Follow Dr. Andreas Höfert
Geopolitical tension aside – and I recognize that this is a big “aside” – the start of 2014 in the Eurozone looks like the best since 2007. After two consecutive years of recession, growth finally made its comeback in the fourth quarter 2013. It is not only the absolute growth figure that is encouraging, but also the fact that the six largest Eurozone economies have all contributed to it.
A good friend of mine, an economic journalist, was teasing me a week ago: “You economists called for a ’year of the dollar’ in 2010, 2011, 2012, 2013 and now you’re doing so again in 2014. Every year you’ve been proven wrong but you persist.” In embarrassed response, I offered up my usual three lines of defense.
Within the last 10 years Germany has evolved from being the “sick man of Europe” to an economic role model that the rest of the world should – and peripheral Europe is being forced to – emulate. Many reasons are usually given to explain this success story. The problem is that some of them are not completely right… and unfortunately some of the right ones cannot be easily replicated in other European countries.
"A storm, an earthquake, a day of mourning!" The media comments both from Switzerland and abroad after the Swiss voted by a majority of 50.3% to reduce European immigration and reintroduce quotas on 9 February were all doom and gloom. Most of the pundits and editorialists focused on the impact the decision will have on the Swiss economy and, more generally, relations between Switzerland, the EU and the rest of the world. Few noticed that the Swiss vote may also reflect a malaise that, sadly, extends well beyond Switzerland.
A couple of weeks ago I mentioned in this column the new tool of optimal control that Janet Yellen could use to implement monetary policy. But what will the characteristics of her monetary policy be compared with her predecessor Ben Bernanke’s?
Five years after the Great Recession 2008–09 is a good time to assess the policies enacted by countries and regions to fight it. Two years ago such an analysis would have opposed two ways of dealing with the recovery – austerity versus growth. By now there should be a clear winner. Or is the debate subtler?
Janet Yellen’s confirmation as the new US Federal Reserve Chairwoman by the US Senate two weeks ago puts the concept of “optimal control” in prominent position within the toolkit and jargon of central banking. This concept has been central in Yellen’s reflections on monetary policy in important speeches over the last couple of years.
What a bizarre question. Trade surpluses (or their big sisters, current account surpluses) seem to be what every country is supposed to aspire to. They are the way, for example, that Germany thinks the euro crisis should be solved. The New Year’s resolution of many European politicians in the “peripheral” countries is quite likely: get our house back in order, become more competitive and achieve trade surpluses.
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