What price to pay for monetary financing of budget deficits in the euro area vox, cepr policy porta

What price to cover monetary financing of budget deficits in the euro area

There keeps growing acceptance that some type of monetary finance is necessary, if not inevitable, in light of the severe nature of the downturn in the euro area. This column argues that while a monetisation of the deficits induced by the COVID-19 crisis would eventually raise the price level in order that, after a go back to economic normalcy, inflation would rise for two years, this is a cost worth paying in order to avoid future sovereign debt crises in the euro area. Moreover, the ECB, as the utmost independent central bank on earth, will be well equipped to avoid the inflationary upsurge from becoming permanent.


The influence of the covid-19 pandemic on safe haven assets

The influence of the COVID-19 pandemic on safe haven assets

The COVID-19 pandemic has severely impacted the financial markets, which includes triggered a flight from risky assets to safe haven assets. This column compares the performance of the safe havens over the world’s ten largest economies during COVID-19 and the 2008 Global FINANCIAL MELTDOWN. The findings claim that the type of safe haven assets has changed because the 2008 crisis. Gold, the original safe haven asset, has lost its glitter. However, the Swiss franc, the united states dollar and US Treasuries retained their safe haven status, and Tether, a cryptocurrency, shows some promise.


Mask mandates reduced the spread of covid-19 in the us

Mask mandates and other lockdown policies reduced the spread of COVID-19 in america

Confronted with COVID-19, people rationally and voluntarily react to information on risks, rendering it difficult to distinguish the result of containment policies from that of voluntary behavioural responses. This column examines the result of mandatory mask policies on COVID-19 cases and deaths in america. If the united states had on 1 April 2020 universally mandated that employees of public-facing businesses use masks, there might have already been nearly 40% fewer deaths by the beginning of June. Containment policies had a big impact on the quantity of COVID-19 cases and deaths, directly by reducing transmission rates and indirectly by constraining people’s behaviour, and take into account roughly half the observed change in the growth rates of cases and deaths.


A hamiltonian glimpse in europe

A Hamiltonian glimpse in Europe

Thorsten Beck believes that as the compromise reached on the European recovery support will never be enough to overcome the COVID-19 challenges in the EU, it really is an important first rung on the ladder.

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The European Council has come to a compromise on the European recovery support, after four days of negotiations. The primary pillars as proposed by Macron and Merkel time ago still stand – joint financing and a significant grant element. However the grant amounts have been down and many forward-looking programmes, including support for climate change, have already been reduced. So, is this a glass half empty or a glass half full? Taking the viewpoint a year ago none of the could have been even imaginable is a valid point if one takes the long-term view towards a slow move towards European fiscal policy integration. As my buddy Sony Kapoor highlights, however, this will not remember that the COVID-19 crisis constitutes a massive risk to the complete European project, you start with the euro, when there is asymmetric recovery and divergence over the EU (and again, especially the euro area). Many economists, including yours truly, have therefore called in early stages for a joint recovery effort on the European level, on economic, political and social grounds. And as a decade ago with the banking union, when these calls were first dismissed as unrealistic, it ultimately did happen. Angela Merkel and Emmanuel Macron have stepped up to the task.