The dramatic episodes in the Eurozone in the past few years called for a number of policy reactions. Yet the response was usually limited to what was deemed indispensable to ensure survival. This column discusses how such half-solutions paved the way for future crises. The author also puts forward a few proposals regarding the Eurozone’s policies. Among them are a European Monetary Fund, an overhaul of surveillance, the completion of banking union, an insolvency procedure for sovereigns, and Eurobonds of some sort. And the sooner such issues are deeply discussed, the faster coherent solutions can be reached.
Jean Pisani-Ferry, 10 April 2016
Dino Pinelli, István Székely, Janos Varga, 22 December 2015
Italy’s economic performance is lagging behind other Eurozone and OECD countries. This column argues that radical changes in human capital, financial, innovation and product markets, and taxation would restore growth, but will take time to bear fruits. This leaves no room for complacency in the ongoing reform efforts.
Philip Jung, Moritz Kuhn, 04 February 2015
Given the pressing need for labour market reforms in Europe, policymakers are looking to the Hartz I-IV reforms conducted in Germany in the mid-2000s for inspiration. To successfully apply their lessons one must understand why they worked. This column argues that the success of the Hartz reforms lay in improving matching efficiency between unemployed workers and vacancies – particularly effective in Germany where employment inflows are the main driver of labour market adjustment, in contrast to the US, where outflows play the primary role.
Marco Buti, Alessandro Turrini, Paul van den Noord, 04 July 2014
Structural reforms are presumed to deteriorate a government’s chance for re-election. This column, which is an update from earlier work, provides evidence of just the opposite – the odds of re-election are larger for reformist than for non-reformist governments. This holds if the financial system is not overly regulated and an adequate social safety net is present.
Miguel Cardoso, Rafael Doménech, Juan Ramón García, Camilo Ulloa, 20 December 2013
After witnessing the destruction of almost 18% of its employment during the crisis, the Spanish economy is now recovering. Understanding the effects of the recent labour market reform and wage moderation is crucial in accelerating employment creation. Correctly implemented and accompanied by appropriate policies at the European level, labour and products market structural policies could be the solution to the anomalously high unemployment rate in Spain
Tom Krebs, Martin Scheffel, 20 September 2013
Faced with stubbornly high and persistent unemployment in 2003-05 the German government implemented far-reaching labour-market reforms, the so-called Hartz reforms. This column shows that these reforms were highly successful in bringing down the non-cyclical component of unemployment in Germany but also argues that the Hartz reforms created winners and losers. This explains why these reforms have been hugely unpopular among the German public.
Francesco Trebbi, Atif Mian, Amir Sufi, 21 February 2012
Political environments appear systematically different in the aftermath of a financial crisis relative to before the crisis. This column argues that the ensuing gridlock and the delay in potentially beneficial policy reforms should come as no surprise.
Leandro Prados de la Escosura, Joan Rosés, Isabel Sanz Villarroya, 22 March 2010
Is democracy essential for economic growth? This column presents new evidence from General Franco’s 1959 Spanish Stabilisation Plan showing that a dictatorship can successfully implement major policy reforms. This also sheds light on the effectiveness of structural adjustment policies. Without the reforms, Spanish GDP per head in 1975 would have been lower by as much as one third.
Marco Buti, Alessandro Turrini, Paul van den Noord, 17 June 2008
European politicians fear embracing reform means losing elections. This column reviews the evidence that rejects this and considers how well-functioning financial markets could front-load reform benefits thereby reducing political opposition. Financial reform may be an essential part of structural reform packages.
Hylke Vandenbussche, Maurizio Zanardi, 08 February 2008
Political divisions among EU member states seem to have derailed the reform process envisaged by Mr Mandelson, the EU Trade Commissioner, for the most important of the EU’s trade defence instruments – antidumping. Here is a discussion of antidumping and what a minimal proposal for reforms should include.
Olivier Blanchard, 20 September 2007
Ensuring secure career paths, streamlining layoff procedures, creating a more efficient unemployment insurance system and changing the way it is financed. All these reforms are possible, but they can only be accomplished together.
Hans-Werner Sinn, 19 June 2007
Germany needs a radical cultural and economic revolution, one as courageous as – but not identical to – the one that occurred in Britain under Margaret Thatcher. After 50 years of progressive entanglement, Germany is ripe for this.