Iceland’s post-Crisis economy: A myth or a miracle?

Jon Danielsson 21 May 2013

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When the Global Crisis struck in September 2008, all eyes were on the US (Eichengreen and Baldwin 2008). Iceland, however, was the first country to really suffer. Its three major banks collapsed in the same week in October 2008, and it became the first developed country to request assistance from the IMF in 30 years. GDP fell 65% in euro terms, many companies went bankrupt and others moved abroad. At the time, a third of the population considered emigration as a good option (Danielsson 2008).

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Topics:  Global crisis

Tags:  Iceland, Eurozone crisis

Are Germans poorer than other Europeans? The principal Eurozone differences in wealth and income

Giovanni D'Alessio, Romina Gambacorta, Giuseppe Ilardi 24 May 2013

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The Household Survey (European Central Bank 2013) is a joint project of the ECB and all the Eurozone central banks providing harmonised information on the balance sheets of 62,000 households in 15 Eurozone countries (all except Ireland and Estonia).1

Media hype had been generated by the ranking of the countries’ median household wealth results, especially by the fact that:

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Topics:  Europe's nations and regions

Tags:  Italy, Germany, Spain, household income, Greece, Eurozone crisis, household wealth

European bank deleveraging and global credit conditions

Erik Feyen, Ines Gonzalez del Mazo 12 May 2013

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In the run up to the global financial crisis, European banks significantly increased their lending activities both domestically and outside home markets driven by a procyclical spiral of cheap abundant funding, increasing profitability, and economic growth. European banks not only provided cross-border financing, but became increasingly involved in domestic financial markets via lending activities of their local affiliates.

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Topics:  Europe's nations and regions Global crisis

Tags:  banking, Eurozone crisis, credit

A pro-growth economic plan

Richard Wood 11 May 2013

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There are similarities in the nature of the economic problems facing affected economies around the world:

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Topics:  Global crisis

Tags:  IMF, recovery, Eurozone crisis, austerity

Escaping liquidity traps: Lessons from the UK’s 1930s escape

Nicholas Crafts 12 May 2013

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In mid-1932, the UK had experienced a recession of a similar magnitude to that of 2008-09, was engaged in fiscal consolidation that reduced the structural budget deficit by about 4% of GDP, had short-term interest rates that were close to zero, and was in a double-dip recession (Crafts and Fearon 2013). The years from 1933 through 1936 saw a very strong recovery with growth of over 4% in every year. The Chancellor of the Exchequer, Neville Chamberlain (in office from November 1931 to May 1937) was the architect of this recovery.

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Topics:  Europe's nations and regions

Tags:  housing, Britain, UK, Eurozone crisis, house building

France’s weak economic performance: Sick of taxation?

Balázs Égert 10 May 2013

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France is often labelled these days as one of Europe’s problem children (The Daily Telegraph 2013, Handelsblatt 2013). Indeed, France is one of the OECD countries which has recorded the weakest real per capita income growth over the last two decades or so (Figure 1). This weak economic performance can be explained by the country’s structural weaknesses in many areas, including taxation. The high tax burden (43% of GDP in 2010) and the structure of the tax system weigh heavily on the economy.

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Topics:  Europe's nations and regions

Tags:  France, reform, taxation, Eurozone crisis

Banking crises and political survival over the long run – why Great Expectations matter

Jeffrey Chwieroth, Andrew Walter 10 May 2013

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The wave of banking and sovereign-debt crises that began in 2007 has had powerful and continuing economic consequences (IMF 2013a; 2013b). Economists have used long run historical data to investigate the economic aftermaths of financial crises, but we lack any equivalent panoramic analysis of the impact of crises on politics. This is an important gap because these political effects, especially the survival prospects of incumbent governments, can shape governments’ post-Crisis policy choices, market sentiment, and thus economic outcomes.

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Topics:  Global crisis Politics and economics

Tags:  elections, business cycle, Eurozone crisis, Finance

Self-defeating austerity shocks

Reda Cherif, Fuad Hasanov 03 May 2013

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In many advanced countries, in the wake of the 2008 global financial crisis, deficits skyrocketed and public debt ballooned (see Figure 1). In fact, fiscal stimulus accounted for only a small fraction of the increase in debt, whereas collapsing revenues and higher unemployment and social benefits contributed the largest share (IMF 2011).

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Topics:  Global crisis

Tags:  fiscal policy, Eurozone crisis, austerity

Political Credit Cycles: The Case of the Euro Zone

Jesús Fernández-Villaverde, Luis Garicano, Tano Santos,

Date Published

Sun, 03/24/2013

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Should the role of preparing budgetary projections be delegated to an independent agency?

Rossana Merola, Javier J. Pérez 01 May 2013

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The debate about fiscal forecasts has recently been growing more intense in Europe. At its root, there is the evidence of planned government deficits significantly exceeding recurrent budgetary plans in recent years. This comes at a time of high public deficit and debt levels for EU member states. Explanatory factors for these misalignments include large GDP shocks and fiscal-stimulus packages adopted on the run. Beyond these explanations, there is also a distinct lack of both transparency and realistic accounts of the facts.

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Topics:  Global crisis Monetary policy

Tags:  fiscal policy, forecasting, Eurozone crisis

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