Europe's nations and regions

Joan Rosés, Nikolaus Wolf, 20 July 2018

Inequality between Europe's regions has risen in the last few decades. Joan Rosés and Nikolaus Wolf discuss their research on inequality at both the personal and regional levels across Europe in the last century. Rising regional inequality is one factor behind the growing populism in Europe.

Marco Buti, András Chabin, Björn Döhring, João Leal, 13 July 2018

Next week, after ten days of swift, flat riding, the Tour de France reaches the Alps. The European economy, meanwhile, has been pedalling uphill since the beginning of this year. 2017 was easy riding as strong global growth boosted domestic investment, but economic growth has had to move into lower gear in the first half of 2018 as this transmission is no longer working properly, and escalating trade conflicts could derail it. This column presents the European Commission’s Summer 2018 Interim Forecast, which suggests that a tightening of global financial conditions could add to the headwinds, though central banks' balance sheets will remain large for a long time, and domestic fundamentals in the euro area remain strong. 

Simona Iammarino, Andrés Rodríguez-Pose, Michael Storper, 13 July 2018

Regional economic divergence has become a threat to economic progress, social cohesion, and political stability in Europe. Market processes and policies that are supposed to spread prosperity and opportunity are no longer sufficiently effective. This column argues that a different approach to economic development is required – one that would strengthen Europe’s strongest regions, but with new methods and instruments to unleash the economic potential of weaker cities and regions. The approach should be adaptable to the specific characteristics, structures, and challenges faced by different groups of cities and regions. 

Silvia Marchesi, Tania Masi, 06 July 2018

Euro area governments have just negotiated a debt relief agreement for Greece, but without face-value debt reduction. This column argues that specific characteristics of sovereign debt renegotiations have significant economic implications. When debt relief operations involve write-offs, the defaulting country benefits strongly in term of growth up to ten years after the restructuring. 

Laura Alfaro, Manuel García Santana, Enrique Moral-Benito, 04 July 2018

Propagation through buyer-seller interactions may amplify the aggregate impact of bank lending shocks on real activity. This column presents insights from estimating the direct and indirect effects of exogenous credit supply shocks in Spain between 2002 and 2013. Both direct and indirect effects of bank credit shocks had sizable effects on investment and output throughout the period. Trade credit extended by suppliers and price adjustments both appear to explain downstream propagation of financial shocks.

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