The short answer is: somewhat positive. The longer, but still broad-brush, answer starts from noting that two important documents have been issued in the last few days: the In-depth reviews following the so called AMR (Alert Mechanism Report) from the European Commission and the World Economic Outlook from the IMF. Read more
Bruegel blog
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What is the net of good and bad news from Brussels and Washington?
22nd April 2013
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Where has all the (base) money gone?
25th March 2013
The short answer is: into the liquidity trap. Read more
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Has the European Central Bank transformed itself into a hedge fund?
8th March 2013
Some observers have accused the European Central Bank (ECB) of having transformed itself into a hedge fund because of the purchases of government securities from stressed countries under the Securities Market Program (SMP). Read more
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Where did smart money go in 2012?
11th December 2012
The short answer is: into the periphery of Europe. Read more
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At last a behavioural change
25th October 2012
With the Fiscal Compact and other institutional innovations, Europe is attempting to remedy some of the weaknesses revealed by the crisis in the governance of the euro area. Important as it is, one cannot be sure that the new institutional set-up will guarantee the avoidance of the macroeconomic mistakes that fed the crisis. It is therefore useful to see whether there are prospective behavioural changes that could complement the institutional innovations. One interpretation of one factor behind the problems revealed by the crisis in Southern European countries is that, after decades with high and variables rates of inflation, economic agents had difficulty in adapting to the low and stable inflation achieved by the ECB. While in places like Germany this… Read more
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Chart of the week - Economic convergence in the euro area: on apprend de ses erreurs
24th October 2012
Economic commentators are rightly worried about the different activity developments between the “core” and the “ periphery” of Europe, with the former in acceptable conditions and the latter in recession. There are, however, other macroeconomic developments worth of notice, with a fairly different, and more positive, message. The charts below show on-going convergence towards balance of three important macro-economic indicators for Germany, Ireland, Portugal, Spain, Italy and even for Greece: current account balances, unit labour costs and fiscal deficits. Current accounts are moving towards balance, from below in the case of Greece, Spain, Italy and Portugal (Ireland is already moving into surplus) and from above in the case of Germany. Current account balance in selected euro area countries (% of… Read more
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An inexorable spiral?
22nd October 2012
Some market participants seem to consider financial support from the euro area governments, either in bilateral form or in the EFSF (and tomorrow ESM) guise, as the first step in an inexorable spiral, in which yields get higher and higher and market access is pushed further and further into the future. In short, the European cure (financial support-plus-macro-structural-adjustment) does not work (whatever its precise calibration with more or less fiscal adjustment) and there is only one possibility: more and more cases of PSI, soon for Ireland and Portugal, somewhat later for Spain and Italy. Greece’s case is generalized into a universal rule. There is one important indicator which tells a very different story: two of the three countries that have… Read more
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The IMF Global Financial Stability Report: Restoring Confidence and Progressing on Reforms
8th October 2012
Financial reform is a complex business and one needs a good guide to understand what is going on in this field as a consequence of the crisis as well to understand whether we are indeed progressing towards a “safer financial system”. Chapter 3 of the IMF Global Financial Stability Report (GFSR, to be found at: http://www.imf.org/external/pubs/ft/gfsr/2012/02/index.htm) is an excellent tool for this purpose. The GSFR is indeed more than an illustration of where the pendulum now is between regulation and liberalization. It takes stock of the different initiatives, assesses them against the target to achieve institutions and markets which are more transparent, simpler and less leveraged and identifies the remaining gaps in the definition and implementation of the new measures.… Read more