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INTRODUCTION TO THE SPECIAL ISSUE ON ADAM SMITH@300 National Institute Economic Review Pub Date : 2024-01-03 Sayantan Ghosal, Anton Muscatelli, Graeme Roy
2023 marks the tercentenary of the birth of Adam Smith. A towering figure of the Scottish Enlightenment, his writings helped to establish the discipline we now refer to as Political Economy. Indeed, many of his ideas remain the foundation of economic theories still in use today. It is this ongoing relevance, and the lessons we can take from Smith’s methods, that binds the papers in this Special Issue
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ADAM SMITH AND THE BANKERS: RETROSPECT AND PROSPECT National Institute Economic Review Pub Date : 2024-01-03 Alfred Duncan, Charles Nolan
Adam Smith promoted free banking—private, competitive, convertible banknotes. He also supported restrictions on banks. We study Smith’s views and the era in which they developed, suggesting his ‘regulations’ were a backstop against banks’ risks to depositors but primarily monetary stability. In modern parlance, Smith supported macroprudential regulations to underpin monetary stability, as did Friedman
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ECONOMIC PROGRESS AND ADAM SMITH’S DILEMMA National Institute Economic Review Pub Date : 2023-11-23 Diane Coyle
Adam Smith saw the division of labour and specialisation as the driver of ‘universal opulence’, a process limited by the scope of the market. He also believed that competition was essential to ensure growth benefited the public. Yet eventually there could be a trade-off between these two mechanisms. In today’s era of global production networks, the markets at certain links in supply chains may support
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ON THE PROMISES AND PERILS OF SMITHIAN GROWTH: FROM PIN FACTORY TO AI National Institute Economic Review Pub Date : 2023-11-21 Marcus Miller
For path-breaking insights on how prices can guide the efficient allocation of resources and how innovation and investment can spur economic growth, Adam Smith is justly renowned. He was, however, well aware of problems posed by market dominance—specifically in banking and, more generally, wherever getting to the scale that delivers increasing returns leads to monopolistic behaviour. For the historical
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ADAM SMITH, COLONIALISM, AND LIBERAL IMPERIALISM National Institute Economic Review Pub Date : 2023-11-07 David Williams
Adam Smith had a longstanding interest in colonialism and more generally relations between Europe and the rest of the world. It was through engagement with these issues that he worked through some of the central elements of his thought. This paper examines both Smith’s contexts and our own and argues that Smith’s work provides an important resource for reflecting today on relations with distant and
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‘PLUNDERING THE LIBERAL PHILOSOPHICAL TRADITION’? THE USE OR ABUSE OF ADAM SMITH IN PARLIAMENT, 1919–2023 National Institute Economic Review Pub Date : 2023-11-07 Zachary Greene, Jan M. Jasinski, Graeme Roy, Thomas Schober, Thomas J. Scotto
The contemporary relevance of Adam Smith is evidenced by continued reference to his name. Computational analysis identifies over 700 mentions of Smith and his two famous works—The Theory of Moral Sentiments and The Wealth of Nations—in post-World War 1 House of Commons debates. We find some parliamentarians appreciate Smith’s complex ideas, but most references are ‘ornamental’. Charting Smith’s use
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DUNCAN BLACK: HEIR TO ADAM SMITH AND THE SCOTTISH ENLIGHTENMENT National Institute Economic Review Pub Date : 2023-11-03 John H. Aldrich
Duncan Black, like Adam Smith before him, was trained at, and taught at, the University of Glasgow. Like Smith, Black followed the Enlightenment in appreciating the importance of theory and of its empirical applications. Black sought to apply the ideas of a schedule of preferences and a conception of equilibrium, to politics, as Smith had done in economics. Black believed that his median voter theorem
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MORAL SENTIMENTS AND SELF-INTEREST IN ADAM SMITH: TWO COMMENTS National Institute Economic Review Pub Date : 2023-11-03 Sayantan Ghosal
This study is a reconsideration of a theme, connecting The Theory of Moral Sentiments and The Wealth of Nations, namely the interplay between moral sentiments and self-interest. Two aspects of the theme are examined. The first consists of an interpretation of the so-called ‘das Adam Smith Problem’, an issue originally pointed out by nineteenth-century German scholars. The second, building on the insight
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ADAM SMITH AS A MODEL FOR THE MODERN MONETARY-POLICY ECONOMIST National Institute Economic Review Pub Date : 2023-10-26 Michael Bordo, Hugh Rockoff
A key insight from Adam Smith is that economists should base their conclusions about a monetary institution or policy on a careful study of the history of that institution or policy, a study that includes the experiences of other countries. To illustrate Smith’s reliance on financial history we cover five current monetary problems that have close analogies with problems that Smith discussed: (1) inflation
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ADAM SMITH’S WEALTH OF NATIONS IS STILL RELEVANT TO UK TRADE POLICYMAKING ON INTERNATIONAL TRADE National Institute Economic Review Pub Date : 2023-10-17 L. Alan Winters
This article reviews Adam Smith’s clearly articulated views about the desirability of free trade and his equally strong view on the necessity of sound institutions and ‘the tolerable administration of justice’ as key ingredients of successful economic management. It starts with Smith’s views on free trade and shows how pertinent they are to today’s high-level trade policy challenges. It then considers
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ADAM SMITH AND THE NEO-LIBERAL PARADIGM: ON THE ESSENTIAL NATURE OF TRUST, AND REBALANCING CAPITAL National Institute Economic Review Pub Date : 2023-10-16 Ronald MacDonald
The key aim of this article is to reassess the societal consequences of the adoption of neo-liberal policies, post-1970, in the light of the writings of Adam Smith. We make two main points: First, the neo-liberal paradigm (NLP) and its characteristics are not the creation of Adam Smith as asserted by leading economists and, indeed, the contrary is very much the case. Second, given this, what does Adam
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MACROECONOMICS AND CLIMATE CHANGE National Institute Economic Review Pub Date : 2023-09-15 Stephen Millard
Climate change and its consequences are the most important issues affecting the UK economy over the coming century and will present a critical challenge for the UK government moving forward. In particular, the challenge of getting to net zero by 2050 is going to have major ramifications for the macroeconomy. In this commentary, I lay out some of the work that has been done on the implications of climate
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MONETARY POLICY: PRICES VERSUS QUANTITIES National Institute Economic Review Pub Date : 2023-09-13 Ben Broadbent
Should the transmission of monetary policy be understood in terms of its impacts on interest rates and bond yields, or monetary aggregates? This article considers the relationship between those aggregates and inflation, both over the past and more recently. And explains how the MPC takes account of “QT” in its forecasts.
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THE EURO AREA HIKING CYCLE: AN INTERIM ASSESSMENT: DOW LECTURE BY PHILIP R. LANE, MEMBER OF THE EXECUTIVE BOARD OF THE ECB, AT THE NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH, LONDON, 16 FEBRUARY 2023 National Institute Economic Review Pub Date : 2023-09-06 Philip R. Lane
This analysis aims at providing an interim assessment of the ECB’s current policy rate tightening cycle. Our analysis suggests that the ECB’s monetary policy measures are tightening financial conditions and reducing credit volumes in the euro area reducing credit volumes. In view of the lags from financing conditions to the real economy, the impact of the policy tightening cycle on inflation can currently
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THE MACROECONOMIC EFFECTS OF RE-APPLYING THE EU FISCAL RULES: RETURNING TO THE STATUS QUO ANTE OR MOVING TO EXPENDITURE RULES? National Institute Economic Review Pub Date : 2023-09-06 Christoph Paetz, Sebastian Watzka
Against the background of the European Commission’s reform plans of the Stability and Growth Pact, this paper uses NiGEM to simulate the macroeconomic implications of re-applying the fiscal rules in 2024. Next to returning to the unreformed rules, the most prominent options include an expenditure rule. Our results indicate that re-applying the unreformed rules leads to severe cuts in public spending
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THE MISSING LINK: MODELLING POTENTIAL OUTPUT AT THE OFFICE FOR BUDGET RESPONSIBILITY National Institute Economic Review Pub Date : 2023-08-29 Jagjit S. Chadha
I outline the missing link in macroeconomic analysis of fiscal policy. While the Office for Budget Responsibility’s (OBR) remit does allow it to judge whether the effects of fiscal (or other economic policies) on potential output are material, such judgements will matter little for the horizon over which it is being asked to assess whether the government will meet its fiscal rules. Even if there is
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ANOTHER LOOK AT A SENSIBLE FISCAL POLICY FOR THE SHARP RISE IN GOVERNMENT DEBT National Institute Economic Review Pub Date : 2023-08-22 Forrest Capie, Meyrick Chapman, Chris Marsh, Geoffrey Wood
This paper weighs possible medium-term responsible policy choices to the extraordinary expansion of government spending in response to the COVID-19 outbreak. The paper is divided into two parts. In part 1 of the paper, we look at conventional debt sustainability and question whether conventional rules created during a period of high interest rates and high inflation remain relevant. Current and future
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CLIMATE POLICIES AND BUSINESS CYCLES: THE EFFECTS OF A DYNAMIC CAP National Institute Economic Review Pub Date : 2023-06-09 Ulrich Eydam
Emissions are directly linked to economic output and consequently subject to business cycle fluctuations. The present study analyses the interactions between climate policies and business cycles through the lens of a New Keynesian dynamic stochastic general equilibrium model. We compare a static cap-and-trade policy with a dynamically adjusting policy in terms of macroeconomic stabilisation, welfare
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THE ROLE OF AN NSI IN A PANDEMIC National Institute Economic Review Pub Date : 2023-05-15 Ian Diamond
It is an enormous privilege for me to present the Deane–Stone lecture. As a young academic at the University of Southampton, I read so much of the work that came out of the National Institute of Economic and Social Research (NIESR) and was always impressed. Also, as an undergraduate and as a master’s student at the London School of Economics, Sir Richard Stone and Professor Phyllis Deane featured prominently
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MONETARY AND FISCAL POLICY REDUX—THE MINI-BUDGET National Institute Economic Review Pub Date : 2023-05-05 Jagjit S. Chadha
Not so very long ago, I argued that it was possible to characterise modern monetary and fiscal policy in the UK as a function of three key events: exit from the European Exchange Rate Mechanism in September 1992, the election of ‘New Labour’ in May 1997 and the global financial crisis of 2007–2009. The first led to the adoption of a domestic inflation target in October 1992, the second to the operational
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HAPPINESS AND AGE—RESOLVING THE DEBATE National Institute Economic Review Pub Date : 2023-04-12 David G. Blanchflower, Carol Graham, Alan Piper
This article is a response to a piece in this journal, by David Bartram, which questions the validity of a vast literature establishing consistently a U-shaped relationship between age and happiness. There are 618 published studies that find U-shapes in that relationship in 145 countries, and only a handful that do not. Of the 30 countries that Bartram (2023, National Institute Economic Review, 1–15)
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LABOUR REGULATION AND PRODUCTIVITY IN THE UK SINCE 1945: DEBUNKING MYTHS ABOUT ‘DISEASE’, ‘MIRACLES’ AND ‘PUZZLES’ National Institute Economic Review Pub Date : 2023-02-21 Jon Cruddas
Over 50 years ago, New Society first identified a new ‘Oxford School’ considered central to British post-war reconstruction. Based around Nuffield College, it contained five key figures: Hugh Clegg, Allan Flanders, Alan Fox, Bill McCarthy and Arthur Marsh. Other identified contributors were Ben Roberts, John Hughes and legal theorist Otto Kahn-Freund. A second generation included the likes of George
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STATE CAPACITY AND ECONOMIC GROWTH: CAUTIONARY TALES FROM HISTORY National Institute Economic Review Pub Date : 2023-02-21 Sheilagh Ogilvie
This paper uses economic history to probe the relationship between state capacity and economic growth during the Great and Little Divergences (c.1500–c.1850). It identifies flaws in the dominant measure of state capacity, fiscal capacity, and advocates instead analysing state expenditures. It investigates five key activities on which states historically spent resources: waging war; providing law and
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THE ECONOMY AND POLICY TRADE-OFFS National Institute Economic Review Pub Date : 2023-02-15 Silvana Tenreyro
Good evening. It is a pleasure and an honour to be here at NIESR to give the annual Dow lecture. We are very lucky in the UK to have high-quality independent institutions such as NIESR focusing on the policy landscape, and in my time on the MPC I have always valued their commentary and research.
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CLASSIC POLICY BENCHMARKS AND INEQUALITY National Institute Economic Review Pub Date : 2023-02-10 James Bullard
This note provides a nontechnical summary of a research paper (Bullard and DiCecio [2021, Classical policy benchmarks for economies with substantial inequality, Federal Reserve Bank of St. Louis, unpublished manuscript]) that I presented as the NIESR 2021 Dow Lecture on 9 February 2021. In the paper, we construct a simple benchmark macroeconomic model with substantial heterogeneity among households
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STRESS TESTING THE FISCAL FRAMEWORK National Institute Economic Review Pub Date : 2023-01-11 David Bell, David Eiser, David Phillips
The part of the UK fiscal framework which determines how UK government funding is allocated across the four home nations has undergone profound change since 2012, given tax and social security devolution. The UK government’s post-Brexit plans for regional development funding, state aid, regulation and trade negotiations have led to significant disagreements about the nature of the devolved fiscal and
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MANAGING SCOTLAND’S BORDERS AFTER INDEPENDENCE AND EUROPEAN UNION ACCESSION National Institute Economic Review Pub Date : 2023-01-11 Katy Hayward, Nicola McEwen, Milena Komarova
Brexit has both increased the momentum towards Scottish independence and complicated what it could mean in practice, especially if Scotland rejoins the European Union (EU). EU accession would re-open the flow of goods, people, services and capital between Scotland and other EU member-states; a corollary of this, however, would be new restrictions on movement between Scotland and its non-EU neighbours
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THE CURRENCY CONUNDRUM FOR AN INDEPENDENT SCOTLAND National Institute Economic Review Pub Date : 2023-01-11 Ronald MacDonald
In this paper we revisit the issue of currency regime choice for an independent Scotland using an international macroeconomic/ finance framework. Specifically, we consider the main competing proposals for currency choice with an emphasis on the SNP’s official policy of the informal use of sterling post-independence. We conclude that from a macroeconomic perspective this option is unlikley to be credible
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TRADE-OFFS: UNDERSTANDING FUTURE TRADE OPTIONS FOR SCOTLAND National Institute Economic Review Pub Date : 2023-01-11 Gioele Figus, Peter McGregor, Stuart McIntyre, Graeme Roy
Trade issues lie at the heart of the two biggest constitutional challenges the UK has faced in decades: Brexit and Scottish independence. Brexit has demonstrated the economic importance of borders and led to renewed calls for Scottish independence. While there are a range of possible trading arrangements an independent Scotland could pursue, all of them involve economically significant change. In this
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INTRODUCTION: DEVOLUTION AND SECESSION IN QUESTION National Institute Economic Review Pub Date : 2023-01-11 Colin Jennings, Adrian Pabst
This special issue of the National Institute Economic Review is being published at an unsettled and uncertain time for the United Kingdom. In June 2022, the First Minister of Scotland Nicola Sturgeon called for a second referendum on Scottish independence to be held in October 2023. While it is unlikely that the referendum will be granted by the UK government, current polling suggests the outcome of
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FIXING THE MIX National Institute Economic Review Pub Date : 2023-01-11 Jagjit S. Chadha
We are entering the end game for this Parliament and so it is now time to focus on the policy horizon. In the run-up to the next election, the government’s pieces will be moved by our fourth Prime Minister since the announcement of the advisory referendum on EU membership in February 2016. The rapidity in turnover of political leadership tells us starkly that there are deep problems with our economic
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PERSISTENT STATES: LESSONS FOR SCOTTISH DEVOLUTION AND INDEPENDENCE National Institute Economic Review Pub Date : 2023-01-11 Anton Muscatelli, Graeme Roy, Alex Trew
The equilibrium size of a nation state is, in part, the result of a trade-off between the gains from scale economies in the provision of public services and the costs of applying uniform policy to heterogeneous cultural, institutional and geographical fundamentals. Changes in such fundamentals can thus place pressure on states to reform over time. We consider this dynamic state formation process in
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REGIONAL ECONOMIC DEVELOPMENT AND THE CASE OF WALES: THEORY AND PRACTICE AND PROBLEMS OF STRATEGY AND POLICY National Institute Economic Review Pub Date : 2023-01-11 Jonathan Bradbury, Andrew Davies
The article assesses economic development strategy in Wales since devolution. It considers theoretical views on success or failure of devolution to realise economic benefit, and reviews existing explanations of Wales’ lack of success in changing its position relative to other UK territories. The article develops a novel critique first of overall economic development strategy, suggesting problems of
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DEVOLUTION, INDEPENDENCE AND WALES’ FISCAL DEFICIT National Institute Economic Review Pub Date : 2023-01-11 Guto Ifan, Cian Siôn, Daniel Wincott
Debate around Wales’ place in the United Kingdom has intensified over recent years, with radically differing visions for the union of the Welsh and UK governments emerging alongside growing (though still minority) support for Welsh independence. This article argues that these constitutional debates must be considered alongside Wales’ current fiscal position. Wales’ estimated fiscal deficit is reflective
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INSTITUTIONAL GEOGRAPHY ONCE MORE? DEVOLUTION ECONOMICS NORTHERN IRELAND STYLE National Institute Economic Review Pub Date : 2023-01-11 Graham Brownlow
In this paper, we investigate devolution in the Northern Irish context. The role of institutional geography is highlighted. Both contemporary and historical (c. 1921–1972) devolution models are discussed. It is argued that institutional factors provide explanations for economic weaknesses found under both devolution models. The evidence presented suggests that the institutional geography has both changed
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POLITICAL ECONOMY OF SECESSION: LESSONS FROM THE EARLY YEARS OF THE IRISH FREE STATE National Institute Economic Review Pub Date : 2023-01-11 Seán Kenny, Eoin McLaughlin
We apply insights from the political economy of secession to analyse the early years of the Irish Free State (IFS). The IFS was fortuitous in a debt settlement that enabled it to begin its existence debt free while also receiving financial assistance to quell civil unrest. Yet the IFS was unable to continue to provide the welfare spending inherited from the old regime thereby exacerbating inequality
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THE PRODUCTIVITY PERFORMANCE OF DIFFERENT TYPES OF UK REGIONS AND THE CHALLENGES OF LEVELLING UP National Institute Economic Review Pub Date : 2023-01-11 Philip McCann, Pei-Yu Yuan
This article examines the key features of the UK’s spatial productivity relationships and discusses some of the key questions currently being articulated or debated as they relate to potential devolution-related discussions. The paper demonstrates that the local productivity challenges facing UK regions are nationwide in nature rather than local, and systemic rather than specific. In particular, the
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THE POLITICS OF LEVELLING UP: DEVOLUTION, INSTITUTIONS AND PRODUCTIVITY IN ENGLAND National Institute Economic Review Pub Date : 2022-11-04 Andy Westwood, Marianne Sensier, Nicola Pike
After the publication of the Government’s ‘Levelling Up’ White Paper, this paper reviews the role of institutions and governance structures across English regions in tackling spatial inequality and low productivity. It considers the recent history and changing roles of local and regional organisations and the overarching policy frameworks that oversee them as a key element of tackling spatial inequality
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INFLATION DIFFERENTIALS AMONG EUROPEAN MONETARY UNION COUNTRIES: AN EMPIRICAL EVALUATION WITH STRUCTURAL BREAKS National Institute Economic Review Pub Date : 2022-10-31 Tasos Stylianou
Inflation rates and their convergence within Euro area have been a major concern, since well before the advent of the single currency. Inflation differentials are a normal phenomenon in any monetary union and even in long-established monetary unions. The aim of this research is to examine the main factors of inflation differentials in the Euro-zone for the period 1999–2018. Our empirical estimates
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THE ECONOMICS OF WALKING ABOUT AND PREDICTING UNEMPLOYMENT IN THE USA National Institute Economic Review Pub Date : 2022-08-19 David G. Blanchflower, Alex Bryson
We show consumer expectations indices from the Conference Board and the University of Michigan predict unemployment upticks in the USA up to 18 months in advance, both at national and at state level. These data predict six of the last six recessions called by the NBER Business Cycle Dating Committee 6–18 months before the date of recession. The consumer expectations data for 2021 and 2022 are consistent
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HOUSEHOLD BEHAVIOUR UNDER RATIONING National Institute Economic Review Pub Date : 2022-08-18 John Fitzgerald, Seán Kenny, Alexandra L. Cermeño
The pandemic-induced economic crisis has seen a massive increase in savings as households could not spend their income. The last time that consumers were seriously rationed was during the Second World War. This article models the behaviour of households during the War years and its immediate aftermath in Ireland, Sweden, the US and UK. Savings were held in liquid form and, once the War was over and
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COMMENTARY: THE GREAT DIVIDES National Institute Economic Review Pub Date : 2022-05-31 Jagjit S. Chadha
Democracy is unstable as a political system as long as it remains a political system and nothing more, instead of being, as it should be, not only a form of government but a type of society, and a manner of life which is in harmony with that type. To make it a type of society requires an advance along two lines. It involves, in the first place, the resolute elimination of all forms of special privilege
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INTRODUCTION: POPULISM IN QUESTION National Institute Economic Review Pub Date : 2022-05-31 Sayantan Ghosal, Adrian Pabst
Much of the media coverage in relation to populism has focused either on populist moments like the Brexit vote or on populist leaders such as Donald Trump or Boris Johnson. Meanwhile, the academic literature on populism is divided between two broad approaches. First, an emphasis in economics on policy (e.g. Dornbusch and Edwards, 1992) and, second, an accentuation in political science on ideology (e
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THE POLITICAL ECONOMY OF LEFT AND RIGHT POPULISM National Institute Economic Review Pub Date : 2022-05-31 Jon Cruddas
The deepening distrust in democracy has grown out of a decade of low growth and cuts to public spending, which in turn has consolidated wage decline while also fuelling a wider sense of economic insecurity. As poverty and inequality intensify, social mobility is in reverse and the social contract is under growing strain. Support for populists has recently receded, but the inability of democratic systems
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THINKING ABOUT SOCIAL NORMS National Institute Economic Review Pub Date : 2022-05-31 Ken Binmore
This article argues that it is a waste of time seeking to treat populists as examples of homo economicus when seeking to persuade them that the conspiracy theories to which they subscribe are big lies. But it does not follow that homo economicus is worthless in this context. He has a role in explaining the evolution of the social norms whose violation is the root cause of the rise of populist movements
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POPULISM AND THE ‘NARROW CORRIDOR’ OF LIBERTY AND JUSTICE National Institute Economic Review Pub Date : 2022-05-31 Marcus Miller, Ben Zissimos
Populist responses to matters of social concern are considered in a framework like that of Acemoglu and Robinson’s ‘narrow corridor’ that supports liberty and justice. We discuss the risk that such responses could result in a country being pushed out of this narrow corridor—and, if so, with what long-run consequences. We conclude that a political system of ‘checks and balances’ can play a key role
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MISCOORDINATION, POLITICS AND POPULISM National Institute Economic Review Pub Date : 2022-05-31 Chanelle Duley, Prasanna Gai
We present two models that shed light on two issues in the political economy of populism: incumbents who refuse to give up office following a democratic election; and politicians gambling with major policy shifts when their consequences are uncertain. In the democratic transition of power, common knowledge about the veracity of the election process enables citizens to threaten incumbents with protests
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THE (IN)STABILITY OF DEMOCRACY National Institute Economic Review Pub Date : 2022-05-31 Sayantan Ghosal, Eugenio Proto
How stable are democracies? Building on Ghosal and Proto (2009, Journal of Public Economics, 93, 1078–1089), the conditions under which democracies are stable are analyzed. How these conditions relate to the threat of the rise of right wing populism poses to democracies is discussed.
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BEYOND BINARIES: TECHNOCRACY, POPULISM AND PUBLIC POLICY National Institute Economic Review Pub Date : 2022-05-31 Adrian Pabst
Populism is a paradoxical phenomenon that resists easy categorisation because it both rejects and intensifies certain elements of technocracy. Populist politics is at once a backlash against liberal-technocratic ideology and policy and an attempted corrective of some of its worst excesses, such as increasing inequality or pressures on wages. Despite deep differences, both rest on a binary logic that
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IS HAPPINESS U-SHAPED IN AGE EVERYWHERE? A METHODOLOGICAL RECONSIDERATION FOR EUROPE National Institute Economic Review Pub Date : 2022-04-11 David Bartram
A recent contribution to research on age and well-being asserts that the impact of age on happiness is ‘u-shaped’ virtually everywhere. I evaluate that finding for European countries, considering whether it is robust to alternative methodological approaches. The analysis excludes control variables that are affected by age (noting that those variables are not antecedents of age) and explores the relationship
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REGIONAL DISPARITIES IN LABOUR PRODUCTIVITY AND THE ROLE OF CAPITAL STOCK—CORRIGENDUM National Institute Economic Review Pub Date : 2022-03-14 Ben Gardiner,Bernard Fingleton,Ron Martin
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KURZARBEIT/SHORT TIME WORKING: EXPERIENCES AND LESSONS FROM THE COVID-INDUCED DOWNTURN National Institute Economic Review Pub Date : 2022-03-14 Bernard H. Casey, Ken Mayhew
Following the covid-induced lockdowns, many commented on the role the German model of Kurzarbeit could play in reducing unemployment. Other countries emulated the model. Looking at the experiences of Germany, the UK, Sweden and the USA, the article analyses the strengths and weaknesses of short-time working (STW) schemes. It asks whether STW has been well designed to have optimal short and longer run
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THE SAHM RULE AND PREDICTING THE GREAT RECESSION ACROSS OECD COUNTRIES National Institute Economic Review Pub Date : 2022-03-14 David G. Blanchflower, Alex Bryson
We examine the start date of the Great Recession across OECD countries. The Sahm Rule identifies the start of recession in the US to the beginning of 2008 but in most other OECD countries it identifies the start after that identified by two successive falls in quarterly GDP. We establish our own rule for predicting recession using the fear of unemployment series to predict recession. We show a 10-point
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INTRODUCTION: SPECIAL ISSUE ON ‘MACROECONOMICS OF CLIMATE CHANGE’ National Institute Economic Review Pub Date : 2021-12-30 Dawn Holland, Hande Kucuk, Miguel León-Ledesma
Climate change is one of the most serious risks facing humanity. Temperature rises can lead to catastrophic climate and natural events that threaten livelihoods. From rising sea levels to flooding, bush fires, extreme temperatures and droughts, the economic and human cost is too large to ignore. More than 190 world leaders got together in Glasgow during November 2021 at the UN’s COP26 climate change
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CLIMATE CHANGE AND FISCAL SUSTAINABILITY: RISKS AND OPPORTUNITIES National Institute Economic Review Pub Date : 2021-12-30 Matthew Agarwala, Matt Burke, Patrycja Klusak, Kamiar Mohaddes, Ulrich Volz, Dimitri Zenghelis
Both the physical and transition-related impacts of climate change pose substantial macroeconomic risks. Yet, markets still lack credible estimates of how climate change will affect debt sustainability, sovereign creditworthiness and the public finances of major economies. We present a taxonomy for tracing the physical and transition impacts of climate change through to impacts on sovereign risk. We
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AN INVESTIGATION OF CARBON TAXES AND TERMS OF TRADE IN A LARGE MACROECONOMETRIC MODEL National Institute Economic Review Pub Date : 2021-12-30 Dawn Holland, Ian Hurst, Amit Kara, Iana Liadze
Carbon taxes are likely to play a key role in meeting greenhouse gas emission targets that are consistent with the Paris Agreement. In this article, we assess the macroeconomic effects of a carbon tax on the global economy, paying particular attention to the terms-of-trade implications for importers and exporters of fossil fuels. We use a modified version of the National Institute’s Global Econometric
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IMPROVING FOOD POLICIES FOR A CLIMATE INSECURE WORLD: EVIDENCE FROM ETHIOPIA National Institute Economic Review Pub Date : 2021-12-30 Shouro Dasgupta, Elizabeth J. Z. Robinson
Climate change and weather shocks have multi-faceted impacts on food systems with important implications for economic policy. Combining a longitudinal household survey with high-resolution climate data, we demonstrate that both climate and weather shocks increase food insecurity; cash assistance and participation in Ethiopia’s Productive Safety Net Programme have reduced food insecurity; but food assistance
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TACKLING THE DECISIVENESS DEFICIT—HOW TO ENHANCE CLIMATE AMBITION OF THE ASIA-PACIFIC COUNTRIES? National Institute Economic Review Pub Date : 2021-12-30 Aneta Nikolova, Hannah Ryder
This article presents clear evidence that current announced climate pledges by Asia-Pacific countries – even those dependent on climate finance – are insufficient to keep the world within a 1.5°C temperature rise. The article provides analysis explaining why and how countries in the region are not being ambitious enough, and proposes three key steps for how to overcome a “decisiveness” deficit to spur
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PRODUCTIVITY IN UK HEALTHCARE DURING AND AFTER THE COVID-19 PANDEMIC National Institute Economic Review Pub Date : 2021-12-30 Diane Coyle, Kaya Dreesbeimdiek, Annabel Manley
Measured health output in the UK declined sharply during the Covid-19 pandemic, despite the evident large increase in some National Health Service (NHS) activities such as critical care, and the new test and trace and vaccination programmes. We explain the measurement methods applied to public services that produced the published decline, in the context of the inherent difficulties of defining and
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CLIMATE POLICIES: CHALLENGES, OBSTACLES AND TOOLS National Institute Economic Review Pub Date : 2021-10-27 Frederick van der Ploeg
A four-pronged approach to climate policy is presented consisting of carbon pricing, subsidies for renewable energies, transformative green investments and climate finance and engendering flywheel effects. Then, a variety of societal and political challenges and obstacles faced by such a climate policy and what can be done to overcome them are discussed. These range from stranded assets, the very long