Category Archives: Macroeconomic policy

Putting the Con in Consumer Confidence

Is the “Consumer Confidence” index really a good proxy for the health of “the economy”?

Blog Roundup: Does Mario Draghi’s Speech at Jackson Hole Signal Policy Shifts?

ECB President Mario Draghi is recognizing that the recovery in the Euro area remains uniformly weak.

French Political Turmoil a Harbinger of Unrest Roiling Eurozone During Their New Depression

I don’t know that I’d go so far to say it was Paul Krugman-induced, but the French government has been dissolved, primarily because two senior ministers dared speak the unspeakable and criticize Francois Hollande’s continued commitment to austerity, in the face of evidence of its failure.

Yanis Varoufakis on the Euro Crisis: The Global Minotaur out now in Finnish

It is with great pleasure that I received the news from Finland that my Global Minotaur: America, Europe and the Future of the World Economy has just been published in Finland by the good people of Vastapaino Publishers. (Click here for their site.)

My Preface to this Finnish edition follows:

UK Rail Shows Pitfalls of Natural Monopoly Privatization

Railway privatization was sold to the public on the basis it would “provide better value for money for the public who travel by rail.” Who could have predicted it wouldn’t work out?

Blogs Review: The Economics of Big Cities

An intriguing paradox of our age is that the global economy is becoming increasingly local, with super-productive cities driving innovation and growth nationwide. This has generated a discussion as to whether local land use policies, which restrict the housing supply in high productive metro-areas, should be constrained by central governments to limit their negative externalities on overall growth.

Summer Rerun: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things

This post first ran on January 7, 2013 By Matt Stoller, who writes for Salon and has contributed to Politico, Alternet, Salon, The Nation and Reuters. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller Throughout much of the United States, cell phone service is terrible (so is broadband, […]

Why is Financial Stability Essential for Key Currencies in the International Monetary System?

The dollar’s dominant role in international trade and finance has proved remarkably resilient. This column argues that financial stability – and the policy and institutional frameworks that underpin it – are important new determinants of currencies’ international roles. While old drivers still matter, progress achieved on financial-stability reforms in major currency areas will greatly influence the future roles of their currencies.

Why Standard Macro Models, DSGEs, Crash During Crises

Many central banks rely on dynamic stochastic general equilibrium models – known as DSGEs to cognoscenti. This column – which is more technical than most Vox columns – argues that the models’ mathematical basis fails when crises shift the underlying distributions of shocks. Specifically, the linchpin ‘law of iterated expectations’ fails, so economic analyses involving conditional expectations and inter-temporal derivations also fail. Like a fire station that automatically burns down whenever a big fire starts, DSGEs become unreliable when they are most needed.

CBO – Still Pushing Deficit Scaremongering Propaganda

Yves here. We’ve written from time to time about the shameless partisan role that the Congressional Budget Office plays in stoking misguided and destructive concern about budget deficits. It’s important to recognize the CBO’s openly partisan stance on this issue, because it is supposed to make independent, apolitical budget forecasts and is widely and mistakenly seen as “objective”. In fact, the CBO’s regularly takes stances that put them in the same camp as billionaires like Pete Peterson and Stan Druckenmiller, who want to slash Social Security and other social safety nets.

Bill Black: Two EU Finance Ministers Throw Their Bosses and Nations Under the Bus

The finance ministers of Italy and Serbia have just publicly thrown their heads of state and their nations under the bus. In a testament to the crippling effect of the belief that “there is no alternative” (TINA) to austerity, these finance ministers have insisted on bleeding economies that are in desperate need of fiscal stimulus. Their pursuit of economic malpractice is so determined that they eagerly sought out opportunities to embarrass the democratically elected head of state in Serbia when he dared to support competent economic policies.

Portuguese Bank Jitters Intrude on QE-Induced Euphoria

Despite unimpressive and often mixed economic data, market prices in a wide range of financial assets have continued to grind higher. And the results that cheered pundits are hard to square. For instance, Floyd Norris in the New York Times today scratches his head over how inconsistent recent employment gains are with the first quarter GDP contraction at an annualized 2/9% rate. It’s also hard to reconcile with reports of weak retail sales and falling in-store traffic. Similarly, China has become concerned enough about growth that it’s started pump priming again. Even so, car sales dropped by 3.4% in June. And in Japan, machinery orders plunged by 19% in May. And despite the recent discussion of Eurozone recovery, recent reports have put a dent in cheery forecasts.

Bill Black: Merkel’s Pyrrhic Victory over Cameron

The old line that one should be very careful about what one wishes for – for you may receive it applies to Germany’s installation of Jean-Claude Juncker as head of the EU Commission. Germany’s Prime Minister Angela Merkel has just crushed her UK counterpart (David Cameron) by orchestrating a nearly unanimous vote among EU nations to appoint (not, really, “elect”) Juncker as head of the EU Commission (not, really, “Parliament”).

But Merkel has two self-created strategic problems with regard to the EU that threaten the EU and Germany’s dominance over the EU.

Will the Eurozone Be Able to Align National Interests?

Yves here. We ran an earlier post by Ashoda Mody, he argued that Eurozone was failing in resolving its recurring crises successfully. That is a coded way of saying that the odds of breakup are rising. Needless to say, that view elicited a lot of commentary from his readers. Mody addresses their reactions and objection below.

BIS Warns About Destabilizing Low Interest Rates

The financial media is all atwitter (no pun intended) over the Bank of International Settlement’s just released annual report, since it shook a stern finger at central banks for keeping super low interest rates and warned them about the difficulty of renormalizing without kicking up a lot of upheaval.