Current Account ‘Core-Periphery Dualism’ in the EMU
Tatiana Cesaroni, Roberta De Santis. Current account dispersion within EU member states has been increasing since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process that is able to stimulate a long-run rebalancing, as neoclassical theory predicts. To shed light on the issue this paper investigates […]
Reflections on the new ‘Secular Stagnation hypothesis’
Lawrence Summers. The notion that Europe and other advanced economies are suffering secular stagnation is gaining traction. This column by Larry Summers – first published in the Vox eBook “Secular Stagnation: Facts, Causes and Cures” – explains the idea. It argues that a decline in the full-employment real interest rate coupled with low inflation could […]
Global imbalances: Whither now?
Aqib Aslam, Samya Beidas-Strom, Marco E Terrones, Juan Yépez. Global current-account imbalances narrowed substantially over the past eight years. As a result, the systemic risks associated with these imbalances have decreased. This column argues that despite this narrowing, the net creditor and debtor positions diverged further. Some large debtor economies remain exposed to changes in […]
Why is financial stability essential for key currencies in the international monetary system?
Linda Goldberg, Signe Krogstrup, John Lipsky, Hélène Rey. The dollar’s dominant role in international trade and finance has proved remarkably resilient. This column argues that financial stability – and the policy and institutional frameworks that underpin it – are important new determinants of currencies’ international roles. While old drivers still matter, progress achieved on financial-stability […]
Lithuania changes the ECB’s voting system
Merler, Silvia. Lithuania will become the 19th member of the Euro area on the 1st of January, following Wednesday’s Council endorsement. The most important part of the story – however – is not that someone is still brave enough to join the Euro area, but that Lithuania’s accession will trigger a change in the voting […]
Monetarism and the Great Depression
Last Friday, Scott Sumner posted a diatribe against the IS-LM triggered by aset of slides by Chris Foote of Harvard and the Boston Fed explaining how the effects of monetary policy can be analyzed using the IS-LM framework. What really annoys Scott is the following slide in which Foote compares the “spending (aka Keynesian) hypothesis” and the “money […]
It takes more than two to tango: Cry, but not for Argentina, nor for the holdouts
Frankel, Jeffrey. The US court ruling forcing Argentina to pay its hold-out creditors has big implications. This column argues that some of them are particularly worrying. The court ruling undermines the possibility of negotiated re-structuring of unsustainable debt burdens in future crises. In the future, it will not be not enough for the debtor and […]
Enhancing the transparency of the Bank of England’s Inflation Report
Jack McKeown, Lea Paterson. The Bank of England has introduced a series of changes aimed at enhancing the transparency of its flagship communication vehicle for monetary policy – the Inflation Report. This column by two BoE economists sets the rationale for these changes in the context of the economic literature. Πηγή: Voxeu πλήρες κείμενο
Reconciling Hayek’s and Keynes’ views of recessions
Beaudry, Paul, Galizia, Dana, Portier, Franck. Hayek viewed recessions as working out excessive investments; Keynes viewed them as demand shortages. This column argues that they may not be as mutually exclusive as many think. Recessions may reflect periods of liquidation but this may be associated with inefficient adjustment involving unemployment and precautionary savings. Stimulative policy […]
Disappearing government bond spreads in the eurozone – Back to normal?
De Grauwe, Paul Yuemei Ji. Since the announcement of the Outright Monetary Transactions (OMT) programme by Mario Draghi, President of the ECB, in 2012, the government bond spreads began a strong decline. This paper finds that most of this decline is due to the positive market sentiments that the OMT programme has triggered and is not […]