A Crisis in Full Flight
Sinn, Hans-Werner. For a while, it looked as if the European Central Bank’s €1 trillion credit program to pump liquidity into Europe’s banking system had calmed global financial markets. But now interest rates for Italian and Spanish government bonds are on the rise again, closing in on about 6%. Πηγή: Project Syndicate πλήρες κείμενο
Austerity Has Only Just Begun
Johnson, Simon. In the early 1930s, much of Western Europe faced a situation very much like today — if countries wanted to keep their existing fixed exchange rates (a constant value for their currency), they needed to engage in considerable austerity. Governments held long and hard to the notion that to change the exchange rate […]
The Unbearable Slowness of Internal Devaluation
Krugman, Paul. The euro area’s economic strategy, such as it is, rests on two pillars: confidence through austerity, and “internal devaluation”. You know how the first is going; what about the second? Πηγή: The New York Times πλήρες κείμενο
The euro’s salvation lies in a little less Europe; not more Europe
Persaud, Avinash. Does Europe need a fiscal union to support its monetary union? This column argues that the cause of Europe’s problems is not public sector ill discipline but rather private sector ill discipline. In such a situation, it asks whether we should be trying to save a drowning man by putting him in a […]
Fiscal consolidation in reformed vs. unreformed labour markets
Turrini, Alessandro. Most EU countries have embarked on a path of fiscal austerity. Would the employment impact of fiscal consolidation be more harmful if reforms liberalising the labour market were taken at the same time? This column argues that fiscal consolidations increase unemployment more in regulated labour markets because employment protection is associated with a […]
How to Compete in Europe
Maystadt, Philippe. Interest in the European Union’s competitiveness did not begin with the euro crisis. Safeguarding Europe’s advanced position in the world economy was, after all, a key motivation behind the creation of the single market. Since then, interest in EU competitiveness has risen further, spurred in particular by the challenge posed by countries like […]
Europe After the Crisis
Moravcsik, Andrew. When European leaders opted for monetary union in 1992, they wagered that European economies would converge toward one another: The deficit-prone countries of southern Europe would adopt German economic standards — lower price inflation and wage growth, more saving and less spending — and Germany would become a little more like them, by […]
Mrs. Merkel’s Triumph?
Three weeks ago, Stein Ringem, Professor of Sociology at Oxford University, wrote a rather smug op-ed piece in the Financial Times entitled “Time for economists to eat humble pie . . . again,” ridiculing all the economists who had been criticizing Mrs. Merkel for not being more forthcoming in negotiating debt relief for Greece and […]
Europe’s Short Vacation
Roubini, Nouriel. Since last November, the European Central Bank, under its new president, Mario Draghi, has reduced its policy rates and undertaken two injections of more than €1 trillion of liquidity into the eurozone banking system. This led to a temporary reduction in the financial strains confronting the debt endangered countries on the eurozone’s periphery […]
A tale of two overhangs: The nexus of financial sector and sovereign credit risks
Acharya, Viral, Drechsler, Itamar & Schnabl, Philipp. The deadliest aspect of the Eurozone crisis is the tripwire linking the riskiness of banks and governments. This column provides evidence of the link and explains how it arose. It argues that given the near-chaos-like interaction, the zero risk weights on sovereign bonds should be revisited. Πηγή: Voxeu πλήρες […]