Krugman, P., (2013), “The Money Trap”, The New York Times, 14 November. When Greece hit the skids almost four years ago, some analysts (myself included) thought that we might be seeing the beginning of the end for the euro, Europe’s common currency. Others were more optimistic, believing that tough love — temporary aid tied to reform — would soon produce recovery. Both camps were wrong. What we actually got was …Read More

Stevis, M., (2013), “Statistics Show Bailout Countries’ Slide Away from EU Targets”, The Wall Street Journal, 29 October. Euro-zone countries in bailout programs have slipped away from the European Union’s targets for economic and social performance, a number of detailed statistical indicators show. The backtracking was made evident Tuesday when Eurostat, the EU statistics agency, presented aggregated data on a set of goals that form Europe’s 2020 Strategy. The program …Read More

Wickens, M. and Polito, V., (2013), “A fiscal perspective on EU sovereign credit ratings: Did the credit-rating agencies get them right?”, VoxEU, 30 October. A good credit rating has become a key fiscal objective, even if it requires austerity when unemployment is high. Recent experience has raised doubts about the sovereign ratings provided by the credit-rating agencies. This column suggests a new way to measure credit ratings based on a …Read More

Wren-Lewis, S., (2013), “The ‘Official’ Cost Of Austerity”, Social Europe Journal, 29 October. Well, not quite, but probably as close as we will ever get. In a new paper, Jan in‘t Veld uses the European Commission’s QUEST model to estimate the impact of fiscal consolidation in the Eurozone (EZ) from 2011 to 2013. The numbers in the table below include spillover effects from other EZ country fiscal consolidations, so they …Read More

Sinn, H.W., (2013), “In Praise of Debt Ceilings”, Project Syndicate, 17 October. The wrangling about raising the US government’s borrowing limit – now thankfully over, at least for a few months – underscores the hazards posed by excessive state indebtedness. Governments nowadays are essentially running gigantic redistribution machines that steer funds from taxpayers to transfer recipients and other beneficiaries of public expenditure. The latter permanently ask for more, while the …Read More

Wright, T., (2013), “The Periphery Six”, Project Syndicate, 14 October. Cyprus, Greece, Ireland, Italy, Portugal, and Spain share a problem. With massive debt, no control over monetary policy, and no leeway for fiscal stimulus, they appear headed for a lost decade of high unemployment and low GDP growth. Such a path would drain the political establishment of legitimacy and prevent a real recovery in Europe. With structural reforms having proved …Read More

Soros, G., (2013), “Angela Merkel’s Pyrrhic Victory”, Project Syndicate, 07 October. As far as Germany is concerned, the drama of the euro crisis is over. The subject was barely discussed in the country’s recent election campaign. Chancellor Angela Merkel did what was necessary to ensure the euro’s survival, and she did so at the least possible cost to Germany – a feat that earned her the support of pro-European Germans …Read More

Roubini, N., (2013), “The Eurozone’s Calm before the Storm”, Project Syndicate, 30 September. A little more than a year ago, in the summer of 2012, the eurozone, faced with growing fears of a Greek exit and unsustainably high borrowing costs for Italy and Spain, appeared to be on the brink of collapse. Today, the risk that the monetary union could disintegrate has diminished significantly – but the factors that fueled …Read More

Kopczuk, W., Marion, J., Muehlegger, E. and  Slemrod, J., (2013), “Tax incidence in the presence of tax evasion”, VoxEU, 30 September. Tax evasion and noncompliance reduces government revenue and exacerbates the problem of increasing debt. Standard economic theory predicts that the identity of the tax remitter shouldn’t affect outcomes – but this ignores the possibility of evasion. This column provides evidence that in the presence of evasion, both the amount …Read More