Eurointelligence has a couple of pieces on the eurozone crisis this week: the one by Philippe Legrain I linked to yesterday, and this piece by Barry Eichengreen.
And here is a newish blog dedicated to the crisis, produced by the Economist Intelligence Unit.
Bright undergraduates tend to enjoy courses in the history of economic thought — I know I did — but the field is in an even more parlous state than economic history when it comes to the hiring decisions of economics departments. After all, why spend time studying the mistaken theories of the past, when you can study the superior theories that have replaced them?
(OK, perhaps that argument doesn’t seem quite so compelling now as it did a few years ago.)
So I was interested to see David Warsh’s report from the AEA meetings which quoted James Heckman, no less, as making the argument for history of thought courses in Economics PhD programmes. It follows the launching of a blog which promises to “engage current financial news and policy debates from the standpoint of the classics of monetary theory.”
And Brad makes the pitch in characteristically understated fashion here.
One of the disappointing things about the bailout and associated adjustment programme is that it has done little to lower the perceived probability of an eventual Irish default. I know that many readers believe Ireland is fundamentally insolvent, and so are not overly surprised. At this stage, however, there is growing recognition that the structure of the European bailouts also makes it difficult for countries to regain market access. Key European policy makers have indicated a willingness to revisit the arrangements, though this will have to go beyond the relatively straightforward option of increasing the size of the support funds.
I grapple with the reasons why the current structure of the bailouts is itself an impediment to regaining creditworthiness in a piece for the business section of today’s Irish Times (article here).
This is really just a sub-thread on Greg’s Krugman post and Kevin’s earlier Buiter post.
A significant part of Paul Krugman’s case against the Euro relates to the resulting loss of macro flexibility. As he explains, nominal exchange rate devaluations/depreciations are effective in lowering the real exchange in an economy with substantial nominal rigidities. However, Willem Buiter and co-authors argue that European countries tend to display real rigidity rather than nominal rigidity, making changes in the nominal exchange less effective in producing improvements in cost competitiveness. Interestingly, however, Buiter holds out Ireland as a possible exception to the European pattern.
Paul Krugman has a thoughtful survey of the Euro crisis in this week’s New York Times Magazine (forthcoming on Sunday but available on-line now). This is not stockbroker-economist-type research, which tends to be long on buzzwords and hyperbole. It is a well-reasoned feature-length review with some policy suggestions. It has a central focus on Ireland and the other troubled peripheral states.