Smorgasbord

Tobias Adrian offers a morphology of “Tokenized Finance” (International Monetary Fund, Note/2026/001, April 2026, https://www.imf.org/-/media/files/publications/imf-notes/2026/english/insea2026001.pdf).

“Financial sector policy frameworks have evolved around institutions, balance sheets, and markets that operate with temporal frictions: end-of-day settlement, batch processing, and delayed reconciliation. These frictions are not only costly to end-investors, but they also provide temporal buffers that allow exposures to be netted, liquidity to be mobilized, and authorities to intervene before settlement becomes final.… Tokenization enables financial claims—including money, securities, and derivatives—to be represented as programmable digital tokens recorded on shared ledgers. This capability allows for real-time atomic settlement, collapsing multiple stages of the traditional financial value chain into a synchronized process.… Tokenization challenges crisis management and resolution frameworks that are built around nationally domiciled institutions, territorially bounded infrastructures, and jurisdiction-specific legal authority. In tokenized systems, transactions are executed on shared ledgers spanning multiple jurisdictions, allowing assets, liabilities, and collateral to move across borders at machine speed and without a clear geographic anchor. This creates a fundamental mismatch between the global, continuous operation of tokenized finance and resolution regimes that rely on jurisdictional control over institutions and locally situated assets, as the key levers of control may instead lie in governance keys, consensus mechanisms, or smart contract logic operating across borders.… Legal uncertainty is a major barrier to scaling tokenized systems beyond pilot projects. Market participants require clarity on whether tokenized records constitute a definitive proof of ownership and whether the settlement finality achieved on a ledger is legally recognized. Without such clarity, tokenized markets risk remaining fragmented and peripheral. A dual-layer legal approach is likely to emerge as best practice. Smart contracts define operational rules, whereas traditional legal agreements establish rights, obligations, and dispute resolution mechanisms. Legislators and courts must clarify the relationship between these layers, ensuring that legal certainty is preserved even as execution becomes automated.”

Hanno Lustig describes “America’s Risky Debt: What Markets See That Policymakers Don’t” (Aspen Economic Strategy Group, August 2026, forthcoming in The American Economy in a New Era, edited by Melissa S. Kearney and Luke Pardue, https://www.economicstrategygroup.org/publication/americas-risky-debt-what-markets-see-that-policymakers-dont/).

“For decades, the US has been the world’s safe-asset provider, and the dollar has been the world’s reserve currency.… Pre-2020, the safe-asset model was a good fit: Treasurys traded at a premium to close substitutes, hedged equity risk, and rallied during stress episodes. Post-2020 each of these predictions has failed. First, US Treasurys are no longer expensive compared to close substitutes like German sovereign bonds or AAA US corporate bonds, especially at longer maturities. Second, the US stock–bond correlation turned positive in 2020. US Treasury allocations no longer hedge the equity risk in an investor’s portfolio. Third, there is increasing evidence that investors no longer flee to the safety of Treasurys when volatility spikes in financial markets. An example of this was the arrival of COVID-19 in March 2020, when the 10-year Treasury yield spiked by 68 basis points in just eight trading days between March 9 and March 18.… Bond investors increasingly question the safety of US Treasurys, and they have re-priced Treasurys as a risky claim. Central bankers and financial regulators have not adjusted: their models and financial regulation still treat government debt as unambiguously safe.”

Steven Ruggles diagnoses “The pig in the python: US decennial labor flows and economic opportunity, 1910–2040” (PNAS, May 15, 2026, vol. 123, #20, e2601716123, https://www.pnas.org/doi/10.1073/pnas.2601716123).

“We are on the verge of a fundamental transformation of the labor market. Baby boomers began retiring in large numbers during the 2010s, and immigration began declining in the same period. The number of births went down 17% between 2007 and 2024, which will contribute to a reduction in the number of new entrants to the labor force in the 2030s. In the current moment of political turmoil, any economic predictions spanning the next 15 years are highly uncertain. We can predict with some confidence, however, the general demographic configuration of the 2040 working-age population: the births have already occurred, mortality change is ordinarily gradual, and a massive surge of immigration seems unlikely.…  Barring revolutionary changes in the economy, the drop in labor-market competition over the coming two decades will have profound consequences. There is likely to be an unprecedented shortfall of new workers, creating strong upward pressure on wages.… Americans born in the 2020s might be the first cohort in a half century that earns significantly more than their parents did. Labor-force participation will probably increase as more workers are pulled into the market by higher wages, and some workers will postpone retirement.” 

The Behavioral Economics Guide 2026, edited by Alain Samson, contains two essays on frontier topics of behavioral economics (June 2026,  https://www.behavioraleconomics.com/be-guide/the-behavioral-economics-guide-2026/).  

In “Homo Experiens: Why Behavioral Economics Needs the Life Sciences,” Ulrike Malmendier writes: “To put it in stark terms, human behavior still seems rather robotic. Where previously, in the neoclassical model, it was the output of a perfectly programmed computer, in the behavioral economics model it became the output of a not-quite-so-perfect computer program, one prone to systematic bugs. And while the discovery of heuristics and biases was a genuine improvement, the resulting models remained mechanical. Once we identify the biases and model them, the program is assumed to run the same way for everyone, at every point in their lives. What you have lived through, what you have felt, what has happened to your body and brain along the way—none of that enters the model.… The implication is that the biological channels through which experiences affect us—stress hormones, neural rewiring, immune and endocrine responses—are real, measurable, and consequential for the economic outcomes we care about. And they are almost entirely absent from economic models, whether behavioral or not.… I believe that the next chapter of behavioral economics lies in a turn towards the life sciences—in taking seriously what neuroscience, psychiatry, medicine, and biology already know about human beings and how they are shaped by what they live through.” 

In “Beyond Preferences: The Biological Foundations,” Isabelle Brocas argues: “A biologically informed economics does not require economists to abandon preferences or reduce behavior to neurons and genes. Preferences remain useful reduced-form representations when behavior is stable and prediction is the objective. The point is different: when economists seek to explain heterogeneity, diagnose why interventions fail, or design policies that work across contexts and populations, it is often necessary to model the mechanisms that generate the outward pattern of choice. Biology can enter economics not only empirically, but also theoretically through models that derive observed behavior from underlying brain processes and resource constraints. This perspective clarifies what is malleable, when it is malleable, for whom, and through which policy levers. Taking biology seriously is therefore not a detour from economic theory—it is a step toward a more explanatory and more useful science of human behavior.… Neuroeconomic work has been especially valuable here because it shows that value-based choice relies on a sequence of interacting computations rather than on isolated behavioral modules.” 

Symposia 

The World Bank has published a collection of six intertwined essays on The Global Jobs Challenge, edited by Tommy Chrimes, M. Ayhan Kose, and Kersten Stamm (June 2026, https://www.worldbank.org/en/research/publication/global-jobs-challenge). From the “Executive summary”:

“Emerging market and developing economies (EMDEs) face a jobs challenge of historic proportions. Over the decade to 2035, around 1.2 billion young people in these economies are set to reach working age, the largest youth cohort the world will likely ever see. Yet global economic growth is at a multi-decade low, constraining job creation prospects. Many of these young people live in economies ill-equipped to confront the challenge. Although projections for employment over the next decade are highly sensitive to underlying assumptions, an illustrative extrapolation suggests that, of these 1.2 billion young women and men, just over 400 million would be employed in 2035, while about 300 million would not be in employment, education, or training. Jobs are at the heart of development: they provide income, purpose, hope, and dignity, while strengthening social cohesion and stability. Job creation underpins growth, poverty reduction, and shared prosperity. Creating sufficient job opportunities for this large wave of young working-age people is thus a pivotal development challenge and a potentially transformational opportunity.”

The Annual Review of Economics (2026, https://www.annualreviews.org/content/journals/economics/browse) has published a three-paper “Symposium on the Economics of Religion.” Paul Seabright contributed “The Economics of Religion: A Review.”

“Religion has been an integral part of economic life for centuries. Religious institutions like churches, temples, and monastic orders were economically important actors in many historical societies. Ancient Greek and Roman temples were vigorous commercial entities offering services for a price to a discriminating public. During the Middle Ages, Christian churches, Hindu and Buddhist temples, and Muslim mosques accumulated large amounts of agricultural land through bequests. By the year 750 CE, the Catholic Church owned around one-third of all the agricultural land in Western Europe as well as other assets such as buildings and slaves. The Church’s wealth allowed a regular flow of resources to the poor and sick as well as the erection of churches, monasteries, cathedrals, and bishops’ palaces. It also provided working capital for businesses with which the Church was more or less closely involved, from banks to pawnbroking operations, textile factories, travel agencies, breweries, and many others.… Some of the earliest manuals of management practice were written by and for monks and priests.… Given this history, it is unsurprising that Adam Smith devoted many pages in Book Five of The Wealth of Nations to issues of incentives and management in religious organizations. It is more startling that for two centuries afterward, religion dropped completely off the map of the economics profession.… his may have been because economists followed the post-Enlightenment tendency to define religions as constituted by doctrines and beliefs. In doing so they lost sight of the fact, of which Adam Smith was well aware and which contemporary research has now placed center stage, that religious individuals engage also in important resource-consuming and resource-producing activities.… The modern economics of religion emphasizes that, rather than absorbing religious habits passively, religious people engage in lucid and reflective choice. To be sure, they inherit habits, norms, and values through their families, and their choices may be (sometimes severely) constrained. However, families themselves often make careful choices about how much to invest in the transmission of their cultural values, including religious values, to children.… Overall, religion is a major economic force in the world, both in the revenues it commands and in the human energies it mobilizes. … The overall message is that modern economics can help understand religion by treating religious movements as organizations that jointly supply belief, ritual, insurance, and social networking.”

The Review of Political Economy (2026, 38:3, https://www.tandfonline.com/toc/crpe20/38/3) has published an eight-paper symposium asking: “What Have We Learned from Summers and Piketty Ten Years On?” As one example, Steven Pressman contributed “Secular Stagnation After Piketty and Keynes” (pp. 961-979).

“Nonetheless, with fresh memories of the Great Depression, economists worried about secular stagnation, especially given the high levels of government debt relative to GDP. Samuelson (1948) developed a clever solution to this problem.… With a little math, Samuelson showed that the balanced budget multiplier was equal to one.… If an economy had an MPC of .8, raising taxes by $1 would tax away 80 cents of spending and 20 cents of savings. The former would reduce consumer spending and economic growth; the latter would not impact the economy. There would be a net spending gain of 20 cents — $1 more government spending and 80 cents less consumer spending. In Samuelson’s simple model, an MPC of .8 implies a multiplier of 5. So 20 cents more net spending would lead to $1 of additional economic growth, and the balanced budget multiplier was equal to 1.… Samuelson’s balanced budget solution works only if additional government spending goes to the middle class and the poor, who have an MPC of close to 1, while higher taxes are paid by the rich, who save a large fraction of their income and don’t receive much from increased government spending. This distributional change would then change aggregate consumption.… More recently, Post Keynesians have taken up the mantle of changing the distribution of income in order to expand economies and have pushed for higher taxes on corporate profits.”

Magnus Henrekson, Christian Sandström and Mikael Stenkula have edited a collection of 16 essays with a European focus about A Green Entrepreneurial State? Exploring the Pitfalls of Green Deals (Springer International Studies in Entrepreneurship Volume 49, 2026, https://link.springer.com/book/10.1007/978-3-032-15512-2). From the “Preface”:

“Green Deals—broad strategies that aim to transform economies by making them climate-neutral, resource-efficient, and competitive all at once—are part of this trend. Nuclear power has been shut down prematurely in parts of Europe and replaced with intermittent energy sources such as wind and solar power. Public funds have been allocated to hydrogen initiatives, carbon capture technologies, and similar efforts to transform Western economies. By 2025, it became increasingly evident that many of these efforts were faltering. Europe’s flagship battery initiative, Northvolt, ended up as the largest bankruptcy in modern Swedish history. Attempts to produce steel using hydrogen were abandoned, despite billions of euros in support from the EU and its member states. In Germany, energy prices hit record highs, and the manufacturing sector was struggling. The blackout in Spain and Portugal raised questions about grid stability in countries increasingly dependent on solar and wind power. These failures are neither small nor insignificant. They stand in stark contrast to the promises made by EU officials and renowned scholars.”

Interviews

Christopher Jeffrey interviews “Mervyn King on his career and big ‘mistakes.’” The subtitle reads: “The former BoE governor speaks with Christopher Jeffery about the value of transparency, lessons from the GFC [global financial crisis], the need to track broad money and tie short-term funding to haircut collateral, and danger presented by non-banks” (Central Banking, June 30, 2026, https://www.centralbanking.com/central-banks/monetary-policy/7976206/mervyn-king-on-his-career-and-big-mistakes, free registration required).

On central bank transparency: “I remember the very first year that I joined the Bank of England full-time, in 1991, Paul Volcker came over to London … I said to him: “Give me one word of advice for a new central banker.” And Volcker, who was 6 feet 7 inches tall–so he certainly looked down on me–just said: “One word, Mervyn: `mystique’.” I came to the view that we had to go in the opposite direction. And, in 1992, when Britain was forced out of the Exchange Rate Mechanism, we had to develop a new domestic framework for monetary policy. Although Britain wasn’t the first to introduce inflation targeting–we followed New Zealand and Canada–we were the first major bank to push explanations of policy to the forefront.” His “pawnbroker for all seasons” method of preparing for the next banking crisis: “I think the secret here is to deal with many of these problems before the crisis hits. That’s why I proposed a system where banks pre-position collateral with the central bank. And the central bank says you cannot issue more short-term funding–anything that rolls over within three or four months–then the amount of money the central bank is willing to lend against the collateral that the bank has pre-positioned, allowing for the haircuts that the central bank would impose. If it’s a very obscure financial instrument that we don’t really understand, the central bank might impose a haircut of 90%. If it’s long-term government bonds, it could be just 2% or 3%.… It has the great benefit that, done properly, bank runs would just disappear as a threat. I think regulation will carry on developing in that direction. I don’t expect any central bank to suddenly say they’ve `seen the light’, and want to adopt a `pawnbroker for all seasons’. They’ll use their own language.… But people are making progress in that direction, and the Bank of England has gone further than anyone else.”

Tyler Cowen serves as interlocutor in “Joel Mokyr on Clans, Corporations, and a Culture of Growth” (Conversations with Tyler, July 8, 2026, https://conversationswithtyler.com/episodes/joel-mokyr/).

“[I]f you look at the world, say, around 800, at the time of Charlemagne, the difference between Europe and China isn’t very large. At some point, during the Middle Ages, you can see this divergence getting started. What’s happening is that, in Europe, there is more and more of a decline in the extended family or the extended kinship group, we call it clan, and instead, people get together and cooperate with other people to whom they are not related and with whom they do not share an ancestor. Whereas in China, it moves exactly in the other direction. In China, you get more and more people getting organized by their extended family. The reasons for that are fairly complex.… In China, there is no Catholic Church. The imperial bureaucracy is more and more in cahoots with local clans to whom they actually outsource a fair amount of the things that they were supposed to do. As you move on out of this period of the Song dynasty into later dynasties, you see this thing growing. The problem in Europe is that the nuclear family, which became the fundamental building block of society, is too small to provide local public goods. You need to cooperate with others. What emerges in Europe, and quite spontaneously, is a bunch of things that provide these local public goods that you just don’t see in China. For instance, we have something called universities. We have monasteries. We have autonomous cities. All of those things are what we call corporations. What it is, is people who are not related, but what they share is not an ancestor but an objective. Guilds have one kind of objective, universities have another one, and so on and so forth. That divergence in social organization turns out, in our view, to be one of the key components of the divergence between Europe and China.” 

Discussion Starters

Tony Payan, Gabriela Siller Pagaza, José Iván Rodríguez-Sánchez explore “Locked in Low Gear: Mexico’s Struggling Economy” (Rice University Baker Institute for Public Policy, April 15, 2026, https://www.bakerinstitute.org/research/locked-low-gear-mexicos-struggling-economy).

“Despite important advantages, such as its proximity to the United States, a still-advantageous access to U.S. markets through the U.S.-Mexico-Canada (USMCA) trade accord, and solid industrial base built over more than three decades — Mexico’s economy has been consistently experiencing slow growth.… Between 2018 and 2024, Mexico’s average growth rate was approximately 0.9% per year … [T]he Mexican economy seems to be locked in low gear.… Over half of all workers have remained in the informal economy, which is generally comprised of jobs not regulated, protected, and taxed by the government.… These workers tend to be among the least productive, as they largely lack the capital, skills, and technology to integrate into the formal economy and do not have access to the formal economy’s employment protections. Moreover, current informal employment levels place significant limits on Mexico’s ability to raise additional revenue to expand sustainable social welfare programs and invest in infrastructure, education, science and technology, and health.”

Matthew Wells tells the story of “The Bank of North America,” subtitled “Before the First Bank of the United States, another, less well-known institution helped the fledgling United States find its financial footing (Econ Focus: Federal Reserve Bank of Richmond, Third Quarter 2026, https://www.richmondfed.org/publications/research/econ_focus/2026/q3_economic_history).

“The nascent country’s financial situation was a major source of uncertainty. The weak and decentralized federal government created under the 1777 Articles of Confederation, along with the states, carried a debt burden of at least $70 million, owed to domestic lenders, as well as Dutch banks and the French and Spanish governments. To put the debt in context, the colonial GDP prior to the war was about $170 million. After five years of war, that number was undoubtedly much lower, possibly making the new country’s cumulative debt equal to a significant portion of its annual economic output. To make matters more complex, the U.S. currency was all but worthless thanks to the Second Continental Congress’ decision to finance the war by just printing money without the necessary gold or silver specie to back it (giving rise to the expression that items of little or no value were “not worth a Continental”). … Hamilton is credited as the architect of the postrevolutionary U.S. financial system that allowed the country to not just survive but grow and prosper. In 1790 and 1791, he led the effort to charter the First Bank of the United States, the country's first national bank. But in the period between the end of the war and the creation of the First Bank, another smaller, far less well-known institution — the Bank of North America — served as proof of concept that addressed these initial problems and got the country pointed in the right financial direction. It was chartered by the Confederation Congress in late 1781 and opened for business in Philadelphia in January 1782.”