A modern history of fiscal prudence and profligacy

Ariel Binder, Paolo Mauro, Rafael Romeu, Asad Zaman, 27 March 2013

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Considering the major impact of the global economic and financial crisis on the fiscal accounts of the main advanced economies, and their widely differing policy responses, how confident should we be that each of these countries remains fiscally prudent?

Topics: Global crisis, Macroeconomic policy
Tags: Eurozone crisis

Europe’s Cyprus blunder and its consequences

Nicolas Véron, 25 March 2013

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The late Mike Mussa1 noted that “there are three types of financial crises:

  • crises of liquidity;
  • crises of solvency; and
  • crises of stupidity.”

This quip comes to mind when considering the developments of the past ten days around Cyprus.

Topics: EU institutions, Macroeconomic policy
Tags: banking union, Cyprus, deposit guarantees, Eurozone crisis

Eurozone: Looking for growth

Laurence Boone, Céline Renucci, Ruben Segura-Cayuela, 25 March 2013

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The financial crisis that erupted in 2008, prolonged by a sovereign crisis in the Eurozone, led to a massive contraction in trade, as well as in investment in physical and human capital; thus undermining the foundations of future growth. This may well continue as growth will not rapidly rebound while deleveraging slowly proceeds across Eurozone economies.

Topics: Europe's nations and regions, Productivity and Innovation
Tags: Ageing, Eurozone crisis, growth, productivity, Solow

Cyprus is different

Marco Annunziata, 20 March 2013

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The Cyprus rescue package under discussion, with its tax on bank deposits, has raised strong emotions and triggered fiery and controversial reactions. Some economists and commentators warn that it might spark bank runs in the larger Southern European countries and ultimately result in the disintegration of the Eurozone.

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

Walking back from Cyprus

Mitu Gulati, Lee C. Buchheit , 20 March 2013

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On Friday 15 March 2013, European leaders trespassed on consecrated ground. They insisted that Cyprus impose losses – euphemistically dubbed a 'solidarity levy' – on insured depositors with Cypriot banks as a condition to receiving EZ/IMF bailout assistance. Entering Friday’s meeting, the leaders had four options on the table:

Topics: Macroeconomic policy
Tags: bailout, Cyprus, Eurozone crisis, EZ crisis

Realism, austerity or demagogy? Evidence from Italy

Maurizio Bovi, 20 March 2013

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Before it was contested, there were two interesting – but different – views about the recent political election in Italy. The Economist (2012) had defined the elections as a test of the maturity and realism of Italian voters. The advice was that Italians should vote for Monti.

Topics: Europe's nations and regions, Politics and economics
Tags: Eurozone crisis, Italy

Professor Monti and the bubble

Paolo Manasse, Giulio Trigilia, Luca Zavalloni, 19 March 2013

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The recent Italian elections yielded a hung parliament. Votes were shared almost equally between the centre-left coalition of Bersani, the centre-right coalition of Berlusconi, and the new Five Star Movement of Grillo. Monti's Civic Choice party appealed to only one in ten voters.

Topics: Europe's nations and regions, Politics and economics
Tags: Eurozone crisis, Italy

The case for policy change: Democratic legitimacy of EMU cannot be an afterthought in solving the crisis

Geoffrey R D Underhill, Jasper Blom, 19 March 2013

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The fallout of the original market crash has generated continuing public and private debt problems, while global and intra-regional payments imbalances remain unresolved. Serious and persistent policy mistakes dressed up as reform have compounded the difficulties while economic growth remains subdued in the major western economies.

Topics: Europe's nations and regions, Financial markets, Global crisis
Tags: Eurozone crisis

Fiscal policy in Europe: Searching for the right balance

Marco Buti, Nicolas Carnot, 14 March 2013

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The debate on the fiscal strategy in Europe seems at times like a war of religions. This is unfortunate because the objective disagreements in substance (e.g. see VoxEU debate: Has austerity gone too far? ) are in our view less pronounced than is sometimes depicted.

Topics: Macroeconomic policy
Tags: austerity, European Commission, Eurozone crisis

The leaderless global economy: Can economic history suggest lessons?

Peter Temin, David Vines, 13 March 2013

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We all want to sustain the global recovery — and are not sure how (Kose and Terrones 2012). The closing years of the last two centuries present two examples of international cooperation that may give us hope.

Topics: Economic history, Global crisis, Global economy
Tags: Eurozone crisis

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