Coulter, S., (2013), “Investing in Europe’s physical and knowledge infrastructure”, Policy Network, 21 October. Europe would benefit from extra investment in both its physical and knowledge infrastructure – the two are necessities, not alternatives. But what are the political choices and impediments to an EU investment and growth agenda? With Europe’s debt crisis receding for the moment and the economic numbers slowly ticking up, heads are beginning to lift up …Read More
The European crisis in the context of historical trilemmas
Bordo, M. and James, H., (2013), “The European crisis in the context of historical trilemmas”, VoxEU, 19 October. The Eurozone’s tangle of conflicting goals – a series of ‘trilemmas’ – is not without precedent. This column argues that it is reminiscent of the interwar situation. The interwar slump was so intractable not just due to financial issues, but also a crisis of democracy, of social stability, and of the international …Read More
To Save Europe, Free the Markets
Hollenbeck, F., (2013), “To Save Europe, Free the Markets”, The Mises Institute, 19 October. The current European economic strategy is to kick the can down the road. Debt levels in almost all European countries continue to rise and growth seems to be a long forgotten memory. The day of reckoning is around the corner, as Rudi Dornbush once warned, “[t]he crisis takes a much longer time coming than you think, …Read More
Unemployment, labour-market flexibility and IMF advice: Moving beyond mantras
Blanchard, Ο., Jaumotte, F. and Loungani, P., (2013), “Unemployment, labour-market flexibility and IMF advice: Moving beyond mantras”, VoxEU, 18 October. The state of labour markets in advanced economies remains dismal despite recent signs of growth. This column explains the IMF’s logic behind the advice it provided on labour markets during the Great Recession. It argues that flexibility is crucial both at the micro level, i.e. on worker reallocation, and at …Read More
In Praise of Debt Ceilings
Sinn, H.W., (2013), “In Praise of Debt Ceilings”, Project Syndicate, 17 October. The wrangling about raising the US government’s borrowing limit – now thankfully over, at least for a few months – underscores the hazards posed by excessive state indebtedness. Governments nowadays are essentially running gigantic redistribution machines that steer funds from taxpayers to transfer recipients and other beneficiaries of public expenditure. The latter permanently ask for more, while the …Read More
Making Markets Work
Aubrey, T., (2013), “Making Markets Work”, Policy Network, October. How Effective Regulation Reduces Reliance on Taxation The complacency with which an ever increasing amount of tax payers’ money was used to counter the worst excesses of the market has weakened centre-left parties in the fall-out from the financial crisis. This form of redress is not only no longer politically viable, but it also fails to address the underlying cause of …Read More
Sovereigns versus banks: Crises, causes and consequences
Jordà,O., Schularick, M. and Taylor, A., (2013), “Sovereigns versus banks: Crises, causes and consequences”, VoxEU, 18 October. In the aftermath of the global financial crisis, few would dispute the risks of excessive borrowing. But which debts should one worry about – public or private? This column presents new research on the interplay of public and private debts since 1870 in 17 advanced economies. History demonstrates that excessive private-sector borrowing plays …Read More
On graduation from fiscal procyclicality
Frankel, J., Vegh, C. and Vuletin, G., (2013), “On graduation from fiscal procyclicality”, Journal of Development Economics, 100(1):32-47. In the past, industrial countries have tended to pursue countercyclical or, at worst, acyclical fiscal policy. In sharp contrast, emerging and developing countries have followed procyclical fiscal policy, thus exacerbating the underlying business cycle. We show that, over the last decade, about a third of the developing world has been able to …Read More
Fiscal Consolidation in the Euro Area: How Much Can Structural Reforms Ease the Pain?
Anderson, D., Hunt, B. and Snudden, S., (2013), “Fiscal Consolidation in the Euro Area: How Much Can Structural Reforms Ease the Pain?”, International Monetary Fund, Working Paper No.13/211, October. The IMF’s Global Integrated Monetary and Fiscal model (GIMF) is used to examine the scope for structural reforms in the euro area to offset the negative impact of fiscal consolidation required to put public debt back on a sustainable path. The …Read More
Bad and Good News on Euro Area Inflation
Watt, A., (2013), “Bad and Good News on Euro Area Inflation”, Social Europe Journal, 16 October. The latest euro area monthly inflation numbers are out and manage to give cause for both gloom and cheer. First the bad news: inflation is too low. The euro area average figure of just 1.1% is a cause for concern because it is so low – only a little over half what the ECB …Read More