Central banks can stave off recession

Article Abstract:

Central banks are in a position to prevent a world recession developing. Recession risks remain low, and there should therefore be no need for a world recession to keep inflation under control. Against this background, equity investors should be willing to accept more risk than they usually do. However, it would not be wise for policy makers to assume that the factors that affect financial market confidence, which in turn has an impact on equity risk premia, will behave predictably. Financial confidence could slump because large areas of the world cannot generate enough growth in demand.

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Risk of world recession begins to fade

Article Abstract:

It is clear that the world economy has been placed under threat by the negative wealth effects associated with falling equity prices, by the danger of new trade drags from the emerging world, particularly Asia, and by the risk of a credit crunch as the process of deleveraging becomes established in credit spread markets. It is also clear that the threat from these financial shocks has begun to diminish. However, the major economies are very likely to see a further slowdown in GDP growth during 1999. It is vital that this problem is addressed by reducing interest rates.

Administration of General Economic Programs, Intnl Economic Policy, Analysis, International economic relations

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Son of ERM can stave off a shotgun wedding

Article Abstract:

It is vital that the UK retains close links with European Union economic developments, even if it does not participate in a single European currency. It should commit itself to Stability Pact, a budgetary deal which will be in the interests of all low-debt economies, and should also consider rejoining the new ERM system. Under ERM2, a central rate would be set for sterling against the euro, but intervention band would be wider, probably around 15% either side of the central rate.

United Kingdom, Economic policy, International relations, European Union, British foreign relations

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