Special Topics in Economic Policy

Vienna University of Economics and Business (WU Wien)

Spring Semester 2021


Group 1

The Covid Crisis and “Freezing the Economy” – Supply and Demand Shocks

Please read and present:

Baldwin: How we should think about containing covid19 economic crisis

https://voxeu.org/article/how-should-we-think-about-containing-covid-19-economic-crisis


Flattening the Pandemic and Recessionary Curve

https://econfip.org/policy-brief/flattening-the-pandemic-and-recession-curves/

Coronavirus and macroeconomic policy

https://voxeu.org/article/coronavirus-and-macroeconomic-policy


In addition, the homework task for your group is the following:

1. Prepare in addition to your presentation, a couple of slides (4-5 slides) that will compare the forecasts by different institutions about GDP growth this year and next year (and or/this quarter) for a number of countries (2-4 countries, e.g. US, UK, Germany, France etc...). This means, explore and find different forecasts that have been published in the recent month. Find forecasts published by different institutions (e.g. IMF, national central banks, national research institutes in the countries in questions); create some graphs comparing these results (could be bar charts, could be other charts); explain the differences (you do not need to read the whole analysis and explanation published by the institutions such as the IMF - just have some bullet points explaining to us what each institutions was thinking would happen when creating their forecasts).


Group 2

    • Monetary Policy, “Whatever It Takes” and QE

Introduction to what the ECB has done in 2012

https://www.bloomberg.com/news/features/2018-11-27/3-words-and-3-trillion-the-inside-story-of-how-mario-draghi-saved-the-euro

Monetary Policy since the crisis: Speech by Peter Praet (1 - 2 people)

https://www.ecb.europa.eu/press/key/date/2017/html/sp170316.en.html

Helicopter Money: The Time is Now

https://econfip.org/policy-brief/helicopter-money-the-time-is-now/

The monetary policy response to the pandemic emergency

https://www.ecb.europa.eu/press/blog/date/2020/html/ecb.blog200501~a2d8f514a0.en.html


In addition, the homework task for your group is the following:

1. Prepare in addition to your presentation, a couple of slides (4-5 slides) that will talk about the recent wave of the ECB Survey of Professional Forecasters. You can find it on the ECB website, it has just been released recently. In two or three slides you will tell us what is this and in another two or three slides you will present 2 or 3 interesting graphs from the recent survey, with a special focus on inflation, GDP and unemployment expectations. Everything you need is on the ECB website.


Group 3

Fiscal Policy – Austerity and Government Spending Multipliers

Please cover:

Multiplier Debate - Fiscal Consolidation - At What Speed - Blanchard and Leigh

https://voxeu.org/article/fiscal-consolidation-what-speed

Austerity and fiscal adjustments - Alberto Alessina

https://voxeu.org/article/fiscal-adjustments-and-recession

https://voxeu.org/article/cut-deficits-cutting-spending

The New View on Fiscal Policy – by Jason Furman

https://voxeu.org/article/new-view-fiscal-policy-and-its-application (this is a summary, please also read the whole article for clarification and details:

Please, make sure you explain well the concept of Ricardian equivalence in your presentation. It will be important for the exam.

In addition, the homework task for your group is the following:

1. I want for you to make your own first survey and report the results. It will not be representative as you would only ask your fellow students, so you will have a sample of 25 people, but it is still something. You would report first the average value you have obtained; you will search on the Internet for a paper which reports self-reported MPCs (marginal propensities to consume) and will compare its average results with the ones you obtain. Then you will report a bar chart with all answers. Finally, you can think about actually amending the question a bit (adding a second question) and sending it expressed in one way to half of the class and in another way to the rest of the class, to see whether this affects the outcomes they give you. You need to think about this latest part on your own first before asking me what I mean by it.

Ask you classmates (send them emails and ask them to answer the following question):

If tomorrow by surprise you are given 500 (five hundred) extra dollars (maybe you win the lottery or your university transfers you a one-off extra payment or some other random event that leads to this happens), how much of it would you spend in the next year? You can respond with just a number (either in dollar terms or %) or also with a longer reply if you know exactly what you will do with the money.


Group 4

Fiscal and Monetary Policy Responses to the Covid Crisis at the Euro Area Level, Monetary Fiscal Interactions

As usual, please have in mind that you can split the material in other proportions regarding your own preference.

Completing the Odyssean journey of the European monetary union - Vitor Constancio (two people can take this)

https://www.ecb.europa.eu/press/key/date/2018/html/ecb.sp180517.en.html

The European policy response - two proposals of European top economists:

https://voxeu.org/article/proposal-covid-credit-line

Repair and reconstruct: A Recovery Initiative

https://voxeu.org/article/repair-and-reconstruct-recovery-initiative

We can also cover a speech by Chris Sims from 3 years ago, where he explains how monetary and fiscal policy interact with each other. Two people can take this text seems it is very advanced.

https://www.kansascityfed.org/~/media/files/publicat/sympos/2016/luncheon-discussion.pdf?la=en

In addition, the homework task for your group is the following:

1. Prepare in addition to your presentation, a couple of slides (4-5 slides) that will talk and summarize the recent World Economic Outlook Macroeconomic Forecasts by the IMF Fiscal Monitor. You can find it on the IMF website:

https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-update

In two or three slides you will tell us what is the main message and in another two or three slides you will present 2 or 3 interesting graphs from the chapter. The chapter may seem long, but you should not think about this as presenting the whole chapter - you should skim the text and then choose the most interesting/important graphs and key messages. Choosing and explaining why this information is important is central part of this assignment.

Group 5

Fiscal and Monetary Policy Responses in the US

The Macroeconomic Implications of Biden’s $1.9 Trillion Fiscal Package

https://www.hamiltonproject.org/blog/the_macroeconomic_implications_of_bidens_1.9_trillion_fiscal_package

Keeping Businesses Alive - Saez and Zucman

https://econfip.org/policy-brief/keeping-businesses-alive-the-government-will-pay/

Christina Patterson: The most exposed workers in the coronavirus recession are also key consumers: Making sure they get help is key to fighting the recession

https://equitablegrowth.org/the-most-exposed-workers-in-the-coronavirus-recession-are-also-key-consumers-making-sure-they-get-help-is-key-to-fighting-the-recession/



In addition, the homework task for your group is the following:

1. Prepare in addition to your presentation, a couple of slides (4-5 slides) that will talk and summarize the Chapter 2 of the IMF Fiscal Monitor from last April. You can find it on the IMF website: Chapter 2 : IDEAS to Respond to Weaker Growth

https://www.imf.org/en/Publications/FM/Issues/2020/04/06/fiscal-monitor-april-2020#Chapter%203

In two or three slides you will tell us what is the main message and in another two or three slides you will present 2 or 3 interesting graphs from the chapter. The chapter may seem long, but you should not think about this as presenting the whole chapter - you should skim the text and then choose the most interesting/important graphs and key messages. Choosing and explaining why this information is important is central part of this assignment.