The Value of Free Health Insurance: Evidence From Mexico’s Seguro Popular
Mexico’s Seguro Popular, launched in 2002, offered free public health insurance to the uninsured informal sector, extending coverage to roughly half of the population that previously lacked any plan. Empirical analysis shows a modest 2.3‑percentage‑point rise (about 3.5%) in the likelihood that no household member holds a formal job among low‑educated families with children, while wages in both formal and informal sectors remain unchanged. The program’s fiscal cost exceeds households’ willingness to pay, which averages below one peso per peso spent, limiting labor‑market reactions. These outcomes echo U.S. studies of Medicaid and other subsidized insurance schemes, suggesting that large spikes in informality may be overstated.
Bank Failures: The Roles of Solvency and Liquidity
A new survey of 160 years of U.S. banking data shows that fundamental insolvency, not depositor runs, is the primary driver of bank failures. Even when runs occur, they usually act as a trigger for already insolvent institutions. Recovery rates...
Global Shocks Are Back: Emerging Markets Holding Up
The latest U.S. Federal Reserve tightening in 2022‑23, despite raising rates over five percentage points, did not trigger the financial crises that historically followed such moves in emerging markets. Researchers attribute this resilience to two structural improvements: higher monetary‑policy credibility,...
The Weaker US Job Ladder Has Slowed Wage Growth
A new NBER paper finds that upward job mobility in the United States has halved since the 1980s, limiting workers' ability to move to higher‑paying firms. The authors develop a novel measure using CPS data and show the gap between...
Why Global Imbalances Matter Again – and What to Do About Them
Global current‑account imbalances have widened sharply since 2018, reaching their highest levels since 2012, with the United States running a deficit of roughly 3.5‑4% of GDP and surplus economies such as China, Europe, Japan and oil exporters expanding their external...
The Great AI Talent Migration: Why Universities Are Losing the Future of Innovation
The analysis of 42,000 AI researchers reveals a rapid migration from universities to large firms, with industry employing 68% by 2019 versus 48% in 2001. Top‑earner compensation in industry surged to $1.9 million (2015 dollars) in 2021, a five‑fold gap over...
Differences in AI Adoption in Europe and the US: Explanations and Implications for Productivity Growth
The United States is outpacing Europe in AI adoption, with 43% of workers using generative AI and 5.2% of work hours devoted to it in early 2026, versus 26‑36% of workers and under 2% of hours in the leading European...
Why Firms’ Responses to Corporate Taxes Differ Across Countries
A new study using administrative tax‑return data from 16 countries provides the first comparable estimates of corporate taxable‑income elasticities. The elasticity ranges from 0.075 to 1.9, averaging 0.79, indicating that a 10% rise in net‑of‑tax rate boosts reported taxable income...
Greening at the Border: Carbon Border Adjustment Mechanism Incidence on EU Member States and Their Trading Partners
The EU’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase in January 2024, levying charges on imports based on embedded carbon content. It currently targets cement, steel, aluminium, fertilizers, electricity, hydrogen and related intermediates, covering roughly half of emissions...
How Emerging Markets Borrow: New Evidence on Sovereign Bond Issuance
The authors analyze 75,000 sovereign bond auctions from 20 emerging‑market economies (2000‑2023) to uncover how timing decisions differ by currency. Local‑currency issuances closely track refinancing needs, while foreign‑currency issuances are driven by global financial conditions, investor sentiment, and terms‑of‑trade shocks....
The Content Moderator’s Dilemma: How Removing Toxic Speech Distorts Online Discourse
A new 2025 study introduces a semantic‑space metric based on Bhattacharyya distance to quantify how removing toxic tweets reshapes online discourse. Analyzing five million U.S. political tweets, the authors find that stricter toxicity thresholds produce measurable shifts, reaching roughly 20%...
Information Equalisation and Competition in Selection Markets: Evidence From Auto Insurance
Researchers examined Italy’s auto‑insurance market to gauge how equalising information across insurers affects competition and consumer welfare. Using a structural model, they compared three scenarios: full transparency, a centralised risk bureau, and a privacy‑limited regime. Full transparency and the bureau...
Beyond Oil: The Macroeconomic Impact of Commodity Supply Disturbances
A new CEPR paper shows that supply disruptions in non‑oil commodities—metals, grains, livestock—affect inflation and industrial production as strongly as traditional oil shocks. Using textual analysis of over one million news articles, the authors construct daily supply‑demand proxies for 20...
From World War Trade to Domino Regionalism: The Emergent Global Trading Order
In April 2025 the United States unleashed sweeping tariffs and China responded with export controls, creating a “World War Trade” that shattered the post‑World‑II rules‑based system. While the US‑China clash intensified, the other 75 % of global trade—countries responsible for three‑quarters of...
From Free Rider to Innovator: How China Became a Global Pharmaceutical Powerhouse
China has transformed from a pharmaceutical free rider into a leading innovator, largely after the 2016 National Reimbursement Drug List (NRDL) reform. The policy slashed prices by 50‑60% while guaranteeing near‑universal coverage, prompting a five‑fold rise in annual clinical trials...
China Spillovers
China’s slowdown generates both supply‑side and demand‑side shocks that ripple through global production networks. Recent IMF‑affiliated research finds that a negative Chinese supply shock cuts partner‑country GDP by about 0.15 % over two years, while demand shocks produce a similar but...
Designing Fiscal Consolidation to Achieve Fiscal Sustainability and the Sustainable Development Goals
The paper by Bhasin and Loungani (2026a) examines over 200 fiscal consolidation episodes across advanced and emerging economies, revealing that specific design choices—such as timing with available monetary space, tax‑based versus spending‑based instruments, and the speed of adjustment—can dramatically alter...
The Economic Consequences of a Low-Skilled Immigration Sudden Stop: Evidence From Korea’s Guest Worker Programme
The study exploits South Korea’s Employment Permit System (EPS) as a natural experiment, showing that the pandemic‑induced 22% drop in low‑skill guest workers caused a sharp labour‑supply shock for manufacturing firms. Firms that relied heavily on EPS workers experienced higher...
Business Investment in the Era of Digital Transformation
Business investment across the OECD has remained weak since the Global Financial Crisis, but digital assets—hardware, software and databases—have surged. Real digital investment rose over 130% since 2007, outpacing non‑digital tangible investment, which barely moved. The United States leads the...
Our Underappreciated International Reserve System
The latest NBER paper shows a pronounced shift in the composition of global foreign‑exchange reserves. The U.S. dollar’s share slipped below 57% in Q3 2025, while gold overtook the euro to become the second‑largest reserve asset. Central banks are diversifying into...
CBDC Neutrality, Bank Liquidity, and the Hybrid Nature of Bank Deposits
Central‑bank digital currency (CBDC) could remain neutral for banks if the central bank recycles CBDC balances back to them at rates equal to deposit‑funding costs, preserving credit creation and profit margins. Deposits, however, are hybrid instruments that provide money‑like services...
Tall Buildings Lead to More Compact and Productive Cities
The paper investigates how building‑height limits affect urban productivity and land use. Using a global dataset of 11,000 agglomerations and 300,000 tall structures, the authors exploit variations in bedrock depth as an instrument to isolate the causal impact of vertical...
Can Blockchain Decentralise Money, Contracts, and Finance?
Bitcoin’s blockchain, valued at $1.3 trillion, has operated uninterrupted since 2009, embodying the original promise of trust‑less money, contracts, and finance. In a new LTI report, economists Yackolley Amoussou‑Guenou, Bruno Biais, and Sara Tucci‑Piergiovanni assess how much of that promise has...
On the Decentralisation of Money, Contracts, and Finance Using Blockchain
The fifth LTI Report surveys how blockchain aims to decentralise money, contracts, and finance by replacing central authorities with distributed ledgers and native cryptocurrencies. Bitcoin’s $1 trillion market cap and Ethereum’s $0.5 trillion ether supply illustrate the scale of monetary decentralisation achieved...
A Prize to Kill For: Management Lessons From the German Air Force in WWII
A recent study shows the WWII German Luftwaffe used a tiered status award, the Knight’s Cross, to spur pilots’ combat effort. By linking each medal tier to a quota of aerial victories, pilots accelerated performance when approaching the threshold, adding...
Europe 2050: Geometries of Peace, Power, and Prosperity
Europe faces a series of wake‑up calls—from COVID‑driven border closures to supply‑chain shocks, Russia’s war in Ukraine, China’s market leverage, and strained US ties—that have exposed deep structural weaknesses in the Single Market, energy security and strategic autonomy. A new...
How Rising Bank Lending to Non-Bank Financial Institutions Reallocates Credit Away From Firms
A new Columbia paper shows that euro‑area banks have shifted lending from corporations to non‑bank financial institutions (NBFIs), with bank‑NBFI exposure rising nearly 60% since 2019 while corporate loans grew only about 20%. Reverse repurchase agreements now represent roughly 45%...
From the Outside In: How International Manager Rotations Narrow the Gender Pay Gap and Change Cultural Norms
The study by Minni et al. shows that exposure to foreign managers with progressive gender attitudes reduces the gender pay gap within teams by 4.9 percentage points, an 18% decline, without lowering men’s wages. Using rotation data from a large...
The Role of Spending Rigidity in Fiscal Adjustment
Public debt has surged to record levels, while government wage bills remain rigid, averaging 10% of GDP across OECD nations. New research by de Mello and Jalles shows that higher wage‑bill ratios blunt the primary balance response to rising debt, especially...
Firms Predict an AI Productivity Boom Is Coming
A new cross‑country survey of over 5,000 senior executives shows that 69% of firms in the US, UK, Germany and Australia are already using AI, with the United States leading at 78%. While AI has had virtually no impact on...
From Earth to Heaven: The Changing Drivers of Monetary Policy
The new Forbes et al. (2026) study uses a factor‑augmented VAR across 13 advanced economies (1970‑2024) to separate global and domestic shocks affecting interest rates, inflation and output. It finds that global shocks have risen from modest influence pre‑1999 to...
The Impact of Brexit on Foreign-Born Workers in the UK
New research by Portes and Springford (2026) uses synthetic difference‑in‑differences to quantify Brexit’s effect on foreign‑born workers. The study finds that EU‑origin employment fell by about 785,000 by 2024, while non‑EU employment grew by roughly 992,000, resulting in a modest...
What Regional Data Tell Us About the Euro Area Phillips Curve
A new ECB research bulletin exploits regional data from 168 NUTS‑2 areas across 11 euro‑area countries (1999‑2023) to re‑estimate the Phillips curve. Controlling for region and time fixed effects yields a slope of –0.19, far steeper than the –0.01 found...
When Neighbours Stop Knocking: The Hidden Impact of Canada’s 2025 Tourism Decline on US Local Labour Markets
In 2025, Canadian tourism to the United States dropped 25% after heightened geopolitical tensions and Trump‑era rhetoric. The decline hit service‑oriented ZIP codes where Canadian visitors comprised at least 1% of foot traffic, leading to a 6% employment contraction in...
Cross-Border Restrictions in the Age of Geopolitical Tensions: What Seven Decades of Data Tell Us
A new study uses large‑language‑model techniques to convert the IMF’s 70‑year AREAER narrative archive into a daily, country‑level dataset of cross‑border financial restrictions (iBoP‑C and iBoP‑S). The high‑frequency indices reveal a stop‑go pattern of financial liberalisation, with advanced economies easing...
Sanctions and Financial Repression
The interview with Oleg Itskhoki examines how Russia employed financial repression in 2022 to weather the largest post‑war sanctions package. By banning cash withdrawals and obligating exporters to surrender foreign‑currency earnings, Moscow halted a ruble freefall and stabilized its fiscal...
A Wartime Labour Market: The Case of Ukraine
Ukraine’s labor market has endured a massive shock since the February 2022 invasion, losing roughly a quarter of its pre‑war workforce due to displacement, mobilization and casualties. Despite a spike in unemployment above 20% in 2022, the rate fell to...
What's Next for Ukraine: The Labour Market
Ukraine has lost roughly a quarter of its civilian workforce since the 2022 invasion, with 3.5 million workers displaced, mobilised, or killed. Despite this shock, aggregate job‑matching efficiency declined only about 15%, a smaller drop than during the 2008 U.S. financial...
Banking on Nonbanks
The IMF paper documents a rapid rise in non‑bank financial institution (NBFI) subsidiaries within banking groups, now accounting for about 32 % of syndicated loan origination in 2024. When macroprudential policies tighten bank‑level constraints, bank subsidiaries cut lending by roughly 1 %,...
How Sanctions Can Help Stabilise Global Oil Supply
A G7‑backed price cap on Russian oil, introduced in 2022, is shown to boost near‑term extraction while curbing global oil prices and volatility. The cap neutralizes market power and reduces the option value of holding reserves, shifting producer incentives toward...
The EU's Path to Service Growth and Clean Tech
The EU can boost growth by deepening single‑market integration for high‑value services and by accelerating clean‑tech investments. While the United States pursues protectionist manufacturing policies and retreats from climate commitments, it still enjoys a large services surplus that could wane....
From Tariffs to Trade Flows: Diversion Effects and China’s Exports to the EU
U.S. tariffs on Chinese imports have coincided with a near‑10% year‑on‑year rise in China’s exports to the EU during 2025, but the surge began before the tariff hike and has not accelerated since. A difference‑in‑differences analysis of over 3,000 product...
Geopolitics in the Evaluation of International Scientific Collaboration
Recent randomized surveys of US policymakers and scientists reveal a pronounced “China penalty” in grant evaluations. When the only variable changed is the collaborator’s nationality, support for US‑China proposals drops sharply compared with identical US‑Germany proposals, with unconditional approval falling...
What’s Next for Ukraine: Investment
Ukraine will emerge from the war burdened with massive debt, but experts Yuriy Gorodnichenko and Maurice Obstfeld argue that restructuring—potentially including outright forgiveness—is essential to attract private capital. They estimate a $40 billion annual investment gap, split between rebuilding destroyed assets,...
A Tale of Two Financial Centres: Brexit Uncertainty and the Fragility of Cross-Border Capital Flows
A new firm‑level study of Swiss‑UK capital linkages finds that the Brexit referendum’s surge in policy uncertainty sharply reduced short‑term debt flows from Swiss‑resident firms to the United Kingdom, while equity investments remained stable. The contraction is driven almost entirely...
Export Bans that Weren't Really Bans: How Russia Kept Importing Military Goods
EU export bans targeting military‑relevant goods after Russia’s invasion were initially narrow, covering only specific product variants. Transaction‑level customs data show three evasion channels: partially sanctioned variants, transit shipments declared en route, and rerouting through third‑country hubs such as Turkey....
Geopolitical Risk and Supply Chain Diversification
A new study of Japanese multinational corporations shows that rising geopolitical risk is prompting firms to diversify supply chains away from China toward ASEAN economies, rather than fully relocating production. Using the Caldara‑Iacoviello Geopolitical Risk index and firm‑level trade and...
EU Capital Markets Reform Should Focus on Innovation Investment
The Bocconi Institute proposes six pragmatic reforms to close Europe’s “scale‑up gap” and boost venture‑capital financing for innovative firms. Using Dealroom data on 64,500 EU start‑ups, the report shows that VC investment in scale‑ups is under 10% of U.S. levels...
The Economics of the Kalshi Prediction Market
Kalshi, a CFTC‑approved designated contract market, operates a quote‑driven prediction platform where makers post offers and takers accept them. An analysis of over 300,000 contracts shows that prices generally track event probabilities but suffer a pronounced favourite‑longshot bias, with cheap...