International Economics

David Elliott, Ralf Meisenzahl and José-Luis Peydró Capital flows and credit growth are strongly correlated across countries. Macroeconomic evidence suggests that this ‘global financial cycle’ is largely driven by US monetary policy: expansionary policy by the Federal Reserve drives increases in lending globally, while contractionary Fed policy leads to a tightening of global financial conditions. … Continue reading Nonbank lenders as global shock absorbers →

Francesca Diluiso and Aydan Dogan To achieve the emissions reduction targets outlined in The Paris Agreement, many economies have started implementing various types of climate policies. These policies, which include subsidies for green production or investment, carbon taxes, and cap and trade schemes, are crucial for guiding the transition to a greener economy. However, by … Continue reading International spillovers from climate policy →

Aydan Dogan, Melih Firat and Aditya Soenarjo How does the use of imported inputs in production affect inflation dynamics in the UK? Over the past few decades, with the rise of global value chains (GVCs), production processes have become increasingly interlinked across countries and sectors. This interconnection means that firms’ pricing decisions are now more … Continue reading Global value chains and inflation: how imported inputs shape UK prices →

Aydan Dogan and Ida Hjortsoe Exporting allows firms to access a larger market, but it also implies costs and risks. Some of these costs and risks are due to the time between production and sales generally being longer for exported goods than for goods sold in the domestic market. In our recent Staff Working Paper, … Continue reading Why short-term finance matters (a lot more) to exporting firms →

Marco Garofalo, Giovanni Rosso and Roger Vicquery Most international trade is denominated in dominant currencies such as the US dollar. What explains the adoption of dominant currency pricing and what are its macroeconomic implications? In a recent paper, we explore a rare instance of transition in aggregate export invoicing patterns. In the aftermath of the … Continue reading Selling England (no longer) by the pound: currency-mismatches and the dollarisation of UK exports →

Julian Reynolds Policymakers and market participants consistently cite geopolitical developments as a key risk to the global economy and financial system. But how can one quantify the potential macroeconomic effects of these developments? Applying local projections to a popular metric of geopolitical risk, I show that geopolitical risk weighs on GDP in the central case … Continue reading Quantifying the macroeconomic impact of geopolitical risk →

Samuel Smith and Marco Pinchetti Recent events in the Middle East, as well as Russia’s invasion of Ukraine, have sparked renewed interest in the consequences of geopolitical tensions for global economic developments. In this post, we argue that geopolitical risk (GPR) can transmit via two separate and intrinsically different channels: (i) a deflationary macro channel, … Continue reading The transmission channels of geopolitical risk →

Rebecca Freeman As another year draws to an end and the blog prepares for some downtime over the festive period, we wanted to take a look back at the blog in 2023. In case you missed any of our posts the first time round, the five most viewed posts for the year were: We hope … Continue reading Top 5 posts 2023 →

Rebecca Freeman, Richard Baldwin and Angelos Theodorakopoulos Supply chain disruptions are routinely blamed for things ranging from elevated inflation to shortages of medical equipment in the pandemic. But how should exposure to foreign supply chains be measured? Using a global input-output database, this post shows that the full exposure of US manufacturing to foreign suppliers … Continue reading Supply chain disruptions: shocks, links, and hidden exposure →

Ambrogio Cesa-Bianchi, Richard Harrison and Rana Sajedi Recent increases in interest rates around the world, following a multi-decade decline, have intensified the debate on their long-run prospects. Are previous trends reversing or will rates revert to low values as current shocks subside? Answering this question requires assessing the underlying forces driving secular interest-rate trends. In … Continue reading Global R* →