Schoder, C., Proano, C. and Semmler, W., (2013), “The Role of Financial Stress in the Sovereign Debt-Output Nexus, and in Economic Activity”, EconoMonitor, 18 November. Since the outbreak of the euro area crisis, the link between a country’s macroeconomic performance and the level of its sovereign debt has become a central topic in the economic debate. Now, the recent showdown in the U.S. Congress over raising the country’s debt ceiling …Read More
Lizoain, D., (2013), “The Jobs Recovery Is Always Two Years Away”, Social Europe Journal, 18 November. Is the jobs recovery around the corner? A few week ago, the European Commission published its latest economic forecast. Unemployment in the Euro area is projected to drop from 12.2% in 2014 to 11.8% in 2015. This is seemingly good news. The bad news is that the Commission also predicted that unemployment would begin …Read More
Eberhardt, M. and Presbitero, A., (2013), “Public debt and economic growth: There is no ‘tipping point’”, VoxEU, 17 November. The idea that there is a common tipping point in the relationship between public debt and economic growth is still widespread. However, this is likely due to a misinterpretation of the existing evidence. Once we allow for the relationship between debt and growth to be country-specific, there is limited evidence supporting …Read More
Dobbs, R., Lund, S., Koller, T. and Shwayder, A., (2013), “QE and ultra-low interest rates: Distributional effects and risks”, McKinsey Global Institute, Discussion Paper, November. There is widespread consensus that the conventional and unconventional monetary policies that world’s major central banks implemented in response to the global financial crisis prevented a deeper recession and higher unemployment than there otherwise would have been. These measures, along with a lack of demand …Read More
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
Wolf, G., (2013), “Governments must follow the ECB’s rate cut with policy action”, Bruegel, 13 November. The Eurozone is still at risk of falling into deflation. Euro area core inflation rates, i.e. inflation rates excluding volatile energy and food prices, have been falling since late 2011. Inflation expectations two years ahead are hardly above one percent and even at a 5 year outlook, market-determined inflation forecast is at 1.44%. So …Read More
OECD, (2013), Government at a Glance 2013, Paris: OECD Publishing. Government at a Glance 2013 provides readers with a dashboard of key indicators assembled with the goal of contributing to the analysis and international comparison of public sector performance. Indicators on government revenues, expenditures, and employment are provided alongside key output and outcome data in the sectors of education and health. Government at a Glance also includes indicators on key …Read More
Wood, R., (2013), “Europe: The Failure of Internal Devaluation”, EconoMonitor, 13 November. Quite apart from the resolution of debt and banking/credit problems, differences in competitiveness, and external account imbalances, are central considerations impacting on the success or failure of the European experiment with a common currency. This short article looks beyond simple cross-country comparisons of unit labour cost trends and evaluates the role that austerity policies have played in relation …Read More
Dell’Ariccia, G. and Ratnovski, L., (2013), “Bailouts and Systemic Insurance”, International Monetary Fund, WP/13/233, November. We revisit the link between bailouts and bank risk taking. The expectation of government support to failing banks creates moral hazard—increases bank risk taking. However, when a bank’s success depends on both its effort and the overall stability of the banking system, a government’s commitment to shield banks from contagion may increase their incentives to …Read More
Sinn, H.W., (2013), “Why Draghi was wrong to cut interest rates”, The Financial Times, 13 November. Europe fears the Japanese disease. In Japan, the gross domestic product deflator – a broad measure of the price level – fell by about 1.2 per cent a year from 1999 to 2013. Today it is as low as it was in 1980. This was a catastrophe, which Japan may only now be overcoming …Read More
