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What’s at stake: The members of the American Economic Association received on Wednesday an email signaling that – beginning July 1, 2012 – all submissions to AEA must be accompanied by a Disclosure Statement summarizing potential conflicts of interest. The AEA's move was partly motivated by the public attention the documentary "Inside Job", which outlined ethical lapses within the profession. Although the AEA has no authority to police economists, other journals will probably use the AEA's disclosure guidelines to formulate their own. And many economics departments and think tanks will likely establish rules that adhere to these guidelines.
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What’s at stake: The last ECOFIN has been the occasion of a fierce negotiation over the adaptation into EU legislation of the Basel Committee rules known as Basel III. The Capital Requirements Directive proposal (CRD4) was proposed in July 2011 by the European Commission and is expected to enter into force in January 2013, with gradual implementation until completion in 2019. Yet no agreement was reached at the last ECOFIN where important divisions inside Europe have been exposed, and more work is still expected from the Basel Committee on a number of elements of the final proposal. This is at the heart of fundamental shifts within Europe’s banking sector and potential political conflicts primarily between the UK and continental Europe.
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What’s at stake: Decisions with respect to climate change action depend on various parameters, but a particularly important one is the choice of the social discount rate (SDR), which captures – among other things – the weight at which we discount the welfare of future generations. This discounting decision has direct implications as to whether it is necessary to delay or accelerate climate change mitigation policies. In discussions about the choice of the appropriate SDR, two main approaches have emerged: an a priori approach (as proposed by Stern) and a market based approach (as proposed by Nordhaus and Weitzman).
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Dave Altig from the Atlanta Fed recently compared sectoral employment growth in the US during two recoveries: the 2001 dot-com recession and the 2007 financial crisis. The 45 degree line in the figure helps us understand the relationship between the two recoveries. If industries are aligned along the line, this means that the pace of […]
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On April 2, the European Systemic Risk Board (ESRB) published a letter by Mario Draghi, as Chair of the ESRB, to EU legislators. The letter focused on developing further the legal basis of the current proposals for the Capital Requirements Directive and Regulation. Martin Wolff takes up the topic of capital requirements in a recent post on England’s Financial […]
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Fiscal devaluations are at the heart of current debates about improving trade competitiveness in the eurozone. Gita Gopinath, Emmanuel Farhi and Oleg Itskhoki provided a strong model to assess the effects of such an enterprise. The idea of simulating a devaluation by means of taxation goes back to Keynes, who suggested using an import tariff […]
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The leaked Debt Sustainability Analysis (DSA) produced by the IMF in February 2012 looked into the economic developments that would arise in Greece following two different scenarios, a baseline and an alternative scenario. A revised version of the DSA was leaked on March 11th, incorporating the recent agreement reached on Private Sector Involvement (PSI) and Official Sector Involvement (OSI).
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Euro area inflation was lower than estimated in January, according to data released on Wednesday, February 29, by Eurostat. The statistical office reported a fall of 0.8 percent in consumer prices against December figures. The numbers reflect expectations about a slowdown in price growth. In a BIS working paper, Galati, Heemeijer and Moessner present new […]
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The Greek austerity package was approved on Sunday February 13th, making it possible for Greece to receive the second EU-IMF bailout worth €130bn. The vote in favour of the package took place in the background of violent protests in central Athens. As the €14.5bn Greek bond payment on March 20th draws closer, the issue of […]
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In the late 1980s, Japan’s credit-fuelled asset bubble burst, leading to a long stagnation. The growth problem experienced by many developed economies at the moment is reminiscent of the Japenese episode. If one compares current GDP, inflation, property prices and interest rates to the ones recorded in Japan, strikingly similar patterns emerge. Some refer to […]
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‘The empirics of firm heterogeneity and international trade’, co-authored by Bernard, Jensen, Redding and Schott, provides a detailed analysis of new developments in trade theory. The paper is featured on the reading list of the Economist Free Exchange. New trade theories shifted away from the traditional focus on comparative advantage and emphasized the role of […]
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The Economist looks into the effect of austerity measures on market expectations and short-run growth. The publication cites research done by Carlo Cottarelli and Laura Jaramillo of the IMF. The authors analyzed the determinants of 5-year CDS spreads for 31 advanced economies and found that markets were especially concerned about short-term variables, such as the […]
