Breaking the “doom loop” — a negative spiral that can result when banks hold sovereign bonds and governments bail out banks — would increase the stability of European economies in the event of another financial crisis.
Regulators should try to break the doom loop by assigning positive risk weights — in calculating banks’ capital requirements — to banks’ holdings of domestic and other Eurozone sovereign bonds.
Breaking the doom loop would impose substantial costs on powerful political constituencies.
Selecting candidates for membership of the Federal Open Market Committee (FOMC) based primarily on their political views would lead to worse monetary policy outcomes than has been the case over the last 15 years.
The recent scandal of rich and famous people buying places for their children at elite colleges has led to a renewed public conversation about the system of legacy preference in admissions at many top US universities. We invited our US panel to express their views on the likely effects of legacies on potentially high-achieving applicants from less advantaged backgrounds and on wider society.
When more affluent people move into an urban neighborhood, the influx can raise house prices and the value of local amenities, leading to the displacement of long-time lower-income residents – a process sometimes known as gentrification. We invited our European panel of economic experts to express their views on whether governments in Europe should be doing more to counter this phenomenon via a range of housing market policies.
In January this year, Senator Elizabeth Warren unveiled a proposal to tax the wealth of the richest 0.1% of Americans. The proposed legislation to tax households with a net worth of $50 million or more draws on analysis by one of our US panel of economic experts – Emmanuel Saez at Berkeley – showing that the richest 0.1% has seen its share of American wealth more than triple from 7% to 22% since the late 1970s. Saez and colleagues have also made calculations of the potential impact of Senator Warren’s proposed tax.
‘Modern monetary theory’ (MMT) – the idea that a country that is able to borrow in its own currency need not worry about government deficits and debt – has been all over the economics and finance media in recent weeks. This approach to macroeconomics, which has been used to underpin calls for new public spending programs, has been debated widely in newspaper columns, blog posts and tweets – often in quite vitriolic ways.
