The doomsday cycle turns: Who’s next?
Johnson, Simon, Boone, Peter. Industrialised countries today face serious risks – for their financial sectors, for their public finances, and for their growth prospects. This column explains how, through our financial systems, we have created enormous, complex financial structures that can inflict tragic consequences with failure and yet are inherently difficult to regulate and control. […]
Fiscal rules: Timing is everything
Marzinottο, Βenedicta, Sapir, André. The strengthening of the European Union’s fiscal rules with the approval of the so-called ‘six-pack’, and the parallel worsening of economic conditions in Europe, re-opened the debate about the relationship between fiscal discipline and growth. Influential voices have argued against the EU’s perceived obsession with fiscal discipline, which risks being self-defeating […]
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 […]
The economic crisis: How to stimulate economies without increasing public debt
Wood, Richard. Quantitative easing and austerity have done little to stop the EZ’s periphery economies sliding towards depression. Policy Insight No. 62 argues that new money creation can finance deficits without increasing public debt. Πηγή: CEPR πλήρες κείμενο
Fiscal policy in developing countries: Escape from procyclicality
Frankel, Jeffrey, Vegh, Carlos & Vuletin, Guillermo. With the ongoing financial turmoil in Europe, many emerging market countries are now deemed less risky than so-called “advanced” countries. This column examines why this is the case and finds that the cyclicality of a country’s fiscal policy – a sign of its riskiness – is inversely correlated with the […]
Graduation from monetary policy procyclicality
Vegh, Carlos, Vuletin, Guillermo. How do emerging markets move from procyclical fiscal and monetary policies to countercyclical ones? This column argues that a key ingredient is stronger institutions. Start and stop, procyclical macroeconomic policies have been a chronic policy problem for emerging markets. Expansionary in good times and contractionary in bad times, booms become unmanageable credit […]
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 […]
Why a Breakup of the Euro Area Must Be Avoided: Lessons from Previous Breakups
Aslund, Anders. One of the big questions of our time is whether the Economic and Monetary Union (EMU) will survive. Too often, analysts discuss a possible departure of one or several countries from the euro area as little more than a devaluation, but Åslund argues that any country’s exit from the euro area would be […]
Europe’s Summer Reading List
Eichengreen, Barry. In August, Europeans head for the beach. The continent shuts down on the assumption that nothing of consequence will happen until everyone returns, suitably tanned, in September. Never mind the subprime crisis of August 2007 or, closer to home, the European monetary crisis of August 1992: the August holiday is a venerable tradition. […]
Government bonds and their investors: What are the facts and do they matter?
Andritzky, Jochen. Public debt held by non-residents has been on the rise over the last few decades – that is until the global crisis. This column looks at how the ownership of government bonds in the G20 and the Eurozone. It finds that increased foreign bondholders bring costs as well as benefits. Πηγή: Voxeu πλήρες […]