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Is Germany a currency manipulator?

Merler, Sylvia, (2017), “Is Germany a currency manipulator?”, Bruegel, 6 February Paul Krugman argues that Navarro is right and wrong at the same time. Germany in effect has an undervalued currency relative to what it would have without the euro, against its neighbors. This is the result of a large real depreciation during the euro’s good years, which has only been partly reversed, because wages are downward sticky, and Germany …Read More

Low inflation in the euro area: Causes and consequences

Ciccarelli, Matteo, Osbat, Chiara, (2017), “Low inflation in the euro area: Causes and consequences”, ECB Occasional Paper Series No 181, January This paper investigates the causes and consequences of low inflation in the euro area after 2012 and analyses whether monetary policy has been successful in dampening the risks associated to low inflation. The paper finds that the missing inflation was primarily due to cyclical factors – domestic in the earlier part of …Read More

Making the best of the European single market

Aussilloux, Vincent, Benassy-Quere, Agnes, Fuest, Clemens, Wolff, Guntram B., (2017), “Making the best of the European single market”, Bruegel, 2 February Now more than ever, the EU needs to address concerns about the significant decline in productivity growth and the increasing perception of unfairness. Completing the single market would unlock the EU’s growth potential. At the same time, the EU should empower member states to fight inequality by helping them better …Read More

Bank competition and financial stability: The role of financial innovation

Marques-Ibanez,David, van Leuvensteijn, Michiel, (2017), “Bank competition and financial stability: The role of financial innovation”, VoxEu, 3 February An unprecedented process of deregulation took place in the banking sector in the three decades prior to the Global Crisis. This column argues that during periods of intense bank competition, financial innovation can compound the adverse effects of competition on stability. Coupled with strong competition, the significant use of one such innovation – securitisation …Read More

Euro area fiscal stance

Bańkowski,Krzysztof, Ferdinandusse, Marien, (2017), “Euro area fiscal stance”, ECB Occasional Paper Series No 182, January This paper analyses the appropriateness of the euro area fiscal stance. In this context, the paper presents the relevant definitions and how the euro area fiscal stance has evolved over time. Furthermore, it contains an evaluation of the appropriateness of the euro area aggregated fiscal stance set out in the European Commission’s Spring 2016 European Economic Forecast, concluding …Read More

Resolving Europe’s NPL burden: challenges and benefits

Constancio, Vitor, (2017), “Resolving Europe’s NPL burden: challenges and benefits”, Bruegel, 3 February Keynote speech by Vítor Constâncio, Vice-President of the ECB, at Bruegel event: “Tackling Europe’s non-performing loans crisis: restructuring debt, reviving growth” Relevant Posts Anastasiou, Dimitrios , Louri, Helen, Tsionas, Mike, (2017), “Non-Performing Loans In The Euro Area: Are Core-Periphery Banking Markets Fragmented?”, Bank Of Greece, December 2016 European Central Bank, (2016), “Addressing market failures in the resolution of nonperforming …Read More

Reducing the uncertainty around exchange rate forecasts: A new model

Marcellino, Massimiliano, Abbate, Angela, (2017), “Reducing the ucnertainty around exchange rate forecasts: A new model”, VoxEu, 4 February Exchange rates are important contributors to business cycle fluctuations in open economies. Forecasting exchange rates is not an easy task, however, perhaps due to the instability of their relationship with economic drivers. This column introduces a model that also allows for changing volatility when forecasting exchange rates. Modelling time variation in the cross-rate relationships, …Read More

Will better insolvency standards help Europe’s debt deleveraging?

Lehmann, Alexander, (2017), “Will better insolvency standards help Europe’s debt deleveraging?”, Bruegel, 23 January Insolvency regimes in the euro area are on the whole costly, lengthy, and recover little value. A new directive proposed by the Commission sensibly aims to strengthen preventive restructuring and to give once-failed entrepreneurs a second chance. But to assist banks in their NPL workout judicial capacity will need to be built up, and regimes better …Read More

European Fiscal Union: Economic rationale and design challenges

Thirion, Gilles, (2017), “European Fiscal Union: Economic rationale and design challenges”, CEPS, No. 2017-01, January 2017 Proposals for different types of elements of a fiscal union have flourished in recent years, both from academic and policy circles. Since a fiscal union could take a constellation of various different forms, this paper first provides an analytical framework pinpointing the five key elements of a fiscal union. It takes stock of the …Read More

Is the Deflation Cycle Over?

Reinhart, Carmen, (2017), “Is the Deflation Cycle Over?”, Project Syndicate, 31 January Until the global financial crisis of 2008-2009, deflation had all but disappeared as a concern for policymakers and investors in the advanced economies, apart from Japan, which has been subject to persistent downward pressure on prices for nearly a generation. And now deflationary fears are on the wane again. By the mid-1960s, the advanced economies began an era …Read More