Coupling advances in AI with an appropriate macroeconomic policy mix is crucial to ensure that it benefits workers and leads to shared prosperity, argue @lucafornaro.bsky.social & Martin Wolf. cepr.org/voxeu/column... #EconSky

Pourquoi le dollar est de nouveau un piège impérial (Gianluca Benigno, @lucafornaro.bsky.social & Martin Wolf) legrandcontinent.eu/fr/2026/05/1...

Pourquoi le dollar est de nouveau un piège impérial | Le Grand Continent

Les tarifs et les stablecoins sont-ils en train de tuer l’industrie américaine ?

legrandcontinent.eu

Hard world we live in.

Luca Fornaro@lucafornaro.bsky.social · last yr.

New paper with Martin Wolf on Fiscal Stagnation. Key insights: 1) High public debt may push the economy into fiscal stagnation, a persistent state of low growth and high fiscal distortions. 2) Pro-growth policies are crucial to exit stagnation, but they require credibility.

A Cesa-Bianchi, @apferrero.bsky.social @lucafornaro.bsky.social & M Wolf examine how industrial policies shape global imbalances. Countries negatively affected by those imbalances should include industrial and innovation policies as part of their policy toolkit. cepr.org/voxeu/column... #EconSky

Large & persistent changes in tariffs affect firms' #innovation decisions and the pattern of technological hegemony. Countries should be wary of using trade policies to boost innovation, as the strategy may easily backfire. @lucafornaro.bsky.social & Martin Wolf cepr.org/voxeu/column... #EconSky

Nuevo episodio de Future is Blue. Hablamos con @LucaFornaro.bsky.social y @miguelgonzsim.bsky.social sobre fiscalidad, innovación, aranceles y la productividad europea. ¿Qué puede hacer Europa para salir del estancamiento? Escúchalo aquí: share.transistor.fm/s/7c29062f

Are public debts in the European Union sustainable? This recent article is a great introduction to this topic, I learned a lot by reading it. One thing that struck me is that debt sustainability analyses typically abstract from the impact of fiscal policy on productivity growth.

How will tariffs affect innovation in the US and abroad? Shall the EU use tariffs to protect its high-tech industries? Should the rise in Chinese exports of high-tech goods worry the rest of the world? We tackle these issues in a new paper on Tariffs and Technological Hegemony.

Some thoughts on the interactions between public debt, public investments and productivity growth in the euro area. Key risk is that the union ends up being split between a fiscally sound/high growth block and a fiscally stagnant one. www.ecb.europa.eu/pub/pdf/sint...

Is the EU heading towards a financial resource curse? Cheap imports (and capital flows) from China could crowd out economic activity in tradable industries in the EU, causing a productivity growth slowdown. crei.cat/wp-content/u...

Michael Pettis@michaelpettis.bsky.social · last yr.

1/8 This ECB study notes that if US tariffs force China to redirect exports from the US to the EU, "the euro area could see imports from China rise by up to 10% in 2026." www.ecb.europa.eu/press/blog/d...

Deeply honored to have participated in a panel at the @ecb.europa.eu Forum in Sintra. My remarks focused on the risk that high legacy debt may push part of the euro area into fiscal stagnation, and how a pro-growth approach to fiscal policy can mitigate this risk.

This Macro-Musings episode 🔈 podcasts.apple.com/it/podcast/m... featuring @lucafornaro.bsky.social provides extremely insightful and clear views on macroeconomic policies to counter hysteresis and stagnation 📈

Luca Fornaro on Hysteresis, Endogenous Growth, and Aggregate Demand Policies

Puntata podcast · Macro Musings with David Beckworth · 19/05/2025 · 1 h

podcasts.apple.com

Enjoyed very much this podcast with MacroMusings and @lucafornaro.bsky.social about endogenous growth and aggregate demand policies. youtu.be/B7aRTPgepok?...

Luca Fornaro on Hysteresis, Endogenous Growth, and Aggregate Demand Policies

YouTube video by Mercatus Center

youtu.be

What do powerlifting and economic hysteresis have in common? My latest newsletter explores this connection, building on @petercontibrown.bsky.social Conti-Brown's powerlifting journey and @lucafornaro.bsky.social's hysteresis research. macroeconomicpolicynexus.substack.com/p/let-it-fai...

Powerlifting through Hysteresis

On strength lost, strength regained, and the scars that shape an economy.

macroeconomicpolicynexus.substack.com

New column by @lucafornaro.bsky.social and Martin Wolf cepr.org/voxeu/column...

@lucafornaro.bsky.social & Martin Wolf argue that a feedback loop is possible between fiscal policy and #growth. Exiting fiscal stagnation requires large policy interventions that reduce public debt-to-GDP ratio, such as credible pro-growth strategies. cepr.org/voxeu/column... #EconSky

Buon 25 aprile!

New paper with Martin Wolf on Fiscal Stagnation. Key insights: 1) High public debt may push the economy into fiscal stagnation, a persistent state of low growth and high fiscal distortions. 2) Pro-growth policies are crucial to exit stagnation, but they require credibility.

I like that Brunnermeier and Merkel at least nod (without citation for some reason) at @gianlucabenigno.bsky.social and @lucafornaro.bsky.social ‘s work on the Financial Resource Curse (e.g crei.cat/wp-content/u...) 3/n

In an AER paper w Martin Wolf (of U.St.Gallen) @gianlucabenigno.bsky.social and @lucafornaro.bsky.social show that the Financial Resource Curse has even larger negative implications when flows go to the world technological leader, I.e. the US (ungated here: www.newyorkfed.org/research/sta...) 3/n

Too many recent takes on this issue ignore the downsides of Treasuries’ global safe haven status. 2/n

Finally, in my own paper with @gianlucabenigno.bsky.social and @lucafornaro.bsky.social, we show that the Financial Resource Curse is not merely a theoretical possibility by presenting careful empirical evidence that it is a general phenomenon www.sciencedirect.com/science/arti... 4/n

Large capital inflows, sectoral allocation, and economic performance

This paper describes the stylized facts characterizing periods of exceptionally large capital inflows in a sample of 70 middle- and high-income countr…

sciencedirect.com

Very clear and comprehensive piece by Brunnermeier and Merkel on the pros and cons (for the US) of US Treasuries being a global safe asset. 1/n

Adam Posen@adamposen.bsky.social · last yr.

Preserving the global safe asset status of US Treasuries and the US dollar is in everyone's interest @piie.com www.piie.com/blogs/realti...

This is very cool

Luca Fornaro@lucafornaro.bsky.social · last yr.

Olivier Blanchard argues that we should understand better the macroeconomics of the medium run, and I could not agree more. Since I have been working on this for a while, let me show you why this is a promising field for young researchers!

Olivier Blanchard argues that we should understand better the macroeconomics of the medium run, and I could not agree more. Since I have been working on this for a while, let me show you why this is a promising field for young researchers!

@lucafornaro.bsky.social argues that political constraint is a reflection of financial constraint, @michaelpettis.bsky.social that political constraint is a function of choices made by other political actors. It is not that international capital flows always restrict the domestic policy space...

Luca Fornaro@lucafornaro.bsky.social · last yr.

Very interesting thoughts, as usual, from @michaelpettis.bsky.social. But is it true that openness to international capital flows always restrict the domestic policy space? Capital inflows typically reduce the government's borrowing cost, which should increase the policy space.

Very interesting thoughts, as usual, from @michaelpettis.bsky.social. But is it true that openness to international capital flows always restrict the domestic policy space? Capital inflows typically reduce the government's borrowing cost, which should increase the policy space.

Michael Pettis@michaelpettis.bsky.social · last yr.

1/20 The views of Maurice Obstfeld (and other American economists) on the relationship between the internal and external accounts of the US are finally starting to evolve. www.brookings.edu/wp-content/u...

All of this points to downside growth risks. It's not necessarily a recession I'm worried about (although I am). Lower growth expectations reduces the incentive to invest in productivity-improving technology (see Benigno and Fornaro's work on Keynesian growth models) bsky.app/profile/pear...

George Pearkes@peark.es · last yr.

Agree with this. There’s a lot of downside to the 2023-2024 growth pace. Mechanically via lower immigration is a big part of it. But expectations can only carry that downside so far, so it’s talking about slow growth rather than a recession barring accelerating macro shocks from here.

This line of thought, in addition to having zero merit on the substance, objectively advances Putin's agenda of turning European people against the European Union.

Interesting thoughts, make me think of this great book by Thomas Philippon www.hup.harvard.edu/books/978067...

The Great Reversal — Harvard University Press

A Financial Times Book of the YearA ProMarket Book of the Year“Superbly argued and important…Donald Trump is in so many ways a product of the defective capitalism described in The Great Reversal. What...

hup.harvard.edu

Europe should be flattered by the Maga attacks - it means the new US regime sees it as its most dangerous adversary. on.ft.com/43dvh9V