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 […]

The G-20 and the Ill-Fated Charge of the Light Brigade

The just concluded G-20 meeting in Australia repeats many themes and patterns set at earlier G-20 meetings.  Those at the Australian Treasury who planned this year’s G-20 economic policy strategy have shown little macroeconomic policy imagination. By adding to the supply-side structural reform plans identified in earlier G-20 meetings (but not fully implemented), and failing […]

To the G-20: It Is Demand Deficiency, Not Supply

The Eurozone countries and Japan are now falling back into recession/depression and deflation, and their public debt levels are grossly excessive, and still rising. The deepening economic crisis in these two large economic blocks could have serious implications for other G-20 countries, as aggregate demand is already weak globally. Nonetheless, based on the advice of […]

Mr Schaeuble and G-20 Leaders: Consider the Following

It has been reported on the BBC news that Mr Schaeuble has said: a)   Criticism that the (German) government was not spending enough was justified, and that; b)  Any improvement in spending would not be made at the expense of a balanced budget. According to the BBC report the German economy has contracted and exports […]

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 […]

High Public Debt, Stagnation, Deflation and Unemployment: Policy Errors and a Way Forward

This note reviews monetary and fiscal policies adopted by Japan, the United States and Eurozone periphery countries during the global financial crisis and subsequently. These countries all experienced similar economic problems; high public debt burdens, the deflation tendency, credit traps, inadequate aggregate demand and high unemployment. It is argued below that policymakers anchored their strategic […]

Eurozone Macroeconomic Framework: Reducing Internal and External Imbalances

Author’s Note: I wish to thank Max Corden for helpful comments on an earlier draft. The current range of macroeconomic problems afflicting many Eurozone countries is profound. Currently, individual countries within the Eurozone are seriously afflicted by both internal and external imbalances.  In this paper internal imbalances are reflected in various degrees in different Eurozone countries […]

Eurozone: Competitiveness Indicators and the Failure of Internal Devaluation

Measures of ‘international competitiveness’, for example those based on broad wage, unit labour cost and price parameters are approximations only[1].   Some are more relevant than others. The purpose of this short article is to review the progress of external account adjustment and internal devaluation in Eurozone countries Unit Labour Cost Comparison Unit labour cost-based measures […]

Secular Stagnation, Incomes, Demand and Economic Recovery

Recently, Lawrence Summers, writing in the Financial Times, has rightly suggested that we could possibly be experiencing secular stagnation. This is a new suggestion that warrants consideration by all. The comments below are intended to be no more than an initial reaction to the issue raised by Professor Summers. Whatever the cause, it is indisputable […]

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