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As Iraq appears to be descending into all-out sectarian war, the implications for the oil-dependent economy are huge. Iraq is Opec’s second-largest crude exporter, so markets are already feeling a little jittery, sending crude oil to its highest since September on Friday. Here are five charts showing how Iraq’s economy has developed since the 2003 US-led invasion of Iraq and where its vulnerabilities lie. Read more
Those hoping for a rapid pickup in UK productivity shouldn’t hold their breath.
That’s the message from a new Bank of England paper which suggests the UK’s dismal figures are more likely to be the result of “persistent effects” from the financial crisis, rather than temporary, cyclical factors which will fade away as the economy recovers.
Just under half (around 6 to 9 per cent) of the UK’s productivity gap can be explained by the hypothesis that the crisis resulted in underlying damage to the UK’s productive capacity:
Institutional weaknesses are mainly to blame for Greece’s dire trading performance, with exports around a third smaller than they should be, according to a new paper from staff at the European Commission.
Aside from being the world’s largest shipping nation, Greece sits at the cross road between three continents and on one of the world’s busiest sea routes.
Yet, researchers estimate its exports are approximately 33 per cent lower than would be expected based on the size of the Greek economy, its trading partners and its geographic position. The Commission staff dubs this “the puzzle of the missing Greek exports.” Read more
It’s crunch time for the European Central Bank. After more than six months of jawboning, pretty much every seasoned ECB watcher thinks the governing council is finally going to ease monetary policy on Thursday.
Disappointing growth, worryingly weak inflation, and the rise of anti-establishment parties in the European Parliamentary elections have only added to the sense that rate-setters must do something to stave off the threat of deflation and help stimulate lending in the real economy. What can we expect from the ECB and how will it work? Read more
Andrew Levin, a Fed staffer who worked extensively on Janet Yellen’s communication reforms when she was vice-chair, sets out a set of principles for central bank communications in a paper at today’s Hoover central banking conference.
He calls for press conferences after every Fed meeting and a quarterly, Bank of England-style monetary policy report. Mr Levin is currently at the IMF but this a direction many Fed officials want to go.
Here are Mr Levin’s principles, with my highlights in bold, and comments in italic: Read more
Professor Thomas Piketty has given a more detailed response to the Financial Times articles and blogs on his wealth inequality data in Capital in the 21st Century (here, here, here and here). He says it is “simply wrong” to suggest he made errors in his data.
There are a few things on which we agree. First, the source data on wealth inequality is poor. I have written that it is “sketchy” and Prof Piketty says it is “much less systematic than we have for income inequality”. Second, it would have been preferable for Prof Piketty to have used a more sophisticated averaging technique than a simple average of Britain, France and Sweden to derive an estimate for European wealth inequality. Third, the available data suggests a broad trend of reduction in wealth inequality during most of the 20th Century. Read more
French academic Thomas Piketty has issued a detailed response to criticism by the Financial Times of his work on inequality, saying it is “simply wrong” to suggest he made errors in his data.
The best-selling author of Capital in the Twenty-First Century, which has ignited an international debate on trends in inequality, said “the corrections proposed by the FT to my series (and with which I disagree) are for the most part relatively minor, and do not affect the long run evolutions and my overall analysis”. Read more
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