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Saturday, June 21

21st Jun - W/E: Best of the Week

Here are the ”best” from my posts of the ending week.

European Commission endorses Telegraph view of the euroThe Telegraph
Ambrose Evans-Pritchard: I never thought I would live to see a serving European Commissioner suggest that it was "reckless" to launch the euro without a lender-of-last resort or fiscal union to back it up.

Eurozone mired in recession
Euro-Zone Economy May Still Be in Recession — Think TankWSJ
Growth and improvements in the labour market have been so anaemic that it is too early to call the end of the Eurozone recession. Indeed, if this is what an expansion looks like, then the state of the Eurozone economy might be even worse than economists feared.

Why the euro crisis still isn’t over, in 1 chartWaPo
Europe's strategy has been self-defeating. It's made countries try to cut their public debt and private debt and wages all at the same time. That's impossible.

Despite lower yields, euro-periphery is not yet out of the woodsBruegel
While the public debt ratio is expected to fall, the debt trajectory remains highly vulnerable to negative growth, primary balance and interest rate shocks.

Euro Area: 2014 Article IV Consultation IMF

Here’s How Much Upside Is Left in European EquitiesWSJ
With euro-zone sovereign debt yields becoming ever more compressed, perhaps it should come as no surprise that investors are chasing European equities.

Periphery Business Cycle MonitorDanske Bank
Spain, Ireland, Portugal and Greece have potential for more surprises as the hard negative shock has resulted in very high pent-up demand. We expect private consumption to improve further as indicated by the increases in consumer confidence.

TLTRO impact questioned as the carry trade provides easy moneySober Look

The ECB’s Bank Review: Kill the Zombies and Heal the WoundedPIIE

Euro area deflation monitorDanske Bank

OECD Urges Broad Tax Reform In U.S.WSJ
The U.S. should reform its tax code with “a degree of urgency” to overcome challenges to long-term economic growth, including an aging population and rising household inequality, OECD said.

2014 Article IV Consultation with the United States of America Concluding Statement of the IMF MissionIMF

IMF Slashes US Growth Expectations; Pushes Higher Minimum Wage, Removing Tax Loopholes & Fiscal StimulusZH

The macroeconomic effects of asset
After reducing their policy rates close to zero in response to the global financial crisis, the Bank of England and the Federal Reserve began purchasing assets. This column assesses the effect of these asset purchases on output and inflation. In line with previous studies, the authors find that asset purchase announcements are associated with increases in both output and inflation in both countries. They also find that quantitative easing had a larger impact on UK inflation, which suggests that the UK Phillips curve is steeper.

The US and the Eurozone 2012-3mainly macro
If fiscal policy is important at the zero lower bound, why did the US recovery continue in 2012 and 2013 despite a large fiscal contraction? Or to put the same question in a comparative way, why was the Eurozone’s fiscal contraction in 2012/3 associated with a recession, but not in the case of the US?

The Case for a Long-Run Inflation Target of Four Percent IMF
Many central banks target an inflation rate near two percent. This essay argues that policymakers would do better to target four percent inflation. A four percent target would ease the constraints on monetary policy arising from the zero bound on interest rates, with the result that economic downturns would be less severe. This benefit would come at minimal cost, because four percent inflation does not harm an economy significantly.

Paul Krugman: Does He Pass the Test?The New York Review of Books
Review of Timothy F. Geithner’s Stress Test: Reflections on Financial Crises

Näin on aina olevaJuhani Huopainen / US

Suomen kustannustason karkaaminen ja taloudellinen menestysTyhmyri

Suhdannekatsaus 1/2014Valtiovarainministeriö
Kuluvana vuonna talous kasvaa vain 0,2 % ja vuonna 2015 päästään maltilliseen 1,4 prosentin kasvuun. Ennustejakson viimeisenä vuotena 2016 BKT:n kasvuksi muodostuu 1,6 %. Vuonna 2015 kaikki kysyntäerät julkisia investointeja lukuun ottamatta vaikuttavat talouskasvuun positiivisesti. Vienti lisääntyy 4,6 % kansainvälisen kaupan piristyessä. Kotitalouksien reaalitulojen kehitys jää kuitenkin heikoksi ja yksityisen kulutuksen kasvu jatkuu edelleen hyvin vaimeana.