On 2 April 2025, the US administration triggered a global shock by announcing sweeping new tariffs. This column describes how what began as a trade policy move evolved into a financial event. The shock activated a financial amplification loop – a self-reinforcing cycle of asset price declines, margin calls, and deleveraging. In order to stop […]
The EU faces a significant investment challenge to meet its ambitious goals of decarbonising the economy, modernising infrastructure, strengthening defence, and improving social services. Public–private partnerships are frequently proposed as a solution, but their effectiveness is debated. The fourth LTI Report presents new empirical evidence on public–private partnerships in Europe and a framework for evaluating […]
Distributed ledgers are the embodiment of the vision of a decentralised notion of money. The key idea is to harness a network of self-interested ‘validators’ to perform the record keeping role of trusted intermediaries that underpin our current monetary system. This column examines the economic trade-offs in designing such systems, focusing on the interplay between […]
In the literature on monetary policy spillovers, countries that would otherwise operate independently are connected through bilateral trade relationships, and it is assumed that there are no frictions in currency, financial, and asset markets. This final column in a three-part series examines whether, in the presence of real-world complexities such as a dominant global currency […]
If Trump’s trade policy is the earthquake, the long-standing hardships confronting America’s middle class are the tectonic plate shifts that made it inevitable. America was hit by globalisation and robotics shocks like all advanced economies, but unlike other advanced economies, it failed to help its workers adjust since the New Deal’s ‘helping hand’ policies had […]
The international transmission of monetary policy shocks features positive output spillovers when the so-called expenditure-switching effect is sufficiently large. Departing from textbook analysis, this second column in a three-part series zooms in on the implications of differences across market participants with respect to their consumption preferences and ability to insure against income risk. The key […]
Consumers have vastly different views about inflation – shaped by personal experience, financial literacy, and exposure to economic news. This column examines how consumers’ housing status shapes the attention they pay to inflation and their subsequent spending decisions, demonstrating marked differences between renters and homeowners. In an experiment conducted with US households between 2021 and […]
Over the past decade, China has shifted towards greater self-reliance while enhancing its export competitiveness in advanced economy markets. This column introduces a new index to assess sectoral trade alignment across countries. China is importing fewer goods typically exported by advanced economies, while its exports increasingly resemble their import needs. This shift is intensifying competition […]
Stephen Miran, Chair of the US Council of Economic Advisers, claims that we live in ‘the world of Triffin’, meaning that foreign official accumulation of dollars is driving US current account deficits. This column argues that over the past ten years US current account deficits have persisted while foreign official inflows into US investments have […]
Over and over in the history of the international monetary system, national policymakers have pointed to – and voiced concerns about – the effects of policy actions undertaken in foreign countries on the outlook and financial conditions in their own domestic economies. The most recent example involves the spillovers of tighter monetary policies to address […]
