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What s wrong with spain

The Spanish housing bubble

Most commentators focus on house prices, usually in real terms, as the gauge the housing bubble and its own developments (e.g. Münchau 2012). Data claim that house prices have indeed adjusted, however, not enough. Figure 1 shows the home price index for Spain (measured as in accordance with rents) at roughly the same level as in 2003 but still much above its pre-2000 levels. We favour the price-to-rent index to the true price because it shouldn’t be suffering from immigration; any upsurge in demand for housing from that source should manifest itself in upwards pressure on both rents and prices. On the other hand, immigration should put more pressure on rents than on house prices since most immigrants will tend to be short of capital and therefore apt to be renting, instead of buying.[2]

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What should the us and china learn from the past us-japan conflict

What should the us and china learn from the past us-japan conflict

What happened with Japan?

It really is true that the united states demanded a lot of things of Japan when the bilateral trade imbalances became large in the mid-1980s and among the demands was an appreciation of the yen. It really is true that the yen appreciated sharply from 260 yen/ dollar in February 1985 to 155 yen/dollar in August 1986, that was among the fastest appreciation episodes ever sold. It really is true that Japan underperformed its prospect of the majority of the 1990s and 2000s. The common growth rate from 1993 to 2003 was just above 1%, and the decade was marked by one crisis after another in the banking sector. Nonetheless it is too simplistic to state that the united states pressured Japan into accepting sharp yen appreciation and that, subsequently, caused two lost decades.

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What share of chinese exports is really made in china

What share of chinese exports is really made in china

Why do we care?

For most policy issues, it is vital to measure the extent of domestic content in exports. For instance, what is the result of a currency appreciation on a country’s exports? The answer depends crucially on the share of domestic content in the country’s exports. Other activities equal, confirmed exchange rate appreciation could have a smaller influence on trade volume, the low the share of domestic content in the exports.

As another example, what is the result of trading with China on European income inequality? The answer depends partly on whether China simply exports products that are intensive in low-skilled labour or whether China’s exports are more sophisticated. Dani Rodrik has noted that the per capita income typically linked to the sort of goods bundle that China exports is a lot greater than China’s actual income. He interprets this as evidence that the skill content of China’s exports may very well be higher than its endowment may imply. Peter Schott has documented an apparently fast upsurge in the similarity between your Chinese export structure and that of high-income countries, and interprets it as proof a rise in the amount of sophistication embedded in Chinese exports. However, if the domestic content in China’s exports is low, especially in sectors that could have already been considered sophisticated or high-skilled in america, then imports from China may still generate a big downward strain on the wage of the low-skilled Americans in the end (as described by Paul Krugman).

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What s new in the financial inclusion literature

What’s new in the financial inclusion literature?

An IMF conference on financial inclusion showed that one research methodology doesn’t fit all. This post summarises some new developments which were showcased at a recently available IMF conference on financial inclusion.

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The other day, I had the honour and pleasure of co-organising a conference on financial inclusion at the IMF with Andrea Presbitero and my former colleague Sole Martinez Peria. Nine papers, mostly work happening, were presented. Together they gave nice insights on where in fact the financial inclusion literature stands. These papers also showed the way the literature has matured in the last a decade, with big questions no more receiving simple-but-qualified answers, and new questions arising.

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What really drives inflation

What really drives inflation

In a recently available speech in Jackson Hole, Fed Chair Jay Powell organized the Fed’s new monetary policy framework. Under this framework, the Fed allows inflation to perform above its 2% target to be able to boost employment carrying out a downturn. The brand new framework marks a departure from the perceived wisdom of the 1970s’ Great Inflation. Under this perceived wisdom, the Fed must respond aggressively to rising inflation or risk losing its credibility and letting inflation spiral uncontrollable. New research on the fantastic Inflation challenges this perceived wisdom and will be offering a fresh explanation for what really drives inflation. Rather than Fed credibility, this explanation puts the economic climate and how it transmits monetary policy front and centre. In doing this, it reconciles the 1970s with the existing environment and a foundation for understanding why the Fed’s new framework is unlikely to trigger runaway inflation.

Covid-19

What price to pay for monetary financing of budget deficits in the euro area vox, cepr policy porta

What price to cover monetary financing of budget deficits in the euro area

There keeps growing acceptance that some type of monetary finance is necessary, if not inevitable, in light of the severe nature of the downturn in the euro area. This column argues that while a monetisation of the deficits induced by the COVID-19 crisis would eventually raise the price level in order that, after a go back to economic normalcy, inflation would rise for two years, this is a cost worth paying in order to avoid future sovereign debt crises in the euro area. Moreover, the ECB, as the utmost independent central bank on earth, will be well equipped to avoid the inflationary upsurge from becoming permanent.

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What option prices tell us about the ecb’s unconventional monetary policies

What option prices reveal about the ECB’s unconventional monetary policies

The decade because the Global Crisis has seen central banks hire a selection of monetary policy tools. This column draws two lessons from the unconventional monetary policy measures employed through the European sovereign debt crisis. First, central banks should communicate clearly – and with sufficient detail – in times of heightened market stress to lessen tail risk perceptions in financial markets. Second, policies targeted at changing the relative supply within different asset classes impact on perceived crash risk, while measures targeted at easing financing costs of commercial banks usually do not.

Bali

What prospects for a wto deal in bali

What prospects for a wto deal in bali

What if the Bali Ministerial Conference achieve?

The WTO Doha Development Round premiered in December 2001 to boost the international trading system by further lowering trade barriers and by revising certain trade rules. Projections using computable general equilibrium models claim that a thorough Doha deal would bring world income gains more than $280 billion, with notable gains for Parts of asia (Hufbauer, Schott, and Wong 2010). The ambitious work program covered around 20 regions of trade, and negotiations made progress until December 2008, when the trade talks stalled over a discord between your US and India over agriculture (Bhagwati and Sutherland 2011, Baldwin and Evenett 2011). Since that time, interest among WTO members in the multilateral route for trade liberalisation has gradually waned. Many countries – including some in Asia – thought we would sign regional trade agreements to lessen trade barriers and improve trade rules (Plummer 2012).

Bali

What priorities should -south- african leaders take into the london summit

What priorities should -south- african leaders take into the london summit

What priorities should (South) African leaders take in to the London Summit?

The gathering overall economy has induced major economic problems for African countries. This column highlights several key priorities for (South) African representatives to take in to the London Summit, including maintaining usage of finance, open markets and redoubling African economic reform efforts.

As the global financial meltdown deepens, so high-level attempts to contain its fallout intensify, and therefore interest in the London Summit, convened by British Prime Minister Gordon Brown for April 2nd, 2009, is quite high. The agenda is extensive and potentially far-reaching, albeit opaque to those in a roundabout way involved with international financial markets as either participants or regulators.

Bali

What next for us-europe trade policy

What next for us-europe trade policy

What next for US-Europe trade policy?

The economies of Europe and america are inextricably linked and within an ideal world, numerous factors motivate a trade deal like the Transatlantic Trade and Investment Partnership. This column, extracted from a recently available VoxEU eBook, argues, however, that given the Brexit referendum in the united kingdom and the election of Donald Trump as US president, in addition to a number of other pre-existing complications, achieving such agreements will be highly contentious.