Nijolė Valinskytė, Erika Ivanauskaitė, Darius Kulikauskas, Simonas Krėpšta, 12 April 2018

The leverage ratio requirement should supplement microprudential the risk-based capital requirements framework to serve as a backstop that ensures sufficient levels of equity in banks. However, the 3% level for this ratio should not be treated as the end-goal, as recent research on optimal capital levels points to substantially higher leverage ratios. This column examines the relationship between risk-based and leverage ratio requirements, and the motivation for the macroprudential use of leverage ratio requirements.

Giancarlo Corsetti, 22 January 2018

How can an economy be stabilised when there are high levels of public debt? In this video, Giancarlo Corsetti explains how central banks should have speculation under control. This video was recorded at the European Economic Association Congress held in Mannheim in August 2015.

Mario Monti, 10 November 2017

What would happen if another crisis were to occur? In this video, Mario Monti discusses potential differences and challenges. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Shang-Jin Wei, 01 November 2017

Could the housing prices in China crash? In this video, Shang-Jin Wei explains whiat are the potential concerns, and how the Chinese government could mitigate them. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Anat Admati, 12 October 2017

How well does the current system work? In this video, Anat Admati discusses how distortive the system actually is. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Charles Calomiris, Marc Flandreau, Luc Laeven, 19 September 2016

The Global Crisis has raised concerns over how far ‘lender of last resort’ policies by central banks should go. This column examines the history of the development of these policies throughout the world. Last resort lending is a locus of political power, and as such, its creation should be viewed as the outcome of a political bargain. It is therefore not surprising that countries differed in their propensity to create such policies, and in the powers with which they chose to endow them.

Ramon Xifré, 29 August 2016

Spain implemented a host of structural reforms following the Global Crisis. But questions remain about whether the current economic condition is due to the reforms or to ‘automatic’ adjustment in public and private sectors. This column sheds light on these questions by examining changes in a set of economic indicators following the introduction of the reforms. Five stylised facts are presented that suggest limitations of the reforms. Much of the current climate appears to reflect inherent limitations of the Spanish economy.

Stefano Micossi, Ginevra Bruzzone, Miriam Cassella, 06 June 2016

Following the financial crisis, the EU banking system is still plagued by widespread fragilities. This column considers the tools and legal provisions available to EU policymakers to address moral hazard and incentives encouraging excessive risk-taking by bankers. It argues that the new discipline of state aid and the restructuring of banks provide a solid framework towards these ends. However, the application of new rules should not lose sight of the aggregate policy needs of the banking system. 

Mark Cliffe, 19 May 2016

The idea that the global economy has entered a low-growth equilibrium appears to have gained acceptance. This column argues that this ‘New Normal’ never was, isn’t, and should be replaced by the ‘New Abnormal’. Far from being an equilibrium, the low growth recorded in the West since the nadir of the financial crisis in 2009 has only been achieved by progressively more aggressive and unprecedented monetary policy actions in response to a series of panic attacks in the financial markets. The aftershocks of the crisis are colliding with a series of structural changes which leave the global economy in a state of latent instability. 

Jason Furman, Jay Shambaugh, 29 April 2016

In terms of GDP and unemployment, the US’s recovery from the crisis was relatively rapid. This was in large part due to forceful fiscal policy conducted by the Obama Administration. This column surveys the lessons for other economies, which have seen less-convincing recoveries. Around the world, increased spending and tax cuts over the last eight years have had positive effects. Continuing recovery will require concerted action in these directions.

Alex Cukierman, 16 April 2016

Both the US and the Eurozone reacted to the Global Crisis by injecting liquidity and loosening monetary policy. This column argues that despite the similarities in the behaviour of bank credit, the behaviour of bank reserves has been quite different. In particular, while US bank reserves have been on an uninterrupted upward trend since Lehman’s collapse, EZ bank reserves have fluctuated markedly in both directions. At the source, this is due to differences in the liquidity injections procedures between the Eurozone and the Fed.

Agnès Bénassy-Quéré, 08 April 2016

The euro is unique in that it is a currency without a sovereign. Since the crisis, there have been major developments towards making the Eurozone more resilient, including the banking union and the European Stability Mechanism (ESM). This column, originally published 12 February 2016, explores whether further normalisation is required to make the Eurozone function properly. It argues that the Eurozone, unlike existing federations, lacks the ability to deliver counter-cyclical fiscal policies while complying with fiscal discipline. Macroeconomic coordination will thus require rules, a strong and independent European Fiscal Board, and the strengthening of the ESM.

Thorsten Beck, Nicola Fuchs-Schündeln, Refet Gürkaynak, Andrea Ichino, 10 February 2016

The Global Crisis was a watershed, not just for economies around the world, but for economics as a discipline. This column introduces a special issue of Economic Policy that collects key papers on the Global Crisis published in its aftermath between 2009 and 2014. The papers chart the evolution of economists’ thinking on the causes of and cures for the Global and EZ Crises. 

Thomas Hintermaier, Winfried Koeniger, 09 January 2016

Crises of confidence turn booms into busts. Bloated household balance sheets and high debt offer the right ingredients for a confidence-driven housing bust. This column develops an analytic framework that accommodates the potential role of confidence fluctuations as a source of uncertainty in the economy. Current debt levels are shown to determine the exposure to crises of confidence. The results point to a clear role for macroprudential policy in the prevention of such crises. 

Biagio Bossone, Marco Cattaneo, 04 January 2016

‘Helicopter tax credits’ have been proposed as a means of injecting new purchasing power into the economies of Eurozone Crisis countries. This column outlines one such system for Italy. The Tax Credit Certificate system is projected to accelerate Italy’s recovery over the next four years, and will likely be sustainable. It also provides a tool to avoid the breakup of the Eurosystem and its potentially disruptive consequences.

Ángel Ubide, 09 December 2015

The diversity of European economic cycles, economic structures, and political dynamics is a strength of the Eurozone. However, sustainable arrangements are required to distribute risks and ensure that all countries can use fiscal policy to cushion economic downturns. This column proposes the creation of a system of stability bonds for the Eurozone. These could be structured to minimise moral hazard, improve governance, and ensure that fiscal policy can support growth during the next recession.

Kevin Daly, Tim Munday, 28 November 2015

The fallout from the Global Crisis and its aftermath has been deeply damaging for European output. This column uses a growth accounting framework to explore the pre-Crisis and post-Crisis growth dynamics of several European countries. The weakness of post-Crisis real GDP in the Eurozone manifested itself in a decline in employment and average hours worked. However, decomposing growth for the Eurozone as a whole conceals significant differences across European countries, in both real GDP growth and its factor inputs.

Régis Barnichon, 12 November 2015

Many commentators have noted that the US has ridden out its post-crisis malaise rather skilfully, not least when it comes to reducing unemployment. This column argues that the US unemployment rate - despite being impressive, all things considered - still has substantial room to fall because desire to work among the non-employed is close to a record low.

Jon Danielsson, Marcela Valenzuela, Ilknur Zer, 02 October 2015

Does low volatility in financial markets mean that another financial crisis is more likely? And should we be worried when everything is OK? This column presents the first empirical results that find a strong validation of Minsky's hypothesis – obtained from 200 years of historical cross-sectional data – that low volatility increases the likelihood of a future financial crisis by increasing risk-taking.

Guido Tabellini, 07 September 2015

What are the main lessons to be drawn from the European financial crisis? This column argues that the Eurozone really is at a major cross-roads. Without a common fiscal policy, and without adequate institutions for aggregate demand management, European leaders have to constantly alter the rules. Currency risk will be the major concern of financial markets, much more than in the past, due to how Europe has dealt with the Greek crisis.

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