The Spanish conundrum
by Jean Pisani-Ferry on 15 March 2010
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Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies
In this article Bruegel Director Jean Pisani-Ferry puts forward the various options that Spain could use to close its yawning competitiveness gap and turn its economy around. Through competitve deflation, it can impose a wage restraint and increase competitiveness. The other options, such as through deflation or re-entering the euro rea with a devalued exchange rate, might have more straightforward results, but the repurcussions could be difficult to deal with. This Op-Ed was first published in Le Monde.
Future developments of global imbalances
by Zsolt Darvas, Jean Pisani-Ferry on 15 March 2010
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Category: EXTERNAL PUBLICATIONS
Topics: Budgetary and monetary policies, European and global governance
Although the crisis was not triggered by a sudden capital outflow from current account deficit countries, such as the US, the deep roots of global imbalances and the crisis coincide to a large extent. Bruegel Director Jean Pisani-Ferry and Research Fellow Zolt Darvas examine the role of global imbalances to the crisis and explain how changes in the international monetary system can mitigate global imbalances.
This document was requested by the European Parliament's Committee on Economic and Monetary Affairs.
"Don't joke with inflation"
by Ignazio Angeloni on 08 March 2010
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Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies
Visiting scholar Ignazio Angeloni argues that the anti-crisis medicine proposed by the IMF- to raise inflation targets in good times- is worse than the illness and defends economic models from the accusation of irrelevance.
Monetary Policy and Risk Taking
by Ignazio Angeloni on 15 February 2010
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Category: WORKING PAPERS
Topics: Budgetary and monetary policies
In this paper Bruegel Visiting Scholar Ignazio Angeloni (European Central Bank), Ester Faia (Goethe University Frankfurt, Kiel IfW and CEPREMAP) and Marco Lo Duca (European Central Bank) examine the links between monetary policy, financial risk and the business cycle, combining data evidence and a new DSGE model with banks. The model includes banks (modeled as in Diamond and Rajan, JF 2000 and JPE 2001) and a financial accelerator (Bernanke et al., 1999 Handbook). A monetary expansion increases the propensity of banks to assume risks. In turn, financial risks affect economic activity and prices. This "risk-taking" channel of monetary transmission, absent in pure financial accelerator models, operates via the leverage decisions of banks. The model results match certain features of the data, as emerged in recent panel data studies and in our own time series estimates for the US and the euro area.
The Best Course for Greece is to Call in the Fund
by Jean Pisani-Ferry, André Sapir on 02 February 2010
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Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies, European and global governance
Director Jean Pisani-Ferry and Senior Fellow André Sapir argue that the best option to solve the 'Greek crisis' is to bring in the IMF for a stand-by agreement involving conditional lending to the Greek government. While the EU is hesitant to bring in the IMF, Pisani-Ferry and Sapir maintain that the IMF is better suited to handle the political problems that would accompany such a bailout. This op-ed was published in The Financial Times (2 Feb).