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Inversions in US presidential elections, 1836-2016

Every four years, voters in the US vote for a president.  But the voters do not elect the president, that is done by the Electoral College. Today, the Electoral College amounts to a set of mathematical rules that transform the country’s votes into a presidential winner. As the world now knows, these rules can yield a surprising result.  An inversion in the Electoral College happens when the candidate who wins the popular vote is not the candidate who wins the presidency. There have...

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Housing policies to combat the affordability crisis

Housing affordability is a leading challenge for local policymakers around the world, yet a coherent framework for analysing the various policy options is lacking. This column builds such a framework and uses it to show that policies that make affordable housing more efficient, that expand rent control, and that increase vouchers have a redistributive effect. Upzoning policies creates smaller, but more uniformly distributed benefits. The ‘housing affordability...

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Tariffs and monetary policy: A toxic mix

President Trump’s objectives to force China to open access to its markets for international trade, reduce capital controls, modify unfair treatment of intellectual property, and address cybersecurity and other US national security issues are important goals with sizeable benefits. However, the escalating tariffs are having a mounting impact on global trade volumes, industrial production and capital formation (see Figure 1) (Bown and Irwin 2019, Cavallo et al. 2019, Irwin 2019), and...

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Right here, right now: The quest for a more balanced policy mix

Over the past few years, economies in the OECD and in particular in the EU had been growing at cruising speed, after having seemingly shrugged off the remains of the global financial crisis. The US is experiencing its longest bout of uninterrupted positive GDP growth on record. Similarly, despite lower growth performance, the EU has been growing for 25 quarters and its unemployment rate is now at its lowest since 2000.  Yet, worldwide growth has been decelerating sharply in 2019,...

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The link between declining middle-wage jobs, rising wage inequality, and worker welfare

The link between declining middle-wage jobs, rising wage inequality, and worker welfare Middle-wage jobs in the US are gradually diminishing while wage inequality has been rising. But are the two related? Does the decline in middle-wage jobs represent polarisation of employment, and is the decline a good or a bad thing for workers?  Inequality between top and middle hourly wages has increased steadily for the last 50 years in the US. By contrast, inequality between...

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The impacts of private provision of Medicaid

Timothy J. Layton, Nicole Maestas, Daniel Prinz, Boris Vabson 17 October 2019 Whether public services should be provided directly by the government or contracted out to private firms is a central debate in public finance and public policy around the world. Private provision of public services is common in education, healthcare, defence, and, in the US, even in incarceration. In other areas – including social security, disability insurance, and...

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The inflation puzzle in the euro area

Thomas Hasenzagl, Filippo Pellegrino, Lucrezia Reichlin, Giovanni Ricco 16 October 2019 The latest ECB projection for headline inflation (HICP) points to a sharp downward revision of what forecasted two years ago (ECB 2017, 2019). For example, this year inflation was projected to be 1.5% while it is now estimated to be at 1.2%. The corresponding numbers for 2020 are 1.7% and 1%, respectively. In January 2018 we wrote a Vox column in which we forecasted euro...

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The cash hoarding puzzle and the rising global demand for cash

In recent years, cashless payment has become increasingly prevalent, whether using conventional methods, or innovative and convenient financial services on mobile phones. This trend will make our economy and financial system more efficient.  The public has had full access to bank accounts and credit cards for a long time. In recent years, it has also had cashless and contactless payment tools. So it is puzzling that demand for cash has been rising in many economies – especially...

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The price effects of trade

The price effects of trade: New evidence from the US and implications for quantitative trade models International trade creates both winners and losers. Using comprehensive price data, this column estimates the US price effects of the China shock from 2000 to 2007. It finds that US consumers benefited from large price declines in product categories in which imports from China increased, as increased trade with China eroded the market power of US producers. The...

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Increasing diversity in economics

The Royal Economic Society has launched Discover Economics, an ambitious three-year campaign to attract more women, minority students and students from state schools to study the subject. Sarah Smith and Arun Advani, co-chairs of the campaign, plus Rachel Griffith, RES president, tell Tim Phillips about how they plan to make this happen.

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