Category Archives: Macroeconomic policy

Greece’s Hot Summer

Figures confirm the pattern already observed last month, with a marked improvement in the primary balance achieved mostly via expenditure cuts and a more limited improvement in revenues.

Wolf Richter: Afraid of Losing Trillions, Wall Street Fights Fed Rate Hikes

Wall Street working up to another tantrum to head off a rate hike from the Fed. Will it work again?

UK Elections Today: Unpredictable, But Depressingly Little Room Between the Parties on Austerity

By David Dayen, a lapsed blogger. Follow him on Twitter @ddayen While in this country somebody’s probably writing up an early analysis of the 2024 elections, for UK elections they do quick-strike campaigns only lasting a handful of weeks. And today voters cast their ballots in an election most observers agree will really get interesting […]

Alicia García-Herrero: Additional Monetary Easing for China?

As many other central banks in the Asian region, the People Bank of China (PBoC) has been on an easing mode for a few months now and more seems to be in the store. The once relatively polarized debate on what the PBoC monetary policy stance should be has increasingly leaned towards additional easing. Some analysts are even proposing full-fledged quantitative easing (QE), in the form of US Treasury sales to raise funds for assets locally, such as local government bonds and other hardly–performing assets. There is no doubt that the PBoC could, thereby, bring another big stimulus into the already heavily massaged Chinese economy as it would help debt-saddled local governments to clean their balance sheets and, at the same time, allow banks’ to lend further. As if this were not enough, any additional easing – capital controls permitting- would also push the RMB to a more depreciated level, bringing thereby an additional push to external demand.

Wolf Richter: China Containerized Freight Index Plunges to Multi-Year Low, Shanghai-EU Rates Totally Collapse, US Rates Morose

Weak demand in the Eurozone; inventory build-up in the U.S., and free money meant carriers added more and more ships. How does the movie end?

An Assessment of the State of the World Economy

Complex forces are shaping macroeconomic evolutions around the world. In this column, IMF’s Chief Economist Olivier Blanchard describes some of these forces and provides an overview of the state of the world economy. Putting the forces together, the baseline forecasts are that advanced countries will do better this year than last, and emerging countries will slow down. Overall, the global growth will be roughly the same as last year, with the macroeconomic risks having slightly decreased.

Greece Talks With Eurogroup Hit “Complete Breakdown”

The Greek negotiations with the Eurogroup are exemplifying the saying, “Things look the darkest before they go completely black.”

Explaining the Dearth of Private Investment

Business investment in advanced economies contracted sharply during the global crisis and has recovered little since. This column argues that the main factor holding back investment is overall economomic weakness. In some countries other contributing factors include financial constraints and policy uncertainty. Fixing the investment dearth will require fixing the general weakness in economic activity.

Ilargi: The American Consumer Will Never Be Back

I don’t see a time in the future when American consumers will start spending again at a rate near that required for economic recovery.

Should We Be Spooked by Deflation? A Look at the Historical Record

Concerns about deflation – falling prices of goods and services – are rooted in the view that it is very costly. This column tests the historical link between output growth and deflation in a sample covering 140 years for up to 38 economies. The evidence suggests that this link is weak and derives largely from the Great Depression. The authors find a stronger link between output growth and asset price deflations, particularly during postwar property price deflations. There is no evidence that high debt has so far raised the cost of goods and services price deflations, in so-called debt deflations. The most damaging interaction appears to be between property price deflations and private debt.

Herr Schäuble’s Foibles: The Eurozone Rebalancing Conundrum

Until we jettison the neoliberal liturgy repeated daily in the press, universities, central banks, and Treasury departments, Schäuble’s Foibles will continue to rule.

Wolf Richter: FOMC Minutes Show Fed Doesn’t Know How to Unscramble the ZIRP Omelet

FOMC members are discussing an exit from QE, even the Fed has no clue how to get the financial markets through it in one piece.

Ilargi: Russia’s Central Bank Governor Is Way Smarter Than Ours

Just like the Bank of England hired Mark Carney from Canada, maybe our central bank, the Fed, should hire Elvira Nabiullina from Russia?