In September 2016, the European Council invited all euro area members to set up a National Productivity Board to focus on productivity and competitiveness. This column summarises the main findings of the first report of the Conseil National de Productivité, which analyses the causes of the French productivity slowdown that are common to other OECD countries and those that are specific to France. It also proposes a definition of competitiveness that should be useful for euro area macroeconomic policy debates and explains why current account imbalances in the euro area are both a sign of deficient adjustment mechanisms and a cause of concern.
Agnès Bénassy-Quéré, Olivier Blanchard, Laurence Boone, Gilbert Cette, Chiara Criscuolo, Anne Epaulard, Sébastien Jean, Margaret Kyle, Philippe Martin, Xavier Ragot, Alexandra Roulet, David Thesmar
With power over corporate resources as well as stature and prestige in the economic system, public-company CEOs to have sizeable influence over policy and political decisions. This column examines the political donations of more than 3,800 US CEOs of S&P 1500 companies to analyse their political preferences over time, across industries and geographical regions, and by gender. It shows that US public company CEOs have a significant preference for Republicans, who may benefit from public companies’ expanded freedom to spend money on politics.
Alma Cohen, Moshe Hazan, Roberto Tallarita, David Weiss
Against the backdrop of new tariffs imposed by the Trump administration and retaliation from targeted countries, notably China, the trade wars of the 1930s have received renewed attention. This column argues that they mainly served to intensify a pre-existing trend towards the formation of trade blocs. The trade wars of the present day may therefore serve a similar purpose as those in the 1930s, that is, the intensification of China- and US-centric trade blocs.
David Jacks, Dennis Novy
False pretences of knowledge about complicated economic situations have become all too common in public policy debates. This column argues that policymakers should take into account what they don’t know in their decision making. It describes a tractable approach for acknowledging, characterising, and responding to different forms of uncertainty, by using theories and statistical methods available at any particular moment.
Lars Peter Hansen, Thomas Sargent
Mothers in the US breastfeed their infants at higher rates today than at any point in documented history, but low-income mothers have become less likely to do so. A leading reason for mothers to stop breastfeeding is the need to return to work. This column uses data on over 270,000 mother-child pairs in California, which implemented paid family leave in 2004, to examine the relationship between paid family leave and breastfeeding. It finds that paid family leave significantly increases overall breastfeeding duration, suggesting that paid family leave may lead to longer-term health improvements for children and mothers, particularly among disadvantaged families.
Jessica Pac, Ann P. Bartel, Christopher J. Ruhm, Jane Waldfogel
In the early days of his administration, Brazilian President Jair Bolsonaro announced plans to privatise several of the country’s largest state-owned enterprises and airports. Fearing such a move would lower both wages and employment, labour unions organised in opposition to Bolsonaro’s plans. This column looks anew at evidence testing whether privatisation offers more than merely an immediate infusion of revenue, and finds that while increases in efficiency might contribute to Brazil’s overall economic growth, privatisation could also expose the country’s most vulnerable workers to significant risk of decreased wages.
Is the rise of ‘atypical’ work arrangements – such as self-employment, freelancing, gig work and zero-hour contracts – a result of workers wanting such jobs or because they have no other choice? This column reports evidence from the UK and the US that while atypical workers may like flexibility, they would prefer a steady job. Indeed, workers would agree to earn less in order to increase their employment security.
Modern monetary theory (MMT) has recently gained prominence in light of doubts about the effectiveness of monetary policy in addressing economic shortfalls. This column assesses the implications of implementing the theory’s policy prescriptions, and the challenges it presents in the case of Japan – an economy that some have argued has already been subject to such policy. Japan’s labour shortages and low inflation mean modern monetary theory’s fiscal stimulus suggestions may be harder to implement than they initially seem.