The prevailing view of shadow banking is that it is all about regulatory arbitrage – evading capital requirements and exploiting ‘too big to fail’. This column focuses instead on the tradeoff between economic growth and financial stability. Shadow banking transforms risky, illiquid assets into securities that are – in good times, at least – treated like money. This alleviates the shortage of safe assets, thereby stimulating growth. However, this process builds up fragility, and can exacerbate the depth of the bust when the liquidity of shadow banking securities evaporates.
Alan Moreira, Alexi Savov, Tuesday, September 16, 2014
Richard S J Tol, Friday, April 25, 2014
The IPCC’s Fifth Assessment Report estimates lower costs of climate change and higher costs of abatement than the Stern Review. However, current UN negotiations focus on stabilising atmospheric concentrations of greenhouse gases at even lower levels than recommended by Stern. This column argues that, given realistic estimates of the rate at which people discount the future, the UN’s target is probably too stringent. Moreover, since real-world climate policy is far from the ideal of a uniform carbon price, the costs of emission reduction are likely to be much higher than the IPCC’s estimates.
Shahid Yusuf, Danny Leipziger, Monday, March 3, 2014
Urbanisation and GDP per capita are positively correlated across countries. However, when the sample is restricted to developing countries, urbanisation and growth are more loosely related – particularly in Africa. CEPR Policy Insight 71 argues that the low share of manufacturing in developing-country cities may help to explain this discrepancy. Strengthening urban finances, embracing technology, improving skills, and stimulating the formal sector will help cities to promote growth. Since decisions affecting urban development can have lasting impact, longer-term planning deserves greater attention than it is currently receiving.
Danny Leipziger, Shahid Yusuf, Monday, March 3, 2014
Urbanisation and GDP per capita are positively correlated across countries. However, when the sample is restricted to developing countries, urbanisation and growth are more loosely related – particularly in Africa. This column argues that the low share of manufacturing in developing-country cities may help to explain this discrepancy. Strengthening urban finances, embracing technology, improving skills, and stimulating the formal sector will help cities to promote growth. Since decisions affecting urban development can have lasting impact, longer-term planning deserves greater attention than it is currently receiving.
Lucija Muehlenbachs, Beia Spiller, Christopher Timmins, Sunday, February 9, 2014
Compared to coal and oil, shale gas offers the prospect of greater energy independence and lower emissions of carbon dioxide and other pollutants. However, fracking is controversial due to the local externalities it creates – particularly because of the potential for groundwater contamination. This column presents evidence on the size of these externalities from a recent study of house prices. The effect attributable to groundwater contamination risk varies from 10% to 22% of the value of the house, depending on its distance from the shale gas well.
Rafael Lalive, Simon Luechinger, Armin Schmutzler, Friday, March 15, 2013
Against a backdrop of road accidents, pollution and congestion, many governments subsidise railways with the aim of reducing such externalities. But do improvements in public transport work? This column argues that recent empirical evidence confirms our expectations and, moreover, that public-transport improvements offer good value for money.
Lucija Muehlenbachs, Beia Spiller, Christopher Timmins, Saturday, September 29, 2012
Natural gas is seen as an attractive source of energy – it is cleaner than coal and often more reliable. But there are potential risks from the drilling and hydraulic fracturing process. This column shows how shale gas extraction could reduce property prices, and argues that policymakers need to bear this in mind when thinking about the costs and benefits.
David Anthoff, Richard S J Tol, Monday, November 29, 2010
An international agreement on tackling climate change is still a long way off. One barrier often cited is that sovereign states will fail to cooperate and among the challenges is how countries would measure the impact of climate change on others. This column presents new insights in this area.
Hans-Werner Sinn, Friday, September 17, 2010
No one likes sitting in a traffic jam, but what can be done about them? This column says the time has come for general road tolls on all roads across all of Europe.
Laura Alfaro, Maggie Chen, Friday, January 8, 2010
Agglomeration effects are important but difficult to measure. This column uses a new database with precise geographical information to investigate the locational interdependence of multinational firms. Knowledge spillovers and capital- and labour-market externalities exert a significant effect on the co-agglomeration of multinational headquarters, while input-output linkages also play a significant role in the case of subsidiary co-agglomeration.
Giorgio Brunello, Pierre-Carl Michaud, Anna Sanz-de-Galdeano, Tuesday, October 6, 2009
Should the government intervene to reduce obesity on the basis of equity or efficiency? This column gives reasons to be sceptical common arguments for such interventions. Unless health insurance provision creates significant moral hazard problems that encourage obesity, there is little reason to attack obesity on the basis of health insurance externalities.
Keith Head, Thierry Mayer, Monday, March 16, 2009
Do cultural imports threaten domestic customs and traditions? This column explains how further liberalisation of trade in audiovisual services would indeed induce cultural change, using the example of foreign influence on names. However, these changes are generally modest, and consumers gain from the enjoyment of consuming cultural goods and a broader cultural choice set.
Eric D Gould, Eyal Winter, Monday, October 15, 2007
How does the effort shown by one worker affect the efforts of fellow workers within the same firm? While frequently proposed behavioural explanations would lead us to expect that one worker trying harder would encourage others to also try harder (and vice versa), irrespective of the roles of the workers concerned, the authors of CEPR DP6527 show how the change in effort put in by one worker can have either a positive or negative impact on co-workers based purely on income-maximizing considerations.