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Secular stagnation and the future of economic stabilisation

Ines Goncalves Raposo, (2019), ” Secular stagnation and the future of economic stabilisation”, Bruegel, 1 April Larry Summers’ and Łukasz Rachel’s most recent study documents a secular fall in neutral real rates in advanced economies. According to the authors, this fall would be even more marked in the absence of offsetting fiscal policies. Policymaking in a world of permanently low interest rates may be hard to navigate, especially in troubled …Read More

The missing link between income inequality and economic growth: Inequality of opportunity

Shekhar Aiyar and Christian Ebeke, (2019), “The missing link between income inequality and economic growth: Inequality of opportunity”, VoxEU, 3 April There are contrasting theories on the relationship between income inequality and growth, and the empirical evidence is similarly mixed. This column highlights the neglected role of equality of opportunity in mediating this relationship. Using the World Bank’s new Global Database on Intergenerational Mobility, it shows that in societies where …Read More

Promoting sustainable and inclusive growth and convergence in the European Union

Maria Demertzis, André Sapir and Guntram Wolf, (2019), “Promoting sustainable and inclusive growth and convergence in the European Union”, Bruegel Policy Contribution Issue No 7, April The European Union can look ahead at the next five years from a good economic position. Employment is comparatively high, the recovery has been uninterrupted for several years and income inequality remains less pronounced than elsewhere in the world. But the EU faces nevertheless …Read More

Europe and the New Imperialism

Jean Pisani-Ferry, (2019), “Europe and the New Imperialism”, Project Syndicate, 1 April For decades, Europe has served as a steward of the post-war liberal order, ensuring that economic rules are enforced and that national ambitions are subordinated to shared goals within multilateral bodies. But with the United States and China increasingly mixing economics with nationalist foreign-policy agendas, Europe will have to adapt. Relevant Posts Christine Lagarde, (2019), «The Euro Area: …Read More

Euro area unemployment at 7.8%

Eurostat/Euro area unemployment at 7.8%/1 April 2019 The euro area (EA19) seasonally-adjusted unemployment rate was 7.8% in February 2019, stable compared with January 2019 and down from 8.5% in February 2018. This remains the lowest rate recorded in the euro area since October 2008. The EU28 unemployment rate was 6.5% in February 2019, stable compared with January 2019 and down from 7.1% in February 2018. This remains the lowest rate …Read More

A Delicate Moment for the Global Economy: Three Priority Areas for Action

Christine Lagarde, (2019), “A Delicate Moment for the Global Economy: Three Priority Areas for Action”, IMF, 2 April In January, the IMF projected global growth for 2019 and 2020 at around 3 ½ percent—less than in the recent past, but still reasonable. It has since lost further momentum, as you will see from our updated forecast next week. Only two years ago, 75 percent of the global economy experienced an …Read More

Euro area annual inflation down to 1.4%

Eurostat/Euro area annual inflation down to 1.4%/1 April 2019 Euro area annual inflation is expected to be 1.4% in March 2019, down from 1.5% in February according to a flash estimate from Eurostat, the statistical office of the European Union. Relevant Posts Eurostat/Euro area annual inflation up to 1.5%/1 March 2019 Eurostat/Annual inflation down to 1.4% in the euro area /22 February 2019

Macroprudential policy in a monetary union with cross-border banking

Matthieu Darracq Pariès, Christoffer Kok and Elena Rancoita, (2019), “Macroprudential policy in a monetary union with cross-border banking”, ECB Working Paper Series No2260, March We analyse the interaction between monetary and macroprudential policies in the euro area by means of a two-country DSGE model with financial frictions and cross-border spillover effects. We calibrate the model for the four largest euro area countries (i.e. Germany, France, Italy, and Spain), with particular …Read More

Greece Mulls Early IMF Repayment as Aid Tranche Nears

Sotiris Nikas and Viktoria Dendrinou, (2019), “Greece Mulls Early IMF Repayment as Aid Tranche Nears”, Bloomberg, 2 April Greece’s plans to repay part of its loans from the International Monetary Fund ahead of schedule may soon come to fruition, paving the way for the debt-stricken nation to claim it has taken another step toward economic normalcy. Relevant Posts Theodore Pelagidis, (2019), «Greek economy: From bailout program exit to recovery?», Brookings, …Read More

What if Zero Interest Rates Are the New Normal?

Adair Turner, (2019), “What if Zero Interest Rates Are the New Normal?”, Project Syndicate, 29 March The valid insight behind “modern monetary theory” – that governments and central banks together can always create nominal demand – was explained by Milton Friedman in 1948. But it is vital also to understand that excessive monetary finance is hugely harmful, and it is dangerous to view it as a costless way to solve …Read More