Merler, Silvia, (2016), “Income convergence during the crisis: did EU funds provide a buffer?”, Bruegel, 10 November Economic convergence is at the heart of European Union integration.  Cohesion policy was born in the 1980s with the aim of complementing the creation of a single European market and fostering the economic development of less advantaged EU regions. This objective is especially relevant in light of the economic crisis that has exacted a …Read More

Bover, Olympia, Casado, Jose Maria, Costa, Sónia, Du Caju, Philip, McCarthy, Yvonne, Sierminska, Eva, Tzamourani, Panagiota, Villanueva, Ernesto, Zavadil, Tibor, (2016), “Diverging household debt patterns in the Eurozone: The role of institutions”, VoxEu, 8 November Household micro-data reveal striking differences in secured debt holdings across Eurozone countries. This column presents new evidence on the role of household characteristics and country institutions in accounting for the cross-country patterns observed. In countries with lengthier …Read More

Panizza, Ugo, (2016), “A Perfectly Crazy Idea for the IMF”, Project Syndicate, 2 November Emerging economies inhabit a risky world characterized by volatile capital flows. But, rather than rely on the IMF to fulfill its mandate of protecting them from liquidity crises, they self-insure by accumulating large stockpiles of international reserves. Emerging and developing economies now lend nearly $7.5 trillion to the US Treasury – resources that could be used …Read More

Cette, Gilbert, Lopez, Jimmy, Mairesse, Jacques, (2016), “Labour market regulations and capital intensity”, VoxEu, 4 November With structural reforms of labour markets currently being considered in several countries, including in southern Europe, assessing their impact is vital. This column investigates the effects of employment protection legislation on a variety of production factors. Structural reforms that increase labour flexibility – that is, which weaken employment protection legislation – could have a favourable …Read More

Skouras, Thanos, (2016), “Correcting The Euro’s Flawed Architecture Demands A Focus On Competitiveness Rather Than Productivity”, Social Europe, 1 November On September 20, the European Council adopted a recommendation calling on the Eurozone member states to establish national productivity boards. This was an unfortunate decision. Not only did it kill a good proposal, it replaced it with a potentially harmful one. The useful initial proposal by the Five Presidents Report …Read More

R. Cline, William, (2016), “Systemic Implications of Problems at a Major European Bank”, Peterson Institute for International Economics, October Following the financial crisis in the United States and Europe, in the last several years banks on both sides of the Atlantic have been subjected to stronger supervision and regulation as well as tougher requirements on capitalization. Yet recent events suggest that vulnerabilities may remain in some of the largest financial …Read More

Merler, Silvia, (2016), “An Italian take on banking crisis”, Bruegel, 27 October The year 2016 has not been good to Italian banks. While resilient to the first wave of financial crisis in 2008, due to their low exposure to US sub-prime products and to the fact that Italy did not have a pre-crisis housing bubble, they have been suffering much from the euro sovereign crisis and the ensuing deteriorating economic …Read More

Farmer, Roger, Zabczyk, Pawel, (2016), “Why unconventional monetary policy works in theory”, VoxEu, 26 October Ben Bernanke famously quipped that monetary policy works in practice, but not in theory. This column bridges the gap between practice and theory in assessing how central banks can influence both of them by intervening in asset markets. To the extent that asset market volatility is driven by shifts in beliefs, the central bank should …Read More

Lehmann, Alexander, (2016), “Private sector debt matters, and better data means better policy”, Bruegel, 27 October Private debt is emerging as a central concern in EU policy. However, the Commission’s regular country reports still give more attention to sovereign than private debt – even though there is always a risk that private liabilities will be socialised. Consistent and more detailed indicators of private debt distress could offer a more effective …Read More

Cukierman, Alex, (2016), “Reflections on the natural rate of interest, its measurement, monetary policy and the zero lower bound”, VoxEu, 15 October The decline in long-term interest rates has nurtured the view of a persistent shift of the natural rate into negative territory. This column argues that existing estimates of the natural rate, based on the New Keynesian model, are likely to be biased downward. It makes a case for …Read More