Without carbon pricing, subsidies to renewables can be counterproductive

THE world's economies have not been idle in the face of climate change. Companies and consumers are endeavouring to reduce their carbon footprint by investing in energy efficiency and changing their travel plans. Financial institutions are pressed to disinvest shares in fossil fuel industries by the “Keep it in the ground” campaign launched by NGOs and the media. In the last decade many countries, particularly EU Member States, have invested heavily in renewable energy sources such as wind and solar power, through generous feed-in tariffs, public tenders and mandatory renewable portfolio standards. China installed about 23 terawatts of new wind power capacity in 2014, almost half of the 53 terawatts installed worldwide. Rich countries have pledged to contribute up to $10 billion a year to the UN Green Climate Fund, with the aim to eventually reach $100 billion. This money is to be used to assist developing countries in adaptation and mitigation practices.

Continue reading

from Economics http://ift.tt/1l1ZSPz
via IFTTT

Latin American economies should show leadership on climate negotiations

In December talks in Paris involving more than 200 countries may result in a new agreement aimed at reducing carbon emissions. In the months leading up to the conference, The Economist will be publishing guest columns by experts on the economic issues involved. Here, Felipe Calderon, former President of Mexico and Chair of the Global Commission on the Economy and Climate, and Ricardo Lagos, former President of Chile and a member of the Global Commission argue there are many opportunities to improve economic performance while reducing growth in emissions.

LEADING countries in Latin America and around the world are showing how ambitious climate action is the right choice for both their citizens and their economies. The evidence is building that the global economy is reaching a key turning point away from its fossil fuel past.

We already know that climate change presents immense risks from rising global temperatures, melting of ice-sheets, more frequent and extreme heat waves and storms, and less predictable growing seasons. These are hurting subsistence communities already, and with greater warming, will affect us...Continue reading

from Economics http://ift.tt/1kX5CKq
via IFTTT

Bankers v mattresses

IN JUNE of last year the European Central Bank reduced its benchmark interest rate, at which it lends to commercial banks, to 0.15% and its deposit rate, which it pays to banks on their reserves, to -0.1%. For a central bank that was once cautious about unconventional measures, setting a negative interest rate was a bold move. The ECB was in effect charging commercial banks to hold their excess deposits at the central bank, in the hope that this would drive down borrowing costs more generally.

Three months later, the ECB cut the deposit rate again, to -0.2%. When the ECB’s rate-setting council next meets, on December 3rd, it is widely expected to trim the deposit rate even further, as well as to approve more “quantitative easing” or QE (the creation of money to buy bonds). In a recent speech Mr Draghi claimed that the ECB’s unconventional policies over the past 18 months had been the “dominant force” in spurring the euro-zone economy and staving off deflation. Lending by banks is slowly reviving. Even so, he suggested, deficient inflation and lingering concerns about the strength of recovery justify further action.   ...Continue reading

from Economics http://ift.tt/1MFEgS3
via IFTTT

Big hunk of junk

Just 25 years ago less than a quarter of corporate-bond issuers were ranked speculative, or junk. Now, according to Standard & Poor’s, a rating agency, it is nearly a half. Growth in the market is due to a number of factors. Investors are more willing to buy high-yield debt, thanks to low interest rates; banks are retreating from corporate lending, particularly in Europe; companies are keen to borrow, given the tax benefits. The shift means the average corporate bond is riskier than it used to be. The default rate is rising, but is still low by historic standards: just 2.5% of issuers defaulted in the year to September.

from Economics http://ift.tt/21ieuuI
via IFTTT

Stopping slurping

It comes at a cost

AROUND the world, governments and beverage makers are locked in battle over taxes on sugary drinks. Hungary has been taxing them since 2011. In 2012 the French government introduced a tax on all drinks with added sugar or artificial sweetener, now €0.075 ($0.08) a litre. The Mexican government followed suit last year, with a tax of 1 peso ($0.06) a litre on all sugary drinks. Chile and the city of Berkeley, California introduced similar measures in January; Barbados followed suit in June and Dominica in September.

The drinks industry has won some victories too, seeing off proposals for taxes on sugar in several American states and persuading the Slovenian government to backtrack on plans to impose a 10% tax on sweetened drinks last year. In 2013 Denmark repealed its tax on soft drinks and ditched plans for a broader sugar tax.

Governments are adopting the taxes in the hope of trimming bulging waistlines and slowing the rise in diabetes, which cost taxpayers vast sums in spending on health care. Mexicans, for instance, are the fourth-biggest guzzlers of sugary drinks in the world, according to...Continue reading

from Economics http://ift.tt/1Nac6vB
via IFTTT

Burden-sharing

BANKS in Italy fared better during the financial crisis than many of their peers, sparing Italian taxpayers the bail-outs their counterparts in other countries had to shoulder. But although they stuck to their cautious business models and avoided fuelling a big housing boom and bust, Italy’s protracted recession has enfeebled them. It has caused bad loans to soar, which in turn has prevented them from supporting a still weak recovery with new lending.

The burden of non-performing loans (NPLs) in Italy is now immense: they amount to €350 billion ($370 billion), the equivalent of 21% of GDP. With these unproductive assets tying up their capital, Italian banks are unable to extend new credit to businesses. In fact, they are lending out less in an effort to shore up their balance-sheets (see chart).

The government would like to fix all this by setting up a “bad bank”—an asset-management company that would strip bad loans off the banks’ books and thus enable them to resume normal service to businesses. Schemes of this sort recently helped Ireland and Spain overcome big banking crises. BCG, a consultancy that has worked...Continue reading

from Economics http://ift.tt/1Nac4E7
via IFTTT

Not so smart

IN 2008, as the financial system was collapsing, Alan Greenspan, the former chairman of the Federal Reserve and champion of free markets, admitted he had been wrong. “I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,” he said. In other words: why would bankers destroy their own livelihoods?

Some clues to Mr Greenspan’s conundrum can be found in a new book* on Lehman Brothers, the American investment bank whose failure precipitated the worst of the crisis, and a recent report** on the collapse of HBOS, a British retail bank, that imploded soon after. Although the two banks had different histories, they made similar mistakes.

For a start, both strayed from their core expertise. HBOS was created through the combination of Halifax, a retail mortgage lender, and Bank of Scotland, one of Scotland’s two biggest banks. The merged entity wanted to gain market share in England and compete with the likes of HSBC and Barclays. The easiest way to increase business was to focus on smaller,...Continue reading

from Economics http://ift.tt/21iesTy
via IFTTT

For richer, for poorer

IN DECEMBER, as a winter chill descends on the continental United States, temperatures in Puerto Rico often reach 30°C. Palm trees sway alongside the Spanish colonial buildings in Old San Juan; the blue Atlantic stretches to the horizon. Yet the economic outlook for America’s Caribbean dependency is anything but sunny. Its government owes $72 billion in debt, which it says it cannot repay. On December 1st the territory is supposed to make—and is almost certain to miss—a $354m debt payment. And that is just the first of a series of repayments that add up to $1.4 billion (or nearly 1.5% of GDP) due in December and January.

Politicians in Washington are scrambling for a solution. The island’s fiscal woes are in part the result of chronically bad budgeting. But they also stem from structural economic weakness. Bailing out Puerto Rico, which is self-governing but not a state, is not a popular option. Yet when any corner of America faces a deterioration in its long-run economic fortunes, the costs will end up being shared, one way or another.

For decades Puerto Rico, which is poorer than the mainland, enjoyed a special tax status designed...Continue reading

from Economics http://ift.tt/1NvXEEF
via IFTTT

Pricing risk

CHINA’S domestic bond market has never been riskier. It was only last year that it suffered its first default. This year at least six companies have defaulted. The miscreants are a diverse lot, including a beverage bottler, a solar-panel maker and a cement company. As economic growth grinds lower, defaults will inevitably rise.

A gloomy outlook of this kind would normally lead investors to demand a premium before buying bonds. Instead, they have lapped them up, making it cheaper for China’s companies to borrow. Bond issuance has boomed this year, reaching almost 12 trillion yuan ($1.9 trillion) so far, up from the record 7.7 trillion sold in all of 2014, according to Wind Information, a data provider. This has prompted warnings that, much like the stockmarket earlier this year, China’s bond market is swelling into a bubble.

Banks accounted for almost all lending in China until a decade ago. Today, for every five yuan of loans companies take out, they also finance themselves with one yuan of bonds. That has made China the world’s third-biggest bond market, behind America and Japan—a development that should...Continue reading

from Economics http://ift.tt/1TgCyJd
via IFTTT

The perils of planning on the basis of economic forecasts

THE joke is not new but it is a good one. How do we know that economists have a sense of humour? They put decimal points in their forecasts. Yesterday, Britain's Office for Budget Responsibility published its analysis of the government's spending package. The big news was that the OBR revised up its assumption on the tax revenues the government could raise, giving chancellor George Osborne the leeway to retreat from some (but not all) unpopular spending cuts. But for this blog let us focus on its economic assumptions.

The OBR revised up its forecast for 2016 and 2017 growth by a tenth of a percentage point in each year, from 2.4% to 2.5%. That is amazingly precise. The average error in estimating UK GDP growth in the official statistics, after the year has actually ended, is half a percentage point. The OBR's forecasts for GDP growth in successive years are 2015 (2.4%), 2016 (2.4%), 2017 (2.5%), 2018 (2.4%), 2019 (2.3%), 2020 (2.3%). 

That is an amazingly smooth pattern. Here are the annual numbers for GDP growth since 1948. There has never been a five-year run of steady growth in...Continue reading

from Economics http://ift.tt/1NQxGWI
via IFTTT

Deep impact

Trying times for Esteves

AS THE founder and boss of BTG Pactual, a Brazilian investment bank, André Esteves has been a shrewd and hyperactive dealmaker. But on November 25th some of those deals appeared to sour, when he was arrested in Rio de Janeiro as part of a vast bribery investigation centred on Petrobras, Brazil’s state-controlled oil-and-gas giant.

Prosecutors allege that Mr Esteves and Delcídio do Amaral, a prominent lawmaker from the party of Dilma Rousseff, the president, tried to help Nestor Cerveró, a former Petrobras director who has since been convicted of corruption, to escape trial. According to the police, Mr Esteves was willing to stump up 4m reais ($1.1m) to spirit him out of the country. Messrs Esteves and Amaral protest their innocence.

What interest, if any, Mr Esteves might have had in putting Mr Cerveró beyond the reach of the law is unknown. Mr Esteves has always insisted that BTG’s investment in Petrobras assets in Africa is spotless. So, he has said, was its involvement with Sete Brasil, a troubled firm that built oil rigs for Petrobras.

Mr Esteves’s predicament nevertheless puts pressure on the...Continue reading

from Economics http://ift.tt/1PbQndp
via IFTTT

Small changes in diet can make a big difference to greenhouse gas emissions

High pay motivates bankers, but bonuses often do not

JOHN CRYAN, the new(ish) co-chief executive of Deutsche Bank, caused a stir earlier this week when he said that bonuses do not encourage bankers to work any harder. The German lender's boss was reported to have said that he had "no idea" why his contract included a bonus scheme. 

Financiers like to claim that their bonuses are necessary to attract and motivate the highly talented. Many financial jobs are stressful, demand long hours and involve a great deal of unrewarding grunt work. Those who fill them have many outside options. With junior bankers literally working themselves to death high pay is necessary to attract people to the sector. Goldman Sachs hiked their juniors’ salaries by 20% this August.  

Whether paying large bonuses—as opposed to higher base salaries—is the best way to motivate employees is a separate issue. Europe's regulators imposed a bonus cap in the aftermath of the crisis. That was strongly resisted by some banks. The practise of paying bonuses made it easier for them to...Continue reading

from Economics http://ift.tt/1TeBYM5
via IFTTT

Douglass North, a pioneer in institutional economics, has died

Terrorism and the economy

ANALYSING the effects of terrorist acts on lost GDP or lower stockmarket indices may seem to be missing the point. But terrorists aim to wreak havoc, including with our economy

Does the size of the state hold back the economy?

LATER this week, the British government will announce its latest spending review. Its aim will be to balance the budget by 2020. In part, this is because the Conservative party genuinely believes a smaller state is good for economic growth in the long run. But is there a hard-and-fast relationship?

This is the kind of issue economists spend years researching. But your blogger pursued a simple approach; comparing the GDP per capita of OECD countries with government spending as a proportion of GDP. (Statistical purists should note; the latest figures on the fomer are from 2014 but the latter only go up to 2013.)

The OECD has data covering both measures for 26 countries. So step 1 was to rank the countries by government spending and then divide them into quartiles (six countries in the 1st and 4th quartiles, 7 countries in the 2nd and 3rd). The results were as follows

Quartile                                        GDP per capita ($)

Highest spenders                         40,285

2nd highest              ...Continue reading

from Economics http://ift.tt/1I6vxcK
via IFTTT

The euro crisis was not a government-debt crisis

THE euro-zone crisis has transitioned from an acute phase to a chronic one. At just this moment the fear that market panic might force one or several economies out of the single currency is low. Yet few analysts believe the euro zone has solved its fundamental problems. In a piece published at Vox EU last week, a cadre of prominent economists made the very sensible point that unless euro-area leaders can agree on the fundamental causes of the crisis, they will struggle to craft long-run fixes. The authors set out their view of the crisis, in hopes that it will prove a foundation for consensus building.

Their explanation, which strikes me as the right one, is that the euro-area crisis was not a sovereign-debt crisis. If it had been, one would have expected Belgium and Italy, which entered the crisis with extraordinarily high debts, to have landed in serious trouble. As it turned out, they made it through without troika programmes, while Ireland and Spain, which entered the crisis with low levels of sovereign debt, needed bail-outs. The problem, instead, was one of massive capital flows across borders, which encouraged high levels of private borrowing in the economies that eventually got into trouble. When the global financial crisis generated a reversal in those flows, private borrowers and banks...Continue reading

from Economics http://ift.tt/1XkTZJ1
via IFTTT

To get a climate agreement, first set out principles for fair cost-sharing

In December talks in Paris involving more than 200 countries may result in a new agreement aimed at reducing carbon emissions. In the months leading up to the conference, The Economist will be publishing guest columns by experts on the economic issues involved. Here, Lucas Bretschger of ETH Zurich argues that an initial focus on setting clear principles for fair cost-sharing will clear the way to a broader climate deal.

BOTH climate change and climate policies have a major impact on world income distribution. If nothing is done to address climate change, less developed and vulnerable countries will suffer disproportionately: climate shocks destroy part of their capital stock, making successful economic development even more difficult than it was in the past. Conversely, the adoption of stringent climate policies will mean that carbon-intensive countries will have to carry a substantial policy burden. Yet, the concerns of high climate-policy costs are not fully warranted, as I show in the book “Greening Economy, Graying Society”. Positive growth effects of climate...Continue reading

from Economics http://ift.tt/1l9oa9N
via IFTTT

Many unhappy returns

“KEEP your eyes on the stars,” said Teddy Roosevelt, “and your feet on the ground.” America’s can-do spirit keeps its economy moving forward, but over-optimism can be harmful, especially if it leads people to make promises they cannot meet. If investment returns are lower in coming decades than they have been in recent ones, that is the position pension funds and college endowments will be in.

When final-salary pension schemes, which are still prevalent among America’s public-sector employees, decide how much to put aside to pay pensions, they have to make an assumption about what returns they will earn. The higher their estimate, the less employers have to contribute today. Similarly, endowments have to estimate their future returns to determine how much to spend each year: pay out too much and their funds will dwindle away.

The average American state or local-government pension fund assumes it will earn a nominal (ie, not accounting for inflation) annual return of 7.69% in future, according to the National Association of State Retirement Administrators (NASRA). Based on past performance, that seems reasonable. Over the past five...Continue reading

from Economics http://ift.tt/1QwoYCO
via IFTTT

Celtic phoenix

In the pink

WHILE the euro zone limps along, growing in the third quarter by a disappointing 0.3% (an annualised rate of 1.2%), one small member of the 19-strong currency club is racing ahead. Less than two years since Ireland exited its humiliating bail-out, its economy is resurgent. Following growth of 5.2% in 2014, GDP rose by 7.0% in the first half of 2015 compared with the same period a year earlier.

Welcome as it may be, the vigour of the upswing highlights the troublesome volatility of the small and ultra-open Irish economy. It is bouncing back, after all, from a deep slump that followed an earlier spell of vaulting growth. The notion that the Irish economy might rebound so strongly would have been dismissed as fantasy only a couple of years ago. Irish banks went spectacularly bust during the financial crisis and required a bail-out of €64 billion ($89 billion), close to two-fifths of GDP. Their woes meant that the Irish state had itself to be bailed out by the EU and the IMF in late 2010. Between its pre-crisis peak in late 2007 and its nadir at the end of 2009, the economy contracted by 11.2% (see chart). A...Continue reading

from Economics http://ift.tt/1LomKh7
via IFTTT

Takeover bid

FOR ordinary Chinese investors, painful memories of the summer’s stockmarket meltdown are fading away, soothed by a fresh rally in share prices. But for the government, the fallout is just getting started. In recent weeks it has launched investigations into officials, bankers and hedge-fund managers suspected of illegal trading. It has tightened rules about using debt to buy shares. Now it is planning the biggest overhaul of Chinese financial regulation in more than a decade.

The idea is to create a “super-regulator”, combining three separate agencies and, possibly, the central bank into a single, powerful entity responsible for monitoring all financial firms: banks, insurers, brokerages, asset managers and so on. Consolidation has been mooted before, only for the system to remain unchanged. But according to people familiar with government discussions, big changes are virtually certain this time because of the stockmarket debacle.

China assembled its regulatory framework in piecemeal fashion in the 1990s and early 2000s as the financial system took shape. Different agencies look after banks, brokerages and insurers, whereas the central...Continue reading

from Economics http://ift.tt/1I1ogWf
via IFTTT

Prizes

Prizes: Patrick Foulis, our New York bureau chief, has won State Street’s 2015 UK Institutional Press Award for best editorial comment; Sacha Nauta, our finance correspondent, won the award for best newcomer.

from Economics http://ift.tt/1Qwp0dU
via IFTTT

Class divides

 

THE University of Missouri, which opened in 1840 and admitted its first female students in 1867, began accepting blacks in 1950. Racial tensions are still all too evident, however. Student protests at the poor handling of a series of racist incidents led to the resignation earlier this month of the university’s president, Timothy Wolfe.

The row unfolded against a backdrop of black frustration: with police violence, such as the shooting last year of Michael Brown, an unarmed black 18-year-old, in Ferguson, Missouri, but also with the persistence of black economic underperformance. The unemployment rate for blacks is twice that for whites. A larger share of whites than blacks work in skilled jobs; even within well-paid professions whites earn more per hour than black workers. The typical white household has more than ten times the wealth of the typical black household.

Blacks do worse than whites on every rung of America’s educational ladder (see chart). A smaller share of black students completes high school, a smaller share attends university and a smaller share graduates. Black students are heavily...Continue reading

from Economics http://ift.tt/1LomKgV
via IFTTT

What a carry on

NEXT month will probably see the first great divergence in monetary policy since the financial crisis of 2008. The Federal Reserve is widely expected to push through a rate increase—its first since 2006. But the European Central Bank is expected to cut its deposit rate, already in negative territory, or to expand its programme of asset purchases. The Bank of Japan is also expected to maintain or amplify its expansionary monetary policy.

For the currency markets, the shift will herald a new era. Before 2008 one of the most popular strategies was the “carry trade”—borrowing in a low-yielding currency and investing in a higher-yielding one. But with interest rates in most of the rich world at or close to zero since 2008, there has been little carry to trade.

After December traders can probably look forward to a prolonged divergence between interest rates in America and the euro zone. Back in 2010 the markets thought the first interest-rate increase by the Fed and the ECB would occur at roughly the same time. (In fact, the ECB fleetingly began raising rates in 2011, before cutting them again.) But now there is an expected...Continue reading

from Economics http://ift.tt/1QwoY63
via IFTTT

A funny form of conservation

TEMPORARY solutions have a way of becoming permanent. The fate of Fannie Mae and Freddie Mac, the two “government-sponsored enterprises” (GSEs) that stand behind much of America’s housing market, is a case in point. The GSEs, which buy American mortgages from banks and other originators, bundle them into securities and resell them to investors with a guarantee, are stuck in a technocratic no-man’s land. Their status has not yet been normalised after their first bail-out, but they may soon require a second. If they do, the administration of Barack Obama, which has been running them since 2009, will be largely responsible.

Fannie and Freddie were tethered to America’s housing market when it fell off a cliff in 2008. The GSEs faced a double impact: they had to cough up to honour their guarantees, while also suffering losses on their own big portfolios of mortgage-backed securities. The firms had an odd ownership structure, with a public charter, and thus an implicit government guarantee, but private shareholders. To stop them collapsing, which would have further hurt both the housing market and the financial system, the government...Continue reading

from Economics http://ift.tt/1LomK0w
via IFTTT

Data whizz wanted

Data whizz wanted: The Economist is looking for a data journalist to be based in London. Details of the job and how to apply can be found at: http://ift.tt/1X0UjSr

from Economics http://ift.tt/1QwoXii
via IFTTT

Swiped

Jam tomorrow

FIVE years ago the odds of being able to pay with a credit card at a street stall or coffee stand in America were next to zero. Nowadays, though, cash seems slightly déclassé at hipster cafes and fancy farmers’ markets. That is thanks largely to Square, a six-year-old firm which handles credit-card payments for 2m-odd small merchants and listed in New York this week.

A private fundraising last year valued Square at roughly $6 billion. The initial public offering (IPO) priced it at $2.9 billion, down by half. The valuation sent a frisson through Silicon Valley, where there are increasing concerns that the optimistic assumptions about the growth and profitability of many “unicorns”—privately held technology firms valued at over $1 billion—are unfounded. Square, the theory runs, may be the first of a series of “down rounds”, capital-raisings that sharply reduce valuations.

Nonetheless, the IPO still leaves Square more valuable than all but the biggest of America’s banks. That is controversial, since the firm has lost $420m since 2012 and has said it intends to lose more. Sceptics dismiss...Continue reading

from Economics http://ift.tt/1LomI8Y
via IFTTT

Impecunity in diversity

DURING the financial crisis, it looked like a stroke of genius. Huge foreign operations helped succour Spain’s two biggest banks, Santander and BBVA. Last year Santander boasted that it was one of the few big international banks not to have suffered a single quarterly loss throughout the crisis. But diversification cuts both ways: turmoil in emerging markets is now sapping profits at Santander and BBVA just as their home market recovers.

Less than 30 years ago, Santander was a smallish Spanish retail bank. Now it is a titan, operating in ten “core” countries, including emerging markets such as Brazil and mature ones such as Britain. BBVA, too, boasts a big retail-banking operation in multiple countries.

The problem is that at least one of each bank’s biggest markets always seems to be in trouble. This time, the weak link for Santander is Brazil, which accounts for about a fifth of its profits. The country has sunk into recession—one reason why Santander’s shares have fallen by about 20% since mid-July. BBVA makes about 70% of its profits in emerging markets, including 40% from Mexico, where BBVA owns Bancomer, the country’s biggest bank. The Mexican economy is not as wobbly as Brazil’s, but estimates of growth have dropped over the past year along with the oil price and the Mexican peso.

Moreover, although scale does bring benefits,...Continue reading

from Economics http://ift.tt/1QwoXPi
via IFTTT

The Paris climate-change conference needs to be more ambitious

In December talks in Paris involving more than 200 countries may result in a new agreement aimed at reducing carbon emissions. In the months leading up to the conference, The Economist will be publishing guest columns by experts on the economic issues involved. Here, Thomas Sterner of the Univesity of Gothenburg argues that countries attending the Paris talks will need to be more ambitious than they have so far.

WHEN world leaders went to the Copenhagen climate conference in 2009, it was with a sense of great optimism that it might result in meaningful progress toward global climate and development goals. Those ambitions quickly proved unrealistic. But sentiment now seems to have moved too far in the other direction. As the climate change conference scheduled to take place in December in Paris draws nearer, the goals being set for the conference are far too modest rather than too ambitious.

Remember the photo with Angela Merkel, Germany's...Continue reading

from Economics http://ift.tt/1S4hiWd
via IFTTT

A world of debt

Governments do not know the best way to save the Amazon rainforest. And that needs to change

In December talks in Paris involving more than 200 countries may result in a new agreement aimed at reducing carbon emissions. In the months leading up to the conference, The Economist will be publishing guest columns by experts on the economic issues involved. In this post, several economists from the TSE, INRA, University of Toronto and University of Pennsylvania argue that more evidence-based policy making is needed in the battle against deforestation.

IT IS widely agreed that worldwide deforestation is bad for the environment. It is responsible for about 10% of climate-change emissions and leads to massive reductions in biodiversity. The shrinkage of the Amazonian rainforest—the most well-known example of deforestation—reached a peak of 2.8 million hectares in 2004, an area almost the size of Belgium.

How can we protect forests? One option is direct regulation: in other words the placement of restrictions on road building or the establishment of protected areas. Another option is to impose a fine or tax on forest clearing. Governments can also pay landowners to conserve their forest under a “payment for ecosystem services” (PES) contract. It might even be possible to let forest owners trade-avoided emissions on a worldwide carbon market, so that forest owners are paid by those burning fossil fuels to...Continue reading

from Economics http://ift.tt/1H65GRY
via IFTTT

Why terrorism has a limited impact on markets

FOR some people, even to discuss the impact on an economy, let alone financial markets, of a tragedy such as the Paris attacks is poor taste. But one of the aims of terrorists is to cause economic and financial damage; hence the attacks on Wall Street on 9/11 or on tourists in Tunisia earlier this year. So the issue is worth considering.

Despite some dire predictions at the weekend, financial markets have been remarkably sanguine in the face of this latest tragedy; at the time of writing, both the London and Frankfurt markets are up on the day. In this, investors may be learning from past experience. The events of 9/11 - an atrocity on a vastly greater scale than anything that preceded it - may have reduced GDP growth in the US that year by half a percentage point; the stockmarket (which was closed for a few days) recovered all its losses within a month. In July 2005, when suicide bombers attacked the London transport network, the UK market recovered within days; British GDP rose 0.8% that quarter.

The attacks may cause a short-term disruption to economic life; people may decide not to visit town centres for a few days. But this generally means they postpone their consumption rather than abandon it; economic activity is simply shifted from one period to the next. In...Continue reading

from Economics http://ift.tt/1Qqh6mn
via IFTTT

The world's never-ending debt story

THIS week's print edition has an array of economics articles that may be of interest. This week's briefing, on how debt crises have leaped from continent to continent over the last decade, is particularly worth reading at:

The world economy: The never-ending debt story (Leaders)

The world economy: Pulled back in (Briefing)

And don't forget to take a look at this week's Free Exchange column, which looks at the impact of the TPP deal.

from Economics http://ift.tt/20WKOmD
via IFTTT

Some simple rules of thumb

TYLER COWEN has set out his macroeconomic framework, circa 2015. I am surprised at how much there is to his list that I disagree with. Rather than nitpick, however, I'll give my own very general framework. There is a lot of nuance and detail left out of the list below; it is more a set of rough principles.

1) Supply-side policy is hard. Why is America the richest large economy in the world? Well, because output per person has grown at about 2% per year, on average, for a very long time. How did it manage that? I have a long list of policy choices and characteristics and historical accidents that I believe contributed, but I would find it very difficult to say which of those factors were most important. If someone gave me free reign over the German economy and asked me to raise its output per person to American levels, I know the sorts of things I would do, but I have a low level of confidence that I could succeed, or even close much of the gap, within a generation.

2) That doesn't mean that supply-side policy should be ignored. Supply-side reforms (of the sort this newspaper tends to favour) are politically difficult to achieve, but many of them are probably at least somewhat useful and should be undertaken whenever the political environment is...Continue reading

from Economics http://ift.tt/1HMXpNu
via IFTTT

Straitened circumstances

THE Chinese theory about economic integration with Taiwan is that it will bind the two together politically. Taiwan will become ever more reliant on China for its prosperity, paving the way to eventual unification. Many in Taiwan fear this process is under way. But now the premise of the theory—that closer ties with China are essential for growth—is being tested by a sharp economic slowdown in Taiwan.

Over his nearly eight years in office, Ma Ying-jeou, Taiwan’s president, has pushed for a detente with China. A flurry of deals, including a limited free-trade agreement, has fuelled business ties. Taiwanese exports to China have soared, as has Chinese investment in Taiwan. A recent meeting between Mr Ma and Xi Jinping, China’s president, in Singapore—the first between leaders of the two countries—was meant to show the promise of more co-operation.

Awkwardly, though, Taiwan’s economy is in a slump. GDP shrank by 1% year on year in the third quarter, its first contraction since 2009. Last year Taiwan grew by 3.8%. Many analysts had expected about the same this year. Instead, it will do well to hit 1%, says Gordon Sun of the Taiwan...Continue reading

from Economics http://ift.tt/1NNoDdo
via IFTTT

Supersize me

THIS week Amundi, one of Europe’s biggest money managers with €950 billion ($1 trillion) of assets, took a step towards becoming bigger still. On November 12th it listed on the Paris stock exchange in the biggest initial public offering of a financial firm in continental Europe since the $2.7 billion flotation in Amsterdam last year of Pershing Square, an American hedge-fund manager. Société Générale, a French bank, is selling its 20% stake to increase capital buffers; Crédit Agricole, another bank and the owner of the rest of Amundi, is selling up to 5%.

By moving Amundi out of the shadow of its two parents, the listing will make it easier for the firm to attract new partners and, in particular, pave the way for acquisitions. That is not because Amundi is retaining the proceeds of the IPO (those go to Société Générale and Crédit Agricole), but because future takeovers can now be financed by issuing more shares. Moreover, once a company is listed it is easy to value, something that could ease a big merger in future. In addition Amundi has €1.3 billion in cash that Yves Perrier, its chief executive, has promised to...Continue reading

from Economics http://ift.tt/1NNoF50
via IFTTT

A graph a minute

ECONOMICS is not usually associated with humour. But once a year in the Irish city of Kilkenny, organisers of the “Kilkenomics” festival try to inject some merriment into the dismal science. When it started in 2010 as Europe’s first festival to combine economics and comedy, Ireland was in no mood for laughter. As ten-year Irish bond yields spiked to 9%, the festival organised its own mock rating agency: Moody and Poor. Shortly after, the government was forced to accept an €85 billion ($112 billion) bail-out.

Five years on, the festival has moved beyond austerity-focused sessions like “Grannies for gold: how to sell your families on Amazon”, notes Dermot Whelan, a comedian. Panellists at this month’s event pondered whether Ireland was on the cusp of a golden era, with Bill Black, an expert on financial crime, concluding that it “will look like a star in the euro zone because the euro zone is crap”.

Panellists did their best to put the fun back into fundamental welfare theorems. A discussion of whether money makes you happy included the answer to how bankers sleep at night: on big piles of cash. Diane Coyle, an economist, predicted that technological change would transform future generations—by giving them hunched shoulders and flexible thumbs.

Economists themselves came in for a little teasing too. Stephen Kinsella of the...Continue reading

from Economics http://ift.tt/1NNoF4W
via IFTTT

Marjorie Deane internship

Applications are invited for a Marjorie Deane internship in The Economist’s New York bureau. The award is designed to provide work experience for a promising journalist or would-be journalist, who will spend 3-6 months at The Economist writing about economics and finance. Applicants are asked to write a covering letter and an article of no more than 500 words, suitable for publication in The Economist. Applications should be sent to deaneinternny@economist.com by December 20th.

from Economics http://ift.tt/1SLqIGI
via IFTTT

Born to run

FIXING the banking system to prevent another crisis on the scale of 2007-08 is a fiddly and time-consuming task. It is not the kind of thing that generates tabloid headlines and public approbation. But another important stage in the process was reached on November 9th when the Financial Stability Board (FSB), a global regulators’ forum, issued new guidelines on bank balance-sheets.

The underlying problem is as ancient as banking itself: banks lend out more money than they have capital to absorb losses. If their loans go sour (or if the banks’ own creditors, including depositors, lose confidence), institutions can rapidly go bust. And then, because of the importance of the banking system to the economy, governments feel obliged to ride to the rescue at potentially vast cost.

To avoid this danger, the FSB wants private investors to bear the cost of bank failure. As well as their equity capital, banks should issue a new type of debt with terms that make it explicit that the lenders will be among the first to take a hit if the bank gets into trouble. This has two advantages. First, severe bank losses will be absorbed by these bondholders and...Continue reading

from Economics http://ift.tt/1NNoEOz
via IFTTT

Paddy-whacked

NEARLY 16% of Indonesia’s 250m people survive on $1.90 a day or less, as do more than 6% of Cambodia’s 15m people. In both countries, rice is the staple crop, providing more than half the daily calories of the poor. That puts needy Cambodians at a distinct advantage: between January of last year and April of this, the average wholesale cost of a kilo of rice in Cambodia was roughly $0.40, while in Indonesia it was nearly $0.70.

There are a few reasons why rice is more expensive in Indonesia. For one, it is a net importer, whereas Cambodia grows more than it needs. Indonesia is also a far-flung archipelago with abysmal infrastructure, which raises transport costs. But David Dawe of the Food and Agriculture Organisation (FAO), a division of the United Nations, has found that transport costs account for only a small share of the gap in prices. Instead, the culprit is policy.

Like many Asian countries, Indonesia wants to be self-sufficient in rice. But as well as trying to help farmers become competitive through investments in agriculture and infrastructure, its government, like others in the region, manipulates the rice market through a...Continue reading

from Economics http://ift.tt/1SLqIGE
via IFTTT

A serviceable deal

IT DID not take long for America’s presidential candidates, busy though they must be, to digest the 6,000 pages of the agreement creating the “Trans-Pacific Partnership” (TPP). America and 11 other countries of the Pacific Rim struck the trade deal in early October, but the full text was not released until November 5th. Within days Bernie Sanders, a Democrat, had rendered judgment: “It’s even worse than I thought.” Donald Trump, a Republican, labelled it “insanity”.

Even people of a less protectionist bent are unimpressed, complaining that TPP’s short-term benefits will be indetectably modest. One estimate suggests that in its first ten years it will cause its members’ exports of goods and services to rise by just $308 billion in total. In 2003-13 global trade in goods and services grew by more than $1 trillion a year on average. A ten-year horizon misses the point, however. TPP’s real promise lies in the liberalisation of trade in services. Just as it took decades for supply-chain integration to flower into the rapid goods-trade growth of the 1990s and 2000s, the pay-off from TPP, and deals like it, is further off.

TPP...Continue reading

from Economics http://ift.tt/1SLpxHt
via IFTTT

Abnormally normal

FROM John Rockefeller’s Standard Oil in the late 1800s, through the Railroad Commission of Texas in 1930, to OPEC since 1960, institutions have long tried to control and stabilise the oil market for their own benefit. Only rarely, says Jason Bordoff, director of Columbia University’s Centre on Global Energy Policy, has the oil market behaved like a normal market, more subject to the laws of supply and demand than to the whims of a cartel. Now is one of them.

Take supply. A year ago Saudi Arabia refused to allow OPEC to try to raise prices by pumping less crude, in the hope that a low price would drive competitors, especially America’s shale-oil producers, out of business. Since then it has used its low cost of production to carve out a bigger slice of the pie. It has fought with Russia and fellow OPEC members to sell oil to China. Seth Kleinman of Citibank says that it has recently sought to displace Russian crude going into refineries in Sweden and Poland, and cut prices across Europe.

Producers with higher costs, including big listed oil firms and many rival national oil companies, have also behaved rationally,...Continue reading

from Economics http://ift.tt/1GXdo0O
via IFTTT

Do ultra-low interest rates really damage growth?

IT’S ONE of the fundamental lessons of any introductory economics course: lower interest rates, when all else remains equal, leads to higher levels of investment. But today, after several years of near-zero interest rates and only modest increases in investment to show for it, some economists are claiming just the opposite.

On October 26th, an op-ed in the Wall Street Journal by Michael Spence and Kevin Warsh, both of Stanford University, argued that the Federal Reserve’s $3 trillion bond-buying programme, which was designed to push down long-term rates and boost corporate borrowing, has actually caused business investment to fall. The authors write that the Fed’s unconventional policies to expand the money supply, known as quantitative easing (QE), have made short-term financial assets like stocks and bonds more appealing as their capital value increases, thereby diverting capital from more productive longer-term investments in the “real economy”. The result has been low investment growth, weak productivity, and stagnant...Continue reading

from Economics http://ift.tt/1RQkoNl
via IFTTT

Why running a budget deficit can reduce the national debt

YESTERDAY, at an event organised by the Resolution Foundation, a think-tank, their chief economist, Matt Whittaker, said something that made a few people sit up. He remarked that it would be simultaneously possible to run a budget deficit (ie, where government spending exceeds taxation) and reduce the burden of government debt at the same time. Now, to British ears this sounds impossible. Running a budget surplus, as the chancellor of the exchequer, George Osborne, is desperate to do (on the wisdom of that, see here) is often elided with paying down the national debt, which currently stands at around 80% of GDP (bailed-out banks notwithstanding). 

And in a way, that does make sense. If the government gets more in taxes than it spends, it will have money left over to repay debt. And given the government does not have to borrow more money, it does not need to issue any more debt. So eventually, the stock of debt will fall.

However, the stock of debt doesn't really matter, for all intents and...Continue reading

from Economics http://ift.tt/1SJuKzj
via IFTTT

Economics and comedy can combine surprisingly well

ECONOMICS is not usually associated with jokes. But once a year in the city of Kilkenny, in Ireland, organisers of the “Kilkenomics” festival inject fun into the dismal science. When it started back in November 2010 as Europe’s first combined economics and comedy festival, the Irish government was in no mood for laughter. As Ireland’s 10-year bond yields spiked to 9%, the festival organised its own mock ratings agency: Moody and Poor. Weeks later the government agreed an €85 billion ($91 billion) bailout deal.

Five years later, the festival has moved beyond sessions like “grannies for gold: how to sell your families on Amazon”, and “breakfast cereal for dinner: it’s okay to use a fork”, in the words of Dermot Whelan, a comedian. This year, over four days from November 5th, panellists pondered whether Ireland was on the cusp of a golden era, with professor Bill Black concluding that “Ireland will look like a star in the euro zone because the euro zone is crap”.

Beyond the woes of the Irish economy, the panellists did their best to put the fun in the fundamental welfare theorems and the...Continue reading

from Economics http://ift.tt/1SIfpip
via IFTTT

Shy unicorns

SOME of Silicon Valley's most successful companies have yet to go public. The private world of "unicorns" is a gentler place than the stock market, perhaps artificially.

Pensions in America, housing booms and Abenomics

THIS week's print edition has an array of economics articles that may be of interest. The following have particularly caught our eye:

This week's Buttonwood column, which argues that Americans are not saving enough for their retirement.

Our coverage of housing booms in San Francisco and Sweden.

And don't forget to take a look at this week's Free Exchange column, which takes a look at Abenomics in Japan.

from Economics http://ift.tt/1LV80Kf
via IFTTT

Why politicians are asking the wrong questions about gender inequality

ONE issue that virtually every Democratic presidential candidate has weighed in on this year is the wage gap between the sexes. The most commonly-cited statistic is that women make just 77 cents for every dollar men do, with the implication being that the 23-cent gap is a result of discrimination. While the statistic is accurate, interpreting it requires some nuance: at least some of the gender pay gap can be explained by differences in things like the number of hours worked or type of careers each gender pursues.

Economic research suggests that the majority of the gender pay gap is because of differences within occupations rather than across them. What is tougher to determine is if women make less for “same work”: studies tend to rely on data from the US Census Bureau and the Bureau of Labour Statistics which are reliable but lack detail when it comes to specific occupations. For instance, in the American Community Survey, one of the most popular sources of data, all doctors fall under the classification “physicians and surgeons” which is problematic since salaries can vary greatly depending on what sort of specialism...Continue reading

from Economics http://ift.tt/1Hu33nN
via IFTTT

The damage

BANKS have been at the centre of Greece’s economic and financial misfortunes this year, as the radical-left Syriza party won an election and then became embroiled in a bitter struggle with the country’s international creditors. Deposits drained out of them on fears that the country would leave the euro and revert to the drachma, inflicting huge losses on depositors. Banks’ woes multiplied when the European Central Bank (ECB) refused to provide them with further liquidity, forcing the government to close them for three weeks during the summer and to impose capital controls. In the end, Greece managed to secure a third bail-out and stay in the euro. But the injuries the banks had sustained along the way seemed ruinous.

As a result, the €86 billion ($94 billion) bail-out from the European Stability Mechanism (ESM), the euro zone’s rescue fund, included a buffer of up to €25 billion, or 14% of GDP, to rebuild the banks. The exact amount would be specified once the supervisors had combed through their books. The ECB, which has directly supervised big banks in the euro zone for the past year, was to examine the four main Greek...Continue reading

from Economics http://ift.tt/1XSDPJ4
via IFTTT

Feeling special

THE summer of 1969 is remembered for many things: the moon landing, Woodstock and the start of American troop withdrawals from Vietnam. The International Monetary Fund’s creation of the Special Drawing Right (SDR) does not rank high on this list. An artificial accounting unit, the SDR resides on the margins of the global financial system. But over the next few weeks, China will haul it into the spotlight.

The question is whether the IMF will include the yuan in the basket of currencies of which the SDR is composed. Its decision, part of a five-yearly review, is expected at the end of the month. Since the late 1990s the SDR has comprised four currencies: the dollar, the euro, the pound and the yen. The IMF allocates some of its notional stash of SDRs to its members, which can be swapped in a pinch for their constituent parts to make external payments.

Adding the yuan to the basket would give it the IMF’s imprimatur as a reserve currency: easily tradable and a good store of wealth. This does not mean it would suddenly rival the dollar. The outstanding value of SDRs is just over $300 billion, about 2.5% of global...Continue reading

from Economics http://ift.tt/1Q71h3Y
via IFTTT

A sticky situation

Agents of extortion

TOURISTS flock to Quebec each autumn to see its forests turn bright colours. The beautiful foliage, however, conceals a dark secret: the province’s tree-tappers are ripping off pancake-lovers. The Federation of Quebec Maple Syrup Producers (FPAQ) tries to control the price of its product much as OPEC does that of oil. Its members—and all syrup producers in the province must join or risk having their output seized by FPAQ’s enforcers—are subject to quotas. Any excess syrup is put into FPAQ’s stockpile, and producers only get paid for it when it is sold, often years later. The intention is to keep prices high and stable by limiting supply. But like most cartels, FPAQ is sapping its own prospects.

Quebec is the Saudi Arabia of syrup, accounting for 71% of global production. But in a bittersweet echo of the oil price run-up of recent years, high prices have encouraged the development of new supplies. America’s maple-syrup harvest grew from 21m pounds (7.2m litres) in 2012 to 35m in 2014. The state of New York alone has more maple trees than all of Quebec, although few of them are tapped. America...Continue reading

from Economics http://ift.tt/1Q71gNr
via IFTTT

Pots and kettles

TWO of the five seats on the Securities and Exchange Commission (SEC), the main Wall Street regulator, are about to be filled. The process is a partisan one, with Barack Obama, a Democrat, picking one new commissioner and the Republican leadership of the Senate the other. That, naturally, is a recipe for discord at an already bruised agency. Its clout has diminished thanks to its poor oversight of investment banks before the financial crisis, to say nothing of its failure to spot the Ponzi scheme of one Bernard Madoff. Now new research suggests that the SEC is doing less well at its main job—policing firms that list shares or issue bonds, among other investments—than its own data suggest.

Start with the new commissioners. Even as the SEC’s standing among regulators has diminished, the Dodd-Frank act of 2010, which overhauled financial regulation in America, has added to its responsibilities, from gathering better data on corporate pay to supervising credit-rating agencies. The two new arrivals are likely to undermine, or at least complicate, much of this additional work. That is because the two nominees, who have yet to be approved by the Senate,...Continue reading

from Economics http://ift.tt/1XSDTZt
via IFTTT

Home is where the heartache is

A rare sight

ASK a central banker what regulators should do when rock-bottom rates cause house prices to soar, and the reply will almost always be “macropru”. Raising rates to burst house-price bubbles is a bad idea, the logic runs, since the needs of the broader economy may not square with those of the property market. Instead, “macroprudential” measures, meaning restrictions on mortgage lending and borrowing, are seen as the answer. But this medicine is hard to administer, as Sweden’s housing market vividly illustrates.

Swedish house prices have doubled in the past decade, their rapid ascent only briefly interrupted by the financial crisis (see chart). So far this year they have risen by about 14%. Apartment prices have been even giddier, rising by more than 150% in ten years.

In part, this is a simple function of supply and demand. Stockholm is among Europe’s...Continue reading

from Economics http://ift.tt/1XSDTZg
via IFTTT

Age may well wither them

EVERYONE knows that the baby-boomer generation is in the process of retiring, and that all those ex-hippies and punks can expect to live longer than the Americans who retired before them. But the financial challenge this poses is less well understood. Any lingering complacency ought to be exploded by two papers in the latest Journal of Retirement.

The first*, from the Centre for Retirement Research (CRR) at Boston College, estimates the proportion of 65-year-olds who will be able to retire without a big hit to their disposable income. Pensioners do not usually need as much money coming in as workers: for a start, they no longer need to save for retirement. The CRR estimates that 65-85% of their previous income is a reasonable “replacement rate”, depending on the type of household.

As well as private pensions, elderly Americans receive income from the federal government (in the form of Social Security, the public pension) and many earn money from their accumulated wealth, particularly by taking equity out of their houses. Even allowing for these sources of income, the CRR estimates that 52% of Americans may not...Continue reading

from Economics http://ift.tt/1Q71fJh
via IFTTT

The Japanese solution

THERE are four kinds of countries in the world, the Nobel-prize-winning economist Simon Kuznets supposedly said: developed, undeveloped, Argentina and Japan. Yet much of the rich world now looks remarkably Japanese, with chronically low interest rates and inflation, and eye-watering levels of sovereign debt. Many governments are therefore watching keenly as Shinzo Abe, the prime minister elected in 2012 on a platform of economic rejuvenation, takes on Japan’s economic mess. His task is harder than many appreciate. What is needed is not simply growth, but growth fast enough to allow Japan to come to grips with its massive public debt.

Mr Abe promised three expansion-boosting “arrows”—fiscal, monetary and structural—to deliver a much more powerful stimulus than the half-measures taken by previous governments. In September of this year he gave a clearer sense of the end-goal: a 20% rise in Japan’s nominal GDP (NGDP), to ¥600 trillion ($5 trillion) from the current ¥500 trillion, where it has stood for the past 20 years, more or less.

Mr Abe’s archery has moved the economy in the right direction. NGDP, which measures...Continue reading

from Economics http://ift.tt/1Q71fcb
via IFTTT

The mega-haven

THE world is becoming less welcoming to tax dodgers. That is the conclusion of the latest Financial Secrecy Index, published every two years by the Tax Justice Network (TJN), an NGO. It looks at various measures of financial transparency and information-sharing in more than 90 countries, then weights them according to the level of financial services each country provides to non-residents. Most countries’ scores have fallen since 2013, indicating greater transparency. Among the biggest improvers are the Cayman Islands, once a notorious tax haven, and Luxembourg, which tax campaigners used to call Europe’s “death star” of financial secrecy.

The reason for the shift is the global, austerity-era push for countries to share more information on tax arrangements. Under the fast-spreading, OECD-sponsored Common Reporting Standard, countries will routinely exchange data on each other’s citizens so they can be taxed appropriately in their home countries. Rules on the registration of corporate ownership are being tightened, too, in order to reduce opportunities to hide dirty money in anonymous shell companies.

But America, the country that has arm-twisted so many others to join the transparency revolution, is dragging its feet. It is now the third most secretive jurisdiction, behind Hong Kong and, inevitably, Switzerland (where rumours of the death of bank...Continue reading

from Economics http://ift.tt/1XSDPZI
via IFTTT

The Bank of England may not raise interest rates until 2017

TODAY is the Bank of England's second Super Thursday, when it makes its monthly interest-rate decision, releases the minutes of the previous meeting, and publishes its quarterly inflation report, complete with projections of price pressures and GDP growth. Earlier this year, there was chatter among pundits saying that the next interest-rate rise would be soon, fuelled by statements by Mark Carney, the bank's governor, and others saying that D-day was nearing. 

But since the first Super Thursday, Britain’s economy has weakened. In the third quarter it grew by 0.5%, less than the bank had expected and below last year’s pace. Not only did the Bank of England announce today that they decided to keep interest rates on hold, it also said that inflation would remain below the bank's target rate of 2% all through 2016, even if rates were held at 0.5%. More super whimper than Super Thursday.

from Economics http://ift.tt/20xaF4k
via IFTTT

How uncertainty over future interest rates should shape policy today

THE question of when interest rates will rise gets frequent attention. Less energy is spent wondering where they will end up in the long-run. But for companies thinking about long-term investment projects, and savers planning for retirement—who will need to contribute more to their pension pots should rates stay low—the second question is at least as important as the first. Two new papers from the Brookings Institution, presented at a conference on October 30th, seek to answer it.

In the long-term, interest rates are beyond the control of central banks like America’s Federal Reserve. If the Fed sets rates too high or too low, inflation will veer off-course. Where rates must eventually settle to keep inflation stable depends on economic circumstances. In particular, it depends on what “real” interest rate—the return to saving, adjusted for inflation—balances the economy’s demand with what it can supply. This elusive sweet spot is called the “equilibrium real rate”.

A long list of factors should, in theory, affect the equilibrium real rate. Top of the list is economic growth. If the economy is expanding quickly,...Continue reading

from Economics http://ift.tt/1kbtSrR
via IFTTT

Money talks: The trust machine

Brazil's economy, bank regulation and happiness

THIS week's print edition has an array of economics articles that may be of interest. The following have particularly caught our eye:

Brazil's economy: Broken lever (Finance)

Container shipping: The big-box game (Business)

Bank regulation in China: Letting go (Finance)

And don't forget to take a look at this week's Free Exchange column, which looks at the relationship between money and happiness.

from Economics http://ift.tt/1RKyLCx
via IFTTT