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Fair or not? How credit rating agencies calculated their ratings during the Eurozone crisis

Boumparis, Periklis, Milas, Costas, Panagiotis, Theodore, (2017), “Fair or not? How credit rating agencies calculated their ratings during the Eurozone crisis”, LSE EUROPP, 23 March Credit rating agencies received a great deal of criticism during the Eurozone crisis, but what actually explains the changes that occur in a country’s credit rating? Drawing on new research, Periklis Boumparis, Costas Milas and Theodore Panagiotidis write that ratings agencies have responded differently to low-rated and high-rated …Read More

Is Italy Europe’s Next Big Worry?

Kirkegaard, Jacob, Funk , (2017), “Is Italy Europe’s Next Big Worry?”, Peterson Institute, 21 March Despite the prospects of a good year economically and politically for the euro area in 2017, uncertainty hangs on the horizon over Italy. Once the French election in May is over, investors’ attention will likely turn to Italy, where an election is due no later than May 2018. But the country may not be capable of …Read More

The Eurozone is Still Vulnerable

Marzinotto, Benedicta, (2017),  “The Eurozone is Still Vulnerable”, Project Syndicate, 22 March When the economic calculus reverses, we can expect to experience a sense of déjà vu. Each country’s gain will entail another country’s loss, which will undermine inter-eurozone cooperation and fuel political tensions. The effects will likely reverberate through each country’s domestic politics, strengthening forces that favor disintegration. To be sure, reforms that were implemented in response to the …Read More

The Troika gave Ireland more autonomy over social security cuts than is commonly recognised

Hick, Rod, (2017), “The Troika gave Ireland more autonomy over social security cuts than is commonly recognised”, LSE EUROPP, 22 March The so called ‘Troika’ of the European Commission, European Central Bank, and the International Monetary Fund was frequently criticised during the Eurozone crisis on the basis that it had imposed austerity on countries requiring a bailout. But how accurate was this picture in reality? Drawing on new research in …Read More

Governments Have Put the ECB in a Bind

Bloomberg, (2017), “Governments Have Put the ECB in a Bind”, Bloomberg, 20 March If you think it will be hard for the U.S. Federal Reserve to normalize monetary policy, spare a thought for the European Central Bank. The euro zone’s monetary guardians have said they will continue to buy 60 billion euros a month in government and corporate bonds until the end of 2017. Headline inflation is running at 2 …Read More

Mixed Signals from the Eurozone

Gros, Daniel, (2017), “Mixed Signals from the Eurozone”, Project Syndicate, 16 March What does the eurozone’s future hold? It depends where you look. Some economic indicators suggest that things are looking up for the common currency’s survival; for example, employment has returned to its pre-crisis peak, and per capita GDP growth exceeded that of the United States last year. At the same time, political risks seem to be increasing, despite the …Read More

What future for Europe?

Wolff, Guntram B., (2017), “What future for Europe?”, Bruegel, 16 March The Commission’s White Paper on the future of the EU sets out five scenarios, but misses the fundamental questions facing Europe. How should the EU interact with its neighbourhood? How can we manage the tensions created by multi-speed integration? And above all how can the Euro be made sustainable in the absence of a major step towards fiscal union? …Read More

Democracy Over Sovereignty in Europe

Reichlin, Lucrezia, (2017), “Democracy Over Sovereignty in Europe”, Project Syndicate, 14 March The future of the European Union may not officially be on the ballot in the upcoming elections in the Netherlands, France, Germany, and Italy, but the results will go a long way towards determining Europe’s fate. Anti-EU sentiment is more widespread than ever, as demonstrated by the feverish campaigns of right-wing populist insurgents like Geert Wilders in the Netherlands and …Read More

Beyond Crisis: Constitutional Change in Greece after the Memoranda

Tsiftsoglou, Anna, (2017), “Beyond Crisis: Constitutional Change in Greece after the Memoranda”, LSE Hellenic Observatory, 9 March Can financial crises bring constitutional change? Has Greece become a prominent such example? Already 7 years into recession, crisis-hit Greece is experiencing a tremendous institutional change. This change, which takes place informally rather than formally, is affecting state institutions- primarily its parliament, the executive and courts. Everyday practice, political or otherwise, changes the …Read More

An update: Sovereign bond holdings in the euro area – the impact of QE

Huttl, Pia, Goncalves Raposo, Ines, (2017), “An update: Sovereign bond holdings in the euro area – the impact of QE”, Bruegel, 9 March Since the ECB’s announcement of its QE programme in January 2015, national central banks have been buying government and national agency bonds. In this post we look at the effect of QE on sectoral holdings of government bonds, updating our calculations published in May and November 2016. …Read More