Follow Joshua McCallum
Joshua McCallum is the senior Fixed Income Economist at UBS Global Asset Management, where he provides economic analysis to support and challenge portfolio managers. Before joining UBS in 2005, Joshua worked for the UK Treasury, dealing with an eclectic range of topics including international macroeconomics, the UK budget, economic reform in Europe, and post-conflict fiscal policy in Iraq.
Japan's real GDP slumped in 2014. But nominal GDP actually grew by almost 2%. The difference between real and nominal GDP growth is the GDP deflator. An increase in nominal GDP means that the Bank of Japan's monetary easing appears to be working. For inflation to be sustained, it will be necessary for wages to rise, and for some structural reforms to take place.
US household formation has been far lower than population growth would suggest since the financial crisis, due to a combination of high unemployment, low wages and limited access to credit. This is creating pent up demand in the US housing market which may help to explain some of the puzzles of that market.
Greece proposed last week that it would drop its call for an outright debt haircut, if the Eurozone agreed to swap some of the Greek bonds it holds for GDP-linked bonds. GDP-linked bonds would not be such a big leap for the Eurozone, given that last time Greece ran into growth problems, the Eurozone lent more money, lowered the interest rate and extended the maturity (an implicit GDP link). However, GDP-linked bonds may not necessarily guarantee long-term sustainability of the Greek debt.
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