Five years into the crisis, the world still faces below-potential growth prospects. The subprime crisis started to unfold in the summer of 2007, and burst in a money-market freeze and credit-crunch in the fall of 2008. A global recession ensued. Between 2009 and 2012, massive fiscal and monetary stimuli prevented a depression, by transferring debt … Read more
Everybody has had a go at the phenomenon of Thomas Piketty’s Capital in the 21st Century. Here’s a version of my Sunday Times piece of a few days ago. Most people in Britain will never have heard of Thomas Piketty, a 42-year old professor from the Paris School of Economics, but that may be about … Read more
Turkish Prime Minister RecepTayyip Erdogan’s criticism of the Central Bank of Turkey, to which I had referred to in my last post, set the economic theme for the week. Not only the PM carried on with his criticism, other cabinet members got involved as well, and on both sides. Actually, there is only one side … Read more
The Spanish National Statistics Office (INE) today published the first detailed estimate of Spain’s Q1 GDP. Basically they confirm the gist of the original Bank of Spain numbers (see my report of 25 March below) although there are some important nuances. In my earlier report, I stressed that Spain’s Q1 surge was as much a … Read more
With Tommaso Nannicini and Alessandro Saia The euro’s impact on southern EZ members is a key topic in national and European debates. This column argues that the economic evidence is twisted to fit preconceptions. It presents evidence based on the ‘synthetic control’ approach, finding that the euro raised trade, lowered interest rates and inflation, but had … Read more
It might seem almost churlish to wonder what would happen if Spain were to leave the euro. The official European position is that the battle of the euro has been pretty much won, and anyone who argues otherwise will be accused of being a euro hater, an Anglo-Saxon or, even worse, a writer for theFinancial … Read more
There has been a lot of agonizing lately about slowing economic growth. Some of it understandably laments the slow recovery from the Great Recession, but the more interesting part concerns long-term growth prospects. Brad DeLong has recently written a thorough review of the stagnation literature under the title “Is Economic Growth Getting Harder? If so, … Read more
I’ve been blogging a series on the role of taxes. In the first piece, I argued that “taxes drive money”, in response to a silly claim that MMT argues we do not need taxes. In the second instalment I examined other uses for taxes—including to reduce excessive aggregate demand and to discourage “sin”. Most importantly, … Read more
Here’s an excellent editorial written by two followers of MMT*, Duane Catlett and Dan Metzger: http://helenair.com/news/opinion/federal-budget-process-what-did-leon-panetta-mean/article_8a5d9510-df0d-11e3-9322-001a4bcf887a.html. I’ll quote an excerpt but you should go read the whole piece. They correctly argue that if you’ve got a government that issues its own sovereign currency, affordability is never the issue. What matters is the real resource constraint. … Read more
The first half of May has produced a series of very confusing, and often misleading, U.S. (and some foreign) data that has set off considerable market volatility – for good reason. A good deal of the headline data is driven by conflicting underlying factors buried deeply in data releases, and pulling all of those dynamics … Read more