products have also taken a knock. growth prospects and public finances have been hurt in countries heavily dependent on commodity exports. 2 see koepke, r. and s. farnham ( 2016 ). “ march 2016 em portfolio flows tracker and flows alert, ” iif portfolio flows tracker, march. for an analysis of the impact on and policy responses of commodity - based economies to lower prices, see international monetary fund ( 2015 ). world economic outlook : adjusting to lower commodity prices, bis central bankers ’ speeches simultaneously, external borrowing costs for emerging economies have increased and their currencies have weakened significantly versus the u. s. dollar. some nations have found themselves in a difficult spot given that fiscal and financial imbalances were built up during the preceding bonanza. problems run from high debt in domestic and foreign currencies and deterioration of financial institutions ’ balance sheets to overly appreciated real estate in some cases. as a result, several economies have been tightening monetary policy in the face of rising inflation and inflation expectations, a development that contrasts with that of advanced nations. the real impact on mexico there are two noticeable avenues through which this adverse external environment has affected mexico ’ s actual and potential economic activity. one is through lower commodity prices, where the impact can be expected to be milder than that for primarily commodity exporters. beginning in the 1980s, mexico undertook a deep economic transformation by expanding its integration with the rest of the world, tearing down foreign trade and investment barriers. among other treaties signed by mexico, the north american free trade agreement of 1993 notably consolidated the country ’ s links with the united states. throughout these years, manufacturing and services gained substantial share, in trade and economic activity, respectively, while agriculture and mining lost relative weight in both. the most important commodity produced and exported by mexico continues to be oil. currently, oil and gas extraction accounts for roughly five percent of gdp, and crude, only around six percent of total exports. a large part of the reduced size of the sector comes from the shrinking production trend observed since 2004 due to the depletion of high - yield oil fields. 3 whereas mexico now depends much less on commodities for production and trade than several other emerging economies, particularly in latin america, the possible real effect of low oil prices is not trivial, especially if they are sustained for a long time. further oil extraction in certain areas may no longer be profitable, and the return on new investments as well as the possibilities for financing may be more limited. negative

consumption beyond the us. yan bai's paper looks into a highly complex problem that is very prominent in the current global scenario : the design of optimal trade policies in the context of innovation and technological change. in her model, these policies are endogenous and what it's key is that a country's trade policies may affect a rival's innovation decisions. this paper may provide insights into another relevant issue : the potential evolution of global trade as various economies, especially the us and china, compete for technological prowess, and move further away from free trade in pursuit of this goal. in a paper that may help shed light on the current issue faced by the ecb regarding the interest rate spreads across eurozone government bonds, the paper by juliana salomao considers the impact that changes in the supply of specific bonds may have on their pricing in the context of a particular clientele for them, for example insurance companies and pension funds, which may have country - specific capital requirements. this paper may contain important insights regarding bond liquidity, the regulatory impact on asset demand, and generally how various policies affect sovereign bond pricing. also addressing a prescient issue, gene grossman analyzes the optimality of various policies regarding supply chains in the context of potential disruptions to these chains. his paper considers policies that promote diversification versus those that encourage reshoring, and evaluates the robustness of the conclusions to a generalization beyond ces preferences. these issues are of great relevance given what the pandemic - related shocks showed about the limits to the resilience of global value and supply chains, but also given the continuation of the conflict between the us and china, especially regarding global trade. 3 / 4 bis - central bankers'speeches finally, oleg itskhoki and dmitry mushkin's paper proposes a new framework to analyze monetary and fx intervention policies with a model where purchasing power parity and uncovered interest parity deviations are endogenous. in their framework, monetary policy is tasked with smoothing the output gap, which leads to a volatile nominal exchange rate, and reducing the economy's ability for risk sharing with foreign investors. surprisingly, there exists the possibility of a " divine coincidence " when the optimal real exchange rate is stable, but more generally the ideal policy is a managed peg and does not require capital controls. this is a very daring paper, with potentially deep implications about alternative monetary policy frameworks, especially for emerging economies. this was just a brief description