Whether the eurozone is viable or not remains an open question. But what if a breakup can only be postponed, not avoided? If so, delaying the inevitable would merely make the endgame worse – much worse. Germany increasingly recognizes that if the adjustment needed to restore growth, competitiveness, and debt sustainability in the eurozone’s periphery … Read more
In Europe, a major shift is taking place in attitudes toward austerity policies. This shift is not yet evident in Germany, but it is very apparent in a number of Eurozone periphery countries, in the Netherlands, and in the public debates underway on both sides of the Atlantic on the need to provide stimulus to … Read more
Opening remarks at the Swedish Financial Markets Committee’s (FMK) Conference on “The European Parliament and the Financial Markets,” Stockholm, June 8, 2012 For the past few years, headlines in Europe have been dominated by the financial and economic developments of the crisis, first in the banking system and then in sovereign debt markets. Throughout this period … Read more
The latest analysis from the Congressional Budget Office (CBO) shows a sharp divergence between a baseline projection and an alternative fiscal scenario for the U.S. economy. To put it in language a child could understand, the baseline projection is too cold while the alternative scenario is too hot. It is clear from the report that … Read more
Today Statistics Netherlands (CBS) warned “House Prices Nosedive“. Prices of existing owner-occupied dwellings sold in July 2012 were on average 8.0 percent down from July 2011. This is the most substantial price drop since the price index of existing residential property was first recorded in 1995. In real terms and indexed to 2005, home values are … Read more
Economists love the idea of rules for monetary and fiscal policy. Many politicians hate them, preferring the discretion to do whatever seems like a good idea at the time. For that reason, if no other, economists should love Paul Ryan, an atypical politician who supports policy rules. But there is a catch—are the rules that … Read more
Economists are often preoccupied with incentives. The Global Financial Crisis and the ensuing policy response can be analyzed from the perspective of the incentives that produced behavior to bring on the crisis, as well as the incentives created by the bail-out that rescued the miscreants. Where are we today? Stoking the fires that created the … Read more
The following was written a month ago for my newsletter but because of the virus problem I had on my site I wasn’t able to post it until today. China’s official GDP growth rate has fallen sharply – on Friday Beijing announced that GDP growth for the second quarter of 2012 was a lower-than-expected 7.6% … Read more
Eurostat released trade figures today, where the trade balance (exports less imports) surged €3.7 bn in the month of June (link to the .pdf release). The current figures imply a 2012 annualized trade balance of €66.9 bn, which is a meaningful boost to the -€7.4 bn deficit in 2011. Eurostat breaks down the regional figures further into intra-Euro … Read more
One of the “best” things about Turkish severance pay is that it literally “binds” employers and employees, although not exactly in solidarity. Here’s the intro. to my latest Hurriyet Daily News (HDN) column, on Turkish severance pay reform. You can read the whole thing at the HDN website. For once, I don’t have a long … Read more