The UK’s recent budget reflects tensions felt throughout Europe – how to stem massive budget deficits while not choking off growth. The UK is often held up as a model for voluntary austerity, but this column argues that its policies are a poor model for growth. It asserts that there is a deep intellectual vacuum at the heart of the budget and the government’s approach to economic growth in general.

Financial systems support and spur economic growth. But does financial innovation foster financial development? While recent innovations have done damage, this column says the long-run story is that financial innovation is essential for economic growth.

How interconnected are finance, trade, and economic growth? This column looks to the past in search of an answer. Examining economies that traded across the Atlantic, it finds that finance and trade reinforced one another between 1880 and 1914 but these links were absent in the post-war period. Financial development has been strongly related to growth throughout the last 130 years, whereas trade had a direct effect on growth only after 1945.

When the global crisis hit, many predicted that London would suffer more than other parts of the UK, given the city’s reliance on the financial services industry. This column explores how the UK capital’s economy suffered far less than the rest of the country.

International donors provide large amounts of financial capital to Africa in the form of aid and grants, but there are also large financial flows in the opposite direction. Many African banks invest large sums abroad and lend relatively little to local businesses. This column explains that this is because many banks suffer from a shortage of information about the creditworthiness of some of their customers.

The Indian economy, along with others in South Asia, is among the fastest growing in the world. But what about social progress? This column reviews World Bank data suggesting that while income growth is helping to reduce poverty, the number of poor people is actually rising and there remains huge room for improvement in education, health, and women’s economic participation.

Does corruption sand or grease the wheels of economic growth? This column reviews recent research that uses meta-analysis techniques to try to provide more concrete answers to this old-age question. From a unique, comprehensive data base of 460 estimates of the impact of corruption on growth from 41 studies, the main conclusion that emerges is that there is little support for the “greasing the wheels” hypothesis.

This paper challenges the Washington Consensus truism that financial liberalization increases economic growth and financial stability in emerging markets. The authors of DP8171 find no evidence that financial liberalization increases growth and blame it for ramping up volatility in output and consumption levels.

The World Bank's Indermit Gill recently argued that economic growth will naturally be spatially unbalanced and that to try to spread it out – too thinly or too soon – would discourage it. This column responds by pointing out that economic concentration is neither necessary nor sufficient for growth.

Does money buy happiness? Discussion Paper 8048 examines the relationship between subjective well-being and income along three dimensions: between individuals in the same country, between other countries, and during a country's growth. In each case higher income correlates with higher reported levels of subjective well-being. Higher income, the authors conclude, does in fact make people happier with their lives.