debating progressive politics in Europe and beyond
A number of commentators have been discussing the use made of the now debunked Reinhart-Rogoff findings by EU economics commissioner Olli Rehn. (Wolfgang Munchau is in good form.) He repeatedly referred in speeches and publications to a 90% rule that, we now know if we didn’t already, is humbug. It is worth looking a little [...]
France is planning to relax budgetary targets in the current year, failing to meet prior commitments, delaying the return to a balanced budget and incurring slippage in reversing the rise in the debt-to-GDP ratio, now set to peak at 94.3 per cent of GDP next year. About time too! Under the new economic governance rules [...]
The Commission has just issued an analysis (in-depth review, IDR) of thirteen EU countries considered to have macroeconomic imbalances.* In principle this is a sensible exercise. Macroeconomic imbalances had built up in the pre-crisis years. They have important cross-border spillover effects. Resolving them is thus a matter of the common interest of all the member [...]
The IMF’s mea culpa about its wrong assessment of the effects of fiscal austerity in European crisis countries is nice. However, did the IMF really have a new insight? No, not at all. Indeed, already ten years ago, in 2003, the IMF’s Independent Evaluation Office (IEO) published a thorough study about the effects of the [...]
France is at a crossroads. It has numerous valuable assets, but it cannot postpone long-overdue reforms, or else it will become increasingly irrelevant in a fiercely competitive global economy. This is the economic challenge that President François Hollande, Prime Minister Jean-Marc Ayrault, and all of us in the French government must confront. We face a [...]
Yesterday the OFCE, ECLM and IMK presented their joint Independent Annual Growth Survey in Brussels. You can download the report (which still requires a little polishing in places) here. The aim of this initiative, as the name suggests, is to offer an alternative analysis of the economic situation in Europe and of the policies to [...]
In April 2010, when the global economy was beginning to recover from the shock of the 2008-2009 financial crisis, the International Monetary Fund’s World Economic Outlook predicted that global GDP growth would exceed 4% in 2010, with a steady annual growth rate of 4.5% maintained through 2015. But the forecast proved to be far too optimistic. In [...]
Europe is now haunted by the specter of debt. All European leaders quail before it. To exorcise the demon, they are putting their economies through the wringer. It doesn’t seem to be helping. Their economies are still tumbling, and the debt continues to grow. The credit ratings agency Standard & Poor’s has just downgraded the [...]
The European Council is meeting in Brussels and crucial decisions are expected regarding both crisis resolution and medium-term reform of the euro area. A grand bargain is likely to emerge in which the ECB will do more to backstop euro area governments and reduce their borrowing costs. In return member states, at least in the [...]
Sometimes a counter-intuitive statement is based on a clever insight. For example, the statement ‘fiscal austerity can lead to higher government deficit ratios’ sounds implausible, but (most) economists agree that, at least under certain conditions, it may well apply. The reason is that the austerity reduces output, and thus the denominator of the deficit ratio, [...]
The ECB has indeed intervened today to buy Spanish and Italian bonds – or for all I know merely announced that it would do so – and, voila, the interest rates on these governments’ debt demanded by ‘the markets’ have fallen by between half and one percentage point. Let me put that in perspective. For [...]
Reports over the weekend and today indicate that hectic negotiations between heads of government, notably Sarkozy and Merkel, and the weekend meeting of the euro area finance ministers have staved off the immediate threat of Greek default, but have done nothing to resolve the crisis. Time has been bought, again. The Merkel/Sarkozy deal shows two [...]
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