Revisión de PIB del 2º trimestre confirma crecimiento del 0,7%, pero da una imagen radicalmente distinta a la estimación inicial: 🔹Consumo crece casi el doble 🔹Inversión se triplica 🔹Importaciones se disparan Esto nos dice es una economía mucho más dinámica de lo que créiamos

🇪🇺🇨🇦 Canada‘s PM Carney just shared what the association membership of the EU could entail: 👩‍💻 freedom to work & study 📚 Erasmus+ 🔬 Horizon Europe ⛏️ alliance on critical raw materials Very important fields for closer & prosperous cooperation between the EU & Canada.

Pendant que la dette française s'élève à plus de 117% du PIB, celle de l'Espagne est passée sous la barre des 100% en juillet (elle culminait à 124% en mars 2021) l.bfmtv.com/7sfJ

I think trying to explain the public the accounting movements is hopeless. Two alternatives everyone understands: - How @AngelUbide put it recently: when you cancel the debt, you are breaching the contract. Two possible reasons (1) can't pay (2) don't want to pay. Both are undoubtedly bad news. - My own view: if you cancel the debt, you are telling public and politicians "don't worry about expenditure, we proceed in two steps, first, ECB buys the debt issued, with no consequences, then we cancel it with no consequences, hence lets spend freely with no consequences". Result: hyperinflation.

Talking markets and global issues at @Bloomberg with @flacqua yesterday from @Ambrosetti_ at Cernobbio bloomberg.com/news/videos/20…

Annuler la dette publique détenue par la Banque de France ne crée pas d’argent magique. Dans Le Monde, avec @ojblanchard1, nous expliquons précisément pourquoi cette annulation ne dégagerait pas de ressources budgétaires sans entraîner de coûts. Notre tribune : lemonde.fr/idees/article/202…

Interesting discussion about the multiplicity of equilibria in financial markets, in particular in bond markets! I learned a lot from digging into the relevant papers. I think I spot a big difference between macroeconomists and financial economists. I used to belong to the first tribe, but maybe not anymore :) Financial economists price long-dated assets, like government bonds or corporate bonds, without worrying too much about which equilibrium bondholders are coordinating on. They basically just try to compute the present discounted value of the cash flows that have been promised as best they can. Bond investors who are pricing Microsoft's 40-year paper just project and discount the cash flows. They're not too worried about which equilibrium they're all going to coordinate on. Take any valuation or asset pricing textbook, and I think you'd be hard-pressed to find anything about the multiplicity of equilibria other than maybe a discussion of bank runs. Read @JohnHCochrane 's Asset Pricing cover to cover (Darrell's book was too hard for me): no equilibrium selection anywhere, at least I don't recall seeing it. Finance doesn't treat it as first-order for valuing long-dated claims. (Of course, when John wandered over into macro, he spent a lot of time thinking about equilibrium selection, but that is consistent with the point I'm trying to make. ) Same goes for John Campbell's Financial Decisions and Markets. And Campbell is not a Chicago economist. He built the excess-volatility literature. Even when finance concludes prices deviate from fundamentals, we reach for discount rates, sentiment, limits to arbitrage. Not equilibrium selection. The credit literature prices long-dated defaultable debt daily ( Merton, Duffie-Singleton, and Pan-Singleton on EM sovereign CDS ) with default intensities driven by fundamentals. No sunspots. When financial economists do focus on self-fulfilling dynamics, it's mostly on funding and liquidity at short horizons, as in Brunnermeier and Pedersen. Macroeconomists have a different tradition. The sovereign-debt literature has emphasized multiple equilibria going back to models like Cole-Kehoe (a great paper by 2 amazing economists, one of who is my long-time coauthor and mentor). That creates an important role for policymakers: eliminate the bad equilibrium and coordinate markets on the good one. (I secretly suspect that's why macroeconomists like this.) In the Eurozone, the example that people always go back to is Mario Draghi's famous 2012 "whatever it takes" speech. All he had to do is speak those words and the Eurozone ended up in a virtuous equilibrium, where sovereign spreads were much lower. No bonds were ever bought under the OMT program. Costless equilibrium selection. Not quite. Look at what actually happened over the following decade. The ECB ended up running a very large balance sheet and rolling out several programs with increasingly complicated acronyms, all of which helped sustain low sovereign funding costs in the supposedly virtuous equilibrium. In the process the ECB was engineering was large cross-country transfers, transfers that I have documented in my work with Yili Chien and Zhengyang Jiang and Matteo Leombroni. nber.org/papers/w34311 So actually, if you look at the Eurozone evidence closely, you realize that the ECB re-engineered the underlying cash flows pretty dramatically. So not just a matter of picking a virtuous equilibrium, but actually a matter of reallocating resources across countries in state contingent ways. Draghi's announcement was a state-contingent promise of transfers.** Sometimes it's enough to just follow the cash flows. Here's why I think this matters. The multiple equilibrium doctrine is part of the official line at the ECB which suppresses the price signals that would maybe force a country like France to actually implement serious fiscal reforms. It kills the only enforcement mechanism we have. If the ECB delivers low funding costs for all governments, that significantly reduces the probability of fiscal reform imo. As Olivier pointed out, counting on the ECB to intervene would be unwise, but I do think the ECB has set some unfortunate precedents in this regard. **Valentin Haddad, Alan Moreira, and Tyler Muir make this point about the Fed's 2020 corporate bond backstop ("Whatever It Takes? The Impact of Conditional Policy Promises"): prices jumped on announcement, purchases were trivial, and the response is what you get when the market prices a conditional promise; a put written on the bad states. You don't need equilibrium selection to explain announcement effects. aeaweb.org/articles?id=10.12…

We knew this, but good to have solid empirical confirmation: European firms suffer from the “small country syndrome” that afflicts European politicians and enacts barriers to the EU single market, and a result they can’t scale and achieve large valuations.

Examining the financial and product-market frictions that constrain European firms’ to scale, from @beckerbobo, Efraim Benmelech, and Joao Monteiro nber.org/papers/w35577

Desde hace tiempo, crecen os hogares que declaran que pueden ahorrar algo a fin de més, y disminuyen los que llegan justo o tienen que tirar de ahorros

Escribo en @el_pais sobre la crisis en #Ceuta “Quien presiona una frontera no pretende solo abrir un paso. Pretende sembrar incertidumbre, desgastar instituciones y dividir a las democracias. Es un método. Por eso exige una respuesta desde la firmeza” elpais.com/opinion/2026-08-0…

An overdue show of EU solidarity with Spain ft.trib.al/PlUAthp | opinion