Inflation will probably melt away in 2022 – central banks will do far more harm trying to tackle it

By Brigitte Granville* – The Conversation

Re-blogged

It remains to be seen whether the omicron variant will shift Sars-CoV-2 towards becoming manageably endemic. But as and when this happens, there will still be “long COVID” to contend with. The latest headlines about inflation – a 7% annual rise in the US and more tough talk from Federal Reserve Chairman Jerome Powell about bringing it down – confirm that something similar is happening with the global economy: it will be shaped by the after-effects of the pandemic even when all restrictions have been lifted.

To understand how this overhang effect may play out in 2022 requires looking back at how the pandemic has affected growth and inflation. The key lies in …….

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

Bailed-out governments did not lose policy-making discretion during the Eurozone crisis

By Catherine MouryStella Ladi*, Daniel Cardoso and Angie Gago The Loop

Re-blogged

Authors argue that bailed-out governments during the Eurozone crisis exercised more leverage than assumed. Despite international market pressure and creditors’ conditionality, bailed-out governments were able to advocate, resist, shape or roll back some of the policies demanded by the EU’s Troika ……

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*Stella Ladi is a Reader at Queen Mary University of London, an Associate Professor at Panteion University in Athens and the co-author of Capitalising on constraint: Bailout politics in Eurozone countries

Ahead of the ECB: is a rise in interest rates on the horizon?

By Brigitte Granville* – The OMFIF Podcast

Re-blogged

As central banks navigate a world of inflation amid the Covid-19 recovery, the European Central Bank is at the heart of the debate. With the Bank of England signalling a rise in interest rates, will the ECB hold steady? Ellie Groves, managing director, Economic and Monetary Policy Institute, OMFIF, is joined by Brigitte Granville, economist and professor of international economics and economic policy in the School of Business and Management at Queen Mary University of London, director of the Centre for Globalisation Research and author of Remembering Inflation (Princeton University Press, 2013). They discuss the new environment central banks find themselves in, the expanding mandates of central banks with the risk of climate change and the political reality the ECB is operating in – especially as we get close to the French election.

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Link to Podcast

*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

Behind the Modern Malaise

By Brigitte Granville* – Project Syndicate

Re-blogged

For decades, workers have been missing out on many of the gains of economic growth, and countless analyses have been published to explain why. Though the problem is fundamentally economic, it cannot be understood without also accounting for technology, politics, and culture.

LONDON – In describing recent economic history as “the inglorious years,” French economist Daniel Cohen’s title refers primarily to a problem that is also examined in the economist Jan Eeckhout’s book, The Profit Paradox. That problem, as Eeckhout puts it, is “wage stagnation and extreme wage inequality.” Over the past half-century, the situation for workers in most rich countries has deteriorated on average, setting this era apart from the 30 glorious years (les trente glorieuses) after World War II, when West Europeans, Canadians, and Americans enjoyed a near-miraculous period of sustained growth, including broad-based growth in real wages and higher living standards.

What can these authors add to the mountain of analyses churned out in recent years……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

Do we need the term BAME?

By Sanghamitra Bandyopadhyay* – Economics Observatory

Re-blogged

The acronym BAME lumps together black, Asian and minority ethnic groups as disadvantaged. Yet not all these groups and certainly not all individuals within them can be characterised as disadvantaged. There are better methods for identifying disadvantaged communities and designing appropriate policy.

One of the recommendations in the recent report of the Commission of Race and Ethnic Disparities (the Sewell report) is to discontinue the use of the term BAME (black, Asian and minority ethnic) as a catch-all to describe ethnic groups who are disadvantaged in the UK. It was introduced as a collective term in the 1960s and 1970s for administrative convenience to identify ‘black communities’ and was eventually expanded to encompass other, mostly non-white, ethnic minorities.

The term has received a lot of criticism in recent years, ……

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*About the author: Sanghamitra Bandyopadhyay is Deputy Director of the Centre for Globalisation Research and Reader in Economics. She is also the lead for the UK-wide research group, Research Circle for the Study of Inequality and Poverty.

Yes, there is a relationship between inequality and terrorism, but not a big one.

by Abdullah Ijaz* and Sanghamitra Bandyopadhyay**

Inequality is well established in the social sciences to be detrimental to societal well-being and for its long standing association with social and political instability. One of the most pressing concerns of the effects of inequality is increased violence, conflict and terrorism. A growing literature concludes that higher levels of income inequality are associated with terrorism. The literature, though, is not clear whether the association stands with home grown (or domestic) terrorism, or whether it is tied to international political rifts which give rise to transnational terrorism.  Domestic terrorism is often found to be associated with poverty, while the causes underpinning transnational terrorism are governed by highly complex international political dynamics. Violence and terrorism have direct and indirect economic costs for both developed and developing countries. Terrorism may occur in many different forms, especially in the presence of weak institutional structures and religious conflict.

The current empirical literature suggests that this relationship is positive but is inconclusive on the nature of the relationship. In order to investigate the nature of the relationship, in our paper we examine the relationship between income inequality and terrorism using a semi-parametric approach to specifically identify non-linearities in the relationship.

Using a sample of 139 countries, including 104 developing and middle-income group countries, we use top income percentile shares as a measure of inequality to provide robust evidence that inequality is weakly and positively associated with terrorism. We use several top income percentile shares as our principal inequality measure, obtained from the World Inequality Database, and estimate our model using the top 1% and top 10% income shares. We also use the Gini measure for robustness, obtained from the World Income Inequality Database. Our principal dependent variable is the total number of terrorist incidents per country-year. We also estimate our model using domestic terrorism, due to it being more frequently observed than transnational terrorism. In order to investigate for the nature of the relationship, we estimate our model using semi-parametric methods specifically designed to identify non-linearities in the inequality and terrorism relationship.

Figure 1. Non-parametric component of the effect of top 1% income shares on total and domestic terrorism incidents for all countries

Strikingly, we observe that inequality has different non-linear associations with terrorism for developed, middle-income and developing countries. Figure 1 highlights that after controlling for explanations of terrorism other than inequality, the positive relationship between inequality and terrorism discussed in the existing empirical literature is very weakly evident for both total (domestic and transnational combined) and domestic terrorism.

In addition, we find that countries with large rural populations have a lower incidence of terrorism. This highlights the importance of developing countries in the sample being associated with low levels of terrorism. We also find consumption expenditure is negatively associated with all definitions of terrorism, again indicating that terrorism is characteristic of low income/consumption expenditure countries. The two results combined suggest that the observed relationship between inequality and terrorism is a characteristic of emerging or middle income countries, which have both large rural populations and low levels of consumption expenditures, compared with rich countries.

Our findings thus highlight two new salient empirical features of the relationship between income inequality and terrorism. Using recently recommended measures of inequality, i.e., top percentile income shares, we fail to confirm previous evidence of a positive relationship between inequality and terrorism. It is, at best, weakly observed, in particular for developing and middle-income group countries. We also find that the relationship is nonlinear, suggesting no particular functional form, and thus deserves future research to identify the mechanisms which govern this relationship.

* Abdullah Ijaz is a doctoral candidate at the School of Business and Management and the Centre for Globalisation Research, specialising on poverty, entrepreneurship and terrorism.

** Sanghamitra Bandyopadhyay is Deputy Director of the Centre for Globalisation Research and Reader in Economics. She is also the lead for the UK-wide research group, Research Circle for the Study of Inequality and Poverty.

A withering, reasoned call to renew France

Economist Brigitte Granville* outlines the country’s dysfunction and seeks to scrap the single currency

By Ben Hall – Financial Times

Re-blogged

In little less than a year French voters will go to the polls to decide whether to give Emmanuel Macron another five years in the Elysée Palace. So it is time to weigh up his achievements and shortcomings. In What Ails France, Brigitte Granville, a French-born economist, finds few of the former and many of the latter. Her assessment is withering, visceral even. The official photograph of the young Olympian president “with his fixed and icy gaze gives me cold sweats every time I set eyes on it in the mayor’s office of my small village in northern Burgundy”. She has written, she concedes, an “at times indignant tract”. The Macron story is one of lost illusions. He rose to power promising ……..

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

CGR Annual Globalisation Seminar and Workshop on Political Economy and Economic Development

On 29th of June the Centre for Globalisation Research (CGR) of the School of Business and Management, Queen Mary University of London is hosting the annual Globalisation Seminar and workshop on Political Economy and Economic Development organised by Dr. Caterina Gennaioli (CGR Director). The special theme of this year’s event is “Climate policy and environmental co-operation”.

The Globalisation Seminar Series is a prestigious annual series offering a platform to prominent academics and policy-makers to discuss the latest debate in economics and economic policy. The Series has attracted world leading scholars such as Esther Duflo (MIT), Jeffrey Sachs (Columbia), Alberto Alesina (Harvard), Paul Collier (Oxford) and Ekaterina Zhuravskaya (Paris School of Economics and EHESS).

The speaker of the Globalisation seminar this year is Professor Scott Barrett (Vice Dean, School of International and Public Affairs; Lenfest-Earth Institute Professor of Natural Resource Economics, Columbia University) who is a leading scholar on transnational and global challenges, ranging from climate change to disease eradication. His research focuses on how institutions like customary law and treaties can be used to promote international cooperation. Professor Barrett will give the talk: “The Promise and Peril of Linking Cooperation on Trade to Cooperation on Climate Change“.

The event will start at 12.45 with a workshop in political economy and economic development where leading scholars in the field will present their most recent research on climate policy and environmental cooperation. The agenda of the event can be found here.

Attendance to this event is by registration only.

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Inflation might well keep rising in 2021 – but what happens after that?

By Brigitte Granville* – The Conversation

Re-blogged

The US Federal Reserve has just reassured the markets that it doesn’t expect inflation to get out of hand in the coming months. It comes as concerns about serious inflation damaging the global economy have reached fever pitch, particularly since recent Labor Department data showed that American inflation rose 4.2% over the 12 months ended April – the highest since the global financial crisis of 2007-09. In the euro area, inflation seems certain during the rest of this year to break out above the European Central Bank target of “close to but below 2%”.

Central bankers on both sides of the Atlantic say that these price rises are a temporary consequence of the whiplash effect of the COVID-19 pandemic on demand. Supply chains in everything from commodities to semiconductors have been disturbed ……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

FRANCE’S CULTURE WAR INTENSIFIES

By Brigitte Granville* – Project Syndicate

Re-blogged

With his speech commemorating the 200th anniversary of Napoleon Bonaparte’s death, President Emmanuel Macron apparently is seeking to confront all aspects of the emperor’s divisive legacy. How he manages that characteristic balancing act could reveal much about his ability to keep France’s simmering culture war from boiling over.

LONDON – By laying a wreath on Napoleon Bonaparte’s tomb on the 200th anniversary of his death, French President Emmanuel Macron has stepped further into the fray of the country’s escalating culture war. Can France’s rifts be healed, or is the country really headed, as some predict, toward “deadly civil war”?

Napoleon’s legacy has long been divisive. His admirers laud……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France