The ECB’s Problem Is Not Arithmetic But Politics

Andrew Watt

Francesco Papadia, a distinguished monetary policy expert, has written an unfortunately potentially misleading piece on quantitative easing (QE) by the ECB. Entitled Some unpleasant Quantitative Easing Arithmetic, the author argues, in essence, that “arithmetics” militate against the use of QE because of the following three facts: the sums needed are large, the only asset classes that […]

The core problem of the ECB’s dangerous asymmetry

Andrew Watt

The ECB has once again failed to take action to boost the European economy, either by cutting rates (from their already very low level of 0.25%) or, more effectively, by adopting one or more direct measures to inject liquidity into the economy. This is despite the fact that inflation, at 0.8%, is well below target […]

Karlsruhe’s Campaign Against European Integration Continues

Andrew Watt

Update: For a little EP-electoral maths, see the added last 2 paragraphs Karlsruhe does it again. After sawing away at the main prop that is keeping the euro area together, it has now decided – once again on a narrow majority – that what is good enough for the German Parliament is too good for […]

Karlsruhe’s Underappreciated Threat To The Euro

Andrew Watt

The euro area once again faces a potentially existential threat, following Friday’s decision by the German Constitutional Court in Karlsruhe. The funny thing is, hardly anyone seems to realise it. To see why this is the case it is helpful to separate the procedural from the substantive issues, before bringing them together again. The procedure: […]

Shocking News: The ECB Acts In Accordance With Its Mandate

Andrew Watt

The media are full of commentaries on yesterday’s decision by the ECB to cut interest rates by a quarter point and maintain its offer of full allotment MRO (which ensures that short-term market interest rates remain low). Most are surprised and not a few are hostile. Why the surprise? Not just the recent fall in […]

Lessons In Creative Statistics: FAZ/Minimum Wage Edition

Andrew Watt

The big economic policy debate in Germany concerns the level of a putative minimum wage. (See also here.) The country’s flagship newspaper, the conservative Frankfurter Allgemeine Zeitung (FAZ) weighed into the debate under the headline How high a minimum wage can Germany bear? The article featured a powerful graph in which national minimum wages are […]

Getting Aggressive

Andrew Watt

The same story again and again. Unemployment in the euro area continues to rise. On today’s figures (which are seasonally adjusted) another 60,000 wasted lives and wasted opportunities for wealth creation in the euro area in September, compared with the previous month, and one million more than a year ago. Meanwhile inflation has fallen again, […]

The German Minimum Wage Debate: Lessons From An EU Comparison

Andrew Watt

A minimum wage is certain to emerge as a cornerstone policy of the next German government. The debate is under way, in the coalition negotiations between the CDU/CSU and SPD, but also in the media and academia, about its level, coverage and the mode by which it is to be implemented and determined over time. […]