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

European imbalances

Hans-Werner Sinn, Akos Valentinyi, 9 March 2013

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Europe is in the grip of three interrelated crises: a balance-of-payments crisis, a sovereign-debt crisis and a banking crisis. Policymakers have primarily focused on the sovereign-debt and banking crises. However, a credible strategy for getting the Eurozone back on track needs to address the problem of its large internal imbalances.

Topics: Europe's nations and regions
Tags: competitiveness, devaluation, Eurozone crisis, imbalances

Periphery economies: National governments must be prepared to provide stimulus

Richard Wood, 4 March 2013

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Periphery countries are continuing to face deepening impoverishment for no good reason. With real incomes falling and unemployment already approaching 20 or 30%, further austerity is unnecessary and unconscionable. The crisis is spreading. France, a country near the centre, is increasingly in difficulty, and now even Germany’s growth is faltering.

Topics: Europe's nations and regions, Global crisis, Macroeconomic policy
Tags: austerity, Eurozone crisis

Incentives for avoiding delayed sovereign defaults

Ugo Panizza, 3 March 2013

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The international financial architecture needs a structured mechanism for dealing with sovereign defaults. The main problem with the status quo is that countries tend to sub-optimally delay necessary defaults, leading to substantial loss of value for debtors and creditors alike.

Topics: Europe's nations and regions, International finance
Tags: Eurozone crisis, lender of last resort, sovereign debt restructuring

Policy-related uncertainty: At the root of the lost resilience of Eurozone labour markets?

Alfonso Arpaia, Alessandro Turrini, 2 March 2013

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The Eurozone, in contrast to the US, exhibited remarkable labour market resilience in the aftermath of the Lehman shock that lead to the Great Recession. Conversely, as the debt crisis developed, labour markets in the Eurozone weakened and unemployment started growing above what was predicted on the basis of GDP growth (Figure 1).

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

Another look at Ricardian equivalence: The case of the European Union

Thomas Grennes, Andris Strazds, 28 February 2013

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The so-called Ricardian equivalence suggests that a government will have the same effect on private spending whether it raises taxes or takes on additional debt to finance higher government spending. The logic behind it is that as the government gets more indebted, people would put aside more money in expectation of higher taxes in the future.

Topics: Europe's nations and regions
Tags: Eurozone crisis, Germany, Greece, Ricardian equivalence, Spain, UK

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