Should central banks publish their interest rate forecasts?

By: Stefan Gerlach, University of Frankfurt

No. The level of uncertainty is simply too high.

Fannie and Freddie on the rope

By: Wolfgang Münchau

When house price are expected to decline by 30%, some strange things are happening

Some empirical evidence in support of the bazaar economy theory

Publication Review: What explains Germany's Rebounding Export Market Share? by S Danninger and F Joutz, IMF Working Paper. The authors produce some empirical evidence in support of Hans Werner Sinn's theory that Germany's export success is not the result of wage moderation, but a pathological phenomenon, known as the Bazaar Effect, which explains Germany's export success in terms of offshoring and outsourcing.

When 101 economists give advice to policy makers

Between 1998 and 2003 there were several hundred reform proposals for the Stability and Growth Pact. Why so many? Did the proposals influence the political outcome of the SGP reform in 2003? These are some of the pertinent questions addressed by Jonas Fischer, Lars Jonung and Martin Larch of the European Commission in a recent Economic paper.

The OECD’s recommendations for the European Central Bank

In its survey on the euro area of January 5, the OECD argues that recent empirical evidence weakened two of the rationales for the use of monetary indicators by central banks: money demand functions were less stable recently than during the 1990s, and the leading indicator qualities of money have diminished. The OECD suggests that the ECB may be therefore be placing too high an emphasis on money in its two pillar-strategy. Furthermore, the strategy poses a communication challenge, as it is unclear to outside observers how the ECB uses the monetary pillar, and how much weight it attaches to it.

Book Review: Barry Eichengreen, The European Economy Since 1945, Princeton University Press 2006

Barry Eichengreen's tour de force of postwar European economic history itells us about Europe's reconstruction, its division and integration from the perspective of the economic system also known as co-ordinated capitalism. His thesis is that Europe's much maligned corporatist institutions played a significant role in achieving the postwar economic miracle, but that these institutions are insufficiently flexible to meet the 21st century's demands.

Do divergences in current account deficits accross euro area member states matter?

While the euro area is running an almost balanced current account, there are big divergences across member countries. Should this be a matter of concern? Does the euro induce or amplify these divergences? Are divergences a general phenomenon or driven by some specific countries? Are these divergences due to one-off effects or expected to last? These are the questions addressed by the European Commission in their Quarterly Report on the Euro Area published this week.