Reproduction is authorised provided the source is acknowledged. Alex Botsis is responsible for all errors... You are invited to follow twitter.com/sir_alex89.
Rephrasing Reagan, R.
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... a guy asks another: "have we really achieved full Neoliberalism? Is this it? Is this now full Neoliberalism?" and the other one says: "hell no!!! things are gonna get a lot worse"
Perhaps, I am seeing things the wrong way, but here is my thought: Following the 5th review of the IMF and Athanasoglou (2011, Chart4, p.11) on "The role of product variety and quality and of domestic supply in foreign trade" it is more than obvious that Greek firms are the largest importers. That is to say, Greece imports, heavily, factors of production other than labor. So, if Greece's non-labor production factors come from abroad, their prices are, also, set abroad... Therefore, the Greek firms may find it rather difficult to reduce their costs - no matter how labor cost might (?) be reduced - since the non-labor costs are set abroad. With firms finding difficult to reduce their costs, they will, subsequently, find it difficult to reduce their prices. This is a reason why prices did not deflate as wages did, so far, and why the the trade balance ameliorated mostly by the reduction of imports following the contraction of income and economic ...
So, Mario Draghi said that an inflation much lower than 2% is against his mandate. And it is! If you ask me, early 2015 is the right time, if not too late, to buy sovereign bonds. Let me, please, tell you what I think. First of all, given that Eurozone economy is below its potential, inflation risk will remain low, and the zero lower bound will prevent monetary policy to be "hazardously" inflationary. But, this is an argument why we should not fear of inflation, if the ECB decides to take bold action. True! For now... Moreover, given that we remain below our potential output, member states have begun to deviate from austerity and call for more expansionary budgets. Sooner or later, they will start creating budget deficits as a mean of expansion. And this has two implications. The first one, which relates to my previous argument is that budget deficits will boost expansion, and, hence, the return to the potential output. Therefore, the later the ECB decides to act, the mo...
This post is an attempt to use my rather inexperienced and naive instinct in economics in order to respond to the allegations of the necessity of austerity and tight monetary policy. More specifically, I post my reply to the arguments presented in "The Live arguments of austerity right now: A bestiary" by Mr. DeLong . Please, forgive me if I am wrong. The first group stresses the importance of tight monetary policy. "The Jeremy Stein argument" : Stein ignores the other element of GDP; the consumption. With lower interest rates households can more easily substitute future for current income. Secondly, risk premium is added to the risk-free rate both when the risk-free is 0% and when it is higher, e.g. 10%, and hence risky assets yield by definition higher returns regardless the level of the risk-free rate. Therefore, bank managers will always prefer more risky assets due to the higher returns they offer anyway. Thirdly, there is always the Basel Accord tha...
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