Jan Pieter Krahnen, Jean Pisani-Ferry, Philippe Martin, Lucrezia Reichlin, Beatrice Weder di Mauro, 22 April 2021

The financial crisis of 2007-2012 was the first wake up call to the inadequacy of the euro area architecture when facing a large systemic crisis. This column explains why the Covid crisis will leave a deeper impact on the European policy system, and re-introduces the Vox debate on Europe’s economic architecture in the context of the transformations that we have witnessed over the past year. Contributions to the debate are welcome.

Niels Thygesen, Roel Beetsma, Massimo Bordignon, Xavier Debrun, Mateusz Szczurek, Martin Larch, Matthias Busse, Mateja Gabrijelcic, Eloïse Orseau, Stefano Santacroce, 26 October 2020

This year’s annual report of the European Fiscal Board provides new evidence that the EU fiscal framework does not deliver the goods. This column argues that it should be reformed without delay. As forging consensus among EU member states takes time, the activation of the general escape clause until end-2021 offers a window of opportunity to build a simpler, leaner and more effective fiscal contract. The year 2019 illustrated once again how EU member states largely failed to build buffers in good times, those very buffers that would have been welcome in the face of the Covid-19 shock. In 2019, and despite sustained economic growth, the aggregate EU government deficit has increased for the first time since 2011 while cases of non-compliance with the preventive arm of the Stability and Growth Pact (SGP). Like other common shocks before, the pandemic has exposed three long-standing gaps in EMU’s architecture: (1) the lack of a genuine and permanent central fiscal capacity; (2) adverse incentives to maintain or scale up growth-enhancing government expenditure; (3) an intractable set of rules and benchmarks poorly tailored to country-specific debt reduction needs and capacities.

Valentin Zahrnt, 22 July 2009

The 2013 Common Agricultural Policy reform will involve EU members competing with each other for subsidy funds. This column calculates potential CAP payments under three different reform scenarios to identify winners and losers. Several traditional defenders of the CAP are indeed likely to lose from reform, but other countries that defend the status quo would – surprisingly – gain from reform.

Declan Costello, Gert Koopman, Kieran Mc Morrow , Gilles Mourre, István Székely, Alexandr Hobza, 15 July 2009

The crisis may reduce the EU’s potential output by 5% of GDP or more. This column warns that the crisis may permanently reduce the EU’s supply-side capacity unless policymakers respond with reforms. It outlines measures to address the crisis and address long-run concerns about demographic shifts, public finances, and climate change.

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