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From microeconomic favouritism to macroeconomic populism

Gilles Saint-Paul, (2019), “From microeconomic favouritism to macroeconomic populism”, VoxEU, 7 March Macroeconomic populism typically leads to higher levels of public debt, public spending, deficits, and crises. Nevertheless, this column argues that it is rational for groups of voters to vote for a populist who reflects their interests, because they will be favoured when a fiscal adjustment occurs. The greater the fiscal adjustment required, the more likely voters are to elect a …Read More

Europe Isn’t Ready for the Next Recession

Bloomberg, (2019), “Europe Isn’t Ready for the Next Recession”, 8 March The European Central Bank surprised financial markets yesterday with moves to loosen monetary policy. The prospects for growth in the euro zone have dimmed lately, and policy was going to be tweaked at some point unless things picked up. But a change wasn’t expected so soon. ECB President Mario Draghi and his colleagues are apparently worried. Relevant Posts Ashoka …Read More

Euro area annual inflation up to 1.5%

Eurostat/Euro area annual inflation up to 1.5%/1 March 2019 Euro area annual inflation is expected to be 1.5% in February 2019, up from 1.4% in January, according to a flash estimate from Eurostat, the statistical office of the European Union. Relevant Posts Eurostat/Annual inflation down to 1.4% in the euro area /22 February 2019 Eurostat/Annual inflation down to 1.9% in the euro area/17 December 2018

The impact of population ageing on monetary policy

Marcin Bielecki, Michal Brzoza-Brzezina and Marcin Kolasa, (2019), “The impact of population ageing on monetary policy”, VoxEU, 5 March Population ageing is likely to affect many areas of life, from pension system sustainability to housing markets. This column shows that monetary policy can be considered another victim. Low fertility rates and increasing life expectancy substantially lower the natural rate of interest. As a consequence, central banks are more likely to …Read More

Greece Is Back in the Bond Market as Yields Fall to 13-Year Low

James Hirai and John Ainger, (2019), “Greece Is Back in the Bond Market as Yields Fall to 13-Year Low”, Bloomberg, 4 March Greece is selling debt for the second time this year, taking advantage of lower borrowing costs after an upgrade from Moody’s Investors Service. The nation has mandated six banks as lead managers for a new 10-year bond, according to an Athens bourse filing on Monday. The sale is …Read More

Trade and innovation: The Schumpeterian role of banks

Christian Keuschnigg and Michael Kogler, (2019), “Trade and innovation: The Schumpeterian role of banks”, VoxEU, 4 March Only strong banks can fulfil their Schumpeterian role by efficiently reallocating credit. The column argues that high capital standards, efficient bankruptcy laws, and a lower cost of bank equity improve credit reallocation and thereby support the productive specialisation of the economy. An efficient banking sector also magnifies the gains from trade liberalisation by …Read More

Portugal can use its economic recovery to build up resilience

OECD, (2019), “Portugal can use its economic recovery to build up resilience”, OECD, 18 February Portugal’s economic recovery is now well established, with GDP back to pre-crisis levels, a substantially lower unemployment rate and renewed investment and domestic consumption now joining a robust export sector to drive the economy. Efforts should now focus on reducing vulnerabilities to build resilience to future shocks, according to a new OECD report. Relevant Posts …Read More

Why the eurozone is going backwards

Paul Taylor, (2019), “Why the eurozone is going backwards”, Politico, 4 March The destructive beast of nationalism is back on the prowl in Europe’s banking sector. Seven years after European leaders agreed to crisis-proof the Continent’s banks by bringing much of the sector under the supervision of the EU, national governments and regulators are undermining the effort. Relevant Posts Jurgen Stark, (2018), «The Eurozone’s Solidarity Fallacy», Project Syndicate, 17 December …Read More

Greece and Argentina show why pension reforms should not be used as a quick fix for a financial crisis

Marina Angelaki and Leandro Carrera, (2019), “Greece and Argentina show why pension reforms should not be used as a quick fix for a financial crisis”, LSE EUROPP, 1 March Greece and Argentina both introduced radical pension reforms following the financial crisis. Drawing on recent research, Marina Angelaki and Leandro Carrera argue that while both countries lacked access to international financial markets and had unsustainable pension systems, the reforms have been …Read More

What to look out for in the latest European Semester package

Konstantinos Efstathiou and Guntram B. Wolff, (2019), “What to look out for in the latest European Semester package”, Bruegel, 26 ΦβερουαρίουFebruary Implementation of the European Commission’s country-specific policy recommendations (CSRs) is at a low rate overall. Whether this trend has continued, particularly among those countries judged to have excessive macroeconomic imbalances, will be evident in the soon-to-be-released reports of the Commission. Relevant Posts Steven Blockmans (ed.), (2019) “What Comes After …Read More