Political Economy

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    Resource curses are more likely in fragmented authoritarian regimes

Resource curses are more likely in fragmented authoritarian regimes

Abundant natural resources like oil and gas rarely turn out to be a real blessing for a country. More frequently they distort economic policies, discourage entrepreneurial activity and ultimately suppress economic growth. Yet not all countries suffer from this resource curse to the same extent: some manage to escape it or even turn natural resources into a blessing. An […]

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    How mortgage market credit conditions affect US presidential election results

How mortgage market credit conditions affect US presidential election results

America is in the middle of an election year. Analysts regularly speculate on how the state of the economy will affect voters. When they do so, they usually refer to unemployment or changes in income (see Fair 1978, 1996, 1998, 2002; Lewis-Beck and Stegmaier 2000). But there is evidence that, under some circumstances, changes in the supply of credit […]

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    Deglobalisation post COVID-19 could spell trouble for the European Monetary Union

Deglobalisation post COVID-19 could spell trouble for the European Monetary Union

The COVID-19 crisis led to severe restrictions in mobility across borders, concerning both individuals and goods. Borders were closed, international travel made almost impossible, and final and intermediate goods were unable to get from one country to another. Massive disruptions of global value chains were caused by inputs not being manufactured due to lockdowns or not being delivered.

While the […]

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    Young people exposed to an epidemic have less trust in political institutions for the rest of their lives

Young people exposed to an epidemic have less trust in political institutions for the rest of their lives

It is widely argued (by, inter alia, Fukyuama 2020) that the keys to success in dealing with COVID-19 are “whether citizens trust their leaders, and whether those leaders preside over a competent and effective state.” By way of example, Rothstein (2020) ascribes the greater success at containing the COVID-19 in the Nordic countries than in Italy in part to […]

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    Knighthoods for the rich, sanctions for the poor: time for a new settlement

Knighthoods for the rich, sanctions for the poor: time for a new settlement

When he was London’s mayor, Boris Johnson called for the nation’s super-rich to be awarded ‘automatic knighthoods’. In contrast, David Cameron’s government launched a rolling programme of benefit cuts, together with new punitive rules on benefit entitlement.

Rich and poor citizens have long been treated by different standards, but that gap has ballooned in recent times. Implicit in the social […]

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    Lars Rebien Sørensen: It makes no sense for countries to develop vaccines individually

Lars Rebien Sørensen: It makes no sense for countries to develop vaccines individually

Although it can be difficult to predict exactly how the next health crisis will impact us, there are valuable lessons to be learned from the current one. Lessons which should be brought to the table in future political discussions across the world. Because it is clear that politicians and other decision-makers now look at our preparedness and response systems […]

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    Coronavirus has made extending the Brexit deadline a necessity

Coronavirus has made extending the Brexit deadline a necessity

On 12 March, the FTSE 100 (index of the 100 largest UK companies) dropped 10.9% – its highest single-day fall since 1987. This follows flat GDP growth in the fourth quarter of 2019, with almost certain decline expected in the first quarter of 2020. The spread of Covid-19 means investors are extremely pessimistic about the outlook for the economy.

And if a […]

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    To survive the COVID-19 crisis, the euro area can’t go back to business as usual

To survive the COVID-19 crisis, the euro area can’t go back to business as usual

The Covid-19 crisis has brought the European economy to a standstill. More and more states are taking drastic measures to contain the spread of the virus, while nobody can predict how long these exceptional circumstances will persist. As with any other crisis, we are once again learning that the future is fundamentally uncertain, and that people do not behave […]

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    Popular governments may be a sign of future financial crises

Popular governments may be a sign of future financial crises

One well-documented predictor of financial crises are credit booms and capital flow bonanzas. Indeed, many banking and current account crises (sudden stops) have been preceded by unusual expansion of domestic and/or external credit (see for example Reinhart and Reinhart 2008, Forbes and Warncock 2012, Schularick and Taylor 2012, Mendoza and Terrones 2012). To the best of our knowledge, however, […]

Sorting: an unintended consequence of EU free movement?

Charles Tiebout’s theory of sorting drew on the idea that if jurisdictions vary in the policies they adopt, and individuals are free to move, then people with similar policy preferences will end up clustering together – which he called sorting. In some contexts that could be efficient and desirable, but suppose the sorting were to take place according to […]

Brexit: mourning the economic and personal damage

Britain has left the European Union (EU). The loss I feel is almost as much as when my father died, almost a quarter of a century ago. He was 16 when he came to Britain with my grandfather, who was a South African political refugee. After completing his UK national service, he married the daughter of a Merseyside dockworker. […]

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    As liberal Britain leaves, will the EU become more protectionist?

As liberal Britain leaves, will the EU become more protectionist?

The Conservative majority following the December 2019 UK General Election means that negotiations between the UK and EU will from February move from the ‘divorce’ talks to discussing the future economic partnership. The content of this new economic partnership will be of vital importance not just for EU-UK relations, but also for the UK’s and the EU’s own future […]

Christine Lagarde has her work cut out for her

Christine Lagarde’s reign at the European Central Bank (ECB) has heralded a shift not in the monetary policy field, but mainly in terms of communication, at least judging from her first press conference in December. She is not Mario Draghi or Jean-Claude Trichet, her predecessors, and she wants to affirm her own different style as President. “Each and every […]

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    The ‘exit index’: how likely are other countries to follow in the UK’s footsteps?

The ‘exit index’: how likely are other countries to follow in the UK’s footsteps?

Ever since the United Kingdom decided to leave the European Union in June 2016, one question has been on the minds of many Europeans: which other member states could leave the EU in the years ahead? In fact, one argument among Brexiteers in the run-up to the referendum was that the UK needs to break free from the EU […]

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    The UK and EU face the consequences of the US-China trade war

The UK and EU face the consequences of the US-China trade war

The world’s two biggest economies – the United States and China – have been engulfed in a trade war for the last couple of years. Like most Western countries, the United States denounces China for stealing US intellectual property, criticises it for engaging in unfair competition on world markets through subsidies and state-owned enterprises (SOEs) and finally laments insufficient […]

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    The Denmark-Greenland paradigm may hold the answer for the Irish Brexit knot

The Denmark-Greenland paradigm may hold the answer for the Irish Brexit knot

Boris Johnson recently tweeted a video of a baby making his first steps. He captioned it ‘Let’s get Brexit done’. Yet these baby steps post-Brexit may not be so pleasant. In fact, the UK government admits that they will not take place at all – at least not in October, as Johnson’s tweets promise. In the latest round of […]

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    Britain’s medium-term preferences in trade point to EU continuity rather than ‘Global Britain’

Britain’s medium-term preferences in trade point to EU continuity rather than ‘Global Britain’

There are competing visions for British trade policy: ‘Global Britain’, which sees a sovereign Britain trading free from the shackles of the EU on the basis of WTO rules, with an ability to shape its own rules; and what might be called the “European continuity vision” that sees UK interests closely linked to the EU. Looking beyond the immediate […]

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    The row over the Irish backstop reveals a lot about the contradictions of Brexit

The row over the Irish backstop reveals a lot about the contradictions of Brexit

A fortnight can be a very, very long time in politics. The plasticity of British politics has become mesmerising. A no-deal Brexit on 31st October, which for a moment looked all but inevitable, now seems to have melted into air. Sometimes, it is easy to become despondent when faced with the brutal immorality of vicious ideologues and moneyed elites. But […]

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    Portugal, Spain and Italy would benefit the most from further EU institutional integration

Portugal, Spain and Italy would benefit the most from further EU institutional integration

Over the last three decades, euro area countries have experienced profound economic, financial and institutional changes, plus diverse shocks. Growth has been volatile, and almost missing, in some countries. In this study we have assembled a rich panel to find which factors might have played a role in stirring growth, and/or reducing it in the short and long run.

We […]

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    No-deal Brexit: don’t ask ‘if’ the economy will be hit, but ‘how much’ and ‘for how long’

No-deal Brexit: don’t ask ‘if’ the economy will be hit, but ‘how much’ and ‘for how long’

To judge by the early pronouncements of the Johnson government, a ‘no-deal’ Brexit is not only worth contemplating, but could well occur. Although both sides continue to profess their hope – and expectation – that a withdrawal agreement can be negotiated, the risks have plainly increased, despite Johnson’s bold assessment of there being a one in a million chance of a […]