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 […]

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 […]

Occupy Germany!

Germany is a short train ride away for 300 million EU citizens. Borders are open. Occupy in the name of the 99%. Stop austerity NOW. Go in peace. Obey all laws. Support the German Labor Unions. Do not leave until the Neoliberals are thrown out. Latest news from the front: March 18, 2015 at 9:32 […]

Saving the Eurozone from Stagnation: Can Draghi Do it Alone?

With inflation declining and constantly undershooting forecasts, and the economies gripped by fiscal austerity, zero-lower bounded interest rates, and gloomy expectations, the Eurozone may have found itself caught into what Caballero and Fahri (2103) call a ‘safety trap’, i.e., an excess demand for safe assets (money and government bonds). Essentially, agents in the Eurozone have […]

Myths and Realities of European QE

The effects of the ECB’s quantitative easing are still unclear and may be insufficient to drag economies out of low growth and high unemployment rates. In effect, removing market pressures might affect incentives to pursue the structural reforms that Europe needs, such as completing the single market and restructuring banks and corporates. There is nothing […]

QE será, será

I always dismissed arguments that the eurozone’s time as an economic power was up, pointing out the strengths of the common currency area. But I finally realized that I have been wrong all along. I start my latest Hurriyet Daily News (HDN) column by explaining why the Europeans do not know how to conduct monetary policy:)- I […]

Why QE in the Eurozone Is a Mistake

Paul De Grauwe and Yuemei Ji (“Quantitative easing in the Eurozone”, VOX, 2015) have argued that quantitative easing (QE) can occur in the Eurozone without fiscal transfers.  This may be the case, but their analysis is fundamentally misplaced, as it is based on incorrect, incomplete or missing premises.  We think it would be a mistake for […]

Toward the Eurozone’s Defining Moment (Finally)

After Greek elections, Brussels and Berlin can no longer shun the issue of debt relief. The era of inflated projections is over. Before the New Year, the Hellenic parliament rejected the nominee of Prime Minister Antonis Samaras for president. Stavros Dimas was not likely to secure two-thirds of the required 300 votes. The former European […]

Time to Scrap the Stability and Growth Pact

Today’s Eurozone fiscal discipline is the amalgamation of reforms implemented over ten years, with the latest and largest changes agreed in crisis settings. This column argues that the result fosters neither growth nor stability since actual fiscal policy has been powerfully procyclical. The focus on intermediate targets has distracted attention from the final objectives – […]

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