The Week That Was in Europe

Artificial Intelligence has made new inroads into areas of work that were reserved exclusively for humans: conversational interaction, pattern recognition & prediction, and writing & teaching. We discuss with Carl Benedikt Frey about the implications of AI technologies for labor market outcomes going forward. Carl Benedikt is the Dieter Schwarz Associate Professor of AI & Work at the O...

We review the main decisions taken by the European Central Bank at its policy meeting on Sept. 14, 2023 & provide perspective on them.

We kick off the fall 2023 season in our "Week in Europe" series by discussing the cyclical and longer-term outlook for the Euro Area growth. We present positive and negative factors affecting growth dynamics and discuss mechanisms through which recent negative supply shocks might give rise to long-term scarring implications for Euro Area GDP. The paper we mention in the podcast is: "The Scars of S...

In the heart of Europe, as national governments engage in intense negotiations over the reform of fiscal rules, the future of the continent's economic stability will be determined. Olivier Blanchard, a Senior Research Fellow at the Peterson Institute, former Chief Economist of the International Monetary Fund and Professor of Economics at MIT, joins us to shed light on the diverse views and proposa...

Various economic commentators have called for the ECB to raise its inflation objective, but central bankers in the Euro Area are reluctant to engange in a discussion about the target. We discuss both views and add insights from recent academic research about what constitutes an optimal inflation target for the Euro Area.

We discuss how trade integration affects labor market outcomes: who are the winners & losers from international trade? Where did the gains from trade end up? And how long-lasting are the effects of trade-induced labor market displacements? Our guest in this episode is Prof. David Dorn from the University of Zurich, see here for his latest research: https://www.ddorn.net/

The ECB has revised inflation forecasts strongly upwards, particularly for core inflation. We review the new ECB forecasts and the main decision taken by the ECB Governing Council. We also discuss the outlook for interest rates going forward.

We discuss about the new insights generated by so-called Heterogeneous Agent New Keynesian (HANK) models. HANK models allow taking into account household heterogeneity when analyzing monetary policy. Ben Moll is one of the founding fathers of this model classs and Professor of Economics at the London School of Economics. For readers wishing to read up on this topic, here is a non-technical summary...

We discuss the contributions of Nobel Prize winning Economist Robert E. Lucas Jr. to economics, together with Juan Pablo Nicolini, his former student, coauthor and friend. We review the main aspects of his work but also hear interesting anecdotes from Juan Pablo about his life and personality. Robert Lucas died May 15, 2023 in Chicago.

Euro area manufacturing activity was surprisingly weak over recent months: we put the pullback in historical perspectiv and discuss possible factors behind it, in particular whether recent weakness is a harbinger of more structural issues in the manufacturing sector.

We discusss the main channels through which Euro Area monetary policy generates income inequality in the cross-section of households and their quantitative importance. We also discuss why the ECB should care about inequality implications of its policies and whether the current rate increases generate effects that are symmetric to the effects generates by the rate cuts during Mario Draghi's ECB pre...

We review the main decisions taken at the ECB's May 2023 Governing Council meeting & discuss the outlook for policy rates going forward.

We discuss what one can learn from the ongoing contraction in Euro Area money growth for output growth and inflation going forward. We discuss the various interpretations of the quantity theory of money and then analyze to what extent the resulting implications are born out by the data.

We discuss with the Global Head of Short-Term Liquidity Management of Groupe BPCE, the second-largest cooperative banking group in France, about liquidity managment & regulation, recent banking sector stress and the ECB's approach to liquidity provision.

We discuss whether recent stress in the banking sector will adversely affect Euro Area economic growth. We look at the latest indicators, their pandemic dislocations and academic research on the importance of financial shocks for business cycles (Jermann & Quadrini, Macroeconomic Effects of Financial Shocks, American Economic Review, https://www.aeaweb.org/articles?id=10.1257/aer.102.1.238 )

We discuss with Ignazio Angeloni about the state of banking supervision in the Euro Area. What kind of information do supervisors have access to and how do they use it? Ignazio Angeloni is a former member of the ECB's Supervisory Board. He coordinated the establishment of the so-called Single Supervisory Mechanism (SSM) at the ECB.

We review the main ECB decisions and the challenges that lie ahead in terms of inflation and financial stability.

The international trade order established by the World Trade Organization seems to be falling apart. We discuss with Harald Fadinger from the University of Mannheim about the reasons behind this development and how Europe should react to it.

We critically review the fiscal situation in Europe and the key elements of the fiscal reform proposal put forward by the European Commission.

We discuss how the Euro Area construction sector will perform given the record speed at which interest rates have been increasing. Can it derail the Euro Area economic recovery?

We discuss about the current state of the Italian economy, structural reforms in Italy, and about Italy's position on the reform of the ESM reform & Stability and Growth Pact. Francesco Giavazzi is Professor of Economics at Bocconi University and was widely seen to be the most important economic advisor to former Prime Mario Draghi.

Europe needs to boost its growth potential - but how? We discuss with Professor Ludger Wößmann (University of Munich & ifo Institute), one of the most eminent researchers in education economics worldwide, about the role of human skills and schools in economic growth.

We discuss the main announcements and possible reasons for why the market wasn't buying them.

Policy rates have increased by 2,5% already since the summer of 2022, but how much more is needed to get Euro Area inflation back to 2%? We discuss: the inflationary situation in Europe, the main aspects of historical inflation surges, and simple calculations that provide a perspective on the required amount of tightening.

The Euro Area has faced one its most dramatic energy price shocks, is operating in an increasingly hostile international trade environment, and experienced a negative confidence shock following the Russian invasion in Ukraine. Yet, a recession has been avoided. We shed some light on why this is the case and what this means going forward.