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Decentralised implementation of centrally mandated antipoverty programmes

Even when the central government is committed to a jobs guarantee, rationing of work opportunities can arise under decentralised implementation in poor places. This column examines India‘s efforts to implement such a scheme and finds that there are two main drivers of this rationing: local administrative costs and local corruption. Partial administrative reforms by the centre can have perverse effects. Deeper policy reforms are needed to as

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Social facilitators for negotiations

Pre-negotiation interactions, such as shared meals, are viewed as a valuable means to buildtrust and rapport so as to improve the outcomes of the negotiation. Even tax authorities acknowledge this business meals tend to be tax-deductible, at least in part. This column puts this folk wisdom to the test using a controlled negotiation simulation experiment with MBA students. It finds that there is no difference in negotiation outcomes whether or not

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Outward FDI and employment in Japanese manufacturing firms

Concerns have been raised that outward foreign direct investment may reduce domestic employment and lead to the ‘hollowing-out‘ of the manufacturing industries at home. This column uses a unique dataset of Japanese firms‘ overseas activities toshow that going abroad does not necessarily lead to a reduction of domestic employment. Investment by Japanese firmsinto other Asian countries has a positive impact on domestic job creatio

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Unconventional monetary policy: A tale of heterogeneity

The ECB‘s unconventional monetary policy package implemented in February 2012 changed collateral requirements. This column examines the effects in the French credit market, using data on corporate loans. Credit indeed increased after the liquidity injection, exclusively driven by supply. There was also strategic risk-taking by a group of banks, an unintentional implication of the policy.

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International evidence for Keynesian economics without the Phillips curve

The economies of many countries are operating close to full capacity, but unemployment and inflation are both low. Using data from the US, UK and Canada, this column compares dierences in the macroeconomic behaviour of real GDP, the ination rate and the yields on three-month Treasury securities in the three countries. It shows that the Farmer monetary model, closed with a belief function, outperforms the New Keynesian model, closed with the New K

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Cross-border banking supervision for Central, Eastern and South Eastern Europe

The banking systems in Central, Eastern, and South Eastern Europe are dominated bysubsidiaries of multinational banks, many with parent banks from theEU. This columnanalyses the effects of regulatory and supervisory changes within the EU and euro area on host regulation and supervision in these countries and on their cooperation with home supervisors and resolution authorities in Western Europe. It also offers some recommendations for authorities

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The new globalisation and income inequality

Trade in intermediates (or ‘unbundling of production‘) and trade in capital have become increasingly important in last 25 years. This column shows that trade in intermediates generates a reallocation of capital across countries that exacerbates world inequality in both income and welfare. Unbundling of production hurts middle-income countries but helps those with high productivity. Trade in intermediates also increases within-country

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Side-by-side demonstrations persuade farmers to adopt new technologies

Networks are important for transmitting knowledge among farmers, but it is not always easy or appropriate to identify the best farmers which whom to seed a new technology. The column shows that side-by-side demonstration plots for a new variety of rice are successful at inducing learning. This method makes it less important to identify the farmers best positioned to spread information and has the potential to target individuals who are not connec

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Promises to repay and sovereign spreads

One way for a government to reassure investors of its willingness to repay is to give them a priority claim to state assets. It remains to be seen, however, whether such commitments are viewed as credible by market participants. This column investigates how markets responded to two such commitments. A commitment by the government of Spain did not affect yield spreads, while one by the government of Puerto Rico did. This may be because, as a sub s

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Long-term and intergenerational effects of education

to come

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Managing the secret state

Did the KGB manage its informers using the iron fist or the invisible hand? Mark Harrison tells Tim Phillips how the state motivated and disciplined its secret workforce.

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The declining opportunities for white, non-college-educated Americans

Behind the headline economic growth in the US over the last five decades lie clear patterns of widening wealth inequality. This column shows that white, less-educated Americans born in the 1960s are worse off than the generation born 20 years previously, based on wage changes, increased medical costs, and shorter life expectancy. This disparity could be worth as much as 132,000.

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Globalisation and state capitalism

Therecent success of China and Vietnam over the past three decades has triggered a debate over ‘state capitalism‘ as a viable growth and development model.This column studies the effect of the 2007 WTO accession on the productivity, profitability, and survival rates of state-owned and private Vietnamese firms. The findings reveal that state-owned enterprises have hampered the efficiency gains brought about by globalisation. An analysi

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