The classic exchange-rate trilemma analysis argues that capital mobility, monetary autonomy and fixed exchange rates are incompatible. This column shows how policy trilemma analysis can be extended to other domains, specifically financial stability, political economy, and international relations. It argues that analysing these trade-offs can help to identify policy options that balance macroeconomic objectives and political realities in the face of globalisation.
Michael Bordo, Harold James, Monday, April 6, 2015
Andrés Rodríguez-Pose, Yannis Psycharis, Vassilis Tselios, Tuesday, March 3, 2015
Electoral results and the geographical allocation of public investment in Greece have been intimately related. This column describes how incumbent Greek governments between 1975 and 2009 tended to reward those constituencies returning them to office. Increases in both the absolute and relative electoral returns for the party in government in a given Greek region were traditionally repaid with a greater level of per capita investment in that region. Single-member constituencies were the greatest beneficiaries of this type of pork-barrel politics.
Leonardo Baccini, Johannes Urpelainen, Friday, January 9, 2015
From 1990 to 2009, more than 500 preferential trading agreements were formed by countries of all stripes. This column argues that the non-trade reform effects are central to understanding the causes and consequences of the recent trade agreement wave. Developing country leaders use deep, legally binding trade agreements with major economic powers, especially the US and the EU, to enact and implement politically controversial domestic reforms.
Roland Kupers, Friday, July 25, 2014
Complexity science is changing the way we think about social systems and social theory. Unfortunately, economists’ policy models have not kept up and are stuck in either a market fundamentalist or government control narrative. This Vox Talk argues for a new, more flexible policy narrative, which envisions society as a complex evolving system that is uncontrollable but can be influenced.
Timothy J Hatton, Saturday, June 7, 2014
In the recent European Parliament elections, right-wing populist parties made significant gains. Commentators have linked the rise of these parties to growing anti-immigration sentiment in the wake of the crisis. This column examines the extent to which public opinion has in fact shifted against immigration. Survey data shows that there was no Europe-wide surge in anti-immigration opinion between 2006 and 2010, although there was a marked change in Spain, Greece, and Ireland. This suggests that populist parties’ success cannot be attributed to anti-immigration sentiment alone.
Christoph Lakner , Branko Milanovic, Tuesday, May 27, 2014
Since 1988, rapid growth in Asia has lifted billions out of poverty. Incomes at the very top of the world income distribution have also grown rapidly, whereas median incomes in rich countries have grown much more slowly. This column asks whether these developments, while reducing global income inequality overall, might undermine democracy in rich countries.
Anish Tailor, Nicolas Véron, Wednesday, May 21, 2014
The European Parliamentary elections are conducted under rules that give voters power that varies with their nationality. This inequality is higher than in European and US national elections, as well as in large emerging-market democracies like Brazil, India, and Indonesia. Making the distribution more equal would be simple, but would require a change in the EU Treaties.
Owen McDougall, Ashoka Mody, Saturday, May 17, 2014
Turnout in the 2014 European Parliament elections is seen as a critical test for EU democracy. This column presents some predictions. Trust in the ECB – rather than in the European Parliament itself – has been associated with higher turnout in previous elections. Macroeconomic conditions are also important – where a country’s fiscal problems are greater, voters are more inclined to vote.
Daron Acemoglu, Suresh Naidu, James A Robinson, Pascual Restrepo, Monday, May 19, 2014
Many analysts view democracy as a neutral or negative factor for growth. This column discusses new evidence showing that democracy has a robust and sizable pro-growth effect. The central estimates suggest that a country that switches from non-democracy to democracy achieves about 20% higher GDP per capita over the subsequent three decades.
Julia Cagé, Valeria Rueda, Wednesday, May 14, 2014
African regions where Protestant missionaries were active had indigenous newspapers a century before other regions. This column argues, based on new research, that this difference has had lasting effects. Proximity to a mission that had a printing press in 1903 predicts newspaper readership today. Population density and light density (a proxy for economic development) is also higher today in regions nearer to missions that had printing presses. The results suggest that a well-functioning media – not Protestantism per se – was important for development.
Poonam Gupta, Arvind Panagariya, Monday, March 17, 2014
Do voters care about economic outcomes? Evidence on this question, especially in the context of developing countries, is rather scant. This column reports the findings from analysis of the 2009 parliamentary elections in India. Voters favoured parties that delivered high growth in their states and rejected those that did not. The authors also find that voters preferred candidates who had served in the parliament before, were wealthy, educated, and affiliated with a large party.
Daron Acemoglu, Suresh Naidu, Pascual Restrepo, James A Robinson, Friday, February 7, 2014
Inequality is currently a prominent topic of debate in Western democracies. In democratic countries, we might expect rising inequality to be partially offset by an increase in political support for redistribution. This column argues that the relationship between democracy, redistribution, and inequality is more complicated than that. Elites in newly democratised countries may hold on to power in other ways, the liberalisation of occupational choice may increase inequality among previously excluded groups, and the middle classes may redistribute income away from the poor as well as the rich.
Ameet Morjaria, Wednesday, February 5, 2014
Ethnic favouritism is a longstanding problem in Africa. This column presents new evidence of this phenomenon and how democracy affects it. Data on road building in Kenya confirms strong ethnic favouritism that disappears during periods of democracy.
Mark Harrison, Wednesday, January 15, 2014
Democracy often seems bureaucratic with high ‘transaction costs’, while autocracies seem to get things done at lower cost. This column discusses historical research that refutes this. It finds empirical support from Soviet archives for a political security/usability tradeoff. Regimes that are secure from public scrutiny tend to be more costly to operate.
Hans Gersbach, Saturday, January 4, 2014
Democratic governments tend to accumulate excessive debt. This column proposes a new rule – the ‘Catenarian Fiscal Discipline’ – which allows a fiscally disciplined incumbent to limit the debt-making of the next officeholder. This way, fiscal discipline today can lead to fiscal discipline in the future. Such a rule would require that we broaden our notion of representative democracy by recognising the fact that a current government already has various implicit ways of limiting what its elected successors can do.
Rafael Doménech, Víctor Pérez-Díaz, Wednesday, December 11, 2013
Based on the report issued by a Committee of Experts, the Spanish Parliament will pass a new law that implements an innovative sustainability factor in the public pension system. This column argues that the proposal solves the problem of financial sustainability in the long run while opening a wider debate on the welfare system and growth under conditions of increased global competition.
Thorvaldur Gylfason, Sunday, November 17, 2013
Based on statistical measures of different degrees of democracy vs. autocracy, this article briefly reviews the progress of democracy around the world during the past 212 years, and places democratic developments in Africa since 1960 in that context. Democracy is positively associated with education, which in turn is associated with lower fertility and greater longevity. Democracy is also associated with reduced corruption. Together, these effects suggest democracy should be good for growth – a hypothesis that is borne out by the data.
Caroline Freund, Melise Jaud, Thursday, January 24, 2013
The Arab world is undergoing a major political transition. The final outcomes of the changes are far from certain. Nevertheless, there have been and will continue to be economic consequences from the moves towards democracy. This column looks at 90 attempts at transition and finds that countries with rapid transitions, irrespective of whether they are successful or failed, experience swift recoveries and a long-run growth dividend of about one percentage point relative to pre-transition growth levels.
Elena Nikolova, Friday, August 17, 2012
Why do some states develop as democracies while others remain authoritarian? The question continues to puzzle social scientists. This column presents new data from 13 British American colonies from before the American Revolution. It shows that democratic institutions had a lot to do with the need to attract workers.
Martin Gassebner, Michael J Lamla, James Raymond Vreeland, Saturday, August 11, 2012
Will democracy establish itself in the Middle East? This column looks at what is needed to start democracies are what is needed to keep them going. It argues that that it is the level of economic development – not short-run economic growth – that is needed for democracy to survive.