debating progressive politics in Europe and beyond
This year’s annual meeting of the International Monetary Fund made clear that Europe and the international community remain rudderless when it comes to economic policy. Financial leaders, from finance ministers to leaders of private financial institutions, reiterated the current mantra: the crisis countries have to get their houses in order, reduce their deficits, bring down [...]
Business lobbies and conservatives have become extremely good at hijacking progressive policy concepts and perverting them into something that suits their own agenda. European economic governance is a perfect example of this. In the nineties, trade unions and progressive politicians were staunch defenders of economic governance. At the time, the idea was that if all [...]
The hypothesis of expansionary fiscal contraction dates back to the early 1990s. According to this hypothesis austerity might have expansionary effects in cases where households trust government efforts and think that today’s sacrifices will translate into tax reductions in the future. These expectations on their future disposable income might induce them to increase consumption and [...]
In spite – or rather because – of a series of austerity packages and a constitutional “debt brake”, the exercise of squaring the circle is going to collapse in Spain. In the environment of a contracting economy (latest forecast -1.7 %), monthly new unemployment records (February: 23.6 %, youth unemployment 50.5 %) and a deepening [...]
Over the last two decades of “inflation targeting” policies, one of the last places to look for pragmatic economic policy were central banks. In answer to the question, in what country does the central bank have a growth focused mandate, most would answer, “there are none” or “beats me”. Yet, there is at least one. [...]
DeLong and Summers on fiscal policy in a depressed economy is out. The headline point is the argument that austerity when you’re in the liquidity trap may well worsen, not improve, your long-run fiscal position; I’ve been making the same point for a couple of years, but Brad/Larry present some evidence from the birth of Eurosclerosis and the [...]
Austerity alone cannot solve Europe’s economic and financial crisis. Growth and jobs need to be promoted with equal zeal. European Union leaders now recognize this: kick-starting growth in 2012 was high on the agenda at the European Council’s meeting on January 30. But the big question remains: How? The need for immediate action is clear. [...]
I’ve just read ‘Tales of Fiscal Adjustment’ by Alesina and Ardagna, which appears to be the founding text for the idea of expansionary austerity. The level of scholarship, at least as it applies to Australia (which is their first illustration) is exceptionally poor, to the extent that it requires a rescuscitation of the ancient Internet [...]
Neville Chamberlain is remembered today as the British prime minister who, as an avatar of appeasement of Nazi Germany in the late 1930’s, helped to usher Europe into World War II. But, earlier in that fateful decade, relatively soon after the start of the Great Depression, the British economy was rapidly returning to its previous [...]
I’m giving a talk in Paris today. Here are some slides; they won’t come as a shock to regular readers, but it may be useful to see them all in one place. First, I make the case that the overall economic crisis is driven by private debt, not public debt: Then I point to the [...]
The Euro crisis may soon be over. This is what German Finance Minister Schäuble thinks and his view is finding an echo among a growing community in the financial markets. But is it true? For Chancellor Merkel and her followers, we are experiencing a debt crisis caused by irresponsible fiscal policies. Their remedy is therefore [...]
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 [...]
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