Club Med and the Sun Belt: Lessons from adjustment within a monetary union
Dadush, Uri, Wyne, Zaahira, Ali, Shimelse. The US and the Eurozone are slowly recovering after the bursting of their huge housing bubbles. Yet the hardest-hit states in the US have adjusted more rapidly than the most troubled European economies. This column examines differences between the US and Eurozone monetary unions that can help explain why. Πηγή: Voxeu […]
Austerity is unavoidable after a bout of profligacy
Gros, Daniel. Despite the EZ doom and gloom discussion, the US and EZ are at roughly the same point in their recovery from the global crisis. This column argues that the ‘austerity kills’ narrative of Krugman and Layard misses the basic point. Public debt ratios without retrenchment would become unsustainable. The fact that austerity is […]
A simple model of multiple equilibria and default
Gros, Daniel. This Working Document by Daniel Gros presents a simple model that incorporates two types of sovereign default cost: first, a lump-sum cost due to the fact that the country does not service its debt fully and is recognised as being in default status, by ratings agencies, for example. Second, a cost that increases […]
Central Banks in Times of Crisis: The FED vs. the ECB
Gros, Daniel, Alcidi, Cinzia & Giovannini, Alessandro. Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The first ‘stage’ of the financial crisis (2007-09) was similar on both sides of the Atlantic, and the response was also quite similar. The second stage of the crisis is unique to […]
EU banking union disunites German economists
Birchler, Urs Bütler,Monika. Plans for an EZ banking union have been subjected to ‘dueling open letters’ by German-speaking economists. This column, by two Swiss-based economists, views the letters as closer than one thinks. The difference rests, not on economics, but on a judgement – will the the EU Summit’s promises be fulfilled, or is this […]
Paths to Eurobonds
Stijn, Claessens, Ashoka, Mody & Shahin, Vallée. This paper discusses proposals for common euro area sovereign securities. Such instruments can potentially serve two functions: in the short-term, stabilize financial markets and banks and, in the medium-term, help improve the euro area economic governance framework through enhanced fiscal discipline and risk-sharing. Πηγή: IMF πλήρες κείμενο
Towards a sustainable recovery
Rajan, Raghu. To understand how to achieve a sustained recovery from the Great Recession, we need to understand its causes. And identifying causes means starting with the evidence. Πηγή: forums.chicagobooth.edu πλήρες κείμενο
The creation of euro area financial safety nets
Bijlsma, Michael, Vallée, Shahin. The financial crisis has exposed the need to devise stronger and broader international and regional safety nets in order to deal with economic and financial shocks and allow for countries to adjust. Πηγή: Bruegel πλήρες κείμενο
Why the EU summit decisions may destabilise government bond markets
De Grauwe, Paul. Among the questions still remaining since last week’s summit of European leaders is whether the new measures will stabilise government bond markets. This column’s answer is ‘no’. Πηγή: Voxeu πλήρες κείμενο
Breaking the vicious cycle: Restoring balanced and sustainable growth in the global economy
Cecchetti, Stephen, Hofmann, Boris. The global economy is still suffering. This column assesses the structural adjustments, monetary and fiscal policy measures, and financial reforms that are needed to break the vicious cycle of weak growth, impaired financial systems, risks to fiscal sustainability and being propped up by monetary policy. Πηγή: Voxeu πλήρες κείμενο