By Fergus Cumming (Bank
of England) and Paul Hubert (Sciences Po – OFCE, France)
Does the transmission
of monetary policy depend on the state of consumers’ debt? In this post, we
show that changes in interest rates have a greater impact when a large share of
households face financial constraints, i.e. when households are close to their
borrowing limits. We also find that the overall impact of monetary policy
depends in part on the dynamics of real estate prices and may not be
symmetrical for increases and decreases in interest rates.
Continue reading “The transmission of monetary policy: The constraints on real estate loans are significant!”
By Magali Dauvin and Hervé Péléraux
In the spring of 2019, the OFCE forecast real GDP growth of 1.5% for 2019 and 1.4% for 2020 (i.e. cumulative growth of 2.9%). At the same time, the average forecast for the two years compiled by Consensus Forecasts was 1.3% each year (i.e. 2.6% cumulative), with a standard deviation around the average of 0.2 points. This difference has led some observers to describe the OFCE forecasts as “optimistic as usual”, with the forecasts of the Consensus or institutes with less favourable projections being considered more “realistic” in the current economic cycle. Continue reading “The OFCE optimistic about growth – “As usual”?”
By Sarah Guillou
A review of: Jonathan Haskel and Stian Westlake, Capitalism Without Capital. The Rise of the Intangible Economy, Princeton University Press, 2017, 288 pp.
This book is at the crossroads of the debate about the nature of current and future growth. The increasing role of intangible assets is indeed at the heart of questions about productivity gains, the jobs of tomorrow, rising inequality, corporate taxation and the source of future incomes. Continue reading “The dilemmas of immaterial capitalism”
By Bruno Ducoudré and Eric Heyer
The industrialized countries are experiencing what seems to be a persistent slowdown in the growth of labour productivity since the second oil shock. This has been the subject of a great deal of analysis in the economic literature that considers the possible disappearance of the growth potential of the developed economies, and consequently their inability to return to a level of activity in line with their pre-crisis trajectories. In other words, could the industrialized countries have entered a phase of “secular stagnation”, making it more difficult to reduce public and private debt? The exhaustion of gains in productivity would also modify any diagnosis made of their conjunctural situation, particularly as regards their labour markets. Continue reading “Which new path for raising labour productivity?”
by Mattia Guerini, Alessio Moneta, Mauro Napoletano, Andrea Roventini
The financial and economic crises of 2008 have been intimately interwined with the dynamics of debt. As a matter of fact, a research by Ng and Wright (2013) reports that in the last thirty years all the U.S. recessions had financial origins. Continue reading “The Janus-Faced Nature of Debt”
By Pierre Cahuc and André Zylberberg
We would like to thank Xavier Ragot for permitting us to respond to his comments about our book, Le Négationnisme économique [Economic Negationism]. Like many critics, Xavier Ragot considered that:
1) “The very title of the book proceeds from great violence. This book is on a slippery slope in the intellectual debate that is heading towards a caricature of debate and verbal abuse.”
2) The approach of our work is “scientistic” and “reductive”, with “faith in knowledge drawn from natural experiments” that he doesn’t believe has a “consensus in economics”.
3) We “want to import the hierarchy of academic debate into the public debate”.
We would like to respond to these three allegations, with which we disagree. Continue reading “Some clarifications on economic negationism”
By Xavier Ragot
The book by Pierre Cahuc and André Zylberberg is an injunction to take scientific truths about economics into account in the public debate, in the face of interventions that conceal private and ideological interests. The book contains interesting descriptions of the results of recent empirical work using natural experiments for the purpose of evaluating economic policies in the field of education, tax policy, the reduction of working hours, etc.
However, assertions in the book that are at the borderline of reason ultimately make it a caricature that is probably counter-productive. More than just the debate over the 35-hour working week or France’s CICE tax credit, what is at stake is the status of economic knowledge in the public debate. Continue reading ““The economic negationism” of Cahuc and Zylberberg: the first-order economy”