The UK’s Referendum on the European Union: What Happens Next? [throwback from June 2016]

[Having just reviewed what I imagined to be the outcome in the event of Leave in the week before the Brexit referendum, I thought I’d drop it online for posterity. This is an abridged version (nothing added, only the scenarios that did not emerge and irrelevant details removed) from that written during the week between the devastating murder of MP Jo Cox and the referendum in 2016. With hindsight, the strength of public finances and the economy is clearly wrong and remains a puzzle to resolve; the business cycle more generally has held up–something to ponder in the period ahead; the prediction of a new PM in Bojo was also (thankfully) wrong; while I completely failed to foresee the recalcitrance of Labour to push back meaningfully against Brexit alongside a few other details… but still, our current predicament was in broad brush terms there to foresee. As to Article 50 extension, which i thought would not be granted, it now seems more a question of whether the UK asks rather if the EU grants, but let’s wait and see. I give myself 6/10, perhaps optimistically.]

*** Continue reading “The UK’s Referendum on the European Union: What Happens Next? [throwback from June 2016]”

On the prospects for global macroeconomic policy coordination

AS NEW ECONOMIC Counsellor and Director of Research Department (RES), Gita Gopinath, settles into her new role at the IMF, what might her priorities be to make an imprint on the world’s premier monetary institution? Here’s a suggestion. She might begin by taking control of the IMF’s global forecasts—and do so with a view to rekindling the prospects for global macroeconomic policy coordination. Continue reading “On the prospects for global macroeconomic policy coordination”

Germany’s Missing €500 billion

THE PERCEPTIVE Simon Tilford of the Centre for European Reform has noticed a curious feature of Germany’s external accounts: her net international investment position (NIIP) reveals net “foreign assets have risen much less rapidly than the accumulated current account surpluses, leading to … losses: around €580 billion since 1999.” Continue reading “Germany’s Missing €500 billion”

Fixing Greece: Part II

The Greek transfer problem

THE MACROECONOMIC challenge facing Greece in 2010 was side-stepped from the start—driving, in turn, policy missteps.

Figure 3 highlights the truly extraordinary non-resident purchases of Greek government debt—capital inflows—during the decade from 1999. The left chart uses the Bank of Greece’s excellent flow of funds data—recorded at market value of transactions—to track the 4-quarter sum of non-resident and resident purchases of Greek debt. It also shows the fiscal balance throughout. Continue reading “Fixing Greece: Part II”

Fixing Greece: Part I

WITNESS, IF YOU WILL, the resurrection of the Greeks. Disbursement of €7.7 billion on 7th July by the European Stability Mechanism (ESM), with another €0.8 billion soon to follow, and an “Agreement in Principle” International Monetary Fund (IMF) precautionary arrangement, has brought Greece to life once more—and deservedly so.

The Greek government bond (GGB) 10-year yield at roughly 5½ percent sits close to post-crisis lows. The Tsipras government has returned to markets with a five-year bond with 4.635 percent coupon, below that attained by the previous administration in 2014. SYRIZA can be forgiven for eyeing program exit. Continue reading “Fixing Greece: Part I”