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	<title>Taylor rule &#8211; RFR</title>
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	<description>GLOBAL MACRO AND THEMATIC INDEPENDENT RESEARCH</description>
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		<title>When the Eurozone Policy Mix Becomes a Weapon of Mass Destruction</title>
		<link>https://richesflores.com/2012/11/04/when-the-eurozone-policy-mix-becomes-a-weapon-of-mass-destruction/</link>
		
		<dc:creator><![CDATA[Véronique Riches-Flores]]></dc:creator>
		<pubDate>Sun, 04 Nov 2012 14:45:04 +0000</pubDate>
				<category><![CDATA[Euro zone]]></category>
		<category><![CDATA[GLOBAL MACRO]]></category>
		<category><![CDATA[Eurozone]]></category>
		<category><![CDATA[Fiscal Stance]]></category>
		<category><![CDATA[Taylor rule]]></category>
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					<description><![CDATA[The perspective of a recession which is unlikely to be countered with the kind of economic policy capable of cushioning the blow is both unprecedented and profoundly disconcerting. Counter-cyclical policies are crucial to stemming the snowball effects set in motion by economic contraction. Without them, there is a serious risk of getting trapped in a lasting depression. Our economic forecasts for the Eurozone would suggest a cut in ECB's key rates to -1% and an increase in the cyclically-adjusted budget balance to be reduced by between 1 and 2 percentage points to mitigate the recession. These adjustments will simply not happen. All other things being equal, the current policy mix should on average cost up to 1.6 percent of eurozone GDP in 2013, plus more than one additional percent due to the absence of automatic stabilizers. The bill will be far too steep for an already ailing euro area making it crystal-clear that a shift in economic policy is in the cards. At this stage, the million-dollar question is whether such long-overdue changes still stand a chance of pulling Europe back from the brink in time.]]></description>
		
		
		
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