Bocchi, Alessandro Magnoli, (2015), “Ten Questions for the Global Economy”, Economonitor, 25 November. The fundamental structure of the world economy is changing. While the contribution of services to global output is on the rise, investment and productivity remain stagnant, savings keep accumulating, and growth and inflation decline. Meanwhile, globalization has increased co-dependence: a rising number of countries can influence the world’s economic performance and its financial stability. Yet, the international monetary system …Read More
Perils of central banks as policymakers of last resort
S. Gürkaynak, Refet, Davig, Troy (2015), “Perils of central banks as policymakers of last resort”, Voxeu, 25 November Central banks around the world have been shouldering ever-increasing policy burdens beyond their core mandate of stabilising prices. This column considers the social welfare implications when central banks take on additional mandates that are usually the domain of other policymakers. Additional mandates are shown to worsen trade-offs faced by the central bank, while distorting …Read More
The ECB and politics in an era of low interest rates
Wolff, Guntram, (2015), “The ECB and politics in an era of low interest rates”, Bruegel publications, 25 November The reasons for this are the subject of heated debate, but the fact is that there have been long-term changes in global savings and investments due to demographic and structural factors. Monetary policy has not caused this situation, yet it has to find a response. All the same, monetary policy cannot address …Read More
How Do Public Debt Cycles Interact with Financial Cycles?
Poghosyan, Tigran, (2015), “How Do Public Debt Cycles Interact with Financial Cycles?”, IMF, Νovember. We employ a duration model to study determinants of public debt cycles in 57 advanced and emerging economies over the 1960–2014 period, with a particular focus on the impact of financial cycles. The results suggest that the association between financial and debt cycles is asymmetric. Debt expansions preceded by overheating in credit and financial markets tend to …Read More
Estimating the Bridge Financing Needs of the Single Resolution Fund: How expensive is it to resolve a bank?
De Groen, Willem Pieter, Gros, Daniel, (2015), “Estimating the Bridge Financing Needs of the Single Resolution Fund: How expensive is it to resolve a bank?”, CEPS, No. 122, November. The Single Resolution Board (SRB) will be responsible for the resolution of banks in the euro area from 1 January 2016. However, the resources of the Single Resolution Fund (SRF) at the disposal of the SRB will only gradually be built up until 2023. This paper …Read More
Asset purchase programmes and financial markets: lessons from the euro area
Altavilla, Carlo, Carboni , Giacomo, Motto, Roberto, (2015), “Asset purchase programmes and financial markets: lessons from the euro area”, Working Paper Series, European Central Bank, 5 November We evaluate the effects on asset prices of the ECB asset purchase programme (APP) announced in January 2015 and assess its main transmission channels. We do so by first extending a term structure model with bond supply effects to account for assets with different types of …Read More
Reviving Credit in the Euro Area
Portier, Jean, Sanfilippo, Luca, (2015), “Reviving Credit in the Euro Area”, IMF direct, 23 November A stock in excess of €900 billion of nonperforming loans continue to clutter the European banking system, impeding economic growth. This issue remains a key challenge for policy makers. As we show in our latest Global Financial Stability Report,part of the solution to address this legacy is an upgrade in legal systems. Current inefficiencies—long foreclosure times …Read More
Conceptualizing Capitalism-Institutions, Evolution, Future
Hodgson, Geoffrey, (2015), “Conceptualizing Capitalism-Institutions, Evolution, Future”, Chicago University Press, October A few centuries ago, capitalism set in motion an explosion of economic productivity. Markets and private property had existed for millennia, but what other key institutions fostered capitalism’s relatively recent emergence? Until now, the conceptual toolkit available to answer this question has been inadequate, and economists and other social scientists have been diverted from identifying these key institutions. Relevant …Read More
Monetary Policy: Past, Present and Future
Draghi, Mario, (2015), “Monetary Policy: Past, Present and Future”, Speech at the Frankfurt European Banking Congress, 20 November Τhe ECB’s monetary policy measures have clearly worked, in fact they are probably the dominant force spurring the recovery. They have been instrumental in arresting and reversing the deflationary pressures that hit the euro a year ago. Yet growth momentum remains weak and inflation remains well below our objective of below but …Read More
A new historical database on economic freedom in OECD countries
Prados de la Escosura, Leandro, (2015), “A new historical database on economic freedom in OECD countries”, Voxeu, 23 November Indices of economic freedom refer mostly to the recent past, making policy prescriptions difficult to draw. This column presents a new historical index of economic liberty covering 21 OECD countries for the period 1850-2007. Over time, progress in economic liberty has derived from different factors, but improvements in legal structures and property …Read More