Grexit and the reintroduction of the drachma would have severe consequences for the Greek people. This column argues, based on Argentina's experience, that this would produce a sharp devaluation of the drachma, inflation, and a severe reduction in real wages and pensions. The effects would be far worse than the reductions that could have occurred as a consequence of the policies proposed by the Troika. By resuming negotiations, continuing with measures to achieve fiscal consolidation and carrying out adequate structural reforms, Greece could reverse the current situation in a sustainable way. It has the great advantage that the ECB, most European governments and the IMF are willing to resume negotiations.
Domingo Cavallo, Tuesday, June 30, 2015 - 00:00
Charles Wyplosz, Monday, June 29, 2015 - 00:00
This weekend’s dramatic events saw the ECB capping emergency assistance to Greece. This column argues that the ECB’s decision is the last of a long string of ECB mistakes in this crisis. Beyond triggering Greece’s Eurozone exit – thus revoking the euro’s irrevocability – it has shattered Eurozone governance and brought the politicisation of the ECB to new heights. Bound to follow are chaos in Greece and agitation of financial markets – both with unknown consequences.
Harald Benink, Harry Huizinga, Saturday, May 16, 2015 - 00:00
QE in the Eurozone is unusual in that the risks of sovereign debt defaults are shared between the ECB and the national central banks. This column argues that if such risk sharing were applied to the Outright Monetary Transactions programme, it could potentially create insolvency problems for countries with large public debts, especially in a low-growth scenario.
Ana-Maria Fuertes, Elena Kalotychou, Orkun Saka, Thursday, March 26, 2015 - 00:00
Lars P Feld, Christoph M Schmidt, Isabel Schnabel, Benjamin Weigert, Volker Wieland, Friday, February 20, 2015 - 00:00
Thorsten Beck, Monday, February 2, 2015 - 00:00
Marco Annunziata, Friday, January 23, 2015 - 00:00
Francesco Giavazzi, Guido Tabellini, Saturday, January 17, 2015 - 00:00
Athanasios Orphanides, Friday, December 5, 2014 - 00:00
Jean-Pierre Landau, Tuesday, December 2, 2014 - 00:00
Luis Garicano, Lucrezia Reichlin, Friday, November 14, 2014 - 00:00
Thorsten Beck, Monday, November 10, 2014 - 00:00
Charles Wyplosz, Friday, September 12, 2014 - 00:00
Marcus Miller, Lei Zhang, Wednesday, September 10, 2014 - 00:00
Francesco Giavazzi, Guido Tabellini, Thursday, August 21, 2014 - 00:00
The stagnating Eurozone economy requires policy action. This column argues that EZ leaders should agree a coordinated 5% tax cut, extension of budget deficit targets by 3 or 4 years, and issuance of long-term public debt to be purchased by the ECB without sterilisation.
Paul De Grauwe, Monday, July 7, 2014 - 00:00
There has been a stark contrast between the experiences of Spain and the UK since the Global Crisis. This column argues that although the ECB’s Outright Monetary Transactions policy has been instrumental in reducing Spanish government bond yields, it has not made the Spanish fiscal position sustainable. Although the UK has implemented less austerity than Spain since the start of the crisis, a large currency depreciation has helped to reduce its debt-to-GDP ratio
Joshua Aizenman, Thursday, July 3, 2014 - 00:00
After a promising first decade, the Eurozone faced a severe crisis. This column looks at the Eurozone’s short history through the lens of an evolutionary approach to forming new institutions. German dominance has allowed the euro to achieve a number of design objectives, and this may continue if Germany does not shirk its responsibilities. Germany’s resilience and dominant size within the EU may explain its ‘muddling through’ approach to the Eurozone crisis. Greater mobility of labour and lower mobility of under-regulated capital may be the costly ‘second best’ adjustment until the arrival of more mature Eurozone institutions.
Marcus Miller, Lei Zhang, Thursday, June 26, 2014 - 00:00
Like banks, indebted governments can be vulnerable to self-fulfilling financial crises. This column applies this insight to the Eurozone sovereign debt crisis, and explains why the ECB’s Outright Monetary Transactions policy reduced sovereign bond spreads in the Eurozone.
Stephen Hansen, Michael McMahon, Andrea Prat, Friday, June 20, 2014 - 00:00
Central bank transparency is essential to democratic accountability. Central bankers often limit it – fearing its stifling effect on frank debate. Yet transparency may induce monetary policy committee members to be better prepared. This column discusses evidence showing that the ‘better prepared’ effect is important empirically. Exploiting a natural experiment in the Fed Open Market Committee in 1993 – and using computational linguistics tools to measure the impact of transparency on deliberation – the research shows that the net effect is a more informative deliberation process.
Owen McDougall, Ashoka Mody, Saturday, May 17, 2014 - 00:00
Turnout in the 2014 European Parliament elections is seen as a critical test for EU democracy. This column presents some predictions. Trust in the ECB – rather than in the European Parliament itself – has been associated with higher turnout in previous elections. Macroeconomic conditions are also important – where a country’s fiscal problems are greater, voters are more inclined to vote.