What Do Central Banks Do Best?

John Cochrane has analyzed the implications of the expansion of the Federal Reserve’s activities from its traditional targeting inflation and unemployment to its more recent allocating credit to sectors of the economy by acquiring non-traditional financial assets such as mortgage backed securities. Ben Bernanke offered a justification for buying non-traditional assets Friday at the annual […]

How Fast Is the Boat to China?

In our previous article we examined the Intra EU-27 trade during last decade and came to the conclusion that the most significant trend with respect to it has been the new EU member states gaining a significant share of the Intra-EU export pie as a result of their accession to the common market and gradual trade liberalization […]

How Fast Is the Boat to China?

In our previous article we examined the Intra EU-27 trade during last decade and came to the conclusion that the most significant trend with respect to it has been the new EU member states gaining a significant share of the Intra-EU export pie as a result of their accession to the common market and gradual […]

The Elephant in the Room in the EU Competitiveness Debate

In one of our previous posts we argued that the relative loss of competitiveness globally by southern European countries since the introduction of the euro has not been as dramatic as sometimes portrayed, is comparable to that experienced by some of the largest developed trading nations, and does not appear to be caused by “übercompetitiveness” […]

The Elephant in the Room in the EU Competitiveness Debate

In one of our previous posts we argued that the relative loss of competitiveness globally by southern European countries since the introduction of the euro has not been as dramatic as sometimes portrayed, is comparable to that experienced by some of the largest developed trading nations, and does not appear to be caused by “übercompetitiveness” […]

Applying the Modigliani – Miller Theorem of Capital Structure to Governments: Why ‘Blue Bonds’ Are Not the Silver Bullet to Kill the Eurozone Debt Crisis

In 1958 Merton Miller and Franco Modigliani published an article outlining the idea that in perfect capital markets the value of a company does not depend on its financing structure. The value of assets of a company does not increase if you raise the weight of debt in its financing structure, as the value of […]