Financial Crisis: Exit and Reform

The financial crisis has hit economies around the world and prompted both short-term questions about how best to alleviate the worst consequences responsibly and long-term questions about reforming the global financial system.

The Organisation for Economic Co-operation and Development (OECD), an international body of 30 developed countries, recently took a comprehensive look at the current crisis and existing financial institutions and offered a menu of strategy recommendations to help global economic policy managers extricate their economies from the crisis. The foreword to this report (PDF) reads:

Two questions, then, are at the core of this report: How and when can governments safely wind down their emergency measures? And how can we sensibly reform financial markets? The purpose is to draw together and demonstrate the interconnections among a wide range of issues, and in doing so to contribute to global efforts to address these challenges.

The report divides its recommendations into both reforming financial incentives and phasing out emergency measures. The report provides a good resource for students wishing to obtain a deeper understanding the current system of national and international finance.

A Century of Growth

With the arrival of 2010 and the end of the decade, many individuals have spent time looking back at trends over the past ten years, identifying the decade's "bests" and "worsts," or simply pondering how the world has changed since 2000. In the same spirit of looking backward, here is an excellent study by the National Bureau of Economic Research that examines technology and economic growth in four of the world's major economies: France, Japan, the United Kingdom, and the United States. The authors take a slightly longer view than the previous decade, instead looking back over the Twentieth century.

The report specifically deals with productivity of labor and total input. Productivity gains are a good measure of technological progress: economically, technology helps to increase output generated from a given level of input.

The authors find:

The past 120 years have been characterized by: (i) rapid economic growth and large productivity gains in all four countries; (ii) a long decline of productivity in the United Kingdom relative to the United States, and to a lesser extent also to France and Japan, a relative decline that was interrupted by the second world war (WW2); (iii) the remarkable catching-up to the United States by France and Japan after WW2, that stopped in the case of Japan during the 1990s.

Much, but not all, of these changes are due to the use of information and communication technology (ICT). The report is an excellent resource for learning about how economies change over time.