24May2013
Eurozone crisis: time for France to step up | Kenneth Rogoff
Germany cannot carry the euro on its shoulders alone indefinitely. France needs to become a second anchor of growth and stabilityThere is no magic Keynesian bullet for the eurozone's woes. But the spectacularly muddle-headed argument nowadays that too much austerity is killing Europe is not surprising. Commentators are consumed by politics, flailing away at any available target, while the "anti-au
Read More23May2013
Bank of England as confused as the rest of us about state of UK economy | Larry Elliott
Six MPC members voted to do nothing but three – including governor Mervyn King – again wanted a £25bn QE expansionThere was something for everyone in Wednesday's batch of economic data. High-street spending was weak in April, but the public finances were better than expected. The Bank of England is as confused as the rest of us about the state of the nation: six members of the monetary policy
Read More22May2013
Will IMF repeat anti-austerity call? | Larry Elliott
George Osborne has been doing his utmost to get the IMF mission to change its view during talks over the past fortnightSomeone stands to lose face when the International Monetary Fund passes judgment on the UK on Wednesday. After two weeks crawling all over the economy, the big question is whether it will repeat the call it made last month for the chancellor to ease up on the pace of deficit reduc
Read More22May2013
Why falling inflation matters
A drop in inflation eases the squeeze on consumer real incomes by reducing the gap between price increases and wage increasesInflation is yesterday's problem. That was the clear message from the latest figures from the Office for National Statistics showing a bigger-than-expected drop in price pressures last month. Cheaper petrol and a seasonal fall in air fares meant the annual increase in the co
Read More21May2013
Austerity v growth
All countries – and policymakers – face difficult choices concerning the timing of austerity, perceived sovereign-credit risk, growth-oriented reforms, and equitable sharing of the costs of restoring growthIn a recent set of studies, Carmen Reinhart and Kenneth Rogoff used a vast array of historical data to show that the accumulation of high levels of public (and private) debt relative to GDP
Read More20May2013
Tax avoidance: how to change corporate behaviour
It is up to consumers and voters to change the lousy behaviour of big banks, energy giants and internet multinationals. They will not change by themselvesLast week, I was waiting in the queue at the butcher while an elderly lady was being served. Clearly, she was not that well-off and chose the cheapest cuts of meat. When she was done, the butcher asked the assistant serving her how much the bill
Read More18May2013
Economics and the perils of big data
Reinhart and Rogoff may have used a relatively small set of mostly publicly available data, but the profession as a whole is using ever-larger tailor-made data setsThe brouhaha over Carmen Reinhart's and Kenneth Rogoff's article "Growth in a Time of Debt" may be the most conspicuous and incendiary scholarly controversy since 1974, when two earlier economists, Robert Fogel and Stanley Engerman, pub
Read More17May2013
UK employment has been a bright spot – but now casual workers feel the heat | Larry Elliott
Even if Britain gets a growth spurt, firms will respond initially by getting full-time workers to work a bit harderBritain's labour market has been one of the bright spots of the recession. Had economists been asked five years ago to predict the level of unemployment in the event that the economy would crash and then recover at a snail's pace, they would have predicted joblessness at 3.5 million o
Read More17May2013
The King has left the building – and he seemed happy to go | Larry Elliott
Sir Mervyn King's final quarterly inflation report was a low-key end to his 21 years at the Bank of EnglandIt was a low-key exit. Those expecting Sir Mervyn King to draw comparisons between his 21 years at the Bank of England and Sir Alex Ferguson's 26 years at Old Trafford were disappointed. There was a quip about Che Guevara, once governor of Bank of Cuba, and a suggestion to a Slovenian journal
Read More16May2013
US budget deficit’s fall should make European ‘austerians’ think again
Budget shortfall predicted to drop to 4%, from 10% in 2009, vindicating Obama's policy of US growing its way out of debtIf only the "austerians" had listened. According to the latest forecasts, the US budget deficit will shrink to 4% of GDP this year.The slide from 2009's 10.1% budget shortfall is one in the eye for the Tea party and any other advocate of "contractionary expansion".Worse for the f
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