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Posts Tagged ‘Keynes’

Jean-Baptiste Hollande

January 15, 2014 34 comments

 le temps est venu de régler le principal problème de la France : sa production.
Oui, je dis bien sa production. Il nous faut produire plus, il nous faut produire mieux.
C’est donc sur l’offre qu’il faut agir. Sur l’offre !
Ce n’est pas contradictoire avec la demande. L’offre crée même la demande.
François Hollande – January 14, 2014

France is often pointed to as the “sick man of Europe”. Low growth, public finances in distress, increasing problems of competitiveness, a structural inability to reform its over-regulated economy.  Reforms that, it goes without saying, would open the way to a new era of growth, productivity and affluence.

François Hollande has tackled the second half of his mandate subscribing to this view. In the third press conference since he became President, he outlined the main lines of intervention to revive the French economy,  most notably a sharp reduction of social contributions for French firms (around € 30bn before 2017), financed by yet unspecified reductions in public spending.  During the press conference, he justified this decision on the ground that growth will resume once firms start producing more. Thus, he tells us, “It is upon supply that we need to act. On supply! This is not contradictory with demand. Supply actually creates demand“. Hmmm, let me think.  Supply creates demand. Where did I read this?
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Wages and Unemployment

June 1, 2012 2 comments

The April data on Italian unemployment are out, and they look no good. Not at all. The overall rate (10.2%)  is at its maximum since the beginning of monthly data series (2004), and youth unemployment is  above 35%. The rest of Europe is not doing any better, with more than 17 millions people looking for a job in the eurozone alone.

We already knew. The latest data just add to the bleak picture. We also know (I discussed it) what the consensus diagnosis is: Too many rigidities, excessively high labour costs, both because of wages and of  taxes on labour (the so-called tax wedge). Therefore, let’s have lower wages, and all will be well! Unemployment will disappear, growth will resume. Mario Draghi said it rather nicely:

Policies aimed at enhancing competition in product markets and increasing the wage and employment adjustment capacity of firms will foster innovation, promote job creation and boost longer-term growth prospects. Reforms in these areas are particularly important for countries which have suffered significant losses in cost competitiveness and need to stimulate productivity and improve trade performance.

Unfortunately, things are not that simple. What about looking at a few data? It is simple to download them  from the website of Eurostat.
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Open Letter to European Leaders

January 23, 2012 4 comments

The Financial Times just published a short letter I wrote with some colleagues.  I reproduce it here.

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(Bad) Arguments Against Debt Monetization

November 21, 2011 3 comments

I think it is useful to list, and assess, the main arguments advanced against an enhanced role of the ECB as a lender/buyer of last resort. I can think of four of them: credibility, inflation, irrelevance, ineffectiveness.

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A Sad Day

October 19, 2011 2 comments

A few days ago Pierangelo Garegnani passed away. A good summary of his contribution to the debate on economic theory can be found here, and a slightly more technical one here.

He has been my first teacher. It is thanks to him that I understood, very young, that the Keynesian principle of effective demand is not a simple special case of the neoclassical theory. Just a few weeks ago I went back to his 1979 CJE controversy on effective demand with Joan Robinson that is surprisingly actual.

But, above all, he taught me rigour, attention to the internal consistency of an argument, and love for economic theory, meant as a conceptual lens to make sense of a complex reality. I had lost him of sight, for a number of reasons of no interest. But his lesson has been invaluable along all my career, and will continue to be. A Maestro…

It is a sad day.