Economics

Is the IMF rethinking austerity?

In an apparent break with its past practices, the IMF’s policy advice shifted towards being more open to fiscal stimulus packages during the global financial crisis in 2008-2009, especially for large economies that are systemically important as growth engines for the world economy. There was evidence of an incremental change underway in the IMF’s policy paradigm and how staff […]

What are economists for?

When you meet someone at a cocktail party who learns you are an economist, the inevitable question follows, “What’s the stock market going to do?” That’s an excellent question. If, on the day I was born, my parents had invested $100 for me in Altria, the top-performing stock since then, I would be a millionaire.

Of course, most of us […]

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    In the absence of domestic resources, foreign cash is feeding UK startups

In the absence of domestic resources, foreign cash is feeding UK startups

For over two years we’ve been concerned about the fall in investment rounds to UK businesses. So we are pleased to see this decline abating in our analysis of equity investment activity in the first half of this year, as well as a record level of cash invested.

But, as usual, beneath the surface there are some interesting undercurrents. The fact that later-stage […]

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    The insurance market and the failure to tell high from low risk

The insurance market and the failure to tell high from low risk

Is it really possible to tell if insurance markets are functioning effectively without too many high- or low-risk buyers of policies?

That is the challenge we address in our new research paper. The study suggests that standard tests for the twin phenomena of adverse and advantageous selection – too many or too few buyers who are likely to make a claim […]

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    How to upgrade the UK economy to higher investment, productivity and pay

How to upgrade the UK economy to higher investment, productivity and pay

At a recent event marking the 10-year anniversary of the financial crisis, the Governor of the Bank of England Mark Carney said the UK’s banking sector could be “15 to 20 times GDP” in just a “quarter of a century”. But such proclamations beg a big question: what is the value of all this activity and wealth to the rest of […]

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    Inequality, technological change and the skill premium throughout the ages

Inequality, technological change and the skill premium throughout the ages

How do economic growth and technological change affect inequality? The skill premium (the wage of skilled labour relative to that of unskilled labour) is one good reflection of the interrelation between growth, technological change and inequality. Existing studies show that skill-biased technological change (SBTC) contributes to the rising skill premium in modern days. But few studies have been made […]

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    Beyond GDP: How social progress and competitiveness are closely related

Beyond GDP: How social progress and competitiveness are closely related

Kuwait, a small country in the Persian Gulf, holds the sixth spot on the global GDP per capita ranking, with an average per capita income of over US$ 69,000 in 2015, adjusted at the purchasing power parity. At the same time, it ranked only 34th in the World Economic Forum’s 2015-2016 Global Competitiveness Index (GCI).

New Zealand, another relatively small […]

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    Sluggish recovery by low-income countries could be Africa’s next big challenge

Sluggish recovery by low-income countries could be Africa’s next big challenge

In April 2017, the World Bank tabled a fairly optimistic forecast for commodity prices for 2017 and 2018 anticipating: crude oil to average $55 per barrel in 2017 before nudging further north to $60 in 2018; a 26 per cent rise in the price of energy commodities (including natural gas and coal) in 2017 and a more moderate 8 […]

Are the British economy’s prospects faltering?

Until well after the turn of the year, the UK economy seemed to have shrugged off any immediate economic effects of the EU referendum. GDP growth had remained steady at an annual rate of around 2%, enabling ministers to claim the UK was the fastest growing of the major western economies; the total number of people in employment continued […]

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    Expert panel: Unemployment hurts the wellbeing of men more than that of women

Expert panel: Unemployment hurts the wellbeing of men more than that of women

Given a generally stronger social norm for men to be working in paid employment than for women, unemployment is typically worse for the wellbeing of men than women. That is the consensus finding of a survey of leading researchers on wellbeing from around the world.

But the experts are divided on whether unemployment is better for an individual’s happiness than […]

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    Welfare gains from trade: Measuring the “average consumer” isn’t good enough

Welfare gains from trade: Measuring the “average consumer” isn’t good enough

No matter which statistics we look at, real growth in trade or trade to GDP ratios, there is little doubt that over the last 20-25 years we’ve seen unprecedented growth in global trade flows. The only exception was the period of the global financial crisis when global trade plummeted but even then recovery was very swift and global trade […]

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    How the rise of the service sector boosted the demand for women workers

How the rise of the service sector boosted the demand for women workers

The rise in female participation in the workforce has been one of the most remarkable changes in the labour markets of high-income countries since World War 2. In the U.S, for example, the employment rate of women has more than doubled from about 35 per cent in 1945 to 77 per cent at the end of the 20th century, […]

Measuring happiness across the ages

The ESRC-funded CAGE centre has a broad remit that includes the study of national subjective wellbeing, commonly called ‘happiness economics’, as one of its key themes. A team of researchers at CAGE, including myself, Thomas Hills (a psychologist) and Eugenio Proto (an economist) have developed a measure of national happiness stretching back hundreds of years.

Measuring long-term happiness

Happiness has long […]

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    Unemployment, reliance on factory jobs and low income explain the Brexit vote

Unemployment, reliance on factory jobs and low income explain the Brexit vote

The UK referendum on EU membership in June 2016 represented a key moment for European integration, and one that academics and political observers are still seeking to understand and explain. In the days running up to the referendum, bookmakers and pollsters had predicted that the ‘remain’ side would win, and, afterwards, many observers were left puzzled about just who […]

With Brexit, inward investment will fall in the UK

Both in the run up to the referendum, and since the UK voted to leave the EU, there has been a good deal of speculation over the likely impact on inward FDI into the UK. In a timely recent piece for Columbia FDI Perspective, Laza Kekic suggested that UK inward investment will remain robust post Brexit. We beg to differ.

Japanese […]

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    When expectations of technological change in the economy are noisy signals

When expectations of technological change in the economy are noisy signals

There has recently been a renewed interest in the old idea that business cycles could be driven by changes in the expectations about future economic conditions, the so-called “animal spirits” (early references are Pigou, 1927, and Keynes, 1936). “Animal spirits” in technology are an important source of business cycles. They explain about 30 per cent of the volatility of […]

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    Why were Western retailers blamed for the building collapse in Bangladesh?

Why were Western retailers blamed for the building collapse in Bangladesh?

Rana Plaza, an eight-story building in Bangladesh that housed garment factories employing approximately 5000 workers, collapsed on April 24, 2013. The resulting fatalities (over 1100) and injuries (over 2400) made it one of the worst industrial accidents in history. The scale of this tragedy and subsequent widespread press coverage put a spotlight on the risks and costs of sourcing […]

When companies stop offshoring, they may end up dying

“In the long run we are all dead,” and firms and industries are no exception. America, Europe, and Japan once dominated the manufacturing of computers and electronics, but these activities had all gone to low-cost countries by the end of the 20th century. Should we ban offshoring and stop “shipping jobs overseas”? Many voters and politicians seem to think […]

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    The European Commission’s Google decision will affect competition law

The European Commission’s Google decision will affect competition law

After years of investigation, the first of the European Commission’s decisions against Google is here. Obviously, most of the coverage in the mass media and online will focus on the high sum of the fine (a staggering 2.42 billion euros). However, the wider implications of the case reach well beyond the monetary fine. It affects what technology giants are allowed to do and what EU […]

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    Strong patent rights accelerate the diffusion of new medicines across countries

Strong patent rights accelerate the diffusion of new medicines across countries

In 1999 lovastatin, a blockbuster cholesterol drug with annual peak sales of more than $1 billion in the U.S., became commercially available in Egypt — twelve years after it was first approved for sale by the U.S. Food and Drug Administration. Our research shows that this is not exceptional — long launch lags are common and 45 per cent […]