Italy’s Predicament is Europe’s Predicament

Italy’s Predicament is Europe’s Predicament

photo: Elliott Brown Durand and Villemot (2016) examine two nncreasingly likely Eurozone scenarios – a single country exit and the complete breakup – concluding that while both scenarios should be taken seriously, their consequences should not be exaggerated. In particular, in the case Italy were to leave the euro – the scenario I will henceforth call […]

Krugman and DeLong Are Right, Eurotimidity Must Be Defeated. Here Is How

Krugman and DeLong Are Right, Eurotimidity Must Be Defeated. Here Is How

photo: Images Money   Key takeaway – In Turkey, a coup attempt failed in less than 12 hours. President Erdoğan has declared that “the government is in control” and he is “not going to compromise”. What is next? Likely, Erdoğan’s popularity will increase, and constitutional changes will lead to a presidential system. Instability will continue, crackdowns […]

Why Helicopter Money is a “Free Lunch”

Why Helicopter Money is a “Free Lunch”

A hot topic[1] Claudio Borio and colleagues (2016) have recently posted a very interesting and thought-provoking comment on the currently highly debated topic of “helicopter money” (HM) and its use to fight secular stagnation in advanced economies. Their contribution does not take on the question of the efficacy of HM as a demand management tool […]

Strengthening “Mario’s Plan”

Strengthening “Mario’s Plan”

photo: European Parliament The bottom line is that unconventional monetary policies that move away from repairing markets or institutions to changing prices and inflationary expectations seem to be a step into the dark. (Rajan 2013) A step into the dark Following the announcement of last 10 March, as part of its enhanced monetary policy action, Mario […]

Making Financial Inclusion a Reality for the Unbanked

Making Financial Inclusion a Reality for the Unbanked

photo: Department of Foreign Affairs and Trade Financial inclusion and the fight against poverty  Ravallion (2015) illustrates how mainstream thinking on poverty has changed over the last 200 years: from considering poverty as inevitable or even necessary for economic advancement, to viewing it as a social ill that can be avoided through public action. In fact, […]

Krugman, Summers and Secular Stagnation

Krugman, Summers and Secular Stagnation

photo: Chris Potter Secular stagnation and escape routes Paul Krugman and Larry Summers are having an interesting conversation on secular stagnation and the continuing decline in global real interest rates.[1] The ‘new secular stagnation hypothesis’ was first evoked by Larry Summers in his now famous speech at the IMF in 2013, and subsequent elaborations, to explain […]

Fiscal Debit Cards and Tax Credit Certificates: The Best Way to Boost Economic Recovery in Italy (and Other Euro Crisis Countries)

A fiscal shock to Italy Recently on this blog, Brunello Rosa had submitted an interesting policy proposal to boost Italy’s GDP. Brunello’s proposal shares many analytical premises with the one we have articulated in a public appeal published at the end of last year,  concerning the issuance of tax credit certificates as a means to […]

Helicopter Money, Central Bank Independence and the Unlearned Lesson From the Crisis

Macro policy coordination post crisis[1] The Great Recession has offered an important opportunity to discuss if and under what circumstances central banks might be required to coordinate their acts with governments in view of achieving specific macroeconomic objectives, such as fighting deflation and overcoming economic depression. Yet central bank independence has become such a strong […]

Greece Still Has a Fighting Chance

Anatole Kaletsky (2015) has a take on Europe vs. Greece confrontation. He notices that, since coming to power in January, the Greek government has believed that default on its debt would be a strong enough threat to the Eurozone, which would force Europe to choose between two alternatives: either Grexit (with potentially disruptive consequences for […]