Time and again “experts” from all areas try to exert pressure on the European Central Bank to relax its anti-inflationary monetary policy in order to increase economic growth in the euro area. But monetary policy is not the answer to Europe’s ills. Indeed, a babel of criticism may prevent people from seeing that the euro area has witnessed ample economic progress since the euro’s launch. The broad macroeconomic fundamentals of sustained growth are, in fact, more favorable today than they have been for years. Europe’s challenge is to exploit this economic potential. It is thus important to be clear about what monetary policy can and cannot do to contribute to Europe’s growth so that other necessary – though often politically difficult – reforms are not neglected. Although there are some theoretical ambiguities, the best available evidence suggests that, in the longer term, inflation is harmful to both output and welfare. The corollary of this is that the best contribution a central bank can make to assure that growth is achieved over the long run is to pursue a policy aimed at maintaining price stability over the medium term. This consensus view is enshrined, explicitly, in the statute of the ECB, which unambiguously states that its “primary objective...shall be to maintain price stability.” But what about the short term? Many commentators suggest that a monetary policy directed at price stability may lead to protracted, and in extreme cases, permanent negative movements in output. The mechanism invoked is
China’s success in the next five years will depend largely on how well the government manages the tensions underlying its complex agenda. In particular, China’s leaders will need to balance a muscular Communist Party, setting standards and protecting the public interest, with an empowered market, driving the economy into the future.
The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by imposing strict isolation. Even in states that have succumbed to reductionist discourses, much of the population has not.
When the Bretton Woods Agreement was hashed out in 1944, it was agreed that countries with current-account deficits should be able to limit temporarily purchases of goods from countries running surpluses. In the ensuing 73 years, the so-called "scarce-currency clause" has been largely forgotten; but it may be time to bring it back.
Republican leaders have a choice: they can either continue to collaborate with President Donald Trump, thereby courting disaster, or they can renounce him, finally putting their country’s democracy ahead of loyalty to their party tribe. They are hardly the first politicians to face such a decision.
As the global economic recovery strengthens, and central banks move to raise interest rates, they need to improve their communication with the general public. To do that, they should follow the trail blazed by Donald Trump.
With talks on the UK's withdrawal from the EU stalled, negotiators should shift to the temporary “transition” Prime Minister Theresa May officially requested last month. Above all, the negotiators should focus immediately on the British budget contributions that will be required to make an orderly transition possible.
In recent decades, as President Vladimir Putin has entrenched his authority, Russia has seemed to be moving backward socially and economically. But while the Kremlin knows that it must reverse this trajectory, genuine reform would be incompatible with the kleptocratic character of Putin’s regime.
As a part of their efforts to roll back the 2010 Dodd-Frank Act, congressional Republicans have approved a measure that would have courts, rather than regulators, oversee megabank bankruptcies. It is now up to the Trump administration to decide if it wants to set the stage for a repeat of the Lehman Brothers collapse in 2008.