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. The Market Monetarist – Lars Christensen: ‘Money and credit confused…again, again and again

    The European Central Bank’s recent decision to cuts its refinancing rate from a historic low 0.25% to an even lower 0.15% and to cuts its deposit rate into negative territory has generated widespread debate about the implications of monetary policy. Lars Christensen shares that these policy actions are a reminder of, “one of the oldest failures in monetary debate – the confusion of money and credit.” Moreover, his opinion is that this confusion has led central banks to, “make the wrong decisions implementing credit policies and mistaking it for monetary easing.” Christiensen acknowledges that there is a relationship between the supply of and demand for both money and credit, but underlines that they are not the same thing.” –  Carl Kelly

  2.  Stumbling and Mumbling –  Chris Dillow: ‘THE PRODUCTIVITY SLUMP’

    Chris Dillow explains in this blog post the logic behind the productivity slump in the British economy and suggests solutions to improve it. He says that a six-year long fall in productivity—like the one seen in the latest data released by ONS—was  last seen in late 1880s. He adds that the latest data weakens the optimistic explanations that the post-2008 drop in productivity was caused in part by labor-hoarding, where firms hung onto their best employees to “use” them in better times of recovery. However, this theory implies that the productivity rate should have exceeded by now the levels reached when the economy entered the crisis. Dillow continues his post by explaining two possible solutions to raise productivity. One possibility would be to just wait for the firms to invest in productivity improvements. A second possibility would be deregulation since data show that free markets improve productivity.  Dirina Mançellari

  3. A Fistful of Euros – Edward Hugh : ‘The “Hot Labor” Phenomenon’

    To what extent are the current economic conditions of Switzerland comparable to the pre-crisis situation in Spain? In both cases the economy grew strongly, real estate prices rose, job were created rapidly and immigration surged. Financial journalist Detlef Gürtler and crisis expert Edward Hugh discuss the potential similarities and differences between the two booms, focusing on the role of the new “hot labor” phenomenon. Hugh reasons that in both economies a surge in immigration was brought about by accommodative monetary policy that fostered economic activity and argues that immigration boom/bust cycles are harmful to an economy if they are followed by massive emigration. In his view, the consequences of an abrupt reversal in migration flows are comparable to that of a sudden stop in capital flows. –  Teresa Kersting

  4. VOX – Martin Weale and Tomasz Wieladek: ‘What are the macroeconomic effects of asset purchases?

    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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