Thursday, May 19, 2011

Panel in Wroclaw on "Social Europe and the Economic Crisis", May 14

Last Saturday, May 14, I spoke on a panel during a conference on "Social Europe and the Economic Crisis" organized by the Ferdinand Lasalle Center of Social Thought in Wroclaw. More info here

FX interventions can work

IMF admits that FX intervention can be effective (a significant change in Fund's views - heretofore FX interventions were anathema), as argued in an interesting paper and an accompanying article on the efficiency of FX interventions in Latin America published on the IMF's blog.

The article's conclusions are that while "results do not detect an immediate impact of interventions on the rate of appreciation, but do find statistically significant effects on the pace of appreciation: on average, increasing interventions by 0.1 percent of GDP will produce—in one week and in comparison to a country that does not intervene—a 0.3 percent slowdown in the pace of appreciation."

In addition, authors find that FX "effectiveness is not dependent on the use of rules or discretionary frameworks, or on the degree of transparency. However, greater financial integration may significantly reduce the effectiveness of interventions. In fact, intervention is more effective in Asia than in Latin America, which is consistent with the differences in financial integration across the two regions" and that "interventions are most effective when there are signs of the currency being overvalued compared to its recent history. This is especially noticeable in Latin America and highlights the importance of intervening “when the time is right,” and never “too early”."

Something for our policymakers to ponder?

Wednesday, May 18, 2011

IMF sees bright economic spots in New Europe

The IMF has just published its Regional Economic Outlook for Europe. It emphasizes the resilience of New Europe (EU-10) and its strengthening economic recovery. It summarizes the message in a text on the blog.

I could not agree more - this is what I have been saying all along (see my recent CEPA paper), ie that the global crisis has hardly weakened the sound long-term growth fundamentals of New Europe and that it will continue fast convergence with Western Europe, heralding the arrival of New Europe's Golden Age.

On happiness and GDP

Samuel Brittan, a columnist at the Financial Times, has an interesting take on the issue of happiness and the role of economic growth. Worth reading. Conclusions below:

What then is the alternative? It might come as an anti-climax; but I still think it is the choice utilitarian one of maximising the range of opportunities open to each individual. And I see the task of policy largely in negative terms; to remove obstacles to the exercise of individual choice rather than lots of fussy interventions on our behalf. But I must be frank and say that even such negative policies involve in my view a degree of income transfer towards the poor and less fortunate, which not everyone in this audience might welcome.

For about three quarters of the world's population a measure of success will still be real GDP per head, corrected for the worst absurdities, and supplemented by a few simple social indicators. But for the more affluent populations of North America and western Europe, economic growth in this sense is no longer a sensible objective of policy. It is much better that the growth rate should emerge from peoples own choices. So it would not be a disaster if after the recent traumatic events Americans adopted a quieter lifestyle with more emphasis on leisure and reflection, and working to live rather than living to work.

We should not throw out the baby with the bath water. GDP statistics will still remain useful for economic management and for looking at the way the national product is divided between different activities and different groups. Information on these matters should not take us along the road to serfdom. Indeed I have heard American friends observe that the social scientists who have been least tempted by collectivism are those who have the most detailed knowledge of the relevant facts and figures.

My conclusion is that the pursuit of happiness is and should remain a personal matter; and the people most likely to achieve this are not those who keep on asking themselves whether they are happy or unhappy, but who find worthwhile purposes and activities and concentrate on them. By all means make use of attitude surveys and similar devices; but let us do so first and foremost to satisfy our curiosity and not imagine that we have found the magic lodestar which has eluded thinkers of the past.

Tuesday, May 10, 2011

"Europe and the World in 2030" workshop in Rome

This is to note that I presented a paper on "The Inexorable Rise of Chimerica: The Long Term Scenario" during a workshop in Rome on May 3-5, 2011, organized within an EU-funded multi-institutional AUGUR project on "Europe and the World in 2030".

Saturday, May 7, 2011

Presentation in Brussels on May 11

On May 11, 10am, at the European Policy Center in Brussels, I am presenting a focus note on "Fueling Growth and Competitiveness through Employment, Skills, and Innovation", a note which I have co-authored, as part of the launch of the new World Bank's "EU10 Regular Economic Report", April 2011.

Here is a (somewhat misleading, since I did not mention the Soviet institutions in such a context) press article on the presentation.

More details below:

Wednesday, 11 May 2011 - 10.00 to 12.00
Policy Dialogue
The EU10 economic recovery and beyond - What scope for skills-driven growth?Speaker(s):
Kaspar Richter, Senior Economist, World Bank
Marcin Piatkowski, Senior Economist, World Bank
Grzegorz Radziejewski, Financial Counsellor, Head of the Budget and Finance Section, Permanent Representation of Poland to the EU