Tag Archives: Political economy

Political Economy for Investors

Mark Dittli of the market NZZ interviews Russell Napier:

… the power to control the creation of money has moved from central banks to governments. By issuing state guarantees on bank credit during the Covid crisis, governments have effectively taken over the levers to control the creation of money.

… statistics on bank loans to corporates within the European Union since February 2020: Out of all the new loans in Germany, 40% are guaranteed by the government. In France, it’s 70% of all new loans, and in Italy it’s over 100%, because they migrate old maturing credit to new, government-guaranteed schemes.

… we are headed into a significant growth slowdown, even a recession, and bank credit is still growing. … The CFO of Commerzbank was asked about this fact in July, and she said that the government would not allow large debtors to fail.

… in a world where large parts of the global economy are in a system of financial repression, there will be all sorts of capital controls. That means that as an investor, you best invest in jurisdictions where you plan to spend your retirement.

“The Political Economy of Early COVID-19 Interventions in US States,” JEDC, 2022

Journal of Economic Dynamics and Control, July 2022, with Martin Gonzalez-Eiras. PDF (local copy).

We investigate how politico-economic factors shaped government responses to the spread of COVID-19. Our simple framework uses epidemiological, economic and politico-economic arguments. Confronting the theory with US state level data we find strong evidence for partisanship even when we control for fundamentals including the electorate’s political views. Moreover, we detect an important role for the proximity of elections which we interpret as indicative of career concerns. Finally, we find suggestive evidence for complementarities between voluntary activity reductions and government imposed restrictions.

“The Political Economy of Early COVID-19 Interventions in US States,” CEPR, 2022

CEPR Discussion Paper 16906, January 2022, with Martin Gonzalez-Eiras. PDF (local copy).

We investigate how politico-economic factors shaped government responses to the spread of COVID-19. Our simple framework uses epidemiological, economic and politico-economic arguments. Confronting the theory with US state level data we find strong evidence for partisanship even when we control for fundamentals including the electorate’s political views. Moreover, we detect an important role for the proximity of elections which we interpret as indicative of career concerns. Finally, we find suggestive evidence for complementarities between voluntary activity reductions and government imposed restrictions.

Forthcoming in the JEDC.