RealTime Economic Issues Watch

A Greek Escrow Account for Bondholders Could Put New Pressure on Athens

Jacob Funk Kirkegaard — Wed, 08 Feb 2012 22:18:08 +0000

The idea of a European Union Budget Commissar to ensure Greek compliance with its reform commitments was floated at a recent European Council meeting—and just as quickly killed as politically impossible to implement. Now Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France have come up with another suggestion to enforce discipline on [...]

How Euro Brinkmanship Is Beginning To Succeed

Jacob Funk Kirkegaard — Fri, 03 Feb 2012 16:55:05 +0000

European Union leaders had the umpteenth euro crisis summit at the end of January. Indeed the EU Council meets so often that the descriptions of these gatherings should be changed from “yet another summit” to “back in session.” The slide to near-permanent policymaking has occurred as the EU Council begins to resemble a sitting parliament. [...]

The Markets’ Favorable Response to Italy’s Major Steps Ahead

Juan Carlos Martinez Oliva — Fri, 03 Feb 2012 14:23:21 +0000

Since December, Premier Mario Monti of Italy has taken several steps that appear to have improved market confidence in the country’s ability to repay its debt, thereby raising hopes that Italy can recover from its financial and economic crisis. Parliamentary approval of an additional public finance adjustment package for 2012–14 in December (the third [...]

How to Discourage Currency Manipulation: Tax It Heavily

Joseph E. Gagnon — Tue, 31 Jan 2012 15:37:35 +0000

Federal Reserve Chairman Ben Bernanke recently said that Chinese currency manipulation “is blocking what might be a more normal recovery process.” In fact, the problem goes beyond China to include many other emerging economies and even a few advanced economies. Altogether, governments in these economies are spending about $1.5 trillion per year on currency manipulation. [...]

Michael Mussa (1944–2012): Challenging Conventional Wisdom

Flemming Larsen — Mon, 30 Jan 2012 16:01:18 +0000

I had the privilege to work with Mike for close to nine exciting and fulfilling years. Mike made the Research Department at the International Monetary Fund (IMF) relevant and respected, both inside and outside the Fund. Above all, he gave meaning to the Economic Counselor role by fulfilling his duties with incisive analyses and policy [...]

Michael Mussa (1944–2012): Integrity, Courage, and a Gift for Friendship

Morris Goldstein — Fri, 27 Jan 2012 21:22:41 +0000

I have been a close friend of Michael Mussa for over twenty years. When Mike joined the International Monetary Fund (IMF) as Economic Counselor and Director of Research in 1991, I was his deputy. When I left the Fund in 1994, he and I stayed in frequent contact, including socially. And when Mike left the [...]

Lessons for Europe’s Fiscal Union from US Federalism

C. Randall Henning — Wed, 25 Jan 2012 19:59:13 +0000

The euro area crisis and debate over fiscal reform have led many observers to pray for salvation by a modern, European version of Alexander Hamilton. By this they generally mean someone capable of leading a movement for a robust fiscal union and implementing this vision (see for example McKinnon 2011). Europe has instead, they lament, [...]

Mike Mussa (1944–2012): An Intellectually Exciting Colleague

Juan Carlos Martinez Oliva — Tue, 24 Jan 2012 20:26:08 +0000

I had the chance to meet Mike Mussa personally when I was working at the International Monetary Fund as senior advisor to the Executive Director from Italy in the mid-nineties. His periodic presentations on the world monetary and exchange rate outlook at the board meetings were the most thrilling and intellectually exciting event on the [...]

Mike Mussa (1944–2012): A Kind Heart and a Razor Sharp Mind

Martin Neil Baily — Fri, 20 Jan 2012 20:25:09 +0000

I had known Mike from professional meetings for a long time, but I really only got to know him well when we both joined the Peterson Institute(or IIE as it was then). As the Institute moved into the new building, Mike and I were two members of the “aging macro group” that lined the back [...]

On Greece, Growth, and Downgrades

Jacob Funk Kirkegaard — Wed, 18 Jan 2012 22:00:12 +0000

Events remain unsettled in the euro area in 2012 in spite of some recent progress toward stabilizing the fiscal and financial outlook. To begin with, negotiations between the Greek government and private creditors represented by the Institute for International Finance (IIF) have been suspended as they enter the final critical phase, with each side considering [...]