Solving the macroeconomic policy challenge in Europe

Richard Wood, 19 December 2012

Five years after the subprime bubble burst, the self-correcting nature of business cycles is being questioned and, subsequently, orthodox macroeconomic policy is starting to be challenged. This column introduces a radical rethink of options open to macroeconomic policymakers, suggesting that in order to simultaneously achieve economic stimulus without increasing debt, new money creation should be used to directly finance on-going budget deficits.

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Countries in Europe are either slipping into recession or experiencing worsening depression. Economies are headed in the wrong direction, and the malaise is spreading. The current orthodoxies are failing.

Topics: Macroeconomic policy
Tags: debt, macroeconomic policy, quantitative easing, Subprime

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Did the Indian capital controls work as a tool of macroeconomic policy?

Ila Patnaik, Ajay Shah, 20 November 2012

Can we agree that capital controls are an effective tool for macroeconomic policy? If so, should they be permanent or temporary? This column argues that under a permanent system of capital controls, a country will always bear costs whether there is a surge or capital flight or not. Looking at the Indian experience, it’s clear that capital controls do not necessarily help a government meet its macroeconomic goals in times of need.

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The empirical literature on the effectiveness of capital controls for macroeconomic management has generally found that transitory capital controls have a relatively limited impact on the magnitude of flows (Magud et. al. 2011). Controls appear to influence the composition of capital flows, but they seem to do so only for a short time.

Topics: Macroeconomic policy
Tags: capital controls, capital flows, India, macroeconomic policy

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Jackson Hole, the crisis and policy responses: A new orthodoxy

Richard Wood, 31 August 2012

The crisis is deepening in Europe, and recession is spreading globally. This column argues that macroeconomic policies have failed to overcome the dual problems of flagging aggregate demand and high and spiralling public debt. It urges policymakers to abandon failed orthodoxies and irrelevant treaties and consider new, alternative solutions.

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Demand, output, manufacturing activity and exports are weakening in many parts of the industrialised world. Quantitative easing policies have generally run their course, as interest rates are at the zero bound or thereabouts. In the Eurozone it is questionable whether the ‘one-size-fits-all’ policy interest rate approach is helpful or meaningful, or whether it can be sustained.

Topics: Global crisis, Macroeconomic policy
Tags: Eurozone crisis, global crisis, macroeconomic policy

The future of macroeconomic policy: Nine tentative conclusions

Olivier Blanchard, 23 March 2011

The global economic crisis has taught us to question our most cherished beliefs about the way we conduct macroeconomic policy. In this column, IMF chief economist Olivier Blanchard lays out his thoughts, arguing that we are far from a new Washington Consensus. Exploration is the order of the day.

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The global economic crisis forces us to question our most cherished beliefs about the way we conduct macroeconomic policy. With this in mind, I have just organised, together with David Romer, Joe Stiglitz, and Michael Spence, a conference at the IMF on "Rethinking macroeconomic policy”.

Topics: Macroeconomic policy
Tags: fiscal policy, macroeconomic policy, monetary policy

International macro-finance

Anna Pavlova, Roberto Rigobon, 15 February 2011

International macro-finance is a new area of open economy macroeconomics that brings portfolio choice and asset pricing considerations into models of international macroeconomics. This column argues that the recent global crisis illustrates just how important these considerations are. It surveys recent developments in international macro-finance and suggests several promising directions for future research.

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Financial markets and their role in international risk sharing have inspired a vast body of theoretical literature. Over the past 40 years, international finance and economics has evolved into a vibrant field spreading from the basic international version of the capital asset pricing model to some of the most sophisticated dynamic stochastic general equilibrium models.

Topics: Frontiers of economic research, International finance
Tags: financial regulation, international macro finance, macroeconomic policy

Automatic stabilisers and the economic crisis in Europe and the US

Mathias Dolls, Clemens Fuest, Andreas Peichl, 17 September 2010

While debate rages over the appropriate size and timing of fiscal expansions, this column points out that much less attention is devoted to role of the automatic stabilisers in the tax and transfer system. It compares these stabilisers in Europe and the US, finding that social transfers play a key role in the stabilisation of disposable incomes and consumer demand.

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The big difference between the "great recession" and the "Great Depression" was government policy – especially stabilisation policy (Eichengreen and O'Rourke 2010).

Topics: Global crisis, Macroeconomic policy
Tags: automatic stabilisers, fiscal stimulus, global crisis, macroeconomic policy

Using states for macroeconomic fiscal policy

Robert P Inman, 15 September 2010

What can we learn from US President Obama’s fiscal stimulus? This column argues that channelling the stimulus package through state governments exposed it to agency costs, free-riding problem, and political expediency. As a result, the stimulus has failed to meet its objectives at the state level. The lesson is that fiscal stimulus should be conducted centrally.

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The recession of 2007 is perhaps the deepest, longest, and most damaging economic event of the last 75 years. In response, all tools of macroeconomic policy management were called into use: from direct easing of interest rates and purchasing of public and private debt to tax cuts and government spending.

Topics: Global crisis, Macroeconomic policy, Politics and economics
Tags: fiscal stimulus, global crisis, macroeconomic policy

EU Economic Integration: Lessons of the past, and what does the future hold?

17 - 19 March 2009, Dallas, Texas, USA

The Economics Interest Section of the European Union Studies Association (EUSA) and the Globalization & Monetary Policy Institute of the Federal Reserve Bank of Dallas are pleased to announce an economics workshop on European Integration. The meeting will be held at the Federal Reserve Bank of Dallas on 18-19th March, 2010 linked to a one-day public conference that the Institute is organising on 17 March on 10 years of the euro.
Papers on any aspect of European economic integration are welcome, as well as papers that place European integration in the context of the ongoing globalization of trade and capital flows. Abstracts are to be sent to both Patrick Crowley at patrick.crowley@tamucc.edu and David Mayes at d.mayes@auckland.ac.nz by January 10th, 2010. Please indicate whether you would also be willing to serve as a chair and/or discussant.

Organizer(s):
Patrick Crowley
Type:
Workshop
Location:
Dallas, Texas, USA
Attendance:
Closed attendance
Contact:
patrick.crowley@tamucc.edu
Institution:
European Union Studies Association; Federal Reserve Bank of Dallas
More information:

Disclaimer: Vox is not responsible for the accuracy of this information.

Topic(s):
Competition policy, Energy, Environment, EU institutions, EU policies, Europe's nations and regions, Exchange rates, Financial markets, Global crisis, Global economy, Global governance, Institutions and economics, International finance, International trade, Macroeconomic policy, Microeconomic regulation, Monetary policy, Politics and economics, Productivity and Innovation, Welfare state and social Europe
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Competition policy, economic policy, European integration, macroeconomic policy

Curbing instability: Policy and regulation

Axel Leijonhufvud, 11 July 2009

The current financial system poses three major sources of risk to macroeconomic stability – price level instability, the increased system-wide leverage, and the increased global connectivity of the financial system. This column proposes policy alternatives to deal with these challenges.

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Macroeconomic perspectives have been largely missing in the debate on how to prevent a re-run of the present crisis. In CEPR Policy Insight 36, I focus on the macroeconomic instabilities that the crisis has revealed.

Topics: Global crisis
Tags: inflation targeting, macroeconomic policy, monetary policy

Master in Macroeconomic Policy and Financial Markets

21 September 2009 - 20 June 2010, Barcelona, Spain

The MSc in Macroeconomic Policy and Financial Markets is a one-year full-time Master taught in English and provides participants with the relevant knowledge about the central issues in macroeconomic and financial economics analysis, as well as the key tools, data and models. Some examples are DSGE models, VAR’s, and ARCH. Participants learn not only how to use these modeling and statistical techniques but also how they are actually applied by government agencies and private financial firms. For more information, please visit www.barcelonagse.eu/MFM/html.

Organizer(s):
Albert Marcet
Type:
Course
Location:
Barcelona, Spain
Attendance:
Open attendance
Contact:
clara.kirchner@barcelonagse.eu
Institution:
Barcelona Graduate School of Economics
More information:
www.barcelonagse.eu/MFM.html

Disclaimer: Vox is not responsible for the accuracy of this information.

Topic(s):
Macroeconomic policy
Tags:
macroeconomic policy

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