Boughton, J. (2014) “Restoring financial stability with economic growth“, VoxEU Organisation, 15 September.   The international financial system is not working fine and reforms of regional and global institutions are much needed. This column discusses some of the transformations that the IMF could implement in order to keep pace with the changes in the world economy. One problem for the credibility of the IMF is the G20 in its current …Read More

Turner, Α. (2014) “Facing Reality in the Eurozone“, Project Syndicate, 08 September.   European Central Bank President Mario Draghi’s recent speech at the annual gathering of central bankers in Jackson Hole, Wyoming, has excited great interest, but the implication of his remarks is even more startling than many initially recognized. If a eurozone breakup is to be avoided, escaping from continued recession will require increased fiscal deficits financed with ECB …Read More

Wren-Lewis, S. (2014) “Has the Great Recession killed the traditional Phillips Curve?“, Mainly Macro Blog, 14 July.   Before the New Classical revolution there was the Friedman/Phelps Phillips Curve (FPPC), which said that current inflation depended on some measure of the output/unemployment gap and the expected value of current inflation (with a unit coefficient). Expectations of inflation were modelled as some function of past inflation (e.g. adaptive expectations) – at …Read More

Wolff, B. G. (2014) “Europe needs new investment, not new rules – the EU must avoid another useless fight over its fiscal rules and instead use political capital to foster growth“, Bruegel Institute, 25 June.   As the European Council meets in Brussels this week, the big debate on what a new policy deal for Europe could look like has re-emerged. Opponents group themselves around the famous “stability” vs “growth” …Read More

Buti, M., Mohl, Ph., (2014), “Lacklustre investment in the Eurozone: Is there a puzzle?”, www.voxeu.org, 4 June. Investment in the Eurozone is forecast to remain below trend until 2015, with a particularly large shortfall in the periphery. Low investment reduces aggregate demand, thus lowering short-term growth, and it also hampers medium-term growth through its effect on the capital stock. This article highlights three causes of low Eurozone investment – reduced …Read More

Krusell, P. & Smith, T. (2014) “Is Piketty’s ‘Second Law of Capitalism’ fundamental?“, VoxEU Organisation, 01 June.   Thomas Piketty’s new book has been widely praised for its empirical contribution, but his prediction of rising inequality rests on economic theory. This column argues that Piketty’s pessimistic forecast is based on an extreme – and unrealistic – assumption about households’ saving behaviour. According to standard theory, the wealth–income ratio would increase …Read More

Mink, M. & de Haan, J. (2014) “Spillovers from systemic bank defaults“, VoxEU Organisation, 24 May.   To date, much uncertainty exists about how large the spillovers would be from the default of a systemically important bank. This column shows evidence that the market values of US and EU banks hardly respond to changes in the default risk of banks that the Financial Stability Board considers globally systemically important (G-SIBs). …Read More

Ladi, S. & Tsarouhas, D. (2014) “The Politics of Austerity and Public Policy Reform in the EU, Political Studies Review, 12: 171–180.   The European Union (EU) is at a critical juncture that will either trigger further integration or reinforce a mode of intergovernmental cooperation. The spread of market pressure to a growing number of states demonstrates that the crisis needs to be dealt with at the European and not just …Read More