Aristomene VAROUDAKIS

The long-term growth impact of the pandemic

Posted by Aristomene VAROUDAKIS | 26 Apr 2020 | Blog, Growth, macroeconomy | 0 |

The economic effects of the Covid-19 pandemic are devastating worldwide. The IMF is projecting that the world economy will contract by 3% in 2020, before rebounding by 5.8% in 2021. The V-shaped recovery is predicated on the pandemic receding in the second half of 2020. A U-shaped scenario, with a prolonged recession, is also possible if the pandemic lingers, or if the recession triggers banking and/or sovereign debt crises. Will GDP growth get back to its pre-crisis trend in the aftermath the pandemic? Is an L-shaped scenario likely, with a permanent decline in the growth rate? Uncertainty surrounding the...

Joint liability bonds for a joint European defense against the pandemic

Posted by Aristomene VAROUDAKIS | 6 Apr 2020 | Blog, Foreign trade, International Economics, macroeconomy, Monetary economy | 0 |

The problem Mitigating the impact of the Covid-19 pandemic will require a significant increase in public spending to rescue sinking economies and further shield health systems. At the same time, tax revenues will be collapsing as long as economic activity remains suppressed. Budget deficits will inevitably swell, leading to soaring public debt. Eurozone countries – such as Italy, Greece, Portugal and Spain – that have already suffered the effects of the sovereign debt crisis – and their debt remains high – will be hit particularly hard. The increase in debt will call into question its sustainability, posing the risk...

The European response to the epidemic

Posted by Aristomene VAROUDAKIS | 29 Mar 2020 | International Economics | 0 |

Germany shut down its borders with France, Denmark, Austria and Luxembourg in an effort to curb the spread of the Covid-19 epidemic at home. Spain and other European Union countries are doing the same. The closure of the Schengen border raises more barriers to individual movements within the EU. Closing the borders is an impulsive response to the crisis. It is perhaps understandable in an emergency, when national governments are responsible for protecting the population, in the absence of a common health policy in Europe. But it promotes an inward-looking attitude that does not facilitate the coordination of actions...