Delivering growth while reducing deficits: lessons from the 1930s
Crafts, Nicholas. Conditions in the 1930s were very similar to those found today: interest rates were already low, the government deficit needed to come down, and the world economy was in disarray. Yet the UK economy grew by almost 20 per cent between 1933 and 1937. This success was built on the government announcing that prices […]
Το ελληνικό και ευρωπαϊκό αδιέξοδο
Χατζησταύρου, Φιλίππα. Στο σημερινό κλίμα αυξανόμενης πολιτικής και οικονομικής αβεβαιότητας, δύο διαδικασίες λαμβάνουν χώρα ταυτόχρονα στην Ευρώπη. Από τη μία πλευρά, η οικονομική κρίση είναι η εκδήλωση της κρίσης των κρατών που βρίσκονται σε θέση αδυναμίας απέναντι στις ανησυχητικές συνέπειες των διεθνών εμπορικών, οικονομικών και χρηματοοικονομικών συναλλαγών. Από την άλλη πλευρά, οι εθνικές πολιτικές ελίτ απομακρύνονται όλο […]
Winning the European Confidence Game
Rajan, Raghuram. If any solution to the European crisis proposed over the next few days is to restore confidence to the sovereign-bond markets, it will have to be both economically viable and politically palatable to rescuers and rescued alike. This means paying attention not just to the plan’s technical details, but also to appearances. Πηγή: […]
Default a World Away Has a Greek Lesson
Blejer, Mario, Levy-Yeyati, Eduardo. The inevitable is finally happening. Although new uncertainties tend to replace old ones — the focus has shifted to Italy’s troubles in the past few weeks — Greece is going through a default. It’s likely that this process will be guided by the broad outlines of an agreement reached between the […]
What Can Save the Euro?
Stiglitz, Joseph. Just when it seemed that things couldn’t get worse, it appears that they have. Even some of the ostensibly “responsible” members of the eurozone are facing higher interest rates. Economists on both sides of the Atlantic are now discussing not just whether the euro will survive, but how to ensure that its demise […]
How Costly Are Debt Crises?
Furceri, Davide, Zdzienicka, Aleksandra. The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The […]
The Draghi Deal
Mankiw, Greg. If I understand the news coming out of Europe correctly, the new head of the European Central Bank is offering a simple deal: If fiscal policy becomes hawkish, monetary policy will be dovish. In other words, as government spending is cut to put European governments on a sounder financial footing, monetary policy will do its best to ensure that any adverse […]
Do Eurozone leaders finally ‘get it’? Not quite yet
Wyplosz, Charles. This week’s announcements by German Chancellor Angela Merkel and ECB President Mario Draghi that the Eurozone is taking steps towards a closer fiscal union seem to be calming markets and restoring confidence in the decision-making of Eurozone leaders. This column argues, however, that the devil is still in the detail. Πηγή: Voxeu πλήρες […]
Eurobills, not Eurobonds
Hellwig, Christian, Philippon, Thomas. Fiscal union is now officially on the European agenda, but the issue of Eurobonds remains controversial. This column argues that the Eurozone needs Eurobills, ie debt of maturities less than a year. Issuing Eurobills – up to 10% of Eurozone GDP – would help with crisis management as well as financial […]
Agreement needed on liquidity provision to restore confidence in the eurozone
Micossi, Stefano. The multiple attempts to restore confidence in the eurozone over the 18 months that have passed since the first Greek rescue in May 2010, have clearly failed. Indeed, following each round of emergency measures agreed by the eurozone summits, matters have turned for the worse. This contribution by Stefano Micossi exhorts the leaders […]