It has become conventional to distinguish between two groups of countries within the eurozone. On the one hand there are the older, relatively richer countries, who tend of late to have been suffering from ‘sub par’ growth. On the other hand we have the more recent, and relatively poorer, members like Spain and Ireland, where growth (and inflation) have been notably stronger.
Author Archives: Edward Hugh
Ageing and Productivity
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Marketing markets
In a letter to the Financial Times published last week, Michael Woolfolk of the Bank of New York makes a curious contrast:
It may end up that signing on to the euro currency will require the move to a market-based economy. This will certainly not be easy for welfare-based economies, and it may not ultimately be possible politically.
(See EuroPolyphony for the link and more info on the letter).
Now this paragraph has me scratching my head: what exactly is the difference between a market-based and a welfare-based economy?
Out of Balance
The expression ‘global imbalances’ has become somewhat fashionable of late. But what exactly are these imbalances, and why are they important. The IMF in its most recent World Economic Outlook draws attention to two of them:
The (current) expansion has become less balanced. Growth has been stronger than expected in the United States, where the ?soft spot? proved more moderate than previously thought; in China, where activity remains buoyant despite tightening measures; and in most emerging market and developing countries. In contrast, growth in Europe and Japan has been disappointing, reflecting?to different extents? faltering exports and weak final domestic demand.
Global current account imbalances have widened. The U.S. current account deficit is estimated at a record 5.7 percent of GDP in 2004, with the effects of the depreciation of the U.S. dollar to date offset by continued strong domestic
demand relative to its trading partners and higher oil prices. This is matched by current account surpluses in emerging Asia, Japan, the oil-producing countries in the Middle East and the Commonwealth of Independent States (CIS), and?to a much lesser extent? the euro area.
Well here we have two of the more obvious of those famed ‘imbalances’ – imbalances in growth and in trade accounts – but are there more of them?
Portugal Given Three Years
Portugal has been given three years (till the end of 2008) to resolve its excess deficit situation. Portugal, like Italy only with less press attention, is in the midst of a serious economic slowdown. The decision to give Portugal slightly more time may be the result of a number of factors: it may be that they are perceived to be doing more to correct the situation than the Italian government is, the accumulated deficit in Portugal (68% GDP) is much less than the Italian one (106% GDP), and again, being a little less strict with Portugal counters the ‘you only chase small countries’ argument.
“We are proposing giving the Portuguese government three years to correct its deficit,” Amelia Torres, a spokeswoman for EU monetary affairs commissioner Joaquin Almunia, told reporters on Wednesday.
As a member of the 12-nation eurozone, Portugal is bound to hold its annual public deficit to under three percent of output under terms of the 1997 Stability and Growth Pact.
The Low-Fertility Trap
I suppose by-now every right thinking and reasonably well read adult knows what the ‘poverty-trap’ is, even if most of us aren’t too clear about what there is to do about it. Being stuck in one of these traps could be thought to be like being stuck in a (not necessarily very deep) well with a slimy surround wall. The more you struggle to get out, the harder it gets: your strength disippates, and the walls get to be even more slippery. This could also be called a negative feedback loop.
Well now there is the suggestion that something similar may exist in the world of fertility. As Wolfgang Lutz suggests in this power point presentation, the critical level may be 1.5. No society which has fallen below this level has -to date – returned above it. (Many thanks here to commenter CapTvK who sent me the link).
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America On The Move
Drat! Comments still aren’t working. This may be part of the story. And just when the Economist has one of its most interesting supplements in ages.
Life Expectancy in East and West Germany
After so many days of posting topics related one way or another with death, perhaps it is better to get back to life. One good excuse for doing this could be the 25th International Population Conference organised by the International Union for the Scientific Study of Population and which opened yesterday in Tours, France.
You can find the full conference agenda here, and there are topics to suit all tastes for those who are interested.
Over the next few days I’ll post on one or two of the workshop topics which catch my eye, and today it’s a paper by German-based researcher Marc Luy, entitled “A new hypothesis for explaining the mortality gap between eastern and western Germany” (Only extended abstract available online at present).
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Chatham House Update
The New York Times is running a story about a document prepared by the Joint Terrorist Analysis Center (the coordinating nerve centre of Britain’s anti-terrorism activity) in June of this year. The document was apparently furbished to the NYT by a ‘foreign security service’ and “was not disputed by four senior British officials who were asked about it”. The majority of the article is about how the document lead the UK government to downgrade the security threat level just before the bombings. It also, however, contains this curious sentance:
“Events in Iraq are continuing to act as motivation and a focus of a range of terrorist related activity in the U.K.”
ie the UK government’s own anti-terrorism coordinators were saying it.
Canned Heat
A German man has canned the noxious-smelling exhaust fumes of East Germany’s cult Trabant car and is doing a brisk trade selling the scent to those nostalgic for the former Communist state.