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ECB’s huge forecasting errors undermine credibility of current forecasts

Zsolt Darvas, (2018), «ECB’s huge forecasting errors undermine credibility of current forecasts», Bruegel, 6 Δεκεμβρίου In its latest projections, on September 13th 2018, ECB staff foresaw a core inflation increase to 1.5% on average in 2019 and further to 1.8% on average in 2020 (core inflation does not include volatile items like energy and food). Such forecasts, along with the renewed euro-area economic growth and the fall in the unemployment rate, constituted …Read More

A changing economic vote in Western Europe? Long-term vs. short-term forces

Ruth Dassonneville and Michael S. Lewis-Beck, (2018), «A changing economic vote in Western Europe? Long-term vs. short-term forces», European Political Science Review, 21 Νοεμβρίου, https://doi.org/10.1017/S1755773918000231 Considerable research shows the presence of an economic vote, with governments rewarded or punished by voters, depending on the state of the economy. But how stable is this economic vote? A current argument holds its effect has increased over time, because of weakening long-term social and political forces. …Read More

European Banks With Bad Loans May Get Help From the EU

Alexander Weber and Silla Brush, (2018), «European Banks With Bad Loans May Get Help From the EU», Bloomberg, 27 Νοεμβρίου Banks from Greece to Italy that are struggling to get rid of a mountain of bad loans may soon get some help from European Union lawmakers. A bill that’s nearing the finish line in Brussels would soften the capital hit banks usually face when they sell non-performing loans at a loss. …Read More

How to provide liquidity to banks after resolution in Europe’s banking union

Maria Demertzis, Inês Goncalves Raposo, Pia Hüttl and Guntram B. Wolff, (2018), «How to provide liquidity to banks after resolution in Europe’s banking union», European Parliament, Committee on Economic and Monetary Affaris, 22 Νοεμβρίου When banks are deemed to be ‘failing or likely to fail’ in the European Union’s banking union, they are either put into insolvency/liquidation or enter a ‘resolution scheme’. The Single Supervisory Mechanism (SSM) typically decides that a bank …Read More

Pockets of risk in European housing markets

Jane Kelly, Julia Le Blanc, Reamonn Lydon, (2018), «Pockets of risk in European housing markets», VoxEU, 25 Νοεμβρίου Loan-to-value limits and other borrower-based macroprudential measures are now used in two-thirds of advanced economies. This column uses survey data to document changes in credit standards in a cross-section of countries in the run-up to, and aftermath of, the financial crisis. There is clear evidence of laxer credit standards in countries that …Read More

Italy’s Populists Aren’t the Only Ones to Blame

Ferdinando Giugliano, (2018), «Italy’s Populists Aren’t the Only Ones to Blame», Bloomberg Opinion, 26 Νοεμβρίου Italy was allowed to join the euro in May 1998 even though its public debt stood just below 120 per cent of gross domestic product. The so-called “Maastrich criteria” – which EU members must meet to enter the single currency – stated that government debt shouldn’t exceed 60 per cent of GDP. Failing that, the ratio should …Read More

When left-leaning parties support austerity, their voters start to embrace the far right

Maria Snegovaya, (2018), «When left-leaning parties support austerity, their voters start to embrace the far right», Washington Post, 20 Νοεμβρίου Recently, former White House adviser Anthony Scaramucci declared that President Trump is a “blue-collar president” — which some observers find curious, given his wealthy upbringing and boasts about being a billionaire. And in Sweden’s general election in September, the far-right Sweden Democrats finished in third place with 18 percent of the …Read More

A monetary policy framework for the European Central Bank to deal with uncertainty

Gregory Claeys, Maria Demertzis and Jan Mazzaa, (2018), «Monetary policy framework for the European Central Bank to deal with uncertainty», Bruegel, 22 Νοεμβρίου Central banks face new challenges. First, the potential long-term decline in neutral rates of interest in advanced economies could reduce the space for central banks to make policy-rate cuts. Second, the potential flattening of the Phillips curve (i.e. the weakening of the relationship between inflation and unemployment) in recent …Read More

Impact of Italy’s Draft Budget on Growth and Fiscal Solvency

Olivier Blanchard, Álvaro Leandro, Silvia Merler and Jeromin Zettelmeyer, (2018), «Impact of Italy’s Draft Budget on Growth and Fiscal Solvency», Peterson Institute for International Economics, Policy Brief 18-24, Νοέμβριος A bitter standoff is under way between Italy’s new government and the European Commission over the Commission’s objections to Italy’s proposed expansionary budget for 2019. In this Policy Brief, the authors look at the merits of fiscal expansion, concluding that Italy’s …Read More

Euro Area Paves the Way for Easier Sovereign Debt Restructurings

Nikos Chrysoloras and Viktoria Dendrinou, (2018), «Euro Area Paves the Way for Easier Sovereign Debt Restructurings», Bloomberg, 19 Νοεμβρίου A proposal to simplify euro-area sovereign debt restructurings has gained broad support among members of the common currency, Portuguese Finance Minister Mario Centeno said, as governments move to bolster its tools after the last credit crisis nearly tore the 19-nation bloc apart. The plan envisages strengthening collective action clauses, which have been mandatory …Read More