Citi's Willlem Buiter and colleagues review recent articles by Martin Wolf and Hans-Werner Sinn on the role and interpretation of intra-Eurosystem (Target2) credit imbalances. They dispute their conclusions on both conceptual and empirical grounds:
Keywords: Euro Imbalances, Credit Imbalances, Intra-Eurosystem
Keywords: European Crisis, European Bail Outs
There are following participants in the panel:
Victor Halberstadt, Professor of Public Economics, Leiden University, Netherlands; Global Agenda Council on Fiscal Crises
Mark Leonard, Director, European Council on Foreign Relations (ECFR), United Kingdom; Young Global Leader; Regional Agenda Council on Europe & Central Asia
Igor Lukšic, Prime Minister of Montenegro
Davide Serra, Founding and Managing Partner, Algebris Investments (UK), United Kingdom; Young Global Leader
Aleh Tsyvinski, Professor of Economics, Yale University, USA; Young Global Leader
The following dimensions will be addressed:
- Fiscal stresses
- Core versus periphery
- Foreign policy
- Rise of nationalism
Keywords: Europe, European Crisis, European Economy
Kai A Konrad Max of the Max Planck Institute and Holger Zschäpitz of "Die Welt" argue that Europe’s policymakers have got their strategy desperately wrong and that the discussed modifications of the Stability and Growth Pact, including a view on macroeconomic imbalances (transfer models), will hardly work, due to the enormous differences in tax revenues and social security spending among the EU countries:
It is highly recommended to read the article on Vox:
Keywords: European Union, Transfers within EU, Sustainability of Transfer Models
Central bank liquidity is gushing everywhere, leading to protests over high prices in India, Ukraine and China, the Financial Times reports.
Stefan Wagstyl and Jonathan Wheatley write, “The main driver of inflation in the past 18 months has been the soaring rise in oil, food, and raw materials prices, powered by growing demand from China, India and other emerging countries.”
Of course the price increases are the result of money printing and not the “main driver of inflation.”
Prices are rising at a 25% clip in Argentina, while the that government claims the number to be 10%.
Some Chinese employers are having to hike wages 20% to 40% and Brazil’s minimum wage is set to increase 6% this year and possibly 14% next.
And while the public always accuse merchants of gouging them with higher prices, the F-T piece points out, “higher costs are squeezing industry’s margins.”
Meanwhile the IMF claims core inflation is up 2-3.75% and Ben Bernanke contends the rise in commodity prices is “transitory.”
Keywords: Global Economy, Monetary Policy, Inflation
Reputed Berkeley professor and currency specialist Barry Eichengreen warns in his latest Project Syndicate of a low dollar.
He explains why a low dollar, often mentioned as a remedy for tje highly indebted US, could have a tremendous negative effect in a next downturn:
"The result would be the Fed’s worst nightmare. With Treasury yields spiking and economic activity collapsing, the Fed would want to cut interest rates and flood the markets with liquidity. But a sharply lower dollar would, at the same time, mean sharply higher inflation, requiring it to tighten policy. Caught on the horns of this dilemma, the Fed could do nothing to solve America’s problems."
Source: Excerpt from article linked to above
Keywords: US Economy, US Monetary Policy, US Exchange Rates
A kind of simple and easy to understand messages ... one would think ... but obviously important to be heard again and again...
Keywords: Free Lunch Myth, Government Spending, Taxes
Keywords: US Economy, Jim Rogers
Economic growth in the United States seems to be slowing again. This might reflect temporary factors, like the Japanese tsunami, which disrupted supply chains and caused some factories to suspend operations. Also, high oil prices have taken a toll on disposable income, impeding growth in consumption demand. This has led to a build-up of inventory – and thus to cuts in production. read more
Keywords: US Economy, Monetary Policy, Raghuram Rajan
In a letter sent to the European Commission, the European Central Bank, the International Monetary Fund and euro-zone countries, Germany's finance minister warns of the possibility of a Greek bankruptcy and concedes the current bailout plan has failed. Instead he is calling for a de facto debt restructuring. read more
Keywords: Greek Crisis, European Crisis, Greek Debt
Keywords: US Economy, Global Economy, Charlie Rose
"We document information rigidity in forecasts for real GDP growth in 46 countries over the past two decades. We investigate: (i) if rigidities are lower around turning points in the economy, such as in times of recessions and crises; (ii) if rigidities differ across countries, particularly between advanced countries and emerging markets; and (iii) how quickly forecasters incorporate news about growth in other countries into their growth forecasts, with a focus on how advanced countries‘ growth forecasts incorporate news about emerging market growth and vice versa."
Keywords: Forecasts, Information Rigidity, Real GDP
Keywords: US Government Revenue, Growth of US Government Revenue
June 7, 2011
Keywords: US Economy, Economic Recovery, Fed, Monetary Policy
What effect do interest-rate changes have on economic growth? Most studies suggest that the answer is “not much”. This column points out that a lot of these studies use US data from the early 1980s when monetary policy was under the “Volcker experiment”. When this episode is excluded, this column finds that the implied contribution of policy shocks to historical US business cycle fluctuations is much larger than found in much of the literature. read more on Vox
Keywords: US Monetary Policy, US Economic Growth
A must watch!
Nov. 2010, Cato Institute
Keywords: Carmen Reinhart, Public Debt, Private Debt, Monetary Policy
Larry Summers, which is interviewed here, thinks that the recovery will continue, even though the economy is a bit "softer".
Airtime: Mon 06 Jun 11 | 12:12 PM ET
Keywords: US Economy, Monetary Policy, Larry Summers
Find here an ECB paper about the improvement potential in fiscal data revision in the EU area:
"Public deficit figures are subject to revisions, as most macroeconomic aggregates are. Nevertheless, in the case of Europe, the latter could be particularly worrisome given the role of fiscal data in the functioning of EU’s multilateral surveillance rules. Adherence to such rules is judged upon initial releases of data, in the framework of the so-called Excessive Deficit Procedure (EDP) Notifications. In addition, the lack of reliability of fiscal data may hinder the credibility of fiscal consolidation plans. In this paper we document the empirical properties of revisions to annual government deficit figures in Europe by exploiting the information contained in a pool of real-time vintages of data pertaining to fifteen EU countries over the period 1995-2008. We build up such real-time dataset from official publications. Our main findings are as follows: (i) preliminary deficit data releases are biased and non-efficient predictors of subsequent releases, with later vintages of data tending to show larger deficits on average; (ii) such systematic bias in deficit revisions is a general feature of the sample, and cannot solely be attributed to the behavior of a small number of countries, even though the Greek case is clearly an outlier; (iii) methodological improvements and clarifications stemming from Eurostat’s decisions that may lead to data revisions explain a significant share of the bias, providing some evidence of window dressing on the side of individual countries; (iv) expected real GDP growth, political cycles and the strength of fiscal rules also contribute to explain revision patterns; (v) nevertheless, if the systematic bias is excluded, revisions can be considered rational after two years."
Keywords: Data Revisions, Fiscal Statistics, Rationality
Adam D. Thierer, of George Mason University's Mercatus Center delivers good "food for thought" with his working paper on Internet optimism and how to save the net from its detractors. The paper can also be downloaded from the Social Science Research Networ: Thierer, Adam D., The Case for Internet Optimism, Part 1 - Saving the Net from its Detractors: (December 1, 2010). THE NEXT DIGITAL DECADE: ESSAYS ON THE FUTURE OF THE INTERNET, p. 57, B. Szoka & A. Marcus, TechFreedom, 2010. Available at SSRN: http://ssrn.com/abstract=1751044
Keywords: Internet, Internet Liberalism
Keywords: US Economy, Great Stagnation
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