http://www.VoxEU.org Recent articles added to VoxEU.org en http://www.VoxEU.org/index.php?q=node/9343 Viral Acharya, Sascha Steffen, 23 May 2013

A pernicious aspect of the Eurozone crisis is the ‘doom loop’ linking European banks and governments. This column argues that poor European policy choices in the wake of the 2008 Global Crisis worsened the problem. Rather than being forcefully recapitalising as in the US and UK, many Eurozone banks were left undercapitalised and free to gamble for redemption. In what may be the greatest carry trade ever, they borrowed cheap, first in short-term debt markets and then from the ECB, to invest in high-yield but risky sovereign debt. Substantial bank recapitalisations against sovereign-bond losses is the way forward.

Full Article: The banking crisis as a giant carry trade gone wrong]]> Thu, 23 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9343 http://www.VoxEU.org/index.php?q=node/9341 Victor Duggan, Sjamsu Rahardja, Gonzalo Varela, 22 May 2013

The ‘manufacturing matters’ movement has gained prominence on the policy agenda even as the nature of manufacturing continues to morph. This column discusses new research showing that opening service sectors to competition and foreign direct investment can be a powerful conduit for productivity gains in manufacturing. The gains depend on both the types of reforms and the specific services sectors in which these are implemented.

Full Article: Service-sector reforms enhance manufacturing productivity: Evidence from Indonesia]]> Wed, 22 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9341 http://www.VoxEU.org/index.php?q=node/9337 Jon Danielsson, 21 May 2013

Icelandic voters recently ejected its post-Crisis government – a government that successfully avoided economic collapse when the odds were stacked against it. The new government comprises the same parties that were originally responsible for the Crisis. What’s going on? This column argues that this switch is, in fact, logical given the outgoing government’s mishandling of the economy and their deference towards foreign creditors.

Full Article: Iceland’s post-Crisis economy: A myth or a miracle?]]> Tue, 21 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9337 http://www.VoxEU.org/index.php?q=node/9334 Otaviano Canuto, Matheus Cavallari, 21 May 2013

The global financial crisis has shattered the confidence of many established principles of monetary policy and financial supervision. This column argues that the two should not remain separate, and maps out the major challenges faced by their complementary implementation.

Full Article: Integrating monetary policy and macroprudential regulation]]> Tue, 21 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9334 http://www.VoxEU.org/index.php?q=node/9330 Lucrezia Reichlin, Adair Turner, Michael Woodford, 20 May 2013

With persistently weak economic conditions becoming the norm in Europe, economists are considering increasingly unconventional policy options. One tool that has yet to be taken out of storage is ‘helicopter money’, i.e. the overt monetary financing of government deficits. This column recounts a policy debate on helicopter money that was held at LBS in April 2013 among three of the world’s leading monetary economists.

Full Article: Helicopter money as a policy option]]> Mon, 20 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9330 http://www.VoxEU.org/index.php?q=node/9328 George Hall, Thomas J. Sargent, 19 May 2013

Can we learn from previous instances of fiscal prioritisation? This column surveys the US Treasury’s response to three wars – the Revolutionary War, The War of 1812 and the Civil War. Contemporary advocates of engaging in fiscal discrimination might ponder the actions of previous US Presidents Madison and Grant, who honoured all existing federal obligations despite challenging fiscal conditions.

Full Article: Fiscal prioritisation: Lessons from three wars]]> Sun, 19 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9328 http://www.VoxEU.org/index.php?q=node/9327 Klaus Desmet, Stephen L. Parente, 18 May 2013

Innovation is the beating heart of modern growth. This column argues that innovation-blocking institutions weaken when markets expand and competition intensifies. The rise and decline of medieval Italian crafts guilds offer valuable insights into this process. Policies that promote greater market integration and stronger competition are key steps in lowering the barriers to innovation.

Full Article: Unleashing growth: The decline of innovation-blocking institutions]]> Sat, 18 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9327 http://www.VoxEU.org/index.php?q=node/9325 William Kerr, 17 May 2013

Do economies’ social policies affect their innovative outcomes? This column uses the case of venture capital investors to argue that it may. Countries that protect workers rather than jobs – and thus avoid employment-protection laws – developed stronger venture-capital markets over 1999-2008, especially in highly volatile sectors like computers or energy.

Full Article: Cuddly or not, the design of worker insurance is critically important]]> Fri, 17 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9325 http://www.VoxEU.org/index.php?q=node/9324 Gordon Dahl, Roger Gordon, 16 May 2013

Remedying a global crisis such as this requires concerted, consensual, coordinated effort. But we’re told economists are divided on what to do next. Is this true? Are we divided? This column praises efforts such as the Economic Experts Panel from the Chicago Booth School of Business. It’s from panels like this – which comprise top economists with differing political views – that we can get a sense of consensus or disagreement on major economic issues.

Full Article: Views among economists: Are economists really so divided? ]]> Thu, 16 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9324 http://www.VoxEU.org/index.php?q=node/9322 M. Ataman Aksoy, Bernard Hoekman, 15 May 2013

Increasing agricultural productivity and expanding the agribusiness industry in sub-Saharan Africa is critical for poverty reduction, food security and economic growth. Numerous recent national, regional and G20-level programmes have been initiated to that effect. This column discusses new research showing that political economy forces have a major bearing on the success or failure of agricultural reform programmes. To be successful, policymakers must bear in mind the extent to which existing elites are affected by the redistribution associated with increasing returns for rural producers.

Full Article: Why reforms fail: Political-economy forces and agriculture in Africa]]> Wed, 15 May 2013 00:00:00 GMT http://www.VoxEU.org/index.php?q=node/9322