European Central Bank/ECB staff macroeconomic projections for the euro area, March 2017 The economic recovery in the euro area is projected to firm further, at a pace slightly above previous expectations. The expected global recovery and resilient domestic demand, supported by the very accommodative monetary policy stance, past progress made in deleveraging across sectors and a continued improvement in the labour market are projected to sustain the recovery over the projection horizon. The recent oil …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
The ECB Faces a Balance Sheet Dilemma
DiMartino Booth, Danielle, (2017), “The ECB Faces a Balance Sheet Dilemma”, BloombergView, 9 March Nature versus nurture. That philosophical debate is more pertinent than ever when it comes to the interventionist efforts of central banks that seek to will their economies back onto a sustainable growth path. But even the noblest of intentions can bump up against limitations when nature, in this case the free functioning of financial markets, is …Read More
The Commission’s White Paper on the Future of Europe – a case of what might have been
Begg, Iain , (2017), “The Commission’s White Paper on the Future of Europe – a case of what might have been…”, EUROPP, 9 March Last week, the European Commission published its White Paper on the Future of Europe (WP), its attempt to set out the options for the development of the European Union. It explicitly rejects the narrow choice between more or less, offering instead a range of scenarios described as ‘neither mutually …Read More
How to re-employ the Spanish long-term unemployed
Bentolila, Samuel, Pérez, Jose Ignacio García , Jansen, Marcel , (2017), “How to re-employ the Spanish long-term unemployed”, Vox Eu, 9 March One of the most tangible legacies of the Great Recession is a surge in the incidence of long-term unemployment, especially in Spain. This is not a new problem – as the title of the 1995 CEPR report, Spanish Unemployment: Is There a Solution?, attests (Andres et al. 1995) – …Read More
The ECB’s ‘High-Class Problem’
Emons, Ben, (2017), “The ECB’s ‘High-Class Problem’”, BloombergView, 7 March The European Central Bank has been in a difficult position when it comes to addressing inflation with conventional policy. The main reason is that, during the debt crisis, the bank faced a trade-off between stabilizing European sovereign bonds, consumer inflation and lending. Financial stress from sovereign bonds spilled over into the real economy and left the ECB with residual deflation, high …Read More
Germany’s Misunderstood Trade Surplus
Fratzscher, Marcel, (2017), “Germany’s Misunderstood Trade Surplus”, Project Syndicate, 7 March Now that Germany’s current-account surplus has reached a record €270 billion ($285 billion), or close to 8.7% of GDP, the ongoing debate about its economic model has intensified. Eurozone politicians and Donald Trump’s administration in the United States are each blaming the other for the economic imbalance; and all are blaming the euro. Relevant Posts Merler, Sylvia, (2017), “Is Germany …Read More
How the Euro Could Break Up—or Be Saved
Wishart, Ian, Rojanasakul, Mira, Fraher, John, (2017), “How the Euro Could Break Up—or Be Saved”, Bloomberg Politics, 7 March Talk about the breakup of the euro is fashionable again. With populists such as Marine Le Pen trying to storm the establishment and the popularity of the single currency in decline, executives and investors, including JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, say nothing can be ruled out. At the …Read More
Institutional investors and home bias in Europe’s Capital Markets Union
Darvas, Zsolt, Schoenmaker, Dirk , (2017), “Institutional investors and home bias in Europe’s Capital Markets Union”, Bruegel, March We highlight that existing indicators of equity home bias in the literature suffer from incomplete coverage because they consider only listed equities. We also consider unlisted equites and show that equity home bias is much higher than previous studies perceived. We also analyse home bias in debt securities holdings, and euro area …Read More