Suchergebnisse

Modern macroeconomics has been based on the paradigm of the rational individual capable of understanding the complexity of the world. Challenging this paradigm using simple rules of behaviour this book applies a new model to real-life macroeconomic problems.

Competitiveness among nations is often approached as if it were a sports competition: some countries win medals, others lose out. This view of countries fighting it out in the economic arena is especially popular in business circles and among politicians. Economists, however, take a very different approach to international economic relations, arguing that international trade leads not to winners and losers but to win-win situations in which all countries profit. In this volume, leading economists take on the sometimes-derided concept of competitiveness, demonstrating the value of systematic analysis in an area too often dominated by special interest groups who use (and abuse) the concept to advance hidden agendas. - The chapters range from broad theoretical views to case studies, examining the multiple factors that drive competitiveness. Contributors consider the conceptual framework underlying the World Economic Forum's approach to competitiveness; differences in per capita GDP between the United States and the European Union; an integrated approach to measuring competitiveness and comparative advantage; divergent trends in price and cost competitiveness in the euro area; methodological issues in constructing competitiveness indicators; taxation and international competitiveness; and a case study of Mexico's competitiveness in world markets in comparison to China's.

We revisit the fragility of the Eurozone which arises because the sovereigns in the Eurozone issue debt in a currency (the euro) over which they have no control. This prevents them from giving a guarantee to bond holders that they will always be repaid at maturity. This fragility can trigger self-fulfilling liquidity crises, such as those that erupted during 2010–12. We document how this fragility has evolved over time and how it has been affected by the reforms in the governance of the Eurozone since the sovereign debt crisis of 2010–12. This will allow us to analyze the most recent episode that started with the emergence of the pandemic in 2020. The latter has, up to now, not led to a new debt crisis in the Eurozone, despite the fact that the shock produced by the pandemic was at least as large as the financial crisis of 2007–08. We document how during the pandemic the new governance of the Eurozone prevented this shock from leading to a new sovereign debt crisis. We end with a discussion of the prospects for the future and ask the question of whether the fragility of the Eurozone is a thing of the past.

In this paper, we study the effects of government spending with a behavioral macroeconomic model in which agents have limited cognitive capabilities and use simple heuristics to form their expectations. However, thanks to a learning mechanism, agents can revise their forecasting rule according to its performance. This feature produces endogenous and self-fulfilling waves of optimistic and pessimistic beliefs (animal spirits). This framework allows us to show that the short-run spending multiplier is state dependent. The multiplier is stronger under either extreme optimism or pessimism and reduces in periods of tranquility. Furthermore, the more the central bank focuses on output gap stabilization, the smaller the multiplier. We also show that periods of increasing public debt are characterized by intense pessimism, while intense optimism occurs in periods of decreasing debt. This allows us to show that governments face a trade-off between the stabilization of the animal spirits and the stabilization of public debt. Then, we show that the existence of this trade-off has implications also for the stabilization of the output gap.