September 2011

Commonsense Route To A Common Europe

22 September 2011

If you read my posts or look at the “Tag Cloud” on the right, you will recognize what a big fan of Wynne Godley I am :-). Above is an Observer article from 1991. Click the newspaper clip to enlarge. Quoting from the end of the article: If we are to proceed creatively towards EMU, [...]

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Severe Imbalances Within EA17

22 September 2011

In a recent post Chart: Euro Zone Indebtedness, I graphed the Net International Investment Position (the negative of “external debt”) for EA17 nations to highlight the severity of internal imbalances within the Euro Area. I found a source of data for the current account balance as a percentage of GDP in the IMF’s latest World [...]

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Separated at Birth? The Twin Budget and Trade Balances

20 September 2011

The International Monetary Fund, IMF has one full chapter devoted to the subject of “twin deficits” in their latest issue of World Economic Outlook. The subject of “twin deficits” is full of complications and can invoke the deepest emotions from economists. Naively, the argument goes as follows: The “three financial balances” identity can be written as NAFA [...]

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The Eurozone And Current Account Imbalances

11 September 2011

There’s a new article from the Federal Reserve Bank of New York - Saving Imbalances and the Euro Area Sovereign Debt Crisis by Matthew Higgins and Thomas Klitgaard. The abstract For several years prior to 2010, countries in the euro area periphery engaged in heavy borrowing from foreign private investors, allowing domestic spending to outpace incomes. Now these countries [...]

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Chart: Martin Wolf From FT

11 September 2011

Martin Wolf used the three financial balances approach in his blog recently. Here’s the chart from that post:

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Chart: Eurozone Balance Of Payments

11 September 2011

Via NYT:

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