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Saving glut or investment dearth?
Martin Wolf at the Financial Times argues that the future of the world economy, in particular that of advanced economies, looks sluggish because investment rates have displayed a downward trend over...
View ArticleEuro workers: no systemic risk
In his last press conference Mario Draghi said that the ECB was ready for negative deposit rates if necessary. His comments led to several European bankers rejecting this as a possibility (here and...
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Where did the saving glut go?
I have written before about the investment dearth that took place in advanced economies at the same time that we witnessed a global saving glut as illustrated in the chart below. In particular, the...
View ArticleBattle lost: austerity won.
It has been surprising to see how over the last five years some have been holding to their economic theories even if the facts kept proving them wrong (Yyperinflation? Confidence and austerity?). At...
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Debt and secular stagnation
In a recent post Paul Krugman refers to the potential link between rising levels of debt prior to the 2008 crisis and the current discussion on secular stagnation. The argument can be illustrated by...
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Four missing ingredients in macroeconomic models
It is refreshing to see top academics questioning some of the assumptions that economists have been using in their models. Krugman, Brad DeLong and many others are opening a methodological debate about...
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The increasing number of Euro fools.
Via the Irish Economy Blog I find this very interesting interview of Mario Draghi with Der Spiegel. I was first surprised by the aggressive responses from Draghi every time he is asked about the German...
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The anti-demand coalition
In yesterday's blog post Paul Krugman summarizes very well the position of some academic economists who deny the potential role that aggregate demand might have in explaining business cycles and, as a...
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The conservative bias of economic models
Chris House has an interesting post on why economists tend to be more conservative than academics in other fields. His argument is that many economic facts have a conservative bias (e.g. when you look...
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ECB and its excuses for inaction
Mario Draghi showed great skills in handling all questions in yesterday's press conference. When pressed about why the ECB is not doing more in the presence of low inflation and possibly deflationary...
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The permanent scars of economic pessimism
Gavyn Davies at the Financial Times reflects on the growing pessimism of Central Banks regarding the growth potential of advanced economies. In the US, the Euro area or the UK, central banks are...
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Financial markets arbitrage: reassuring or lovely?
John Cochrane has a new blog post summarizing recent research by Budish, Cramton and Shim on the effects of high frequency trading. The paper shows that as high frequency trading spreads the...
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Global interest rates and growth (r-g).
The difference between interest rate and growth rates appears as an important parameter in many macroeconomic models. It is also a key variable to assess the sustainability of public finances: higher...
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The difficulties of reducing long-term unemployment
Since the global financial crisis started there has been a debate about how much of the increase in unemployment is cyclical versus structural. Arpaia and Turrini summarize the results of their...
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The many hands of Mario Draghi
Mario Draghi press conference yesterday was yet another exercise of creating confusion about what the ECB intends to do. Maybe what he referred to as an unanimous consensus in the ECB council is not...
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The price is wrong
The Euro area inflation came lower than expected in March and this has raised concerns about deflation (or "lowflation" as labelled by the IMF). In today's Financial Times, Jurgen Stark, a former ECB...
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Secular stagnation or secular boom?
The notion that some countries are caught in a long and protracted period of low growth has received an increasing amount of attention and has been labelled "secular stagnation". The pessimism that the...
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The contradiction in economics
Somehow a graduation speech by Tom Sargent (nobel prize in Economics in 2001) from back in 2007 made it to Vox two days ago and it has been reposted by several bloggers. The article in Vox did not...
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Honey, I blew up a few economies.
The International Comparison Program (hosted at the World Bank) just released its new estimates of Purchasing Power Parity that are used to compare GDP across countries. These estimates are released...
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Refocusing economics education.
Via Mark Thoma I read an interesting article about how the mainstream economics curriculum needs to be revamped (Wren-Lewis also has some nice thoughts on this issue).I am sympathetic to some of the...
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