Everyday the blogosphere offers an enormous amount of in-depth analysis on any imaginable topic. The world of macroeconomics and economic forecasting is no exception. To keep themselves updated on the latest information, our in-house team of economists scan the world wide web and gather what they consider the most interesting, appealing, informative or just curious blog posts from experts in the field of global economics. Here’s the list of the Top 4 posts from this week. Check it out!

  1. Caracas Chronicles – Juan Cristobal Nagel: ‘It’s the institutions, stupid!

    According to Acemoglu and Robinson’s book “Why Nations Fail”, economic and political institutions can be inclusive—people participate in economic activity—or extractive—the elites drain the country’s resources for its own benefit. In this post, Juan Cristobal Nagel argues that the Venezuelan administration falls into the latter category and that any change in the country should be focused on moving toward inclusive economic institutions. The key point, however, is not “what”, but “how” this change will be made. In any case, this is an essential blog for people wanting to understand the economic and political situation in Venezuela. – Ricard Torné

  2. Econbrowser – Jeffrey Frankel: ‘Unemployment and Unnecessary U-turns in Forward Guidance’

    Jeffrey Frankel, professor at Harvard University, takes a look at a complication that has arisen regarding forward guidance. Specifically, the unemployment rate in the U.S. has dropped to 6.6%, which is just a tad above the 6.5% threshold established by the Fed. Similarly, unemployment has fallen to 7.1% in the U.K. and is poised to drop below the 7.0% threshold previously laid out by the Bank of England. However, concerns about weakness in these economies still persist and neither central bank is planning on raising interest rates anytime soon. Frankel recognizes that these unemployment thresholds were presented as necessary but not sufficient conditions for monetary tightening, but argues that, “the shift in emphasis is a policy U-turn that has confused the financial markets.” Frankel argues that the Fed and BoE made a mistake by placing unemployment at the core of their guidance, because it is vulnerable to extraneous fluctuations such as a decline in labor force participation. Moreover, he believes that this situation could have been avoided if the central banks had chosen a more robust indicator, such as nominal GDP. – Carl Kelly

  3. Bruegel Blog – Philine Shuseil: ‘A review on Germany’s minimum wage debate’

    According to Bruegel’s contributor Philine Schuseil, Germany, unlike other European economies, does not have a national minimum wage even though specific industrial sectors have one.  The upper chamber of parliament, the Bundesrat, proposed a minimum wage of 8.5€. The debate over introducing a general minimum wage has therefore emerged and he summarizes this debate, in particular German media voices, positions of German political parties as well as statements of economists. A worth-reading piece for those interested in Germany’s current economic developments!  – Ricardo Aceves

  4. Credit Writedowns – Frances Coppola: ‘Scotland and then the banks

    Frances Coppola provides an exhaustive explanation of the different monetary settings that could emerge after an hypothetic Scottish independence. Coppola’s article is especially interesting because it includes some historical background, starting in the path breaking 1844 Banking Charter Act and bringing the discussion to the current shape of Scottish banks’ portfolios. According to Coppola, political independence will be conditional  to monetary independence. Far from being an easy challenge, the transition to an independent monetary setting remains a trip full of uncertainties, a trip that Coppola beautifully illustrates with some historical and more recent examples. – Enrique Jorge

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