First published: Prospectmagazine.co.uk, 4/01/2017
Things are looking up—for now
It’s not for nothing that economics is sometimes called the dismal science. Yet it isn’t always true that economists are gloomy. Indeed, they aren’t gloomy at the moment. Compared with this time last year, when equity markets were in free fall, and everyone was concerned about a China meltdown and a US recession, the current environment looks almost panglossian.
At the same time, it would be churlish not to highlight the so-called “tail risks.” These are low probability or hard-to-measure events that have far-reaching outcomes if they occur. Think food poisoning or serious sports injuries—mostly, they don’t happen, but we know they happen often enough to fear very unpleasant consequences. In the world of political economy, think the financial crisis, Brexit referendum result and the election of Donald Trump….Read more: