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Effects of unemployment insurance savings accounts: New insights from Chile

Gonzalo Reyes, Jan van Ours, Milan Vodopivec, 9 February 2010

How can policymakers provide unemployment insurance while minimising adverse incentives? This column presents new evidence from Chile suggesting unemployment insurance savings accounts can increase job-finding rates. This provides a strong endorsement of the savings account component to reform traditional unemployment insurance programmes.

How disciplining China could save the WTO

Susan Ariel Aaronson, 9 February 2010

Is the WTO doomed? This column argues that the WTO’s credibility is waning and that to get it back it needs to reign in China’s erratic governance. China’s failure to enforce trade laws threatens the concept of mutual benefit that underpins the WTO. China is broken, and a broken China could break the WTO.

Anatomy of distress: New insight on the probability of bank turmoil

Martin Cihák, Tigran Poghosyan, 8 February 2010

How safe are the banks? This column provides new evidence on what determines the likelihood of an EU bank experiencing distress, suggesting that bank risks have converged across EU members, and that a more tightly integrated financial regulation should reflect this. The results also call for a greater role for market discipline.

Tax banks to discourage systemic-risk creation, not to fund bailouts

Enrico Perotti, 7 February 2010

Obama’s plans for bank taxation took markets, policymakers, and academics by surprise, leaving all parties now debating its merits. This column suggests an alternative. By raising a Pigouvian tax based on banks’ individual contribution to systemic-risk creation, the policy would target the externality caused by funding fragility while raising the cost of opportunistic risk creation in good times.

The mystery of Chinese savings

Shang-Jin Wei, 6 February 2010

What is the connection between China’s one-child policy and its savings glut? This column provides a pioneering explanation. China’s surplus of men has produced a highly competitive marriage market, driving up China’s savings rate and, therefore, global imbalances.

Memory and the dollar: New evidence on international demand

Rebecca Hellerstein, William Ryan, 6 February 2010

Will the dollar lose its dominant role in international transactions? This column argues that this will happen quite slowly, if at all. It presents new evidence that in developing economies, demand for dollars hinges much more on historical factors than on recent experience. The highest inflation rate recorded within a country over the past 30 years explains flows of cash dollars more compellingly than recent inflation rates.

Short-selling bans in the crisis: A misguided policy

Alessandro Beber, Marco Pagano, 6 February 2010

Did the bans on short selling achieve their stated purpose of restoring order to the stock market and limiting unwarranted drops in prices? This column presents new evidence from 30 countries arguing that the effect on stock prices was at best neutral, the impact on market liquidity was clearly detrimental – especially for small-cap and high-risk stocks, and that the ban slowed down price discovery.

After the stimulus, the big retrenchment

Giancarlo Corsetti, André Meier, Gernot Müller , 5 February 2010

The staggering growth in public debt as a result of the financial crisis has led many to call for significant fiscal retrenchment. This column argues that such looming expenditure cuts will actually enhance the effectiveness of today’s fiscal stimulus. But if monetary policy is constrained by the zero lower bound on policy rates, the spending cuts should not come too early.

The enlightened economy: how ideas drive growth

Joel Mokyr, 5 February 2010

Joel Mokyr of Northwestern University talks to Romesh Vaitilingam about his book, The Enlightened Economy, which argues that we cannot understand the Industrial Revolution without recognising the importance of the intellectual sea changes of Britain’s Age of Enlightenment. They discuss the importance of cultural beliefs for the pursuit of economic growth in today’s developing countries. The interview was recorded in San Francisco in January 2009.

Kyoto and the carbon content of trade

Rahel Aichele, Gabriel Felbermayr, 4 February 2010

Production-based CO2 emission targets can give rise to carbon leakage, as firms relocate to countries without carbon policies. This column shows that Kyoto countries’ embodied CO2 imports have been increasing by about 50% since the Protocol was signed. Climate policies may have lead to additional carbon imports without sizeable domestic reductions. Consumption-based targets should therefore play a more prominent role in climate policies.

Are sovereign wealth fund investments politically biased?

Rolando Avendano, Javier Santiso, 3 February 2010

Are sovereign wealth funds substantially different in their investment choices from other types of institutional investor? This column compares the holdings of two groups of sovereign and mutual funds – and finds a few differences. Contrary to popular belief, evidence suggests that sovereign and mutual funds’ investments do not differ when looking at the political profile of targeted countries.

Do employers discriminate in female-dominated occupations?

Alison Booth, Andrew Leigh, 2 February 2010

Does gender-stereotyping in the workplace cut both ways? This column presents evidence from Australia suggesting that employers in occupations with more women discriminate against male applicants, perhaps preferring to conform to perceived social norms. As with discrimination against women, this raises concerns for both equity and efficiency.

Economic inequality during recessions

Jonathan Heathcote, Fabrizio Perri, Gianluca Violante, 2 February 2010

The unemployment rate has dominated economic headlines, but recessions raise numerous problems. This column warns that recessions raise earnings inequality and income inequality, absent mitigating government programmes. The current recession has indeed raised such inequality, but consumption inequality has surprisingly declined.

A framework for central banks and bank supervision

Hans Gersbach, 1 February 2010

Should monetary policy and banking regulation be conducted by separate bodies? This column proposes a new policy framework whereby the central bank chooses short-term interest rates and the aggregate equity ratio while banking regulation and supervision, including the determination of bank-specific capital requirements, would be left to separate bank-regulatory authorities.

Financial system reform from first principles

Alberto Giovannini, 30 January 2010

The debate over reform of the financial system has intensified even as the crisis has started to recede. This Policy Insight argues that too much investment activity has been able to operate without detection by regulators. To prevent a repeat crisis, regulators must have an informational advantage over market participants to assess the weaknesses in the financial system as they develop.

Happy peasants and miserable millionaires

Carol Graham, 30 January 2010

What measures of human wellbeing are the most accurate benchmarks of economic progress and human development? This column presents new research suggesting that while people can adapt to be happy at low levels of income, they are far less happy when there is uncertainty over their future wealth. This may help explain why different societies tolerate such different levels of health, crime, and governance, and why US happiness plummeted during the global financial crisis but has since been restored despite incomes remaining lower.

Icesave: The big ultimatum

Friðrik Már Baldursson, 29 January 2010

Many expect Iceland’s March referendum on Icesave to produce a “no” vote. Despite the dire consequences, this column argues that Icelanders, faced with the hard end of the “ultimatum game”, are likely to reject the standing offer which they regard as unfair. This column proposes lowering the interest rate on the loans as a compromise that could solve the problem and avoid a referendum.

Economics of digital media

Joel Waldfogel, 29 January 2010

Joel Waldfogel of the University of Pennsylvania’s Wharton School talks to Romesh Vaitilingam about the economics of digital media, including: music file sharing (both illegal and legal) and the impact on artists and record labels; the threat that intellectual property piracy poses to the movie business; and the future of books and newspapers in the digital age. The interview was recorded in London in December 2009.

Measuring crowded trades in financial markets

Richard M. Levich, Momtchil Pojarliev, 29 January 2010

Regulators understand the potential threat of crowded trades, but they also recognise the difficulty of tracking them. This column suggests a new approach for regulators to monitor crowdedness of selected trades. Fund managers and financial regulators could use data on crowdedness to assess the risk that a financial market may enter an asset bubble.

The Trans-Pacific Partnership and US leadership in Asia

Claude Barfield, Philip Levy, 28 January 2010

The future of Asian regionalism is in extreme flux, presenting President Obama with both opportunities and dangers. This column argues Trans-Pacific Partnership negotiations present an opportunity to trigger a wholesale reconfiguration of Asian commercial alliances in a way that would meet important and long-held US goals.

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The world economy is tracking or doing worse than during the Great Depression (September 2009 update)

Barry Eichengreen, Kevin H. O’Rourke, 1 September 2009

This is an update of the authors' 4 June and 6 April 2009 columns comparing today's global crisis to the Great Depression. World industrial production, trade, and stock markets are now showing signs of recovery. Still – today's crisis remains dramatic by the standards of the Great Depression.

Views 441319

Educated in America: College graduates and high school dropouts

James J. Heckman, Paul A. LaFontaine, 13 February 2008

Official statistics for US high school graduation rates mask a growing educational divide. This column presents research showing that a record number of Americans are going to university – while an increasing number are dropping out of high school. This poses major social challenges for the United States.

Views 78898

Subprime 'crisis': FAQs (revised & updated)

Stephen Cecchetti, 15 August 2007

A revised and updated version of the 13 August column on the basic how's and why's of what the Fed has been doing to calm financial markets.

Views 48997

The euro could surpass the dollar within ten years

Jeffrey Frankel, 18 March 2008

One of the world’s leading international economists explains how the euro could surpass the dollar as the premier international currency and examines the geopolitical implications of such a shift.

Views 42772

Subprime ‘crisis’: FAQs

Stephen Cecchetti, 13 August 2007

Here are the basic how's and why's of what the Fed has been doing to calm financial markets.

Views 39918

Subprime crisis: causes, consequences and cures

Carmen M. Reinhart, 15 March 2008

We may just have started to feel the pain. Asset price drops – including housing – are common markers in all the big banking crises over the past 30 years. GDP declines after such crises were both large (-2% on average) and protracted (2 years to return to trend); in the 5 biggest crises, the numbers were -5% and 3 years. This column, based on the author’s testimony to the Congress, picks through the causes and consequences. It argues that when it comes to ‘cures,’ it would be far better to get the job done right than get the job done quickly.

Views 35691

Good news at last? The recession will be over sooner than you think

Nicholas Bloom, Max Floetotto, 12 January 2009

A key source of the today’s economic weakness is uncertainty that led firms to postpone investment and hiring decisions. This column, by the authors whose model forecast the recession as far back as June 2008, report that the key measures of uncertainty have dropped so rapidly that they believe growth will resume by mid-2009. This means any additional economic stimulus has to be enacted quickly. Delaying to the summer may mean the economic medicine is administered just as the patient is leave the hospital.

Views 34083

Five decades of evidence on financial crisis and recession: How long? How deep?

Stijn Claessens, M. Ayhan Kose, Marco E. Terrones, 7 October 2008

The house and equity price busts on top of a credit crunch make this an unprecedented crisis for the modern US economy; its real economy effects are thus difficult to assess. This column provides insights based on evidence from 122 recessions in 21 advanced nations since 1960. Findings suggest recessions in such circumstances are much costlier and slightly longer. But the outcome can be affected by policy, and it’s high time that policymakers act swiftly and decisively.

Views 33276

Krugman’s view on the dollar

Richard Baldwin, 2 October 2007

As the dollar has started to slide, the question is: how far, how fast? This column, which is based on Paul Krugman’s recent Economic Policy article suggests the answers are: pretty far and pretty fast.

Views 32997

Mother of all bailouts and what it means for Europe

Daniel Gros, Stefano Micossi, 20 September 2008

The radical moves in the US have direct implications for European banks and indirect implications for European governments. This column discusses the likely channels and notes that several European banks are both too big to fail and may be too big to be saved by their national governments alone.

Views 32590

How bad could the crisis get? Lessons from Iceland

Jon Danielsson, 12 November 2008

Iceland’s banking system is ruined. GDP is down 65% in euro terms. Many companies face bankruptcy; others think of moving abroad. A third of the population is considering emigration. The British and Dutch governments demand compensation, amounting to over 100% of Icelandic GDP, for their citizens who held high-interest deposits in local branches of Icelandic banks. Europe’s leaders urgently need to take step to prevent similar things from happening to small nations with big banking sectors.

Views 31094

Trade and inequality, revisited

Paul Krugman, 15 June 2007

It’s no longer safe to assert that trade’s impact on the income distribution in wealthy countries is fairly minor. There’s a good case that it is big, and getting bigger. I’m not endorsing protectionism, but free-traders need better answers to the anxieties of globalisation’s losers.

Views 30343

Tennis, pressure and the gender wage-gap

M Daniele Paserman, 26 June 2007

Female tennis players play more conservatively and commit more unforced errors when playing critical points. Does this explain the upper-echelons wage gap?

Views 28190

Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis

Barry Eichengreen, Richard Baldwin, 9 October 2008

Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks.

Views 26900

Is the LIBOR-OIS spread due to predatory behaviour?

Francesco Giavazzi, 2 June 2008

There has been a persistent spread between the rate at which banks lend each other money and government-backed securities yields in recent months. This column describes hypotheses explaining the spread – including the possibility that banks aren’t lending in order to bankrupt acquisition targets.

Views 26382

Open Letter to European leaders on Europe’s banking crisis: A call to action

Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz, Klaus F. Zimmermann, 1 October 2008

This is a once-in-a-lifetime crisis. Trust among financial institutions is disappearing; fear may spread. Last week’s US experience showed that saving one bank at a time won’t work. A systemic response is needed and in Europe this means an EU-led initiative to recapitalise the banking sector. Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath.

Views 26376

Do you really want to tax ability?

N. Gregory Mankiw , Matthew Weinzierl, 12 June 2009

Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This column explains how the standard utilitarian framework for tax policy analysis says that individual attributes correlated with wages, such as height, should determine tax liabilities. Taller individuals should pay higher taxes. If this is objectionable, then something is wrong with the standard framework.

Views 26371

Slave trade and African underdevelopment

Nathan Nunn, 8 December 2007

Slavery, according to historical accounts, played an important role in Africa’s underdevelopment. It fostered ethnic fractionalisation and undermined effective states. The largest numbers of slaves were taken from areas that were the most underdeveloped politically at the end of the 19th century and are the most ethnically fragmented today. Recent research suggests that without the slave trades, 72% of Africa’s income gap with the rest of the world would not exist today.

Views 26086

The dangerous protectionism of Barack Obama

Willem Buiter, Anne Sibert, 26 February 2008

Barack Obama, the likely Democratic presidential candidate, has proposed tax breaks for US corporations that invest at home rather than abroad. This column argues that his proposal is protectionist, reactionary, and economically unsound.

Views 24772

Why Paulson is wrong: Saving capitalism from the capitalists

Luigi Zingales, 21 September 2008

This weekend’s decisions will shape the type of capitalism we live with for the next fifty years. Here one of the world’s leading financial scholars, Chicago Business School Professor Luigi Zingales, argues that bailing out the financial system with taxpayers’ money is wrong. He discusses an alternative – forced debt-for-equity swap or debt-forgiveness.

Views 24651
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Tax banks to discourage systemic-risk creation, not to fund bailouts

Enrico Perotti, 7 February 2010

Obama’s plans for bank taxation took markets, policymakers, and academics by surprise, leaving all parties now debating its merits. This column suggests an alternative. By raising a Pigouvian tax based on banks’ individual contribution to systemic-risk creation, the policy would target the externality caused by funding fragility while raising the cost of opportunistic risk creation in good times.

The mystery of Chinese savings

Shang-Jin Wei, 6 February 2010

What is the connection between China’s one-child policy and its savings glut? This column provides a pioneering explanation. China’s surplus of men has produced a highly competitive marriage market, driving up China’s savings rate and, therefore, global imbalances.

Icesave: The big ultimatum

Friðrik Már Baldursson, 29 January 2010

Many expect Iceland’s March referendum on Icesave to produce a “no” vote. Despite the dire consequences, this column argues that Icelanders, faced with the hard end of the “ultimatum game”, are likely to reject the standing offer which they regard as unfair. This column proposes lowering the interest rate on the loans as a compromise that could solve the problem and avoid a referendum.

Lobbying and the financial crisis

Deniz Igan, Prachi Mishra, Thierry Tressel, 27 January 2010

Should the political influence of large financial institutions take some blame for the financial crisis? This column presents evidence that financial institutions lobbying on mortgage lending and securitisation issues were adopting riskier lending strategies. This contributed to the deterioration in credit quality and to the build-up of risks prior to the crisis.

The impact of the Fed’s mortgage-backed securities purchase programme

Johannes Stroebel, John Taylor, 27 January 2010

Should the Fed scale back its ownership of mortgage-backed securities? This column analyses the effect of the programme on mortgage interest rates. Controlling for prepayment and default risk suggests the programme has had little or no impact, and that the Fed could gradually cut the size of its portfolio without a significant impact on the mortgage market.

Too interconnected to fail = too big to fail?

Daniel Gros, 26 January 2010

Did allowing financial institutions to become “too big” play a role in the financial crisis? This column argues that being “too interconnected” is also a factor, and that US accounting standards should recognise gross derivatives exposure on the balance sheet to make this interconnectedness, and the resulting exposure, clear.

The saga of Icesave: A new CEPR Policy Insight

Jon Danielsson, 26 January 2010

Icelanders may well reject the terms of the financial deal with Britain and the Dutch in a March referendum. This column introduces a new CEPR Policy Insight arguing that responsibility for Icesave losses falls jointly on Iceland, Britain and the Netherlands. Regardless of the vote, the three governments should come to a more reasonable agreement that enables Iceland to pay its obligations without tipping the economy into the abyss.

Making sense of Obama’s bank reform plans

Viral Acharya, Matthew Richardson, 24 January 2010

Obama’s sweeping proposal for financial regulation took the world by surprise. Here two of the world’s leading professors of finance explain why it is step in the right direction from the standpoint of addressing systemic risk. They also point out a number of drawbacks that should be fixed.

A modest proposal: Double liability for bankers

Axel Leijonhufvud, 23 January 2010

What happened to the capitalist system where everyone was supposed to pay for their own mistakes? Bankers have been playing “I win, you lose” with the general public. This column suggests a return to double liability for bank managers in an attempt to change the game to “If I lose, then I have to pay.”

Parametric estimations of the world distribution of income

Maxim Pinkovskiy, Xavier Sala-i-Martin, 22 January 2010

World poverty is falling. This column presents new estimates of the world’s income distribution and suggests that world poverty is disappearing faster than previously thought. From 1970 to 2006, poverty fell by 86% in South Asia, 73% in Latin America, 39% in the Middle East, and 20% in Africa. Barring a catastrophe, there will never be more than a billion people in poverty in the future history of the world.

Oil windfalls and living standards: New evidence from Brazil

Francesco Caselli, Guy Michaels, 20 January 2010

Does the “resource curse” exist? This column presents new evidence from Brazil. Municipalities that receive oil windfalls report significant increases in spending on infrastructure, education, health, and transfers to households. However, the windfalls do not trickle down and much of the money goes missing. Indeed, oil revenues increase the size of municipal workers’ houses but not the size of other residents’ houses.

Crushed aid: Why is fragmentation a problem for international aid?

Emmanuel Frot, Javier Santiso, 18 January 2010

The rapid growth in the fragmentation of aid donors is seen by many to be a burden for recipient countries. This column argues that too much fragmentation is not the issue; the problem is that there is too little competition between the suppliers of aid.

New insight on the role of imbalances in the global crisis

Ricardo Caballero, 14 January 2010

Global imbalances have been suggested as the root cause of the global crisis. This column argues that another imbalance is the guilty party. The entire world had an insatiable demand for safe debt instruments that put an enormous pressure on the US financial system and its incentives. This structural problem can be alleviated if governments around the world explicitly absorb a larger share of the systemic risk.

The failure of the Lisbon strategy

Charles Wyplosz, 12 January 2010

The Lisbon strategy for making the EU the world’s most competitive economy is a failure, yet an extension of the failed approach is in the works. This column argues that EU governments should let the strategy die a peaceful death. A new model is needed.

Financial globalisation has improved international risk sharing

Robert Flood, Nancy P. Marion, Akito Matsumoto, 12 January 2010

Financial globalisation makes it easier for individuals to trade financial assets, and that should help them diversify against country-specific risks. But empirical support for improved international risk sharing is limited. This column says that there is evidence of improved international risk sharing, and it comes mostly from the convergence in rates of consumption growth among countries.

New insights on the impact of protectionism on trade: The “Russian doll” effect

Lucian Cernat, Nuno Sousa, 9 January 2010

What is the impact of crisis-led protectionism on trade? This column provides a new way to interpret protectionism – the “Russian doll” effect – and shows that the effect on EU exports has been more severe than the rest of the world.

Farewell to the natural rate: Why unemployment persists

Roger E. A. Farmer , 6 January 2010

Most policymakers subscribe to the existence of a natural rate of unemployment. This column provides a visual history of unemployment, vacancies, and inflation in the US and says there is no natural rate. It suggests the economy can rest in any equilibrium on the Beveridge curve, as decided by the confidence of households and firms that pins down asset values.

China’s Copenhagen commitment: Business as usual or climate leadership?

Carlo Carraro, Massimo Tavoni , 5 January 2010

China has promised to lower its carbon intensity by 40%–45% by the year 2020. This column says that standard estimates imply that China could meet that target simply by continuing its long-term historical trend. But China’s recent experience of a lower income elasticity of carbon intensity suggests additional efforts and leadership could be required.

The 1967-75 Suez Canal closure: Lessons for trade

James Feyrer, 23 December 2009

The effects of distance on trade and of trade on income have puzzled economists for centuries. This column presents new evidence from a natural experiment – the 1967-1975 closure of the Suez Canal. Results suggest that a 10% decrease in ocean distance results in a 5% increase in trade. Also, it estimates that every dollar of increased trade raises income by about 25 cents.

Race against time: New insight on the growth effect of ethnic fractionalisation

Nauro F. Campos, 22 December 2009

Does ethno-linguistic fractionalisation stifle economic growth? This column presents new evidence that considers how fractionalisation changes over time and treats it as both a cause and an effect of economic growth. While fractionalisation is found to have a negative effect on growth, it also changes over time, contrary to conventional wisdom.

 

Global Crisis Debate

VoxEU.org is partnering with the UK government to collect the views of economists from around the world on what the G20 should do to fix the global economy. Read more. There are five themes:

Macroeconomics

Moderator: Philip Lane

Institutional reform

Moderator: Francesco Giavazzi

Financial rescue and regulation

Moderator: Luigi Zingales

 

Countries in crisis

Moderator: Jon Danielsson

Development and the Crisis

Moderator: Dani Rodrik

Open markets

Moderator: Richard Baldwin


CEPR Policy Research

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Policy Insights and Reports

Financial system reform proposals from first principles

Alberto Giovannini

Alberto Giovannini highlights some fundamental characteristics of the recent financial crisis and identifies ways to make the financial system stronger.

The saga of Icesave

Jon Danielsson

This new CEPR Policy Insight looks at the issues arising from the collapse of Landsbanki.

Ambulance economics: the pros and cons of fiscal simuli

Max Corden

This new CEPR Policy Insight suggests that the 'Keynesian ambulance' of fiscal stimuli in response to the crisis may have averted a Great Depression.

Real Time Solutions for US Financial Reform

Viral Acharya, Thomas F. Cooley, Matthew Richardson, Ingo Walter

The NYU Stern group – authors of the influential book Restoring Financial Stability: How to Repair a Failed System – have completed a new ebook that assesses the strengths and weaknesses of the US financial reform legislation. This column introduces the new ebook.

The Unrelenting Pressure of Protectionism: The 3rd GTA Report

Simon J Evenett

The latest Report from Global Trade Alert focuses on the Asia-Pacific region.

The Great Trade Collapse: Causes, Consequences and Prospects

Richard Baldwin

A new VoxEU.org Ebook aims to inform the world trade ministers what the economists know about the trade collapse.

Income contingent tuition fees for universities

Neil Shephard

The financial position of the UK Government suggests that its university sector may have its funding squeezed. In CEPR Policy Insight 42, Neil Shephard argues that universities should be able to charge income contingent tuition fees if their teaching costs are not met by the current tuition payments.

Macroeconomics and the Crisis: A Personal Appraisal

Axel Leijonhufvud

In CEPR Policy Insight No.41, Axel Leijonhufvud argues that theories that assume that the economy is a stable general equilibrium system, albeit beset with some frictions and imperfections, do not hold true in general and that we need a new paradigm of economic thought.

Liquidity Risk Charges as a Macroprudential Tool

Enrico Perotti, Javier Suarez

Liquidity risk charges were proposed in February 2009 as a new macro-prudential tool to discourage systemic risk creation by banks. CEPR Policy Insight No. 40 refines this proposal in order to clarify challenging issues surrounding the implementation of liquidity risk charges.

How big are fiscal multipliers?

Ethan Ilzetzki, Enrique G. Mendoza, Carlos A. Vegh

Economists do not agree on one question crucial to evaluating governments' responses to the crisis: how much stimulus does spending provide? CEPR Policy Insight No.39 examines how the characteristics of an economy impact on the size of fiscal multipliers.

Discussion Papers

Tax and multinational firm location decisions

Salvador Barrios, Harry Huizinga, Luc Laeven, Gaëtan Nicodème

Increased globalization and decreased trade barriers worldwide have led an increasing number of corporations to expand their activities internationally. The authors of CEPR DP7047 examine the effects of host and parent country taxation on the location decisions of these multinational corporations using a range of data from 33 European countries.

What are the real returns from a higher education?

Enrico Moretti

The increase in the return to education is typically measured using nominal wages. The author of CEPR DP6997 looks at housing costs for high school and college graduates and discovers that, when looking at real as opposed to nominal wages, the return to education and the increase in inequality may be smaller than previously thought.

Boom-bust cycle for Poland in run-up to euro adoption?

Barry Eichengreen, Katharina Steiner

Assuming that Poland does adopt the euro, will it be able to avoid the boom-bust cycle that has afflicted other economies around the time of euro adoption? The authors of CEPR DP7027 look at the causes of these cycles and ask whether Poland's situation is any different to those of its predecessors. Their conclusions are mixed.

Why do we really have children?

Francesco C. Billari, Vincenzo Galasso

Why are couples in industrialized societies having fewer children than they used to? Indeed, why are they deciding to have children at all? The authors of CEPR DP7014 seek to address these issues, focusing on the two main motives for childbearing often cited: children as a 'consumption' vs. an 'investment' good.

Inheritance Law and Investment in Family Firms

Andrew Ellul, Marco Pagano, Fausto Panunzi

The authors of DP6977 investigate the effect of inheritance law on investment in family firms in 32 countries.

Competition in grocery sales

Kathleen Cleeren, Marnik G. Dekimpe, Katrijn Gielens, Frank Verboven

Discounters, such as Lidl, operate to offer 40-60% lower prices than conventional retailers, but how much of a competetitive threat to they pose to supermarket giants? In addition to analysing "inter-format" competition between traditional supermarkets and discounters, Verboven et al. examine the competitive effect between retailers of a similar kind and the effects that local conditions can have upon the success the the two formats.

Efficiency in the 'market for innovation'

Alberto Galasso, Mark Schankerman

The 'market for innovation' - the licensing and sale of patents - is one of the principal incentives for firms to invest in R&D. In CEPR DP 6946, Galasso and Schankerman set out to examine the impact that US developments have had on market efficiency, by studying the length of patent infringement disputes and find that the US system has performed surprisingly well in recent decades.

Settling the trade/growth dispute – the impact of the Uruguay Round

Antoni Estevadeordal, Alan Taylor

The link between greater openness to trade and higher growth, once held sacred by economists, has come under contestation in recent years. The authors of DP6942 develop a growth model with a basis for trade in order to uncover the impressive impact trade has had upon growth of GDP, using data from before and after the Uruguay Round.

The price of oil and the state of the world economy: using terrorism as the instrumental variable

Natalie Chen, Liam Graham, Andrew J Oswald

Higher energy prices are likely to reduce profitability of industry and thus could bring about an economic downturn. The authors of DP 6937 experiment with terrorist acts as an instrumental variable, in order to examine the relationship between the price of oil, terrorist incidents and the resultant effects on profitability and margins.

Happiness inequality in the United States

Betsey Stevenson, Justin Wolfers

Surveys that have attempted to measure the level of happiness in US citizens by means of a subjective response have unveiled decreases in happiness inequality. The authors of CEPR DP6929 have used these responses to analyse the level and dispersion of happiness within and between demographic groups over the period of 1972-2006.