How abnormal was the stock market in October 2008?

By: Paul De Grauwe, Leonardo Iania, Pablo Rovira Kaltwasser

Last month saw a stock market move with a probability of occurring only once in 73,357,946,799,753,

900,000,000 years. What does this tell us about modern finance?

The depression of 2009

Wrong government policies on both sides of the Atlantic are turning a crisis into a catastrophe.

The Stability and Growth Pact

The Stability and Growth Pact (SGP) forms part of the rules and procedures for fiscal policy of the member states of the euro area. The SGP has been subject to criticism long before it was officially agreed at the EU summit in Dublin in 1997 and ever since. The debate about the SGP reflects some of the deep ideological divisions that have accompanied the creation of economic and monetary union. The opponents of the SGP have criticised inter alia that it is pro-cyclical and anti-growth.

Economic reforms in the euro area: Is there a common agenda? by Xavier Debrun and Jean Pisani-Ferry, Bruegel

Despite the recent growth revival, the state of the euro area economy remains vexingly disappointing. What is taking place is too little, too late and the very fact that output growth only started to pick up in the fourth year of the global recovery suggests that something must be wrong. Against this background, the overriding priority remains to design and implement policy packages aiming at: Increasing potential output through higher employment, higher labour participation, and higher productivity; Ensuring that actual output does not lag behind gains in potential output.

Private versus Public Banks: The academic evidence

In France, about two thirds of the banking system is owned by the public sector. In Germany, that proportion is even higher – about 75%. In Spain, the public sector owns no banks outright, but the public sector is still a dominant player among the savings banks. In Italy, the situation is interesting. In 1990, Italy had a similar banking structure to Germany, with about 70% of the banking sector stated-own. That proportion went down to 9% by 2005.

 The creation of a single European financial market is often viewed as one precondition for the success of monetary union in the long-run. The EU’s Financial Services Action Plan is one part of the process towards a harmonized financial sector in the EU. But for the euro area specifically, the ambitions the ambitions should go beyond...

What the European Constitution means for the Euro Area

The Constitution makes a number of changes to the Union's economic policy and monetary policy, in particular: strengthening the capacity of the Union and of the euro zone in particular, to act; establishing the European Central Bank (ECB) as an EU institution; considerably simplifying the texts.

Should a modern central bank still care about money?

Does money still matter for modern monetary policy? If you thought the beast was dead, you could not be more wrong. The subject of whether monetary aggregates matter for a central bank remains one of the big issues of modern monetary economics, but the discussion about this subject differs fundamentally from the discussion several decades agoThis is a distinctly European issue in the sense of the major central banks in the world, only the European Central Bank still makes explicit reference to money in its policy formulation. The ECB has adopted a two-pillar strategy, in which standard economic analysis, based on a neo-Keynesian forecasting model, forms the first pillar, while monetary analysis constitutes the second pillar of policy. The ECB is sometimes described as monetarist, partly...