Policy preferences of central bankers and the design of a monetary-policy committee
Eijffinger, Sylvester, Mahieu, Ronald & Raes, Louis. Debate about who should be on central-bank committees has resurfaced in recent years. Is it better to appoint experienced central bankers, financiers, NGO workers or civil servants? This column argues that variations in voting patterns change with career background. Evidence suggests that if central banks want a wide range of […]
Should the role of preparing budgetary projections be delegated to an independent agency?
Merola, Rossana, Pérez, Javier. Who should we trust when it comes to fiscal forecasts: governments or independent agencies? This column argues that this question is, in fact, a red herring: empirical evidence suggests that in the past, international agencies’ fiscal forecasts were partially affected by the same problems that the literature widely acknowledges for governmental forecasts. […]
Did the euro kill governance in the periphery?
Fernández-Villaverde, Jesús, Garicano, Luis & Santos, Tano. By the end of the 1990s, under the incentive of Eurozone entry, most peripheral European countries were busy undertaking structural reforms and putting their fiscal houses in order. This column argues that the arrival of the euro, and the subsequent interest-rate convergence, loosened a tide of cheap money that reversed the […]
Debt, Growth and the Austerity Debate
Reinhart, Carmen, Rogoff, Kenneth. IN May 2010, we published an academic paper, “Growth in a Time of Debt.” Its main finding, drawing on data from 44 countries over 200 years, was that in both rich and developing countries, high levels of government debt — specifically, gross public debt equaling 90 percent or more of the […]
Public debt and economic growth, one more time
Panizza, Ugo, Presbitero, Andrea. Are high levels of public debt harmful for economic growth? The very public Rogoff-Reinhart kerfuffle has focused on what is not true. This column reviews the evidence on what is true. It suggests that the debt-growth link is more complex than commonly thought. While there is evidence that public debt is negatively […]
Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff
Herndon, Thomas, Ash, Michael & Pollin, Robert. We replicate Reinhart and Rogoff (2010a and 2010b) and find that coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period. Our […]
What is the net of good and bad news from Brussels and Washington?
Papadia, Francesco, Daluiso, Giuseppe. Τhe short answer is: somewhat positive. The longer, but still broad-brush, answer starts from noting that two important documents have been issued in the last few days: the In-depth reviews following the so called AMR (Alert Mechanism Report) from the European Commission and the World Economic Outlook from the IMF. It […]
Augmented inflation targeting: Le roi est mort, vive le roi
Baldwin, Richard, Gros, Daniel. The Bank of Japan has now joined the club of central banks practising a new, post-Crisis form of inflation targeting. This column discusses the new goals, new tools and new challenges of ‘augmented inflation targeting’. Despite economists’ worries and the many unknowns ahead, there really is no alternative in a post-Crisis world. […]
Europe’s growth problem (and what to do about it)
Darvas, Zsolt, Pisani-Ferry, Jean, Wolff, Guntram. The issue: The European Union’s pre-crisis growth performance was disappointing enough, but the performance has been even more dismal since the onset of the crisis. Weak growth is undermining private and public deleveraging,and is fuelling continued banking fragility. Persistently high unemployment is eroding skills, discouraging labour market participation and undermining […]
Three New Lessons of the Euro Crisis
Subramanian, Arvind. While some observers argue that the key lesson of the eurozone’s baptism by fire is that greater fiscal and banking integration are needed to sustain the currency union, many economists pointed this out even before the euro’s introduction in 1999. The real lessons of the euro crisis lie elsewhere – and they are […]