Economy & Markets

Edited by Donato Masciandaro and Gianmarco Ottaviano

2023-09-13 Donato Masciandaro

Digital Euro: Moving Forward with Caution and 'Education'

Do we need a digital euro? The answer is affirmative if the ECB keeps its promise to create a complementary public currency that will be useful for European citizens, and also enhance effectiveness from both a monetary policy and banking supervision perspective. We must move forward, but with caution. A middle ground must be found between the skeptical positions of those who, out of ignorance or convenience, do not see the need for this innovation and, on the other extreme, the superficial enthusiasm of those who see the digital euro as the sole currency of the future, replacing both physical ...

2023-07-21 Donato Masciandaro

Dangerous Liaisons: Digital Bank, Social Networks, and Financial Instability

Being constantly connected is harmful to the mind, common sense tells us. However, it can also be very harmful to the wallet, as suggested by what happened with the four recent bank failures: Silicon Valley Bank (SVB), Signature Bank, First Republic Bank, and Credit Suisse. Three cases in America and one in Europe share a common lesson: regulation and oversight must be proactive. It is necessary to eliminate the possibility of conducting unlimited digital banking operations in terms of time or amount and to be very cautious about the rules for introducing the digital Euro. A couple of months after ...


The War of Talents and the Challenge of Skilled Immigration in Europe

Despite not capturing media attention, the increasingly urgent need for skilled immigration in Italy and Europe has been the focus of numerous analyses carried out over the years by both national and international institutions. The Organization for Economic Cooperation and Development (OECD) has been particularly active on this front, publishing several reports as part of the series entitled “Recruiting immigrant workers.” The OECD is an international organization for economic studies consisting of member countries (including Italy) that share the common characteristics of being developed ...

iStock_QwazzMe Photo
2023-04-18 Donato Masciandaro

Swedish Lessons for the ECB

A good central bank is one that is understood; if it is also credible, it becomes excellent. A bad central bank is one that must be interpreted; if it also creates macroeconomic damage, it becomes terrible. From this point of view, in February the ECB took a step forward, unfortunately taking two steps back in March. Let's start with February. How to judge what the ECB did and said, also through the words of President Lagarde? Economic analysis allows us to make the question more precise: what have we understood about the reaction function of the ECB? The concept of a reaction function is what ...

2023-03-17 Gianmarco Ottaviano

The Role of the State in the New Phase of Globalization

In the period after the Second World War, the design of global markets was executed based on a strong trust in the ability for self-regulation under the auspices of multilateral international organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization. The idea was that globalization could produce benefits in terms of economic development and wellbeing for all of the countries in the world. This did happen in large part, in the sense that a series of indicators of poverty and exclusion, especially in developing countries, showed improvement in part thanks ...

2023-02-15 Donato Masciandaro

The Fed Floats between Wall Street and the White House

The beginning of 2023 has seen the Federal Reserve continue to pursue rate rises, but at a slower pace. The Fed perseveres in its policy of “getting by”: decisions are made meeting by meeting, and the only goal seems to be to avoid mistakes, floating between the desires of the financial markets, that believe inflation “has fallen,” and those of the Biden administration, that claims it is “still high.” Chair Jerome Powell and his colleagues are pursuing the same policy inaugurated last year, that does not entail any transparency on the future path of interest rates, thus not allowing ...

2023-01-23 Gianmarco Ottaviano

Reglobalization: From the Supremacy of Economics to that of Politics?

Starting from the time of the Second World War, precisely to counter some of the causes of the conflict – as well as to stem some of its consequences – an international, diplomatic, and political movement arose aimed at achieving integration of the markets in various countries; integration that was global and multilateral, meaning that it would leave nobody out. This, for two reasons: first of all, with the aim of stability, i.e. to avoid the creation of opposing blocs; and secondly, for reasons of inclusiveness, to prevent a situation in which large industrialized countries would reach agreements ...

2022-12-13 Donato Masciandaro

Short-sighted Monetary Policy: A Winning Horse or a Scapegoat?

The Fed and the ECB are by now like the Pythia of the Oracle of Delphi: they speak little, and poorly. They must always be interpreted, with all of the related unknowns. It’s an opportunistic strategy, that increases the risk of stagflation. To understand why, let’s set some ground rules. We’ll start from the fact that both central banks want to fight inflation, and bring interest rates onto a path in which the remuneration of assets, both real and financial, and thus interest rates, is compatible with price growth of 2%, by 2024. To be clearer, the starting assumption means basing monetary ...

2022-11-08 Donato Masciandaro, Gianmarco Ottaviano

Has Financial Fair Play Changed the European Soccer Industry?

Last summer, the president of the FIGC, Gabriele Gravina, spoke to Sky Sport to present the twelfth edition of the Soccer Report, developed by the FIGC Study Center, in collaboration with AREL and PwC Italia. The report had good and bad parts, we could say, even though there was a lot more bad than good.  “The data in our Soccer Report is ruthless as always […] in 12 years we have accumulated aggregate losses of 4.1 billion euros; we have lost one million euros a day […] 79% of our clubs have closed their accounts with losses. In the last 12 years our world has practically doubled its debts, ...

2022-10-03 Donato Masciandaro

Monetary Normalization: The Lesson of Whatever It Takes

On July 26, 2012, Mario Draghi pronounced the words that would enter the Treccani Dictionary as an expression that “opened another, unprecedented horizon in European politics.” To shed light on the significance of “whatever it takes,” we can tell the story of the evolution of the monetary announcement as an opera in three acts. Act I: We are at the end of the 1970s, when the dominant problem for the policies of advanced countries is to defeat the Great Inflation. Economic analysis offered a recipe to obtain an effective monetary policy, that was based on two ingredients, mixed together: ...