Cyprus: The next blunder

Charles Wyplosz, 18 March 2013

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The decision to tax all Cypriot bank deposits has attracted massive attention (Spiegel 2013) – and rightly so. It is a huge blunder:

Topics: EU institutions, Macroeconomic policy
Tags: Cyprus, EU, Eurozone crisis

Avoiding an Italian bailout: Why and how

Francesco Giavazzi, 13 August 2012

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Spain has no options, but Italy does.

Topics: EU policies
Tags: EFSF, Eurozone crisis, Italian bailout, Spanish bailout

The wisdom of Karlsruhe: The OMT Court case should be dismissed

Francesco Giavazzi, Richard Portes, Beatrice Weder di Mauro, Charles Wyplosz, 12 June 2013

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This week the German Constitutional Court in Karlsruhe is considering a case in which the plaintiffs oppose the Outright Monetary Transactions (OMT) programme announced last September by the ECB. The court will consider whether the ECB overstepped its mandate and thus imposed undue risks on German taxpayers.

Topics: Europe's nations and regions
Tags: Eurozone crisis, OMT, Outright Monetary Transactions

Exit strategies: Time to think ahead

Charles Wyplosz, 8 June 2013

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Right now, most central banks in developed countries are deeply focused on finding ways to support a lackluster economic recovery from the 2009’s Great Recession. In some cases, these banks are struggling to exit from a double dip. With interest rates at the zero lower bound, these efforts are taking the form of a massive expansion of liquidity.

Topics: Monetary policy
Tags: Eurozone crisis, liquidity trap, quantitative easing, Vox Views, zero lower bound

Regional transfers in Europe: Do we need fewer of them or different ones?

Sascha O Becker, Peter Egger, Maximilian von Ehrlich, 6 June 2013

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The EU encourages regional cohesion through transfers for structural changes and development. This column presents new research suggesting that some poorer countries don't benefit as well as we might expect. This is likely to be because of worse technological and institutional absorptive capacity.

Topics: Europe's nations and regions
Tags: Eurozone crisis, regional transfers

The urgent need to recapitalise Europe’s banks

Harald Benink, Harry Huizinga, 5 June 2013

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Unlike the US, Europe failed to recapitalise its biggest banks following the financial crisis of 2007-09. Instead, policymakers gambled that economic recovery would lift the profitability of financial institutions, enabling them to increase their capital buffers over time. It is now clear that this strategy has failed.

Topics: Europe's nations and regions
Tags: Eurozone crisis

Is the euro a foreign currency to member states?

Giancarlo Corsetti, Luca Dedola, 5 June 2013

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Analysts and policymakers have recently put forth the view that Eurozone nations have, in essence, issued sovereign debt in a ‘foreign’ currency – foreign in the sense that national authorities don’t control the printing presses (see De Grauwe 2011, among many others).

Topics: Europe's nations and regions
Tags: Eurozone crisis

Small isn’t always beautiful: The cost of French regulation

Luis Garicano, John Van Reenen, 30 May 2013

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Slow growth in Europe has led to a debate over whether structural reforms can be used to raise productivity (see Costello et al. 2009, Crafts 2012). Many countries have tough labour regulations which may be a barrier to growth.

Topics: Europe's nations and regions, Labour markets
Tags: Eurozone crisis, France, Labour Markets

Public and private saving and the long shadow of macroeconomic shocks

Joshua Aizenman, Ilan Noy, 29 May 2013

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The Global Financial Crisis of 2008-09 and the evolving crisis in Europe raise many intriguing questions regarding the long-term response to crises. Households that lost access to credit, were forced to adjust and increase saving.

Topics: Global crisis
Tags: Eurozone crisis, macroeconomics, savings rate

The banking crisis as a giant carry trade gone wrong

Viral Acharya, Sascha Steffen, 23 May 2013

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The health of the European financial system is intimately tied to the health of European sovereigns through the holdings of the sovereign debt (Angeloni and Wolff 2012; Acharya, Drechsler and Schnabl 2013). Traditionally, banks have been major holders of domestic sovereign debt, but in Europe there are substantial cross-country sovereign holdings.

Topics: Europe's nations and regions
Tags: banking, Eurozone crisis

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