More than five years after the start of the great QE experiment, agreement about what the asset buying scheme achieved is still thin on the ground. A new Bank of England paper from external MPC member Martin Weale released today tries to put a figure to how much QE boosted national output and inflation in the UK and the US. Its results are as follows:
“At the median, an asset purchase shock that results in an announcement worth 1% of nominal GDP, leads a rise of about .36% (.18%) of real GDP and .38% (.3%) in CPI in the US (UK). These findings are encouraging, because they suggest that asset purchases can be effective in stabilising output and prices” Read more
The UK’s labour market figures have sparked a lot of excitement – and a certain amount of confusion – on the hot topic of real wage growth. Here are six charts that explain what has happened and what it means.
The UK has spent years fretting about its dismal productivity performance in the wake of the financial crisis, but it’s no closer to figuring out what has gone wrong or what (if anything) should be done about it.
Perhaps it should look further afield. The UK is not the only place with a “productivity puzzle” on its hands: New Zealand is scratching its head too. For a developed country with seemingly supportive policies on tax, regulation and education, New Zealand’s workers are surprisingly unproductive, and they don’t seem to be improving very quickly either. Read more
By Roman Olearchyk and Lindsay Whipp
Ukraine’s economy and Kiev’s financial position were deteriorating rapidly even before the political crisis gripped the country last year. But as the interim government grapples with Russia’s annexation of Crimea, spreading separatist unrest in the east and gas bills that will almost double, Kiev is slipping closer towards financial breaking point. The government is awaiting a multibillion dollar loan International Monetary Fund and on Monday night the central bank raised key interest rates as it embarks on reform of the way it conducts its monetary policy. Read more
Many US citizens are proud of their Irish roots and have a great affinity for the Emerald Isle. In an otherwise rather dull International Monetary Fund fiscal monitor, this table might make them reconsider.
It shows the level of financial support given to banks in the financial crisis and the level of recovery to date. All the figures are in terms of percentages of national income so they show the relative burden of the support and the recovery. Read more
(c) Getty Images
Looking for a cheap flight to jet off to warmer climes over Easter? This time you may have left it too late.
The best window for cheaper fares – on Ryanair at least – is between 21 and 14 days prior to departure, according to a new academic paper by Marco Alderighi at Bocconi University, Marcella Nicolini at the University of Pavia and Claudio Piga at Keele University set to be presented at the Royal Economic Society’s conference on Wednesday.
Researchers scraped the Ryanair website to build a database of how fares change as the date gets closer and the plane fuller, looking at over 80 routes of flights departing from the UK. Read more
Britain’s finance minister George Osborne is off to Washington this week to give an “I told you so” speech about the merits of his austerity programme.
But if a paper to be presented today is to be believed, the credit for lowering Britain’s budget deficit should really go to his Old Etonian boss David Cameron. Read more
Last Friday marked the one-year anniversary of QQE – the aggressive monetary easing regime launched by Bank of Japan governor Haruhiko Kuroda. Under the new policy, dubbed “quantitative and qualitative easing,” the BoJ hoovers up just about every long-term bond the market is offering, with the aim of keeping interest rates low and stable enough to drive investors into riskier assets.
So far it has mostly done the job, with the currency down, stock markets up, and signs of a pick-up in lending. Meanwhile the drop in the yen has pushed core inflation to 1.3 per cent – apparently on course to hit the 2 per cent target within the original time-frame outlined last April.
But over the weekend Twitter seemed more interested in a long speech by Masaaki Shirakawa, Mr Kuroda’s predecessor, delivered last September but published (with footnotes) last week on the Bank for International Settlements website. Read more
Guest post by Eswar Prasad, Karim Foda, and Arnav Sahu on the latest Brookings Institution-Financial Times Tracking Indices for the Global Economic Recovery (Tiger), which combines measures of economic activity, financial variables and indicators of confidence
The global economic recovery remains uneven and wobbly but finally appears to have built up some staying power.
The worst may be over, but prospects for a durable and sustained recovery hinge on whether national governments demonstrate their commitment to substantive structural reforms.
The Brookings-FT Tiger index shows advanced economies are gradually gathering growth momentum while emerging market economies are cooling off. This has led to some degree of convergence in the short-term growth prospects of these two groups of economies. Reflecting this, financial markets in emerging economies took a beating in recent months, although equity markets in some countries like India and Indonesia are on the rebound.
Welcome to our live coverage of ECB president Mario Draghi monthly press conference. Earlier the ECB kept its rates on hold for the fifth month in the row, despite inflation falling to its lowest level in more than four years. Follow the questions and reaction live here with deputy FT.com news editor Lindsay Whipp and economics reporter Emily Cadman.