The sharp decline in correspondent banking over the past decade has raised concerns that the associated disruptions in cross-border payments could hamper international trade and economic growth. This column combines data on terminated correspondent bank relationships with firm-level data from emerging Europe to show that when local respondent banks lose access to correspondent services, their […]
During the recent monetary policy tightening cycle, US inflation has proven persistent, with discussions emerging about the effectiveness of monetary policy with respect to previous cycles. This column shows that when looking at a measure of core inflation that is ‘super sensitive’ to monetary policy, the Fed’s interest rate hikes had and still have a […]
The mounting geopolitical threats make the EU governments’ holding on to national defence policies increasingly outdated. Defence fulfils the standard properties of a public good, being non-excludable and non-rivalrous, and qualifies as a European public good given the increasing returns-to-scale and positive externalities. As such, a common defence can be classified along two dimensions: delivery […]
Economists overwhelmingly support the idea of an independent central bank. This column introduces a new data set on central bank independence since 1800. It documents the trend toward increased independence post 1980, but also earlier, more limited movement in the direction of enhanced independence in the 1920s. Using natural language processing on current statutes, it […]
The recently published Draghi report on European competitiveness offers radical proposals to reverse Europe’s competitive decline compared to China and the US. This column argues while the report rightly recognises that the availability, affordability, and quality of telecoms services are a key driver of European competitiveness, its recommendations on telecoms are misguided and dangerous. On […]
Poland has emerged as a standout performer among Eastern European economies. But the country’s journey from lower-middle-income to high-income status remains an exception. This column studies more than 100 countries stuck in various forms of the middle-income trap due to rising debt, ageing populations, and growing protectionism. In order for the six billion people now […]
Support for right-wing populist parties in many advanced democracies is characterised by considerable regional heterogeneity. This column uses data on high-street vacancies in the UK to show that visible signs of local decline play a crucial role in driving support for right-wing populists. One important policy implication is that countering populism requires not only regional […]
Monetary policy is said to impact the economy with long and variable lags. This column studies how monetary policy affects subcomponents of the Personal Consumption Expenditures Price Index of the US. Following a monetary policy contraction, the response of the aggregate index turns significantly negative after over three years. There are stark differences in the […]
Traditional views on monetary-fiscal interactions suggest that fiscal deficits can be stabilised through changes in taxes, government spending, or inflation. This column examines how economic growth driven by technological innovation affects price stability and the sustainability of public debt. It argues that there is another stabilisation channel for public debt: economic growth. Increased demand boosts […]
In the ongoing debate on climate change, one of the most pressing challenges is fostering effective international cooperation. This column examines the success of the 1987 ‘Montreal Protocol’ in phasing out harmful chlorofluorocarbons to offer new insights into how international agreements can be made more effective in solving global public goods problems. The Protocol’s realistic, […]
