How central banks contributed to the financial crisis
Biggs, Michael, Mayer, Thomas. Even before the crisis, there were some who stressed that monetary policy should keep an eye on asset bubbles and the growth of credit. This column argues that the policy of inflation targeting, used widely in the 1990s and 2000s, did indeed lead to excessive credit growth that eventually bred financial […]
Confronting the jobs crisis under tight fiscal constraints
Clements, Benedict, Ruud de Mooij & Schwartz, Gerd. Many advanced country governments face the dual challenge of promoting job growth while pushing ahead with spending cuts. This column discusses how well-designed fiscal policy reforms can help boost employment without busting the government budget. Πηγή: Voxeu πλήρες κείμενο
Why early sovereign default could save the euro
Hau, Harald, Hege, Ulrich. The recent announcement by the ECB that it will start to buy Spanish and Italian sovereign debt has been warmly welcomed throughout Europe. But this column argues that by doing so the ECB is digging the euro’s grave. It says the solution is default, either through inflation or debt restructuring – […]
Europe should choose whether it wants Greece in or out
Pisani-Ferry, Jean. For the third time in three years the Europeans’ stance on Greece is economically inconsistent. The first time was in 2009-2010 after then prime minister George Papandreou indicated that he would need to file for assistance from the International Monetary Fund. The European response was to reject the principle of IMF intervention while […]
Making sense of Eurobond proposals
Claessens, Stijn, Mody, Ashoka & Vallee, Shahin. The Eurozone debate is awash with proposals for mutualising national debt. This column summarises and evaluates the main proposals – suggesting how they might be combined in a five-year path to a fiscal union. It stresses that short-term stability objectives will only work if they help to advance the agenda […]
One Money, (Too) Many Markets
Kotz, Hans-Helmut Kotz. Europe’s monetary union is screeching toward the abyss, unintentionally, but apparently inexorably. Greece will most likely not meet the criteria to receive further financial assistance from its eurozone partners and the International Monetary Fund. Europeans will then need to decide whether to let Greece go. The exit option would not improve Greece’s […]
Internal Devaluation, Inflation, and the Euro
Krugman, Paul. I’ve been writing for a long time about how the euro area needs more inflation. But I suspect that many readers don’t quite see how this ties into the macro story. So here’s something that may or may not clear things up — a stylized little model linking euro inflation and the adjustment […]
End of game? Don’t bet on it
Wyplosz, Charles. The EZ crisis is once again on the march; Spain and Italy are under pressure. This column argues that policymakers are likely to fall back once again on a failed approach to avoid admitting past errors. Ultimately, however, EZ leaders will come around to the only way forward – the ECB underwriting both […]
A Redemption Pact for Europe: Time to act now
Bofinger, Peter, Buch, Claudia, Feld, Lars, Franz, Wolfgang & Schmidt, Christoph. EZ leaders have failed to tame the crisis. This column presents the English language version of the new plan by the German Council of Experts to resolve the crisis via “redemption bonds” and accompanying institutional reforms. Πηγή: Voxeu πλήρες κείμενο
US unemployment: Neither natural nor unnatural
Calvo, Guillermo, Coricelli, Fabrizio & Ottonello, Pablo. Economic output in the US seems to have recovered since the Great Recession – but jobs have not. This ‘jobless recovery’ has led economists to argue that unemployment has reached a point where it can fall no further without further inflation. This column disagrees, suggesting the nature of the crisis […]