Isabelle Brocas, Juan D. Carrillo , 18 March 2010
Why do people persistently make seemingly irrational decisions? This column introduces neuroeconomic theory, which uses neuroscience and neurobiology to try to shed light on the black box of human decision-making.
Kati Suominen, 17 March 2010
Discussions over a European Monetary Fund have gained momentum over the last week. This column argues that regionalising the IMF is sub-optimal. But discussions over a European Fund offer an opportunity for a complementary fund, which can offer a reference for Asian countries.
Stefano Micossi, 16 March 2010
Policymakers and commentators have suggested that large banks should be broken up. This column argues that such an idea risks the very existence of a global financial system. It outlines an alternative framework in which deposit insurance should be covered by banks not taxpayers, banks should not be guaranteed a bailout, and regulators should be mandated to step in when the warning signs begin.
Daniel Gros, Thomas Mayer, 15 March 2010
Europe was caught totally unprepared for the pressure on public debt that followed the global crisis. This column outlines a proposal for a European Monetary Fund with which, it argues, the EU would be much better prepared to face these difficult times.
Claudio Raddatz, 15 March 2010
How did a seemingly small shock to the US financial markets manage to spread so far, so quickly? This column argues that the heavy reliance on short-term wholesale funding is to blame. It follows that the discussions of regulatory reform should focus on the risks associated with the liability structure of banks.
Holger Görg, László Halpern, Balázs Muraközy, 14 March 2010
Why are the prices of exports higher for countries that are further away – even when transport costs are excluded? This column suggests that this is partly because firms choose to ship out their best quality goods, just like a brewery with its “export” brands.
Graziella Bertocchi, Marianna Brunetti, Costanza Torricelli, 13 March 2010
Does marriage make people less averse to risk? This column argues that this is the case for women, but not for men. But married women's different attitude towards risk has fallen over time as the prevalence of marriage in society has faded. For women who work, marriage makes no difference.
Michael Burda, 13 March 2010
Greece’s recent deficit-cutting budget was met with planned strikes and protests in the streets. This column argues that the painful fiscal adjustments could turn out to be a good thing for Europe’s political integration, but the region has to take the next step and set up a European Monetary Fund.
Deliana Kostova, Hana Ross, Evan Blecher, Sara Markowitz, 12 March 2010
Do higher cigarette prices deter smoking? This column finds that policymakers in developing countries could reduce cigarette consumption by youths by raising taxes. A 10% increase in the price will reduce youth cigarette demand by 18.3%.
Josh Lerner, 12 March 2010
Josh Lerner of Harvard Business School talks to Vox about the policies that governments employ to encourage venture capital and entrepreneurial activity, drawing on the findings in his book, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It. The interview was recorded in London in January 2010.
Francesco Paolo Mongelli, 11 March 2010
Why would countries share a single currency? This column introduces a new CEPR Policy Insight and argues that some aspects are missing in the current debate on the merits of the EMU. Benefiting from monetary union is a matter of time, perseverance, and seizing opportunities.
Andrew Scott, 11 March 2010
The high levels of government debt have raised concern among policymakers and commentators. But this column argues that markets have financed much larger levels of debt than are currently predicted for the UK and US. Given the enormous financial shock these economies have experienced, they might actually be better off with high debt for a long period of time.
Fernanda Brollo, Tommaso Nannicini, Roberto Perotti, Guido Tabellini, 10 March 2010
Is the discovery of natural resources necessarily a good thing? Examining data from Brazil, this column finds that a 10% windfall in government revenues leads to a 12 percentage point increase in corruption and a 3 percentage point reduction in the probability that politicians have a degree. The chance that an incumbent is reelected raises by over 4 percentage points.
Daniel Leigh, 9 March 2010
Olivier Blanchard, the IMF’s Chief Economist, recently broached the idea that central banks should target an inflation rate of 4% during the good times to leave more room for nominal rate cutting during bad times. This column supports this view, presenting new research showing that a higher inflation target could have halved the output loss of Japan during its “Lost Decade.”
Barry Eichengreen, Kevin H. O’Rourke, 8 March 2010
This column updates the original Vox columns by Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression. The three previous columns have shattered all Vox readership records with over 450,000 views. This latest edition covers up to February 2010 showing that, while there is cause for optimism, there is no room for complacency.
Hylke Vandenbussche , Maurizio Zanardi, 8 March 2010
The global crisis has raised fears that governments would engage in a protectionist spiral. This column argues that, while countries have by and large kept their promises not to raise barriers to trade, antidumping has crept up. Far from being a “small price to pay”, the new tough users of antidumping laws such as Brazil, India, Mexico, Taiwan, and Turkey have 5.9% fewer annual imports as a result.
Marc Auboin, 7 March 2010
Trade finance is an essential facility for world trade. But this column argues that the safe, short-term, and self-liquidating character of trade finance has not been properly recognised under the Basel II framework and the proposed revised rules ("Basel III") seem to raise additional hurdles to trade finance. Both trade financiers and regulators should strive to avoid this.
Yuyu Chen, Ginger Zhe Jin, Yang Yue, 7 March 2010
What determines mass migration within countries? Examining data from China – the biggest internal migration experience in human history – this column finds that migrants from the same village tend to cluster at the same destination for the same occupation. This pattern is driven by social networks within villages that reduce the moving costs for future migrants, such as the risk of not finding a job.
Daron Acemoglu, Pierre Yared, 7 March 2010
Is globalisation inevitable and irreversible? This column argues that globalisation is a policy choice. It examines the relationship between military expansion and international trade flows, finding that increased nationalist and militarist sentiments are negatively associated with trade. A 10% increase in military spending between 1985 and 2005 is associated with a reduction in the trade share of GDP of around 2%.
Jean Boivin, Robert Clark, Nicolas Vincent, 6 March 2010
How much of a change in exchange rates is required to redress global imbalances? This column presents new evidence from online bookstores suggesting that neither shoppers nor retailers react to price differences across borders. This implies that realignment of cross-country consumption levels may require large and persistent exchange rate changes.
Barry Eichengreen, Kevin H. O’Rourke, 8 March 2010
This column updates the original Vox columns by Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression. The three previous columns have shattered all Vox readership records with over 450,000 views. This latest edition covers up to February 2010 showing that, while there is cause for optimism, there is no room for complacency.
Views 469438
James J. Heckman, Paul A. LaFontaine, 13 February 2008
Official statistics for US high school graduation rates mask a growing educational divide. This column presents research showing that a record number of Americans are going to university – while an increasing number are dropping out of high school. This poses major social challenges for the United States.
Views 84967
Stephen Cecchetti, 15 August 2007
A revised and updated version of the 13 August column on the basic how's and why's of what the Fed has been doing to calm financial markets.
Views 50965
Jeffrey Frankel, 18 March 2008
One of the world’s leading international economists explains how the euro could surpass the dollar as the premier international currency and examines the geopolitical implications of such a shift.
Views 44873
Stephen Cecchetti, 13 August 2007
Here are the basic how's and why's of what the Fed has been doing to calm financial markets.
Views 41658
Carmen M. Reinhart, 15 March 2008
We may just have started to feel the pain. Asset price drops – including housing – are common markers in all the big banking crises over the past 30 years. GDP declines after such crises were both large (-2% on average) and protracted (2 years to return to trend); in the 5 biggest crises, the numbers were -5% and 3 years. This column, based on the author’s testimony to the Congress, picks through the causes and consequences. It argues that when it comes to ‘cures,’ it would be far better to get the job done right than get the job done quickly.
Views 38074
Stijn Claessens, M. Ayhan Kose, Marco E. Terrones, 7 October 2008
The house and equity price busts on top of a credit crunch make this an unprecedented crisis for the modern US economy; its real economy effects are thus difficult to assess. This column provides insights based on evidence from 122 recessions in 21 advanced nations since 1960. Findings suggest recessions in such circumstances are much costlier and slightly longer. But the outcome can be affected by policy, and it’s high time that policymakers act swiftly and decisively.
Views 36602
Nicholas Bloom, Max Floetotto, 12 January 2009
A key source of the today’s economic weakness is uncertainty that led firms to postpone investment and hiring decisions. This column, by the authors whose model forecast the recession as far back as June 2008, report that the key measures of uncertainty have dropped so rapidly that they believe growth will resume by mid-2009. This means any additional economic stimulus has to be enacted quickly. Delaying to the summer may mean the economic medicine is administered just as the patient is leave the hospital.
Views 35996
Richard Baldwin, 2 October 2007
As the dollar has started to slide, the question is: how far, how fast? This column, which is based on Paul Krugman’s recent Economic Policy article suggests the answers are: pretty far and pretty fast.
Views 34728
Daniel Gros, Stefano Micossi, 20 September 2008
The radical moves in the US have direct implications for European banks and indirect implications for European governments. This column discusses the likely channels and notes that several European banks are both too big to fail and may be too big to be saved by their national governments alone.
Views 34381
Jon Danielsson, 12 November 2008
Iceland’s banking system is ruined. GDP is down 65% in euro terms. Many companies face bankruptcy; others think of moving abroad. A third of the population is considering emigration. The British and Dutch governments demand compensation, amounting to over 100% of Icelandic GDP, for their citizens who held high-interest deposits in local branches of Icelandic banks. Europe’s leaders urgently need to take step to prevent similar things from happening to small nations with big banking sectors.
Views 33132
Paul Krugman, 15 June 2007
It’s no longer safe to assert that trade’s impact on the income distribution in wealthy countries is fairly minor. There’s a good case that it is big, and getting bigger. I’m not endorsing protectionism, but free-traders need better answers to the anxieties of globalisation’s losers.
Views 32849
M Daniele Paserman, 26 June 2007
Female tennis players play more conservatively and commit more unforced errors when playing critical points. Does this explain the upper-echelons wage gap?
Views 29963
Barry Eichengreen, Richard Baldwin, 9 October 2008
Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks.
Views 28561
Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz, Klaus F. Zimmermann, 1 October 2008
This is a once-in-a-lifetime crisis. Trust among financial institutions is disappearing; fear may spread. Last week’s US experience showed that saving one bank at a time won’t work. A systemic response is needed and in Europe this means an EU-led initiative to recapitalise the banking sector. Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath.
Views 28464
Nathan Nunn, 8 December 2007
Slavery, according to historical accounts, played an important role in Africa’s underdevelopment. It fostered ethnic fractionalisation and undermined effective states. The largest numbers of slaves were taken from areas that were the most underdeveloped politically at the end of the 19th century and are the most ethnically fragmented today. Recent research suggests that without the slave trades, 72% of Africa’s income gap with the rest of the world would not exist today.
Views 28348
Francesco Giavazzi, 2 June 2008
There has been a persistent spread between the rate at which banks lend each other money and government-backed securities yields in recent months. This column describes hypotheses explaining the spread – including the possibility that banks aren’t lending in order to bankrupt acquisition targets.
Views 28143
N. Gregory Mankiw , Matthew Weinzierl, 12 June 2009
Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This column explains how the standard utilitarian framework for tax policy analysis says that individual attributes correlated with wages, such as height, should determine tax liabilities. Taller individuals should pay higher taxes. If this is objectionable, then something is wrong with the standard framework.
Views 28103
Willem Buiter, Anne Sibert, 26 February 2008
Barack Obama, the likely Democratic presidential candidate, has proposed tax breaks for US corporations that invest at home rather than abroad. This column argues that his proposal is protectionist, reactionary, and economically unsound.
Views 26511
Luigi Zingales, 21 September 2008
This weekend’s decisions will shape the type of capitalism we live with for the next fifty years. Here one of the world’s leading financial scholars, Chicago Business School Professor Luigi Zingales, argues that bailing out the financial system with taxpayers’ money is wrong. He discusses an alternative – forced debt-for-equity swap or debt-forgiveness.
Views 26226
Daniel Gros, Thomas Mayer, 15 March 2010
Europe was caught totally unprepared for the pressure on public debt that followed the global crisis. This column outlines a proposal for a European Monetary Fund with which, it argues, the EU would be much better prepared to face these difficult times.
Barry Eichengreen, Kevin H. O’Rourke, 8 March 2010
This column updates the original Vox columns by Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression. The three previous columns have shattered all Vox readership records with over 450,000 views. This latest edition covers up to February 2010 showing that, while there is cause for optimism, there is no room for complacency.
Daron Acemoglu, Pierre Yared, 7 March 2010
Is globalisation inevitable and irreversible? This column argues that globalisation is a policy choice. It examines the relationship between military expansion and international trade flows, finding that increased nationalist and militarist sentiments are negatively associated with trade. A 10% increase in military spending between 1985 and 2005 is associated with a reduction in the trade share of GDP of around 2%.
Augusto de la Torre, Eduardo Levy-Yeyati, Sergio Schmukler, 6 March 2010
The fiscal crisis in several European countries has led many commentators to suggest novel solutions, including a holiday from the euro. This column examines the much-cited example of Argentina and argues that such ideas look better on paper than in practice. What these countries need is a “good old bailout” – conditional on “getting the house in order”.
Joshua Aizenman, Gurnain Kaur Pasricha, 3 March 2010
The crisis led to significant fiscal stimulus efforts by the US government to offset the downturn. But this column argues that, properly adjusted for the declining fiscal expenditure of the fifty states, the aggregate stimulus was close to zero in 2009. While a net decline was avoided, the stimulus did not raise aggregate expenditure above its predicted mean. This can explain the anaemic reaction of the US economy to the alleged “big federal fiscal stimulus”.
Roger E. A. Farmer , 28 February 2010
What are the implications of combining Keynesian ideas with Walrasian general equilibrium theory in a way that does not assume sticky prices? This column presents the second in a two-part outline of a new paradigm for macroeconomics in the 21st century, focusing on policy. It argues that fiscal policy is not the right response to a financial crisis.
Roger E. A. Farmer , 27 February 2010
What are the implications of combining Keynesian ideas with Walrasian general equilibrium theory in a way that does not assume sticky prices? This column presents the first of a two-part outline of a new macroeconomics paradigm for the 21st century, starting with the theory.
Tim Besley, Andrew Scott, 25 February 2010
The financial crisis has brought large fiscal deficits and soaring public debt. A switch to tight fiscal policy risks throttling the recovery, but continuing deficits are spooking markets. This column argues the obvious solution is to promise future fiscal rectitude and stick with the current expansionary policies in the near term. This requires independent fiscal policy committees to institutionalise fiscal transparency and restore credibility to governments’ long-term public finances.
Gary Clyde Hufbauer, Jeffrey J. Schott , Woan Foong Wong, 22 February 2010
Fears of protectionism have risen in the wake of the global financial crisis. This column argues that, far from being time to abandon the Doha Round, sustaining political support for the rules-based multilateral trade system is more important than ever. If this column’s recommendations are followed, world GDP could gain up to $282.7 billion a year.
Richard Baldwin, Charles Wyplosz, 22 February 2010
Martin Feldstein suggested last week that Greece take a “holiday” from the Eurozone, rejoining with a depreciated nominal exchange rate. This column argues that the idea is not just impractical, it’s dangerous for the Eurozone.
Domingo Cavallo, Joaquín Cottani, 22 February 2010
Martin Feldstein argued last week that Greece should take “a temporary leave of absence with the right and the obligation to return at a more competitive exchange rate.” In this column, Argentina’s highly regarded former Minister of the Economy and a co-author argue that the idea won’t work. A better solution would be to adjust the Greek tax system.
Charles A.E. Goodhart, Udara Peiris, Dimitri Tsomocos, Alexandros Vardoulakis, 18 February 2010
The global financial crisis has led many to propose regulatory measures that will reduce the idiosyncratic and systemic risk of banks. This column argues in favour of the suggestion by the Bank for International Settlements to block banks from paying dividends to shareholders or bonuses if their capital levels fall below a minimum threshold.
Thorsten Beck, Diane Coyle, Mathias Dewatripont, Xavier Freixas, Paul Seabright, 18 February 2010
Billions have been spent saving European banks. Should these bailouts be subject to the usual competition rules or should stability be allowed to trump ‘business as usual’? This column introduces a new CEPR report “Bailing out the Banks: Reconciling Stability and Competition” that argues for a more subtle reaction. Competition policy is critical even in crises but the rules applied must recognise the special features that mark a crisis-struck banking sector.
Simon J Evenett, 18 February 2010
The threat of tit-for-tat protectionism is not over yet. This column presents the latest report from the Global Trade Alert and suggests the recent recovery has not slowed the protectionism wave. In the last quarter of 2009, almost every major trading nation has implemented discrimination against foreign commercial interests above trend levels.
George Hall, Thomas J. Sargent, 17 February 2010
Net interest payments on the federal debt are widely reported, yet this column argues that this misreports government borrowing costs and leaves open the possibility of manipulation. Computed correctly, the return on Treasury debt is lower on average and considerably more volatile than the official reported interest costs.
Michele Lenza, Lucrezia Reichlin, 16 February 2010
What effects have the recent exceptional monetary policy interventions had on loans and unemployment, and what are the possible effects of phasing them out? This column provides quantitative estimates for the Eurozone, arguing that that the exceptional policies affect the economic via the spread between the policy rate and the market rate on overnight deposits rather than through their effect on the monetary base.
Olivier Blanchard, Giovanni Dell'Ariccia, Paolo Mauro, 16 February 2010
The global crisis forced economic policymakers to react in ways not anticipated by the pre-crisis consensus on how macroeconomic policy should be conducted. Here the IMF’s chief economist and colleagues (i) review the main elements of the pre-crisis consensus, (ii) identify the elements which turned out to be wrong, and (iii) take a tentative first pass at outlining the contours of a new macroeconomic policy framework.
Thorvaldur Gylfason, 13 February 2010
How to stop a repeat of Iceland’s crisis – both in the country and elsewhere? This column provides eleven lessons covering asymmetric information, moral hazard, better warning systems and improved regulation, preventing banks becoming “too big to fail” and restricting asset bubbles, holding creators of externalities to account, and providing safeguards on political interference.
Avinash Persaud, 10 February 2010
Policymakers and commentators have recently argued for downsizing banks that are “too big to fail.” This column argues that the logic is based on an illusion. A 2006 list of institutions considered “too big to fail” would not have included Northern Rock, Bear Sterns, or even Lehman Brothers. Instead, regulators should aim to make the financial system less sensitive to error in the markets’ estimate of risk.
Charles Wyplosz, 9 February 2010
The latest turn in the global financial crisis has ensnared the debt of some European nations. The fact that these nations are members of a monetary union has generated much confused comment. Here one the world’s leading experts on Eurozone monetary and financial matters sets the record straight, debunking 10 myths and setting forth 10 frequently overlooked facts.
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VoxEU.org is partnering with the UK government to collect the views of economists from around the world on what the G20 should do to fix the global economy.
Read more. There are five themes:
Moderator: Francesco Giavazzi
Moderator: Luigi Zingales
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Moderator: Jon Danielsson
Moderator: Richard Baldwin
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Policy Insights and Reports
Francesco Paolo Mongelli
This new Policy Insight asks why countries would share a single currency, and addresses some aspects missing from the current debate on the benefits of the euro area.
Simon J Evenett
The latest GTA report examines whether macroeconomic stabilisation has altered governments' resort to protectionism, with a focus on the Gulf Region.
Thorsten Beck, Diane Coyle, Mathias Dewatripont, Xavier Freixas, Paul Seabright
This new CEPR report focuses on two specific aspects of the policy response to the crisis: financial regulation and competition policy.
Alberto Giovannini
Alberto Giovannini highlights some fundamental characteristics of the recent financial crisis and identifies ways to make the financial system stronger.
Jon Danielsson
This new CEPR Policy Insight looks at the issues arising from the collapse of Landsbanki.
Max Corden
This new CEPR Policy Insight suggests that the 'Keynesian ambulance' of fiscal stimuli in response to the crisis may have averted a Great Depression.
Viral Acharya, Thomas F. Cooley, Matthew Richardson, Ingo Walter
The NYU Stern group – authors of the influential book Restoring Financial Stability: How to Repair a Failed System – have completed a new ebook that assesses the strengths and weaknesses of the US financial reform legislation. This column introduces the new ebook.
Simon J Evenett
The latest Report from Global Trade Alert focuses on the Asia-Pacific region.
Richard Baldwin
A new VoxEU.org Ebook aims to inform the world trade ministers what the economists know about the trade collapse.
Neil Shephard
The financial position of the UK Government suggests that its university sector may have its funding squeezed. In CEPR Policy Insight 42, Neil Shephard argues that universities should be able to charge income contingent tuition fees if their teaching costs are not met by the current tuition payments.
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Discussion Papers
Salvador Barrios, Harry Huizinga, Luc Laeven, Gaëtan Nicodème
Increased globalization and decreased trade barriers worldwide have led an increasing number of corporations to expand their activities internationally. The authors of CEPR DP7047 examine the effects of host and parent country taxation on the location decisions of these multinational corporations using a range of data from 33 European countries.
Enrico Moretti
The increase in the return to education is typically measured using nominal wages. The author of CEPR DP6997 looks at housing costs for high school and college graduates and discovers that, when looking at real as opposed to nominal wages, the return to education and the increase in inequality may be smaller than previously thought.
Barry Eichengreen, Katharina Steiner
Assuming that Poland does adopt the euro, will it be able to avoid the boom-bust cycle that has afflicted other economies around the time of euro adoption? The authors of CEPR DP7027 look at the causes of these cycles and ask whether Poland's situation is any different to those of its predecessors. Their conclusions are mixed.
Francesco C. Billari, Vincenzo Galasso
Why are couples in industrialized societies having fewer children than they used to? Indeed, why are they deciding to have children at all? The authors of CEPR DP7014 seek to address these issues, focusing on the two main motives for childbearing often cited: children as a 'consumption' vs. an 'investment' good.
Andrew Ellul, Marco Pagano, Fausto Panunzi
The authors of DP6977 investigate the effect of inheritance law on investment in family firms in 32 countries.
Kathleen Cleeren, Marnik G. Dekimpe, Katrijn Gielens, Frank Verboven
Discounters, such as Lidl, operate to offer 40-60% lower prices than conventional retailers, but how much of a competetitive threat to they pose to supermarket giants? In addition to analysing "inter-format" competition between traditional supermarkets and discounters, Verboven et al. examine the competitive effect between retailers of a similar kind and the effects that local conditions can have upon the success the the two formats.
Alberto Galasso, Mark Schankerman
The 'market for innovation' - the licensing and sale of patents - is one of the principal incentives for firms to invest in R&D. In CEPR DP 6946, Galasso and Schankerman set out to examine the impact that US developments have had on market efficiency, by studying the length of patent infringement disputes and find that the US system has performed surprisingly well in recent decades.
Antoni Estevadeordal, Alan Taylor
The link between greater openness to trade and higher growth, once held sacred by economists, has come under contestation in recent years. The authors of DP6942 develop a growth model with a basis for trade in order to uncover the impressive impact trade has had upon growth of GDP, using data from before and after the Uruguay Round.
Natalie Chen, Liam Graham, Andrew J Oswald
Higher energy prices are likely to reduce profitability of industry and thus could bring about an economic downturn. The authors of DP 6937 experiment with terrorist acts as an instrumental variable, in order to examine the relationship between the price of oil, terrorist incidents and the resultant effects on profitability and margins.
Betsey Stevenson, Justin Wolfers
Surveys that have attempted to measure the level of happiness in US citizens by means of a subjective response have unveiled decreases in happiness inequality. The authors of CEPR DP6929 have used these responses to analyse the level and dispersion of happiness within and between demographic groups over the period of 1972-2006.
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