Federico Etro, 30 January 2011
The dominant firm in online advertising is under investigation by many antitrust authorities. The EU Competition Commission is the latest to breathe heavily down its neck. Analysing Google’s market behaviour, particularly its search and display advertising model, this column argues that such investigations are welcome; the world needs to know if Google is abusing its market power.
Maurizio Michael Habib, Livio Stracca, 30 January 2011
What makes a safe haven currency? This column analyses a panel of 52 currencies in advanced and emerging countries over the past 25 years. It finds that save haven status is not determined by the interest rate spread, as emphasised in the carry trade literature, but by the net foreign asset position, which is an indicator of country risk and external vulnerability.
Markus Poschke, 29 January 2011
Despite recent progress, the cost of complying with entry regulation is still higher in continental Europe compared to Anglo-Saxon or Northern European countries. This column illustrates this point using data from the World Bank and presents some recent research on the negative effect of these entry costs on output and productivity.
Marco Del Negro, 28 January 2011
Marco Del Negro of the Federal Reserve Bank of New York talks to Romesh Vaitilingam about his research with Gauti Eggertsson, Andrea Ferrero and Nobuhiro Kiyotaki on the macroeconomic impact of the Fed’s non-standard monetary policies. Their simulations suggest that these policy interventions were effective in stabilising the economy, to the point that they might have prevented a repeat of the Great Depression in 2008-09. The interview, which was recorded at the annual congress of the European Economic Association in Glasgow in August 2010, represents Marco Del Negro’s personal views.
Richard Baldwin, 28 January 2011
The Doha Round is likely to conclude this year, as a burst of political leadership by G20 and APEC nations and deft diplomacy by the WTO have spurred talks that are rapidly narrowing the remaining gaps. This column reviews the progress and highlights what more is needed based on a newly released report written by the High Level Trade Experts Group.
Olivier Coibion, Yuriy Gorodnichenko, 28 January 2011
As the US economy recovers in fits and starts, attention is turning to exit strategies. How will the Fed unwind its quantitative easing? This column presents evidence of substantial levels of policy inertia in monetary policy. It says that we should not expect rapid policy changes in the near future – barring clear signs of economic distress.
Luis AV Catão, Roberto Chang, 27 January 2011
Rising food prices once again pose central banks a tricky question. How far should they ignore food price inflation? This column suggests that food tends to have stronger predictive power on global inflation cycles than oil. The problem is more severe in emerging markets where consumption basket weights for food are two or three times larger than in rich nations. Central banks should pay close attention.
Pasquale Della Corte, Lucio Sarno, Ilias Tsiakas, 26 January 2011
The carry trade in foreign currency has attracted considerable attention from academics and practitioners. This column presents evidence of a new carry trade strategy – this time speculating on the volatility of foreign exchange. This is done by buying or selling forward volatility agreements. It suggests that investors following the new carry trade can do extremely well – regardless of whether the value of these currencies go up or down.
Jan Luiten van Zanden, 26 January 2011
China has been one of the world’s most dynamic economies in recent decades, but how did it fall so far behind? This column argues that the industrial revolution occurred in Europe rather than China because European entrepreneurs were eager to adopt machines to cut down on high labour costs. China didn’t “miss” the industrial revolution – it didn’t need it.
Axel Leijonhufvud, 25 January 2011
The shell game is a roadside con as old as civilisation. This column argues that the same swindle is being performed on a massive scale at the expense of the unsuspecting taxpayer. It says that, with their near zero interest rates, central banks are effectively subsidising the banking sector – with barely a pea passed on to the public.
Stefano Corradin, Reint Gropp, Harry Huizinga, Luc Laeven, 25 January 2011
For many, the US housing market was the epicentre of the global crisis. This column suggests that the US bankruptcy code, which in some cases protects a large section of the individual’s house, leads to overinvestment in housing – a bias that may have helped massage the US housing bubble in the decade preceding the global crisis.
Laurent Gobillon, Thierry Magnac, Harris Selod, 24 January 2011
The employment effects of enterprise zones are widely studied but remain uncertain. This column examines the impact of recent tax incentives designed to attract businesses to poor residential areas around Paris. It finds that while unemployment decreases, the costs of the programme leave its efficacy open to interpretation.
Giorgia Giovannetti, Marco Sanfilippo, 23 January 2011
Can developing countries afford large social-protection programmes, such as unemployment benefits or medical insurance? Summarising studies from across Africa, this column finds that such programmes are politically, fiscally, and administratively feasible – even for low-income Sub-Saharan African countries – and on a scale and scope previously thought out of reach.
Martin Ravallion, 23 January 2011
Measuring and comparing the level of human development across the world continues to be a highly contentious issue. This column argues that the new Human Development Index has – perhaps inadvertently – sharply reduced its valuation of longevity, raising doubts about whether it is sending the right signals to the governments of poor countries aiming to promote human development.
Samuel Bentolila, Pierre Cahuc, Juan Dolado, Thomas Le Barbanchon, 22 January 2011
Since the global crisis, unemployment in Spain has soared to 20%, double the EU average. This column compares Spanish unemployment with that of France and argues that differences in employment protection legislation account for nearly half of the dramatic rise in unemployment in Spain. Its findings add further support to calls for a single labour contract in the country.
Assaf Razin, Efraim Sadka, 21 January 2011
Does the free movement of factors of production lure tax authorities into a race to the bottom? This column argues that, when a group of host countries faces an upward supply of immigrants, tax competition does not lead to a race to the bottom; competition may actually lead to higher taxes than tax coordination.
Sanjeev Goyal, 21 January 2011
Sanjeev Goyal of the University of Cambridge talks to Romesh Vaitilingam about his research on social networks. He describes the significance and potential downside of the ‘law of the few’, whereby social groups typically rely on information from a very small number of ‘opinion leaders’ to inform their economic decision-making. The interview was recorded at the annual congress of the European Economic Association in Glasgow in August 2010.
Anna Iara, Guntram Wolff, 20 January 2011
The Eurozone crisis has whetted the appetite for economic governance reform in the EU, with one high-profile proposal aiming to strengthen national fiscal frameworks. With a unique data set, this column shows that stronger fiscal rules in Eurozone member states reduce sovereign risk, especially in times of high uncertainty. If followed, these rules could reduce sovereign yield spreads by up to 100 basis points.
Eduardo Levy-Yeyati, 20 January 2011
The global crisis has reignited debate on the desirability of capital controls. This column examines evidence from Argentina and Chile and argues that capital controls can be effective, but that their effectiveness and efficiency varies. It adds that controls need to be considered as part of a macro-prudential toolkit to prevent asset inflation and overvaluation that is costly to revert in the down cycle.
Nicolas Véron, 19 January 2011
With emerging and oil-rich economies increasingly investing in European companies, some have proposed modifying the EU’s stance on foreign investment for reasons of geopolitical security. But this often is a guise for protecting narrow political interests, particularly as unemployment rises. This column calls for a clear and consistent legal framework to avoid the dangerous extremes of complete closure and complete, unchecked openness.
Barry Eichengreen, Kevin H. O’Rourke, 8 March 2010
This column updates the original Vox columns by Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression. The three previous columns have shattered all Vox readership records with over 450,000 views. This latest edition covers up to February 2010 showing that, while there is cause for optimism, there is no room for complacency.
Views 608850
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 142332
Barry Eichengreen, 4 May 2010
Originally posted 17 November 2007, this Vox column is more relevant than ever arguing that adopting the euro is effectively irreversible. Leaving would require lengthy preparations, which, given the anticipated devaluation, would trigger the mother of all financial crises. National households and firms would shift deposits to other Eurozone banks producing a system-wide bank run. Investors, trying to escape, would create a bond-market crisis. Here is what the train wreck would look like.
Views 97360
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 80154
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 75276
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 72512
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 71870
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 69093
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 68131
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 64968
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 63088
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 61669
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 61303
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 60946
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 59200
Willem Buiter, Anne Sibert, 30 October 2008
In the first half of 2008, Buiter and Sibert were invited to study Iceland’s financial problems. They identified the “vulnerable quartet” of (1) a small country with (2) a large banking sector, (3) its own currency and (4) limited fiscal capacity – a quartet that meant Iceland’s banking model was not viable. How right they were. This column summarises the report, which is now available as CEPR Policy Insight No. 26 with an October 2008 update.
Views 58674
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 57782
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 56344
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 55995
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 54676
Richard Baldwin, 28 January 2011
The Doha Round is likely to conclude this year, as a burst of political leadership by G20 and APEC nations and deft diplomacy by the WTO have spurred talks that are rapidly narrowing the remaining gaps. This column reviews the progress and highlights what more is needed based on a newly released report written by the High Level Trade Experts Group.
Axel Leijonhufvud, 25 January 2011
The shell game is a roadside con as old as civilisation. This column argues that the same swindle is being performed on a massive scale at the expense of the unsuspecting taxpayer. It says that, with their near zero interest rates, central banks are effectively subsidising the banking sector – with barely a pea passed on to the public.
Open letter, 16 January 2011
In October 2010, a group of leading thinkers on environmental policy met at the Sustainable Consumption Institute at the University of Manchester for a conference in honour of Nobel Laureate Tom Schelling. This column presents a 10-point guideline for climate change policy co-authored by 26 attendees that focuses on designing policies that are credible, easily monitored, and easily enforced.
Barry Eichengreen, 10 January 2011
The dollar’s key role in international markets is once again in the spotlight. This column introduces a new book by Barry Eichengreen: Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System. As the author puts it, “If you were worried by talk of currency war late last year, you ain’t seen nothin’ yet.”
Daniel Gros, 21 December 2010
Last week's meeting of the European Council were ushered in with optimism and the hope that Europe's leaders would take steps towards greater stability. This column argues that no such steps were taken, that there is really no change to the status quo, and that – under these conditions – the crisis is likely to fester indefinitely
Paolo Manasse, 16 December 2010
The recent proposal by Luxembourg’s prime minister Jean-Claude Juncker and the Italian finance minister, Giulio Tremonti to provide European governments with Eurobonds has sparked debate. According to this column, it will help through financing infrastructure and increasing market liquidity. But because it requires highly-indebted countries to surrender a large chunk of fiscal sovereignty, it is a good idea whose time has not yet come.
John H Cochrane, 7 December 2010
Last month, the US Federal Reserve announced a new quantitative easing programme, in which it will inject money into the economy by buying up to $600 billion in long-term government bonds. This column argues that now is not the time to be buying back long-term debt. Given exceptionally low long-term rates, the US government should be issuing it instead.
Charles Wyplosz, 3 December 2010
The Eurozone crisis is not over. This column argues that the bailout of Greece and the €750 billion Special Purpose Vehicle set up in May 2010 was the first step down the slippery slope. The first and only possible remedy is to reconstruct the no-bailout clause and let markets discipline governments; the EU has proven that it cannot.
Barry Eichengreen, 3 December 2010
Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German leadership designed a package that is not economically feasible in the long run (it would trigger a vicious debt deflation spiral) and it is not politically sustainable in the short run. The Eurozone had better have a Plan B for when the new Irish government rejects the package next year and imposes a haircut on Irish bank bondholders.
Ernesto Zedillo, 18 November 2010
How should we judge the 2010 Seoul G20 meeting? A failure, according to this column. It argues that the G20’s failure to coordinate economic policies puts the global economy at risk and that there is little in the G20 Seoul Action Plan addressing the tensions that preceded the summit.
Paul Krugman, 18 November 2010
Debt is the crux of advanced economies’ current policy debates. Some argue for fiscal expansion to avoid recession and deflation. Others claim that you can’t solve a debt-created problem with more debt. This column explains the core logic of a new model by Eggertsson and Krugman in which debt shocks and policy reactions can be examined. Relying on heterogeneous agents, the model naturally produces the paradox of thrift but also finds new supply-side paradoxes, those of toil and flexibility. The model suggests that most economists have been misthinking the issues and that actual policy in the US and EU is misguided.
Graziella Bertocchi, Arcangelo Dimico, 14 November 2010
US commentators regularly lament the country’s racial and ethnic inequality. This column presents data from 1870 and 1940-2000 to argue that the divide has its roots in the slave trade and that its legacy persists today through the racial inequality in education.
Andreas Fuchs, Nils-Hendrik Klann, 10 November 2010
This year’s Nobel Peace Prize was awarded to Liu Xiaobo, the human rights activist who is currently a prisoner in China. Beijing has condemned the decision, saying it will harm relations with Norway. This column argues this threat should be taken seriously. It shows that receiving the Dalai Lama, who is perceived as a threat by the Chinese, can decrease exports to China by as much as 8.1%.
Philippe Legrain, 2 November 2010
While the debate over global imbalances often focuses on China, this column argues that the biggest threat to the world economy comes from the other side of the seesaw – the US.
Fred Bergsten, 1 November 2010
Yiping Huang recently argued that the US would not win a currency war over global imbalances. This column agrees that a currency or trade war would be lose-lose. But it says that such a conflict is inevitable unless the root causes of the growing imbalances are addressed
Yiping Huang, 20 October 2010
On 19 October, the Chinese central bank announced a series of rate hikes. This column argues that the moves were aimed at combating domestic inflation and addressing the risks of an asset bubble.
Ricardo Caballero, 19 October 2010
Emerging markets with large trade surpluses are reluctant to heed calls for them to help with global aggregate-demand rebalancing by appreciating their currencies. They fear harm to their export-led development and sudden reversals of capital inflows in the future. Here one of the world’s most innovative macroeconomists suggests a way to square the circle: A dual exchange-rate system that would shield their exporters while fostering imports.
Francesco Giavazzi, Luigi Spaventa, 14 October 2010
The European Commission now recognises that fiscal discipline alone is not enough to ensure the stability of the euro. Yet this column argues that the new proposals to combat the Eurozone’s fragility are an empty and useless exercise – Europe’s policymakers should instead be worried about unchecked credit expansion.
Olivier Blanchard, 12 October 2010
A “strong, balanced, and sustained world recovery” as demanded by the G20 is a daunting challenge for policymakers. This column argues that two rebalancing acts are required: internal rebalancing – replacing government spending with private-sector demand, and external rebalancing – addressing the global imbalances between exporting and importing countries. These two rebalancing acts, it adds, are taking too long.
The Editors, 12 October 2010
The saga of Greece’s public finances continues, and it is not the only country whose fiscal sustainability is in doubt. This column introduces a new Policy Insight by Willem Buiter and Ebrahim Rahbari that analyses the sovereign debt crisis in the Eurozone and the response of the national authorities, EU institutions, and IMF.
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Moderator: Richard Baldwin
The European Commission has just launched a public consultation on the future direction of EU trade policy.
This VoxEU debate launches an online discussion of the Commission's proposals.
The first column, by Lucian Cernat, DG Trade's Chief Economist, presents the key elements of the new policy.
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Policy Insights and Reports
Bob Denham
An executive summary and video from the recent CEPR conference on regulatory reform which brought together leading academics, regulators and practitioners from Europe and around the world to take stock of reforms to date and to consider the challenges and difficulties that remain.
Simon J Evenett
Although the dispute over China's exchange rate regime intensified in the run up to the Seoul G20 Summit, pressures for across-the-board protectionist measures have been contained, for now. The 8th Global Trade Report shows that the countries with large current account surpluses have not been targeted unduly in recent months.
Enrico Perotti
CEPR Policy Insight No.52 highlights how the 2005 bankruptcy changes created a negative externality for all intermediaries in liquidity runs, the leading cause of shock propagation in the credit crisis
Willem Buiter, Ebrahim Rahbari
CEPR Policy Insight No.51 explains how and why the fiscal crisis in the Eurozone came about and how it is likely to evolve during the rest of this decade.
M. Ataman Aksoy, Bernard Hoekman
The contributions in this latest book from CEPR and the World Bank review trends in international prices and trade patterns of key food commodities, and assess the incidence of food price changes in a number of developing countries using household level data on sources of incomes and consumption patterns.
Simon J Evenett
The Seventh Report of Global Trade Alert, drawing upon over 1200 investigations of state measures, reveals that while 2010 has seen a substantial recovery in world trade, governments have continued to discriminate against foreign commercial interests.
Xavier Vives
CEPR Policy Insight 50 models the trade-off between competition and stability in the banking sector. Competition might increase instability through two channels: by exacerbating the coordination problem of depositors/investors on the liability side and fostering panics; and by increasing incentives to take risk, and thus the raising probability of failure. Regulation can alleviate this competition-stability trade-off, but the design of optimal regulation has to take into account the intensity of competition.
Stijn Claessens, Richard J. Herring, Dirk Schoenmaker
Financial reform is finally emerging in the major economies but these reforms come up short on one crucial aspect – the resolution of systematically important, i.e., ‘too complex to fail’, cross-border financial institutions. The latest Geneva Report on the World Economy advocates a two-tier solution to this problem – a universal approach for closely integrated countries such as EU members, and a modified universal approach for other countries.
Stijn Claessens, Simon J Evenett, Bernard Hoekman
This new eBook aims to provide policymakers and their advisers with up-to-date, comprehensive analyses of the central facets of global economic imbalances and to identify and evaluate potential national and systemic responses to this challenge.
Simon J Evenett
This Report of the Global Trade Alert, published to coincide with the Toronto G-20 Leaders' Summit in June 2010, presents a comprehensive global overview of protectionist trends since the last G-20 summit in September 2009.
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Discussion Papers
Pierre Cahuc, Stéphane Carcillo
In many OECD countries, the Great Recession has spawned new social programmes allowing employers to temporarily reduce hours works while reimbursing employees for lost income. The authors of CEPR DP8214 investigate how effectively these programmes prevent a surge in unemployment. They find, with a few caveats, significant benefits.
Luigi Guiso, Aldo Rustichini
Why are women so under-represented among entrepreneurs? Are women intrinsically ill-suited to the risk-taking and competition of entrepreneurship? Or is it social norms that impede them? The authors of CEPR DP8204 test these theories and argue that sexist culture keeps even high-ability women from becoming entrepreneurs.
Pieter Bevelander, Ravi Pendakur
The Great Recession worsened the already-intractable unemployment problem of many immigrant communities in western countries. Can acquiring citizenship improve employment prospects for immigrants? CEPR Discussion Paper 8182 argues that recent liberalization of citizenship regulations in Sweden and Canada has increased employment probabilities for immigrant groups in both countries.
Fernando A Broner, Jaume Ventura
This paper challenges the Washington Consensus truism that financial liberalization increases economic growth and financial stability in emerging markets. The authors of DP8171 find no evidence that financial liberalization increases growth and blame it for ramping up volatility in output and consumption levels.
Samuel Bentolila, Pierre Cahuc, Juan Dolado, Thomas Le Barbanchon
Why has Spain suffered so many more job losses than other EU states in the Great Recession? In CEPR DP8152 the authors argue that Spain's two-tiered labour markets and weak employment protection legislation allowed unemployment to surge to 19%.
Camille Landais, Pascal Michaillat, Emmanuel Saez
Much controversy surrounds the generosity of unemployment insurance in modern economies. Do generous benefits discourage workers from looking for jobs and increase unemployment? Or does unemployment in recessions simply stem from a lack of jobs? CEPR DP8132 explores the optimal level of unemployment benefits during the booms and busts of the business cycle.
Domenico Giannone, Michele Lenza, Huw Pill, Lucrezia Reichlin
Did monetary policy errors cause the economic collapse of the early 1930s? What lessons have monetary policymakers and central banks taken from this episode? Discussion Paper 8125 sets out to address these questions, in the context of the financial crisis of 2008-09 and with application to the euro area.
Yves Zenou
Can transportation policies impact employment levels in cities? Discussion Paper 8110 models the linkages between poverty, unemployment, rural migrantion, and transport infrastructure. The author concludes that improving urban transport can positively affect employment levels.
Roger E. A. Farmer
CEPR Discussion Paper 8100 re-examines the ability of old-Keynesian and new-Keynesian models to cope with persistence of unemployment. The author argues the an import input of persistent unemployment is the "animal spirits" of the unemployed. He tests an old-Keynesian model in which the Phillips curve is replaced by a belief function and finds it a better fit for the data than new-Keynesian variants.
Rick van der Ploeg, Anthony Venables
Dutch disease symptoms often plague economies that experience surges in foreign exchange due to natural resource or aid income. Discussion Paper 8086 analyses how an economy's capacity for absorbing capital determines the incidence and extent of Dutch disease.
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