Trade, volatility, and the role of specialisation and diversification

The relationship between trade and volatility depends on a complex interaction between sectoral shocks, sectoral specialisation, and geographic diversification. This column uses a multi-country, multi-sector framework to study the main sources of risk for open economies and how trade determines the exposure to those risks through specialisation and diversification of sales. It shows that diversification reduces volatility, particularly in countries with higher output volatility.

Climate change risks to sovereign debt

Evidence suggests that sovereign debt markets are taking climate effects into account in pricing, creating the potential for a climate-debt doom loop. However, climate risks to fiscal stability do not attract the same attention as climate risks to financial stability. This column discusses how integrated assessment models can be linked with stochastic debt sustainability analysis to inform our understanding of climate risks to sovereign debt.

Causes and costs of populism

Recorded live at CEPR Paris Symposium 2022: Across Europe and beyond, populist movements have recently flourished. What does history teach us about the economic impact of populism – and is our taste for populists a bug or a feature of democracy? Tim Phillips talks to Moritz Schularick and Massimo Morelli.

The innovation response to the covid crisis: A new eBook

How has the global innovation system fared in the wake of the Covid-19 crisis? A new eBook untangles how the COVID-19 shock affected innovation ecosystems in different parts of the world and how scientists, entrepreneurs, and creative professionals responded to the shock. Innovation not only proved crucial in finding solutions to the crisis, overall the innovation system proved more resilient to the pandemic’s fallout compared to previous crises.  

The Fed Tackles Kalecki

Ratner and Sim’s “Who Killed the Phillips Curve – A Murder Mystery”

“… the slope of the Phillips curve — a measure of the responsiveness of inflation to a decline in labor market slack — has diminished very significantly since the 1960s. In other words, the Phillips curve appears to have become quite flat.” Janet L. Yellen (2019)


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