Pontus Rendahl, 26 April 2012

Many developed economies are in a liquidity trap with interest rates at or near zero. Many also have high unemployment that looks set to persist. This column argues that it is times like these when governments should be spending more, not less – they just have to be careful how they do it.

S. M. Ali Abbas, Nazim Belhocine, Asmaa El-Ganainy, Mark Horton, 18 December 2011

As policymakers continue to grapple with high debts and the troubles that come with them, this column looks at the lessons from data on public debt in 178 countries stretching back as far as 1880. It argues that when faced with an unsustainable debt burden, slow but steady adjustment is the way to go.

Maurizio Bovi, 02 December 2011

The countries most affected by the Eurozone debt crisis seem also to be characterised by bad institutions and large shadow economies. This column describes the bad equilibrium in which bad governments offer few and low-quality public services and make people less willing to pay for services. Firms stay underground, public receipts stay low, and governments remain inefficient. In sum, the presence of inept bureaucracy may be strongly associated with the shadow economy.

Lans Bovenberg, Casper van Ewijk, 20 November 2011

There is a large variety of pension systems across EU members. This column argues for more private retirement saving as it is necessary to maintain old-age incomes and as it may also contribute to the stability of markets for government debt. But, it adds, governments should retain important responsibilities to prevent moral hazard due to intragenerational redistribution, to facilitate risk-sharing, and to minimise the agency issues due to financial illiteracy.

Anna Ivanova, Paolo Mauro, Edouard Martin, 09 November 2011

Fiscal consolidation is just one of the many ugly phases that we will have to get used to in the coming years. Yet how can governments reduce their debts without making things even uglier? This column argues that although today’s debts are the highest since World War II, there is much to be learned from previous attempts.

Andrea Presbitero, 19 November 2010

The global crisis and expansionary government reactions that followed revived the attention of policymakers and academics on the adverse effects of large public debt. This column examines the case of Heavily Indebted Poor Countries. It argues that a focus on the consequences of external debt is outdated as the share of domestic debt in total public debt in increased from 11% to 37% from 1991 to 2008. A new framework to deal with total public debt is now required to take into account domestic interest payments.

Hans Gersbach, 14 November 2010

How can excessive public debt be avoided? This column proposes a novel solution: “vote-share bonds”. These government bonds are tied to the share of the vote that the adoption of the underlying deficit has received in parliament. A bond with a higher vote-share is considered senior. Vote-share bonds inspire fiscal responsibility, while retaining the flexibility to stabilise negative macroeconomic shocks.

Andrew Scott, 11 March 2010

The high levels of government debt have raised concern among policymakers and commentators. But this column argues that markets have financed much larger levels of debt than are currently predicted for the UK and US. Given the enormous financial shock these economies have experienced, they might actually be better off with high debt for a long period of time.

Tim Besley, Andrew Scott, 25 February 2010

The financial crisis has brought large fiscal deficits and soaring public debt. A switch to tight fiscal policy risks throttling the recovery, but continuing deficits are spooking markets. This column argues the obvious solution is to promise future fiscal rectitude and stick with the current expansionary policies in the near term. This requires independent fiscal policy committees to institutionalise fiscal transparency and restore credibility to governments’ long-term public finances.

Anne Murphy, 15 January 2010

Anne Murphy, lecturer in history at the University of Hertfordshire and associate director of the Centre for Financial History at Newnham College, Cambridge, talks to Romesh Vaitilingam about her new book ‘The Origins of English Financial Markets: Investment and Speculation before the South Sea Bubble’. The interview was recorded in London in January 2010.

Joshua Aizenman, Nancy Marion, 18 December 2009

As the US debt-to-GDP ratio rises towards 100%, policymakers will be tempted to inflate away the debt. This column examines that option and suggests that it is not far-fetched. US inflation of 6% for four years would reduce the debt-to-GDP ratio by 20%, a scenario similar to what happened following WWII.

Helge Berger, Emil Stavrev, 10 October 2009

Uncertainty surrounding potential output is keeping policymakers awake around Europe. This column argues that monetary policymakers should clearly communicate their views on potential output and their intent to adjust as new information becomes available in order to keep inflation expectations firmly anchored and limit the costs of policy mistakes. It also says that fiscal policy should be consolidated as soon as the recovery becomes entrenched, as returning fiscal policy to a sustainable path will be a formidable challenge.

Hans Gersbach, 17 June 2009

How might we limit the accumulation of public debt by democratic governments? This column proposes “voting twice" – first for a deficit ceiling and second for a particular budget. Such a procedure might strike a balance between flexibility and the commitment to refrain from loading debt onto future generations.



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