Perhaps the greatest damage caused by the confrontation with Greece is a general loss of confidence. If we want to get Greece back to growth, people, companies and investors have to regain confidence in the viability of the country. For this to work, a legitimate and competent government as well as an efficient administration and judiciary are essential. Yet the issue of debt sustainability is … [continue reading]Read more
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]Read more
The decision by the Swiss National Bank (SNB) was long overdue. Its exchange rate policy hat protected Swiss exporters and helped their competitiveness through a weaker Swiss franc. But this policy could prove a very expensive mistake, because the Swiss franc will had to appreciate against the euro in the foreseeable future. The valuation losses for the DNB could therefore become substantial. The timing of the decision by the SNB is certainly not a coincidence. The expectations of an ECB … [continue reading]Read more
This article was first published on ft.com on 27 August 2014.
The news that German output declined in the second quarter has dented the country’s economic euphoria, but only a little.
Many blame the Ukraine crisis and transient factors such as the mild winter, and believe that Europe’s largest economy remains fundamentally strong. They are wrong. Germany’s disappointing performance mostly reflects structural weaknesses, both at home and in the eurozone. Policy makers should act quickly, before the problems become further … [continue reading]Read more
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]Read more
This article was first published on FT.com on 18th November 2013.
Germany is under attack from the US government, the International Monetary Fund and the European Commission for its huge current account surplus. The criticism is right, but for the wrong reasons. The surplus is excessive, but the accusation that it hurts Europe is nonsense. Worse, it distracts German policy makers from tackling the true cause of the national surplus and the country’s economic Achilles heel: its huge private investment … [continue reading]Read more
Published in Financial Times (21st of February 2013)
There is a lot of hype about the prospects of an EU-US free trade agreement, especially in the wake of Barack Obama’s State of the Union address last week. Supporters point to the benefits such an agreement could bring to both economies. Yet the costs are likely to outweigh the benefits. Most importantly, a transatlantic deal will undermine multilateralism, in particular the long-overdue completion of the Doha round, and weaken multilateral institutions … [continue reading]Read more