The Prudence Principle

In the first episode of our New Economy interview series, Marc Blyth and Eric Lonergan introduce the idea behind their Forum Working Paper for a revised Eurozone fiscal policy framework.


The New Economy interview series is our newest content format, where we invite leading economists to share their views on the most relevant and current issues facing economics and the global economy in short interviews.

In the first episode, we were joined by MARC BLYTH (Brown University) and ERIC LONERGAN (M&G Investments) who introduced the Prudence Principle to us, the idea behind their vision for a new and more transparent framework for Eurozone fiscal policy. The concept is laid out in more detail in their recently published Forum New Economy Working Paper.

We speak about the idea behind the prudence principle, why Eric and Marc think that we do not need to be afraid of wage price spirals, but financial markets are still nervous towards them, and why central banks should get out of asset supporting and instead focus on income supporting.

You can watch the whole interview here:

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