EU policies

Martin Larch, Stefano Santacroce, 24 September 2020

The urgent need to respond to the unprecedented economic shock resulting from the Covid-19 pandemic has relegated the review of EU fiscal rules to the background. However, the question of whether and how to review the Stability and Growth Pact will soon re-emerge as a key topic in the policy debate, not least in light of the very sharp increase in government debt levels. This column presents a new database from the Secretariat of the European Fiscal Board that tracks numerical compliance with the SGP. It offers valuable insights into which rules worked or not for which group of countries and under what circumstances. The database is available to the research community and can inform any future attempt to improve the current fiscal framework of the EU.

Lorenzo Codogno, Giancarlo Corsetti, 18 September 2020

The EU Recovery Plan agreed upon in July 2020 supports investment activity through grants and loans to member states at close-to-zero interest rates. This column suggests that its implementation could give a substantial boost to the economy and fiscal revenues under very conservative assumptions on multipliers. In addition, as the ECB is keeping interest rates and government bond yields low, also through its asset purchase programmes, if it refrains from reacting forcefully to potential upward pressures on prices caused by the massive fiscal stimulus, even a gradual and delayed ‘normalisation’ of interest rates would not undermine debt sustainability. 

Philippe Aghion, Sofia Amaral-Garcia, Mathias Dewatripont, Michel Goldman, 01 September 2020

While EU countries have been able to rely on a more resilient social model and a science-based approach in managing the Covid crisis more successfully so far than the US, Europe has fallen short in matching the US effort to incentivise Covid vaccine innovation. This is due to a lower level of financial investment and also an inability to ensure coordination across different (national and European) funding schemes. This column calls for the creation of a European equivalent to the US Biomedical Advanced Research and Development Authority to tackle these problems, thereby strengthening European industries' leadership in vaccine research and innovation.

Fabienne Ilzkovitz, Adriaan Dierx, 27 August 2020

With the increased globalisation and digitalisation of the economy and the challenge of recovery from the COVID-19 crisis, the future of EU competition policy is up for debate. In response, the European Commission is reviewing its enforcement practice and has brought forward new policy initiatives. In an effort to improve the evidence base of its activities, the Commission has become increasingly active in evaluating the economic effects of its competition policy interventions. This column summarises the main lessons learnt from this work and sets out areas for further research.

Roel Beetsma, Brian Burgoon, Francesco Nicoli, Anniek de Ruijter, Frank Vandenbroucke, 21 August 2020

Building a large and durable consensus for mutual assistance policies in the EU is challenging. Even in times of crisis, member states express different preferences, and policies must reckon with democratic politics. This column presents evidence from a randomised survey to assess support for various EU budgetary assistance packages across five member states. A majority of packages are supported in all countries, although individual design features have significant effects on public approval. Importantly, it is possible to design packages such that they obtain majority support across all sampled countries, a key condition for success with policies of this kind.

Other Recent Articles:

Events

CEPR Policy Research