Greece Still Has a Fighting Chance

Anatole Kaletsky (2015) has a take on Europe vs. Greece confrontation. He notices that, since coming to power in January, the Greek government has believed that default on its debt would be a strong enough threat to the Eurozone, which would force Europe to choose between two alternatives: either Grexit (with potentially disruptive consequences for […]

Greek Parallel Currency: How to Do it Properly

According to several recent media reports, both the Greek government and the ECB are taking into consideration the possibility (for Greece) to issue a parallel domestic currency to pay for government expenditures, including civil servant salaries, pensions, etc. This could happen in the coming weeks as Greece faces a severe shortage of euros. It is […]

Saving the Eurozone from Stagnation: Can Draghi Do it Alone?

With inflation declining and constantly undershooting forecasts, and the economies gripped by fiscal austerity, zero-lower bounded interest rates, and gloomy expectations, the Eurozone may have found itself caught into what Caballero and Fahri (2103) call a ‘safety trap’, i.e., an excess demand for safe assets (money and government bonds). Essentially, agents in the Eurozone have […]

Why QE in the Eurozone Is a Mistake

Paul De Grauwe and Yuemei Ji (“Quantitative easing in the Eurozone”, VOX, 2015) have argued that quantitative easing (QE) can occur in the Eurozone without fiscal transfers.  This may be the case, but their analysis is fundamentally misplaced, as it is based on incorrect, incomplete or missing premises.  We think it would be a mistake for […]

To G-20 Leaders: Urgent Need to Boost Demand in the Eurozone

The economies in the Eurozone are continuing to slide into recession and depression.  Senior officials of G-20 countries (including those in Australia, the host government) have not understood, or anticipated, that the Eurozone crisis is a major threat to global recovery. The officials have provided sub-standard advice to their leaders.  The deepening crisis must be […]

Krugman and Helicopter Drops

The recent debate in the United States over helicopter drops and quantitative easing is very important.  It is, therefore, essential that sound economic logic is applied to separate out key issues. In ‘Helicopters Don’t Help (Wonkish)’, New York Times, 9 December, Paul Krugman compliments David Beckworth on trying to establish the irrelevance of ‘helicopter money’.  […]

Italy, Europe: Please Do Something!

by Biagio Bossone, Chairman of the Group of Lecce [1] The crisis is deepening After fifty or more days from general elections, Italy is still ensnared in big political uncertainties and its economic recession is worsening. Negative fiscal space and private sector retrenchment in the country continue to squeeze aggregate demand, amongst persistent indications of declining […]