Professor Miguel León-Ledesma, the School’s European economics expert, comments on the prospects for the single currency.
He said: ‘The euro project is at a crossroads and it won’t be long before we see some sort of resolution for good or bad. There are two relevant questions to pose at this stage: is saving the euro project a good thing? And, if so, are we taking the right steps?
The answer to the first is positive. The cost of dismantling the euro can be much larger than the cost of creating it. An abrupt exit of countries like Greece may lead to a bank-run, bringing monetary instability, rising costs, and ending in hyperinflation (and hyperinflation always brings about political instability of the worst sort).
The answer to the second is negative. The new fiscal compact asking for dramatic short-term budget cuts is self-defeating and not credible. It is already proving to excessively harm weak economies, and could lead to waning political support for the euro. Budget discipline and re-thinking the role of the state are absolutely crucial in the medium-run, but this cannot be achieved without consensus.
From 2009 to the end of this year, Greece’s economy may shrink by close to 20%. This is a very heavy burden for people to bear, and presents an unlikely scenario to achieve any results on the fiscal side. Germany has benefitted from the euro and the consumption boom in other European countries during the expansion. The German financial system has thus lent vast amounts to what are now weak economies.
For these reasons, the pain of a full blown crisis would harm Germany and they have to be responsive. A mild German fiscal expansion, through tax cuts and laxer terms to achieve fiscal balance, would be beneficial for all. There is, of course, no magical formula. We live in a world of pure uncertainty. But taking the radical route is not a prudent way of dealing with these situations.’
Miguel León-Ledesma is Professor of Economics. He is a regular consultant for the European Central Bank and has also been a consultant to the Asian Development Bank.
The School of Economics is one of the top economics departments in the UK according to The Guardian University Guide 2013. The School is ranked number 1 in the UK for teaching, 4th for assessment and feedback, and 6th for overall satisfaction with the course.
Professor Alan Carruth, Head of School, said: “The School is delighted by this excellent result. It is a very welcome recognition for the dedication of our staff and students.”
The School has also maintained its position as third for overall student satisfaction in the Complete University Guide 2013, and our scores remain high in other national surveys – click here for further details.
An International Macroeconomics workshop, titled ‘Capital Flows, Real Exchange Rates and Growth in the Global Economy: A New Context for Macroeconomic Policies’, will take place on Tuesday 3 July 2012 at Aix-Marseille Universite, Aix-en-Provence, France.
This one-day workshop, jointly organised by the School’s Professor Miguel León-Ledesma and Karine Gente from Aix-Marseille University, continues the series of Open Macroeconomics and Development (OMD) conferences that took place between 2006 and 2008. The objective of the conference is to gather academics to discuss recent contributions on the issues of open macroeconomics, especially on international capital flows, real exchange rates and growth.
The invited speakers include economists from international financial institutions and academics, and they will present eight papers covering both theoretical and empirical issues. Click here to download the full programme.
If you are interested in attending the workshop, please register by emailing Elisabeth.firstname.lastname@example.org. Registration is free and includes the workshop, lunch and dinner. Places are limited to 30 participants only, so register early to secure your place.
Professor Roger Vickerman delivered a keynote lecture to the University of Hong Kong’s influential Institute of Transport Studies on 25 April. His lecture, titled ‘On the Wider Economic Impacts of Transport Projects’, was part of the Institute’s Distinguished Transport Lecture Series 2012.
During his lecture, Professor Vickerman looked at the methodologies currently used to determine whether transport projects bring wider economic benefits.
Professor Vickerman said: ‘There is at least a popular belief that major transport infrastructure projects give rise to benefits which are not captured in conventional investment appraisal. The building of a metro network, a major airport or a high-speed rail line will have ramifications which go beyond the simple measurement of time savings or reductions in accidents.
However, substantiating the idea with a methodology which is both theoretically sound and empirically applicable has proved challenging. Approaches have been refined in recent years and the empirical evidence has become more robust and convincing, showing that any such impacts need not always be beneficial.
This presentation reviewed the arguments for consideration of wider impacts and their treatment. It concluded with recommendations for the development of transparent procedures to ensure consistent treatment of such impacts.’
Roger’s lecture was part of a visit by senior figures from the University to strengthen its links in Hong Kong. Kent Vice-Chancellor Professor Dame Julia M Goodfellow led a high-level delegation to meet members of the Hong Kong business community and the University’s Hong Kong Alumni Association on 24 April. The visit came as part of the University’s £2 million Hong Kong and China Portal fundraising campaign, launched in 2010.
Roger Vickerman is Professor of European Economics at Kent and Director of its Centre for European, Regional and Transport Economics. He is also Dean of the University’s Brussels School of International Studies.
Professor Tony Thirlwall gave a keynote address at the United Nations Conference on Trade and Development (UNCTAD) in Geneva in February, to celebrate the 30th birthday of the founding of the flagship Trade and Development Report.
Tony’s address, titled ‘Reflections on some of the Macroeconomic Issues Raised by UNCTAD’s Trade and Development Report over Three Decades’, is now published in the Trade and Development Report, 1981-2011.
Click here to read Tony’s statement and the full report.