By Michael Alexeev and Robert Conrad

After Brazil’s recent large oil discoveries that may easily propel the country into the world’s top 10 by reserves, some economists and other commentators may have a stark warning for Brazilians: be afraid, be very afraid.  The oil curse is coming to Brasilia, and it will result in lower economic growth, corruption, political instability and a soaring real.

These warnings may be premature and, we believe, misleading. While the oil curse may have become accepted wisdom in some academic and political circles, it is not in line with recent economic research, including our own, and reasonably interpreted facts. Continue reading "Risk of an ‘oil curse’ to Brazil is exaggerated"

From the FT:

Martin Wolf: This time will never be different

Mohamed El-Erian: Return of the old ways of thinking threatens recovery

Wolfgang Münchau: A recognition of the deep roots of the crisis

Robert Shiller: In defence of financial innovation

Elsewhere:

Urban Jermann and Vincenzo Quadrini, VOX EU: Paying more attention to financial shocks

Paul Krugman, New York Times: Crowding in

Carlo Bastasin, Peterson Institute: Is It wise or productive for the United States to press germany to abandon Its export-driven economy?

Markus Jäger, VOX EU: Can China be the world’s growth engine?

By Roman Frydman and Michael D. Goldberg

Confidence seems to be returning to markets almost everywhere, but the debates about what caused the worst crisis since the Great Depression show no sign of letting up. Instead, the spotlight has shifted from bankers, financial engineers and regulators to economists and their theories. This is not a moment too soon. These theories continue to shape the debate about fiscal stimulus, financial reform, and, more broadly, the future of capitalism, which means that they remain a danger to all concerned. Continue reading "An economics of magical thinking"

By Richard Robb

For anyone who was engaged in the financial markets during the week of September 15, 2008, Lehman changed everything. It was obvious. So what could be more tempting to finance professors than to overturn this conventional wisdom? Descartes described the man of letters who takes more pride in his speculations “the more they are removed from common sense,” and so showing that the Lehman collapse was inconsequential has spawned a minor literature. Continue reading "Why the Lehman failure did change everything"

From the FT:

Philip Augar and John McFall: To fix the system we must break up the banks

Clyde Prestowitz: Obama can help free trade with tariffs

Elsewhere:

Peter Thal Larsen, Reuters: Squeeze is on for investment banks

Edwin M Truman, Peterson Institute: Pittsburgh Priorities

Economists’ View: Poverty is up, median income is down