Delgado, M., Ketels, C., Porter, M. & Stern, S. (2014) “Deep roots or current policies – what drives sustained prosperity differences across locations?“, VoxEU Organisation, 18 September.   There is a consensus among economists that ‘deep roots’ – geography, natural endowments, and institutions – are important determinants of prosperity differences across countries. This column argues that deep roots matter, but they are neither the whole story nor an excuse for …Read More

Atkeson, Α., Eisfeldt, Α. & Weill, P. O. (2014) “Entry and Exit in OTC Derivatives Markets“, VoxEU Organisation, 17 September.   Entry and trading in over-the-counter (OTC) derivatives markets have received considerable attention. However, many critical questions remain unaddressed. This column describes a formal study of banks’ incentives to enter and trade in OTC derivatives markets. In equilibrium, only large banks enter to become dealers, and middle-sized banks only enter …Read More

Mody, Α. & Riley, Ε. (2014) “Why does Italy not grow? – The Italian economy has barely grown since it joined the euro area in 1999“, Bruegel Institute, 09 September.   In April this year, the Italian debt-to-GDP ratio was expected to peak by year-end at 135 percent of GDP. That projection assumed a real GDP growth rate of 0.6 percent and inflation of about 0.7 percent. The projected decline …Read More

Korte, J. & Steffen, S. (2014) “A ‘sovereign subsidy’ – zero risk weights and sovereign risk spillovers“, VoxEU Organisation, 07 September.   European banking regulation assigns a risk weight of zero to sovereign debt issued by EU member countries, making it an attractive investment for European banks. This column defines a ‘sovereign subsidy’ as a new measure quantifying to what extent banks are undercapitalised due to the zero risk weights. …Read More

EconMatters (2014) “European Bond Market: Bubble of all Bubbles!“, Global Market Economics Matters, 27 August.   European Bond Rush Right now investors in European Bonds are running over each other all in an effort to front run what the Big Banks have been begging the ECB to begin a bond buying program similar to the United States’ QE bond buying program.  Tourism has its Limitations It is hilarious as European …Read More

Giavazzi, F. & Tabellini, G. (2014) “How to jumpstart the Eurozone economy“, VoxEU Organisation, 21 August.   The stagnating Eurozone economy requires policy action. This column argues that EZ leaders should agree a coordinated 5% tax cut, extension of budget deficit targets by 3 or 4 years, and issuance of long-term public debt to be purchased by the ECB without sterilisation. The mantra is that once again it is up …Read More