The recent announcement that Pfizer will close its main UK research lab (where Viagra was created) is the latest bit of bad news to bite the British economy. This column argues that the UK government’s austerity programme is only making growth prospects worse. Instead of Plan B, it says that the government needs the economic equivalent of Pfizer’s little blue pill – a “Plan V”.

Why didn’t the most recent run-up in oil prices have dramatic effects as in the 1970s? Here one of the world’s leading macroeconomists surveys a variety of explanations: i) developed countries are now less energy-intensive, ii) wages are more flexible, iii) the US auto industry is relatively smaller, iv) monetary policy now targets core inflation, and recent shocks were to industrial demand, not oil supply.

The US Federal Reserve has used unorthodox policy instruments to reduce recent financial turmoil. In this column, the author of CEPR Policy Insight 23 argues that the crisis raises more fundamental questions about core tenets of modern monetary orthodoxy – inflation targeting and central bank independence.

The financial turmoil has been worsening as lagged adjustment processes play out. This column outlines economic dangers that may arise as they unwind, including a scenario in which the United States suffers extended stagflation.