Mitchell, B. (2014) “IMF attacks the Stability and Growth Pact“, Bill Mitchell Blog, 26 June.   The IMF recently called on the euro-zone leaders to In its 2014 Consultation – 2014 Article IV Consultation with the Euro Area Concluding Statement of the IMF Mission – (an annual event the IMF does with each contributing member) the IMF said that the Stability and Growth Pact (SGP) in the euro-zone “has become …Read More

Pascouau, Y. (2014) “The European Council’s strategic guidelines and immigration: can the EU be bold and innovative?“, European Policy Centre Commentary, 25 June.   The agenda of the June 2014 EU Summit will be particularly heavy. Alongside issues related to the conclusion of the European Semester, the climate and energy framework, possible debates about Ukraine, Iraq and Syria, EU leaders will have to decide on two key dossiers: the nomination …Read More

Ball, M. L. (2014) “Long-Term Damage from the Great Recession in OECD Countries“, NBER Working Paper No. 20185, May.   This paper estimates the long-term effects of the global recession of 2008-2009 on output in 23 countries. I measure these effects by comparing current estimates of potential output from the OECD and IMF to the path that potential was following in 2007, according to estimates at the time. The losses …Read More

Haliassos, M. (2014) “The Fiscal Crisis as a Crisis in Trust“, Goethe University Frankfurt, Center for Financial Studies and SAFE, Frankfurt: 12 May.   The sources of the fiscal crisis have been different, but the prescribed measures amount to two: achieve budget surpluses to start reducing the size of the debt, and undertake the necessary reforms to create or boost the productive base, so as to make repayment of the …Read More

Darvas, Z. & Pia Hüttl, P. (2014) “Despite lower yields, euro-periphery is not yet out of the woods – while the public debt ratio is expected to fall, the debt trajectory remains highly vulnerable to negative growth, primary balance and interest rate shocks“, Working Paper – European Macroeconomics, Bruegel Association, 18 Ιουνίου.   Following Ireland, Portugal has also exited its financial assistance programme in a clean way, namely without any …Read More

Hendry, F. D., Mizon, E. G. (2014) “Why DSGEs crash during crises“, VoxEU Organisation, 18 June.   Many central banks rely on dynamic stochastic general equilibrium models – known as DSGEs to cognoscenti. This column – which is more technical than most Vox columns – argues that the models’ mathematical basis fails when crises shift the underlying distributions of shocks. Specifically, the linchpin ‘law of iterated expectations’ fails, so economic …Read More

Stegeman, H. (2014) “The ill-advised rigidity of the 2% inflation target“, Pieria Network, 16 June.   Our macroeconomic policy is largely based on the theory mainly developed in the post-war years, and more particularly at the time of the Great Moderation. This was the period of steady, reasonably predictable economic growth from the beginning of the 1980s until the crisis of 2007/2008 and the subsequent Great Recession. As a result …Read More

Vegh, C. A. & Vultein, G. (2014) “The social impact of fiscal policy responses to crises“, VoxEU Organisation, 12 June.   The question of whether fiscal policy should be pro- or countercyclical has become increasingly relevant during the recession. This column provides causal evidence from South American countries showing the success of countercyclical policy in improving social indicators of economic success, combined with correlative evidence from Europe. This represents a …Read More

Mudde, C. (2014) “The European Parliament elections show the increasingly fragmented nature of European party systems“, LSE EUROPP, 12 June.   Most coverage of the European Parliament elections has noted the rise of several far-right and Eurosceptic parties across Europe. Cas Mudde argues, however, that a more important trend was toward increasingly fragmented party systems. Presenting a series of numbers from the elections, he illustrates that ‘big parties’ are experiencing …Read More