Archivi tag: coronavirus

art1_vardy

Among the intense debate about the European Stability Mechanism, some economists claim that under the ESM conditionalities Italy would finally implement the structural reforms it needs to enhance its productivity and competitiveness. Although economists have asked these measures for years, politicians have been too populist and selfish to endanger their popularity and approve unpopular policies in the short-term, but that would strengthen Italian economy in the long-term. This view is widely shared inside economics departments, also among many students. Despite its diffusion, this claim is wrong because it implies that economics oversteps its boundaries by imposing political decisions in an authoritarian way. In this article I explain my view after having briefly discussed the features of ESM and its effectiveness (when I talk about ESM borrowings I do not mention the unconditional borrowings up to 2% of GDP approved during the last Eurogroup).

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stayhome

Have you ever wondered about how much your life is worth? Economists have always tried to give monetary value to people’s lives. Nowadays, this issue gets even hotter, since policymakers have to take into account all costs and benefits deriving from shutting down the world economy: when will the benefits of saving lives by ‘flattening the curve’ of infected individuals be outweighed by its costs?

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By toonpool.com

‘Eurobonds’ are debt securities denominated in a currency foreign to the country of issuing. Then, why everybody is so concerned, especially nowadays, about something that exists since 1963, the year when Autostrade issued the world’s first 60.000 Eurobonds denominated in U.S. Dollar? The answer is simple: the same word is also used to define another concept. The ‘Eurobond’ we are talking about is also called ‘stability bond’, a government bond, denominated in euro, issued jointly by the eurozone states. How is it different from the usual sovereign debt?
The point here is what is underlying the issues of common government securities, i.e. interest rates and collaterals.
In this series of articles, we will explain what Eurobonds are, why there are so many concerns around them and if they could be developed someday soon. In particular, we will go through European peculiarities and analyse all viable options to face extreme circumstances  as it is for COVID-19.

Why everybody messed up with debt

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