Economic Policy


1 - 30 of 617
01 October 2014

This report reviews the various ways in which the Member States of the European Union handle the collection of revenues for the EU budget, as well as the classification and treatment of EU expenditures. The study finds a substantial diversity in these practices among the Member States and calls for a full harmonisation of the accounting procedures. It concludes with some options for transforming the Gross National Income resource into a ‘genuine’ resource for the EU and assesses the potential of a real VAT resource.

01 October 2014

In presenting their priorities for the new European Commission, Miroslav Beblavý and Ilaria Maselli assert in this CEPS Commentary that the time has come to devise an EU-level shock absorption mechanism. In their view, the instrument that best aligns varying political and economic objectives is a form of reinsurance of national systems of unemployment insurance.

18 September 2014

In recent months, the ECB has taken several steps to revitalise credit. In June, it decided to offer banks targeted longer-term refinancing operations (TLTROs), and in September, it announced its intention to buy large (as yet unspecified) amounts of asset-backed securities (ABS), also with the aim of improving the financing conditions for investment, especially for small and medium enterprises (SMEs). However, this focus on bank balance sheets as an inhibitor of lending might be misplaced.

12 September 2014

The exchange rate can have a very significant influence on the euro area, which is a rather open economy. Indeed the share of exports amounts to about 27% of GDP, which is much higher than for other economies of similar size (US or even Japan). However, the impact of exchange rates on exports is usually limited in the short run.

08 September 2014

Ansgar Belke and Daniel Gros have published an article in International Economics and Economic Policy, September 2014, Volume 11, Issue 3, pp 413-430. Entitled “A simple model of an oil-based global savings glut—the ‘China factor’ and the OPEC cartel”, this contribution illustrates the interaction between oil prices and the global savings equilibrium, which can invert the usual IS-type relationship between growth and interest rates. Higher growth is usually associated with higher interest rates.

08 September 2014

Member countries of the Economic and Monetary Union (EMU) initiated wide-ranging labour market reforms in the last decade. This process is ongoing as countries that are faced with serious labour market imbalances perceive reforms as the fastest way to restore competitiveness within a currency union. This fosters fears among observers about a beggar-thy-neighbour policy that leaves non-reforming countries with a loss in competitiveness and an increase in foreign debt.

08 September 2014

Work is both an essential part of our daily lives and one of the major policy concerns across Europe. Yet the public debate of labour issues is all too often driven by political rhetoric and short-term concerns. In this volume, researchers from seven European countries explain, in accessible language, the findings from various social sciences and what they mean for the future of labour in Europe.

12 August 2014

Daniel Gros explores in a new CEPS Commentary the feasibility of creating a common fund to provide compensation for the economic costs of sanctions as an integral part of the EU’s foreign-policy stance that is now emerging towards Russia, albeit slowly and painfully. 

Daniel Gros is Director of CEPS. An earlier version of this Commentary was originally published by Project Syndicate, 7 August 2014 (http://www.project-syndicate.org/columnist/daniel-gros#AjP1vwU8bkf1j4Vm.99) and is reprinted here with its kind permission.

 

05 August 2014

Daniel Gros argues in this commentary that the cause of the transatlantic growth gap following the recovery starting in 2010 from the global financial crisis should not be sought in excessive eurozone austerity or the excessive prudence of the European Central Bank. Rather, compared to the US, he argues that the excess debt created in the EU during the boom years has been much more difficult to work off.

24 July 2014

After an in-depth review of the Stability and Growth Pact, the authors of this CEPS Policy Brief conclude that there is sufficient flexibility within the Pact to accommodate any unexpected drop in economic activity and has ample margin to finance structural reforms during transition to the new regime.

Stefano Micossi is Director General of Assonime, visiting professor at the College of Europe in Bruges and a member of CEPS Board of Directors. Fabrizia Peirce is Senior Economist in Assonime economic division.

26 June 2014

As the European Council convenes today and tomorrow (June 26-27th) to confirm Jean-Claude Juncker as the candidate for President of the European Commission, CEPS Director Daniel Gros shows in this Commentary that the Council should de facto also be considered more a 'mini parliament' than an assembly of states and that the European Parliament cannot claim the monopoly on democratic legitimacy.

20 June 2014

The authors test Paul De Grauwe’s eurozone fragility hypothesis using a time window around the announcement of the Outright Monetary Transactions (OMT) programme. The findings reveal significant contagion from Spain to other eurozone countries, but solely during the pre-announcement period. The authors conclude that in this case the OMT programme has succeeded in mitigating the self-fulfilling dynamics within the eurozone.

13 June 2014

This report is based on discussions within the CEPS Task Force on “The Quantity and Quality of Human Capital in Higher Education: Comparing the EU, the US and China", chaired by Jan-Eric Sundgren, Senior Adviser to the CEO of Volvo, and former President of Chalmers University of Technology in Gothenburg. It aims to draw salient lessons from the successes and failures in higher education practices in the EU, the US and China by comparing key education indicators and policy trends.

14 May 2014

Since the announcement of the Outright Monetary Transactions (OMT) programme by Mario Draghi, President of the ECB, in 2012, the government bond spreads began a strong decline. This paper finds that most of this decline is due to the positive market sentiments that the OMT programme has triggered and is not related to underlying fundamentals, such as the debt-to-GDP ratios or the external debt position that have continued to increase in most countries. The authors even argue that the market’s euphoria may have gone too far in taking into account the same market fundamentals.

06 May 2014

The significant gains in export market shares made in a number of vulnerable euro-area crisis countries have not been accompanied by an appropriate improvement in price competitiveness. This paper argues that, under certain conditions, firms consider export activity as a substitute for serving domestic demand. The strength of the link between domestic demand and exports is dependent on capacity constraints. Our econometric model for six euro-area countries suggests domestic demand pressure and capacity-constraint restrictions as additional variables of a properly specified export equation.

28 April 2014

The study presents an overview of the impact of the main investment tools of the EU budget. The focus is on the increasing role of the financial instruments, which are fundamentally changing the budget’s nature and reach. Through these instruments, the EU can invest more efficiently in more areas and mobilise a multiple of funds. The EU budget has the potential to influence the European economy much more than its modest size in terms of GDP may suggest.

08 April 2014

Notes Regardless of whether Ukraine is ‘lost’, or who lost it, Daniel Gros finds in this new Commentary that the country can still offer an attractive future for all of its citizens if unavoidable economic reforms can be made compatible with regional cohesion. He urges the EU to play an essential role in the process by opening its market and providing funding and technical assistance in crucial areas.

02 April 2014

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28 March 2014

The EMS crisis of the 1990s illustrated the importance of a lack of confidence in price or exchange rate stability, whereas the present crisis illustrates the importance of a lack of confidence in fiscal sustainability. Theoretically the difference between the two should be minor since, in terms of the real return to an investor, the loss of purchasing power can be the same when inflation is unexpectedly high, or when the nominal value of government debt is cut in a formal default.

27 March 2014

Has inflation targeting (IT) conferred benefits in terms of economic growth on countries that followed this particular monetary policy strategy during the crisis period 2007-12? This paper answers this question in the affirmative. Countries with an IT monetary regime with flexible exchange rates weathered the crisis much better than countries with other monetary regimes, predominantly countries with fixed exchange rates.

26 March 2014

Daniel Gros, Director of CEPS, contributed this column to VoxEU, where it was first published on 19 March 2014.

25 March 2014

The European Commission has recently published results of its "in-depth review" in the context of the so-called Macroeconomic Imbalances Procedure (MIP). This provides a valuable occasion to reflect on the design and effectiveness of the MIP. The authors note in this article that the MIP is envisaged to warn of future crisis within the euro area, so it does not make sense to use absolute indicators or thresholds, especially if they are backwards looking.

24 March 2014

In assessing the compromise agreement reached on March 20th on how to deal with banks in difficulty in the eurozone, Daniel Gros finds that the Single Resolution Fund represents an awkward step in the right direction in that it leaves as many problems unresolved as it addresses. But the end result is likely to be quite strong, because it establishes a key innovation: a common fund that effectively mutualises much of the risk resulting from bank failures.

19 March 2014

The news from Greece these days has been dominated by the announcement that the government achieved a primary budget surplus in 2013. While acknowledging that this is indeed a highly laudable accomplishment, Daniel Gros points out in a new commentary that a more important news item, which has received much less attention, is the fact that Greece exported less in 2013 than in 2012.

12 March 2014

The financial crisis of 2007–2010 has presented a number of key policy challenges for those concerned with the long-term stability of the euro area. It has shown that price stability as provided by the European Central Bank is not enough to guarantee financial stability, and exposed fault lines in governance and deficiencies in the architecture of the financial supervisory and regulatory framework.

11 March 2014

Two of the four macroeconomic adjustment programmes – in Portugal and Ireland – can be considered a success in the sense that the initial expectations in terms of adjustment, both fiscal and external, were broadly fulfilled. A rebound based on exports has taken hold in these two countries, but a full recovery will take years. In Greece the initial plans were insufficient. While the strong impact of the fiscal adjustment on demand could have been partially anticipated at the time, the resistance to structural reforms was more surprising and remains difficult to cure.

12 February 2014

Despite considerable differences, there were also many similarities in economic performance between Latvia and Greece before their respective adjustment crises. After the immediate crisis, however, economic activity rebounded sharply in Latvia but continued to contract in Greece.  This paper argues that this difference was due primarily to developments in credit. In Latvia credit growth fell sharply, and the economy was deleveraging aggressively by 2009. When the pace of deleveraging started to stabilise, the rebound in the credit impulse caused domestic demand growth to recover.

07 February 2014

This paper aims to estimate the crowding-out effect of the Danish mandatory labour market pension reforms begun in 1993 on the level of total household savings for renters. The effect is identified via a large panel of individual administrative records utilising the differences in speed, timing and sectoral coverage of the implementation of the reform in the period 1997 to 2005. Little substitutability was found between current mandatory labour market pension savings and private voluntary savings.

04 February 2014

This volume, published by Oxford University Press and edited by Rosa M. Lastra and Lee Buchheit, contains a contribution by CEPS Director Daniel Gros entitled “Restructuring in a Monetary Union: Economic Aspects”. His chapter discusses the economic aspects of sovereign debt restructuring by first showing how economic and monetary union changes the usual concordance between foreign debt and foreign currency debt.

24 January 2014

Paul De Grauwe writes in this new CEPS Commentary that the recent and surprising conversion of François Hollande to supply-side economics completes the victory of the northern European policy-makers who believe that insufficient aggregate demand should be fought exclusively by supply-side measures. In his view, however, it is not the first time in post-war history that economists and policy-makers apply the wrong medicine; or to put it differently, it's akin to some generals who fight a new war by applying the strategies developed for the previous war.