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Italy’s Budget Isn’t as Crazy as It Seems

Ashoka Mody, (2018), “Italy’s Budget Isn’t as Crazy as It Seems”, Bloomberg Economics, 26 October Europe’s leaders have come down hard on Italy for its plans to increase spending with the aim of boosting growth and helping the poor. What they fail to recognize is that a little stimulus might be just what the Italian economy needs. The outlook for the global economy is deteriorating more rapidly than forecasters realize. …Read More

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Reforming the EU fiscal framework: A proposal by the European Fiscal Board

Beetsma R., Thygesen N., Cugnasca A., Orseau E. , Eliofotou P., Santacroce S., (2018), “Reforming the EU fiscal framework: A proposal by the European Fiscal Board”, VoxEU.org, 25 October While today the need for fiscal rules is higher than ever, it is increasingly recognised that the Stability and Growth Pact (SGP) is not up to its task and requires a deep overhaul. In 2016, the Dutch presidency of the Council …Read More

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The Italian Budget: A Case of Contractionary Fiscal Expansion?

Blanchard O., Zettelmeyer J, (2018), “The Italian Budget: A Case of Contractionary Fiscal Expansion?”, Peterson Institute for International Economics, 25 October Ιtaly’s government is in a standoff with the European Commission over its first budget proposal. Rather than reducing the public deficit, as the previous government had promised, the new government plans to increase it significantly. Because Italy’s debt is very high—over 130 percent of GDP—the proposed budget violates EU …Read More

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Spain’s Socialists Show Italy How to Do It

Ferdinando Giugliano, (2018), “Spain’s Socialists Show Italy How to Do It”, Bloomberg, 23 October The Spanish prime minister is running a minority government, with his Socialist Party holding less than one-quarter of the seats in parliament. Undaunted, he’s trying to cobble together a budget that would raise the deficit targets set by his center-right predecessor Mariano Rajoy. The measures, which include an increase in social spending and higher taxes on …Read More

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European fiscal rules require a major overhaul

Darvas Z., Martin P., Ragot X., (2018), “European fiscal rules require a major overhaul”, Bruegel, 24 October The reconsideration of the complex set of European fiscal rules should be a priority in terms of euro-area reform. The rules contributed to excessive fiscal austerity during the crisis, thus helping to aggravate and prolong its economic, social and political consequences. Moreover, either because countries did not abide by the rules or because …Read More

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Euro area reform: An anatomy of the debate

Jean Pisani-Ferry, (2018), “Euro area reform: An anatomy of the debate”, CEPR, Policy Insight No. 95, October There are essentially two possible theories for this enduring state of controversy: the ‘battle of interests’ and the ‘battle of ideas’. The first posits that problems are fundamentally distributional – decisions are controversial because they pit creditors against debtors, high-debt against lowdebt states, stable against crisis-prone countries, or global banks against local banks. The second emphasises cognitive issues. According to this reading, …Read More

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Italy’s game of chicken with Europe is getting serious again

Matt O’Brien, (2018), “Italy’s game of chicken with Europe is getting serious again”, Washington Post, 22 October For a long time, Italy has been Europe’s hidden crisis. Now, though, it’s becoming much more open. The problem is simple enough: Its economy has forgotten how to grow. Indeed, even if you cast things in the most favorable light possible by adjusting for its shrinking working-age population, Italy’s economy is still roughly …Read More

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Europe’s Banks Aren’t Ready for the Next Crisis

Bloomberg, Editorial Board, (2018), “Europe’s Banks Aren’t Ready for the Next Crisis”, Bloomberg, 22 October A renewed bout of distress among Greek and Italian banks illustrates a deeper problem in Europe: The financial system’s overseers haven’t done nearly enough to prepare for the next crisis. They should redouble their efforts before the window of opportunity closes. The European economy may be doing relatively well, but you wouldn’t know it to …Read More

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Fixing the euro needs to go beyond economics

Anne-Laure Delatte, (2018), “Fixing the euro needs to go beyond economics”, VoxEU, 23 October The agenda to fix the euro is hampered by conflicting national interests. Creditor countries demand fiscal house cleaning and debtor countries ask for risk sharing. There is currently a political deadlock about how the adjustment burden should be distributed, perpetuating a state of vulnerability that is not in the collective interest of euro area members. This …Read More

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Fiscal Consequences of the Refugee Crisis

Zsolt Gal, (2018), “Fiscal Consequences of the Refugee Crisis”,  International Migration, 17 October The European Union faced an unprecedented influx of asylum seekers during the 2014–2016 refugee and migration crisis. The admitted refugees pose a critical challenge, but at the same time represent an opportunity for the host countries’ public finances. If the fiscal balance of immigration is positive, then migrants become net contributors to public budgets, helping to alleviate …Read More

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