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Euro area government deficit at 0.5% and EU28 at 0.7% of GDP

Eurostat/Euro area government deficit at 0.5% and EU28 at 0.7% of GDP/21 October 2019 In 2018,the government deficit and debt of both the eur oarea(EA19)and the EU28 decreased in relative terms compared with 2017.In the euro area the government deficit to GDP ratio fell from 0.9% in 2017to 0.5% in 2018,and in the EU28 from1.0%to 0.7%. In the euro area the government debt to GDP ratio declined from 87.8% at …Read More

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Challenges ahead for the European Central Bank: Navigating in the dark?

Gregory Claeys, Maria Demertzis and Francensco Papadia (2019), “Challenges ahead for the European Central Bank: Navigating in the dark?” Bruegel, 25 September Since the second half of 2018, signs of a slowdown have been piling up in the euro area. The ECB will face major challenges in this potentially difficult period: its main tools are nearly exhausted, the monetary union in which it operates is still incomplete, and it lacks …Read More

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Potential output and EU fiscal surveillance

Marco Buti, Nicolas Carnot, Atanas Hristov, Kieran Mc Morrow , Werner Roeger and Valerie Vandermeulen, (2019), “Potential output and EU fiscal surveillance”, VoxEU, 23 September Criticisms have recently been raised on the usefulness of the EU’s commonly agreed methodology for estimating potential output and output gaps. Whilst mindful of the uncertainty which inevitably surrounds an unobservable variable such as potential output, this column argues that much of the criticism is …Read More

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Macroprudential policy could have reduced imbalances in the euro area

Marcin Bieleki, Michał Brzoza-Brzezina, Marcin Kolasa and Krzysztof Makarski, (2019), “Macroprudential policy could have reduced imbalances in the euro area”, VoxEU, 18 September The boom-bust cycle in the euro area periphery has almost toppled the euro. This column suggests that region-specific macroprudential policy could have substantially smoothed the credit cycle in the periphery and reduced the build-up of external imbalances. In contrast, common monetary policy could have stabilised output in …Read More

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The financial origin of the euro area fiscal wound

Alberto Caruso, Lucrezia Reichlin and Giovanni Ricco, (2019), “The financial origin of the euro area fiscal wound”, VoxEU, 13 September One of the most cited books written in the aftermath of the 2008 financial crisis, which documents the special characteristics of recessions associated with financial crises over time and across countries, is titled “This time is different”. This column argues that the joint behaviour of the public deficit and public …Read More

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Economic priorities for new EU leadership

Maria Demertzis, (2019), “Economic priorities for new EU leadership”, Bruegel, 10 September Europe is no longer in crisis mode. However, it remains vulnerable; it is unprepared and it is procrastinating. Following European elections this May, new leaders are about to take their positions at the main European institutions for the next 5 years. They have the power in their hands to take action. But more importantly, they have the power …Read More

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ECB Cuts Rates, Revives QE to Lift Growth as Draghi Era Ends

Yoko Takeo and Piotr Skolimowksi, (2019), “ECB Cuts Rates, Revives QE to Lift Growth as Draghi Era Ends”, Bloomberg, 12 September The European Central Bank cut interest rates further below zero and revived bond purchases after President Mario Draghi overcame critics of his stimulus policies to make a final run at reflating the euro-area economy. Relevant Posts Daniel Gros, (2019), «The ECB’s Deflation Obsession», Project Syndicate, 6 September Summers, Lawrence …Read More

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Government investment and fiscal stimulus

Christoph Boehm, (2019), “Government investment and fiscal stimulus”, VoxEU, 7 September Fiscal stimulus packages typically feature large investment in infrastructure. The column argues that the fiscal multiplier associated with government investment during the Great Recession was near zero. Meanwhile, the government consumption multiplier was around 0.8. Estimates of the multiplier for total government purchases do not distinguish these two effects, which may affect their validity. Relevant Posts Giugliano, Ferdinando, (2019), …Read More

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How the IMF can ‘raise its game’ on monetary policy advice

Charles Collyns and Prakash Loungani, (2019), “How the IMF can ‘raise its game’ on monetary policy advice”, VoxEU, 9 September Unconventional monetary policies were used extensively to deal with the Global Crisis. This column presents the results of a study by the IMF’s Independent Evaluation Office which assessed the value provided by the IMF in its advice on unconventional monetary policies over the past decade. While in many ways the …Read More

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The ECB’s Deflation Obsession

Daniel Gros, (2019), “The ECB’s Deflation Obsession”, Project Syndicate, 6 September It is hard to understand why the European Central Bank is currently so anxious to find new ways to make its policy stance even more expansionary. Its hyper-vigilance about falling prices is misplaced, and its ability to increase the rate of inflation is dubious. Relevant Posts Gerlach, Stefan, (2019), “Lagarde’s ECB Checklist”, Project Syndicate.org, July El-Erian, Mohammed, (2019), “Are …Read More

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