Policy Contributions

Trade and Global Value Chains

• [New!] "Europe's Shift to EVs Amid Intensifying Global Competition," IMF Working Paper No. 2024/218, October 2024 (joint Philippe Wingender, Jiaxiong Yao, Benjamin Carton, Diego Cerdeiro and Anke Weber).
  Description: We use quantitative models to assess the economic impacts on EU economies of the EU's proposed adoption targets for electric vehicles (EVs) against the backdrop of an emerging Chinese comparative advantage in EVs. Our baseline scenario assumes that China's entry into the European car market broadly mirrors Japan's entry into the US car market in the 1970s and 80s. We find that for the EU as a whole, the GDP costs are small in the short term, and close to zero in the long term. However, Central and Eastern European economies that are heavily reliant on car manufacturing are most adversely affected and would see sizeable labor dislocations. Tariffs would further raise the costs of the EV transition, but with limited effects on emissions. By contrast, encouraging FDI and realistic productivity gains in the EU car sector would go a long way towards softening the impacts of the "EV shock".
  Presentation slides

• "Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World," IMF Departmental Paper No. 2023/003, May 2023 (joint with Asmaa ElGanainy, Shushanik Hakobyan, Fei Liu, Hans Weisfeld, Ali Abbas, Céline Allard, Hippolyte Balima, Celine Bteish, Rahul Giri, Daniel Kanda, Sergii Meleshchuk, Gustavo Ramirez, Vivek B. Arora, Subir Lall, Benjamin Kett and Megan Pohl).
  Description: The African Continental Free Trade Area (AfCFTA ) is the world’s largest free trade area by population, but its implementation remains in the early stages. This paper finds that there is substantial room for intra-African trade and Africa's trade with the RoW to grow if obstacles to trade are addressed. Planned reductions in tariffs and non-tariffs measures under AfCFTA would increase trade noticeably, and raise the median African country’s real income by 1.3 percent in the long run, but much larger gains could be unlocked through improvements in the trade environment. The paper also argues that further trade integration could help Africa respond to ongoing global and domestic shifts, including climate change, geoeconomic fragmentation, and technological change. 
  Presentation slides
  [Media coverage: VOA; Al Jazeera; Business Insider Africa; Africa Report; and others]

• "Global Value Chains, Volatility and Safe Openness: Is Trade a Double-Edged Sword?," Bank of England, Financial Stability Paper No. 46, January 2021 (joint with L. D'Aguanno, O. Davies, A. Dogan, R. Freeman, S. Lloyd, D. Reinhardt, and R. Sajedi).
  Description: In this paper, we show that the relationship between GVC integration and macroeconomic volatility is ambiguous in theory, and insignificant in the data. This supports our headline conclusion that there is no compelling reason to fear the double-edged sword: a blanket reduction in GVC integration would impose economic costs without necessarily, or significantly, reducing economic volatility. We discuss the scope for policy actions to make trade safe and open, drawing out an analogy with the financial sector reforms enacted following the global financial crisis.
  Presentation slides
  [Cited in the 2022 and 2023 Economic Reports of the President]

Growth and Productivity

• [New!] "People's Republic of China: Service Sector Productivity, Allocative Efficiency and Innovation," Selected Issues, IMF Country Report No. 2024/276, August 2024 (joint with N. Novta and Y. Xu).
  Description: This paper documents that, despite large and growing misallocation of capital and labour in China's services sector, structural transformation towards services has positively contributed to economy-wide total factor productivity (TFP) over the last 20 years. It also provides sector- and firm-level evidence that trade liberalisation, improved labor mobility and a reform of state-owned enterprises could support TFP growth, both in services and overall. The service sector was one of a number of selected issues addressed in the context of China's 2024 Article IV consultation.

• [New!] "Slowdown in Global Medium-Term Growth: What Will It Take to Turn the Tide?," IMF World Economic Outlook: Chapter 3, April 2024 (joint with N. Li, C. Maggi, D. Noureldin, C. Okou, and A. B. Sollaci).
  Description: This chaper takes stock of some global trends that have contributed to the slowdown in economic growth since the Global Financial Crisis, and examines the implications for medium-term global growth prospects. It was supported by the Macroeconomic Policy in Low-Income Countries program of the UK Foreign, Commonwealth and Development Office. A short summary of the main findings is available from the IMF blog. You can watch my colleague Cedric Okou and me present the headline findings here.
  [Media coverage: New York Times; Financial Times; and others]

• "UK Regional Productivity: An Evidence Review," Industrial Strategy Council Research Paper, February 2020 (joint with B. Jones).
  Description: This report takes stock of what we know about productivity differences across UK regions, identifies evidence gaps, and draws some policy lessons. It was commissioned by the UK Industrial Strategy Council, and funded by the Economic and Social Research Council. A short summary of the main findings is available from the Industrial Strategy Council blog.
  [Media coverage: Financial Times; The Times; The Guardian; The Telegraph; Reuters; Bloomberg]
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• "Wealth of the Nation: Scotland's Productivity Challenge," David Hume Institute, September 2019 (joint with J.-F. Kelly, and M. Mitchell).
  Description: This report seeks to place Scotland's productivity performance in an international context. It draws on some insights from my work on open-economy development accounting with Alejandro Cuñat. A technical appendix is available here. A non-technical summary of the main economic findings is available from the Fraser of Allander Institute blog.
  [Media coverage: The National; Financial Times; The Times; BBC News; ITV News; and others]

2016 UK EU-Membership Referendum

• "Watch Out for Winners and Losers: Odds-Implied Brexit Sentiment and FTSE Returns," June 2016 (joint with C. Milas, and T. Worrall)
  Description: This note analyses the effect of changes in the perceived likelihood of a British exit from the European Union ahead of the 2016 EU Referendum on the returns of FTSE companies. To measure Brexit sentiment, we use the Brexit probabilities implied in the betting odds of UK bookmakers. A non-technical summary is available from the LSE Politics & Policy blog.
  [Media coverage: Bloomberg; The Times]

2014 Scottish Independence Referendum

• "Country Size and Border Effects in a Globalised World," Workshop, University of Edinburgh, 26-27 June 2014.
  Description: This academic workshop was dedicated to the economics of small countries and border effects, and included a public panel on "The Economics of New Borders: Implications for Scotland" with academic visitors James Anderson (Boston College) and Enrico Spolaore (Tufts University), and HM Treasury economist Stephen Farrington.
  Keynote lecture by James Anderson (video); keynote lecture by Enrico Spolaore (video)

Public Finance

• "Fiscal Rules - Anchoring Expectations for Sustainable Public Finances," IMF Board Paper, Fiscal Affairs Department, December 2009 (joint with M. Kumar, E. Baldacci, A. Schaechter, C. Carceres, D. Kim, X. Debrun, J. Escolano, J. Jonas, P. Karam, and I. Yakadina)
  Description: This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new database spanning the whole IMF membership, and explores the fiscal framework that could be adopted as countries emerge from the Global Financial Crisis.
  Presentation slides