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Is 0% growth for 90% a successful economic model?
Via Greg Mankiw I read the review of Piketty's book by Deirdre McCloskey. The review reminds me of the conversations I have in my class when I bring up the issue of income inequality. While most people...
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The logic behind the German Euro gamble.
In the current economic policy debate in Europe there seems to be an increasing polarization between the German view and the view of the other countries. How did we end up with such polarized views of...
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And this is how Greece might leave the Euro
An interesting month lies ahead for the Euro area. On January 22 the ECB will meet and they will either announce a QE-style monetary policy action, as most expect by now, or they will disappoint...
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Grexit: it is not the debt, it is the future.
A follow up to my previous post now that we know that the Syriza party has won the election. What comes next will not be easy. And it is not because the policies proposed by Syriza are that radical or...
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Greece, EMU and democracy
One more post on Greece, possibly not the last one.Markets are more worried about what is going on and there is more and more talk about the possibility of and exit of Greece from the Euro area. As I...
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Which countries managed the Great Recession better?
As we compare countries' performance since the beginning of the global financial crisis we try to look for patterns that explain differences in behavior and lessons on how to handle the next crisis....
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Those mountains of debt (and assets)
A recent report by the McKinsey Global Institute on the increasing amount of debt among advanced and emerging markets made it to the front page of many financial newspapers yesterday (e.g. the FT). The...
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Financial crisis, the Euro and the need for political union.
In today's Financial Times, Gideon Rachman discusses the flaws of the Euro and the possibility of failure. He admits that from the beginning he believed that the Euro project would eventually collapsed...
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The Taylor rule conundrum
Back in February 2005 Alan Greenspan referred to the abnormal (low) level of US long-term interest rates as a conundrum:"For the moment, the broadly unanticipated behavior of world bond markets remains...
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Missing the anti-inflation central bankers.
In two recent posts, Martin Feldstein and Andrew Sentance (former member of the Bank of England monetary policy committee) criticize the recent actions of central banks to bring inflation back to its...
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The Greek Dra(ch)ma is back?
One more round of negotiations between Greece and the rest of is European partners to seek a last-minute solution before the Greek government runs out of money. Negotiations could end up going in any...
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Interest rates: natural or artificial?
The debate about who is responsible for the low level of interest rates that has prevailed in most economies over the last years heated up when Ben Bernanke wrote a series of blog posts on what...
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Greece: negotiating without trust
The Eurozone and Greece are going through the last hours of a negotiation to ensure release of additional funds from the previous agreement and possibly setting the basis for the next one.The leaked...
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Did the IMF provide support to Syriza?
The IMF published yesterday a preliminary analysis on the debt sustainability of the Greek government. The timing of the publication, a couple of days ahead of the referendum, has triggered a variety...
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Micromanagement of European reforms
The agreement between Greece and its Euro partners is full of very detailed policies to be approved by the Greek government in the coming week. How did we end up in a situation where the domestic...
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A third scenario for stock markets
Robert Shiller on the New York Times argues that the stock market is expensive by historical standards using the cyclically-adjusted price earnings ratio (CAPE) that he has made popular through his...
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Savings glut and financial imbalances
Martin Wolf in today's Financial Times discusses the reasons for low interest rates and suggests some interesting scenarios for the years ahead. I agree with most of what he says but I have doubts...
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GDP growth is not exogenous
Ken Rogoff in the Financial Times argues that the world economy is suffering from a debt hangover rather than deficient demand. The argument and the evidence are partly there: financial crises tend to...
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The missing lowflation revolution
It will soon be eight years since the US Federal Reserve decided to bring its interest rate down to 0%. Other central banks have spent similar number of years (or much longer in the case of Japan)...
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Counting backwards to the next recession
In most advanced economies business cycles can be well characterized by a succession of long expansion phases that are interrupted by short recessions. Given this pattern it is sometimes natural to...
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