Author: Russell Jones

Aggregate demand policy in a time of COVID

  • Large increases in government expenditure generally necessitate restraint elsewhere
  • However at present significant resources are lying idle: no such sacrifice is needed
  • Hence increases in government exenditure currently need not be financed by borrowing
  • Neither need they be recorded as increases in debt owed to the public
  • Today’s circumstances require the explicit coordination of fiscal and monetary policy
  • This could be calibrated by targeting an appropriate target path for nominal GDP

You wouldn’t want to start from here

The world is faced by a major macro policy conundrum

The COVID-19 pandemic and its aftermath pose two fundamental and closely-related challenges to macro stabilisation policy: to specify the framework most appropriate for these novel and difficult circumstances; and to determine appropriate operational procedures.… Read the rest

Focus – Abenomics is found wanting

  • The record of Abenomics is at best mixed, and at worst a chronicle of failure.
  • Overall growth potential is minimal, lowflation embedded, and vulnerability to shocks high.
  • Orthodox macro policy is now exhausted, and progress in structural reform has been sluggish.
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Economics Risks

  • Viral resurgences further set back incipient recoveries
  • Balance sheet distress intensifies, not least in the EMs
  • Fiscal policy support is withdrawn too soon
  • Real activity takes several years to return to recent highs
  • Near-zero inflation becomes embedded in the euro area
  • A ‘no-deal’ Brexit greatly adds to the UK’s economic woes

OECD: the recovery process faces tough challenges

  • OECD real GDP fell an unprecedented 9.8% q-o-q in Q1 (-10.9% y-o-y), after registering a 1.8% decline in Q1.
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Russell Jones

Partner – Russell has been a macroeconomist in the financial markets for 35 years, occupying senior roles in London, Tokyo, the Middle East, and Sydney, and working on both the ‘buy’ and ‘sell’ sides.

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Household balance sheets will deteriorate as joblessness rises

This stands to feed back negatively on the financial sector


Household balance sheets will deteriorate as joblessness rises 7

1.    Consumer credit write-offs typically rise with unemployment.

−         Interesting data from the Bank of England show that each 1-point rise in the unemployment rate is accompanied by around a 1 percentage point increase in the consumer debt write-off rate. … Read the rest

Global Letter – Tip of the iceberg

The basic science has long been known: but the planet is warming faster than expected.

COVID-19 is a sharp reminder of humankind’s fragility and its linkages with the natural world. Headlines understandably focus on its devastating human and economic consequences.… Read the rest

Global Letter – The EU: on the money

The EU’s recovery programme is a potential game changer for the economy and the single currency.

Decisive moment

In his memoirs, European visionary and revered French diplomat Jean Monnet asserted that: “Europe will be forged in crises and will be the sum of the solutions to those crises”.Read the rest