Lehmann, Alexander, (2016), “Private sector debt matters, and better data means better policy”, Bruegel, 27 Οκτωβρίου Private debt is emerging as a central concern in EU policy. However, the Commission’s regular country reports still give more attention to sovereign than private debt – even though there is always a risk that private liabilities will be socialised. Consistent and more detailed indicators of private debt distress could offer a more effective …Read More

Cukierman, Alex, (2016), “Reflections on the natural rate of interest, its measurement, monetary policy and the zero lower bound”, VoxEu, 15 Οκτωβρίου The decline in long-term interest rates has nurtured the view of a persistent shift of the natural rate into negative territory. This column argues that existing estimates of the natural rate, based on the New Keynesian model, are likely to be biased downward. It makes a case for …Read More

Garriga, Carlos, Kydland, Finn, Šustek, Roman, (2016), “Keeping policy rates persistently low: Implications for the monetary transmission mechanism”, VoxEu, 16 Οκτωβρίου Central banks responded to the financial crisis by cutting policy rates to prevent deflation and curb the decline in economic activity, but these responses have been anything but temporary. This column explores whether the sticky price channel is still relevant in an environment of persistently low rates. Although the …Read More

Lehmann, Alexander, (2016), “ECB bank supervision cannot tackle debt restructuring single-handedly”, Bruegel, 13 Οκτωβρίου The European Central Bank has begun to tackle a key symptom of banking sector fragility with its proposed guidelines on banks’ management of non-performing loans (NPLs). But detailed targets for the reduction of NPLs and prescriptions for the internal governance and management of distressed assets also represent a new style of more intrusive supervision. For the …Read More

Galofré-Vilà, Gregori, McKee, Martin, Meissner, Christopher, David, David,  (2016), “Economic consequences of the 1953 London Debt Agreement”, VoxEu, 9 Οκτωβρίου In 1953, the Western Allied powers approved the London Debt Agreement, a radical plan to eliminate half of Germany’s external debt and create generous repayment conditions for the remainder. Using new data from the historical monthly reports of the Deutsche Bundesbank, this column argues that the agreement spurred economic growth by …Read More

Labouré, Marion, Braunstein, Juergen, (2016), “The Great Stagnation”, LSE Euro Crisis in the Press, 4 Οκτωβρίου The recent Brexit vote, as well as high uncertainty around a number of upcoming elections (e.g., the 2016 US and 2017 French presidential elections), are only symptoms of a larger underlying problem. Voting for populist and extremist campaigns is a mean of expressing discontent with the status quo, but with far reaching implications. We believe there …Read More

Hüttl, Pia, Schoenmaker, Dirk, (2016), “Fiscal capacity to support large banks”, Bruegel, 3 Οκτωβρίου During the global financial crisis and subsequent euro-debt crisis, the fiscal resources of some countries appeared to be insufficient to support their banking systems. These countries needed outside support to stabilise their banking systems and thereby their wider economies. This Policy Contribution assesses the potential fiscal costs of recapitalising large banks. Based on past financial crises, we estimate that the …Read More

Gaspar, Vitor, Obstfeld, Maurice, Sahay, Ratna, (2016), “Macroeconomic Management When Policy Space Is Constrained: A Comprehensive, Consistent, and Coordinated Approach to Economic Policy”,  IMF Staff Discussion Note, 28 Σεπτεμβρίου Concern is widespread that countercyclical policies have run out of space or lack the power to raise growth or deal with the next negative shock. The common perceptions are that the effective lower bound on policy interest rates limits the room to loosen monetary …Read More

Blanchard, Olivier, (2016), “The State of Advanced Economies and Related Policy Debates: A Fall 2016 Assessment”, Peterson Institute for International Economics, Σεπτέμβριος This Policy Brief reassesses macroeconomic policies in the current environment of low growth and low interest rates in major advanced economies. Despite low rates, demand remains anemic. The scope for monetary policy, which has carried much of the burden to stimulate demand, is increasingly limited. But there is plenty …Read More

Gros, Daniel, (2016), “Ultra-low or Negative Yields on Euro-Area Long-term Bonds: Causes and Implications for Monetary Policy”, CEPS Working Document No. 426, Σεπτέμβριος The importance of monetary policy for the current ultra-low interest rates is often over-estimated. As emphasised by ECB President Draghi himself, monetary policy cannot determine long-term rates directly, and its influence on long-term real rates is even more limited and indirect. Moreover, long-term bond yields have fallen to unprecedented …Read More