Richard Baldwin, Daniel Gros, Stefano Micossi, Pier Carlo Padoan, Giuliano Amato, 07 December 2010

The unfolding crisis in Europe has focused policymakers’ attention on reducing debt-to-GDP ratios. This open letter to the President of the European Council argues that, while the top part of that fraction is important, the most critical factor in the long run is the restoration of GDP growth – offering several policy recommendations to this end.

Charles Wyplosz, 03 December 2010

The Eurozone crisis is not over. This column argues that the bailout of Greece and the €750 billion Special Purpose Vehicle set up in May 2010 was the first step down the slippery slope. The first and only possible remedy is to reconstruct the no-bailout clause and let markets discipline governments; the EU has proven that it cannot.

Angelo Baglioni, Umberto Cherubini, 01 December 2010

Bailing out banks has put severe pressure on government finances, particularly in the Eurozone. This column compares 10 EU governments’ explicit bailout commitments with their expected liabilities. It shows that the Irish government’s commitments are an outlier. Faced with a systemic crisis, financial assistance from international institutions is unavoidable.

Paolo Manasse, Giulio Trigilia, 26 November 2010

Is Italy the next European country to go? This column argues that the jury is still out, although the grace period will not extend beyond three years.

Beatrice Weder di Mauro, Jeromin Zettelmeyer, 26 November 2010

The bailout of the Irish government has turned up the heat on Europe’s leaders. This column argues that it is time for a serious debate over one possible solution: A European Sovereign Debt Restructuring Mechanism.

Christiane Nickel, Philipp Rother, Lilli Zimmermann, 21 November 2010

Record levels of government debt in the EU have forced some countries to call for help. This column presents data from the EU between 1985 and 2009 covering episodes when governments have tried to rapidly lower public debt. It shows that appropriate policies, especially on the expenditure side, can help make this reduction sustainable.

Nicola Gennaioli, Alberto Martin, Stefano Rossi, 17 November 2010

Recent sovereign defaults in developing countries have put severe strain on the defaulting country’s banking system. This column argues that these events teach us how the development of private financial markets plays a critical role in reducing the risk of government default and thus in supporting public borrowing.

Jacques Melitz, 16 November 2010

Earlier this year, the fiscal situation in Greece caused turmoil across Europe. This column examines why the financial difficulties of several state governments in the US are not having similar impacts on its economy.

Alberto Alesina, 12 November 2010

Many nations are in the middle of painful fiscal retrenchments. This column presents recent research on the impacts of these policies. It argues that spending cuts are less recessionary than tax increases when deficits are reduced and responds to criticisms of these findings in the recent IMF World Economic Outlook.

Joshua Aizenman, Gurnain Kaur Pasricha, 07 November 2010

Amid government concern over public debt, one measure – the debt-to-GDP ratio – has gained prominence above all others. This column presents forecasts of the fiscal burden of debt for each OECD country. Looking at past as well as current data, it argues that prudent fiscal policy should involve both short-term stabilisation and forward-looking fiscal reforms. Finding a balance between the two is crucial.

Salvador Barrios, Sven Langedijk, Lucio R Pench, 02 October 2010

Europe’s policymakers are trying to balance fiscal consolidation with economic recovery. This column examines financial crises in EU and OECD countries from 1970 to 2008 and finds that countries facing high debt levels or those at risk of low GDP growth would be better off with quick, “cold-shower” fiscal consolidations. Other countries might benefit from a more gradual approach.

Paolo Manasse, Giulio Trigilia, 27 September 2010

Many countries in Europe now have a coalition government. This column uses data from Italy to argue that this comes at a cost. It finds a positive and significant relationship between the political instability caused and a rise in government yields, making today’s fiscal adjustments even more difficult and painful.

Adrian Blundell-Wignall, Patrick Slovik, 14 September 2010

Despite the encouraging results from the stress tests of the EU’s banking sector, market confidence in the financial system remains subdued. This column argues that while most of the sovereign debt held by EU banks is on their banking books, the EU stress test only considered their smaller trading book exposures. Market participants do not have the luxury of being so selective.

Carmen Reinhart, Vincent Reinhart, 13 September 2010

Is the global economic recovery about to grind to a halt? This column provides evidence on economic performance in the decade after a macroeconomic crisis. It finds that growth is much slower and as well as several episodes of “double dips”. It adds that many of these economies experience plain “bad luck” that strikes at a time when the economy remains highly vulnerable.

Carmen Reinhart, Kenneth Rogoff, Rong Qian, 31 August 2010

Are declarations of victory against the global crisis premature? This column argues that “graduation” – the emergence from recurrent crisis bouts – is a long and painful process which neither developed nor developing countries look close to completing. Two centuries of evidence suggests that most countries need 50 years before the chances of further crises subside.

Jérémie Cohen-Setton, Natacha Valla, 17 August 2010

Fiscal stance is this summer’s hot topic. This column highlights that significant revisions have been made to output estimates for the 2008-2011 period without being made clear and discussed in public, while the economic foundations for applying such revisions are questionable. The debate should take the impact of these revisions into account.

Carmen Reinhart, Kenneth Rogoff, 11 August 2010

With the advanced economies at a critical juncture, some economists are urging more fiscal stimulus while others argue that raising debt levels will stunt growth. This column presents the Reinhart-Rogoff findings on the relationship between debt and growth based on data from 44 countries over 200 years with a focus on the debt-growth link during high-debt episodes.

Fabio Panetta, Giuseppe Grande, 07 August 2010

The spectre of sovereign default looming over the world economy represents a major threat to economic stability. This column argues that, even without a fully-fledged debt crisis, the deterioration of public finances in major countries could trigger an increase in long-term interest rates and jeopardise the recovery.

Guillermo Calvo, 04 August 2010

The debate over fiscal policy has reached a fork in the road. One way leads to maintaining or increasing the fiscal stimulus. This column argues that policymakers should take the other path. This would mean phasing out government expenditure while phasing in social protection programmes at the risk of a double-dip recession but potentially resulting in a more vibrant economy.

Paolo Manasse, 26 July 2010

Are Europe’s budgets cuts too little too late or too much too soon? This column asks how each country’s adjustments compare with the European average. It finds that Germany and the Netherlands are ahead of the pack along with highly indebted nations such as Spain, but Italy is lagging far behind.

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