Hancké, B. (2014) “Two years after Mario Draghi’s ‘whatever it takes’ moment, the Eurozone is once again staring into the abyss“, LSE EUROPP, 21 Οκτωβρίου. Growth in the Eurozone has declined significantly over recent months, raising fears that Europe could be heading toward another economic crisis. Bob Hancké writes on what it would take to generate growth in Eurozone states. He argues that the best – and possibly only …Read More
Sovereign-debt relief and its aftermath: The 1930s, the 1990s, the future?
Reinhart, M. C., Trebesch, C. (2014) “Sovereign-debt relief and its aftermath: The 1930s, the 1990s, the future?“, VoxEU Organisation, 21 Οκτωβρίου. To work towards resolving Europe’s ongoing debt crisis this column looks to the past. From the recent emerging market debt crisis (1980s-2000s) and the interwar episode of the 1920s-1930s we learn that debt write-downs and defaults are able to be postponed but not prevented. Punishment for default is …Read More
Why Should Europe (or Anyone Else) Fear Deflation?
Dolan, E. (2014) “Why Should Europe (or Anyone Else) Fear Deflation?“, Economonitor Blog, 20 Οκτωβρίου. Europe is fearful as it teeters on the brink of deflation. As the chart shows, September consumer prices in the eurozone were just 0.3 percent higher than in the same month a year earlier. That is far below the 2 percent inflation target set by the European Central Bank (ECB). Five countries were already …Read More
The UK recovery is a false dawn
Mitchell, B. (2014) “The UK recovery is a false dawn“, Bill Mitchell Blog: Modern Monetary Theory … macroeconomic reality, 18 Οκτωβρίου. A few weeks ago (October 1, 2014), I wrote in this blog – British economic growth shows that on-going deficits work – that the British Chancellor was overseeing an expanding fiscal deficit and public debt ratio, which despite the rhetoric to the contrary, was supporting growth and helping …Read More
The ECB Changes Its Mind Which Bonds It Will Monetize, Then It Changes It Again
Durden, T. (2014) “The ECB Changes Its Mind Which Bonds It Will Monetize, Then It Changes It Again“, ΘZeroHedge, 20 Οκτωβρίου. To get a sense of just how chaotic, unprepared, confused and in a word, clueless the ECB is about just its “private QE”, aka purchases of ABS, which should begin in the “next few days” (but certainly don’t hold your breath) – let alone the monetization of public …Read More
Regulating Capital Flows at Both Ends: Does it Work?
Ghosh, R. A., Qureshi Saeed, M. & Sugawara, N. (2014) “Regulating Capital Flows at Both Ends: Does it Work?“, IMF Publications, Working Paper 14/188, 17 Οκτωβρίου. This paper examines whether cross-border capital flows can be regulated by imposing capital account restrictions (CARs) in both source and recipient countries, as was originally advocated by John Maynard Keynes and Harry Dexter White. To this end, we use data on bilateral cross-border …Read More
The British origins of the US endowment model
Chambers, D. & Dimson, E. (2014) “The British origins of the US endowment model“, VoxEU Organisation, 20 Οκτωβρίου. Yale University has generated annual returns of 13.9% over the last 20 years on its endowment – well in excess of the 9.2% average return on US university endowments. Keynes’ writings were a considerable influence on the investment philosophy of David Swensen, Yale’s CIO. This column traces how Keynes’ experiences managing …Read More
Cyprus: from boom to bail-in
Michaelides, Al., (2014), “Cyprus: from boom to bail-in”, Economic Policy, Vol. 29, Issue 80, pp. 639-689. This is a case study of how a country nearly reached bankruptcy in March 2013, within five years of entering the eurozone. The magnitude of the requested assistance is extremely large relative to GDP (100%) and studying this event provides useful lessons for avoiding such crises in the future. The crisis resulted from a …Read More
Making regulatory agencies independent is not always a recipe for better decision-making
Jordana, J. & Rosas, G. (2014) “Making regulatory agencies independent is not always a recipe for better decision-making“, LSE EUROPP, 16 Οκτωβρίου. The principle of making certain bodies independent from government, such as regulatory agencies or central banks, has become popular in a number of contexts over recent decades. As Jacint Jordana and Guillermo Rosas write, the basic assumption underpinning the principle is that electoral pressures can have a …Read More
Why We Must Break Up the Financial Herd
Persaud, D. A. (2014) “Why We Must Break Up the Financial Herd“, Peterson Institute for International Economics – Article in QFinance, 16 Οκτωβρίου. Background Memories are short. But those in finance are even shorter. Before the credit crunch began in 2007, policymakers in advanced economies were flirting with the idea that we should just accept that financial crises occur every seven years or so and plan accordingly, as seeking …Read More