During the Global Crisis, sovereign debt-to-GDP ratios grew substantially in the face of shocks to growth, increased fiscal deficits, bank recapitalisation costs, and rising borrowing costs. This column looks at how these various shocks interact with each other to exacerbate or mitigate the eventual impact on debt. Choice of monetary policy regime is an important determinant of how public debt reacts to these shocks.
Alex Pienkowski, Pablo Anaya, Thursday, August 6, 2015
Chun Chang, Kaiji Chen, Daniel Waggoner, Tao Zha, Saturday, August 1, 2015
China’s spectacular growth over the 2000s has slowed since 2013. The driving force behind the country’s growth was investment, so the key to understanding the slowdown lies in understanding what sustained investment in the past. This column shows how a preferential credit policy promoting heavy industrialisation explains the trends and cycles in China’s macroeconomy over the past two decades. This policy was not without negative consequences, particularly in terms of the distortions it introduced for business finance. Going forward, China needs to focus on creating the right incentives for banks to make loans to small productive businesses.
Charles A.E. Goodhart, Jonathan Ashworth, Wednesday, October 8, 2014
Despite the growth of online and card payments, the ratio of currency to GDP in the UK has been rising. This column argues that rapid growth in the grey economy has been a key cause. The authors estimate that the grey economy in the UK could have expanded by around 3% of UK GDP since the beginning of the Global Crisis.
Leandro Prados de la Escosura, Saturday, September 27, 2014
As demonstrated by the dramatic upward revision of Nigeria’s GDP for 2013, the choice of a benchmark year matters when computing GDP statistics. This column explains how the replacement of benchmark years creates an inconsistency between new and old national accounts series, and how different ways of resolving this inconsistency yield very different estimates of historical GDP levels and growth rates. When used to evaluate the relative historical performance of Spain and France, the interpolation procedure for splicing national accounts produces more plausible results than the conventional ‘retropolation’ approach.
Philippe Weil, Friday, June 20, 2014
The CEPR Business Cycle Dating Committee recently concluded that there is not yet enough evidence to call a business cycle trough in the Eurozone. Instead, the committee has announced a 'prolonged pause' in the recession. This Vox Talk discusses the possible directions that this situation could lead to and questions whether the Great Recession has harmed the Eurozone’s long-term growth prospects to the extent that meagre growth could become the 'new normal'.
CEPR Business Cycle Dating Committee, Tuesday, June 17, 2014
The simplest business cycle dating algorithm declares recessions over after two consecutive quarters of positive GDP growth. By that metric, the Eurozone recession has been over since 2013Q1. This column argues that growth and improvements in the labour market have been so anaemic that it is too early to call the end of the Eurozone recession. Indeed, if this is what an expansion looks like, then the state of the Eurozone economy might be even worse than economists feared.
Maxim Pinkovskiy, Xavier Sala-i-Martin, Thursday, February 27, 2014
How many people are poor worldwide? This column explains that the answer depends on whether one uses survey of national-accounts data to anchor country distributions of income. It then argues that night-time lights suggest that national accounts offer a better estimate. Developing world poverty may be as low as 4.5% in 2010, much lower than the path constructed by surveys.
S Borağan Aruoba, Francis X. Diebold, Jeremy J Nalewaik, Frank Schorfheide, Dongho Song, Tuesday, December 3, 2013
GDP can be estimated by measuring either expenditure or income. Since a penny spent is a penny earned, both methods should give the same answer, but there is substantial measurement error in both estimates. This column presents a new method of measuring US GDP that blends these two estimates. According to the new measure, GDP growth is about twice as persistent as the current headline measure implies. The new measure also makes the current recovery look stronger, especially in 2013.
Martin Ravallion, Friday, March 26, 2010
The World Bank’s estimate of China’s real GDP per capita was revised down by 40% in 2005. This column explains how economic growth impacted price structures in developing countries -- impacts that had not been factored into how old PPPs were updated prior to new price surveys. It argues that large revisions could be avoided by using better economic models for predicting PPPs.
Enrique G. Mendoza, Vincenzo Quadrini, Saturday, November 14, 2009
Can we blame financial globalisation for the severity of the current crisis? This column says that financial integration spread the negative banking shock that originated in the US across countries, thereby making the US better off at others’ expense.
Andrew K Rose, Saturday, August 1, 2009
Less synchronised business cycles would be good news for the world economy, allowing for more stable global growth and opportunities for risk-sharing across countries. However, is decoupling fact or fiction? This column says that, contrary to much current commentary, there is no downward trend in synchronisation.
Nicholas Crafts, Friday, July 11, 2008
Standard policies to redress Europe's productivity problems keep politicians in their comfort zone: support for the “knowledge economy” and more R&D. More progress would come if they accepted and facilitated the “dark side” of productivity improvement – the exit of high-cost producers and re-deployment of labour.
Philip R. Lane, Tuesday, July 1, 2008
Ireland switched from 5% growth in 2007 to negative growth in 2008. Ireland’s leading macroeconomist discusses that causes and consequences for national policy. A thorough reform of tax and spending policy is the answer, even if it violates the Maastricht limits in the short run.
Jon Faust, Thursday, January 31, 2008
The US Federal Reserve makes monetary policy based on necessarily imperfect economic forecasts. Recent research shows that the Fed is quite adept at assessing current economic conditions, but forecasting the future remains disappointingly difficult.
Riccardo Cristadoro, Giovanni Veronese, Monday, October 29, 2007
Real-time policy-making requires real-time monitoring. The recent turmoil in international financial markets, for example, raised concerns that it would dampen euro-area growth prospects. Surveys of the euro-area in August and September revealed that business expectations had indeed deteriorated. Interpreting such data in real time is notoriously difficult. Statistical techniques provide a systematic and more reliable means of extracting real-time indicators from current data: “€-coin”, a monthly indicator published by the Banca d'Italia and CEPR, is a useful tool to monitor the evolution of the euro-area growth as the financial turmoil unfolds.
Charles Wyplosz, Monday, May 28, 2007
National foreign-exchange reserves have grown massively over the past ten years. Is this growth unexpectedly large? And is it driven by insurance motives, or does it result from competitiveness-boosting currency manipulation?
Guido Tabellini, Alberto Alesina, Friday, June 8, 2007
GDP per capita is a poor measure since it leaves out home production and intangible investments. Considering these two items, however, suggests that if GDP were measured correctly, Europe’s relative decline might be even more pronounced.
Richard Baldwin, Friday, June 3, 2005
Written June 2005: The ‘non’ and ‘nee’ will have important effects on French and Dutch domestic politics, but won’t be the ‘political tsunami’ for the EU that many observers predict. The EU was headed for tough times regardless of the Constitution’s fate, and there is a simple, viable ‘Plan B.’