Monetary policy

David Chambers, Elroy Dimson, 20 October 2014

Yale University has generated annual returns of 13.9% over the last 20 years on its endowment – well in excess of the 9.2% average return on US university endowments. Keynes’ writings were a considerable influence on the investment philosophy of David Swensen, Yale’s CIO. This column traces how Keynes’ experiences managing his Cambridge college endowment influenced his ideas, and sheds light on how some of the lessons he learnt are still relevant to endowments and foundations today.

Zheng Song, Kjetil Storesletten, Fabrizio Zilibotti, Yikai Wang, 19 October 2014

The design of the pension system is a hot policy issue in China, given its fast-ageing population. This column discusses how different pension systems could allow different generations to share the benefits of high growth. The authors argue that a reform of the current system is necessary to achieve financial sustainability. However, delaying its implementation is advisable on the grounds of its effect on income inequality.

Lucian Cernat, 18 October 2014

Recent findings suggest that a small proportion of EU firms accounts for a disproportionate share of aggregate exports. This column argues, however, that a large number of EU exporting firms are small and medium enterprises (SMEs) and they have a non-negligible part in EU exports. Identifying the trade barriers SMEs face should, therefore, be among the EU trade priorities.

Christian Thimann, 17 October 2014

Having completed the regulatory framework for systemically important banks, the Financial Stability Board is turning to insurance companies. The emerging framework for insurers closely resembles that for banks, culminating in the design and calibration of capital surcharges. This column argues that the contrasting business models and balance sheet structures of insurers and banks – and the different roles of capital, leverage, and risk absorption in the two sectors – mean that the banking model of capital cannot be applied to insurance. Tools other than capital surcharges may be more appropriate to address possible concerns of systemic risk. 

Esther Hauk, Giovanni Immordino, 16 October 2014

Given a large body of evidence that television influences cultural attitudes, the fear that foreign content erodes local culture may be justified. Such reasoning is often cited in support of the cultural exception that the audiovisual industry routinely receives. This column introduces an economic model of cultural transmission and viewer choice to argue that a competitive TV industry is the best way to ensure cultural survival.

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