While most economists agree that the UK and other countries need to cut back to ensure the sustainability of their public finances, the debate rages over when and by how much. This column argues that the timing matters – starting too early, before the economy has recovered, will have substantial economic costs.
Nitika Bagaria, Dawn Holland, Jonathan Portes, John Van Reenen, Tuesday, August 14, 2012
Florence Pisani, Anton Brender, Emile Gagna, Thursday, June 21, 2012
Is austerity in the Eurozone doomed to fail? This column argues that Eurozone governments have to acknowledge that their response to the sovereign crises has been wrong. Bringing budgets back to balance as quickly as possible and at any cost for growth is a recipe for disaster.
Pietro Alessandrini, Andrew Hughes Hallett, Andrea F Presbitero, Michele Fratianni, Wednesday, May 16, 2012
Unsustainable debt along Europe’s periphery is bringing the euro to breaking point. But this column argues that this is not simply the result of fiscal ill-discipline. After 2010, the Eurozone crisis went from a fiscal crisis to a balance-of-payments crisis – with different prescriptions for policy.
Peter Stella, Manmohan Singh, Monday, May 14, 2012
Much of the debate over public finances in the US relates to the amount of debt, this column explores the type of debt. It criticises the recent suggestion that the US Treasury should start issuing floating rate notes.
Patricia Funk, Christina Gathmann, Friday, February 10, 2012
As debt crises hit on both sides of the Atlantic, a safe haven for many investors has been Switzerland. This column looks at Swiss public spending over the last century and argues that one reason for its low debt may be its greater use of direct democracy, where people vote on individual policies, as opposed to representative democracy, where people elect others to make decisions on their behalf.
Paul De Grauwe, Yuemei Ji, Monday, January 23, 2012
Economists now agree that markets were wrong in placing the same risk premium on Greek bonds as on German bonds. But this column adds that today the same markets are also wrong in overestimating the risk that the periphery countries will default. Policymakers looking to calm such skittish markets should take note.
S. M. Ali Abbas, Nazim Belhocine, Asmaa El-Ganainy, Mark Horton, Sunday, December 18, 2011
As policymakers continue to grapple with high debts and the troubles that come with them, this column looks at the lessons from data on public debt in 178 countries stretching back as far as 1880. It argues that when faced with an unsustainable debt burden, slow but steady adjustment is the way to go.
Daniel Gros, Tuesday, November 29, 2011
With European governments cutting back on spending, many are asking whether this could make matters worse. In the UK for instance, recent OECD estimates suggest that ‘austerity’ will lead to another recession, which in turn may lead to a higher debt-to-GDP ratio than before. As the debate heats up, this column provides some cool economic logic.
Anna Ivanova, Paolo Mauro, Edouard Martin, Wednesday, November 9, 2011
Fiscal consolidation is just one of the many ugly phases that we will have to get used to in the coming years. Yet how can governments reduce their debts without making things even uglier? This column argues that although today’s debts are the highest since World War II, there is much to be learned from previous attempts.
Charles Wyplosz, Friday, September 16, 2011
Europe’s debt crisis is unfolding while Japanese and US debt problems are on hold. The problem of public debt in advanced economies will be with us for decades. This column introduces a new Geneva Report on the World Economy that addresses the nuts, bolts, and worries surrounding the issue.
Barry Eichengreen, Jürgen von Hagen, Charles Wyplosz, Jeffrey Liebman, Robert Feldman, Friday, September 16, 2011
The 13th CEPR/ICMB Geneva Report on the World Economy takes a long-term perspective on debt sustainability, arguing that fiscal stabilisation is easier the faster the economy is growing.
Jordi Gual, Tuesday, September 13, 2011
The IMF has recently suggested the recapitalisation of Europe’s banks as the most prudent way out of the continent’s economic crisis. This column argues that such thinking is based on a flawed analysis of the problem and is an unhelpful distraction at best. Europe is facing a crisis of government debt. The true problem of the Eurozone is not its banking system.
Giancarlo Corsetti, Gernot Müller, Friday, August 12, 2011
With sharply rising sovereign risk spreads, few governments can consider their public finances beyond doubt. This column explores the macroeconomic consequences of austerity when sovereign risk is high.
Thorsten Drautzburg, Harald Uhlig, Sunday, July 31, 2011
The debt crises in the Eurozone and the US are reminders that all government expenditures must eventually be financed by tax revenues. This column analyses the effect of the US fiscal stimulus programme and argues that abstracting from financing decisions presents a skewed version of the net benefits to society.
Fabio Panetta, Michael Davies, Tuesday, July 26, 2011
Sovereign credit risk has emerged as the main challenge to global financial stability. This column explains how a deterioration in sovereign creditworthiness can damage bank funding conditions before discussing possible options for mitigating these effects. It argues that banks can only do so much and that the policymakers have a critical role.
Thomas F Cooley, Ramon Marimon, Wednesday, July 20, 2011
The sovereign-debt crisis spreading through Europe is threatening the existence of the single currency. Meanwhile in the US, debt has been a problem for many states without threatening the US itself. This column proposes a way of preventing future crises in Europe by learning how policymakers in the US achieve fiscal prudence without loss of sovereignty.
Nicolas Véron, Thursday, June 23, 2011
As the Eurozone crisis continues, politicians are blaming the markets and the markets are blaming politicians. This column argues that the uneasy relationship between the two is nothing new and that the markets have a point. It says the crisis is as much institutional as it is financial or fiscal.
Stefano Micossi, Sunday, May 29, 2011
The Eurozone crisis has exposed serious flaws in the single currency’s ability to manage a crisis. This column outlines three ways that Europe’s financial assistance programmes should be changed to rectify this.
Daniel Gros, Tuesday, May 24, 2011
As EU leaders muddle through the Eurozone crisis, the debate about its root causes continues. The debate is important if we are to understand how to prevent future crises. This column argues that the focus on total public debt is misleading – external debt is the key to the turmoil in European economies.
Angelo Baglioni, Saturday, May 21, 2011
Should Greece's creditors tackle its mountain of debt by writing some of it off or stretching out the repayment period? This column argues that both approaches are likely to have profound negative repercussions for Greece and the rest of Europe. Instead, it suggests a “market-based solution.”