The New Economic Nationalism, Part 2: The New Great Game

Commentators often assume that relatively unfettered trade in goods and services and free movement of capital are givens, but the drive toward greater economic openness could now be undergoing a reversal, with profound implications for the global economy. This piece, picking up from where Part 1 left off, looks how different countries may adapt to this […]

Where Are the European Entrepreneurs?

This post is based on class #2 in my MIT Sloan course, Entrepreneurship Without Borders.  An edited version appeared this morning on the’s Economix blog. Europe today is relatively rich on average, and there is undeniable potential for further convergence towards Northern levels in use of technology, organization of firms, and productivity levels.  We witnessed some impressive […]

Clean Energy Damaging Europe’s Competitiveness

For years Europe has been at the forefront of the renewable energy revolution, promoting and establishing global rules in this sector. There are signs however that this trend might change. The economic crisis has forced many European countries to reassess their clean energy policies, heavily reliant on substantial, and often irrational subsidies, that have started […]

The Global Crisis, the Shaky Recovery and the Road Ahead: Interview With L. Randall Wray

I hope that all of you saw the very nice feature on Wynne Godley in the NYTimes. It’s about time he got the notice he deserved. I just came across a juicy quote from Wynne: Wynne Godley: “I want to say of neoclassical macroeconomics what I have sometimes said of certain kinds of fiction; I […]

The Decline of Southern Europe

“Europe is back!” is the new, though cautious, market mantra. Certainly, Europe will ultimately recover, but it will be a different Europe. Current hopes are inflated, as evidenced by the erosion of Southern Europe. The second quarter GDP figures for the euro-area economies indicated growth, for the first time in 18 months. Some fund managers […]

Draghi Reiterates Forward Guidance

The most important take away from ECB President Mario Draghi’s initial remarks is that he has reiterated the forward guidance that rates will remain this low or lower for an extended period. There were some suspicions, given clear signs of an economic recovery, judging from the PMI data, which Draghi did acknowledge. Draghi also revealed […]

Autumn’s Known Unknowns

During the height of the Iraq war, then-U.S. Secretary of Defense Donald Rumsfeld spoke of “known unknowns” – foreseeable risks whose realization is uncertain. Today, the global economy is facing many known unknowns, most of which stem from policy uncertainty. In the United States, three sources of policy uncertainty will come to a head this […]

Overt Money Financing and Public Debt

Purpose and Concepts The purposes of this brief note are two-fold: first, to establish, by country, the extent to which public sector borrowing contributed to the rise in public debt over the period since 2008; and, second, to draw some policy inferences. The two indicative fiscal parameters used in this analysis are: Borrowing = general […]

Another Look at Ricardian Equivalence: The Case of the European Union

The so-called Ricardian equivalence suggests that a government will have the same effect on private spending whether it raises taxes or takes on additional debt to finance higher government spending. The logic behind it is that as the government gets more indebted, people would put aside more money in expectation of higher taxes in the […]

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