Sapir, A., (2014), “France and Germany must both change economic strategy”, Bruegel Blog, 13 February. The euro was first and foremost a Franco-German project, not only politically but also economically. Thanks to its stability culture, Germany had a strong currency. At times, when the dollar was weak, the D-mark was even too strong, penalizing German exporters in favor of their European competitors. Germany was therefore keen to have France and …Read More

Guha, K., (2014), “Can Mario Draghi Beat Deflation?”, Bloomberg Opinion, 12 February. The European Central Bank may soon have to roll out the heavy artillery, in the form of an asset purchase program similar to those in the U.S., U.K. and Japan, to fight the specter of deflation. But in a currency union with 18 different sovereign bonds, the tough question will be what to buy. The best solution: Purchase …Read More

Mody A., (2014), “The ECB’s Bridge Too Far”, Project Syndicate, 11 Φεβρουαρίου. The German Constitutional Court’s recent decision to refer the complaint against the European Central Bank’s so-called “outright monetary transactions” to the European Court of Justice (ECJ) leaves the scheme’s fate uncertain. What is clear is that the economics behind OMT is flawed – and so is the politics. The OMT program arose in August 2012, when months of …Read More

Mody A., (2014), “Europhoria once again- should we view the recent fall in spreads and yields as a sign of confidence or as another overreaction?”  Bruegel Blog, 10 February. Europhoria was rampant in the euro’s first decade. Just before the onset of the crisis, the yields paid by the soon-to-be distressed Greek, Irish, and Portuguese sovereigns were almost indistinguishable from the yields paid by the German sovereign. Then it all …Read More

Fratzscher, M., (2014), “Germany’s Pyrrhic Victory”, Project Syndicate, 10 February. The German Constitutional Court has ruled against the European Central Bank’s pledge to buy potentially unlimited quantities of distressed eurozone countries’ government bonds, and has called on the European Court of Justice (ECJ) to confirm its decision. Until that happens, the “outright monetary transactions” (OMT) scheme is effectively dead, weakening the ECB’s ability to act as an effective and credible …Read More

Loungani, Pr., (2014), “Are Jobs and Growth Still Linked?”, iMFdirect, 7 Φεβρουαρίου. Over 200 million people are unemployed around the globe today, over a fifth of them in advanced economies. Unemployment rates in these economies shot up at the onset of the Great Recession and, five years later, remain very high. Some argue that this is to be expected given that the economy remains well below trend and press for …Read More

Sinn, H.-W., (2014), “Outright Monetary Infractions”, Project Syndicate, 10 February. The German Constitutional Court has delivered its long-awaited decision on the European Central Bank’s “outright monetary transactions” program. Since its launch in 2012, the OMT program has allowed the ECB to buy, if necessary, unlimited amounts of troubled eurozone countries’ government bonds, provided the affected countries subscribe to the rules of Europe’s rescue fund, the European Stability Mechanism.