Marelli, Enrico, Signorelli, Marcello, (2017), “Deepening the Economic and Monetary Union: What the Commission missed in its reflection paper”, LSE EUROPP, 20 June The European Commission’s recent reflection paper on deepening economic and monetary union raises several key questions about the past and future of the Eurozone. The paper certainly represents a positive contribution to the ongoing process of European integration, after the impasse caused by the deep and prolonged …Read More

Merler,  Silvia, (2017), “The Fed’s problem with inflation”, Brugel, 19 June Joseph Gagnon at PIIE argues that the FOMC meeting offered three unexpected items. First, Chair Yellen pointed to “one-off” development in the prices of mobile phone service plans and pharmaceuticals in March, as the main reason the FOMC’s preferred measure of inflation has moved away from its 2 percent target to 1.5 percent as of April. Gagnon wonders whether the …Read More

Rothstein, Bo, (2017), “Immigration And Economic Growth: Is Keynes Back?”, Social Europe, 20 June During the huge refugee crisis in 2015, among the OECD countries, Sweden accepted the largest number of refugees in relation to its population size (10m): 163,000 asylum seekers. If the United States had received an equal share compared to its population, it would have been about 5.5 million people but it took in only about 70,000 asylum …Read More

McGeever, Jamie, (2017), “If central banks can’t taper QE now, when can they? Maybe never”, Reuters, 13 June As the Fed prepares to raise interest rates again and actively considers how and when to start exiting QE, it appears that the process of normalising monetary policy across the Western world is slowly but surely getting into gear. Global conditions for unwinding crisis-fueled stimulus look fertile: the strongest economic growth in …Read More

Rogoff, Kenneth, (2017), “How Long Can the Eurozone Survive Without Greater Integration?”, Project Syndicate, 14 June With a reform-minded centrist president elected in France and the re-election of German Chancellor Angela Merkel seeming ever more likely, is there new hope for the stalled single-currency project in Europe? In the near term, it looks that way. The eurozone recovery has out-performed expectations, and the election of Macron has raised hopes that …Read More

Nocera, Andrea, Roma, Moreno, (2017), “House prices and monetary policy in the euro area: evidence from structural VARs”, ECB, June We use a structural Bayesian vector autoregression model for seven euro-area countries (Belgium, France, Germany, Ireland, Italy, the Netherlands, and Spain) for the period 1980:Q1- 2014:Q4 to provide a systematic structural analysis of the impacts of housing demand shocks on economic activity and the role of house prices in the monetary …Read More

Gros, Daniel, (2017), “Why keeping the balance sheet of the Federal Reserve constant is equivalent to a gradual exit”, Vox Eu, 12 June When interest rates are at the zero lower bound, the stance of monetary policy is judged by the size of the balance sheet of the central bank. However, this is not quite correct since one part of the balance sheet is determined by the demand for cash, which …Read More

Giugliano, Ferdinando, (2017), “The Study Europe’s Rate-Setters Should Read”, Bloomberg View, 8 June A key argument for hurrying up with a monetary tightening is that negative rates have hurt bank profitability, restricting lenders’ ability to give credit to families and firms. But is it really the case? How low can interest rates go before they become a drag on the economy? A new way of thinking about this problem comes from …Read More

Bloomberg View, (2017), “Europe (Finally) Shows How to Deal With a Failing Bank”, 8 June Credit where credit’s due: The sale for 1 euro of Banco Popular Espanol SA, a failing Spanish bank, to rival lender Banco Santander SA shows how the euro zone should handle such cases. The regulators acted swiftly and fairly. Global markets barely noticed. This is a model for future interventions. Banco Popular’s troubles date back to …Read More

Perrut, Dominique, (2017), “A Pilot for the Governance of the Euro Is Required Immediately” , EconoMonitor, 8 June After the Brexit, European leaders are faced with the strict obligation to make Europe credible, particularly by consolidating the weak pillar of the Euro, namely, economic governance. This must henceforth be piloted by a Finance Minister. This step, which is necessary for the survival of the Euro, must be taken by the European …Read More