Princeton’s Ashoka Mody (former mission chief for Ireland at IMF) has an op-ed in the Irish Times – it is here.
Year: 2012
Economonitor have put together some charts using the EU’s new Macroeconomic Imbalance Procedure which was introduced as part of last year’s ‘Six Pack’. The charts are a little busy but the relative imbalances across the 11 economies covered are pretty clear.
Individual charts are produced for each of the countries.
It is not clear what impact the MIP will have. Following the first alert mechanism report issued in February, in-depth reviews were issued for 12 countries over the summer (‘programme’ countries are excluded from the MIP). The country reviews are at the bottom of this page.
The conclusion of the reviews for Belgium, Bulgaria, Denmark, Finland, Sweden and the UK was:
This in-depth review concludes that [country] is experiencing macroeconomic imbalances, which are not excessive but need to be addressed.
For France, Italy, Hungary and Slovenia the conclusion was:
This in-depth review concludes that [country] is experiencing serious macroeconomic imbalances, which are not excessive but need to be addressed.
While for Spain and Cyprus the conclusion was:
This in-depth review concludes that [country] is experiencing very serious macroeconomic imbalances, which are not excessive but need to be urgently addressed.
In no case was a formal Excessive Imbalance Procedure initiated so there is no example to indicate how this will look in practice. Of course, 21 Member States remain subject to an Excessive Deficit Procedure. Earlier this year Karl Whelan wrote a useful paper discussing, among other things, the imbalance scorecard devised for the MIP.
Text and slides available here.
Last week’s release of the 2011 Institutional Sector Accounts has not attracted much attention. The thread on it only generated one (seemingly misplaced) reply. The addition this year of consolidated tabled for the financial accounts is useful and gives this table of debt liabilities for the household, government and NFC sectors.
The impact of netting out intra-sectoral balances is small on the household and government sectors. The consolidation nets out about €45 billion of (domestic intra-company) liabilities in the NFC sector. All liabilities of the NFC sector with the rest of the world are still included so there is still a significant impact of MNCs in the 168% of GDP figure given for the sector.
One notable feature of the loan liabilities of the household sector is the decline that has occurred in the past three years.
In 2011, the net financial wealth of the household sector increased by €3 billion to €120 billion, driven mainly by the reduction in liabilities. The increases in the debts of the government sector go without saying.
The non-financial accounts are equally useful. The government accounts give a cash-based view of the general government sector which is more complete in scope than the Exchequer Accounts. The general government accounts used for the EDP are accrual-based.
Below the fold are the current accounts of the general government sector since 2007. The value of output figure used is based on the inputs used rather than prices as most government output is non-market.