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. Bruegel Blog – Zsolt Darvas and Pia Huttl : ‘Negative ECB deposit rate: But what next?

    Zsolt Darvas and Pia Huttl discuss the decisions announced by president Mario Draghi at the European Central Bank (ECB) meeting on 5 June. Specifically, they address the ECB’s introduction of a negative deposit rate for the first time in its history in order to tackle deflationary risks and boost the weak economy of the Eurozone. Darvas and Huttl argue that since the commercial banks can hold excess reserves on their current accounts in the ECB at zero interest rate, a negative deposit rate should be accompanied by negative rates on the current accounts as well. The experiment of negative deposit rate was first introduced by the Central Bank of Denmark (Nationalbank) in 2012 in order to stimulate a depreciation of the local currency. However, since the goal of the ECB is different from the one of Nationalbank, the main question is whether the Eurozone will experience the same results as Denmark.” – Dirina Mançellari

  2.  Reading Marx’s Capital with David Harvey –  David Harvey: ‘Afterthoughts on Piketty’s Capital’

    We have seen a lot of debate around Thomas Piketty book “Capital in the Twenty-First Century”. Although most of the sharpest criticism comes from the liberal side of economic thinking, some people in the far-left have also casted doubts on the fundamentals of this controversial book. In this article, David Harvey—one of the world’s foremost Marx scholars—argues that all of Piketty’s theory is based on a mistaken definition of capital, with capital presented as the “stock” of all assets tradable in the market (used or not). However, Harvey contends that capital is a dynamic concept and we should only include the capital that is actually used. The creation of an “artificial scarcity” is what ensures a rate of return on the capital high enough to reproduce the capitalist system.  Ricard Torné

  3. New Economics – Leander Bindewald : ‘Back-up currencies: the solution to our euro woes?’

    Leander Bindewald reflects on the concept of multiple, complementary currencies and raises the question of whether such kind of system may contribute to increase liquidity and economic activity in some countries of the Euro area, particularly in southern states. The author points out that historically, complementary currencies often evolved when national currencies failed, for instance during the Great Recession in the United States. Some well-known complementary currencies are the Austrian Wörgl or the Swiss WIR, which is now being used for almost 80 years and has a turnover of more than CHF 1.5 billion. The historic experience with complementary currencies and the recent emergence of new systems, such as the Bristol Pound or the business-to-business currency called So Nantes, prompt the author to pose the question of whether “an integrated system of currencies, different in scale and scope and governed in a bottom-up fashion [could] provide the way forward for southern European states, providing liquidity without alienating their northern partners?” –  Teresa Kersting

  4. Antonio Fatás on the Global Economy – Antonio Fatas: ‘Refocusing Economics Education

    In his latest blog entry, Antonio Fatás considers the need for a serious re-thinking of the way economics is taught. He states that the global economic crisis should be the main reason to change the economics curriculum, although he points out that economists “indeed” failed to predict many aspects of the crisis. His view, however, is not that there is a lack of tools or understanding. On the contrary, he thinks that there are too many and the problem is to choose the correct tool for the particular problem. He provides an interesting list of four mistakes in which economics teachers and researchers have failed in recent years: #1 Too much theory, not enough emphasis on explaining empirical phenomena. #2 Too many counterintuitive results. Economists like to teach things that are surprising. #3 The need for a unified theory. #4 Teachers teach what their audience wants to hear. – Ricardo Aceves 

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