Podcast: Macro Waves


Covid-19 and the environment 9/8/2020

Covid-19 and the outlook for inflation 7/22/2020

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

On the Same Theme

The migration of risk in 2021 1/15/2021
Risk and uncertainty never disappear but their nature, intensity and economic consequences evolve over time. 2021 should be the perfect illustration.
Special Edition – 2021: hopes and challenges 1/7/2021
2021 is a year of hope with the arrival of vaccines. Health-related and economic uncertainty should ease significantly, and better visibility will help boost consumer and business confidence and thus drive economic growth. It is also a year of hope for the climate thanks to European initiatives and the prospect of a change of policy direction in the US. But these hopes bring challenges. How will we manage government debt? How might financial markets react if growth surprises on the upside?
What difference will the pace of vaccination make for the economy? 1/7/2021
The introduction of vaccines will enable the global economy to make the shift from a stuttering recovery, shaped by a series of lockdowns and their relaxations, towards a steadier growth trend. A key factor will be the gradual reduction in uncertainty, which will encourage households to spend and businesses to invest. The quicker we reach collective immunity, the stronger this economic momentum will be.
2020: Entering a new era 12/18/2020
From an economic perspective, 2020 will go down in history for obvious reasons – the consequences of the Covid-19 pandemic – but also because we have entered a new era.
2020 economic review: agile responses to the Covid-19 shock 12/11/2020
Covid-19 represents an exogenous shock to the global economy of unseen proportions in recent decades. The reaction has been swift and agile. Central banks have eased policy and injected liquidity whereas governments have put fiscal discipline aside and used their budgets to bring much-needed support.  This has softened the blow from the pandemic. What has also played a role is the agility of companies by adapting their production and/or distribution models to cope with the disruption of supply chains and the impact of restrictions on sales and by making it possible for a lot of their staff to work from home. Most importantly, the development of a vaccine brings hope at the end of a very difficult and challenging year. Vaccination should lead to a lasting economic recovery although questions remain about the possible longer-lasting impact of the pandemic in terms of unemployment and corporate as well as public sector indebtedness.
After celebrating the reduction in uncertainty, investors to focus on the growth outlook 12/4/2020
The latest OECD Economic Outlook reminds us that despite the prospect of a vaccine being widely available next year, the recovery should be very gradual. Yet, equity markets have rallied strongly in November, following the announcement of a highly effective vaccine. This suggests that the reduction in uncertainty, rather than a significant improvement in the growth outlook for next year, has been the driving force behind the reaction of investors. With the decline in uncertainty largely priced in, going forward, the focus will shift to the growth outlook. When will a sufficient number of people have received a vaccine? What about the pace of the recovery? The road ahead looks bumpier than the experience in November.
The stop-go recovery 11/13/2020
After a mechanical and spectacular recovery in economic activity during the third quarter, there seems to be a real risk that the euro zone will see the recovery come to an abrupt halt in the final quarter of the year. This will be due to the sharp rise in the number of new coronavirus cases, the measures taken to restrict the spread of the disease and the general feeling of uncertainty that will hold back spending. This said, we can already look forward to the impetus to recovery from a relaxation of these measures once the number of new cases has been brought back under control. We are therefore living in a stop-start economy, with strong acceleration alternating with brutal slowdowns. Such an environment, with its lack of visibility beyond the short term, is depressing the propensity of businesses to invest. Households may also delay spending on large-ticket items. Monetary and, to an even greater extent, fiscal support will thus remain crucial. Spillover effects from the rest of the world will also play a key role. In this context, one thinks of China and of the USA, where a new stimulus package is being drawn up.
Preparing for a post-pandemic world: towards a more targeted economic policy 10/16/2020
In its latest World Economic Outlook, the IMF considers that the economic recovery will be long, uneven and highly uncertain. This will require support from monetary and in particular fiscal policy for a long time to come.
QE forever: on the slippery slope towards fiscal dominance? 9/25/2020
Declining effectiveness of monetary policy and increased fiscal policy space make the case for increased public debt issuance in combination with quantitative easing to boost growth. There is concern that such policy coordination would lead to fiscal dominance whereby monetary policy is dictated by considerations in terms of public finances to maintain public debt sustainability.  Once the pandemic will be behind us, governments will have the responsibility to improve their public finances. Inaction in this respect would put the burden on the ECB when fighting future downturns. It would be a different type of fiscal dominance.
Uncertainty: still high, though less than before 9/25/2020
Based on our indicators, uncertainty has declined after the huge jump earlier in the year following the outbreak and spreading of Covid-19. Starting top left and moving clockwise, the media coverage based indicator has declined but remains at a high level, reflecting that the pandemic continues to dominate headlines. Uncertainty based on company surveys has eased in the US whereas in Germany, the improvement is more outspoken. In both cases however, the level remains very high. The geopolitical risk measure has increased recently. The series is quite volatile but one observes a rising trend [...]

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