Guntram B. Wolff, (2019), “The implications of no-deal Brexit: is the European Union prepared?”, Bruegel, 14 January Overall, a no-deal Brexit would be disruptive in the short-term: There would be immediate very significant administrative and logistical challenges in trade. Preparations to reduce those disruptions are underway but are unlikely to be sufficient. But while Most-Favoured Nation tariffs will affect some sectors significantly, the macroeconomic effect on the German economy might not be …Read More
The mixed success of the Stability and Growth Pact
Jasper De Jong, Niels Gilbert, (2019), “The mixed success of the Stability and Growth Pact”, VoxEU.org, 15 January The corrective arm of the SGP has both been ridiculed by those highlighting that despite non-compliance sanctions have never been imposed, and vilified by those blaming it for having caused procyclical fiscal tightening. This column suggests there is probably more truth to the latter than the former criticism. While we find indications …Read More
Debt overhang, rollover risk, and corporate investment: Evidence from the European crisis
Sebnem Kalemli-Ozcan, Luc Laeven, David Moreno, (2019), “Debt overhang, rollover risk, and corporate investment: Evidence from the European crisis”, VoxEU.org, 15 January We argue that the maturity structure of corporate debt is crucial in understanding the effect of debt on firm-level investment. If the debt accumulated during the boom years is mostly short-term – i.e. its remaining maturity is less than one year – there is an increase in the …Read More
Banking integration in the EMU: Let’s get real!
Mathias Hoffmann, Egor Maslov, Bent Sørensen, Iryna Stewen, (2019), “Banking integration in the EMU: Let’s get real!”, VoxEU, 10 January We argue that the situation in the euro area today is reminiscent of banking in the US pre-1980, where there was a common interbank market but little deep interstate banking integration due to restrictive banking laws. The removal of barriers to entry for out-of-state banks considerably improved access to finance, …Read More
The euro at 20: An enduring success but a fundamental failure
Barry Eichengreen, (2019), “The euro at 20: An enduring success but a fundamental failure”, The Conversation, 4 January So the euro will stumble forward. No one will be happy with its operation. Equally, no one will leave. Progress will be minimal, since there is no appetite for the political union needed to support fundamental reforms. As a result, the euro remains vulnerable to another crisis. The next crisis could heighten the perceived …Read More
Differently Eurosceptic: radical right populist parties and their supporters
McDonnell, Duncan, and Annika Werner. “Differently Eurosceptic: radical right populist parties and their supporters.” Journal of European Public Policy (2018): 1-18., 23 December Since the 2008 crisis, radical right populist (RRP) party positions on European integration have hardened and/or increased in salience. But do their supporters align with them on this? And what role does Euroscepticism play in driving support for these parties? Using data from the ‘euandi’ voting advice …Read More
Risks at Home Mount for Greece in Its First Post-Bailout Year
Sotiris Nikas, (2019), “Risks at Home Mount for Greece in Its First Post-Bailout Year”, Bloomberg Economics, 3 January After emerging from its steepest economic crisis in living memory, Greece still has a mountain to climb in 2019 if it’s to consummate its comeback with a sustained return to bond markets. The government plans to issue as much as 7 billion euros ($8 billion) of new debt this year, using part of its …Read More
Hard Brexit Truths
Bill Emmott, (2019), “Hard Brexit Truths”, Project Syndicate, 3 January An honest Brexiteer should therefore admit that leaving the EU on their terms may well lead to the dissolution of the UK. Irish reunification would almost certainly make another independence referendum in Scotland irresistible, though it is impossible to know which way it would go. Last June, when asked about business leaders’ fears over Brexit, Johnson infamously declared, “Fuck business.” If he …Read More
The gains from economic integration: The EU has still a long way to go
David Comerford, Sevi Rodriguez Mora, (2019), “The gains from economic integration: The EU has still a long way to go”, VoxEU.org, 4 January The EU aims to create an integrated economic community where national borders do not impede trade in any way. Recently, Brexit and the populist governments in Italy, Poland and Hungary have challenged this. Brexit and the rise of populism reflect a wave of anti-globalisation. These challengers are …Read More
The Eurozone’s Solidarity Fallacy
Jurgen Stark, (2018), “The Eurozone’s Solidarity Fallacy”, Project Syndicate, 17 December In the name of “solidarity,” eurozone reformers have continued to introduce new instruments for sharing risk across member states in the event of another crisis. But what the monetary union needs is not joint liability – and the unacceptable degree of moral hazard that would come with it – but rather risk reduction. Since 2010, many measures have been adopted …Read More