The COVID-19 crisis has caused the greatest collapse in global economic activity since 1720. Some... more The COVID-19 crisis has caused the greatest collapse in global economic activity since 1720. Some advanced countries have mounted a massive fiscal response, both to pay for disease-fighting action and to preserve the incomes of firms and workers until the economic recovery is under way. But there are many emerging market economies which have been prevented from doing what is needed by their high existing levels of public debt and-especially-by the external financial constraints which they face. We argue in the present paper that there is a need for international cooperation to allow such countries to undertake the kind of massive fiscal response that all countries now need, and that many advanced countries have been able to carry out. We show what such cooperation would involve. We use a global macroeconomic model to explore how extraordinarily beneficial such cooperation would be. Simulations of the model suggest that GDP in the countries in which extra fiscal support takes place would be around two and a half per cent higher in the first year, and that GDP in other countries in the world be more than one per cent higher. So far, such cooperation has been notably lacking, in striking contrast with what happened in the wake of the Global Financial Crisis in 2008. The necessary cooperation needs to be led by the Group of Twenty (G20), just as happened in 2008-9, since the G20 brings together the leaders of the world's largest economies. This cooperation must also necessarily involve a promise of international financial support from the International Monetary Fund, otherwise international financial markets might take fright at the large budget deficits and current account deficits which will emerge, creating fiscal crises and currency crises and so causing such expansionary policies which we advocate to be brought to an end.
The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. ... more The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. In this paper, we compare CU formation with and without this Article XXIV constraint. We show, in a multi-country oligopoly model, that for a given CU structure, Article XXIV improves world welfare by lowering trade barriers. However, we also show that Article XXIV has a composition effect on CU formation: it affects the endogenous choice of CUs. By encouraging more symmetric CUs, Article XXIV causes more trade to be subject to trade barriers. As a result, Article XXIV may be 'bad' for world welfare.
In the United Kingdom, as elsewhere, there has been a debate on how to escape from lockdown witho... more In the United Kingdom, as elsewhere, there has been a debate on how to escape from lockdown without provoking a resurgence of the Covid-19 disease. This paper presents a simple cost-benefit analysis inspired by optimal control theory, incorporating an SEIR model of disease propagation. Our calibration accords with UK experience and simulations start from the beginning of January 2021. The optimal path for government intervention is computed under different assumptions about the value of life. We examine how the test & trace system and vaccination affect this optimal path and show that these policies are complements. Test & trace has most effect at the beginning when prevalence is high, whereas vaccination only affects infections gradually. Comparing optimal paths, we show that economic cost is much lower under vaccination alone than under test & trace alone. Deaths, in contrast, are somewhat higher under vaccination. In general, the greater is the value of life, the longer is the op...
This paper shows that the WTO's Article XXIV increases the likelihood of free trade, but may wors... more This paper shows that the WTO's Article XXIV increases the likelihood of free trade, but may worsen world welfare when free trade is not reached and customs unions (CUs) form. We consider a model of many countries. Article XXIV prevents a CU from raising its common external tariff, which makes CU formation less attractive and explains why free trade is more likely. In an equilibrium where two CUs do form, one is necessarily larger than the other. We show that Article XXIV has a 'composition effect' on CU formation, whereby CUs are (endogenously) more symmetric in size so more goods are subject to tariff distortions as they move between CUs; thus Article XXIV may be 'bad' for world welfare.
This paper analyses the e¤ects of in ‡ation shocks, demands shocks, and aid shocks on low-income,... more This paper analyses the e¤ects of in ‡ation shocks, demands shocks, and aid shocks on low-income, quasi-emerging-market economies, and discusses how monetary policy can be used to manage these e¤ects. We make use of a model developed for such economies by . We examine the e¤ects of four things which this model features, which we take to be typical of such economies. These are: the existence of a tradeables/non-tradeables production structure, the fact that international capital movements are -at least initially -con…ned to the e¤ects of currency substitution by domestic residents, the use of targets for …nancial assets in the implementation of monetary policy, and the pursuit, in some countries, of a …xed exchange rate. We then modify the model to examine the e¤ect on such economies of three major changes, changes which we take to be part of the transition by such economies towards more fully- ‡edged emerging-market status: an opening of the capital account so that uncoveredinterest-parity comes to hold, a move to ‡oating exchange rates, and the replacement of …xed stocks of …nancial aggregates by the pursuit of a Taylor rule in the conduct of monetary policy.
Education is a fundamental aspect in building a civilization. The human role as actor of educatio... more Education is a fundamental aspect in building a civilization. The human role as actor of education will determine development and lack of nation. Education system becomes an important indicator in shaping people educated and superior. The aim of this study is to highlight some major issues in Indonesia such as social justice, politic, economy, and education that built by incorrect concept of knowledge. Rabbani education is one model that emphasizes religious values to reach the peak of civilization as the best nation (Ummah Wasatan). Rabbani is solution for Ummah, particularly in dealing with major social problems such as corruption, violation of human right, scandal and poverty. This paper used qualitative method by using a descriptive approach to obtain the true data. The most important result is Rabbani education can be implemented in the curricula of Indonesia's education as the main spirit in performing a comprehensive, progressive and affective education.
The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. ... more The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. In this paper, we compare CU formation with and without this Article XXIV constraint. We show, in a multi-country oligopoly model, that for a given CU structure, Article XXIV improves world welfare by lowering trade barriers. However, we also show that Article XXIV has a composition effect on CU formation: it affects the endogenous choice of CUs. By encouraging more symmetric CUs, Article XXIV causes more trade to be subject to trade barriers. As a result, Article XXIV may be 'bad' for world welfare.
This Discussion Paper is issued under the auspices of the Centre's research programme in INT... more This Discussion Paper is issued under the auspices of the Centre's research programme in INTERNATIONAL TRADE AND REGIONAL ECONOMICS. Any opinions expressed here are those of the author(s) and not those of the Centre for Economic Policy Research. Research ...
This book is the first in a major new series examining global economic institutions and contrasts... more This book is the first in a major new series examining global economic institutions and contrasts regional economic integration in the Asia Pacific region and in Europe. In the Asia Pacific region, regionalism is developing by means of'open regionalism', constructed through the ...
Bank of England, FMG and University of Oxford. The views expressed are those of the author and do... more Bank of England, FMG and University of Oxford. The views expressed are those of the author and do not necessarily reflect those of either the Bank of England or the FMG of the LSE or the University of Oxford.
at Austin. Financial support from The Brookings Institution is gratefully acknowledged. This pape... more at Austin. Financial support from The Brookings Institution is gratefully acknowledged. This paper forms part of research being carried out by David Vines and Mathan Satchi for the Leverhulme Trust on "EMU and European Macroeconomic Policy in a Global Context". We are grateful to the Leverhulme Trust for its financial support under grant no. F/108 519A. The data underlying the new version of the model used in this paper are from the International Economics Database at ANU and GTAP version 5 as well as the MSG database. Alison Stegman provided valuable assistance with the data revisions. The views expressed in this paper are those of the authors and should not be interpreted as reflecting the views of any of the organizations with which the authors are affiliated. Documentation of the models and applications to which the paper refers can be found at www.gcubed.com ISBN: 1 74032 054 9 This Working Paper series provides a vehicle for preliminary circulation of research results in the fields of economic development and international trade. The series is intended to stimulate discussion and critical comment. Staff and visitors in any part of the Australian National University are encouraged to contribute. To facilitate prompt distribution, papers are screened, but not formally refereed.
This paper argues that the Covid recession, and aggressive monetary tightening in the US accompan... more This paper argues that the Covid recession, and aggressive monetary tightening in the US accompanying the post-Covid recovery, are likely to cause a sovereign debt overhang in emerging market economies—i.e. debt which is unlikely to be fully repaid. A sovereign debt reconstruction mechanism (SDRM) seems necessary to avoid widespread disorderly debt write-downs. We discuss a range of procedures that are available, building upon Anne Krueger’s proposal for an SDRM in 2002 (Krueger, 2002a,b). At that time Krugman (1988) had already argued that any SDRM should incentivize debtors so that they put in effort to clear their debts (a Krugman contract). Menzies (2004) went further than this to show that these effects should be further sharpened, creating what he called ‘hyper-incentive effects’ (a Menzies contract). The International Monetary Fund has argued that risk-sharing between debtors and creditors will also be important (IMF, 2020). But we show that risk-sharing will—in general—pull ...
In this paper we analyse why an understanding of the global ‘non-system’, in which we now live, t... more In this paper we analyse why an understanding of the global ‘non-system’, in which we now live, took so long to arrive after the Bretton Woods system collapsed in 1971. We first describe how knowledge of how an inflation-targeting regime would operate—what we call ‘Taylor-rule macroeconomics’—was only gradually created during the 1970s, 1980s, and 1990s. We then describe how, subsequent to this, an awareness emerged, also gradually, of how the international non-system might work, depending, as it does, on Taylor-rule macroeconomics being already in place. We then discuss the Great Moderation, making clear that a well-functioning global non-system would require not just inflation targeting and floating exchange rates in each country, but also adequate fiscal discipline, and a satisfactory form of financial regulation. We describe how a well-functioning version of this global non-system would actually fit together. We then discuss how this non-system has responded to two enormous chal...
This paper argues for the regular testing of people in groups that are more likely to be exposed ... more This paper argues for the regular testing of people in groups that are more likely to be exposed to SARS-CoV-2, to reduce the spread of COVID-19 and resume economic activity. We call this ‘stratified periodic testing’. It is ‘stratified’ as it is based on at-risk groups, and ‘periodic’ as everyone in the group is tested at regular intervals. We argue that this is a better use of scarce testing resources than ‘universal random testing’, as has been recently discussed globally. We find that, under reasonable assumptions and allowing for false negative results 30 per cent of the time, 17 per cent of a subgroup would need to be tested each day to lower the effective reproduction number R from 2.5 to 0.75, under stratified periodic testing. Using the same assumptions the universal random testing rate would need to be 27 per cent (as opposed to 7 per cent as argued by Romer (2020b)). We obtain this rate of testing using a corrected method for calculating the impact of an infectious person...
Executive SummaryThe UK faces no easy options in determining how to develop its approach to inter... more Executive SummaryThe UK faces no easy options in determining how to develop its approach to international trade post-Brexit. If it finally decides to leave the European Customs Union and Single Market, it faces the possibility either of simply crashing out of the EU without a deal; trying to form market-access agreements and Free Trade Areas (FTAs) with the EU and other countries; or unilaterally reducing tariffs and liberalising trade with all countries. Each course raises significant practical difficulties, and entails major disadvantages compared with staying in the Customs Union and Single Market.The economic costs of a ‘no-deal’ approach stand to be very large, including inevitable tariffs, obstruction of UK access to EU markets, physical disruption at borders, a damping of investment and the much-discussed problem of the Irish border. Assuming ‘no-deal’ does not happen, negotiating FTAs with other countries would be possible only after a lengthy transition period, as in the Wi...
We examine how trustworthy behaviour can be achieved in the financial sector. The task is to ensu... more We examine how trustworthy behaviour can be achieved in the financial sector. The task is to ensure that firms are motivated to pursue the long-term interests of customers rather than pursuing short-term profits. Firms' self-interested pursuit of reputation, combined with regulation, is often not sufficient to ensure that this happens. We argue that trustworthy behaviour requires that at least some actors show a concern for the well-being of clients, or a respect for imposed standards, and that the behaviour of these actors is copied in such a way that it becomes a behavioural norm. We briefly suggest what such behavioural norms might need to be if trustworthy behaviour is to be achieved, and consider how they might be supported; we describe the research that is necessary in order to understand these norms in more detail. We argue that the norms of traders are different from the norms of those engaged in other activities, since they are inevitably self-interested, and we consider the risk that traders' norms might undermine those of other actors. We analyse the task for governance in dealing with this problem, and the role which leadership by a corporate board and management might play in doing this. We describe the need for further research to describe how this might be done.
Zeitschrift für Staats- und Europawissenschaften, 2011
This claim is not new: the lack of a fiscal-policy system of this kind within EMU was a major ana... more This claim is not new: the lack of a fiscal-policy system of this kind within EMU was a major analytical reason why the UK refused to join EMU. 1 But it is now very urgent. I maintain that the four actions enumerated in the previous paragraph are bound to fail unless they are also accompanied by the stability-oriented framework for fiscal policy which is described in this article. This new stability-oriented fiscal-policy framework is outlined in a paper by Christopher Allsopp and me which appeared in a volume edited by Marco Buti, Servaas Deroose, Vitor Gaspar and João Nogueira Martins and was entitled "The Euro: The First Decade". 2 That volume was the outcome of a conference held in October 2007, a meeting designed to celebrate the quality of economic policy-making within the Eurozone. It was hoped that the proceedings of that conference would be published with a fanfare in 2009, ten years after the birth of the Euro. Unfortunately, publishing delays meant that the volume only appeared in February 2010, barely three months before the eruption of the Greek crisis. The Allsopp-Vines paper, warning of difficulties with the SGP and advocating that it be radically reformed, appeared alongside a number of other papers, most of which painted a rosy picture of the Eurozone. With fitting irony, our article appeared as Chapter 13 in the volume. The present contribution first sets out the conventional wisdom on European macroeconomic policy-making. It then describes the conventional views about what has gone wrong and of what to do next, and points out the weaknesses of 1 See Westaway, P.: Modelling Shocks and Adjustment Mechanisms in EMU, London, 2003. This paper was published by the UK Treasury in support of the UK's decision not to join EMU. The other analytical reason for the UK not to join EMU was the "Walters Critique", which is discussed below. There were of course also political reasons for the UK's decision.
This is a response to a critique by Paul Davidson of our 2013 book Keynes: Useful Economics for t... more This is a response to a critique by Paul Davidson of our 2013 book Keynes: Useful Economics for the World Economy and related work, 3 where we describe, amongst other things, how the Swan diagram can be used to show how economies can use policy tools to achieve internal and external balance. In his article "Full Employment, Open Economy Macroeconomics, and Keynes' General Theory: Does the Swan Diagram Suffice?" Davidson rejects our use of the Swan diagram and argues that it distorts Keynes' own views. We show here why Davidson's critique is incorrect, inconsistent and ahistorical.
The COVID-19 crisis has caused the greatest collapse in global economic activity since 1720. Some... more The COVID-19 crisis has caused the greatest collapse in global economic activity since 1720. Some advanced countries have mounted a massive fiscal response, both to pay for disease-fighting action and to preserve the incomes of firms and workers until the economic recovery is under way. But there are many emerging market economies which have been prevented from doing what is needed by their high existing levels of public debt and-especially-by the external financial constraints which they face. We argue in the present paper that there is a need for international cooperation to allow such countries to undertake the kind of massive fiscal response that all countries now need, and that many advanced countries have been able to carry out. We show what such cooperation would involve. We use a global macroeconomic model to explore how extraordinarily beneficial such cooperation would be. Simulations of the model suggest that GDP in the countries in which extra fiscal support takes place would be around two and a half per cent higher in the first year, and that GDP in other countries in the world be more than one per cent higher. So far, such cooperation has been notably lacking, in striking contrast with what happened in the wake of the Global Financial Crisis in 2008. The necessary cooperation needs to be led by the Group of Twenty (G20), just as happened in 2008-9, since the G20 brings together the leaders of the world's largest economies. This cooperation must also necessarily involve a promise of international financial support from the International Monetary Fund, otherwise international financial markets might take fright at the large budget deficits and current account deficits which will emerge, creating fiscal crises and currency crises and so causing such expansionary policies which we advocate to be brought to an end.
The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. ... more The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. In this paper, we compare CU formation with and without this Article XXIV constraint. We show, in a multi-country oligopoly model, that for a given CU structure, Article XXIV improves world welfare by lowering trade barriers. However, we also show that Article XXIV has a composition effect on CU formation: it affects the endogenous choice of CUs. By encouraging more symmetric CUs, Article XXIV causes more trade to be subject to trade barriers. As a result, Article XXIV may be 'bad' for world welfare.
In the United Kingdom, as elsewhere, there has been a debate on how to escape from lockdown witho... more In the United Kingdom, as elsewhere, there has been a debate on how to escape from lockdown without provoking a resurgence of the Covid-19 disease. This paper presents a simple cost-benefit analysis inspired by optimal control theory, incorporating an SEIR model of disease propagation. Our calibration accords with UK experience and simulations start from the beginning of January 2021. The optimal path for government intervention is computed under different assumptions about the value of life. We examine how the test & trace system and vaccination affect this optimal path and show that these policies are complements. Test & trace has most effect at the beginning when prevalence is high, whereas vaccination only affects infections gradually. Comparing optimal paths, we show that economic cost is much lower under vaccination alone than under test & trace alone. Deaths, in contrast, are somewhat higher under vaccination. In general, the greater is the value of life, the longer is the op...
This paper shows that the WTO's Article XXIV increases the likelihood of free trade, but may wors... more This paper shows that the WTO's Article XXIV increases the likelihood of free trade, but may worsen world welfare when free trade is not reached and customs unions (CUs) form. We consider a model of many countries. Article XXIV prevents a CU from raising its common external tariff, which makes CU formation less attractive and explains why free trade is more likely. In an equilibrium where two CUs do form, one is necessarily larger than the other. We show that Article XXIV has a 'composition effect' on CU formation, whereby CUs are (endogenously) more symmetric in size so more goods are subject to tariff distortions as they move between CUs; thus Article XXIV may be 'bad' for world welfare.
This paper analyses the e¤ects of in ‡ation shocks, demands shocks, and aid shocks on low-income,... more This paper analyses the e¤ects of in ‡ation shocks, demands shocks, and aid shocks on low-income, quasi-emerging-market economies, and discusses how monetary policy can be used to manage these e¤ects. We make use of a model developed for such economies by . We examine the e¤ects of four things which this model features, which we take to be typical of such economies. These are: the existence of a tradeables/non-tradeables production structure, the fact that international capital movements are -at least initially -con…ned to the e¤ects of currency substitution by domestic residents, the use of targets for …nancial assets in the implementation of monetary policy, and the pursuit, in some countries, of a …xed exchange rate. We then modify the model to examine the e¤ect on such economies of three major changes, changes which we take to be part of the transition by such economies towards more fully- ‡edged emerging-market status: an opening of the capital account so that uncoveredinterest-parity comes to hold, a move to ‡oating exchange rates, and the replacement of …xed stocks of …nancial aggregates by the pursuit of a Taylor rule in the conduct of monetary policy.
Education is a fundamental aspect in building a civilization. The human role as actor of educatio... more Education is a fundamental aspect in building a civilization. The human role as actor of education will determine development and lack of nation. Education system becomes an important indicator in shaping people educated and superior. The aim of this study is to highlight some major issues in Indonesia such as social justice, politic, economy, and education that built by incorrect concept of knowledge. Rabbani education is one model that emphasizes religious values to reach the peak of civilization as the best nation (Ummah Wasatan). Rabbani is solution for Ummah, particularly in dealing with major social problems such as corruption, violation of human right, scandal and poverty. This paper used qualitative method by using a descriptive approach to obtain the true data. The most important result is Rabbani education can be implemented in the curricula of Indonesia's education as the main spirit in performing a comprehensive, progressive and affective education.
The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. ... more The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. In this paper, we compare CU formation with and without this Article XXIV constraint. We show, in a multi-country oligopoly model, that for a given CU structure, Article XXIV improves world welfare by lowering trade barriers. However, we also show that Article XXIV has a composition effect on CU formation: it affects the endogenous choice of CUs. By encouraging more symmetric CUs, Article XXIV causes more trade to be subject to trade barriers. As a result, Article XXIV may be 'bad' for world welfare.
This Discussion Paper is issued under the auspices of the Centre's research programme in INT... more This Discussion Paper is issued under the auspices of the Centre's research programme in INTERNATIONAL TRADE AND REGIONAL ECONOMICS. Any opinions expressed here are those of the author(s) and not those of the Centre for Economic Policy Research. Research ...
This book is the first in a major new series examining global economic institutions and contrasts... more This book is the first in a major new series examining global economic institutions and contrasts regional economic integration in the Asia Pacific region and in Europe. In the Asia Pacific region, regionalism is developing by means of'open regionalism', constructed through the ...
Bank of England, FMG and University of Oxford. The views expressed are those of the author and do... more Bank of England, FMG and University of Oxford. The views expressed are those of the author and do not necessarily reflect those of either the Bank of England or the FMG of the LSE or the University of Oxford.
at Austin. Financial support from The Brookings Institution is gratefully acknowledged. This pape... more at Austin. Financial support from The Brookings Institution is gratefully acknowledged. This paper forms part of research being carried out by David Vines and Mathan Satchi for the Leverhulme Trust on "EMU and European Macroeconomic Policy in a Global Context". We are grateful to the Leverhulme Trust for its financial support under grant no. F/108 519A. The data underlying the new version of the model used in this paper are from the International Economics Database at ANU and GTAP version 5 as well as the MSG database. Alison Stegman provided valuable assistance with the data revisions. The views expressed in this paper are those of the authors and should not be interpreted as reflecting the views of any of the organizations with which the authors are affiliated. Documentation of the models and applications to which the paper refers can be found at www.gcubed.com ISBN: 1 74032 054 9 This Working Paper series provides a vehicle for preliminary circulation of research results in the fields of economic development and international trade. The series is intended to stimulate discussion and critical comment. Staff and visitors in any part of the Australian National University are encouraged to contribute. To facilitate prompt distribution, papers are screened, but not formally refereed.
This paper argues that the Covid recession, and aggressive monetary tightening in the US accompan... more This paper argues that the Covid recession, and aggressive monetary tightening in the US accompanying the post-Covid recovery, are likely to cause a sovereign debt overhang in emerging market economies—i.e. debt which is unlikely to be fully repaid. A sovereign debt reconstruction mechanism (SDRM) seems necessary to avoid widespread disorderly debt write-downs. We discuss a range of procedures that are available, building upon Anne Krueger’s proposal for an SDRM in 2002 (Krueger, 2002a,b). At that time Krugman (1988) had already argued that any SDRM should incentivize debtors so that they put in effort to clear their debts (a Krugman contract). Menzies (2004) went further than this to show that these effects should be further sharpened, creating what he called ‘hyper-incentive effects’ (a Menzies contract). The International Monetary Fund has argued that risk-sharing between debtors and creditors will also be important (IMF, 2020). But we show that risk-sharing will—in general—pull ...
In this paper we analyse why an understanding of the global ‘non-system’, in which we now live, t... more In this paper we analyse why an understanding of the global ‘non-system’, in which we now live, took so long to arrive after the Bretton Woods system collapsed in 1971. We first describe how knowledge of how an inflation-targeting regime would operate—what we call ‘Taylor-rule macroeconomics’—was only gradually created during the 1970s, 1980s, and 1990s. We then describe how, subsequent to this, an awareness emerged, also gradually, of how the international non-system might work, depending, as it does, on Taylor-rule macroeconomics being already in place. We then discuss the Great Moderation, making clear that a well-functioning global non-system would require not just inflation targeting and floating exchange rates in each country, but also adequate fiscal discipline, and a satisfactory form of financial regulation. We describe how a well-functioning version of this global non-system would actually fit together. We then discuss how this non-system has responded to two enormous chal...
This paper argues for the regular testing of people in groups that are more likely to be exposed ... more This paper argues for the regular testing of people in groups that are more likely to be exposed to SARS-CoV-2, to reduce the spread of COVID-19 and resume economic activity. We call this ‘stratified periodic testing’. It is ‘stratified’ as it is based on at-risk groups, and ‘periodic’ as everyone in the group is tested at regular intervals. We argue that this is a better use of scarce testing resources than ‘universal random testing’, as has been recently discussed globally. We find that, under reasonable assumptions and allowing for false negative results 30 per cent of the time, 17 per cent of a subgroup would need to be tested each day to lower the effective reproduction number R from 2.5 to 0.75, under stratified periodic testing. Using the same assumptions the universal random testing rate would need to be 27 per cent (as opposed to 7 per cent as argued by Romer (2020b)). We obtain this rate of testing using a corrected method for calculating the impact of an infectious person...
Executive SummaryThe UK faces no easy options in determining how to develop its approach to inter... more Executive SummaryThe UK faces no easy options in determining how to develop its approach to international trade post-Brexit. If it finally decides to leave the European Customs Union and Single Market, it faces the possibility either of simply crashing out of the EU without a deal; trying to form market-access agreements and Free Trade Areas (FTAs) with the EU and other countries; or unilaterally reducing tariffs and liberalising trade with all countries. Each course raises significant practical difficulties, and entails major disadvantages compared with staying in the Customs Union and Single Market.The economic costs of a ‘no-deal’ approach stand to be very large, including inevitable tariffs, obstruction of UK access to EU markets, physical disruption at borders, a damping of investment and the much-discussed problem of the Irish border. Assuming ‘no-deal’ does not happen, negotiating FTAs with other countries would be possible only after a lengthy transition period, as in the Wi...
We examine how trustworthy behaviour can be achieved in the financial sector. The task is to ensu... more We examine how trustworthy behaviour can be achieved in the financial sector. The task is to ensure that firms are motivated to pursue the long-term interests of customers rather than pursuing short-term profits. Firms' self-interested pursuit of reputation, combined with regulation, is often not sufficient to ensure that this happens. We argue that trustworthy behaviour requires that at least some actors show a concern for the well-being of clients, or a respect for imposed standards, and that the behaviour of these actors is copied in such a way that it becomes a behavioural norm. We briefly suggest what such behavioural norms might need to be if trustworthy behaviour is to be achieved, and consider how they might be supported; we describe the research that is necessary in order to understand these norms in more detail. We argue that the norms of traders are different from the norms of those engaged in other activities, since they are inevitably self-interested, and we consider the risk that traders' norms might undermine those of other actors. We analyse the task for governance in dealing with this problem, and the role which leadership by a corporate board and management might play in doing this. We describe the need for further research to describe how this might be done.
Zeitschrift für Staats- und Europawissenschaften, 2011
This claim is not new: the lack of a fiscal-policy system of this kind within EMU was a major ana... more This claim is not new: the lack of a fiscal-policy system of this kind within EMU was a major analytical reason why the UK refused to join EMU. 1 But it is now very urgent. I maintain that the four actions enumerated in the previous paragraph are bound to fail unless they are also accompanied by the stability-oriented framework for fiscal policy which is described in this article. This new stability-oriented fiscal-policy framework is outlined in a paper by Christopher Allsopp and me which appeared in a volume edited by Marco Buti, Servaas Deroose, Vitor Gaspar and João Nogueira Martins and was entitled "The Euro: The First Decade". 2 That volume was the outcome of a conference held in October 2007, a meeting designed to celebrate the quality of economic policy-making within the Eurozone. It was hoped that the proceedings of that conference would be published with a fanfare in 2009, ten years after the birth of the Euro. Unfortunately, publishing delays meant that the volume only appeared in February 2010, barely three months before the eruption of the Greek crisis. The Allsopp-Vines paper, warning of difficulties with the SGP and advocating that it be radically reformed, appeared alongside a number of other papers, most of which painted a rosy picture of the Eurozone. With fitting irony, our article appeared as Chapter 13 in the volume. The present contribution first sets out the conventional wisdom on European macroeconomic policy-making. It then describes the conventional views about what has gone wrong and of what to do next, and points out the weaknesses of 1 See Westaway, P.: Modelling Shocks and Adjustment Mechanisms in EMU, London, 2003. This paper was published by the UK Treasury in support of the UK's decision not to join EMU. The other analytical reason for the UK not to join EMU was the "Walters Critique", which is discussed below. There were of course also political reasons for the UK's decision.
This is a response to a critique by Paul Davidson of our 2013 book Keynes: Useful Economics for t... more This is a response to a critique by Paul Davidson of our 2013 book Keynes: Useful Economics for the World Economy and related work, 3 where we describe, amongst other things, how the Swan diagram can be used to show how economies can use policy tools to achieve internal and external balance. In his article "Full Employment, Open Economy Macroeconomics, and Keynes' General Theory: Does the Swan Diagram Suffice?" Davidson rejects our use of the Swan diagram and argues that it distorts Keynes' own views. We show here why Davidson's critique is incorrect, inconsistent and ahistorical.
Uploads
Papers by David vines