Podcast: Eco Waves
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Trade tensions underpin a high level of economic policy uncertainty 5/24/2019
Against a background of trade tensions between the US and China, economic policy uncertainty remains very high. Uncertainty of German companies, measured by the dispersion in their assessment of the business environment, is no longer increasing, yet remains at a high level. Uncertainty of US companies had dropped at the start of the year, but has now rebounded a bit. Geopolitical risk, measured using news coverage, has been on a rising trend since early 2013, although it has eased recently. Uncertainty based on the dispersion of the stock market performance of individual companies has declined since the start of the year.
Growth, interest rates and government debt 4/26/2019
The relationships between government debt, economic growth and interest rates are complex and varied. In general, a recession causes an increase in government debt and a decline in government borrowing costs. A prolonged period of monetary accommodation during a cyclical upswing can cause the average nominal interest rate on government debt to drop below the rate of nominal GDP growth. Depending on the level of the primary balance, such a situation can, under certain conditions, create leeway for fiscal expansion in order to support growth.
From slowdown to stabilisation 4/26/2019
Downward revisions to the outlook has been the driving theme since the middle of last year and the first quarter of this year continued to be challenging, not to say difficult in many countries. Understandably, data released in April were eagerly awaited. They show increasing signs of stabilisation in the eurozone and China whereas the US continues to do well. With a cautious stance from central bankers and support from the drivers of final demand, the outlook has improved somewhat but confirmation is needed. A trade deal between the US and China, which now seems likely, would give sentiment another much-needed push.
Labour market: The importance of social dialogue 4/24/2019
May Day is approaching. It is the occasion to celebrate progress made in improving workers’ rights. It can also be an opportunity to recall how much the quality of social dialogue matters for a well-functioning of the labour market. According to 2018 Global Competition Review of the World Economic Forum, the quality of labour-employer relations is relatively high in continental northwest Europe and Japan. At the same time, these countries score very well in terms of labour market outcomes. The lightly regulated labour markets in the English-speaking countries have also achieved low unemployment levels, although jobs are less well protected. In the southern European countries, the social dialogue seems to function less well. Unemployment in these countries has remained persistently high.  
Uncertainty: mixed signals 4/19/2019
The different uncertainty measures are sending mixed signals. The Economic Policy Uncertainty Index, which is based on media coverage about policy uncertainty, is no longer increasing but a downward trend has not yet started.
Lingering concerns despite hopeful signs 4/19/2019
Recent data in China and the eurozone point towards a stabilisation of growth and have been met with relief. Although the US economy is slowing, growth should remain at a satisfactory level in the near term. Yet there are lingering concerns about the underlying strength of the global economy. The IMF has again scaled down its forecasts and only expects a modest growth pickup later this year. The flattening of the US yield curve fuels worries that growth will disappoint. The Fed insists it is confident about the outlook and patient in setting its policy. Markets have welcomed this accommodative message. Yet the signals sent by equity and bond markets about future growth are quite different. It only adds to the list of concerns.
Global economy: Starting to look a bit better 4/5/2019
Strong job creation in March in the US has brought relief after the disappointing data the month before. The Chinese manufacturing indices have rebounded and crossed the 50 level. In the eurozone, the pressure on the manufacturing sector continues but the services PMI has improved. Retail sales have beaten expectations. For the manufacturing sector, a lot will depend on how uncertainty evolves. In this respect there are hopeful signs. The likelihood that an agreement will be reached between the US and China has increased whereas in the UK, cross-party negotiations seek to avoid a hard Brexit.
Inflation targeting: experience and assessment 3/29/2019
This second episode analyses the role of inflation targeting in the big disinflation of the 90s, the implications for growth, volatility of growth and inflation, real interest rates and inflation expectations. It also discusses the different perspectives on inflation targeting before and after the Global Financial Crisis of 2008. Interview conducted with François Doux.  
Inflation targeting: which future? 3/29/2019
In an environment of extremely low interest rates, central banks' room for manoeuvre to boost growth in the event of a recession is limited. So what monetary policy should be pursued today? William De Vijlder discusses the question of changing the objective of targeting inflation in monetary policies. Interview conducted with François Doux.  
Federal Reserve: monetary policy self-assessment 3/8/2019
  The Federal Reserve will conduct a review of its monetary policy framework and the conclusions will be made public in the first half of 2020. Three questions will be addressed: should the monetary policy stance take into account past misses of the inflation objective? Are the tools adequate? How can communication be improved? The initiative should be welcomed because it shows the Fed’s efforts for being ready when the next recession hits. Facing similar challenges, the ECB is likely to be interested in the outcome of the Fed research.

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