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Research-based policy analysis and commentary from leading economists
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23 января, 00:00

The macroeconomic performance paradox: A new model

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Following the post-financial crisis recession, the UK and other high-income countries have experienced slow growth and stagnant productivity, along with both low inflation and, more recently, low unemployment. This column introduces an intuitive macroeconomic model that helps explain this puzzling combination.

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23 января, 00:00

Productivity and secular stagnation in the intangible economy

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Many economists have suggested that slowing technical innovation is behind the secular stagnation and slowdown in total factor productivity growth that have plagued many advanced economies since the Global Crisis. This column argues that the recent rise of the intangible economy could play an important role. An assessment of measurement trends and the properties of intangible investment across the globe suggests that total factor productivity growth will continue to be low until governments design the institutions an intangible economy needs, and until its commercial, legal, and ethical norms are worked out.

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23 января, 00:00

Global value chains and firm heterogeneity

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The study of global value chains has become increasingly relevant as production becomes more and more fragmented across countries. This column uses evidence from Japan to evaluate recent theories that such chains have caused some of the country’s industries to become less competitive. The findings suggest that considering production for exports and domestic sales separately may provide a more complete picture of firm heterogeneity within industries, and a more complete picture of interconnected countries at the industry level.

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22 января, 00:00

A new year, a new you?

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The impact of variation in diet quality across individuals on obesity and diet-related disease has received much attention, but variation in individuals’ diet quality over time less so. This column combines British data on food purchases with a model in which individual choice is driven by the influence of a healthy self and an unhealthy self to examine self-control problems in food choice. The results indicate that self-control problems in food purchases are important, and that the interaction of the mechanisms at play merits investigation.

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22 января, 00:00

Shared power as a way to reduce violence

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Power sharing has been proposed as a potential solution to political violence in ethnically or religiously diverse countries. Using data from the Troubles in Northern Ireland, this column shows that power sharing has significant and substantial effects in terms of curbing violence. These positive effects disappear when power sharing ends, however, implying that that political cooperation and inclusion need to be maintained in the long run if the benefits of lower violence are to continue.

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21 января, 00:00

The effect of age on willingness to take risks

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Many developed countries have ageing populations, with potentially major economic, political, and social consequences in the near future. Using Dutch and German panel data to control for cohort and period effects, this column investigates the relationship between age and risk attitudes. The results suggest that willingness to take risks declines with age, implying that societies may become more risk-averse as their population ages.

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20 января, 00:00

Supermarket transparency lowers prices

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The ability to compare prices openly and easily is widely thought to foster competitiveness, but mandatory disclosure of pricing information can also facilitate collusion between sellers. This column uses evidence from before and after the introduction of price disclosure regulation in the Israeli supermarket industry to evaluate how price transparency affected food prices. Mandatory disclosure decreased the dispersion and, to a lesser extent, the levels of prices. On average, Israeli consumers saved about $27 per month thanks to the regulation.

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19 января, 00:00

Why societies cooperate

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Three attributes are often suggested to generate cooperative behaviour – a good heart, good norms, and intelligence. This column reports the results of a laboratory experiment in which groups of players benefited from learning to cooperate. It finds overwhelming support for the idea that intelligence is the primary condition for a socially cohesive, cooperative society. Warm feelings towards others and good norms have only a small and transitory effect.

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19 января, 00:00

Microeconomic shocks drive aggregate fluctuations in Europe

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The economics profession has generally explained large movements in macroeconomic aggregates such as GDP or employment by shocks to other aggregates. This is in part due to the difficulty of translating micro or localised shocks into macro-relevant ‘news’. This column argues that idiosyncratic shocks at the biggest European firms are behind 40% percent of aggregate GDP fluctuations in Europe. These results have implications for the effectiveness of traditional demand-side policies in the fine-tuning of granular economies.

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18 января, 00:00

How the barcode changed retailing

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ICT fuelled rapid growth in US retail during the 1990s and 2000s. This column maps the adoption of universal product codes and scanners to show that the barcode was one of the main drivers of this growth. Companies adopting barcodes employed 10% more employees, delivered a wider range of products, and were more likely to procure from abroad.

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18 января, 00:00

Reconsidering the ‘China shock’ in trade

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International trade has become a focus of political debates in the US and around the world, but while previous studies focus on the job-reducing effect of the surging imports from China or other low-wage countries on the US employment, the job-creating effect of exports has receive much less attention. This column employs two approaches – an instrumental variable regression analysis and a global input-output approach – to argue that the negative effects of import competition on US employment are largely balanced out once the country’s job-creating export expansion is taken into account.  

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18 января, 00:00

Finance and investment: Europe’s lost decade

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This column draws on a new book presenting the results of a two-year research programme that brought together leading economists from around the world to examine whether finance and public policy contributed to the deep and prolonged decline in European investment after the financial crisis. The findings point consistently to the importance of debt overhang as a contributory factor and the role of both tax and regulatory policy in exacerbating the problems.