The Manufacturing Imperative
Rodrik, Dani. We may live in a post-industrial age, in which information technologies, biotech, and high-value services have become drivers of economic growth. But countries ignore the health of their manufacturing industries at their peril. High-tech services demand specialized skills and create few jobs, so their contribution to aggregate employment is bound to remain limited. […]
Europe’s Plan Won’t Cut Greek Debt
Allen, Peter, Eichengreen, Barry & Evans, Gary. Postmortems of last month’s European Union summit meeting have now turned to why the Greek debt rescue failed to restore investor confidence in the country’s finances. Many reasons are advanced: the failure to communicate clearly; the complexity of the plan; the inability to coordinate with the International Monetary Fund. There’s […]
Debt burden in advanced economies now a global threat
Prasad, Eswar & Ding, Mengjie. Our analysis paints a sobering picture of worsening public debt dynamics and a sharply rising debt burden in advanced economies. These rising debt levels combined with heightened concerns about fiscal solvency now constitute a major threat to global financial stability. Recent events in Greece, Ireland, Portugal and other economies on […]
Global currencies for tomorrow: a European perspective
Angeloni, Ignazio, Bénassy-Quéré, Agnès, Carton, Benjamin, Destais, Christophe, Darvas, Zsolt, Pisani-Ferry, Jean, Sapir, André & Vallée, Shahin. This report examines how the international monetary system (IMS) might evolve and the implications of different scenarios for the euro area over the next fifteen years. After the collapse of the Bretton Woods system forty years ago, the IMS gradually developed into its […]
Happiness economics: Can we have an economy of wellbeing?
Graham, Carol. The UK government is the latest to consider incorporating measures of happiness in its policymaking. This column takes stock of what we know from investigations into people’s wellbeing. It concludes that there is still much to resolve before a measure of gross national happiness is possible – or indeed desirable. At this year’s […]
The Human Face of Economics (vid.)
Prakash Loungani profiles George Akerlof. IN 1984, economics Nobel Laureate George Stigler predicted that economics was on its way to becoming the queen of the social sciences. He called economics “an imperial science,” one that was clearing a path through the academic thickets for other social disciplines. He applauded the work of “economist-missionaries . . […]
The Future of Economic Growth
Rodrik, Dani. Perhaps for the first time in modern history, the future of the global economy lies in the hands of poor countries. The United States and Europe struggle on as wounded giants, casualties of their financial excesses and political paralysis. They seem condemned by their heavy debt burdens to years of stagnation or slow […]
Is Europe an optimal currency area?
Favero, Carlo. Is the euro doomed? This column argues that economic differences within Europe, clearly exposed by the current crisis, are reasons to doubt the sustainability of the single currency. The Eurozone debt crisis poses an unprecedented challenge to policymakers in Europe. A very peculiar situation has emerged – a common, area-wide monetary policy is […]
A Tale of Two Defaults
Gros, Daniel. Once upon a time, there was a country plagued by large deficits, high inflation, and decades of economic stagnation. When economic problems once again became particularly acute, the country’s leadership embraced a radical approach to achieving price stability. A new currency was introduced and pegged to the US dollar at a one-to-one exchange […]
Seeing Double at Central Banks
Yueh, Linda. Central banks are now targeting liquidity, not just inflation. The credit boom of the past decade highlighted the inadequacy of focusing only on prices, and underscored the need for the monetary authority of a country (or group of countries in the case of the European Central Bank and the eurozone) to monitor the […]