BLOG MASH-UP OF THE WEEK

Everyday the blogosphere offers an enormous amount of in-depth analysis on any imaginable topic. The world of macroeconomics and economic forecasting is no exception. To keep themselves updated on the latest information, our in-house team of economists scan the world wide web and gather what they consider the most interesting, appealing, informative or just curious blog posts from experts in the field of global economics. Here’s the list of the Top 4 posts from this week. Check it out!

  1. Mainly Macro – Simon Wren-Lewis: ‘That referendum was fun. Shall we do it again?

    Simon Wren-Lewis investigates the similarities and differences between the referendum on Scottish independence and a referendum in the UK on whether to remain a member of the EU. He argues that the main similarities between both referendums is that the immediate consequence of independence, whether from the UK in the Scottish case or from the EU in the UK case, is negative. He suggests that independence is seen as a means to an end in both referendums, for Scotland it would ensure that they would not be ruled by a right wing Conservative party, while for the UK leaving the EU would stop large scale migration into the country. Finally, he concludes by stating that if the Conservatives win in 2015, he believes that there is a distinct possibility  that the UK might vote to leave the EU. – Angela Bouzanis

  2. Antonio Fatas on the Global Economy – Antonio Fatas: ‘The Euro crash?’

    In his latest blog post, Antonio Fatas talks about the consequences of the ECB starting its QE process as the Fed might soon start raising interest rates. According to some analysts, this divergence might be a potential source of a large fall in the value of Euro. Fatas presents the evolution of the USD/EUR exchange rate since 1975, where he replaces the Euro with the German Mark for the period before 1999. After 2006, one can notice a drift up of the graph mostly because inflation in Europe has consistently been below that of the US. In addition, during this period, there are two separate episodes with a pattern of divergence in economic conditions between Europe and the US that triggers an appreciation of the USD. Are we supposed to expect the same thing now? Fatas says that it is certainly a possibility but far from guaranteed. Using the same dataset you can find other episodes during which US growth was also stronger than European growth and US interest rates were raising faster and the US dollar did not appreciate. Dirina Mançellari

  3. Investment Adventures in Emerging Markets – Mark Mobius: ‘The Leapfrog: The Role of Technology in Accelerating Emerging Markets’ Growth’

    The concept of leapfrogging means that a large and well positioned company with a leading technology has less incentives to innovate than other competitors. Eventually, this company loses its leadership in favor of new risk-seeking businesses. In this post, Mark Mobius argues that emerging and frontier markets are bypassing old technologies and, instead, are taking advantage of cutting-edge technologies. An example of this situation is a Kenyan company that successfully launched a mobile money transfer system, which satisfies the needs of Kenyans that do not have a bank account. Another example is the emergence of internet retailers in India. While heavy initial capital investment will remain crucial for emerging markets, some sectors could benefit from technology—with lower investment requirements—in order to successfully reach their potential clients. – Ricard Torné

  4. Fistful of Euros – Edward Hugh: ‘Does Abenomics Work? – The Doubts Grow’

    Does Abenomics work? To address this question, Edward Hugh cites several rather critical articles. These articles point out several aspects that indicate that Abenomics did not work yet as intended. Firstly, even though unemployment is low, wages continue to drop because of an excessively flexible labor market. Secondly, inflation rises but living standards decline. Thirdly, there is a lack of clearly defined policy goals beyond inflation; Abe’s fiscal policy tries both to stimulate the economy and to reduce public debt. Fourthly, demographic changes and the decline of the export industry pose major challenges to the economy, which still need to be addressed. In Edward Hugh’s opinion, these facts show that Japan needs further structural changes that go beyond Abe’s agenda, and that particularly reform the labor market and solve demographic problems. Teresa Kersting

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