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Home / Tag Archives: Global Economics & Governance

Tag Archives: Global Economics & Governance

Europe’s true immigration capacity: what we can learn from the US green card system

The United States grants permanent lawful resident status [1]—with benefits similar to full citizenship save the right to vote—to approximately one million immigrants every year. Could Europe do the same? An immigrant can obtain lawful permanent resident status in the US (i.e. receive a “green card”) through family, employment, refugee or asylee status, or other specific and exceptional conditions. Once immigrants are granted status, they have it for life, as long as they do not leave the US...

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Has globalisation ‘peaked’? Trade and GDP growth in the post-crisis context

A decades-old rule of thumb has it that trade grows faster than GDP, mainly as a result of globalisation. And yet, since the crisis-induced ‘Great Trade Collapse’ of 2008/2009, followed by a brisk but brief recovery in 2010, international trade has been growing roughly in line with world GDP. This pace is markedly slower than in the previous fifteen years, in which yearly trade growth at times even doubled global GDP growth (Figure 1). In addition, the last spell of data shows that trade...

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Why is China finding it hard to fight the markets?

China’s market drama started in June this year with the collapse of the Shanghai stock exchange, followed by frantic interventions by the Chinese authorities. As if the estimated $200 billion already spent on propping up stock prices were not enough, China found itself in another battle with the market, defending the RMB against depreciation pressures after the PBoC devalued the RMB by nearly 2% on August 11. The cost of the foreign exchange intervention to keep the RMB stable is estimated at...

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The global trade slowdown puzzle

Motivation and stylized facts about trade elasticity Bernard Hoekman writes that we should care about the growth performance of the trade/GDP ratio because trade is a channel for knowledge transfer (technology flows) and for specialization according to comparative advantage, thereby improving resource allocation and supporting higher economic growth and welfare (real incomes) over time. Another reason to care about whether trade grows faster than output is that net exports are a key channel...

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The Rolling Global Crisis Will Come Home

This article was also published in the Indian Express Finance Minister Arun Jaitley and Reserve Bank Governor Raghuram Rajan have been quick to declare that India is well-protected from the global turmoil. It is their job to soothe investor and public nerves. And the large foreign exchange reserves are a defense against a flight of funds from India. But this is not a conventional financial crisis. We are in the midst of a rolling global growth crisis that began in 2007 and has now entered a...

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The dragon sneezes, Europe catches a cold

Should we be worried about the turmoil in China’s stock market, and the spill-overs to markets in other countries? Two competing hypotheses currently exist: The first is that Chinese stocks had grown at unsustainable rates leading up to the crash, and this is simply a market correction back towards fundamentals, and not a warning of deeper weakness in the Chinese economy. This view would align with that of the ECB’s vice-president Vitor Constâncio: “Indications are that … the...

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The grand divergence: global and European current account surpluses

Global current account imbalances widened before the 2007/2008 crisis and have narrowed since. While the post-crisis adjustment of European current account deficits was in line with global developments (though more forceful), European current account surpluses defied global trends and increased. We use panel econometric models to analyse the determinants of medium-term current account balances. Our results confirm that higher fiscal balances, higher GDP per capita, more rapidly...

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Delhi’s children deserve quality education

In the recently announced Delhi government budget, the newly elected Aam Aadmi Party (AAP)—the self-styled representative of the common man—has increased by 50 percent the funds allocated to education, raising the proposed outlay for the coming year to ₹98 billion. But money has not held up educational advancement either in Delhi or in India more generally. Delhi’s education budget has risen steadily. Indeed, the worry is that the increased budget will once again be hijacked by glamorous but...

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Europe must wake up before Iran falls into the arms of Russia and China

This post was originally published on The Financial Times Blogs Everybody seems to be greedily eyeing potential business deals with Iran after the nuclear deal reached with six world powers. This is no surprise. Iran’s economy is larger than Australia’s and twice as large as Iran’s successful neighbour, the UAE. More importantly, Iran is set to grow even faster. In fact, even under the most conservative projections (before the deal was signed), Iran was set to contribute nearly as much as...

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