Clik here to view.
The Big Day for the Fed
On January 25th, 2012, in addition to its regular statement from the Federal Open Market Committee, the Federal Reserve published for the first time two additional documents: Economic Projections of...
View ArticleClik here to view.
A matter of faith (in markets)
Alan Greenspan contributed yesterday to the Financial Times debate about Capitalism in Crisis. The title of his article was "Meddle with the market at your peril". Not surprisignly Greenspan presents a...
View ArticleClik here to view.
New treaty, same old flaws.
The European Union member states (with the exception of the UK and the Czech Republic) agreed yesterday to a new Treaty on "Stability, Coordination and Governance". The text of the agreement can be...
View ArticleClik here to view.
The overvalued Euro
Over the last months the Euro has drifted from about 1.45 USD to below 1.30 and some commentators see this as the sign of the decline of the Euro, driven by all the economic problems of European...
View ArticleClik here to view.
The austerity recovery
Both Europe and the US have witnessed so far very weak recoveries from the past recession. There are many reasons why the recovery has been unusually slow: a weak real estate market, debt overhang, the...
View ArticleClik here to view.
The missing long-term perspective on government debt.
When looking at the challenges of government debt in Europe the severity of the problem can look very different depending on the perspective one takes. If we focus on the last 5 years we see that:1....
View ArticleClik here to view.
The Great Wall and Chinese Reforms
Last week China's Vice Premier Li Kequiang mentioned that reforms in China have now entered "a crucial stage and cannot be delayed." And a few days earlier Prime Minister Wen Jiabao explicitly referred...
View ArticleClik here to view.
The Euro Divorce
Arnab Das and Nouriel Roubini write today in the Financial Times a commentary suggesting that Euro members should get a divorce (they call it an "amicable divorce settlement"). The current policies...
View ArticleClik here to view.
Convergence in US-EU labor markets
Out of the many signs that the US economic recovery is not as strong as previous ones, the variable that possibly best demonstrates the weakness of the recovery is the stagnant employment to population...
View ArticleClik here to view.
Ideology and Facts in the Economic Policy Debate
The fact that ideology matters in the economic policy debate should not be a surprise to anyone. But the influence that ideology has has in some of the economic analysis we have seen since the...
View ArticleClik here to view.
Euro and US Coordinating Austerity
To add yet one more perspective on how significant the shift to austerity among advanced economies has been since 2009, I decided to add the Euro series to a chart from Paul Krugman's blog. This is...
View ArticleClik here to view.
Germany and the Benefits of the Euro
Since the launch of the Euro, there has always been a question about the benefits that Germany could enjoy of sharing a currency with other countries. While for the other countries (the "periphery")...
View ArticleClik here to view.
Ignore Competitiveness?
Wolfgang Munchau in the Financial Times argues that competitiveness is not the real problem of Southern Europe and that internal devaluation is not the solution. Paul Krugman disagrees with him and...
View ArticleClik here to view.
With or Without the Euro
UK GDP contracted faster than previously announced in the first quarter of 2012. What would the evolution of GDP have looked like during this crisis if the UK had been part of the Euro area? Impossible...
View ArticleClik here to view.
Fiscal Federation or Fiscal Policy
Can a monetary union work without being a fiscal federation? This has been a question that has been repeatedly asked since EMU became a project. Economists consider a fiscal federation a way to share...
View ArticleClik here to view.
The Difficulty in Accepting "Discretionary Stabilizers"
As the debate on the appropriateness of doing more fiscal and monetary stimulus continues, here is a reflection on something that I never understood in that debate: even those who strongly oppose the...
View ArticleClik here to view.
Draghing their feet
Mario Draghi disappointed markets yesterday by not offering a clear commitment to any concrete policy action to resolve the turmoil in European financial markets. Nothing new: the inability of European...
View ArticleClik here to view.
Excess Reserves Explained
I have written before about the confusion that exists in the press about the interpretation of the excess reserves that commercial banks currently hold at central banks as money that is being "parked"...
View ArticleClik here to view.
Why not Earlier?
Mario Draghi presented yesterday one more plan with great promises but short of details (as usual) to save the Euro. Markets are happy, but will this plan follow the fate of the previous announcements?...
View ArticleClik here to view.
QE3 and the Fed Dual Mandate
The US Federal Reserve just announced the third round of quantitative easing (QE3) by signaling a commitment to keep rates low for a long(er) period of time and engage in additional purchases of assets...
View Article