Nicolas Veron, (2019), «Brexit and Finance: Brace for No Impact?», Bruegel, 14 October Amid the daily high drama of Brexit, it is easy to lose track of the structural shifts, or lack thereof, that may be associated with the UK’s possible departure from the European Union. One of them, and not the least, is the potential impact on the European and global financial system. London is currently the undisputed financial hub of …Read More
With or without you: are central European countries ready for the euro?
Zsolt Darvas, (2019), «With or without you: are central European countries ready for the euro?», Bruegel, 10 October Southern European euro-area members suffered from unsustainable developments after they joined the euro in 1999 and up to 2008, and have had great difficulties since. Inadequate national policies were the main causes of these unsustainable developments, but euro membership played a role before 2008 by leading to low real interest rates (which …Read More
Rethinking fiscal policy choices in the euro area
Paul De Grauwe qnd Yuemei Ji, (2019), «Rethinking fiscal policy choices in the euro area», Voxeu, 14 October With the spectre of a recession looming in the euro area, and elsewhere, the policy question that arises is how much leeway the fiscal authorities in the euro area have to follow counter-cyclical fiscal policies aimed at providing some stimulus. The conclusion must be that the burden of business cycle stabilisation in the euro …Read More
France’s eurozone budget ambitions hit Hanseatic wall
Bjarke Smith-Meyer and Hannah Brenton,(2019), «France’s eurozone budget ambitions hit Hanseatic wall», Politico, 11 October EU finance ministers agreed on the general structure of a scaled-back eurozone budget after eight hours of talks Wednesday night. On the way to agreement, they put in safeguards requested by Nordic countries. France was pushing for a credible cash pot to support reforms in eurozone countries and ultimately help absorb sudden economic shocks across …Read More
Greece Sees Growth in 2020, Putting It on Track for Fiscal Goals
Sotiris Nikas (2019), «Greece Sees Growth in 2020, Putting It on Track for Fiscal Goals» Bloomberg, 7 October Greece’s government is forecasting 2.8% economic growth in 2020, which it says puts it on track to meet a budget target agreed with creditors while still enacting tax relief measures.The creditors, however, have warned that the cost of polices to which Prime Minister Kyriakos Mitsotakis’s government has committed will create a shortfall of …Read More
Challenges ahead for the European Central Bank: Navigating in the dark?
Gregory Claeys, Maria Demertzis and Francensco Papadia (2019), “Challenges ahead for the European Central Bank: Navigating in the dark?” Bruegel, 25 September Since the second half of 2018, signs of a slowdown have been piling up in the euro area. The ECB will face major challenges in this potentially difficult period: its main tools are nearly exhausted, the monetary union in which it operates is still incomplete, and it lacks …Read More
Potential output and EU fiscal surveillance
Marco Buti, Nicolas Carnot, Atanas Hristov, Kieran Mc Morrow , Werner Roeger and Valerie Vandermeulen, (2019), “Potential output and EU fiscal surveillance”, VoxEU, 23 September Criticisms have recently been raised on the usefulness of the EU’s commonly agreed methodology for estimating potential output and output gaps. Whilst mindful of the uncertainty which inevitably surrounds an unobservable variable such as potential output, this column argues that much of the criticism is …Read More
Macroprudential policy could have reduced imbalances in the euro area
Marcin Bieleki, Michał Brzoza-Brzezina, Marcin Kolasa and Krzysztof Makarski, (2019), “Macroprudential policy could have reduced imbalances in the euro area”, VoxEU, 18 September The boom-bust cycle in the euro area periphery has almost toppled the euro. This column suggests that region-specific macroprudential policy could have substantially smoothed the credit cycle in the periphery and reduced the build-up of external imbalances. In contrast, common monetary policy could have stabilised output in …Read More
The financial origin of the euro area fiscal wound
Alberto Caruso, Lucrezia Reichlin and Giovanni Ricco, (2019), “The financial origin of the euro area fiscal wound”, VoxEU, 13 September One of the most cited books written in the aftermath of the 2008 financial crisis, which documents the special characteristics of recessions associated with financial crises over time and across countries, is titled “This time is different”. This column argues that the joint behaviour of the public deficit and public …Read More
Economic priorities for new EU leadership
Maria Demertzis, (2019), “Economic priorities for new EU leadership”, Bruegel, 10 September Europe is no longer in crisis mode. However, it remains vulnerable; it is unprepared and it is procrastinating. Following European elections this May, new leaders are about to take their positions at the main European institutions for the next 5 years. They have the power in their hands to take action. But more importantly, they have the power …Read More