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.
Read more...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.
Read more...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.
Read more...Until we jettison the neoliberal liturgy repeated daily in the press, universities, central banks, and Treasury departments, Schäuble’s Foibles will continue to rule.
Read more...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.
Read more...The best budget policy: Let the government deficit float and spend on programs to produce full employmen and solve our many other problems.
Read more...Just like the Bank of England hired Mark Carney from Canada, maybe our central bank, the Fed, should hire Elvira Nabiullina from Russia?
Read more...Greece’s crisis is a public debt crisis enabled by membership in the Eurozone. The Baltic crisis was a private sector property bubble crisis.
Read more...Can capital flows mitigate or even eliminate the problems generated by secular stagnation?
Read more...The Greek government continues to climb down substantively on its promises of resistance to the dictates of its creditors as time pressure intensifies.
Read more...Budget season brings out the deficit/debt burden propagandists, and Maya MacGuineas of Fix the Debt is a prominent fixture. Sadly, her type needs to be debunked often.
Read more...Things are not looking good for Greece.
Read more...If you followed Yanis Varoufakis before he became a household word (at least in Europe and in finance circles), you’ll recognize that he is making a layperson-friendly case for the Eurozone reforms that he, Stuart Holland, and Jamie Galbraith call A Modest Proposal. A new wrinkle is that he argues that the scarcity of bonds eligible for QE argues for one of its ideas, infrastructure spending funded by the EIB (those bonds would presumably be eligible for QE purchases).
Read more...Bernie Sanders gave a forceful, if sobering, assessment of the state of the economy from the perspective of working men and women, as well as retirees, and focused on the hypocrisy of corporations and the wealthy that poor-mouth as a way to extract even more subsidies and tax breaks.
Read more...Yves here. Unlike many other comments on the state of Greece’s finances, this post takes a stab at Greece’s ongoing budget needs as well as its various debt due dates. Note that one uncertainty flagged here has been resolved in Greece’s favor. The Greek government will receive €550 million this month from the Hellenic Financial Stability Facility.
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