Is the ECB right to buy up sovereign bonds in southern Europe? This column argues that the answer depends on who is right: Keynes or Hayek.
Giovanni Cespa, Xavier Vives, Tuesday, September 18, 2012
Harald Hau, Ulrich Hege, Saturday, September 8, 2012
The recent announcement by the ECB that it will start to buy Spanish and Italian sovereign debt has been warmly welcomed throughout Europe. But this column argues that by doing so the ECB is digging the euro’s grave. It says the solution is default, either through inflation or debt restructuring – and that debt restructuring has many advantages if it is done early enough.
Zsolt Darvas, Wednesday, September 5, 2012
The need to rebalance the debts of several Eurozone members is a major root of the current crisis. This column argues that a purely intra-euro rebalancing strategy has its limits and that a weaker euro would help. It urges the European Central Bank to adopt looser monetary policy, which is anyway justified in a highly recessionary environment.
Monica Eaton, Michael J Ferrantino, Tuesday, September 4, 2012
The Eurozone debt crisis is not simply a problem for industrialised countries. This column shows how its effects are being felt throughout Africa.
Paolo Manasse, Monday, September 3, 2012
The Eurozone crisis threatens not just European economies but economies all over the world. This column argues that a global problem calls for a global solution – and the solution this time round is monetary policy. The ECB needs to commit to keeping sovereign debt yields within reason while the Federal Reserve needs to work towards lowering long-term yields.
Richard Wood, Friday, August 31, 2012
The crisis is deepening in Europe, and recession is spreading globally. This column argues that macroeconomic policies have failed to overcome the dual problems of flagging aggregate demand and high and spiralling public debt. It urges policymakers to abandon failed orthodoxies and irrelevant treaties and consider new, alternative solutions.
William R. Cline, Thursday, August 30, 2012
Interest rates on Italian and Spanish bonds are back up to their 2011 levels, raising alarm bells across Europe. But this column argues that the media’s hard-held belief that neither Italy nor Spain can withstand interest rates of 7% is wrong.
Thomas Huertas, María J Nieto, Sunday, August 26, 2012
In June 2012 the EU proposed both a banking union and a framework for bank resolution. This column argues that the proposed Crisis Management Directive is a step in the right direction for resolution but that banking union needs a single resolution authority and single resolution fund along with a single supervisor.
Frank Westermann, Sven Steinkamp, Wednesday, August 22, 2012
Despite assurances that the ECB will do “whatever it takes” to save the euro, interest rates on sovereign bonds in the highly indebted European countries remain alarmingly high. This column argues that in order for interest rates to fall, policymakers need to assure private investors that their bond holdings are safe from subordination.
Anders Åslund, Tuesday, August 21, 2012
It has become increasingly fashionable to talk about Europe without the euro. But this column points out that in the last century Europe has seen the collapse of three multi-nation currency zones: the Habsburg Empire, the Soviet Union, and Yugoslavia – and they all ended with disastrous hyperinflation. The lesson for the Eurozone is clear: avoid break up at almost any cost.
Piero Ghezzi, Sunday, August 19, 2012
The ECB president, Mario Draghi, said he’d do “whatever it takes to save the euro”. This column asks what 'whatever it takes', means and whether the ECB is prepared to go that far. It argues that limited and conditional lending improves the odds of success but it is not the game changer needed.
Stijn Claessens, Ashoka Mody, Shahin Vallee, Friday, August 17, 2012
The Eurozone debate is awash with proposals for mutualising national debt. This column summarises and evaluates the main proposals – suggesting how they might be combined in a five-year path to a fiscal union. It stresses that short-term stability objectives will only work if they help to advance the agenda for fiscal federalism including macroeconomic stabilisation and risk-sharing.
Jaime Luque, Abderrahim Taamouti, Thursday, August 16, 2012
When economies are on the down, uncertainty is on the up – particularly during a crisis. But this column argues that the euro itself may have been a cause of uncertainty in the first place, long before the crisis.
Ziad Daoud, Martin Brookes, Thursday, August 16, 2012
Two-year bond yields in six European countries recently turned negative. What explains the shift? This column presents a model suggesting that a higher chance of extreme economic events – such as a break up of the euro – can be the cause of a number of abnormal patterns in the bond markets.
Charles Wyplosz, Wednesday, August 15, 2012
Some maintain that Italy and Spain risk losing market access for their sovereign bonds despite drops in yields. A recent Vox column by Francesco Giavazzi suggested that Italy could and should avoid a bailout. This column argues that in spite of all its admirable human and economic assets, Italy has moved to a bad equilibrium from which it is most unlikely to escape.
Stefan Bach, Gert Wagner, Wednesday, August 15, 2012
The European debt crisis drags on, dragging Europe down with it. This column argues that one-off capital levies – taxes on the rich – is one way of financing debt reduction. This could be an important step towards deleveraging public budgets without severely damaging the economy.
Marco Annunziata, Tuesday, August 14, 2012
While markets have been cheered by recent ECB announcements on sovereign debt, some still question the Bank’s ability to save the euro. This column argues that the ECB is a lot stronger than many think. Linking ECB sovereign bond purchases to policy conditionality will ensure that reform efforts are sustained. The free lunch option has been ruled out – and that is a good thing.
Francesco Giavazzi, Monday, August 13, 2012
Spain looks set to turn to the EFSF for a formal bailout subject to stringent conditionality. In this column, Francesco Giavazzi – one of Europe’s leading macroeconomists and an advisor to the Monti government – argues that Italy’s situation is nothing like Spain’s. To avoid submitting itself to its EFSF conditionality, Italy should reduce its borrowing needs with a determined programme of public asset sales and bridge financing from the Cassa Depositi e Prestiti.
Uri Dadush, Zaahira Wyne, Shimelse Ali, Tuesday, July 24, 2012
The US and the Eurozone are slowly recovering after the bursting of their huge housing bubbles. Yet the hardest-hit states in the US have adjusted more rapidly than the most troubled European economies. This column examines differences between the US and Eurozone monetary unions that can help explain why.
Tito Boeri, Friday, July 20, 2012
Solving the EZ crisis will almost certainly involve some financial transfers in exchange for some loss of sovereignty. This column suggests a guiding principle for which policies should be under EZ control. Transfers of authority to supranational bodies must make a no-further-bailout clause credible.