Darvas, Z. & Pia Hüttl, P. (2014) “Despite lower yields, euro-periphery is not yet out of the woods – while the public debt ratio is expected to fall, the debt trajectory remains highly vulnerable to negative growth, primary balance and interest rate shocks“, Working Paper – European Macroeconomics, Bruegel Association, 18 Ιουνίου.   Following Ireland, Portugal has also exited its financial assistance programme in a clean way, namely without any …Read More

Hendry, F. D., Mizon, E. G. (2014) “Why DSGEs crash during crises“, VoxEU Organisation, 18 June.   Many central banks rely on dynamic stochastic general equilibrium models – known as DSGEs to cognoscenti. This column – which is more technical than most Vox columns – argues that the models’ mathematical basis fails when crises shift the underlying distributions of shocks. Specifically, the linchpin ‘law of iterated expectations’ fails, so economic …Read More

Stegeman, H. (2014) “The ill-advised rigidity of the 2% inflation target“, Pieria Network, 16 June.   Our macroeconomic policy is largely based on the theory mainly developed in the post-war years, and more particularly at the time of the Great Moderation. This was the period of steady, reasonably predictable economic growth from the beginning of the 1980s until the crisis of 2007/2008 and the subsequent Great Recession. As a result …Read More

Vegh, C. A. & Vultein, G. (2014) “The social impact of fiscal policy responses to crises“, VoxEU Organisation, 12 June.   The question of whether fiscal policy should be pro- or countercyclical has become increasingly relevant during the recession. This column provides causal evidence from South American countries showing the success of countercyclical policy in improving social indicators of economic success, combined with correlative evidence from Europe. This represents a …Read More

Mudde, C. (2014) “The European Parliament elections show the increasingly fragmented nature of European party systems“, LSE EUROPP, 12 June.   Most coverage of the European Parliament elections has noted the rise of several far-right and Eurosceptic parties across Europe. Cas Mudde argues, however, that a more important trend was toward increasingly fragmented party systems. Presenting a series of numbers from the elections, he illustrates that ‘big parties’ are experiencing …Read More