“Forward with forward guidance!” OR “Much ado about nothing?

Many central banks in advanced economies have engaged in some form of forward guidance. The latest to tread this path was the Bank of England, which was preceded by the Reserve Bank of New Zealand, the Bank of Japan, the Fed, the Norges Bank, the Sveriges Riksbank, the Czech National Bank, the Bank of Canada and the European Central Bank. Also the Swiss National Bank has lately, if somewhat implicitly, had recourse to forward guidance.

Hurray, a crisis!

The European phase of the Great Recession that started in May 2010 has produced huge damage: ask unemployed youngsters in Spain, the Exchequer in Ireland, banks in Italy and about everybody in Greece. There are two categories of people, however, that could welcome it: economists and naïve Europhiles.