Global
Top Economic Reports
May 21, 2013

By Global Economic Team|

Sunday Start: What Next in the Global Economy (MAY 12, 2013): Once upon a time when I was a young economist, it was fashionable to believe in the impotence of policy. Rational expectations models suggested that monetary policy was only effective (at best) if the central bank's actions were unanticipated, and in 'real business cycle models' monetary policy actually played no role whatsoever the cycle was entirely driven by shocks to productivity and preferences. Deficit-financed tax cuts had no effect on aggregate demand because inter-generationally altruistic consumers/taxpayers would set aside savings equivalent to the tax cut to make sure they or their grandchildren would have the funds to pay the higher future taxes needed to retire the government debt. I confess: I was initially seduced by the elegance of these models (or should I say fairy tales?) and by the radicalism of their conclusions. Yet, it didn't take me long to understand that they had little to do with reality. Macro-economics has long moved on since then, yet somehow the belief in the impotence of monetary and fiscal policy has survived in some quarters. Joachim W Fels

Turkey Economics: Everybody Else Is Doing It So Why Can't We? Since the start of the year, almost all growth-related data have been disappointing and raising the risks of attaining the 4%Y full-year official growth target. The fact that 4Q12 GDP growth came out below expectations led to the formation of a low starting base for 2013 and, at least arithmetically it will provide some help. Tevfik Aksoy

Latin America: If the Glitter Goes - Week Ahead in Latin America: While our global colleagues don't expect a serious commodity downturn, we remind Latam watchers that the region would be hard hit if commodity prices suffered. Strong balance sheets in the region should reduce the risks of a downturn morphing into a full-blown financial crisis, but provide little immunity for the region's business cycle. Gray Newman

Poland Economics: Rethinking the NBP: The NBP cut rates by 25bp, to 3%: The cut came against our and the majority of analysts' expectation for unchanged rates, but was almost fully priced in. In this note, we look at the key drivers for the decision, and sketch out a path for interest rates over the next few months. Pasquale M Diana