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“What must be asked of economists is to know how to react when we encounter problems”

Jaume Ventura, director and senior researcher at the Centre for Research in International Economics (CREI), National Research Award 2022

02.03.2023

Imatge inicial

Jaume Ventura (Barcelona, 1963), a PhD in Economics from Harvard University and a master’s degree in International Relations from the Johns Hopkins University in the USA, is currently a director and a senior researcher at the Centre for Research in International Economics (CREI), a professor at the UPF Department of Economics and Business, and a research professor at the Barcelona School of Economics (BSE).

He has recently obtained the National Research Award 2022, convened by the Catalan Government and the Catalan Foundation for Research and Innovation, "for his pioneering research in the field of international economics, which has contributed to building a model of global economic trade that is studied on the best doctoral programmes around the world", an award that will be received on June 20 from Pere Aragonès, president of the Generalitat de Catalunya.

How do you value having won the National Research Award 2022? Is research in economics often barely recognized compared to other disciplines?

I greatly appreciate the award. It is recognition for my career as a researcher. It is also recognition for the trajectory of the Centre for Research in International Economics, since it is the second National Research Award we have obtained: Jordi Galí , also a CREI researcher, received this award in 2011. Sometimes, research in economics is less recognized than research in other areas, indeed; but in this case it has not been so.

At the CREI, what fields of research in international economics are you currently promoting the most? Has the evolution of the global economic situation led to changes in research priorities and approaches?

At the CREI it is the researchers themselves who decide what problems they wish to solve. But I see that my colleagues get their motivation in the real world. For example, CREI researchers have made significant contributions to the following topics: the effects of sovereign debt, the effects of climate change and migration, the conduction of monetary policy when interest rates are negative, the economic effects of covid, the origins and effects of speculative bubbles, or the design of optimal infrastructures, among others. These are not esoteric problems, but problems that really affect citizens.

"At the CREI it is the researchers themselves who decide what problems they wish to solve"

It is true that, at times, we also deal with methodological problems that are somewhat removed from the situation of the world economy. But even in these cases, our work serves to develop the tools that will allow us to delve into issues of more immediate interest, such as those mentioned above.

Will the war in Ukraine, which began a year ago, mark a watershed in international economy and trade?

No. The war in Ukraine has disrupted international trade, especially in areas such as energy. But there have always been wars, unfortunately, and the economy has recovered once they have ended.

Is it reasonable to make long-term economic forecasts, with this situation of permanent uncertainty and volatility?

You always have to make predictions when it comes to making decisions. Although these predictions are inaccurate due to a high level of uncertainty.

Despite the pessimism, the Spanish economy has grown above the forecasts of the IMF and the Bank of Spain, and inflation in Spain is among the lowest in the Eurozone. Are such data always a good indicator of the health of a country’s economy?

Yes, of course. Low inflation in the Eurozone means that the European Central Bank won’t have to raise interest rates. And that’s always good news.

Spain’s public debt is constantly rising. Is there a limit to the growth in debt? Can the possibility of intervention by the ECB be raised again in the future, if it cannot be stopped?

In 2010, the Spanish government stubbornly resisted a bailout plan for its sovereign debt offered by the European institutions. Many of the people who were making the decisions then today welcome the fact that “it was not necessary”. But I think it was a big mistake and it was necessary. The adjustment of expenditure was paid for by the weakest sectors of society, the ones that most need the help of the State. The rates of poverty and social exclusion in our country are higher than ever. I fear that the social problems and conflicts we have inherited as a result of this decision will take a generation to disappear.

Today we are steadily getting more into debt. I am not convinced that the expenditure funded by this debt is justified. Perhaps we will encounter a similar scenario to that of 2010 in the coming years.

"The rates of poverty and social exclusion in our country are higher than ever"

Is the European Union a long way from being a free market? Despite transnational federations, do countries’ borders continue to hinder international trade?

Indeed. It is obvious that much progress has been made with the creation of a single market. But we still find that national borders are important. In a recent study I have conducted with Marta Santamaría (University of Warwick) and Uğur Yeşilbayraktar (Pompeu Fabra University), we have built a database of regional trade in the European Union. This database allows us to calculate the “frontier effect”: let us consider, for example, two similar pairs of regions (that is, that the two pairs contain comparable regions and at a similar distance). The only difference between the two pairs of regions is that the first pair has the two members within the same state, while the second pair has the two members in different states. We then find that the volume of trade of the second pair is only 17.5% of that of the first pair. We interpret this as the “frontier effect”. It is more difficult to trade outside the state than within the state. There is still a long way to go before we can say that Europe is a single market.

"All national governments use the European institutions to solve their states’ internal problems"

Is the real integration of the European Union very complicated, given the great differences between the countries, both the current ones and potential candidates?

Yes, it’s complicated. But much progress has been made. The biggest problem facing the European project today is not economic. I think the main problem is the lack of commitment by national governments to the European project. They all use the European institutions to solve their states’ internal problems. There is no purely European vision like that of the first two generations of politicians after the Second World War.

The growth of China, a key player in world trade, appears to have stalled. Is this more due to shortcomings in its international trade model or to more structural aspects?

China couldn’t keep up the spectacular growth rate of recent years permanently. It has suffered from covid more than other countries, and the shrinkage of international trade during the pandemic has affected it more than other economies. But these problems are circumstantial. The political problem is much more serious. How long can China postpone political openness and the expansion of the political and personal rights of its population?

"How long can China postpone political openness and the expansion of the political and personal rights of its population?"

Do asset bubbles like the Internet bubble in the 1990s, the real estate market of the 2000s or the recent Bitcoin bubble prove that investors act irrationally? Which bubbles pose the greatest danger to the economy today?

I don’t know. We economists are not very good at making predictions. What must be asked of economists is to know how to react when we encounter problems. The study of economic history is essential to acquire this skill.

What kind of research line or project are you currently working on?

I am developing a model to understand why the market power of companies has increased so much and what implications this has for the type of economic growth of countries and the well-being of their citizens. In this project, I am also working with my CREI colleagues Vladimir Asriyan and Alberto Martín.

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