Low Inflation and Government Debt

Low Inflation and Government Debt

photo: Simon Cunningham Low Inflation and Government Debt  Government debt typically refers to nominal GDP, generally rising in postwar Oecd countries. Last crisis was an exception, firstly displaying in 2009 a nominal recession affecting 27 out of 34 countries. To understand reasons and implications, I evaluate in Table 2 for six Oecd countries (US, UK, Germany, […]

Government Debt in Japan and Euro Area: Actions Speak Louder than Words

Government Debt in Japan and Euro Area: Actions Speak Louder than Words

photo: flickr Fiscal Rules in Japan  Fiscal rules, such as a quantitative debt limit, have been proposed to restrain the size of government debt. However, experience has shown that passing laws or issuing rules has little economic effect, unless they are enforced systematically and without delay. This point was illustrated last week by Kenichi Ueda […]

Even with IMF Aid, Risks Loom Large for Ukraine

Even with IMF Aid, Risks Loom Large for Ukraine

Finance Minister Jaresko sees debt restructuring and economic reforms as steps toward ‘return to growth in 2016’ In April, ratings agency Standard & Poor’s placed a negative outlook on Ukraine, citing a “deteriorating macroeconomic environment” and warning of a likely default on foreign-currency central government debt. The assessment was a tangible indicator of the risks […]

Central Banks Policy Asynchronous-ity – A Source of New Risk

Since 2009, the key driver of financial markets has been low rates and abundant liquidity which has boosted all asset prices. The total amount of money pumped into global money markets is around US$10-12 trillion, enough to buy each person on earth a widescreen flat TV.  In the great reflation, according to one estimate, over […]

Japan’s Third Lost Decade Begins

Japan’s recession is not paving the way for sustained growth. It is prolonging new debt and liquidity and thus deteriorating fiscal discipline. In the last quarter, Japan’s economy fell into recession. In the West, it was characterized as “unexpected.” The realities are precisely the reverse. With its third ’lost decade,’ Japan has entered an era […]

Argentina’s Default: A Not-So-Illogical Move

Argentina failed to reach an agreement with its holdout creditors last week, defaulting on its debt for the second time in thirteen years. In this piece for Foreign Policy, I explain why this outcome is not so surprising. You can read the beginning of the piece below:  On July 30, Argentina defaulted on its outstanding debt. The technical […]

Hard Work and External Help: How to Successfully Conduct Macroeconomic Adjustment With Official Assistance

What are the factors that ensure a successful and durable completion of a financial assistance programme? Past experience with IMF-supported adjustment programmes underlines the importance of external conditions but also of fiscal consolidation, financial repair and structural reforms. These findings vindicate the strategy pursued in recent adjustment programmes in the euro area: putting the fiscal […]

China’s Debt Endgames

Quick And Slow Deaths… Understandably, the major focus now is on the denouement of the crisis. Pessimists are concerned about a catastrophic crash. Optimists are more sanguine, expecting a soft landing with gradual reforms correcting the systemic issues. The crash scenario is predicated on continuing increases in debt levels and over-investment. Policy adjustments are fatally […]