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Sunday, November 9

9th Nov - W/E: Economics

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Policy Makers Must Do What Is Best for Their Economies While Weighing Global Implications — Central BankersWSJ

Basel III implementation: Progress, pitfalls, and prospectsBIS
Keynote speech by Mr Stefan Ingves, Chairman, Basel Committee on Banking Supervision and Governor, Sveriges Riksbank at the High-Level Meeting for the Americas, Lima, Peru, 3-5 November 2014.

Planetary Economics: macroeconomic and international implicationsEuropp / LSE

Reforming the architecture of EMU: Ensuring stability in EuropeDNB
Netherlands Bank DNB Working Papers by Jakob de Haan, Jeroen Hessel and Niels Gilbert

Potential output from a euro area perspectiveECB
European Central Bank Occasional papers by Robert Anderton, Ted Aranki, Alistair Dieppe, Catherine Elding, Stephan Haroutunian, Pascal Jacquinot, Valerie Jarvis, Vincent Labhard, Desislava Rusinova, Béla Szörfi

Debt-overhang banking crisesFED

Japan on the BrinkKrugman / NYT
The funny thing is that both sides of this debate believe that it’s about credibility; but they differ on what kind of credibility is crucial at this moment.

What Lies Ahead for the Global Economy: A BRICS PerspectivePIIE
Mohamed A. El-Erian, chief economic adviser at Allianz, delivers the Peterson Institute's tenth Whitman Lecture

Monetary policy and long-term
There has been a long-term downward trend in labour’s share of national income, depressing both demand and inflation, and thus prompting ever more expansionary monetary policies. This column argues that, while understandable in a short-term business cycle context, this has exacerbated longer-term trends, increasing inequality and financial distortions. Perhaps the most fundamental problem has been over-reliance on debt finance. The authors propose policies to raise the share of equity finance in housing markets; such reforms could be extended to other sectors of the economy.

The Shift and the Shocks: What We've Learned--and Have Still to Learn--from the Financial CrisisPIIE
Martin Wolf, chief economics commentator for the Financial Times, presented his new book, The Shift and the Shocks: What We've Learned—and Have Still to Learn—from the Financial Crisis, on October 9, 2014, at the Peterson Institute for International Economics (transcript)

The Euro Trap: On Bursting Bubbles, Budgets, and BeliefPIIE
Hans-Werner Sinn, Ifo Institute for Economic Research, Peterson Institute for International Economics, Washington, DC, September 15, 2014

Why Don’t We See More Macroeconomic Populism?Krugman / NYT

The Wonks Battle for the FedView / BB

The Fed dog is not being wagged by the freshwater or saltwater academic tailsLong and Variable

China, Europe, and optimal currency zonesMichael Pettis
I typically think of four main factors that determine whether or not an economy can function efficiently as a single currency or economic zone. They primarily determine the level of adjustments costs and how these costs are to be shared, so that regions more able to bear the costs absorb a larger share of those costs:

Wage Growth of Part-Time versus Full-Time WorkersMacroblog
We find that part-time workers as a group appear to experiencing a lower average wage growth rate than full-time workers during the recovery from the Great Recession.

How severe has the zero lower bound constraint been?
Monetary policy has not been severely constrained by the zero bound until mid-2011. The results imply that the Fed could have done more to ease monetary policy between 2009 and 2011. These findings could also help explain why the fiscal stimulus package adopted in 2009 did not bring the expected success.  

Inflation? Deflation Is New RiskNYT

Decomposing the velocity of moneySober Look
Going forward, as long as inflation remains low, we could continue to see reasonable real GDP growth while the velocity of money remains depressed.

Fighting the last warmainly macro
In the grand scheme of things we should worry about inflation and debt, but right now we are worrying about them too much and therefore failing to deal with more pressing concerns.

Buttonwood: Every man for himselfThe Economist
Economic policies are diverging in the developed world as deflation looms

International Mensch FundKrugman / NYT
Facing up to austerity mistakes.

The IMFs evaluation of 2010 austeritymainly macro

IMF Publishes Book on Staff Stress Testing ModelsIMF
Toolkits to Check Health of Financial Institutions and Systems

Guest post: The case for sovereign reprofiling the IMF way, part oneFT
‘Reprofiling’ is a controversial word in the world of sovereign debt at the moment. The IMF is gathering responses on a proposal to extend bond maturities when a country’s debt looks like it might be unsustainable going into a programme.

Is economic growth permanently lower? Gavyn Davies / FT

What Secular Stagnation Isn’t Krugman / NYT

The long viewThe Economist
There has been much talk in recent months of "secular stagnation" after the former Treasury secretary Larry Summers made a speech on the issue in February. The problem for the developed world has not arisen overnight.

Demography and economics: Look past the
Most of the world is now at the point where the support ratio is becoming adverse, and the growth of the global workforce is slowing. This column argues that these changes will have profound and negative effects on economic growth. This implies that negative real interest rates are not the new normal, but rather an extreme artefact of a series of trends, several of which are coming to an end. By 2025, real interest rates should have returned to their historical equilibrium value of around 2.5–3%.

Reflections on the new 'Secular Stagnation hypothesis'
Lawrence Summers: The notion that Europe and other advanced economies are suffering secular stagnation is gaining traction. This column by Larry Summers – first published in the Vox eBook “Secular Stagnation: Facts, Causes and Cures” – explains the idea. It argues that a decline in the full-employment real interest rate coupled with low inflation could indefinitely prevent the attainment of full employment.

The world economy is flying with only one engineThe Guardian
The pilots of the global financial system must navigate menacing storm clouds, and fights are breaking out among the passengers, writes Nouriel Roubini

Business vs. EconomicsKrugman / NYT
Business leaders often give remarkably bad economic advice, especially in troubled times. And I think it’s important to understand why.

[2010] A country is not a companyKrugman / HBR
Why businesspeople don’t necessarily make great economists