The so-called Ricardian equivalence suggests that a government will have the same effect on private spending whether it raises taxes or takes on additional debt to finance higher government spending. The logic behind it is that as the government gets more indebted, people would put aside more money in expectation of higher taxes in the future.
Another look at Ricardian equivalence: The case of the European Union
Thomas Grennes, Andris Strazds, 28 February 2013
Winners of a European banking union
Dirk Schoenmaker, Arjen Siegmann, 27 February 2013
The aim of the prospective banking union is to foster financial stability in Europe. The euro sovereign debt crisis has shown that financial stability cannot be managed effectively at the national level, because of the diabolic loop between national governments and banks (Alter and Schüler 2012).
Investigating the effect of exchange-rate changes in Japan, China, east Asia, and Europe
Willem Thorbecke, 26 February 2013
Policymakers are concerned about currency wars and competitive devaluations. Many complain that trading partners are artificially lowering their exchange rates through quantitative easing and managed exchange rates in order to gain price competitiveness for their exporters.
IMF lending and banking crises
Luca Papi, Andrea F Presbitero, Alberto Zazzaro, 25 February 2013
During the 1990s, the IMF’s lending policy has been blamed for imposing the economic recipes of the Washington Consensus on recipient countries.
Mutualisation and constitutionalisation
Harold James, Hans-Werner Sinn, 26 February 2013
It is often claimed – especially but not only by US economists – that the travails of the euro show that it is impossible to have a monetary union in the absence of a political union.
Why do large movements in exchange rates have small effects on international prices?
Mary Amiti, Oleg Itskhoki, Jozef Konings, 19 February 2013
Exchange rate moves have surprisingly small effects on prices. This apparent ‘disconnect’ is one of the central puzzles in international macroeconomics. It is also a continual headache for policymakers who rely on exchange rates to accommodate the adjustment of global (current account) imbalances.
Designing a federal bank
Harold James, 18 February 2013
How centralised should the operation of a central bank be? Central banks were originally created as instruments to facilitate the financial arrangements of unified and centrally directed states, as was the case for the first central banks – in Sweden, England, and France.
Making the European Monetary Union
Harold James, 17 February 2013
It is often claimed – especially but not only by US economists – that the travails of the euro show that it is impossible to have a monetary union in the absence of a political union, and that Europe is necessarily embarking on a US-style experiment in federalism.
We may have avoided the cliffs, but we still face high mountains
Olivier Blanchard, 13 February 2013
Optimism is in the air, particularly in financial markets. And some cautious optimism may indeed be justified.
Compared to where we were at the same time last year, acute risks have decreased. The US has avoided the fiscal cliff, and the euro explosion in Europe did not occur. And uncertainty is lower.
Monetary policy and firing costs
Ester Faia, Wolfgang Lechthaler, Christian Merkl, 9 February 2013
Recession has put many Eurozone labour markets under stress, particularly those in Mediterranean countries that have inflexible markets. As part of ongoing reforms, many have tackled the labour market – under the explicit encouragement of the EU and the ECB.
- Fiscal consolidation: At what speed?Blanchard, Leigh
- Public debt and economic growth, one more timePanizza, Presbitero
- Escaping liquidity traps: Lessons from the UK’s 1930s escapeCrafts
- The lessons of the North Atlantic crisis for economic theory and policyStiglitz
- Do entrepreneurs matter?Becker, Hvide
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Reichlin, Baldwin, 14 April 2013
CEPR Policy Research
- Political Credit Cycles: The Case of the Euro ZoneFernández-Villaverde, Garicano, Santos
- Winning by Losing: Incentive Incompatibility in Multiple QualifiersDagaev, Sonin
- Income and schoolingBrückner, Gradstein
- Monetary Policy and Rational Asset Price BubblesGalí
- Does Supporting Passenger Railways Reduce Road Traffic Externalities?Lalive, Luechinger, Schmutzler
- How the EZ crisis is permanently changing EU institutionsMicossi
- WTO 2.0: Global governance of supply-chain tradeBaldwin
- Is US economic growth over? Faltering innovation confronts the six headwindsGordon
- The economic crisis: How to stimulate economies without increasing public debtWood
- Austerity: Too Much of a Good Thing?Corsetti