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Research-based policy analysis and commentary from leading economists
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22 ноября, 00:00

Populism and time inconsistency

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Global politics of late has been marked by the rise of anti-elite political movements and anti-establishment leaders. This column analyses the tactics of such populists through the lens of the ‘time inconsistency’ problem – that what is considered a long-term optimal policy today may not be optimal when that future arrives. Populist leaders seek to gain and increase their power by undermining democratic institutions and conventional commitment devices. Several ‘second generation’ institutional commitment devices to counter this are proposed.

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22 ноября, 00:00

Economic implications of a protectionist US trade policy

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The Trump administration intends to restructure US international trade relations with its major trade partners to correct what it perceives to be unfair trade and establish a ‘level playing field’. This column uses a structurally estimated and simulated trade model to analyse three potential protectionist policies that have been discussed by the administration. The results suggest that the promise to create more jobs and investment in the US through such policies is a fallacy.

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22 ноября, 00:00

The effects of employer payroll tax cuts

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Cuts to the employer portion of payroll taxes are often discussed as a policy lever to reduce labour costs for firms. This column examines the effects of a Swedish experiment which dramatically cut employer payroll taxes for young workers between 2007 and 2015. The tax cut reduced youth unemployment by 2-3 percentage points, without any differential increase in wages of young workers. Firms used the tax windfall to expand employment and business activity, and firms with larger tax windfalls raised wages for workers – both young and old – collectively.

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21 ноября, 00:00

Economic effects of natural disasters: New evidence from Japan

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Economists have studied extensively the direct impacts of natural disasters on local labour markets, but less is known about the knock-on consequences for wider markets. This column argues that although supply chain disruptions caused by the Great East Japan Earthquake increased job separation and geographical shifts, the effects on employment status were weak. The long-run impact of the earthquake on the labour markets outside of the directly affected areas appears to be limited, despite public concerns at the time.

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21 ноября, 00:00

Leverage and limited liability: A toxic cocktail

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There is little doubt that one of the main causes of the Global Crisis was excessive risk-taking by large international financial institutions. This column argues that the combination of very high leverage and limited liability continues to incentivise risky behaviour by bankers. Dealing with this problem requires the alignment of bankers’ incentives with those of society, rather than of shareholders. Deferred compensation in the form of contingent convertibles presents one promising strategy.

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20 ноября, 00:00

The rise and future of progressive redistribution

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There has been a blossoming of research into fiscal incidence by income class. This column combines century-long histories for Britain and South American countries with previous research to offer a global history of government income redistribution. Contrary to some allegations, the shift towards progressivity in government budgets over the last 100 years has not been reversed since the 1970s. The rise in inequality since the 1970s therefore appears to owe nothing to a net shift government redistribution toward the rich.

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20 ноября, 00:00

Consequences of Brexit for UK inflation and living standards: First evidence

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On 23 June 2016, the UK voted to leave the EU. As soon as the result became clear, sterling depreciated sharply and, since the vote, UK inflation has dramatically increased. This column asks how much of the rise in inflation is due to the referendum. It finds that the referendum result pushed up UK inflation by 1.7 percentage points, which amounts to an annual (and potentially permanent) cost of £404 for the average British household.

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19 ноября, 00:00

Silver mining's deadly dividend

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Studies have found that the occurrence of natural resources can increase the risk of civil war and interstate conflict. This column uses data from 50 countries beginning in 1890 to show that silver mining can also have substantial effects on interpersonal violence during peacetime. Across many different countries and periods, an economy's increasing dependence on silver has increased the homicide rate.

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18 ноября, 00:00

Corporate governance and strategic shareholders

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Strategic shareholding – companies holding minority shares in other companies for the sake of business relations – can be used for anticompetition purposes or to reduce pressure from shareholders. This column explores strategic shareholding in Japan. Roughly one third of shareholders are found to be strategic, with three quarters of these being business corporations. However, in Japanese corporate culture it is not uncommon for such shareholding to occur as part of technical or business partnerships without affecting managerial independence.

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18 ноября, 00:00

The origins of the Industrial Revolution

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The Industrial Revolution is arguably the most important economic event in world history, and successful industrialisation continues to elude many developing countries today. This column argues that an important driver of industrialisation in England was the development of markets that allowed division of labour, innovation and, ultimately, social change. Institutional change, rather than advantageous geography, is the main driver of successful industrialisation in England.

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17 ноября, 00:00

Economics gets out more often

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Economics, and economists, are often accused of insularity and hubris, and of talking primarily to themselves in their research. This column uses a recent analysis of citations to and from other disciplines to show that this is no longer the case. Economics papers increasingly cite non-economic research, and other disciplines cite economists more often too. The data suggest that the rising quantity and quality of empirical research in economics has increased the relevance of the field to non-economists.

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17 ноября, 00:00

How European integration builds up state capacity

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The many benefits and costs of economic integration are notoriously difficult to pinpoint. This column introduces new institutional measures for 17 EU candidate countries since 1997 to explore whether deep integration helps the build-up of state capacity. Estimates highlight the relationship between judiciary capacity and bureaucratic independence as the key engine behind state capacity-building engendered by the prospect of EU membership.