Archive for November 29th, 2011

Effects of fiscal policy – Seperating ideology from empirics

November 29, 2011

A nice paper/speech from Team Obama’s ex chief economist – Christina Romer. This has been blogged about much. Krugman, Gulzar and John Taylor (responding to his criticism in the paper) have blogged about it.

Tons of research is to follow on whether fiscal policy worked or failed in this crisis. All I can say with 90% confidence is despite so much research, we can never be sure whether fiscal policy worked in this crisis.

However, this paper is a very good one (in plain english) and explains the basic problems with research on fiscal policy.

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How should the Eurozone fiscal union/finance ministry look like?

November 29, 2011

Benedicta MarzinottoAndré SapirGuntram B. Wolff  of Bruegel institute throw some light on this hot issue.

Basically, it has to be like any other finance ministry/treasury responsible for stability of the economy. Here as we are talking about Europe, this should also mean it has veto powers over budgets of national finance ministries that could create instability in Euroarea  as we are seeing today.

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