Business Cycles, Growth, Economic Structure Economic Policy Public Finances and Financial Economics

Expert Commission presents 10-point plan to increase investment, growth, and jobs

PK_Expertenkommission

The Expert Commission appointed by Federal Minister of Economic Affairs Sigmar Gabriel proposes a 10-point plan to lay a new foundation for increasing investment, growth, and jobs in Germany. With this, both the existing investment opportunities in the public sector as well as the framework conditions for private investment should improve – including through an investment pact for municipalities, the formation of a public infrastructure institution, and a public infrastructure investment fund. In the creation of a plan to “strengthen … [continue reading]

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Economic Policy Monetary Policy

ECB Projections for Growth and Inflation Very Optimistic – Downside Risks to the Euro Area Still Significant

Comment on the ECB Monetary Policy Decisions (5 March 2015):

The new ECB projections for growth and the return to price stability are very optimistic. The ECB projections are based on probably too optimistic expectations about the effectiveness of its QE programme. The weak euro and the decline in government bond yields over the past few months are largely the result of the high expectations about the QE programme. It is unlikely that the QE programme will continue to exert … [continue reading]

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Currency and Financial Markets Economic Policy Foreign Trade and International Economic Relations Macroeconomics Public Finances and Financial Economics

GDP-linked bonds as a key for a sustainable recovery of the Greek economy

The Greek government yesterday proposed the transformation of part of its official debt into GDP-linked bonds. DIW Berlin has published a detailed study, which analyses how such an instrument might work. DIW Berlin considers this proposal as a constructive option to improve debt sustainability, which will ultimately foster a return to economic growth. Such a solution will help Greece accept ownership of its reform prorgramme – which is the key for a sustainable recovery of the economy. It is … [continue reading]

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Currency and Financial Markets Economic Policy Monetary Policy

Decision of ECB sends a strong and convincing argument

The decision of the ECB sends a strong and convincing argument that it is determined to pursue its mandate of price stability. The programme constitutes a necessary step to help end the European crisis. We don’t have to like the programme, but we should support it to give Europe a perspective for the future.

The size of the purchase programme sends a credible signal to financial markets, also as it exceeds expectations. The ECB rightly underlines the urgent responsibility of … [continue reading]

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Economic Policy Europe Macroeconomics

Strong and Overwhelming Support for the ECB

Statement on the recommendation of the ECJ advocate general Cruz Villalón on bond purchasing of the ECB

The recommendation of the advocate general of the ECJ is an overwhelming success for the European Central Bank (ECB). Such a strong and overwhelming support for the ECB is surprising and could not have been expected. The decision finds the OMT program to constitute a legal instrument of monetary policy that pursues a legitimate objective. The recommendation is in clear contradiction to the … [continue reading]

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Business Cycles, Growth, Economic Structure Currency and Financial Markets Economic Policy Europe Foreign Trade and International Economic Relations Macroeconomics

Sanctions Blowback

This article was first published on Project Syndicate on 14 August 2014.

With the crisis in Ukraine intensifying, the United States and the European Union are locked in a battle of wills – and sanctions – with Russia. Indeed, in retaliation for the intensification of Western financial sanctions, Russia has announced a ban on food and agricultural imports from the US and the EU. But the real threat to the West lies in the potential impact of a financial crisis … [continue reading]

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Currency and Financial Markets Economic Policy Europe Macroeconomics

Germany’s Pyrrhic Victory

This article was first published on Project Syndicate on 10 February 2014.

The German Constitutional Court has ruled against the European Central Bank’s pledge to buy potentially unlimited quantities of distressed eurozone countries’ government bonds, and has called on the European Court of Justice (ECJ) to confirm its decision. Until that happens, the “outright monetary transactions” (OMT) scheme is effectively dead, weakening the ECB’s ability to act as an effective and credible financial-market backstop at a time when European governments … [continue reading]

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