Panic-driven austerity in the Eurozone and its implications
De Grauwe, Paul, Yuemei Ji. Eurozone policy seems driven by market sentiment. This column argues that fear and panic led to excessive, and possibly self-defeating, austerity in the south while failing to induce offsetting stimulus in the north. The resulting deflation bias produced the double-dip recession and perhaps more dire consequences. As it becomes obvious […]
Why do large movements in exchange rates have small effects on international prices?
Amiti, Mary, Itskhoki, Oleg, Konings, Josef. Why is it that large movements in exchange rates have small effects on international prices? What does this mean for a crisis-stricken Eurozone? Using firm-level data, this column presents new research that investigates this exchange rate ‘disconnect’. Evidence suggests that the prices of the largest firms – with their disproportionately large […]
We may have avoided the cliffs, but we still face high mountains
Blanchard, Olivier. The new year has provided cheer for macroeconomic optimists. This column by Olivier Blanchard, one of the world’s leading economists, argues that important progress has been made in putting the crisis behind us, but that recovery continues to be hampered by the need for fiscal consolidation and a weak financial system. Πηγή: Voxeu […]
Misplaced concerns about central bank independence
Annunziata, Marco. Economists and policymakers are increasingly concerned that central bank-independence is being threatened. This column argues that central banks are not losing their independence, but that their room for manoeuvre is being eroded by a lack of structural reforms and fiscal adjustment. The financial crisis has caused mission creep, pushing central banks well beyond […]
Monetary policy and firing costs
Ester, Faia, Lechthaler, Wolfgang & Merkl, Christian. Eurozone labour markets are under stress. This column explores the connections between labour-market reform and macroeconomic policy, arguing that with its large differences in firing costs, normal Eurozone monetary policy is inappropriate for several Eurozone countries. If the efficacy of the ECB’s policy is impaired because there is no harmonisation […]
The Tyranny of Political Economy
Rodrik, Dani. There was a time when we economists steered clear of politics. We viewed our job as describing how market economies work, when they fail, and how well-designed policies can enhance efficiency. We analyzed trade-offs between competing objectives (say, equity versus efficiency), and prescribed policies to meet desired economic outcomes, including redistribution. It was […]
Commodity prices and growth: A changing relationship?
Lúcio Vinhas de Souza. Commodity price shocks are frequently considered among the most important potential threats to the global economy. However, since the second half of the 1980s, energy prices have experienced very large changes, with arguably limited effects on global GDP developments. This column presents evidence that oil shocks just aren’t what they used […]
Who really pays social security contributions and labour taxes?
González-Páramo, José Melguizo, Ángel . In spite of its policy relevance, academics and policymakers cannot agree on who bears the brunt of a tax on labour. This column uses meta-regression techniques to argue that economic institutions, the tax wedge definition, and the time horizon are crucial in determining who actually pays. Results based on 52 […]
More evidence that financial markets imposed excessive austerity in the eurozone
De Grauwe, Paul, Yuemei Ji. In this Commentary, Paul De Grauwe and Yuemei Ji provide evidence to suggest that movements in the spreads in the eurozone – i.e. the difference between national government bond rates and the German rate – between 2010 and the middle of 2012, when the ECB announced its OMT (outright monetary […]
Ethnic inequality
Alesina, Alberto, Michalopoulos, Stelios & Papaioannou, Elias. A large body of research has shown ethnic diversity to have a negative impact on development. This column suggests that it is the unequal concentration of wealth across ethnic lines that is detrimental for development rather than diversity per se. It shows that ethnic inequality, measured using ethno-linguistic maps and […]