What’s at stake: In his State of the Union Address, US President Barack Obama resurrected a pledge to raise the minimum wage he had made during the 2008 campaign. In an effort to fight inequality, alleviate poverty and make work more attractive President Obama proposed proposed a $9 federal minimum wage, indexed to inflation. This has generated a lot of writings in the blogosphere, with the main issues revolving around the classic questions of the employment effect of the minimum wage as well as its efficacy as a means of redistribution. Read more
Bruegel blog
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Blogs review: The Minimum Wage debate
4th March 2013
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Blogs review: The safe asset shortage
22nd February 2013
What’s at stake: Safe debts – or what is often called information insensitive assets, as they do not suffer from the types of financial frictions that are characteristic to other financial assets – play a major role in facilitating transactions for institutional investors. And, as we have learned in the recent years, they also play a major role in triggering financial crises when they loose their safety status and turn into information sensitive assets. As central bankers start backpedalling on their commitments to increase the supply of safe assets and start worrying about the negative effects of the “search for yield”, there has been a renewed discussion in the blogosphere about the role of safe assets and whether they remain in short supply. Read more
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Blogs review: Asset prices and monetary policy redux
15th February 2013
What’s at stake: Federal Reserve Governor Jeremy Stein gave serious consideration to the idea that monetary policy has a role to play in managing financial stability (read asset prices) in a speech titled “Overheating in Credit Markets: Origins, Measurement, and Policy Responses” given last week at a conference hosted by the St. Louis Fed. Governor Stein provided evidence that risk was building in certain segments of financial markets and discussed policy tools that go beyond countercyclical macroprudential regulation or the simple use of the Federal Funds rate to address these risks. Read more
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Blogs review: The Monetary Regime and the drawbacks of NGDP targeting
8th February 2013
What’s at stake: There has been much ink spilt (except maybe in the eurozone) over the last few years about the need to move away or at least complement the flexible inflation-targeting framework so that central banks can create expectations of future expansionary policy in a liquidity trap without changing its long-run goals. One idea – Nominal GDP targeting – has gathered most attention. After qualifying the idea as “powerful” and raising expectations of a possible future adoption, the Bank of England governor-designate Mark Carney reversed course and said that he was “far from convinced” by the idea in front of the Treasury select committee yesterday. While he didn’t lay out precisely the intellectual reasons for that change of heart, we’ve tried to put together some of the reasons put forward against NGDP targeting. Read more
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Blogs review: Inequality and the recovery
1st February 2013
What’s at stake: Inequality is again a hot topic in the blogosphere. While the early focus of that debate was about the role of inequality in fostering financial crises (see this review from 2011), the debate moved away from short-term macroeconomic issues for some time with the discussion about capital-biased technical change and the rise of robots (see here). That time was short, however, as the latest round of discussion has been about the role that inequality might play in holding back the recovery. Read more
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Blogs review: A bird’s eye view on Bruegel’s research in the crisis
25th January 2013
What’s at stake: On 22 January 2003, the idea of setting up what would become Bruegel had been given a strong impetus by the Chirac-Schröder declaration issued on the occasion of the 40th anniversary of the Elysée Treaty. Ten years after that first impulse, Bruegel has been ranked as 1st think-tank in Western Europe, 2nd outside the US, and 1st worldwide in International Economic Policy in the 2012 Global Go To Think Tanks Report. In the spirit of the Stability and Growth Pact, we decided to grant an exception the rules governing our blogs review and survey some of our very own publications for those of you (especially in the blogosphere since we were pretty late at joining the dance) who may have missed these. Read more
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Blogs review: The trillion-dollar platinum coin option to the debt ceiling
10th January 2013
What’s at stake: What started as an arcane idea on a finance blog a couple of months ago – that the debt ceiling crisis could be averted by exploiting a legislation designed to govern the issuance of commemorative coins, which allows the Treasury to mint platinum coins, and only platinum coins, in any denomination – has moved center stage in the punditry debate and gone viral on Twitter under the hashtags #MintTheCoin and #StopTheCoin. Read more
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Blogs review: State-dependent monetary policy guidance
17th December 2012
What’s at stake: The Fed announcement to move from a date-based approach to forward policy guidance to quantitative unemployment and inflation targets marks a major evolution in the practice of monetary policy. While there is still no consensus as to how effective this move will be, there has been wide recognition of its intellectual importance. And although similar moves appear to be in the making in the UK and Japan, the ECB has been singled out as behind the curve along this dimension of the crisis response. Read more
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Blogs review: Robots, capital-biased technological change and inequality
10th December 2012
What’s at stake: What started as a discussion about the rise of automation in manufacturing – and its potential impact on “re-shoring” manufacturing to the U.S. by some firms – has turned into a broader discussion about the impact of capital-biased technological change on the future of jobs and inequality. The discussion also touches on the role of increasing mark-ups in the shift in income away from labor. Read more
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Blogs review: an update on the fiscal cliff
3rd December 2012
What’s at stake: On January 1, unless preventive legislation is enacted, the U.S. economy will be gripped by a fiscal contraction equal to around 4% of GDP. The lead negotiators for the White House and Congressional Republicans used the Sunday morning news to introduce their opening bids and defend their positions. Beyond the back and forth political process, the ongoing discussion poses the question of the optimal timing for fiscal contraction in a recovering economy.
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