Publications

OMFIF and the BSIA (Balsillie School of International Affairs)  jointly published on 16 September a piece authored by William White. He contends that the global economic system, and indeed the state of mankind more generally, is more precarious than is commonly understood. Prior to the pandemic, the economic, political and environmental systems that underpin our democratic and capitalist institutions were already highly stressed. The pandemic, the Fourth Horseman of the Apocalypse, now threatens to trigger “tipping points”  that will not be easy to reverse. White remains optimistic that properly chosen policies can reduce these exposures, but they require answering a number of important questions. Not least, what past policies have contributed to the current, unsustainable state of affairs and should be avoided in the future? Spend and print is not a sustainable solution.

https://www.omfif.org/2020/09/unsustainable-policies-and-their-remedies/?utm_source=omfifupdate

The Institute for New Economic Thinking (INET) recently published a Working Paper by William White. He argues that changes to international financial regulations, post the 2008 crisis,were undoubtedly useful but still fall short of taming global “boom-bust” credit cycles. A macrofinancial stability framework, in which both monetary and macroprudential instruments were used to “lean against the wind” of credit booms, would seem the minimum requirement to achieve the desired objective. This should likely be complemented by other measures designed to change the behaviour of market participants (including higher capital requirements)and also the structure of  markets themselves. White also notes the shortcomings of individual regulatory changes, and refers to concerns raised about their coherence as a package. The paper concludes with a brief overview of more radical solutions for change suggested in the literature (eg, Free Banking and Narrow Banking) and a final observation. The current International Monetary (Non)System imposes no international discipline to mitigate national tendencies to excessive credit creation.

https://www.ineteconomics.org/perspectives/blog/why-international-financial-regulation-still-falls-short

This article will be published shortly as a chapter in a book “New Approaches to Economic Challenges: The Financial System” , published by the OECD in Paris. It is argued in the chapter that economies are Complex, Adaptive Systems (CAS). Such systems are widespread in nature and society,have been well studied by other disciplines, and have many shared characteristics. This communality implies that insights from other disciplines might inform macroeconomic policies as well. Ironically, the embrace of complexity leads to at least ten lessons for policymakers that, while revolutionary,  are both simple and intensely practical.

On 19 August, prior to its publication by the OECD, the chapter was also published as an article in the Swiss financial newspaper “The Market”.

https://themarket.ch/english/simple-lessons-for-macro-policymakers-from-embracing-complexity-ld.2503

William White, together with a number of other economists, answered this question in a submission to the Winter 2020 edition of “The International Economy”.  White notes that the current dollar based regime is decidedly sub optimal, not least because it has no nominal anchor and no reliable lender of last resort, and it needs to be replaced. While there is currently no political appetite to engage in such discussions, the next serious crisis in the global financial system might change this. White suggests that a crucial exposure today is  the massive reliance on short term dollar funding faced by many non US financial institutions. Should this trigger other problems, it might lead to a broader discussion of the shortcomings of the current International Monetary (Non) System.

This article appeared in the Winter 2020 edition of “The International Economy”. White argues that there is a fundamental intertemporal inconsistency in the repeated use of monetary easing by advanced countries to stimulate aggregate demand. This arises from the fact that monetary stimulus encourages the buildup of debt which eventually strangles further spending.  Moreover, such stimulus in the advanced economies has undesirable side effects. It threatens financial instability, has negative effects on productivity growth and can seriously injure emerging market economies as well. Looking forward, there should be greater reliance on fiscal expansion in response to economic downturns, complemented by stronger fiscal contractions in upturns. Improvements are urgently needed in administrative and judicial procedures for debt restructuring, both private and public.

This paper will in time be published as a chapter in a book. In the interim it will be forthcoming as an INET Working Paper. It argues that, while significant efforts have been made in the post-crisis period to  to make the global financial system more stable, worrying shortcomings remain. Comments would be appreciated before a final version is decided upon.

William White, along with other economists, gave his answer to this question in the Summer 2019 edition of The International Economy. He concludes that “The world has been in a currency war for about a decade” as important central banks have eased domestic monetary policy either to encourage currency depreciation or to prevent appreciation. Whatever the rhetoric about the objective of policy being solely domestic, the end result has been global monetary stimulus of unprecedented magnitude.

William White made comments in the concluding panel of a two day meeting (August, 2018) in Reykjavik, Iceland. The papers and proceedings of this conference have just been published by Palgrave Macmillan as

“The 2008 Global Financial Crisis in Retrospect”  Edited by R Z Aliber and G Zoega (2019).

Mr White’s comments focus on whether post-crisis reforms to financial regulation have been sufficiently robust. He welcomes the progress made to date but concludes that threats to financial stability remain uncomfortably high.

This article was published in the Winter edition of The International Economy, 2019. It suggests that monetary and macroprudential policies should be tightened jointly to resist credit bubbles and the build up of debt to dangerous levels. While central banks have shown no appetite for this, they are increasingly inclined to use macroprudential policies to allow “lower for longer” monetary policies. This implies that monetary and macroprudential policies are now working at cross purposes, which risks raising the costs of future financial instability.

Bill White made a presentation at the annual Lamfalussy Conference held at the Central Bank of Hungary, this year on February 4 in Budapest. His topic was the process of economic convergence between the Central, Eastern and South Eastern Economies (CESEE) in Europe and those richer economies further to the West. After looking at the recent history, Mr White suggested that future prospects for convergence depended in large part on the CESEE economies being resilient in resisting downturns. Historical studies indicated clearly that political division and the erosion of the rule of law reduced the trust and cooperation required for a resilient economy.