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Do employment and educational characteristics of central bank governors affect financial regulation? To answer this question, we construct a new and unique dataset based on curriculum vitae of all central bank governors around the world in 1970-2011, and merge this with data on financial regulation and other variables. The proportion of governors that had past experience in finance increases from 10 percent in 1980 to 30 percent in 2010. Past experience in finance matters, and the effect is large: Over the average duration in office (5.6 years), a central bank governor with financial sector experience deregulates three times more than a governor without financial sector experience. Experience in finance after tenure as governor is not important. Similar results hold for past experience at the International Monetary Fund; in contrast, past experience at the Bank of International Settlements and the United Nations have the opposite effect, slowing the pace of deregulation. Our findings are consistent with the view that past work experiences of central bankers shape their beliefs and preferences, which, in turn, are consequential for policy outcomes.
In this imaginary dialogue, a populist and an economist discuss the role of economic shocks to explain populism. A simple correlation between economic shocks and populism is weak. However, economic shocks can explain well the phenomenon of populism in countries with low pre-existent level of trust. This is confirmed both at the macro cross-country level and also by micro evidence obtained from surveys. Finally, this finding is consistent with the “ideational approach” in political science, which emphasizes how the populist narrative opposes the “corrupt elite” to the “virtuous people.”
Aggressive monetary policy actions by one country can lead to significant adverse cross-border spillovers on others, especially as countries contend with the zero lower bound. If countries do not internalize these spillovers, they may undertake policies that are collectively suboptimal. Perhaps instead, countries could agree to guidelines for responsible behavior that would improve collective outcomes. This paper puts forward some of the practical issues that need to be considered in framing possible rules of the monetary game. We argue that policies could be broadly characterized and rated based on analytical inputs and discussion. Policies that generally have positive or domestic effects could be rated Green, policies that should be used temporarily and with care could be rated Orange, and policies that should be avoided at all times could be rated Red. We provide a brief review of the some of the frameworks that have been used in the literature to measure and analyze spillovers. We make the case that models may reflect the policy biases of those devising them, and may be at too early a stage to be able to draw strong conclusions from them. Therefore, while more empirical analysis should be undertaken, it should be seen as an input to a dialogue rather than definitive, with the analysis being refined as we understand outcomes better. The paper also discusses the specific role of the IMF in this context.
Contrary to the perception of India being a closed economy, exports to GDP have doubled over the last 15 years, and at 20% of GDP India’s are at the same as Indonesia’s. Furthermore, we estimate that the slowdown in export growth over the last decade explains at least two thirds of the headline GDP slowdown, thereby underscoring the increasing imports of exports. Furthermore, India’s merchandise exports have undergone a quiet revolution over the last two decades with new-age engineering, electronic and pharmaceutical exports gradually replacing India’s traditional exports of leather, textile, gems and jewelry. In this paper, using sectoral and firm level data, we ascertain what drives India’s exports. Sectoral data reveal that export volumes are largely driven by changes in partner country growth. Interestingly, this is particularly true in the engineering and electronics sector. That said, we find a structural break around 2005 — well before the global financial crisis and the subsequently documented de-globalization — after which these partner country growth elasticities have fallen sharply, with the decline being largest in India's new age exports. In contrast, changes in the exchange rate and supply side constraints, at the margin, are not found to impact India’s export volumes. Using firm level data broadly produces the similar results. Controlling for external demand conditions and domestic supply constraints, we find little evidence that exchange rate movements hurt competitiveness at the firm level. In fact, the value of imported intermediates increases significantly in response to an appreciation of the rupee. There is however, interesting variation across sectors, with firms in sectors with lower domestic value added content such as drugs and pharmaceuticals, exhibiting a sharper increase in the value of imported intermediates, and a muted response of exports to an appreciation of the exchange rate; while firms in sectors with domestic high value added such as textiles showing a larger response of exports to exchange rate movements.
How does information supplied by firms influence policy? How efficient is legislative bargaining within Congress? To answer these questions, this paper studies the political influence of individual firms on Congressional decisions to suspend tariffs on U.S. imports of intermediate goods. We develop a model of legislative bargaining in which firms influence legislators by transmitting information about the value of protection, using verbal messages and lobbying expenditures. We estimate our model using firm-level data on tariff suspension bills and lobbying expenditures from 1999-2006. We find that, controlling for lobbying expenditures, an increase in the number of import-competing firms expressing opposition to a suspension significantly reduces the probability of the suspension being granted, suggesting that firm messages do indeed contain policy-relevant information. We further find that lobbying expenditures by proponent and opponent firms sway this probability in opposite directions. The effect of the number of opponents is significantly larger than that of both opponent and proponent lobbying. We estimate that the greater information content of verbal opposition fully accounts for its larger impact relative to opponent lobbying and explains about three quarters of its greater effect relative to proponent lobbying, with the remaining one quarter explained by legislative bargaining costs.
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