The IMF Managing Director Christine Lagarde recently mentioned that a more unified euro area could be a “compass to prosperity for the region and a beacon of hope to the world.” In this spirit, the Elcano Royal Institute has recently published a paper by Spanish economists on the reform of the EMU.
Francesco Saraceno | This post is nothing new. It is just a reminder for non European readers (or for distracted European readers), about the way things work in the EMU. The German Bundesbank President Weidmann violently attacked the European Commission for failing to enforce fiscal discipline within the Stability Pact.
Last week the Council decided that Spain and Portugal’s recent efforts to reduce deficit were not enough. This lead to the two countries being fined, the first time this happens since the inception of the euro.
The ECB’s main priority will be to fuel confidence in the financial markets and inflation will be its alibi for this. In February, eurozone CPI receded to -0.2% year-on-year and, in the short term, the region should be prepared for negative rates to continue.
Francesco Saraceno | The EMU policy debate in the past few months kept revolving around monetary policy. Just this morning I read a Financial Times report on the never ending struggle between hawks and doves within the ECB. I am all for continued monetary stimulus. It cannot hurt. But there is only so much monetary policy can do in a liquidity trap. I said it many times in the past (I am in very good company, by the way), and nothing so far proved me wrong.
PARIS | By Francesco Saraceno | I was asked to write a piece on whether we should continue to study the EMU (my answer is yes. In case you wonder, this is called vested interest).
By Luis Martín via Truman | Professor at the Lyndon B. Johnson School of Public Affairs (Texas), James K. Galbraith was advisor to the Greek Minister of Finance, Yanis Varoufakis, from February through July 2015. In this interview he spoke about the Greek crisis and the challenges ahead for the euro currency.
PARIS | By Francesco Saraceno | So, Mario Draghi is disappointed by eurozone growth, and is ready to step up the ECB quantitative easing program. The monetary expansion apparently is not working out as planned.
LA CAIXA RESEARCH | Convergence between core and periphery countries must improve in order to strengthen the eurozone’s future growth and sustainability.
NICOSIA |By Marios Zachariadis via MacroPolis | Policies undertaken from a narrow national perspective that encourage systematic fiscal surpluses, coupled with a national consensus on wage suppression between unions and industry facilitated by the state, impact negatively upon domestic spending while increasing national saving.