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The Top Economics Commentaries of 2017

Despite large-scale political upheavals around the world, and escalating tensions in many regions, the global economy performed well in 2017, and will enter the new year with a momentum not seen in years. But as some of our top economics commentaries from 2017 point out, there are still risks on the horizon.

In many ways, 2017 was a watershed year for the global economy. Stock markets reached all-time highs. Macroeconomic indicators in key countries improved throughout the year. And, despite catastrophic natural disasters, nuclear saber-rattling on the Korean Peninsula, escalating power politics between oil producers in the Middle East, worries about Chinese debt, and the slow-motion collapse of Venezuela, the global economic recovery continued to gain steam.

In the compilation below, we have selected some of Project Syndicate’s most-read commentaries on economics in 2017. Taken together, they offer a message of caution, and point to risks on the horizon. Will the bull run of 2017 last, or will the looming specter of protectionism, long-awaited adjustments in monetary policy, and other factors change the economic story? To answer those and similar questions about the global economy in the year ahead, one could do worse than to revisit some of the most insightful analysis of the year now ending.

From Bad to Worse for Puerto Rico

Nobel laureate economist Joseph Stiglitz and Martin Guzman of Columbia University Business School, writing before Hurricane Maria devastated Puerto Rico this fall, warned that proposals to address the US commonwealth’s unsustainable debt will make a bad problem even worse.

Venezuela’s Unprecedented Collapse

Ricardo Hausmann of Harvard University reported this summer that, under President Nicolas Maduro’s increasingly authoritarian regime, Venezuela’s per capita GDP was already down 40% just halfway through the year, reflecting an economic crisis that “dwarfs any in the history of the US, Western Europe, or the rest of Latin America.”

The Coming Bear Market?

Nobel laureate economist Robert Shiller observed in September that the US stock market’s sky-high performance has started to look a lot like “the peaks before most of the country’s 13 previous” downturns.

The End of Trump’s Market Honeymoon

Similarly, Nouriel Roubini of New York University, writing at the start of the Trump presidency, predicted that the kind of tax cuts that have now been enacted in the United States would push up the dollar, fuel inflation, and spell the end of the market’s long climb.

The Trump Deficit

Harvard University’s Kenneth Rogoff, also writing at the start of the Trump presidency, foresaw that Republicans, having taken control of the White House and both houses of Congress, would abandon their lip service to fiscal rectitude and pursue economic growth through massive deficit spending, tax cuts, or both.

Trump’s Tax Plan and the Dollar

Harvard University’s Gita Gopinath and Emmanuel Farhi and Princeton University’s Oleg Itskhoki remind us that for a large part of the year, the Republican tax-reform plans centered around a “border adjustment tax” that would have done little for the economy while severely weakening the US’s net foreign-asset position.

The Lost Lesson of the Financial Crisis

Mohamed El-Erian of Allianz, writing in August to mark the tenth anniversary of the beginning of the global financial crisis, worried that advanced economies remain too beholden to a growth model based on liquidity and leverage, rather than on investment in public goods and human capital.

Addicted to Dollars

Carmen Reinhart of Harvard University, describing a study she co-authored in February, reported that the US dollar has retained its dominant position as the global reserve currency despite America’s declining share of global output over the past few decades. But she wondered how much longer that would last.

Another Lesson from Japan

Stephen Roach of Yale University responded to Japan’s April consumer-price data by tackling a central economic problem of our time: missing inflation, which will likely continue to vex central bankers and challenge long-held economic assumptions across advanced economies in 2018 and beyond.

Too Late to Compensate Free Trade’s Losers

Dani Rodrik of Harvard University issued a pointed rebuke to those who assume that today’s populism can be addressed simply with better social programs, rather than with a more comprehensive revision of the rules of globalization itself.

China’s Weapons of Trade War

Keyu Jin of the London School of Economics, writing just a month after Trump’s “America First” inauguration address, explained why the United States – and Trump supporters in particular – would lose much more than China would in a trade war.

How Economic Populism Works

Andrés Velasco of Columbia University traced the roots of Trump, the United Kingdom’s Brexiteers, and other contemporary populists back to twentieth-century Latin American leaders such as Juan Domingo Perón and Getúlio Vargas, who pioneered the practice of ransacking the economy to hand out patronage to their supporters.;