The Short-Economics behind the Conflict Government vs. Rural Sector in Argentina

Other than any political reasons—that I won’t discuss here—the conflict government-rural sector in Argentina results mainly from an economic inconsistency. Of course, there are additional important issues. I want to focus on what I understand is one of the basic origins of the problem. As already reported before, Argentina has a high inflation bias generated […]

The Protests in Argentina

For the past three nights I had the opportunity to witness the protests in Buenos Aires against the Argentine government’s decision to increase export taxes on soy from 35 to 44 percent. Although the government claims otherwise, it appears like the initial protest was a spontaneous, grass-roots reaction to president CFK’s speech, where she characterized […]

Financial crises and rising inflation: the role of monetary policy

While the global financial crisis is spreading fast, policy makers (supervisors, regulators, central bankers, finance ministers) are desperately trying to cope with a situation in many ways unprecedented. After years of strong and steady economic and credit expansion, all of a sudden financial markets virtually ceased to function. As if this wasn’t enough, policymakers are […]

Overview: The Commodity Bust

After languishing for decades, commodities sprung to life at the end of 2001. The CRB index soared 132%. Crude oil spiked 250% since January 2003. Copper soared 460% during the same interim and gold jumped 174%. Grains, metals and energy posted new highs. Growing demand from Asia, greater prosperity across the emerging world and a […]

Are eurozone economies converging?

The Single Monetary Market in 1993 and successively the advent of the European Monetary Union (EMU) in 1999 constitute two significant institutional changes that should have affected economic activity in member countries. This study investigates the extent to which growth rate dispersion has changed during the last few years and whether business cycle synchronisation has […]

Transatlantic differences in real estate bubbles?

With the outbreak of the so called ‘sub prime’ crisis the attention of policy makers has been focused on the US housing market. It is by now common knowledge that the problem started with a bubble in US house prices. However, it is not widely appreciated that in Europe housing prices have also increased over […]

Tough wage negotiations ahead in Germany

A year ago we published our forecast on Eurozone Watch that after years of decline (see here), unit labour costs in Germany would start to be back on a rising trend after the wage bargaining round in 2007. This forecast has proofed to be almost dead on target. Our model indicated that unit labour costs […]

Overview: Bolivar and Washington, Contrasts in Style

The life and times of Simon Bolivar have been used as the ideological underpinnings for some Latin American leaders. This is not the first time that political leaders resurrected characters from the distant past to provide credence to their irrationality. Most people outside of Latin America do not know much about Simon Bolivar. However, he […]

Beware of false arguments: The strong euro will hurt

In the economic policy debate, Germans tend to extrapolate their current situation indiscriminately into the future. When the economy hardly grew at all in 2002 and 2003, German economists and journalists were quick to estimate potential growth to be “below 1 percent”. Now, with exports having grown strongly over a number of years, it is […]

Sound Macroeconomic Policies: Better Hurry or it will be TOO Late (or how Fiscal, Monetary, and Exchange Rate Policies are Running Behind the Curve)

I always tell my students: “If you observe inflation picking up, something is wrong with that economy; it is like a fever.” The Argentine government has a high inflation problem. Instead of applying sound macroeconomic polices to stabilize inflation it is just using income polices—like price controls and export constraints. On the contrary, since this […]

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