Global Economics
Highlights
Credit Crunch Watch:
Stress levels rose for the third successive week last week, with a similar pattern to that seen in the previous week – higher equity volatility, rising mortgage spreads and wider corporate bond spreads. As in the previous weeks, stress levels were boosted by a series of disappointing economic data releases, especially in the US. Meanwhile, monetary conditions tightened due to a flattening yield curve. Treasury bond yields continue to fall, although the positive impact of this on borrowing costs is being offset to some extent by wider credit spreads
27 August 2010
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How healthy is the European banking sector?
Recent movements in key financial stress indicators in the Eurozone suggest that problems in the banking sector remain significant. Key indicators of financial stress have worsened again in recent weeks after initially improving in the wake of the publication of the bank stress tests. Banks in the 'peripheral' Eurozone states are also continuing to increase their borrowing from the ECB and the latest ECB bank lending survey suggests the recent financial turmoil has led to renewed tightening of bank credit standards. If the ECB continues with its relatively hawkish recent stance, it could risk repeating the errors of mid-2008 when it tightened policy just before Europe was tipped into the deepest recession since the 1930s.
20 August 2010
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Why have G7 unemployment rates diverged?
Since the onset of the recession in 2008, there has been a sharp divergence in the performance of labour markets across the G7 economies. Although one may expect that these cross-country variations in labour market performance would be related to differences in the depth of the recent recession, this is not the case. Econometric evidence suggests that the relationship between unemployment and output varies considerably between the G7 economies and through time. Our results confirm that the performance of labour markets during the recent recession has been unusual, particularly for the US and Germany. This article examines the reasons underlying these differential labour market developments and compares prospects for a cyclical recovery in employment.
22 July 2010
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Country Economic Forecasts
These concise reports provide regular analysis and forecasts on economic conditions and policy developments in 190 countries. They include downloadable spreadsheets covering 10-year forecasts and 20 years of historical data for key economic indicators.
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