The Economist, (2013), “Generations: On the meaning of inflation”, Free Exchange Economics Blog, 11 September. Inflation, like demand itself, is always and everywhere a monetary phenomenon. Milton Friedman was right about that. But while that’s a useful thing to know it’s not always the answer to the question we’re really asking about macroeconomic troubles. If you ask what America’s main macroeconomic problem is at the moment, one correct answer is …Read More
Is Europe out of the woods?
Eichengreen, B., (2013), “Is Europe out of the woods?”, Project Syndicate, 11 September. And what happened in Greece would not stay in Greece. Once the process of euro exit had started, there was no telling where it would stop. The general feeling was that the common currency was doomed. CommentsView/Create comment on this paragraphIn fairness, this dark prognosis was not universally embraced. My own favorite recollection of this period is …Read More
End to Crisis ‘Within Sight’ Says Barroso
Norman, L., (2013), “End to Crisis ‘Within Sight’ Says Barroso”, The Wall Street Journal, The Euro Crisis Blog, 11 September. Europe must move ahead on its banking union project to help the region exit an economic and debt crisis whose end is now “within sight,” the European Union’s top official said Wednesday. In his annual address to the European Parliament, European Commission President José Manuel Barroso said the region has “started …Read More
Countries with higher rates of taxation tend to have happier citizens
Binder, D., (2013), “Countries with higher rates of taxation tend to have happier citizens”, European Politics and Policy Blog, 10 September. What impact does a country’s level of taxation have on the happiness of its citizens? Using OECD data, David Binder assesses the relationship between high taxation levels and measures of citizen wellbeing/happiness. He finds that there is a correlation between high taxation and increased happiness, but that there are …Read More
Euro-Zone Unemployment Unlikely to Fall Quickly
Billington, I., (2013), “Euro-Zone Unemployment Unlikely to Fall Quickly”, The Wall Street Journal, The Euro Crisis Blog, 10 September. The euro zone may have emerged from recession this year, but unemployment is unlikely to fall quickly with companies less likely to hire staff in the final three months of the year than they were earlier in 2013, a survey of employers showed Tuesday. The quarterly Manpower Employment Outlook shows that, while there …Read More
Enhancing the global financial safety net through central-bank cooperation
Truman, E.W., (2013), “Enhancing the global financial safety net through central-bank cooperation”, www.voxeu.org, 10 September. Should we expect more global financial crises? This column argues that we should. Global financial crises are far from being a thing of the past because they are often caused by buildups of excessive domestic and foreign debt. To successfully address them and to limit negative spillovers, we need coordinated actions that prevent a contraction …Read More
Credit rating agencies and the Eurozone Crisis: What is the value of sovereign ratings?
Gaillard, N., (2013), “Credit rating agencies and the Eurozone Crisis: What is the value of sovereign ratings?”, www.voxeu.org, 9 September. Credit rating agencies didn’t anticipate the Eurozone Crisis and their ratings have been procyclical ever since. This column discusses research on the agencies’ recent performance. Since 2009, credit ratings have persistently lagged behind market spreads, suggesting that ratings have been more lenient with respect to Eurozone countries than generally believed. …Read More
Sovereign default risk and banks in Europe’s monetary union
Uhlig, Η., (2013), “Sovereign default risk and banks in Europe’s monetary union”, www.voxeu.org, 5 September. EZ banks are more exposed to their own nation’s government bonds than ever. This column argues that Eurozone members can now afford to tell their banks to diversify, but pressure from Germany, Austria, France and the ECB might be necessary. Defusing the pernicious entanglement between the Eurozone’s weak banks and weak sovereigns would reduce the …Read More
Low for how long? Estimating the ECB’s “Extended Period of Time”
Bletzinger, Τ., Wieland, V., (2013), “Low for how long? Estimating the ECB’s “Extended Period of Time”, www.voxeu.com, 5 September. The ECB has promised to keep interest rates low for an “extended period of time”. In a broad hint to the profession, President Draghi stressed a reasonable forecast of this period could be extracted from a monetary policy reaction function. This column presents one such forecast based on published macro forecasts …Read More
Eurozone recession ends — but it’s too soon to celebrate
De Grauwe, P., (2013), “Eurozone recession ends — but it’s too soon to celebrate”, edition.cnn.com, 18 August. Spring is in the air. That’s the feeling in Brussels and Berlin. The latest economic numbers issued by the European Commission seem to indicate that the eurozone has slowly crawledout of the recession.