It takes a lot to shock me nowadays, but the failure of most OECD countries over this pandemic I do find shocking. Not in the case of the UK under Johnson, the US under Trump, Brazil under Bolsonaro or India under Modi, as the reasons for their failures are all too obvious. After all Johnson had the idea before the pandemic that the UK should be the one country to opt out of restricting the economy to save lives, and that this would give the UK some big global economic advantage. Only when the implied NHS chaos was explained to him did he change his mind. What I find shocking is the failure of mainland Europe almost without exception A few countries did completely understand what they … [Read More...]

In memory of Andrew Hughes Hallett Eurozone fiscal rules have been suspended during the COVID crisis, thankfully. But I have argued on this blog since it began in 2012 (e.g. here) that the Eurozone fiscal rules, or any modified version thereof, were not fit for purpose. Now is the time to rethink the whole basis on which those rules were introduced. Olivier Blanchard, Álvaro Leandro, and Jeromin Zettelmeyer also think the existing rules should be scrapped, but their alternativestill has concerns about debt as central. It is the obsession with debt that has helped cause so many problems. We need a much more radical rethink, by going back to basic macroeconomics. Before the Euro was formed, I argued in academic papers with others (e.g. here) that… [Read More...]

If anyone gets these blogs via an email alert, unfortunately the platform I use is ending these in July. Sorry about this (outside my control), so please find another way to regularly receive this blog. In last week’s post I referenced an earlier post I had written in 2017 called “Was Neoliberal Overreach Inevitable? The question it posed was whether Trump and Brexit were an inevitable consequence of Thatcher and Reagan, or whether there was an alternative ‘fork in the road’ which if taken could have saved neoliberalism from that fate. That post was written in the aftershock of Trump’s election and the Brexit referendum. Four years on I think it is worth revisiting that question. (This post is a slightly more focused version of something I wrotesix … [Read More...]

I don’t normally talk about forecasts, but last week’s IMF World Economic Outlook illustrates a point a number of people have made. While both the UK and EU countries are prepared to gradually return what they believe as their non-inflationary level of output from below, the approach in the US is to overshoot, running the economy slightly hot for a period. This table from the Outlook shows expected GDP growth. The key figure is the last column, which shows overall growth from the start of the pandemic to when the recovery is largely complete. It shows how focusing on just 2022 growth, as I’m sure many in the UK and Europe will, is completely misleading. IMF Economic Outlook April 2021 Forecasts GDP growth 2020 2021 2022 2022/2019 United States -3.5% 6.4% 3.5%… [Read More...]

I recently wrote a postentitled “Why are the Conservatives so bad at running the economy?”. By bad I meant both in absolute terms (so many home grown crises: monetarism, ERM, austerity), and relative to the last Labour government. My post was hardly contested, and what criticism i received was easy to bat away. Things like ‘Labour left the economy vulnerable to a global financial crisis’, where the post noted that the Tories wanted even less financial regulation before the crisis. However, as I also noted, Labour have for the last decade been well behind in the polls on who is best to run the economy. Labour under Ed Miliband made the huge mistake of failing to contest the Tory lies about how Labour profligacy caused the… [Read More...]

Mainly for economists I want to talk about the latest Oxford Review of Economic issueon ‘rebuilding macroeconomics’, and particularly the first article by David Vines and Samuel Wills. The first thing I want to say is that the title is pretentious. Academic macroeconomics is reasonably happy doing what it is currently doing and in that sense there is nothing to rebuild. A better title is future directions for macroeconomics. The Vines and Wills article suggests two major changes in direction. The first, following Blanchard, is to partly reverse the microfoundations hegemony, by allowing models or parts of models that don’t include microfounded models routinely back into the top journals. The second is to focus on models that allow more than one long run equilibrium. I will take … [Read More...]

I don’t think this is understood by the leadership of the main opposition parties, along with many others. The Conservatives are way ahead in the polls at the moment, because the government had the right policy on vaccine procurement and delivery. That will fade, but it could quickly be replaced by an economic recovery bounce. The economy is likely to grow rapidly both this year and next, so the recovery bounce could last until 2023. As usual, much will be made of ‘record growth rates’ and rather less to where we are in comparison to pre-pandemic. For this reason, I suspect Johnson will call an election well before he needs to (having repealed the FTPA). Their erroneous reputation for managing the economy will appear enhanced. The Conservative… [Read More...]

Don’t worry, this isn’t really about that interview. But what struck me most about the whole situation is that the Royal Family had turned down a huge opportunityto revitalise its image, and the main reason it has done this was because of the right wing press, and possibly fear of change, and possibly race. Now I know many reading this don’t spend much time worrying about the Royal Family’s image (neither do I) but please bear with me. Looking at how public opinion about the affair splits by age should be very worrying for a monarchy that wants to survive. If the Palace had embraced the couple, which would have meant publicly defending Meghan against press misinformation and supporting her as much as they could in dealing… [Read More...]

Despite their reputation, over the last forty odd years Conservative Chancellors have been very bad at running the economy. Given the general view which suggests the opposite (twice as many thinkthe Tories are better at managing the economy than Labour) , it is worth setting out the record, but also to ask why they have been so bad. I’m going to start in 1979, with the Thatcher government, because Thatcher represented a new type of Conservatism. Before 1979 the Conservative party was more paternalistic, less neoliberal, and generally accepted the largely Keynesian methods for running the economy. (That is a huge oversimplification of course, but we have to start somewhere.) Above is the path of GDP per head over the period of Conservative government that started in 1979. As you… [Read More...]

by Joseph Joyce Financial Globalization and Inequality The global financial crisis slowed the pace of financial globalization, while the impact of the pandemic on its future course is unclear. But enough time has elapsed to assess the record of integrated financial markets that greatly expanded in the 1990s and early 2000s. The evidence on one […] The post Financial Globalization and Inequality appeared first on Angry Bear. [Read More...]