The IMF published its new World Economic Outlook today (see the report here and the database here). Once again, euro-area’s outlook has been revised downward, but this is not the case for the USA and Japan. Read more
Bruegel blog
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New IMF growth forecasts: EU revised downward, once again
16th April 2013
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China needs to set its services free
16th April 2013
China enjoyed a growth rate of more than 10 per cent from 2000 to 2010. But its economy is now in trouble. Read more
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Europe’s banks need to be recapitalised – now
15th April 2013
Europe’s growth performance was disappointing before the financial crisis. It has been dismal since. Five years into the “great recession”, the risk for Europe is to remain trapped in stagnation. Vicious circles are apparent across the continent: weak growth undermines deleveraging and fuels banking fragility. Read more
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European Emission trading - A blueprint for a countercyclical policy without teeth
11th April 2013
Carbon emissions have been falling, but perhaps not for the most sustainable reasons. The graphs below show volumes of carbon emissions produced by the European industrial sector. Read more
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Italy’s elections had little impact on TARGET2 balances
9th April 2013
We documented early signs of improved market sentiment towards struggling euro members in this post at the end of January. Since then, however, European economic data has been mostly disappointing. Read more
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Preventing bank runs – a primer
2nd April 2013
Worries about Cyprus at first decreased with the second agreement between the Cypriot government and euro area partners. Controversially, however,capital controls have been used as a way to prevent an outright bank run. This blog briefly reviews the literature on bank runs and comments on different ways to prevent them. Read more
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Time for us to bank on a new Marshall Plan
2nd April 2013
Almost like a bolt from the blue, the Eurogroup meeting of euro-area finance ministers, along with the troika of the European Commission, the European Central Bank and the International Monetary Fund, agreed on March 16 to a tax on all deposits in Cyprus, including small deposits. Read more
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The Politics of Moral Hazard
31st March 2013
It is an old and a never-ending contest. On one side are the moral-hazard scolds, claiming that one of the major responsibilities confronting policymakers is to establish incentives that demonstrate that imprudent behavior does not pay. On the other side are the partisans of financial stability, for whom confidence in the financial system is too precious to be endangered, even with the best possible intentions. Read more
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With Cyprus, Europe risks being too tough on banking moral hazard
29th March 2013
Europe has long been far too tolerant of moral hazard in its banking system. But with the Cyprus plan, the pendulum may now be swinging too far in the opposite direction. Read more
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Large banks relative to GDP: is there a risk beyond Cyprus?
28th March 2013
Are other EU countries with large bank balance sheet relative to GDP also running a risk similar to Cyprus? The answer is no. The major reason for the banking troubles in Cyprus is the massive losses that the two biggest banks have suffered. But in other euro-area countries with big banking sectors this is not the case, as we show below. Read more