Posted on Monday, November 2nd, 2009
By the Center for Geoeconomic Studies
The greatest challenge of European monetary union is devising a single monetary policy for a large grouping of countries facing divergent economic conditions. As these charts show, this challenge has been thrust to the fore since 2008, as eurozone employment conditions have diverged dramatically across member countries. Whereas the effectiveness of independent monetary policy as a tool for managing employment in smaller open economies is much debated among economists, the political challenge facing the European Central Bank in having to justify its policy decisions under current conditions is clear.
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Posted in 2008/9 Downturn, Central Banks, Europe | 0 Comments »
Posted on Friday, September 11th, 2009
By the Center for Geoeconomic Studies
In a typical post-war recession, recovery would be well under way after twenty-one months. This time around, all that has emerged is limited optimism over ‘green shoots.’ Although conditions in financial markets have improved (e.g., the spread between AAA corporate debt and treasuries has narrowed by over 150 basis points since November 2008), the labor market has continued to deteriorate. The chart below indicates that the increase in unemployment since this recession began is worse than all post World War II recessionary spikes in unemployment.
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Posted in 2008/9 Downturn, Economic Cycle, U.S. | 1 Comment »
Posted on Wednesday, July 8th, 2009
By the Center for Geoeconomic Studies
Until the economic crisis, many praised the U.S. model of flexible labor markets for promoting faster growth and low unemployment. But flexibility has a cost: the United States is leading the G7 in terms of job losses over the past year. Output in Germany has fallen more than in the U.S., but Germany has experienced significantly fewer job losses. This perhaps helps explain the Merkel government’s less aggressive approach toward fiscal stimulus.
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Posted in 2008/9 Downturn | 0 Comments »
Posted on Friday, June 12th, 2009
By the Center for Geoeconomic Studies
Government borrowing has increased sharply, but the fall in private borrowing by households and firms has been equally dramatic. Overall borrowing has not changed substantially. Will the government be able to reduce its borrowing when private borrowing resumes?
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Posted in 2008/9 Downturn, U.S. | 3 Comments »
Posted on Tuesday, June 9th, 2009
By the Center for Geoeconomic Studies
The collapse in U.S. trade associated with the current downturn far exceeds the fall in any other post-war recession. It tracks the fall in trade observed in the 1930s, though there are now signs of stabilization. So far this collapse has been driven by economic factors, such as the decline in demand and trade financing, but as the world economy contracts the risk of protectionism increases.
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Posted in 2008/9 Downturn, Economic Cycle, Trade | 1 Comment »
