Monday 23 Jul 2018 | 23:49 | SYDNEY
Monday 23 Jul 2018 | 23:49 | SYDNEY

Wednesday linkage: Economics edition


Mark Thirlwell

3 June 2009 12:47

  • In a previous post about the likely shape of the economic recovery, I discussed the standard alphabet soup of Vs, Us and Ws. Gillian Tett in the Financial Times explains why it’s more likely to be a sort of squiggle...or rather the shorthand sign for ‘bank’.
  • China has been a leading candidate in the global quest for the ‘green shoots’ of economic recovery, with strong credit and investment numbers in particular catching the world’s attention. Now there are signs that China’s manufacturing sector may be doing better too. But how much faith can we put in Chinese economic statistics?
  • One of the big risks to the economic environment highlighted by the IMF and others has been the adverse feedback loop between economic and financial developments. I’ve also been worried about the workings of another feedback loop — the one between the economy and politics. The good news is that so far the political fallout from the GFC has been relatively muted — a point made in this piece at World Politics Review. That said, with unemployment and poverty both set to worsen from here, we shouldn’t get too complacent. Also, see Gideon Rachman, who makes the interesting point that the most negative response to a period of austerity might come in the developed, rather than developing, world.
  • The latest in the IMF’s Staff Position Note series provides a useful primer on fiscal multipliers.
  • Satyajit Das invokes Mancur Olson to explain the Wall Street Treasury complex. Meanwhile, the lobbying over the future of the financial sector continues.
  • Alan Blinder in the Wall Street Journal describes the dysfunctional incentives facing Wall Street’s traders ('Heads, you become richer than Croesus; tails, you get no bonus, receive instead about four times the national salary and may (or may not) have to look for a new job') and CEOs ('Heads, you become richer than Croesus ever imagined; tails you receive a golden parachute that still leaves you richer than Croesus').  Well worth reading in this context is this excellent 2005 paper by Raghuram Rajan.