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Public debt through the ages

Barry J. Eichengreen ; Asmaa A ElGanainy ; Rui Pedro Esteves ; Kris James Mitchener, (2019), “Public debt through the ages”, IMF Working Paper No 19/6, 15 January We consider public debt from a long-term historical perspective, showing how the purposes for which governments borrow have evolved over time. Periods when debt-to-GDP ratios rose explosively as a result of wars, depressions and financial crises also have a long history. Many …Read More

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After the meaningful vote: What are Theresa May’s options?

Sam Lowe, John Springford, (2019), “After the meaningful vote: What are Theresa May’s options?”, CER, 16 January It is difficult to see an obvious pathway toward the UK remaining in the EU – be it by a second referendum or a decision made by parliament. It would probably require a change of heart by Jeremy Corbyn, who opposes a re-run of the referendum, and by May. One possible scenario is …Read More

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Normalisation of the ECB’s monetary policy is timely

Peter Bofinger, (2019), “Normalisation of the ECB’s monetary policy is timely”, The Progressive Post, 11 January If everything goes according to plan, the European Central Bank (ECB) will end its “extended asset purchase programme” at the end of the year. This marks the end of a three-year phase in which public sector and private bonds totaling 2 trillion euros were bought. The high level of these unconventional measures naturally raises the …Read More

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Spain is no longer exceptional: Mainstream media and the far-right party Vox

Sergio Olalla, Enrique Chueca and Javier Padilla, (2019), “Spain is no longer exceptional: Mainstream media and the far-right party Vox”, LSE Eurocrisis in the Press, 10 January For a long time Spain and Portugal have been considered exceptions within the European Union due to the lack of a far-right political party with representation in parliament. However, this situation is no longer the case in Spain due to the recent entrance of Vox …Read More

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The ECB’s performance during the crisis: Lessons learned

Ashoka Mody, Milan Nedeljkovic, (2019), “The ECB’s performance during the crisis: Lessons learned”, VoxEu.org, 14 January Dollar liquidity was a very particular need. By alleviating the dollar shortage, the Fed made a significant contribution to the euro area’s stabilisation. In contrast, the ECB’s euro liquidity to banks, by its very design, did little to create confidence in economic prospects. While the liquidity did bring temporary calm, it increased the risk-taking …Read More

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The implications of no-deal Brexit: is the European Union prepared?

Guntram B. Wolff, (2019), “The implications of no-deal Brexit: is the European Union prepared?”, Bruegel, 14 January Overall, a no-deal Brexit would be disruptive in the short-term: There would be immediate very significant administrative and logistical challenges in trade. Preparations to reduce those disruptions are underway but are unlikely to be sufficient. But while Most-Favoured Nation tariffs will affect some sectors significantly, the macroeconomic effect on the German economy might not be …Read More

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The mixed success of the Stability and Growth Pact

Jasper De Jong, Niels Gilbert, (2019), “The mixed success of the Stability and Growth Pact”, VoxEU.org, 15 January The corrective arm of the SGP has both been ridiculed by those highlighting that despite non-compliance sanctions have never been imposed, and vilified by those blaming it for having caused procyclical fiscal tightening. This column suggests there is probably more truth to the latter than the former criticism. While we find indications …Read More

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Debt overhang, rollover risk, and corporate investment: Evidence from the European crisis

Sebnem Kalemli-Ozcan, Luc Laeven, David Moreno, (2019), “Debt overhang, rollover risk, and corporate investment: Evidence from the European crisis”, VoxEU.org, 15 January We argue that the maturity structure of corporate debt is crucial in understanding the effect of debt on firm-level investment. If the debt accumulated during the boom years is mostly short-term – i.e. its remaining maturity is less than one year – there is an increase in the …Read More

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Banking integration in the EMU: Let’s get real!

Mathias Hoffmann, Egor Maslov, Bent Sørensen, Iryna Stewen, (2019), “Banking integration in the EMU: Let’s get real!”, VoxEU, 10 January We argue that the situation in the euro area today is reminiscent of banking in the US pre-1980, where there was a common interbank market but little deep interstate banking integration due to restrictive banking laws. The removal of barriers to entry for out-of-state banks considerably improved access to finance, …Read More

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The euro at 20: An enduring success but a fundamental failure

Barry Eichengreen, (2019), “The euro at 20: An enduring success but a fundamental failure”, The Conversation, 4 January So the euro will stumble forward. No one will be happy with its operation. Equally, no one will leave. Progress will be minimal, since there is no appetite for the political union needed to support fundamental reforms. As a result, the euro remains vulnerable to another crisis. The next crisis could heighten the perceived …Read More

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