Why economics needs economic history
Kevin O’Rourke. The current economic and financial crisis has given rise to a vigorous debate about what training graduate and undergraduate economics students are receiving. This column argues that knowledge of economic and financial history isn’t taught enough, yet it is crucial in thinking about the economy. It’s also replete with opportunities for instructors trying to […]
When is the time for austerity?
Taylor, Alan. Recent austerity policies have been guided by ideology rather than research. This column discusses research that reconciles disparate estimates of fiscal multipliers in the literature. It finds that common identification assumptions are problematic. Matching methods based on propensity scores show how contractionary austerity really is, especially in economies operating below potential. Πηγή: Voxeu […]
Short-time work: Does it save jobs?
Balleer, Almut, Gehrke, Britta, Lechthaler, Wolfgang & Merkl, Christian. During the Great Recession, 25 of 33 OECD countries have used some version of short-time work, a form of publicly subsidised working-time reductions. This column argues that despite its popularity, knowledge of the macroeconomic effects of this measure is limited. Using Germany as a case study, it’s […]
Big banks and macroeconomic outcomes
Bremus, Franziska, Buch, M. Claudia, Russ, Katheryn & Schnitzer, Monika. The regulation of big banks has been in the spotlight for many reasons. This column adds to the list. Examining evidence for more than 80 countries for the years 1995-2009, banking systems are shown to be highly concentrated. In many cases, the banks are so big that bank-specific credit-growth […]
Can the European Central Bank control interest rates?
Daluiso, Giuseppe, Papadia, Francesco. The short answer is a hesitant yes, bordering with a timid no. The longer answer starts by noting that the mechanism transmitting the monetary policy impulse from the European Central Bank to the economy is, in essence, a chain with three links: first, the official rate(s) of the ECB; second, the rate […]
The Distributional Effects of Fiscal Consolidation
Ball, Laurence, Furceri, Davide, Leigh, Daniel & Loungani, Prakash. This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The […]
Explaining the global Great Recession
Bacchetta, Philippe. How can we explain the rapid spread of the Great Recession? This column focuses on international co-movements to explain its global nature, developing a model that shows the global panic to be a rational self-fulfilling mechanism and global co-movements to occur even in countries without much economic integration. Perhaps most importantly, the global […]
A step in the dark: unconventional monetary policy after the crisis
Rajan, Raghuram. Two competing narratives of the sources of the crisis, and attendant remedies, are emerging. The first, and the better known diagnosis, is that demand has collapsed because of the high debt build up prior to the crisis. The households (and countries) that were most prone to spend cannot borrow any more. To revive […]
Central bank cooperation during the great recession
Papadia, Francesco. During the Great Recession, central banks went well beyond their normal operations and provided liquidity in unlimited amounts, in foreign currency and to foreign banks. Central bank cooperation took the form of a swap network, and amounted to an episode of global monetary policy. Πηγή: Bruegel πλήρες κείμενο
Migrating out of poverty: The role of finance
Ayyagari, Meghana, Beck, Thorsten & Hoseini, Mohammad. Financial liberalisation has been controversial among academics and policymakers as it is not clear whom the benefits of expanded credit allocation accrue to. Using time and state-level variation across Indian states, this column finds strong evidence that financial deepening reduces rural poverty, especially among the self-employed. Financial deepening is also […]