Remembering Chris Sims and data-driven macro
CEPR tribute highlights a broad influence on macroeconometrics, with VARs, Bayesian methods, DSGE models and beyond.
Few economists have shaped the intersection of theory and data like Chris Sims. The piece surveys his impact on the field, emphasising how policy analysis at central banks and similar institutions now relies on system-wide approaches rather than single-equation narratives. VARs, factor models and estimated DSGE models trace their modern prominence to his influence, while the broader agenda of confronting theories with data defines a generation of macroeconomists.
Minnesota priors and Bayesian econometrics are among his most enduring legacies. The column notes that, decades before regularisation became mainstream, Sims argued for incorporating prior information when estimating complex models. His promotion of Bayesian methods extended well beyond VARs, shaping how empirical work informs policy discussions. The enduring point is that macroeconomics, at its best, speaks to policy through robust, data-grounded methods.
Sims’ role in promoting DSGE models at central banks is also emphasised. His collaboration with Leeper in the 1990s helped set an agenda for models that could be likelihood-estimated and incorporate monetary policy dynamics. Colleagues recount how his advocacy for the term DSGE helped normalize a broader toolkit that blends microfoundations with policy relevance. The piece closes by recalling his influence as a mentor who pushed students to improve through rigorous, sometimes punitive, feedback delivered with care and high standards.
Industrial policies, global imbalances, and technological hegemony
A CEPR column links industrial policy to global imbalances and shifts in technological leadership, with capital flows shaping innovation.
The authors present a framework connecting industrial policies, global imbalances and technological development across two regions. The tradable sector is treated as the growth engine, particularly for high-tech innovation, while the non-tradable sector is more stagnant. A larger tradable sector raises the incentive to invest in innovation, boosting productivity, yet comes with the risk that resources shift away from tradable goods.
Global imbalances are framed around the demand and supply of liquid assets, with households seeking foreign assets when domestic asset supply is inelastic. In this view, East subsidies to high-tech tradables can enlarge the tradable sector and drive growth there, but financing needs push capital flows abroad, tightening the world interest rate and triggering capital outflows from the East. The West, facing inflows, borrows and experiences a consumption-led expansion in non-tradables, with an exchange-rate appreciation that dampens tradable competitiveness and productivity over time.
Empirical hints are offered by correlations between industrial polices and manufacturing shares or total factor productivity. The paper also cites work suggesting episodes of large capital inflows coincide with tradable-sector slowdowns and productivity slowdowns in some cases, a phenomenon the authors label the financial resource curse. The discussion raises questions for policy debates about tariffs, subsidies, and innovation policy and their real-world implications for global welfare and technological leadership.
It may be time for Sweden to join the euro
Calmfors 2026 argues that euro adoption could yield modest efficiency gains and lower stabilisation costs for Sweden.
The contention rests on a view of the euro area’s integration as a stabilising force through reduced exchange rate risk and stronger policy coordination. The analysis points to potential efficiency gains and a more predictable macro policy toolkit for Sweden, with implications for debt dynamics and banking union participation. It also notes that joining the euro would alter Sweden’s influence within EU policy debates and standards-setting.
The piece flags political dynamics as a crucial near-term variable. Shifts in Swedish public support and EU policy discussions on euro area integration are presented as the pivot for any decision. The authors encourage close monitoring of political developments and policy signals that could change the calculus on euro adoption. While not a forecast, the argument emphasises that the decision will reconfigure macro policy options and international standing.
Dont buy global funds, warns Dennehy Wealth
Brian Dennehy argues global funds expose investors to hidden US risks amid geopolitical tensions, AI disruption and late-cycle dynamics.
The argument frames a risk-management rethink for investors, suggesting greater emphasis on defensive, regional exposures and more liquid asset management. The thesis implies that global diversification could carry hidden vulnerabilities in a geopolitically tense, tech-driven macro environment. The piece urges attention to flows and allocations, with a focus on inflation-linked bonds and energy assets as potential diversification vectors.
Watchers are advised to track fund flows and shifts in allocations toward the UK, Asia, and other regional exposures. The commentary suggests that investors may tilt away from broad global equity or bond funds toward more targeted, resilient strategies in the face of geostrategic risk and evolving technological disruption.
Are EVs really rolling backwards?
Trustnet assesses EVs as a structural market component with continued growth in Europe and China and faster charging-network expansion.
The analysis argues that electric vehicles have moved beyond their emergence into a structural role in mobility and logistics. Europe and China are highlighted as growth regions, with charging infrastructure expanding rapidly to support higher utilisation. The piece suggests opportunities lie in EV-related technologies, battery supply chains and grid upgrades required to support charging capacity.
Watchers are urged to monitor EV adoption rates, charging-point deployment, and grid investment data to gauge whether the opportunity remains on track. The story also implies attention to policy and investment signals that could accelerate or cap the transition in the near term.
Sustainable fund managers defend their tech-heavy portfolios
Sustainable funds remain overweight in technology, supported by engagement and ESG screening, according to Trustnet.
The narrative describes how ESG constraints are navigated within tech-heavy exposures, shaping risk management and potential returns. Engagement with portfolio companies and screening practices underpin a continued tilt toward technology-heavy holdings in sustainable mandates. The piece raises questions about how such allocations interact with risk, performance and the evolving ESG landscape.
Near-term observation should focus on changes in technology weightings across leading sustainable funds and the outcomes of engagement efforts with holdings. The sector’s ability to balance sustainability goals with return objectives remains a live area of scrutiny.
StanChart: Europe’s Gas Prices Could Spike Above $90/MWh By The Summer
European gas price forecasts point to elevated prices due to Middle East disruption, LNG constraints and Gulf outages.
The briefing notes that European natural gas futures climbed amid uncertainty over a Middle East ceasefire and targeted energy infrastructure damage. LNG capacity constraints and reported reductions in LNG availability have intensified competition for cargoes, with a shift to alternative supplies. StanChart’s scenario highlights a potential price trajectory that could keep European gas costs high into the summer and beyond.
The near-term watchpoints include gas price trajectories, LNG capacity expansions, and developments around Gulf outages. Policy responses and energy-security measures in Europe will be tested by how these dynamics unfold over the coming months.
Washington Stress-Tests $200 Oil as War Risk Mounts
US modelling of a $200 oil scenario examines macro fallout and policy implications amid Middle East conflict.
Oilprice reports that unnamed officials have indicated the federal government is assessing a high-oil-price scenario to understand potential macro consequences and policy options. The exercise underscores the risk that sustained energy-price stress would place on inflation, growth and income distribution, with a focus on policy levers including strategic reserves and fiscal adjustments.
Observers will want to track official modelling results and price trajectories as conflicts evolve. The analysis emphasises that the economic impact hinges on price duration, supply resilience and policy responses rather than any single forecast.
New Zealand Receives Application for Canterbury Hydrocarbon Prospecting
New Zealand opens a competitive three-month window for CBX Energy’s Canterbury Basin permit, with 2026 decisions anticipated.
Decision timelines are central to this story, with a formal process that could unlock new energy supply and adjust New Zealand’s energy security. The process is framed around regulatory milestones and the potential for Canterbury Basin activity to influence domestic energy dynamics and regional markets.
Regulatory updates and work programs from CBX Energy will be the key indicators in the months ahead, along with any shifts in regulatory posture affecting exploration timelines.
E&Ps Flag Iran War in Latest Dallas Fed Energy Survey
Rigzone reports that Iranian conflict is increasing upstream volatility and price uncertainty in the Dallas Fed survey.
The energy sector narrative emphasises how geopolitical risk translates into market volatility and signals about profits. The Dallas Fed survey’s take on war-related risk factors informs expectations for investment in upstream projects and pricing dynamics in a stressed macro environment.
Follow-up surveys and price movements will be important to gauge whether volatility persists or subsides as the geopolitical picture evolves.
Iran Oil Revenue Soars
Rigzone notes Iran’s oil revenue rising with exports near 1.6 million barrels per day as sanctions relief steps and Hormuz leverage boost revenue.
The development has implications for Iran’s economy, regional dynamics and global oil markets. Revenue growth could influence negotiation leverage and policy posture, even as broader sanctions regimes continue to evolve.
Monitoring export volumes, pricing signals and sanctions developments will be essential to understanding the sustainability of the revenue trajectory.
Oil Climbs as Hormuz Disruption Deepens
Rigzone traces Brent and WTI gains as Hormuz disruption tightens supply and geopolitical tensions drive volatility.
The piece highlights energy-market sensitivity to regional chokepoints and conflict-related disruptions. The price dynamics underscore inflation risks and policy challenges associated with energy-market volatility, particularly in consumer energy costs and broader macro conditions.
Key indicators include Strait of Hormuz developments, tanker flows and price levels, alongside policy communications from energy and finance authorities.