Feeds:
Posts
Comments

Archive for the ‘Institute of International Monetary Research’ Category

Acabo de participar en un seminario organizado por la Fundación Civismo sobre dinero e inflación con dos buenos amigos y colegas (auténticos maestros), especializados en banca central; Pedro Schwartz y José Antonio Aguirre. Hablamos de si importa que la cantidad de dinero, en su medida más amplia (incluidos depósitos bancarios), esté creciendo a tasas tan elevadas desde Marzo de 2020 (alrededor del 22% anual en EEUU y de 15% en el Reino Unido), y de sus consecuencias sobre gasto nominal e inflación en 2021 y 2022.

Además, hicimos la presentación de un curso ‘online’ sobre dinero e inflación que hemos realizado desde el Institute of Internacional Monetary Research, en que se trata de cómo se crea el dinero (y también de cómo se destruye), y de cómo cambios en la cantidad de dinero afectan a los precios de los activos (reales y financieros) primero, y posteriormente al gasto nominal y a los precios de los bienes y servicios de consumo. Es un curso con una introducción a estas cuestiones desde una perspectiva monetarista. Más información sobre el curso aquí: https://mv-pt.org/online-course/

Un saludo,

Juan Castañeda

Read Full Post »

Dear readers and blog followers,

Please, find below a unique Christmas card with a very relevant message, as sent by the Institute of International Monetary Research earlier this week. The card has a text from the Spanish scholastic, Martín de Azpilicueta (School of Salamanca), who alerted to the effects of the over-issue of the currency and the subsequent danger of inflation back in the XVI c. in Spain. I wish current regulators and monetary-policy makers read him much more often.

Merry Christmas to you all.

—————————————-

Estimado lector y seguidor de este foro,

Es un placer poder despedir este año con una felicitación Navideña como ésta, tan única y apropiada para estos tiempos que corren, enviada por el Institute of International Monetary Research esta semana. Contiene una cita del gran escolástico Navarro, Martín de Azpilicueta (Escuela de Salamanca), quien ya alertara de los peligros de la sobre-emisión de moneda y de la inflación subsiguiente a mediados de la España del siglo XVI. Ojalá le leyeran más los reguladores y hacedores de la política monetaria en la actualidad.

Muy Feliz Navidad a todos.

Read Full Post »

Este es título del libro que acabo de publicar con Unión Editorial, bajo la edición de José Antonio Aguirre, todo un referente en Economía en España en lo que se refiere a la publicación de libros sobre moneda y banca central, tanto los suyos propios como traducciones muy meritorias que incluyen excelentes estudios de los clásicos en este campo. Este libro es una traducción al castellano del original escrito por el economista monetario y colega mío en el Institute of International Monetary Research (IIMR), Tim Congdon, y yo mismo, publicado por el Institute of Economic Affairs de Londres en Junio de 2020.

Portada libro

Lo que hacemos en el libro es detallar cómo se crea el dinero (entendido en un sentido amplio, que incorpora los depósitos bancarios en su definición) en economías modernas; y cómo la financiación por parte de los bancos y del banco central del creciente gasto público en que los gobiernos han incurrido desde Marzo de 2020 tiene efectos muy significativos sobre los precios y el ciclo económico, tanto en el corto como en el medio y largo plazo. 

Si bien el análisis de los procesos por los que se crea el dinero son aplicables a cualquier economía moderna, utilizamos en nuestro estudio únicamente datos referentes a la economía de EEUU. Lo hacemos así por su relevancia en la economía mundial y porque ha sido precisamente en EEUU donde el crecimiento monetario desde Marzo de 2020 ha sido más excepcional, al menos comparado con el de otras economías avanzadas. En la segunda mitad de 2020, el crecimiento del dinero (medido a través del agregado monetario M3) ha superado tasas del 25% interanual, lo que significa una tasa récord de crecimiento del dinero en tiempos de paz en la historia reciente de EEUU.

Crecimiento Monetario en EEUU durante la Crisis Financiera International (2008-09) y la crisis de Covid-19(fuente, ‘IIMR Monthly Note, October 2020‘) 

Oferta monetario

Es importante la diferenciación que hacemos en nuestro análisis entre distintos tipos de agregados monetarios: Por un lado está la ‘base monetaria’, constituida por el efectivo creado por el banco central o la casa de moneda nacional y las reservas bancarias en el banco central. La base monetaria representa un porcentaje ciertamente pequeño de la cantidad de medios de pago que usamos en nuestras transacciones cotidianas, y menos aún si se trata de transacciones de mayor valor monetario. Este agregado monetario reducido no es más que entre un 10% – 15% de los medios de pago disponibles en la economía. El resto de la oferta monetaria está constituida por los depósitos bancarios que usamos regularmente mediante el empleo de tarjetas de pago y transacciones bancarias.

Lo distintivo del crecimiento monetario registrado desde Marzo de 2020 en EEUU, es que ha crecido la cantidad de dinero en su sentido más amplio, incluyendo depósitos bancarios; esto es, la oferta monetaria. Y es el crecimiento de este último agregado monetario el que explica de mejor manera variaciones en la inflación en bienes y servicios, así como fluctuaciones de la actividad económica a lo largo del ciclo económico (ver el análisis empírico entre variaciones de la cantidad de dinero y la inflación y la renta nominal en el estudio publicado por el IIMR aquí).

Esta vez sí es diferente

En la crisis financiera de 2008-09, lo que creció fue la base monetaria (el balance de los bancos centrales), pero no la oferta monetaria que, de hecho, cayó en 2009 y 2010 y fue acompañada de desinflación y deflación. De ahí que no hubiera inflación de bienes de consumo entonces (aunque sí la hubo de precios de activos), y nuestra previsión que explicamos en el libro es que sí la habrá en esta ocasión, tras la crisis de Covid-19. No será automática ni inmediata. De hecho, el cuándo y cuánto subirán los precios es difícil de decir con precisión, aunque sí nos atrevemos a ofrecer cifras en el libro. Lo que sí que podemos apuntar son tendencias de precios a medio y largo plazo. Una vez que lo peor de la actual crisis sanitaria haya pasado y la economía vuelva a re-abrirse, el exceso de dinero creado en los últimos meses no habrá desaparecido ‘por arte de magia’. Será entonces, muy probablemente en los años 2021-2022, cuando veremos un fuerte aumento de la demanda nominal en la economía, seguida de presiones inflacionistas, que conducirán a tasas de inflación ciertamente por encima de las tasas que hemos visto en los últimos años.

Más detalles y análisis sobre todo ello en el libro. Como siempre, comentarios y críticas muy bienvenidos.

Juan Castañeda

Read Full Post »

Central banks are not just interest rate setters: an introduction to modern central bank roles

This is the online presentation I made at the 2020 Freedom Week (by the Adam Smith Institute and the Institute of Economic Affairs) on August 21st. It is an overview of the major roles undertaken by modern central banks in our economies, which involves much more than setting the policy rate. Actually, since the outbreak of the Global Financial Crisis what leading central banks have been doing is to act as ‘bank of banks’, ‘bank of the government’ and, as regards monetary policy, to engage in asset purchase operations (i.e. Quantitative Easing). Once policy rates were brought down to the effective lower (nominal) bound, central banks have used outright asset purchases to be able to affect macroeconomic outcomes. Contrary to a very popular misperception, in purely fiat monetary systems, central banks cannot run out of ammunition, even when nominal policy rates are zero or close to zero. In this presentation, I briefly discuss (1) what central banks do as providers of services to the banking sector and to the government, as well as (2) the importance of monetary analysis to understand the effects of changes in the amount of money on inflation and output over the medium to the long term. This is at the core of what we do at the Institute of International Monetary Research.

I hope you find it a good introduction to central bank roles in modern economies. As ever, comments welcome.

Juan Castaneda

PS. If only for enjoying James Gillray‘s caricatures as a means to explain money and central banking, it may well be worth watching.

 

Read Full Post »

Moneda, precios y el monetarismo en Europa

Aquí podéis encontrar la charla que tuve el placer de dar a mis amigos y colegas del Centro Hazlitt de la Universidad Francisco Marroquín (UFM), en Guatemala (Marzo 2020). El tema era la vigencia (o su no vigencia) del monetarismo como perspectiva y escuela de análisis económico en Europa. Como comprobaréis, soy muy pesimista en mi presentación; sobre todo en lo que se refiere a la explicación de la inflación en los modelos económicos predominantes en las ultimas tres/cuatro décadas. A pesar de ello, reivindico el uso de un análisis monetario riguroso (de la oferta y de la demand da dinero) si queremos explicar tendencias en los precios en el medio y largo plazo; una afirmación que me parece obvia, pero que en el entorno académico actual resulta tristemente revolucionaria … . Además, si bien soy muy crítico con el estado de los modelos macroeconómicos en lo que respecta a la explicación de la inflación, soy más optimista por lo que en la práctica los bancos centrales hacen cuando se enfrentan a una crisis financiera. Hemos visto cómo a partir de 2009/10 (o más tarde en la Eurozona), los bancos centrales recurrieron a operaciones de compra de activos (‘expansión cuantitativa’ o QE en sus siglas en inglés) para evitar la caída de la cantidad de dinero. Querían evitar con ello caer en el mismo error en el que cayó la Reserva Federal de los EEUU en los años 30 del siglo XX. Pareciera como si, por la vía de los hechos, los bancos centrales estuvieran persiguiendo una política monetaria encaminada a lograr la estabilidad del crecimiento del dinero (‘a la Friedman’).

Asimismo, también comento en algún detalle en la presentación algunas de las críticas más habituales que se hacen al monetarismo desde distintas perspectivas teóricas: como (1) la (supuesta) necesidad de imponer la estabilidad en la demanda de dinero (o de su inversa, la velocidad de circulación) para su validez en la práctica; o (2) el no tratamiento de los efectos reales que las variaciones en la cantidad de dinero traen consigo a medio y largo plazo. Como veréis en este video, intento demostrar que ambas críticas no son ciertas o están basadas en supuestos erróneos, y que la ecuación cuantitativa del dinero sigue siendo un esquema teórico válido para explicar variaciones de los precios y de la actividad nominal a lo largo del tiempo. Eso sí, no debería utilizarse esta ecuación y los supuestos en los que se basa, de una manera miope y mecanicista; eso sería un error grave. Hay muchas variables que afectan a la inflación en el corto plazo que están fuera del alcance de esta ecuación y de lo que los banqueros centrales pueden aspirar a controlar. Además, hay un grado indudable de incertidumbre y de retardos en la transmisión de las variaciones de la cantidad de dinero en los precios y la actividad económica; de ahí que sea mejor hacer análisis en el medio y largo plazo o en tendencia.

Aquí tenéis la grabación de la charla, que fue seguida de un coloquio con los miembros del Centro Hazlitt de la UFM que resultó muy provechoso e interesante. Muchas gracias a los asistentes y especialmente a Daniel Fernandez y a Clynton López, por su amable invitación a participar en estos seminarios. A ver cuándo podemos repetirlo!

Juan Castañeda

 

Read Full Post »

On the economic effects of the policy responses to Covid-19

Today the Institute of Economic Affairs (IEA, London) has just published a report by my colleague Tim Congdon and myself (Institute of International Monetary Research and University of Buckingham) on the debate on the expected inflationary vs. deflationary consequences of the current crisis. Of course there are many unknowns yet and we should not claim or have the illusion that we can forecast exactly inflation rates in the next 2-3 years. But what we can attempt is to do ‘pattern predictions’ (see Hayek’s 1974 Nobel lecture speech). Based on the monetary data available and the theoretical body linking changes in the amount of money to price changes over the medium/long term, we have observed in the last two months an extraordinary increase in the amount of money in most leading economies (certainly in the USA, with a rate of growth of money, M3, of 25% in April 2020). This comes from the implementation of quite significant asset purchases programmes (i.e. Quantitative Easing) and the (partial) monetisation of very much enlarged government deficits; a trend that will most likely continue for the rest of the year. It is both the extraordinary money growth rates seen recently, along with the expected persistence in monetary growth in 2020 what support our forecast of an inflationary cycle in the US (and in other leading economies, though to a lesser extent) in the next 2-3 years. The diagram below from the report says it all (see page 8).
More details in the report (IEA Covid-19 Briefing 7, June 2020) at:
https://iea.org.uk/themencode-pdf-viewer-sc/?file=/wp-content/uploads/2020/06/Inflation_the-new-threat25787FINAL.pdf. Also, the webinar presentation of the report with my colleagues Geoffrey Wood and Tim Congdon will be available soon at the IEA’s website/YouTube channel.
Money growth (M£) in the USA
Juan Castañeda
Summary of the report (in pages 4-5):
  • The policy reaction to the Covid-19 pandemic will increase budget deficits massively in all the world’s leading countries. The deficits will to a significant extent be monetised, with heavy state borrowing from both national central banks and commercial banks.
  • The monetisation of budget deficits, combined with official support for emergency bank lending to cash-strained corporates, is leading – and will continue to lead for several months – to extremely high growth rates of the quantity of money.
  • The crisis has shown again that, under fiat monetary systems, the state can create as much as money as it wants. There is virtually no limit to money creation. The frequently alleged claim that ‘monetary policy is exhausted at low (if not zero) interest rates’ has no theoretical or empirical basis.
  • By mid- or late 2021 the pandemic should be under control, and a big bounce-back in financial markets, and in aggregate demand and output, is to be envisaged. The extremely high growth rates of money now being seen – often into the double digits at an annual percentage rate – will instigate an inflationary boom. The scale of the boom will be conditioned by the speed of money growth in the rest of 2020 and in early 2021. Money growth in the USA has reached the highest-ever levels in peacetime, suggesting that consumer inflation may move into double digits at some point in the next two or three years.
  • Central banks seem heedless of the inflation risks inherent in monetary financing of the much-enlarged government deficits. Following the so-called ‘New Keynesian Model’ consensus, their economists ignore changes in the quantity of money. Too many of these economists believe that monetary policy is defined exclusively by interest rates, with a narrow focus on the central bank policy rate, long-term interest rates and the yield curve. The quantity theory of money today provides – as it always has done – a theoretical framework which relates trends in money growth to changes in inflation and nominal GDP over the medium and long term. A condition for the return of inflation to current target levels is that the rate of money growth is reduced back towards annual rates of increase of about 6 per cent or less.

Read Full Post »

A model of parallel currencies under free exchange rates

Money is one of the most studied and truly complex phenomena in Economics. How money is created? And how is it destroyed? ‘What constitutes money and what doesn’t? Is money only the means of payment sanctioned by law, by the State? In our current monetary systems, can we ‘create’ as much as money as we like? If so, wouldn’t it be inflationary? These are some of the questions Economics students frequently ask at the start their degrees. Today I am only going to focus, if only timidly, on one of them; the absence of competition in the national currencies markets in our days. Of course, the absence of competition in this market is not the result of the application of the conventional laws of Economics; quite the opposite, as masterly explained by Vera Smith in her ‘Rationale of Central Banking and the Free Banking Alternative’ in 1936, the granting of the legal tender clause to a single currency, that issued by the State, has been an explicit decision made by the government (the relation between the State and the central bank has always been problematic to say the least, you can find more details on it here). F. Hayek also explains marvellously the abolishment of the laws of Economics as regards money in his ‘Denationalisation of Money’ in 1976. More recently, my colleague from the Institute of International Monetary Research (IIMR), Tim Congdon, discussed this issue in his ‘Money in a Free Society’ in 2009 and makes the case for a privatised and truly independent central bank, detached from the political agenda or the economic needs of the government.

Following this debate, two colleagues of mine, Pedro Schwartz and Sebastian Damrich, and myself have reflected on these issues in a working paper just published by the Applied Economics Centre of the John Hopkins University (‘A model of parallel currencies under free floating exchange rates’. In Studies in Applied Economics, Num. 160, June 2020). In the paper we assess the feasibility of a parallel currency system under different macroeconomic scenarios. We first offer the rationale for the introduction of more competition in this market and then develop a model to see wether (and under which conditions) a parallel currency system ends up in the running of a single currency economy, or rather in two currencies competing for the market. We draw policy implications and use the the eurozone as a case-study, but the model could well be applied to any other set of countries sharing a currency or willing to access a different currency area. In a nutshell, what we show in the model is the conditions for the issuer of each currency to gain a higher market share and benefit from it. We make a distinction between (1) a macroeconomic stable scenario, defined in the paper ‘as one in which the sensitivity of the market share of the currencies to changes in prices in both currencies is not high (as we presume changes in inflation in both currencies will be rather small)’ (see page 25). In this scenario, it is ultimately the supply of each currency what determines their market share (the less inflationary currency will gain more market share over time); and (2) a highly unstable macroeconomic scenario, ‘where agents’ demand of each currency is very sensitive to changes in relative prices in both currencies. In this high price sensitive scenario, an increase in the switching costs to favour the use of one of the currencies (i.e. the government’s preferred currency) would only lead to inflation in that favoured currency and very quickly to its expulsion from the market’ (see page 25). The model can thus be applied to well-established economies, where both the national currency and the common currency circulate in the economy and to highly inflationary economies, where the government favours the use of its currency and uses the currency as a source of revenues (i.e. seigniorage).

This is the abstract of the paper, which you will be able to access in full here:

‘The production of good money seems to be out of reach for most countries. The aim of this paper is to examine how a country can attain monetary stability by granting legal tender to two freely tradable currencies circulating in parallel. Then we examine how such a system of parallel currencies could be used for any Member State of the Eurozone, with both the euro and a national currency accepted as legal tender, which we argue is a desirable monetary arrangement particularly but not only in times of crisis. The necessary condition for this parallel system to function properly is confidence in the good behaviour of the monetary authorities in charge of each currency. A fully floating exchange rate between the two would keep the issuers of the new local currency in check. This bottom-up solution based on currency choice could also be applied
in countries aspiring to enter the Eurozone, instead of the top-down once and for all imposition of the euro as a single currency that has turned out to be very stringent and has shown institutional flaws during the recent Eurozone crisis of 2009 – 2013. Our scheme would have alleviated the plight of Greece and Cyprus. It could also ease the entry of the eight Member States still missing from the Eurozone.’

All comments welcome. We still have to work more on the paper and suggestions for change and further references will be most appreciated.

 

Juan E. Castañeda

PS. A previous study on parallel currencies by P. Schwartz, F. Cabrillo and myself can be found here; where we put it forward as a solution to ease and expedite the adjustments needed to apply to the Greek economy in the midst of the so-called euro crisis.

 

Read Full Post »

It’s not all about interest rates!

In a piece published by CityAM on 12/11/2019 (‘Interest rates aren’t central banks’ only ammunition to defend against recession‘), I criticised the view apparently shared by most policy commentators about the alleged lack of ammunition of central banks to tackle the next crisis; they claim that this is because policy rates have reached either zero or close to zero levels and therefore there is no more room for monetary expansion. As I put in the article, this is wrong:

But interest rate change is not the only policy tool available to create money. Indeed, nor is it the most effective in times of crisis. In modern economies, where monetary systems are purely based on fiat currencies, money can be created “out of thin air”. As shocking as it may sound, this means that central banks can always increase the amount of money in the economy.

Since 2008 central bank (main policy) rates had been cut down to zero or near zero territory, and for many years it was mainly by changes in the amount of money how central banks managed to stabilise spending (through unconventional policy measures or QE). The outcome in the US, the UK but also in the Eurozone (though achieved much later), has been the stabilisation of the rate of growth of broad money in these economies followed by a period of a relatively stable overall macroeconomic picture (i.e. broad money growth in the US around 4% – 5% for a long period of time).

 

Broad money growth, US

 

The fundamentals to understand how monetary policy decisions are made in modern monetary systems, particularly in times of a financial crisis, where commercial banks struggle to expand deposits, can be summarised as follows:

  • In the absence of a truly binding anchor (such a metallic standard under the gold or silver standards) central banks can always create money ‘out of thin air’, with no limit.
  • In modern monetary systems both commercial banks and central banks create money; actually the bulk of the means of payments used are created by commercial banks in the form of deposits and the extension of overdrafts (see the seminal paper on this, Money creation in the modern economy , by McLead, Radia and Thomas, 2014).
  • The announcement and later application of tighter bank regulation in the midst of the Global Financial Crisis (2009 – 2010) increased bank capital requirements by approx. 60%, thus limiting the ability of banks to give loans and create deposits (i.e. money) in an already recessive economy. In the absence of the creation of money by markets (i.e. banks), central banks had no choice but to step in and buy assets from the market (from non-financial institutions), the so-called QE operations. Otherwise, money supply would have contracted very severely, with the harm it would have inflicted on the economy (this time, central bankers were determined to avoid the mistakes they made in the Great Depression years as Ben Bernanke had famously put it back in 2002, when deposits contracted by more than 30% in four years in the USA, therefore aggravating and prolonging the recession).

I argue in the article that, for better or worse, the ‘monetary weaponry’ in modern monetary systems can never be exhausted (Venezuela today is a dramatic example of it, when the printing press is heavily exploited by the government). Under purely fiat monetary systems, we need to tie the hands of the central banks so they abide by a rule in order to maintain a moderate and stable rate of growth of money; a rule that does not result in excessive money growth during the expansion of the economy, nor in a strong decline or even a fall in money growth during recessions. My colleague from the University of Buckingham and the Institute of International Monetary Research, Professor Geoffrey Wood, explains masterly and in few minutes how to define and adopt such a monetary rule in the Eurozone in this video.

 

Juan Castañeda

PS. You can have access to the CityAM article in full at https://www.cityam.com/interest-rates-arent-central-banks-only-ammunition-to-defend-against-recession/

 

Read Full Post »

On the performance of the Euro vs. the US dollar (video presentation)

Those who follow this blog will know that I have already published an entry on the index of performance of the euro (1999 – 2018); I commented on the outcomes of an overall index of macroeconomic dispersion among the Eurozone Members States, which can be split up into four (sub) indices: business cycle, competitiveness, public finance and monetary dispersion. I have also reported on the same metrics calculated for the US, so we could compare then with those of the Eurozone. The results are somehow expected, but nevertheless very revealing.

  • Overall macroeconomic dispersion in the US is much smaller than in the Eurozone.
  • Macroeconomic asymmetries within the US states did exacerbate in the crisis years and also in the pre-crisis years, but in the US have quickly returned to pre-crisis levels and remained fairly stable since 2010; whereas in the Eurozone we still have a long way to go.

Of course, some caveats apply in this instance: the US dollar has been a single monetary area for more than 150 years, and indeed a banking union and a fiscal union (with a meaningful federal-central budget) for a long time too. Even with these caveats in mind, what it is very revealing is not that the size of macroeconomic dispersion or internal asymmetries are much larger in the Eurozone, but how differently macroeconomic dispersion has evolved after the crisis: In the case of the Eurozone, particularly as regards monetary and competitiveness dispersion trends, they  show a very strong persistence, revealing (among other things) a more rigid functioning of the price system in goods and services and labour markets as compared to those in the US. The caveats mentioned above may well explain the difference in levels of dispersions, but the changes in trends reveal underlying/structural problems in the way in which markets adjust to crisis in the Eurozone.

We are now extending the results of the project to include the index of dispersion among regions and nations within the UK sterling area, and the (provisional) results confirm the same pattern: the poorer performance of the Eurozone (as measured by internal dispersion) as compared to both the US dollar monetary area and the UK sterling one. We may disagree on the solutions to this problem but we should not simple ignore the facts. ‘All and sundry’ claim that a fiscal union and a pan-EU central budget should be adopted, so counter-cyclical policies can diminish the negative effects of ‘lateral shocks’ (those affecting some MSs considerably more than others) in the future. I do advocate for a different solution, one that requires no further integration, but the devolution of fiscal discipline to the national level. Here it is a the report with my proposal for the re-balancing of the Eurozone.

Here you will find the video to the presentation of the index of the Euro performance (2019) at the European Parliament, in an event organised by the Institute of International Monetary Research in Brussels (29/10/2019). Feedback most welcome.

Juan Castañeda

 

Read Full Post »

An optimality index of the single currency: internal asymmetries within the Eurozone and the USA since 1999

We have measured the macroeconomic dispersion within the Eurozone (see further details here on the indicators we have used) and this is in a nutshell how the euro (12 and 19) has performed since its launched in 1999.

 

As shown in the chart above we have added Target2 balances in the calculation of the (overall) index of internal dispersion; which is in fact an index of divergence within the Eurozone. The empirical conclusions are quite revealing, and somehow the expected ones: (1) in the good years (1999-2007), overall dispersion increased quite notably (it doubled!); (2) after the 2008-09 crisis, divergence deteriorated much more sharply and, leaving Target2 balances aside, the trend has been reversed and the index shows signs of improvement (though at a very slow pace).

We have also calculated an index of macroeconomic dispersion for the (mainland US) dollar area, using the same methodology. The chart below shows the trends in dispersion/internal asymmetries in this two major monetary areas:

 

There are many questions to discuss on this issue: among others, I will just mention three: (1) should we or should we not add Target2 balances to the calculation of the index of dispersion? (effectively, do Target2 balances matter?); (2) since the US is indeed a banking union, should we factor in monetary dispersion across States?; and (3) do the charts above suggest that the policies implemented during the recent crisis are the right ones in order to achieve a greater degree of convergence in the Eurozone?

We will discuss these questions and the charts above, and what they mean for the interpretation of convergence trends in the Eurozone, in a two-day conference at the University of Buckingham this week (21-22 February): The Economics of Monetary Unions. Past Experiences and the Eurozone. If you cannot make it, you will be able to follow the presentations live online. More information on the full programme here and how to follow it at the Institute of International Monetary Research social media.

All welcome.

 

Juan Castañeda

 

Read Full Post »

Older Posts »