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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
In response to several inquiries1, I offer a few more comments on Europe in 2013, in particular why I do not view a delay in euro area fiscal integration as a disaster, why the United Kingdom will not leave the European Union and what I view as the major downside risk in 2013. (Hint: It [...]
Despite the numerous predictions of its demise, the euro is alive and well at the end of 2012. Indeed, it has again held its value against other currencies during the year,1 confounding skeptics just as it did a year ago. As 2012 comes to a close and the last European Union Council of the year [...]
The political agreement reached early on December 13 by Europe’s finance ministers makes it highly likely that legislation establishing a Single Supervisory Mechanism (SSM) with the European Central Bank (ECB) at its center will be enacted in March 2013. This is a big European success, high up on what was the range of possible outcomes. [...]
The British economy is lacking productive investment, but not for want of investment opportunities. Banks and large corporations are sitting on cash, households are holding back on large purchases (including of housing), and the public sector is slashing its investment flow. This shortfall reflects the deficiencies of the British domestic financial system, some of them [...]
The announcement by Italy’s technocrat prime minister, Mario Monti, of his intention to resign after parliament’s approval of the 2013 budget law came as a surprise for most observers. Premier Monti attributed his decision to the withdrawal of crucial support by PDL (People of Freedom Party), which had supported his technocrat government for the past [...]
The International Monetary Fund (IMF) has just published a public information note about its preliminary findings from the annual review of the Latvian economy. It is rare for the IMF to write anything as positive as it did in its first summary paragraph: Latvia’s economy continues to recover strongly. Following real GDP growth of 5.5 [...]
Industrial policy, in which governments seek to support certain industrial sectors, has made a comeback. It has attracted new respectability with the economic rise of China. Justin Lin, the recently departed World Bank chief economist, has made the intellectual and empirical case for industrial policy. The essence of his industrial policy is to identify comparative [...]