Eberhardt, M. and Presbitero, A., (2013), “Public debt and economic growth: There is no ‘tipping point’”, VoxEU, 17 Νοεμβρίου. The idea that there is a common tipping point in the relationship between public debt and economic growth is still widespread. However, this is likely due to a misinterpretation of the existing evidence. Once we allow for the relationship between debt and growth to be country-specific, there is limited evidence supporting …Read More

Wolf, G., (2013), “Governments must follow the ECB’s rate cut with policy action”, Bruegel, 13 Νοεμβρίου. The Eurozone is still at risk of falling into deflation. Euro area core inflation rates, i.e. inflation rates excluding volatile energy and food prices, have been falling since late 2011. Inflation expectations two years ahead are hardly above one percent and even at a 5 year outlook, market-determined inflation forecast is at 1.44%. So …Read More

Wood, R., (2013), “Europe: The Failure of Internal Devaluation”, EconoMonitor, 13 Νοεμβρίου. Quite apart from the resolution of debt and banking/credit problems, differences in competitiveness, and external account imbalances, are central considerations impacting on the success or failure of the European experiment with a common currency.  This short article looks beyond simple cross-country  comparisons of unit labour cost trends and evaluates the role that austerity policies have played in relation …Read More

Sinn, H.W., (2013), “Why Draghi was wrong to cut interest rates”, The Financial Times, 13 Νοεμβρίου. Europe fears the Japanese disease. In Japan, the gross domestic product deflator – a broad measure of the price level – fell by about 1.2 per cent a year from 1999 to 2013. Today it is as low as it was in 1980. This was a catastrophe, which Japan may only now be overcoming …Read More

Wolf, M., (2013), “Why Draghi was right to cut rates”, The Financial Times, 12 Νοεμβρίου. Τhe monetary policy of the European Central Bank has been too tight. This is shown in the fall of core annual inflation to just 0.8 per cent in the year to October 2013. The case for the monetary easing undertaken last week was overwhelming. Indeed, it was long overdue. Yet, it has been leaked, the …Read More

Buchheit, L., Weder di Mauro, B., Gelpern, A.,  Gulati, M., Panizza, U. and Zettelmeyer, J., (2013), “Revisiting sovereign bankruptcy”, VoxEU, 12 Νοεμβρίου. Sovereign-debt crises occur regularly and often violently. The recent debt crisis in Greece almost led to the collapse of the euro. Yet, there is no legally and politically recognised procedure for restructuring the debt of bankrupt sovereigns. Procedures of this type have been periodically debated – most recently, …Read More

Krugman, P., (2013), “Germany’s lack of reciprocity”, The New York Times, 12 Νοεμβρίου. Huge tensions over the ECB rate cut, with a split on the board and many German economists protesting. As usual, a lot of it is about the perception that those lazy southern Europeans are getting a free ride: A commentary by the chief economist of the financial weekly Wirtschaftswoche called the decision a “diktat from a new …Read More

Münchau, W., (2013), “The eurozone needs to get inflation up again”, The Financial Times, 10 Νοεμβρίου. What surprised me last week was not the European Central Bank’s decision to cut interest rates, but that so few people had expected it. That is astonishing since the ECB is certain to fall short of its inflation target – achieving an annual rate of close to 2 per cent in the medium term. …Read More