Director’s Remarks, August 2018 NIER

"The main risks to the global economy are explored in the Review. If economics is the 'study of scarcity', then one aspect that does not seem at all scarce in modern economies is debt. The burgeoning levels of public debt in the advanced economies and corporate debt in the emerging economies mean that many economies are particularly vulnerable to negative income shocks and/or positive interest rate shocks. Total debt in the advanced economies is $123Tn at some 276% of GDP and in the emerging economies debt is some $54Tn at some 193% of GDP. Given that prosperity and trade go hand in hand, we quantify the risks that a tariffs represent to global trade. Any escalation in the "trade war" and in the deployment of tariffs will tend to reduce the rate of technological progress and thus global output. Finally, we explore the extent to which fiscal policies may be able to alleviate some economic underperformance by focussing on the Euro Area, which we expect to grow below the OECD average in 2018 and 2019. "