November 2019

14Nov

US. Federal pension fund to include China investments, bucking political pressure

A pension fund for federal workers on Wednesday said it will begin tracking a benchmark that includes China-listed companies, despite strong opposition from a bipartisan group of Senators. The decision by the Federal Retirement Thrift Investment Board (FRTIB), an independent government agency that oversees the Thrift Savings Plan (TSP) retirement fund, comes amid heightened trade tensions with China and efforts to limit the flow of U.S. capital to Chinese companies due to security concerns. It also bucks months of...

November 14, 2019
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13Nov

Latin Americans Are Clamoring for Equality — and Democracy

Economic crisis and stagnation have sparked a wave of protest and a demand for more transparency and an efficient welfare state across the region. A sign carried by one of the more than a million Chileans demonstrating on Oct. 25 read: “Neoliberalism was born in Chile; it is dying in Chile.” You’d think the obituary rings true, if you judge not just by protests not just in Chile and Ecuador a few weeks back, but also by election results...

November 13, 2019
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11Nov

German coalition parties avert government crisis with pension deal

German Chancellor Angela Merkel's conservatives and the center-left Social Democrats (SPD) on Sunday broke a deadlock over a higher basic pension for low-income workers, an impasse which had threatened the future of their governing coalition. Senior coalition members, including Merkel and SPD Finance Minister Olaf Scholz, sealed the compromise deal during talks in the chancellery that lasted more than six hours. The package also includes lower contributions to the public unemployment insurance scheme and the creation of an investment...

November 11, 2019
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08Nov

Robert C. Merton and the Science of Finance

By Zvi Bodie Starting with his 1970 doctoral dissertation and continuing to today, Robert C. Merton has revolutionized the theory and practice of finance. In 1997 Merton shared a Nobel Prize in Economics “for a new method to determine the value of derivatives.” His contributions to the science of finance, however, go far beyond that. In this essay I describe Merton’s main contributions. They include the following: 1. The introduction of continuous-time stochastic models (the Ito calculus) to the theory...

November 8, 2019
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October 2019

30Oct

How Pinochet’s economic model led to the current crisis engulfing Chile

After 12 days of mass demonstrations, rioting and human rights violations, the government of President Sebastián Piñera must now find a way out of the crisis that has engulfed Chile. Analysts have correctly interpreted the wave of protests as a reflection of discontent with the material, political and social inequalities engendered by the economic model imposed by the country’s former dictator Augusto Pinochet. That model deregulated markets and privatised social security systems, and was widely emulated by other countries...

October 30, 2019
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29Oct

US senator plans Bill to block Federal Pensions investing in China

Senator Marco Rubio plans legislation to block U.S. government pensions from investing in Chinese stocks after the board overseeing the funds put off a decision that would add exposure to China. The Federal Retirement Thrift Investment Board on Monday addressed concerns that switching the benchmark for its $50 billion TSP I Fund to mirror an index with Chinese assets would undermine U.S. economic and national security. A decision was delayed for at least two weeks, according to Kim Weaver,...

October 29, 2019
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29Oct

Interview with Alejandro Werner on the Latest Economic Developments in Latin America

To boost the economic recovery and create more jobs, the region will need to rely on domestic drivers of growth, like consumption and investment. In a wide-ranging interview with Alejandro Werner, the head of the IMF’s Western Hemisphere Department, we discussed the report’s findings, the recent social unrest in the region, as well as the latest developments in Argentina and Ecuador. The Regional Economic Outlook last year looked at the evolution of inequality and poverty in the region....

October 29, 2019
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25Oct

Essentials of Pension Economics

By Sergio Nisticò This Palgrave Pivot provides a concise overview of pension systems which, whether paid by governments or by private companies, are the sole source of income for millions of people around the world. By 2050, two billion elderly people will have to be ensured some form of income while, at the same time, the prospect facing younger generations is of a gloomy future. This book breaks down the jargon, investigates different designs and analyses these designs'...

October 25, 2019
Aging, Books, Sustainability,
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25Oct

Secure Retirement: Connecting Financial Theory and Human Behavior

By Jacques Lussier Investors fear return uncertainty and drawdowns associated with owning relatively risky asset classes, such as equity. The fact that greater risk is associated with greater expected return does not preclude the possibility that realized returns may be far less than a low-risk asset could provide, even with horizons as long as 5 to 10 years. Fear prompts the average investor to sometimes act against his own best interest. Therefore, the average investor’s portfolio often underperforms a...

October 25, 2019
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16Oct

Increasing Decision Making Capacities of Local Governments: Mexico’s Quest for Economic Growth

By Heidi Jane Smith (Economics Professor and Public Policy Coordinator, Department of Economics, Universidad Iberoamericana) This paper examines the relationship between fiscal autonomy and a municipalities’ commitment to and the impact upon economic development activities. This article evaluates quantitatively, using a panel dataset from 1989-2014, the relationship of fiscal capacity to a city’s economic development. It tests the hypothesis that if a municipality is more fiscally autonomous in collecting their own revenue and also discretion in making their...

October 16, 2019
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