Supplemental Memorandum of Understanding/ Fourth Review of the ESM Programme/ DRAFT – 23 May 2018 • Implementation of the reform agenda provides the basis for a sustainable recovery, and the policies are built around four pillars:Restoring fiscal sustainability (section 2): Greece will target a medium-term primary surplus of 3.5 percent of GDP. This is supported by an ambitious programme to strengthen tax compliance and public financial management, and fight tax …Read More
A plan to save the euro
Jeffry Frieden, (2018), “A plan to save the euro”, VoxEU, 23 May Even in the most heavily affected debtor nations, support for monetary union never fell below 50% of the population, and was typically closer to 70%. However, Europeans have little faith in the willingness or ability of existing political leaders to manage it fairly and efficiently: debtor-country citizens’ confidence in the institutions of the EU dropped from over 70% …Read More
Global Crises and Populism: the Role of Eurozone Institutions
Luigi Guiso, Helios Herrera, Massimo Morelli, Tommaso Sonno, (2018), “Global Crises and Populism: the Role of Eurozone Institutions”, working paper, CEPR, May Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the face of shocks, result in poorer performance and frustration among voters who turn to populist movements. …Read More
‘Second-generation’ fiscal rules: From stupid to too smart
Xavier Debrun, Luc Eyraud, Andrew Hodge, Victor Lledo, Catherine Pattillo, (2018), “‘Second-generation’ fiscal rules: From stupid to too smart”, VoxEU, 22 May The ongoing debate on fiscal governance in the euro area – and by implication on the implied degree of fiscal discipline – reminds us that four decades after Kydland and Prescott (1977), the debate on ‘rules versus discretion’ still rages on. The basic problem is that policymakers’ ability …Read More
Euro area international trade in goods surplus €26.9 bn
Eurostat/Euro area international trade in goods surplus €26.9 bn/ May 2018 Euro area The first estimate for euro area (EA19) exports of goods to the rest of the world in March 2018 was €199.9 billion, a decrease of 2.9% compared with March 2017 where they peaked at €205.9 bn. Imports from the rest of the world stood at €173.0 bn, a fall of 2.5% compared with March 2017 (€177.4 bn). …Read More
The populism backlash: An economically driven backlash
Luigi Guiso, Helios Herrera, Massimo Morelli, Tommaso Sonno, (2018), “The populism backlash: An economically driven backlash”, VoxEU, 18 May The surge of populism in Europe and the US has often put at the centre stage three ideological actors of society: the people, the elite, and the ‘other’ (foreigners, immigrants) to whom, in the populist narrative, the elite has sold the people out. Populist policies have often picked convenient scapegoats for …Read More
Completing Europe’s Banking Union means breaking the bank-sovereign vicious circle
Isabel Schnabel, Nicolas Véron, (2018), “Completing Europe’s Banking Union means breaking the bank-sovereign vicious circle”, VoxEU, 16 May Several euro area leaders, including the German chancellor, her finance minister, and the French president, have recently referred to the need to “complete the Banking Union”. These public calls echo those made in more formal settings, in intergovernmental meetings (European Council 2014) and in European Commission communications (European Commission 2015) over the …Read More
How much does your country invest?
Eurostat/How much does your country invest?/14 May 2018 Last year, total investment (both from the public and the private sectors) by European Union (EU) Member States amounted to almost €3 100 billion. Construction accounted for about half of these investments, with machinery, equipment & weapons systems (31%) and intellectual property products (19%) following. The intellectual property products category has shown the largest increase in investment in proportion to total capital …Read More
The Debt Shackles Return
Michael Heise, (2018), “The Debt Shackles Return”, Project Syndicate, 15 May Market analysts view the uptick in private lending in most emerging and some developed economies as a sign of higher demand and a precursor of faster growth. But, while this is true in the short run, the relentless rise of overall debt remains among the most serious problems burdening the global economy. Despite years of deleveraging after the 2008 …Read More
Euro area reform: No deal is better than a bad deal
Peter Bofinger, (2018), “Euro area reform: No deal is better than a bad deal”, VoxEU, 15 May Given the focus on ‘risk sharing’, it is surprising that the authors do not explicitly explain what specific risks they want to be shared. Their proposals focus on the risk of idiosyncratic demand shocks and the risk of a national banking crisis. But this neglects the unique and existential risk of euro area …Read More