Current Warnings
Discover our Thematic BlogSpots series: a timely review of an important topic.
US-Euro Area Unemployment Divergence
Six years since the start of the Great Recession, US unemployment has nearly returned to its pre-crisis level. By contrast, in the euro area, a double dip recession has stalled growth and pegged unemployment around 11.5%, compared to 7.5% in 2008. At his August 2014 central bank symposium speech, Mario Draghi called attention to this divergent post-2011 trend.
How real is this divergence?
Inequality: what role for policymakers?
While inequality is coming to the fore of the policy debate, as discussed in our previous BS, policy responses differ depend on the definition of inequality, on institutions or economists, or what economists think is the driver of global inequality—leaving a vacuum as to what policies to actually implement...
Tackling current and future financial crisis with regulations: the Euro Zone gamble
European banks suffered heavily from the 2007 crisis and are recovering laboriously. Banking systems in Eurozone were under-capitalized since the financial crisis, and turned to risky sovereign debt assets as a result. With the emergence of the European debt crisis, banks faced severe liquidity and solvency issues. Even more worrying is the...
Geopolitics and the economy: What are the risks?
Geopolitical risks are at the centre stage of 2015 risk agenda. The list of potential risks is long: the Ukraine-Russia conflict, the Israeli-Palestinian conflict, the terrorist acts of the Islamic State and a possible coordinated response. How is the geopolitical context affecting the economic outlook?
Can Structural Reforms Save the Eurozone?
Structural reforms are increasingly called upon to restore solid economic growth, especially in the eurozone, where monetary policy lacks in effectiveness and fiscal space is limited. But the composition and pace of reforms, as well as their political acceptability, raise questions. Under what conditions could structural reforms lift Eurozone GDP?
Is sluggish growth in Europe a usual downturn or an investment gap?
From 2007 to 2013, investment has fallen by 18 percentage points of GDP in the EU, compared to just 6 in the US. In Southern Europe, investment literally collapsed. Even in Germany, DIW, the German economic institute, reckons that the investment gap is real putting it at about 2% of GDP, or €200 billion, enough for policy action...
Is Secular Stagnation the New Normal?
The concept, first coined by Alvin Hansen in 1938 to describe the US economy after the Great Depression, was reintroduced by Summers in a November 2013 speech. It describes a situation where "something more fundamental has gone wrong than the usual down-phase of the business cycle." But is the current environment really more than just some usual downturn?