Véron, Nicolas, (2016), “Breaking the vicious circle”, Bruegel, 21 Οκτωβρίου The eurozone’s banking union has moved from vision to reality in a short period of time, with the European Central Bank now an established supervisory authority for the area’s large banks. This has already made a big difference to the many national banking champions that local supervisors had been treating with kid gloves. But the banking union’s ultimate policy goal, …Read More

Bofinger, Peter,Scheuermeyer, Philipp, (2016), “Income distribution and aggregate saving: New evidence”, VoxEu, 20 Οκτωβρίου The effect of income distribution on aggregate saving has important implications for aggregate demand and global current account imbalances.  Drawing on evidence from a panel of high-income OECD countries, this column documents a hump-shaped relationship between inequality and aggregate saving rates. It also shows that the relationship between inequality and saving depends on financial market conditions. …Read More

Campos, Nauro, Macchiarelli, Corrado, (2016), “A new measure of economic asymmetries in the Eurozone”, VoxEu, 19 Οκτωβρίου Explanations for the Eurozone Crisis rely on the notion of cross-country asymmetries. The core-periphery pattern to the EU was first established by Bayoumi and Eichengreen in 1993, prior to the Eurozone. This column replicates their approach to explore whether the euro has strengthened or weakened this pattern. A new ‘coreness index’ indicates that …Read More

Demertzis, Maria, (2016), “A framework for thinking about bad loans”, Bruegel, 18 Οκτωβρίου An important guiding principle in resolving non-performing loans (NPLs) should be to ensure that viable debt remains serviced, while non-viable debt gets resolved. We present here a framework to approach the issue. Σχετικές Αναρτήσεις Panagiotarea, Eleni, (2016), “The Political Economy of NPLs resolution: Ownership and conditionality”, Hellenic Observatory LSE, 13 Οκτωβρίου Minenna, Marcello, (2016), “The Italian Non-Performing Loans …Read More

A. El-Erian, Mohamed, (2016), “Toxic Politics Versus Better Economics”, Project Syndicate, 15 Οκτωβρίου The relationship between politics and economics is changing. Advanced-country politicians are locked in bizarre, often toxic, conflicts, instead of acting on a growing economic consensus about how to escape a protracted period of low and unequal growth. This trend must be reversed, before it structurally cripples the advanced world and sweeps up the emerging economies, too. Σχετικές Αναρτήσεις …Read More

Reichlin, Lucrezia, Vallée, Shahin, (2016), “Resolving Europe’s Banking Crisis in Italy”, Project Syndicate, 14 Οκτωβρίου The European banking sector is crippled and highly fragmented. Though its problems are more acute for some countries and financial institutions, the sector runs on a level of profitability that is, on average, lower than its cost of equity and maintains a stock of non-performing loans and hard-to-value assets large enough to undermine its capitalization for years …Read More

Reis, Ricardo, (2016), “Fiscal crises as pretexts for quantitative easing”, VoxEu, 14 Οκτωβρίου Conventional economic theory predicts that, outside of a financial crisis, quantitative easing should have no effect on real outcomes or inflation. This column proposes two theoretical channels through which quantitative easing might also work in a fiscal crisis. In this case, quantitative easing can be a valuable tool because it can control the path of inflation over …Read More

Mody, Ashoka, (2016), “Europe after Merkel”, Project Syndicate, 13 Οκτωβρίου Next year, Germany will hold a federal election, and the new Bundestag will choose the country’s next chancellor. Whether or not Angela Merkel retains the role – at the moment, things are not looking good for her or her Christian Democratic Union (CDU) – one thing is certain: Germany’s chancellor will no longer be de facto Chancellor of Europe. That will …Read More

Masten, Igor, Grdović Gnip, Ana, (2016), “Stress testing the EU fiscal framework”, VoxEU, 13 Οκτωβρίου Fiscal policies in European Economic and Monetary Union states are being reinforced. This column argues that the cyclically adjusted budget balance will be an imprecise tool for measuring fiscal discipline, and structural deficit rules limits are too stringent. If the official methodology is used to trigger corrective fiscal contractions, it may increase macroeconomic instability. Σχετικές Αναρτήσεις …Read More

Fatás, Antonio, Summers, Lawrence,  (2016), “Hysteresis and fiscal policy during the Global Crisis”, VoxEu, 12 Οκτωβρίου Conventional wisdom on supply and demand suggests that demand shocks are cyclical or transitory, and that only technology shocks are responsible for trend changes. This column argues that cyclical events can have permanent effects on demand, and therefore GDP. It is time for policymakers to start considering the possibility of hysteresis seriously. Σχετικές Αναρτήσεις Ubide, Ángel, …Read More