Bubbles, real misallocations and the size of the financial sector
One of the conclusions that could be drawn from the most recent financial crisis is that the financial sector absorbed far too big a share of the (US) economy’s resources to be sustainable over a longer time span. This, in turn, suggests a policy implication that the size of the financial sector should be closely monitored to detect any signs of underlying unsustainable dynamic credit and asset price developments.
Read more Towards a new research organization
After an external evaluation process of the Bank of Finland's research function was completed and the evaluation report published in December 2009, the board of the Bank of Finland decided to set-up a task force, chaired by Seppo Honkapohja, the board member responsible for research, to prepare a concrete proposal to reform the Bank's research function. The task force prepared a proposal by the summer of 2010 and after presentation to the board and initial board deliberations the proposal was accepted in its August 2010 meeting.
Many of the features of the new research organization are well in line with the recommendations made by the external evaluators in their final report from December 2009. However, some of the new features deserve special attention.
Read more How does one forecast China's economic performance?
As China’s importance in the world economy has increased, so too has the level of interest in forecasting its economic performance. Consensus Economics, which specialises in collating economic forecasts, currently reports on forecasts of China’s key economic indicators produced by nearly 20 different international research organisations. At the same time, however, doubts have been raised about whether China’s statistical data are able to give a realistic picture of the huge country’s economic situation.
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