade openness, political institutions, financial integration, financial development, and macroeconomic instability. No study has so far attempted a quantitative assessment of the relative importance of each of these competing factors. This column presents new evidence suggesting that financial development and institutional change are two main factors behind the unusual growth trajectory of Argentina over the last century. 

Enrico Minelli, 19 December 2014

Growth and inequality are back at the centre of the economic debate. This column presents a framework for interpreting Thomas Piketty’s data based on Paul Romer’s model of endogenous growth. Two balanced growth regimes are possible in this framework: one (‘merit’) with a low capital–output ratio, a high interest rate, and high growth; and another (‘rent’) with a higher capital–output ratio, a somewhat lower interest rate, and much lower growth. An increase in the returns to physical capital accumulation compared to innovation could explain a shift from ‘merit’ to ‘rent’.

Marcelo Giugale, 18 December 2014

Sub-Saharan Africa has been growing steadily over the past decade. The main question that policymakers should face is how to sustain the region’s progress. This column argues that the positive growth is due both to good policies and higher prices of certain commodities (such as oil, gas, and minerals). To ensure sustainability governments should not rely only on these higher rents but rather implement policies that take advantage of them. 

Brian Pinto, 17 December 2014

Since the Global Crisis, concerns have grown that advanced economies are suffering from secular stagnation. This column discusses the lessons that can be learnt from the economic transition of central and eastern Europe and the emerging-market crises of the late 1990s and early 2000s. Structural reform is particularly costly in the context of a debt overhang and an overvalued exchange rate. However, the crux is not debt restructuring per se, but whether economic governance changes credibly for the better following it.

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