IMF, (2018), “Regional Economic Outlook: Domestic Expansion Running into External Turbulence”, World Economic and Financial Surveys, November Economic activity continued to expand in the first half of 2018, albeit at a slower-than-expected pace, mainly in advanced Europe. Domestic demand, supported by stronger employment and wages, remains the main engine of growth. However, the external environment has become less supportive and is expected to soften further in 2019 owing to slowing global …Read More

Martin Hopner and Mark Lutter, (2018), “The diversity of wage regimes: why the Eurozone is too heterogeneous for the Euro”, European Political Science Review, Volume 10, Issue 1 Why did the transnational synchronization of wage inflation fail during the first 10 years of the euro? We analyze data from 1999 to 2008 for 12 euro members and estimate increases of nominal unit labor costs both in the overall economy and in …Read More

Pierluigi Balduzzi, Emanuele Brancati, Fabio Schiantarelli, (2018), “Crowding out risk: Sovereign debt, banks, and firms’ investment in Italy”, VoxEU, 9 November In its budget draft, the Italian government has decided to pursue an expansionary fiscal policy, increasing the deficit to 2.4% of GDP in 2019 and maintaining an expansionary posture for the following two years. The bulk of the deficit increase is due to a minimum universal income scheme and …Read More

Marcos Chamon, Julian Schumacher, Christoph Trebesch, (2018), “Sovereign bond pricing in the euro area: When legal clauses matter”, VoxEU, 6 November The discussion on sovereign debt restructuring in the euro area has recently focused on legal considerations, in particular on whether the legal framework should be reformed to make restructurings more ‘viable’, for example via new collective action clauses (Bénassy-Quéré et al. 2018, Tabellini 2018, Pisani-Ferry and Zettelmeyer 2018). Should …Read More

Jan Mazza, (2018), “The consequences of Italy’s increasing dependence on domestic debt-holders”, Bruegel, 6 November What could happen then, if the government indeed had to revise its estimates downward and provide a rebalancing of its fiscal position (either through increased revenues or lower expenditure)? Several signals point to the usual suspects: Italian residents, and their still substantial private wealth. On this, there is perhaps surprising agreement between the Italian ruling …Read More

Peter S. Goodman, (2018), “2 Views of Angela Merkel’s Legacy: Stoic Leadership, and Economic Malpractice”, The New York Times, 1 November But many economists take a less generous view of the German chancellor’s place in modern European history. Far from a hero who anchored the bloc under profound challenges, she played a leading role in amplifying an economic crisis, allowing it to erupt into an existential threat to the European …Read More

Kirkegaard J., (2018), “Italy-EU Budget Confrontation: Prospects for a Happy Ending”, Peterson Institute for International Economics, 5 November Perhaps predictably, the new anti-establishment Italian coalition government, which took office in May, is engaged in a confrontation with the European Commission over its expansionary budget. With a significantly larger deficit planned for the coming fiscal year, the budget conflicts with the EU’s fiscal rules and reneges on commitments made by the …Read More

Giang Ho and Rima Turk-Ariss, (2018), “The Labor Market Integration of Migrants in Europe: New Evidence from Micro Data”, IMF Working Paper, No. 18/232, 1 November This paper presents novel empirical evidence on the labor market integration of migrants across Europe. It investigates how successfully migrants integrate in 13 European countries by applying a unified framework to analyze a rich micro dataset with over ten million individuals surveyed between 1998 …Read More

Fernando Avalos and Emmanuel C Mamatzakis, (2018), “Euro area unconventional monetary policy and bank resilience”, BIS Working Papers, No 754, 2 November The ECB has deployed a broad array of unconventional monetary policy tools over the last few years. Those include negative interest rates, and several programmes of asset purchases and long-term liquidity provision, which we bundle together under the general label of “quantitative easing”. We study the impact of …Read More