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ECB's latest move won't work

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ECB's latest move won't work

Draghi never disappoints. In his penultimate monetary-policy meeting, the still President of the ECB announced that the Eurozone’s central bank would soon resume the net asset purchase program in an attempt to get inflation back to the ECB’s 2 percent target after some months of lower-than-expected inflation. The Governing Council also agreed to lower the deposit rate to -0.5%,…

What is that Phillips curve everyone is talking about?

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What is that Phillips curve everyone is talking about?

Federal Reserve’s Chairman Jerome Powell testified last month before the House Committee on Financial Services. As usual, Powell answered questions regarding the present and future of monetary policy. During the testimony, Democratic Congresswoman Alexandria Ocasio-Cortez asked Powell about the weakening of Phillips curve and its relevance for today’s monetary-policy decisions.…

What can we expect from ECB’s new president Christine Lagarde?

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What can we expect from ECB’s new president Christine Lagarde?

Habemus praeses. Incumbent IMF chairwoman Christine Lagarde was recently nominated to become the next president of the ECB after the agreement reached by European leaders last week. The French politician will take up the position next November, bringing an end to Draghi’s eight-year mandate. Draghi’s presidency has been characterized by two key aspects. First, during his mandate, the…

Who will succeed Mario Draghi as head of the ECB?

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Who will succeed Mario Draghi as head of the ECB?

The days of Mario Draghi as head of the European Central Bank are coming to an end. Next October, Draghi will cease to be one of the most powerful central bankers in the world after eight years in office. A hero for some, a villain for others, everyone agrees that his mandate will go down in history as one of the most decisive in the short history of the euro as he was forced to cope with a…

Mr. Trump, leave the Fed alone

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Mr. Trump, leave the Fed alone

One sometimes wonders if Trump’s irresponsible statements have other objective than to show his bold ignorance on economic and political issues. Last week, the US President lashed out at the Federal Reserve for its stance on monetary policy. In a nutshell, he complained about the dollar appreciating against the Euro as a result of Fed’s policies. This, according to Trump, undermines…

What is the place premium?

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What is the place premium?

Wage differentials within a country can be explained by factors such as work experience, years of education, or career choices. Yet things get more complicated when comparing wages from workers living in different countries. When we do so, we need to take into account an extra factor: migration barriers. This is exactly what economists Michael Clemens, Claudio Montenegro and Lant Pritchett do in…

Global migration numbers refute the rhetoric of invasion

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Global migration numbers refute the rhetoric of invasion

The anti-immigration wave that has emerged over the last years on both sides of the Atlantic has contributed to spreading a number of mantras about the migration phenomenon on a global scale. I myself have tried to debunk some of the myths related to the economic impact of immigrants on host countries, pointing out that most claims are either false or overstated (e.g., here, here, or here).…

What is Modern Monetary Theory? (III): A Critique

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What is Modern Monetary Theory? (III): A Critique

A widespread idea among MMT proponents is that governments can never go bankrupt. And to some extent, this is true. If a government has the capacity to print money, it can’t strictly default on its debt. Put differently, a government with monetary autonomy will always be able to print money to repay its debt in nominal terms. But at what cost? Imagine you buy a one-year government bond for…

What is Modern Monetary Theory? (II): A Critique

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What is Modern Monetary Theory? (II): A Critique

In the last months, the US political debate has revolved around a number of proposals (e.g., Bernie Sander’s Medicare for All or Alexandria Ocasio-Cortez’s Green New Deal) that, if materialized, would send government expenditures through the roof. Most economists would tell you that, in the long run, these new programs must be financed either by increasing taxes or by trimming other…

What is Modern Monetary Theory? (I): Some Ideas

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What is Modern Monetary Theory? (I): Some Ideas

In an interview last January, Democratic Party’s rising star Alexandria Ocasio-Cortez brought attention to so-called Modern Monetary Theory (MMT), a theory that challenges the foundations of mainstream economics regarding fiscal and monetary policy. Whereas its supporters see in MMT a solid theoretical framework with which to justify the expansion of public spending, its detractors argue…

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