Schoder, C., Proano, C. and Semmler, W., (2013), “The Role of Financial Stress in the Sovereign Debt-Output Nexus, and in Economic Activity”, EconoMonitor, 18 November. Since the outbreak of the euro area crisis, the link between a country’s macroeconomic performance and the level of its sovereign debt has become a central topic in the economic debate. Now, the recent showdown in the U.S. Congress over raising the country’s debt ceiling …Read More

Lizoain, D., (2013), “The Jobs Recovery Is Always Two Years Away”, Social Europe Journal, 18 November. Is the jobs recovery around the corner? A few week ago, the European Commission published its latest economic forecast. Unemployment in the Euro area is projected to drop from 12.2% in 2014 to 11.8% in 2015. This is seemingly good news. The bad news is that the Commission also predicted that unemployment would begin …Read More

Eberhardt, M. and Presbitero, A., (2013), “Public debt and economic growth: There is no ‘tipping point’”, VoxEU, 17 November. The idea that there is a common tipping point in the relationship between public debt and economic growth is still widespread. However, this is likely due to a misinterpretation of the existing evidence. Once we allow for the relationship between debt and growth to be country-specific, there is limited evidence supporting …Read More

Wolf, G., (2013), “Governments must follow the ECB’s rate cut with policy action”, Bruegel, 13 November. The Eurozone is still at risk of falling into deflation. Euro area core inflation rates, i.e. inflation rates excluding volatile energy and food prices, have been falling since late 2011. Inflation expectations two years ahead are hardly above one percent and even at a 5 year outlook, market-determined inflation forecast is at 1.44%. So …Read More

Wood, R., (2013), “Europe: The Failure of Internal Devaluation”, EconoMonitor, 13 November. Quite apart from the resolution of debt and banking/credit problems, differences in competitiveness, and external account imbalances, are central considerations impacting on the success or failure of the European experiment with a common currency.  This short article looks beyond simple cross-country  comparisons of unit labour cost trends and evaluates the role that austerity policies have played in relation …Read More

Sinn, H.W., (2013), “Why Draghi was wrong to cut interest rates”, The Financial Times, 13 November. Europe fears the Japanese disease. In Japan, the gross domestic product deflator – a broad measure of the price level – fell by about 1.2 per cent a year from 1999 to 2013. Today it is as low as it was in 1980. This was a catastrophe, which Japan may only now be overcoming …Read More

Wolf, M., (2013), “Why Draghi was right to cut rates”, The Financial Times, 12 November. Τhe monetary policy of the European Central Bank has been too tight. This is shown in the fall of core annual inflation to just 0.8 per cent in the year to October 2013. The case for the monetary easing undertaken last week was overwhelming. Indeed, it was long overdue. Yet, it has been leaked, the …Read More

Buchheit, L., Weder di Mauro, B., Gelpern, A.,  Gulati, M., Panizza, U. and Zettelmeyer, J., (2013), “Revisiting sovereign bankruptcy”, VoxEU, 12 November. Sovereign-debt crises occur regularly and often violently. The recent debt crisis in Greece almost led to the collapse of the euro. Yet, there is no legally and politically recognised procedure for restructuring the debt of bankrupt sovereigns. Procedures of this type have been periodically debated – most recently, …Read More

Krugman, P., (2013), “Germany’s lack of reciprocity”, The New York Times, 12 November. Huge tensions over the ECB rate cut, with a split on the board and many German economists protesting. As usual, a lot of it is about the perception that those lazy southern Europeans are getting a free ride: A commentary by the chief economist of the financial weekly Wirtschaftswoche called the decision a “diktat from a new …Read More