Bogdan C. Enache

Political scientist, former business journalist, book reviewer; interested in politics, economics and the art of living

Romania’s Anti-Communist Straussianism

The decision of the Bucharest Court of Justice on Friday, September 20th 2019, to uphold the verdict issued in May by the National Council for the Study of the Archives of the “Securitate” (CNSAS) regarding former President Traian Băsescu’s collaboration with the Communist regime’s secret police has been received with a sense of avenged satisfaction on the part of his long-time critics and adversaries. This was doubled by a feeling of avowed surprise on the part of his most loyal and ardent supporters. Neither of these opposite attitudes is however justified by a careful analysis of the country's recent politics. More

The Curious Case of the Romanian Yield Curve

Bogdan C. Enache

The single biggest evidence in favour of a recession looming on the horizon, which is on the lips of every single pundit in advanced economies at present, is an atypical relationship between the yields of government bonds of different maturities, called the inversion of the curve. Short term government borrowing has become more expensive than long term government borrowing, which goes against basic tenets of economic theory such as time preference. This atypical relationship between long term and short term maturities is thought to predict a recession, because the only reason why borrowing would become more expensive in the short run than in the long run seems to be a flight on the part of creditors to safe, highly liquid and easy to exchange assets, which pushes up demand for the near-end of the curve, and a pessimistic growth outlook for the future, which pushes down demand for the far end of the curve. In the United States, the model-economy in this regard, the inversion of the curve has so far predicted every recession in the last decades. More

An International Auction for Romanian Wild Brown Bears

Bogdan C. Enache

In late August 2017, the Romanian Government, through the Ministry for the Environment, decided to allow the shooting of 140 brown bears in the Carpathian Mountains as an administrative measure to curb the bear population in the country, which in some areas is threatening peasant livestock and even the safety of town dwellers. Although the Government backpedalled on its decision in the face of strong pressure from the public and conservationist groups – who accused it of giving in to the hunting industry’s lobby and spurious bear population statistics –, ultimately reaffirming its ban on the trophy hunting of bears and other protected species in the country, it is worth reflecting on how economics can balance public and private interests in the management and conservation of wildlife. More

Corruption as Bad Governance

Bogdan C. Enache

The issue that has polarized, more than any other, Romanian politics and Romanian society for the last decade and a half is the subject of Alina Mungiu-Pipidi’s book, “The Quest for Good Governance: How Societies Develop Control of Corruption”, Cambridge University Press, 2015 (translated in Romanian by Ioana Aneci as “În căutarea bunei guvernări: cum au scăpat alte țări de corupție”, Polirom, 2017). More

Inflation Surpassing Populism

Bogdan C. Enache

In a Europe locked-in below-target inflation, for the most part, one country basically surpasses all others. Romania managed to almost triple its inflation rate one month into the New Year, after a brief – and unique period in the last quarter century or so – when the headline figure was actually negative. What’s behind this astonishing success, or not such a success after all? More

The Emerging Frontier of the Bucharest Stock Market

Bogdan C. Enache

Since 2016, The Bucharest Stock Exchange (Bursa de Valori București - BVB) is actively seeking official recognition of emerging market status from the world’s leading providers of stock market services. In fall last year, for instance, BVB entered FTSE Russel’s “Watchlist”, the London Stock Exchange’s research and rating agency shortlist of potential emerging markets, while also being under the consideration of S&P, MSCI and Stoxx. More

The Euro’s Italian Job

Bogdan C. Enache

Although part of the euro sovereign debt crisis that triggered a double-dip Eurozone recession in 2012 and turned control of public spending – or austerity – into a reverse-keynesian precept for calming the market’s animal spirits, Italy’s conundrum is quite different from that of Greece, Spain, Ireland or Portugal with which the country is often grouped together by financial analysts. More

The Romanian Government’s Underwhelming Response to the COVID-19 Crisis

Bogdan C. Enache

The Romanian Government’s response to the COVID-19 crisis has nothing exceptional, no original idea, no single individualized policy, no special or particular focus. If Sweden, no matter how controversial, dared to pursue an individualized strategy of keeping the country open so as to achieve a higher degree of immunity as well as minimize economic loss and social distress, or if Germany implemented a swift search-and-clean infection-cluster policy followed-up by an effective intensive care capacity and real-time viral research, Romania has simply copy-pasted some broad European and World Health Organization lockdown guidelines to stop the contagion risk. There is no active – in some cases even experimental – strategy, no special health care crisis unit, no real-time research and goal-oriented policy – just a rather ridiculously named “Group of Strategic Communication”, made up mostly of police and intelligence officers, which releases some basic statistics concerning the number of people infected, those hospitalized, confined or dead to some press outlets and, with long lags, publishes them on the website of Ministry of Internal Affairs. More

What Cost Disinflation?

Bogdan C. Enache

The debate over the causes of the 2021 worldwide surge in inflation has been superseded by events without having furnished a consensual conclusion. Many economists and policymakers still hold that the key determinants are supply-side distortions, shortages generated by the pandemic lockdowns, which were accentuated by Russia’s war against Ukraine, particularly in energy markets. Others insist that it is essentially a demand-side phenomenon, generated by a miscalculation in monetary policy: prolonged expansionary credit policies, put in place in the decade following the Great Recession, were too keenly extended and in many cases supplemented by generous fiscal stimulus measures with the onset of the pandemic, leading to increased money balances chasing too few goods once vaccination against the virus – which can be viewed as a positive demand shock – was available and quarantine measures were gradually lifted, while the war in Ukraine played only a secondary role, primarily through hoarding, congestion and panic in oil and gas markets often dependent on sanctions-hit Russian infrastructure and supply. More

The Theory of Inflation Expectations on Trial

Bogdan C. Enache

The concept of expectations has, arguably, been the crown jewel of contemporary macroeconomics. In itself, it represents roughly half of all so-called “micro-foundations” innovations that distinguishes modern macroeconomics from its Keynesian origins. Incorporated into economic modelling beginning with the 1970s, it is the theory of expectations more than anything else that basically lays the foundation for modern-day central bank policy which – until a decade or so ago – seemed to have finally mastered the ups and downs of the economy. Inflation targeting, policy guidance, transparency, commitment, credibility, time consistency and so on are just another way of saying the successful central banks manage the economy by managing expectations. Thoughts are future actions and words can shape reality before it even comes into being, altering 19^th century style classical causality – this is in a nutshell the Sci-Fi appeal and semiotic charm of a concept that undergirds current economic theory! Recent economic events has put the theory of expectations to the test like never before, but the outcomes are far from satisfactory. More

Mihail Manoilescu – Beyond Taboos and Clichés

Bogdan C. Enache

Outside Brazil and Romania, Mihail Manoilescu is essentially a forgotten economist, and, even in the latter, when his name is mentioned he is generally taught as a trade or protectionist theorist, although he is a development, growth, trade and industrial planning theorist rolled into one. In the end, he was essentially an implicit macroeconomic theorist at a time when macroeconomics was just being established. What little was assimilated from him by post-war Anglo-Saxon economics happened indirectly and almost by chance, through out-of-the-Paul Samuelson-mainstream economists who – maybe because of his tainted ideological stands, or because of Romania’s fall into obscurity after the establishment of the communist regime – rarely mentioned his name, such as Paul Rosenstein-Rodan’s theory of development traps or Ráoul Prebisch’s theory of commodity dependency cycles, despite the fact that in the 1930s he commanded enormous intellectual and policy influence. Back then, he was as a sort of intellectual icon for the Geneva institutions’ group of less developed economies – the League of Nations’ nascent IMF/World Bank/WTO of the era – against the political economy orthodoxy of the day as well as a regular speaker at Davos-style conferences organised by the far right regimes of António de Oliveira Salazar, Benito Mussolini and also that of Adolf Hitler. More

New Developmentalism, Old Ideas

Bogdan C. Enache

The so-called anti-austerity backlash in Romania, led by the now defunct unnatural alliance between the National Liberal Party (PNL) and the Social Democratic Party (PSD) of eight years ago, has kept the Romanian public on the edge and can even be credited with electoral success, but its actual anti-austerity policies are quite hard to pin down. Despite a lot of angry rhetoric, until 2015 the USL (Social-Liberal Union) government’s fiscal policy basically followed, with minor tweaks, the 2010 much maligned austerity measures put in place after an external financing agreement with international financial institutions. The 2015 tax cuts were basically a Trump-style “neoliberal” supply-side fiscal stimulus that the most leftish, non-PSD aligned, commenters criticized as the climax of post-communist Social-Democratic hypocrisy, surpassing in scale even the 2005 introduction of the flat income tax. It is only in the last year or two that the PSD government has actually strayed from more or less orthodox, even if sometimes ill-timed, fiscal policies, by adopting an ill-designed bank-assets tax, as well as a turnover tax for the energy and telecommunication companies, in order to finance a growing deficit ahead of a major electoral year. Nevertheless, there is actually a heterogeneous group of both Social-Democratic as well as National-Liberal economists that claims to propose a radically different, heterodox, set of economic policies and which has gained considerable influence over policymaking. More