The ECB Governing Council has given hints that it will keep rates low for long (see its May and June statements). On 4 July 2013, the Council went further embracing ‘forward guidance’ (Praet 2013, Woodford 2013).1
Low for how long? Estimating the ECB’s “Extended Period of Time”
Tilman Bletzinger, Volker Wieland, 5 September 2013
Revisiting the pain in Spain
Paul De Grauwe, 7 July 2014
The different macroeconomic adjustment dynamics in Spain – a member of a monetary union – and the UK – a stand-alone country – is stark. Paul Krugman popularised this contrast in his New York Times blog with the title “The Pain in Spain” (Krugman 2009, 2011), and commented on my own analysis in De Grauwe (2011).
Topics: Europe's nations and regions, Global crisis, Macroeconomic policy
Tags: austerity, currency depreciation, ECB, EMU, euro, EZ crisis, fiscal policy, government debt, monetary policy, monetary union, Outright Monetary Transactions, Spain, UK
The euro crisis: Muddling through, or on the way to a more perfect euro union?
Joshua Aizenman, 3 July 2014
The short history of the Eurozone has been remarkable and unprecedented – the euro project has moved from the planning board to a vibrant currency within less than ten years.
Saving the euro: self-fulfilling crisis and the ‘Draghi put’
Marcus Miller, Lei Zhang, 26 June 2014
In surveying eight centuries of financial folly, Reinhart and Rogoff (2009) observed that:
Topics: International finance, Monetary policy
Tags: ECB, European sovereign debt crisis, eurozone, financial crises, Outright Monetary Transactions, self-fulfilling crises, sovereign debt, sovereign debt crisis
Central bank transparency and committee deliberation
Stephen Hansen, Michael McMahon, Andrea Prat, 20 June 2014
The world’s major central banks display significant differences in transparency. The European Central Bank currently publishes no direct information on its internal policy debates, and will only release minutes with a 30-year lag. The Bank of England releases minutes soon after meetings, but withholds transcripts.
Will voters turn out in the 2014 European Parliamentary elections?
Owen McDougall, Ashoka Mody, 17 May 2014
The extent of voter turnout in the 2014 European Parliamentary (EP) election is widely viewed as a critical test for European democracy. Turnout in the EP elections has steadily declined over three decades, from 62% in the first election in 1979 to 43% in the 2009 election (EP Liaison Office undated).
ECB: An appropriate monetary policy
Mickey Levy, 16 May 2014
Europe’s modest economic recovery and uncomfortably low inflation put the ECB in a bind. Although economic conditions are improving gradually (European Commission 2014), concerns about the potentially negative impacts of deflation persist (Armstrong et al. 2014).
Europe’s banking problem through the lens of secular stagnation
Jan Willem van den End , Jakob de Haan, 28 March 2014
What is the economy’s new normal? Will it be secular stagnation as suggested by Summers (2013)? According to this view, the economy will be in a permanent state of recession because aggregate demand is below potential output. As the actual real interest rate exceeds the negative equilibrium real interest rate (the natural rate), investment activity is too low.
Considering QE, Mario? Buy US bonds, not Eurobonds
Jeffrey Frankel, 24 March 2014
The ECB should further ease monetary policy. Inflation at 0.8% across the Eurozone is below the target of ‘close to 2%’, and unemployment in most countries is still high. Under the current conditions, it is hard for the periphery countries to bring their costs the rest of the way back down to internationally competitive levels as they need to do.
TARGET balances, Bretton Woods, and the Great Depression
Michael Bordo, 21 March 2014
During the Eurozone crisis, an analogy was made between the events in Europe between 2007 and 2012 and the collapse of the Bretton Woods System between 1968 and 1971. There has been a build-up of TARGET liabilities since 2007 by some central banks (notably Greece, Ireland, Portugal, and Spain, or the ‘GIPS’), and of TARGET assets by Germany and others.
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
Cadot, de Melo, 16 June 2014
CEPR Policy Research
- The buyer margins of firms' exportsCarballo, Ottaviano, Volpe
- Commodity and Equity Markets: Some Stylized Facts from a Copula ApproachDelatte, Lopez
- Ethnic Unemployment Rates and Frictional MarketsGobillon, Rupert, Wasmer
- Finance and Poverty: Evidence from IndiaAyyagari, Beck, Hoseini
- The Manipulation of Basel Risk-WeightsMariathasan, Merrouche