Europe’s Russian Connections

By Aasim M. Husain, Anna Ilyina and Li Zeng: The conflict in Ukraine and the related imposition of sanctions against Russia signal an escalation of geopolitical tensions that is already being felt in the Russian financial markets (Chart 1). A deterioration in the conflict, with or even without a further escalation of sanctions and counter-sanctions, could have a substantial […]

Hard Work and External Help: How to Successfully Conduct Macroeconomic Adjustment With Official Assistance

What are the factors that ensure a successful and durable completion of a financial assistance programme? Past experience with IMF-supported adjustment programmes underlines the importance of external conditions but also of fiscal consolidation, financial repair and structural reforms. These findings vindicate the strategy pursued in recent adjustment programmes in the euro area: putting the fiscal […]

Euro Area: An Unbalanced Rebalancing?

By John Bluedorn and Shengzu Wang: Since the financial crisis, the euro area current account, made up mostly of the trade balances of the individual countries, has moved from rough balance into a clear surplus. But the underlying rebalancing across economies within the euro area has been highly asymmetric, with some debtors, like Greece, Ireland, and Spain, seeing […]

Euro Area – Q&A on QE

By Reza Moghadam and Ranjit Teja: As inflation has sunk in the euro area, talk of quantitative easing (QE)—and misgivings about it—have soared. Some think QE is not needed; others that it would not work; and yet others that it only creates asset bubbles and may even be “illegal.” In its latest report on the euro area, the IMF assesses […]

Great Graphic: Disinflation or Deflation in Europe?

This Great Graphic appeared was posted by Alen Mattich at the Wall Street Journal.    The red bar shows the average CPI in the 2000-08 period.  The blue bar shows the latest inflation. That was before today’s reports.  These include France, where the year-over-year rate in June slipped to 0.6% from 0.8% and the Netherlands, where the year-over-year rate ticked […]

Closing Dinner Remarks — The Hyman P. Minsky Summer Seminar — June 21, 2014

Closing Dinner Remarks The Hyman P. Minsky Summer Seminar June 21, 2014 Daniel Alpert The Levy Economics Institute of Bard College Annandale-on-Hudson, New York This past weekend I was very honored to give the closing dinners remarks at the Levy Economic Institute’s Hyman P. Minsky Summer Seminar, which talk is set forth below.  The Summer […]

What a Drag: The Burden of Nonperforming Loans on Credit in the Euro Area

By Will Kerry, Jean Portier, Luigi Ruggerone and Constant Verkoren: High and rising levels of nonperforming loans in the euro area have burdened bank balance sheets and acted as a drag on bank profits. Banks, striving to maintain provisions to cover bad loans, have had fewer earnings to build-up their capital buffers. This combination of weak profits and a decline […]

What the ECB Did and What it Means

We anticipate that it will take investors some time to digest the new initiatives the ECB announced last week. The ECB will be providing more details as well going forward. Here we will review the actions and discuss the implications of the different measures. There were five new measures announced: 1. Rate cuts: The entire rate corridor […]