Macroeconomic policy

Kevin Daly, Tim Munday, 28 November 2015

The fallout from the Global Crisis and its aftermath has been deeply damaging for European output. This column uses a growth accounting framework to explore the pre-Crisis and post-Crisis growth dynamics of several European countries. The weakness of post-Crisis real GDP in the Eurozone manifested itself in a decline in employment and average hours worked. However, decomposing growth for the Eurozone as a whole conceals significant differences across European countries, in both real GDP growth and its factor inputs.

Angus Armstrong, Francesco Caselli, Jagjit Chadha, Wouter den Haan, 27 November 2015

Economists often disagree on China’s prospects. This column provides the results from a survey of top UK-based macroeconomists by the Centre for Macroeconomics (CFM). It turns out that three quarters of the experts believe that China’s annual growth rate will be less than 6% over the next ten years or so. But the panel is divided on whether the slowdown will have a significant impact on the UK economy.

Olivier Blanchard, Jonathan D Ostry, Atish R Ghosh, Marcos Chamon, 26 November 2015

Some scholars view capital inflows as contractionary, but many policymakers view them as expansionary. Evidence supports the policymakers. This column introduces an analytic framework that knits together the two views. For a given policy rate, bond inflows lead to currency appreciation and are contractionary, while non-bond inflows lead to an appreciation but also to a decrease in the cost of borrowing, and thus may be expansionary.

John C. Williams, 26 November 2015

Interest rates have been extremely low since the Global Crisis. This column surveys the recent debate over whether they will remain low, or return to normal. While an unequivocal answer is not possible, the evidence suggests a significant decline in average real rates – perhaps to as low as 1%.

Linda Yueh, 25 November 2015

The British government has placed productivity at the centre of its economic growth agenda. Yet, despite the economy recovering to pre-Crisis levels, productivity has slowed. This column argues that we mustn’t lose sight of investing in productivity as a sure-fire and long-term guard against slow growth, outlining a range of strategies to get to a healthy level of investment.

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