Paul-Adrien Hyppolite, 27 May 2017

The Greek crisis is typically seen as a sovereign debt crisis. Using a new dataset, this column explores the dynamics of national wealth accumulation in Greece over the past two decades. It argues that, despite certain idiosyncrasies, the Greek crisis can be better characterised as a balance of payments crisis. This implies that Greece shouldn’t be seen as an outlier amongst the periphery Eurozone countries. 

Steven Brakman, Harry Garretsen, Tristan Kohl, 11 May 2017

New trade deals for the UK will be an important part of the Brexit negotiations, not only with the EU but also with the rest of the world. This column argues, however, that the UK has no trade-enhancing alternative to an agreement with the EU that essentially mimics its current situation as an EU member. A gravity model predicts that the negative impact of Brexit would be only marginally offset by a bilateral trade agreement with the US, and even in the case of trade agreements with all non-EU countries, the UK’s value-added exports would still fall by more than 6%.  

Fredrik Andersson, Lars Jonung, 08 May 2017

Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome. 

Marco Di Cataldo, Andrés Rodríguez-Pose, 06 April 2017

EU development strategies are aimed at producing growth with “a strong emphasis on job creation and poverty reduction”. But it is unclear whether the economic conditions in EU regions are ideal for the generation of employment and labour market inclusion. This column argues that the quality of public institutions and the endowment of human capital – two key factors behind EU growth strategies – are essential for the reduction of labour market exclusion and the promotion of inclusive employment across Europe.

Nauro Campos, Fabrizio Coricelli, 10 March 2017

After 1945, the economies of the six founding members of the European Union grew faster than the UK's economy. Margaret Thatcher’s reforms in the mid-1980s have been credited with reversing this relative decline. This column argues that there is little empirical support for this explanation, and that a more credible turning point was around 1970 when the UK finally began the process of joining the European Economic Community. 

Claudia Buch, Lena Tonzer, Benjamin Weigert, 06 March 2017

In response to the Global Crisis, governments have implemented restructuring and resolution regimes backed by funds financed by bank levies. Bank levies aim to internalise system risk externalities and to provide funding for bank recovery and resolution. This column explores bank levy design by considering the German and European cases. The discussion points to the importance of structured policy evaluations to determine the effects of levies.

Marco Buti, Karl Pichelmann, 22 February 2017

With its current competences lacking the ability to address distribution effects, the EU is seen as an agent of globalisation rather than a response to it.  At the same time, it is charged with undermining national autonomy, identity, and control. This column sets out five guiding principles for policy articulation at the EU level for a new positive EU narrative.

Alen Mulabdic, Alberto Osnago, Michele Ruta, 23 January 2017

The British government and the EU face a difficult negotiation over the terms of Brexit. This column uses new data on the content of trade agreements to assess the trade impact of Brexit, identifying a tradeoff between the depth of the post-Brexit agreement and the intensity of future UK-EU trade. A ‘harder’ Brexit may have a stronger negative impact on the UK’s services trade and supply chain integration, which have relied more on the depth of the EU. This tradeoff will likely delimit future policy choices. 

Paolo Pasimeni, Stéphanie Riso, 19 January 2017

EU budget reform is a key issue in policy debates, in particular the redistributive effects between member states. This column assesses redistribution within the EU budget over the period 2000 to 2014. It finds that the net redistributive impact of the EU budget is rather small and, contrary to common belief, that the revenue side is more progressive than the expenditure side.

Lucian Cernat, 17 January 2017

The availability of statistics on services by modes of supply has been a longstanding priority for trade negotiators and an important element of other trade policy priorities. Based on a recent Eurostat project, this column presents the first such estimates for EU trade in services. It also explores possible avenues for building a global services dataset by modes of supply building on the latest European initiatives in this area.

Ian Bright, Senne Janssen, 13 January 2017

With growth and inflation in Europe remaining low, the idea of helicopter money is slowly gaining traction with politicians and economists alike. This column presents the results of a survey that asked people how, if they were to receive an extra €200 per month to do with as they chose, they would use the money. There was broad support for the policy among respondents, but only about one in four said they would spend most of the money. The findings suggest that a larger impact might be achieved if instead the money were given to the government to finance projects.

László Andor, Paolo Pasimeni, 13 December 2016

Since its inception, the Eurozone has had lower growth and higher unemployment rates than other regions, which suggests the need for new fiscal instruments. This column argues for a stabilisation instrument based on unemployment as the driving indicator. This unemployment benefit scheme coud take the form of a basic common European scheme, or a reinsurance fund supporting national systems. In either case, the instrument wouldn’t be a panacea, and the key obstacle to implementation would be political. 

Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Pozzolo, 12 December 2016

In the years since the Global Crisis, there has been substantial public opposition to taxpayer-funded bailouts of financial institutions. Reflecting this sentiment, a cornerstone of the EU’s post-crisis resolution framework is that losses be borne by private investors and creditors. This column surveys some of the details that need to be worked out before such bail-in measures can work. Effective implementation requires clear identification of the limits to bail-in. In particular, for such measures to be successful, bailout cannot be ruled out by assumption.

Philippe Jehiel, Laurent Lamy, 22 November 2016

Bid preferences and set-asides are popular discriminatory practices in US public procurement, but are prohibited in the EU. This column argues that discrimination can be cost-reducing provided it is targeted to favour those firms whose participation is more responsive to the auction procedure. Situations when set-asides may be cost-reducing are also discussed.

Marco Fioramanti, Robert Waldmann, 19 November 2016

The European Commission is currently evaluating compliance with the Stability and Growth Pact across the Eurozone. However, differences in the econometric methods used by member states and by the Commission can lead to estimates that are at odds. This column argues that the Commission’s method of estimating the non-accelerating wage rate of unemployment for Eurozone members, which relies on an accelerationist Phillips curve, is inferior to specifications with a traditional Phillips curve. The findings highlight how technical aspects of an estimation procedure can have serious effects on policy outcomes.

Craig McIntosh, Gordon Hanson, 15 November 2016

At first glance, the migration pressures on the EU and US appear similar, but recent history is not a reliable guide to future trends. This column uses demographic trends to predict that the US will experience a gradual decline in its newly arrived immigrant population, while the EU, ringed by nearby high-population-growth states, will see large increases in the stock of first-generation immigrants. As a result, US emphasis on strengthening borders and returning undocumented migrants may be misplaced.

Luca Dedola, Luc Laeven, 15 November 2016

In September 2016, the ECB held its first Annual Research Conference. This column surveys the contributions to the conference, which brought together policymakers and academics from around the world to promote discussion of topics at the forefront of monetary and financial economic research. Nobel laureate Eric Maskin gave the keynote lecture, addressing whether fiscal policy should be set by politicians, and the conference included eight further presentations and a panel discussion on monetary policy and financial stability.

Christian Dustmann, Francesco Fasani, Tommaso Frattini, Luigi Minale, Uta Schӧnberg, 18 October 2016

The current refugee crisis poses an enormous challenge not only to European countries, but to the fundaments and achievements of the EU as a whole. This column discusses how this latest crisis differs from the crisis in the early 1990s, and argues there is a drastic need for a new regulatory framework to replace dated coordination attempts. The framework should be based on two pillars: a coordinated policy that secures Europe’s outer borders and deals with asylum claims before refugees have (illegally) crossed into mainland Europe, and a more equitable allocation mechanism.

Richard Tol, 27 September 2016

The UK may opt to leave the EU Emissions Trading System. This column argues that as the UK is a large importer of emission permits, this would make meeting its climate policy targets much harder and dearer, and would remove the legal standing of many permits circulating in the rest of the EU. Some non-EU countries do take part in the Emissions Trading System, and this appears to be the best option for the UK post-Brexit. If not, the UK Government will be forced into a major overhaul of its climate policy.

Pasquale D'Apice, 13 September 2016

There has been renewed interest in economic analysis of the EU budget following the Global Crisis. This column presents new calculations of cross-border flows operated through the EU budget and compares them with those estimated for the US. For each euro paid by an average net (EU member state) contributor, approximately 75 cents return through the EU budget, and 25 cents cross a border. At the margin, the US federal budget is less redistributive in normal times, with around 90 cents per dollar returning to the contributing state, but net cross-border fiscal flows in the US increased steeply in the wake of the Global Crisis, financed by federal borrowing.

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