• The 500 Euro banknote nightmare

    The 500 Euro banknote nightmare4

    On May 4th 2016, the European Central Bank has decided to permanently end the production of the €500 banknote by the end of 2018. On the other hand, the circulating €500 banknotes will still remain legal tender and retain their value even after 2018. What’s behind such decision and what are the consequences for the European citizens? Is it feasible for us to have a €500 banknote in our wallet and exchange it within the European Monetary Union? Well, it might depend…

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  • Policy dead-end: Central Banks’ continued use of DSGE Models

    Policy dead-end: Central Banks’ continued use of DSGE Models0

    The financial crisis ushered in an era where monetary policy has been disproportionately tasked with mending a sluggish economy. Central banks have taken, far from their original remit, extraordinary, and historically unprecedented steps in an attempt to boost economic activity, stabilise financial markets and spur inflation. With central banks wielding ever-greater influence on economic policy, the continued use of questionable policy-setting models, such as the Dynamic Stochastic General Equilibrium or DSGE model, should be reviewed.

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  • Stagnation – temporary or a new normal?

    Stagnation – temporary or a new normal?1

    The global financial and economic crisis has exposed a chasm between the theory and the practice of policy. Not only did the models underpinning policy choices not help anticipate the crisis, but now arguably they cannot even help fight it. Concerns are rising in the policymaking field that something structural – that models cannot capture – has changed. The stagnation afflicting the global economy could hence be a new normal, from which we can escape only by thinking out of the box of deceptively comfortable models.

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