The Bank of Japan has recently implemented one of the largest central bank policy shifts in modern times, raising its inflation target explicitly to 2% and kicking off the most rapid balance sheet expansion among the leading central banks. This column assesses this policy decision and its potential pitfalls, and compares it to similar policies enacted in the past. Unless policy has a significantly larger impact on financial conditions going forward than it has to date, the revised framework will likely be insufficient to achieve the Bank’s inflation target any time soon.
A recent Vox eBook examined the the potential issues facing various EU members when it comes to negotiating with the UK over Brexit. This column, taken from the eBook, examines Spain's negotiating position, including the possible stumbling block of Gibraltar.
A recent Vox eBook examined the the potential issues facing various EU members when it comes to negotiating with the UK over Brexit. This column, taken from the eBook, focuses on Germany and argues that as the country's prosperity is inseparable from the success of Europe and the Eurozone, Germany's priority has to be to preserve both and to avoid corrosive, possibly divisive or even destructive compromises with a country that wants to leave.
As with previous systemic crises, the 2007-2009 crisis has created regulatory reform, but is it adequate? This column argues that prudential regulation should consider interactions between conduct – capital, liquidity, disclosure requirements, macroprudential ratios – and structural instruments, and also coordinate with competition policy. Though recent reforms are a welcome response to the latest crisis, we do not know how effective they will be in future.
Thirty years ago, a distinguished group of economists advocated a ‘two-handed’ approach to unemployment that targeted supply as much as demand. This column examines recent work on the effectiveness of cyclical and structural policies – the two ‘hands’ – targeting unemployment in Europe. It further considers the pressures from greater integration of capital and labour markets on the success of these reforms. Cyclical measures, particularly the easing of monetary policy, have been successful, but further structural reforms are still needed in many countries where average unemployment remains too high.
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