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Podcast: Macro Waves
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COVID-19 causes balance sheet disruption 5/28/2020

Central banks: the need for re-assessing the objectives 2/26/2020

Negative interest rates and the paradox of saving 10/28/2019

The challenges of financial stability 9/4/2019

Climate change puts balance sheets at risk 6/28/2019

On the Same Theme

Dilemma for businesses: reduce debt or invest? 5/28/2020
The second episode focuses on non-financial companies. As well as having a considerable impact on their short-term (cash) and long-term assets (imperative of aligning their operational model with new requirements in terms of supply chain resilience), the Covid-19 crisis has obliged businesses to increase their indebtedness. This confronts them with a dilemma whether to strengthen their balance sheet by paying back debt or to maintain a high degree of leverage an invest.
Ever bigger central balance sheets raise question about where is the limit 5/28/2020
Central banks have played a key role in supporting the economy during the pandemic-induced recession. To do so, they increased the size of their balance sheet. William De Vijlder explains the mechanisms governing this increase in their balance sheet. Is there any limit on how far it might go? He also explains the concept of direct monetary financing.
Following the surge in the debt/GDP ratio, what action will the governments prioritise? 5/28/2020
In response to the pandemic, many governments took a vast range of measures to curb the impact of the pandemic on the economy. In this final episode, William De Vijlder shows how the state remains the “balance sheet of last resort” in the event of an economic crisis. He also reviews the current situation of public finances and what this implies in terms of dynamics of the  debt/GDP ratio.
The Covid-19 pandemic: stress testing the supply side 4/17/2020
The Covid-19 pandemic shows that the supply side warrants greater attention when conducting macroeconomic analyses. Very long global value chains may be optimal from a cost and price perspective, but operationally may be very complex and, in particular, fragile. A more resilient supply side comes with a cost, both at the micro and macro level. Solving this trade-off in a market economy is difficult, which, to some degree, leaves a role for public policy.
Huge jump in uncertainty acts as an additional drag on activity 4/17/2020
The Covid-19 pandemic has caused a jump in most of our uncertainty indicators. The media coverage based indicator is now at a record high. After stabilising at a high level, uncertainty of German companies has increased further whereas it has seen a big jump for US businesses. The behaviour of geopolitical risk is an exception...
Will the Covid-19 shock lead to a significant increase in the inflation rate ? 4/17/2020
There is no doubt that the Covid pandemic will lead to a short but deep world recession. However, the effect on inflation is unclear. If in the short term, many observers expect disinflationary bias, the medium-term inflation outlook is more ambiguous.
Hospital capacity and ageing populations 4/15/2020
Over the past decennia, hospital capacity has been gradually reduced in most OECD countries, as major health care innovations have resulted in a gradual shift towards more extra-muros care. Nevertheless, countries with the oldest populations such as Japan and Germany have maintained a large hospital capacity. In Germany, the number of acute beds is two to three times larger than in some other major countries such as France, the UK, and Italy. In that respect, South Korea is an outlier by combining a large hospital capacity with a relatively young population. In the current Covid-19 outbreak, having a large hospital capacity is a clear advantage. Fortunately, some countries have been able to increase their capacity of intensive care beds rapidly. Moreover, hospital capacity has been better used by transporting patients from overstretched regions to those with less Covid-19 patients. Thus, Germany has been able to receive French patients to relieve the hospitals in the eastern part of France. Hospital capacity is only one aspect of the current crisis. A country’s resistance to the virus is for an important part also determined by health care policies such as the availability of personal protective equipment, testing capacity and universal access to the health system.
COVID-19: Key measures taken by governments and central banks 4/15/2020
Major economic policy responses have been introduced to try to attenuate the impact of the Covid-19 pandemic on the economy. This document reviews the key measures taken by central banks and governments in a large number of countries as well as those taken by international organisations. It includes measures that were introduced through 10 April. It will be updated regularly.
COVID-19: Key measures taken by governments and central banks 4/9/2020
Major economic policy responses have been introduced to try to attenuate the impact of the Covid-19 pandemic on the economy. This document reviews the key measures taken by central banks and governments in a large number of countries as well as those taken by international organisations. It includes measures that were introduced through 3 April. It will be updated regularly.
Sudden stop to be followed by a gradual, uneven recovery 4/8/2020
The COVID-19 pandemic has caused a sudden stop in an increasing number of countries. This in turn had led to international spillovers via a decline in foreign trade and an increase in investor risk aversion triggering a global rush for dollar liquidity and a surge in capital outflows from developing economies. A forceful reaction has followed in major economies in terms of monetary and fiscal policy in an effort to attenuate the impact of the pandemic. The near-term dynamics of demand and activity will entirely depend on the length and severity of the lockdown. Once the lockdown has ended, the recovery is likely to be gradual and uneven and policy will have to shift from pandemic relief to growth-boosting measures, thereby putting additional pressure on public finances.  

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