Economists often disagree on China’s prospects. This column provides the results from a survey of top UK-based macroeconomists by the Centre for Macroeconomics (CFM). It turns out that three quarters of the experts believe that China’s annual growth rate will be less than 6% over the next ten years or so. But the panel is divided on whether the slowdown will have a significant impact on the UK economy.
Angus Armstrong, Francesco Caselli, Jagjit Chadha, Wouter den Haan, Friday, November 27, 2015 - 00:00
Stephen Cecchetti, Enisse Kharroubi, Tuesday, July 7, 2015 - 00:00
A booming financial sector means economic growth. Or does it? This column presents new evidence showing that when the financial sector grows more quickly, productivity tends to grow disproportionately slower in industries with either lower asset tangibility or in industries with higher research and development intensity. It turns out that financial booms are not, in general, growth-enhancing.
Jakob de Haan, Dirk Schoenmaker, Monday, July 6, 2015 - 00:00
The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European banking union. It argues for the inclusion of these topics in curricula for the next generation of finance students.
Francesco D'Acunto, Marcel Prokopczuk, Michael Weber, Thursday, February 26, 2015 - 00:00
Kirill Shakhnov, Saturday, January 17, 2015 - 00:00
Joanne Lindley, Steven McIntosh, Sunday, September 21, 2014 - 00:00
Neil Kay, Gavin Murphy, Conor O'Toole, Iulia Siedschlag, Brian O'Connell, Sunday, June 29, 2014 - 00:00
Small and medium-size enterprises (SMEs) often report difficulties in obtaining external finance. Based on new research, this column argues that these difficulties are not due to greater financial risks associated with SMEs. Instead, they are the result of imperfections in the market for external finance that negatively affect smaller and younger enterprises. The same research has shown that these types of firms are also the most reliant on external finance to support their investment and growth.
Nauro F. Campos, Stefan Dercon, Saturday, March 1, 2014 - 00:00
Financial development and growth have long been linked. This column argues that there remain fundamental lacunae in our understanding of the finance-growth nexus. Three main areas for future research are identified: aid, institutions and technology.
Hans Degryse, Liping Lu, Steven Ongena, Wednesday, August 21, 2013 - 00:00
Non-bank financing originating in the shadow banking system has increasingly become an issue for policymakers. This column argues that informal financing has, in fact, been an essential element of corporate performance in China. Through reviewing the interaction between informal and formal financing, evidence suggests that informal financing simultaneously granted with formal financing (co-funding) is helpful for growth, especially for small firms.
Jeffrey Chwieroth, Andrew Walter, Friday, May 10, 2013 - 00:00
The economic consequences of financial crises have been systematically explored. Their political consequences haven’t. This column argues that without paying attention to politics, crises will remain poorly understood. After all, politics shapes policy choices, market sentiment and, ultimately, economic outcomes. Evidence from the effects of banking crises over the past century show that crises have a dramatic impact on the survival prospects of governments.
Edward J Kane, Wednesday, January 30, 2013 - 00:00
Do financial institution managers only owe enforceable duties of loyalty, competence and care to their stockholders and explicit creditors, but not to taxpayers or government supervisors? This column argues that in the current information and ethical environments, regulating accounting leverage cannot adequately protect taxpayers from regulation-induced innovation. We ought to aim for establishing enforceable duties of loyalty and care to taxpayers for managers of financial firms. Authorities need to put aside their unreliable, capital proxy: they should measure, control, and price the ebb and flow of safety-net benefits directly.
Rolando Avendaño, Niels Boehm, Elisa Calza, Sunday, January 27, 2013 - 00:00
Small and medium-sized enterprises provide the vast majority of employment in developing countries and are keystones in the productive structures of emerging economies. This column argues that the growth of such firms is being hindered by scarce financing. Looking at Latin America, it is clear that public financial institutions are increasingly important in meeting credit demands. If emerging economies want to see long-term growth, there needs to be a comprehensive approach to reducing the ‘traditional’ barriers to small and medium enterprise financing.
James Choi, Hongjun Yan, Friday, January 25, 2013 - 00:00
Security-market regulations often seek to ensure that all investors have equal access to information about each company. But what are the actual costs of an unequal information playing field? This column reviews evidence from China, Finland, and the US, suggesting that information asymmetry raises companies’ cost of capital. This inhibits investment and thereby long-run economic growth.
Roger E. A. Farmer , Tuesday, January 22, 2013 - 00:00
The efficient market hypothesis – in various forms – is at the heart of modern finance and macroeconomics. This column argues that market efficiency is extremely unlikely even without frictions or irrationality. Why? Because there are multiple equilibria, only one of which is Pareto efficient. For all other equilibria, the whims of market participants cause the welfare of the young to vary substantially in a way they would prefer to avoid, if given the choice. This invalidates the first welfare theorem and the idea of financial market efficiency. Central banks should thus dampen excessive market fluctuations.
Takeo Hoshi, Sunday, December 23, 2012 - 00:00
Rejigging financial regulation is in vogue. But, in the world of international finance, how well do different regulatory systems join up? This column argues that the US Dodd Frank Act and Basel III are, in part, incompatible and that harmonising them may lead to unintended consequences. The US ought to tread carefully here but should also try hard to maintain the spirit of better financial regulation.
Robert Shiller, Monday, October 14, 2013 - 00:00
Robert Shiller of Yale University has just been awarded the Nobel Memorial Prize in Economic Sciences (with Eugene Fama and Lars Peter Hansen). In this interview recorded in May 2012, he talks to Romesh Vaitilingam about his book, ‘Finance and the Good Society’, which argues that even after the crisis, rather than condemning finance, we need to reclaim it for the common good. They discuss financial innovation, personal morality, the importance of education and the contribution that finance can make to our lives.
Alexander Popov, Frank Smets, Thursday, November 3, 2011 - 00:00
Well-developed financial systems play a crucial role in stimulating growth but are associated with more frequent financial shocks and higher macroeconomic risk, as the financial crisis of 2007–09 reminded us. This column argues that the goal of financial regulation must be to reduce systemic risk without eliminating the financial sector’s contribution to long-term economic growth.