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31. How to Achieve a Better Budget for the European Union?

Author:
Daniel Gros
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
In recent decades the EU has widened and deepened to such an extent that it now deals in almost all areas of policy-making. Its budget, however, has barely changed over this period. It thus needs to be radically reformed if it is to reflect the priorities of an expanding and deepening Union. Over 40% of spending still supports agriculture, a declining sector; spending for research and innovation, recognised as the main driving force of productivity growth, is too low, and there is no room in the budget for the new public goods of domestic and external security that the public demands. However, the budget is determined through an inter-governmental negotiation in which no entity defends the over-arching European interest since all countries (rationally) care only about their 'net balance'.
Topic:
Government and International Political Economy
Political Geography:
Europe

32. The US Housing Bust and Soaring Oil Prices: What next for the world economy?

Author:
Daniel Gros and Cecilia Frale
Publication Date:
06-2008
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper estimates the impact of the ongoing housing bust and oil price boom on the US and European economies. It finds that large house price movements (changes in construction investment) are useful to predict exceptionally bad and good times for the US economy, but not for most large European countries. In Europe housing market developments have led to extreme values of GDP, mainly in the UK, Spain and some Nordic countries.
Topic:
Economics and Oil
Political Geography:
United States and Europe

33. The Post-2010 Lisbon Process: The Key Role of Education in Employment and Competitiveness

Author:
Daniel Gros and Felix Roth
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper points out that education should be the central objective of the post-2010 Lisbon Process. Compared to other OECD countries, the member states of the European Union perform poorly when it comes to key indicators of innovative potential, such as the percentage of students enrolled in tertiary education and the educational quality of Europe's students. Education makes a three-fold contribution to a country's economic health. First it is beneficial for employment rates, second it is a key driver for long-term economic growth and third it appears to be beneficial for social cohesion. It will be crucial for European countries to attain higher levels of tertiary education and increase the quality of their education.
Topic:
Economics, Education, and Regional Cooperation
Political Geography:
Europe and Lisbon

34. Iceland on the brink? Options for a Small, Financially Active Economy in the Current Financial Crisis Environment

Author:
Daniel Gros
Publication Date:
04-2008
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
For small financially active countries the exchange rate assumes particular importance, not only as a shock absorber, but potentially also as a source of shocks during financial market crises. This is very much in evidence today in the case of Iceland which is being hit hard by the recent turbulence in financial markets.
Topic:
Economics and Financial Crisis
Political Geography:
Europe

35. What next? How to save the Treaty of Lisbon

Author:
Daniel Gros and Sebastian Kurpas
Publication Date:
06-2008
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
In the wake of the Irish no-vote on the Treaty of Lisbon, numerous scenarios are currently being debated. This paper critically assesses the legality and political feasibility of the principal proposals and then puts forward an alternative 'Plan B', which we believe would amply satisfy both criteria.
Topic:
International Organization, Regional Cooperation, and Treaties and Agreements
Political Geography:
Europe and Lisbon

36. Bubbles in real estate? A Longer-Term Comparative Analysis of Housing Prices in Europe and the US

Author:
Daniel Gros
Publication Date:
10-2007
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The downturn in the US housing market has attracted a lot of attention as it has sparked a global financial crisis. It is generally assumed that the eurozone does not face a similar problem. This paper shows that this assumption is wrong. The euro area average index of real housing prices has risen almost as much as that of the US and is now (as that of the US) about 40% above its 30-year average. This is similar to the overvaluation of Japanese real estate at the height of the Japanese bubble, which was then followed by over a decade of continuous decline. Over the last 30 years, the euro area index for real housing prices has tended to follow that of the US quite closely. The lag is now much shorter than in the 1970s or 1980s. The euro area market is thus likely to turn soon as well. One feature of housing price cycles that tends to be forgotten is their extraordinary length: many last for more than ten years. This persistence means that the downswing, which now seems to have started, is likely to last at least until the next decade. Within the euro area, there are large divergences: cases of 'froth' (Spain, for example) co-exist alongside cases of declining prices (Germany). These divergences have persisted for over a decade and have led to important macroeconomic disequilibria. The paper also develops an indicator of 'housing overhang', which shows by how much demand for new construction has to decline to bring the supply of housing back to normal levels. This indicator suggests that there is virtually no housing overhang in the eurozone on average and that it is of a manageable magnitude in the US. Spain and Ireland, however, face a massive housing overhang and thus probably a sharp deceleration of construction demand.
Topic:
Economics and Markets
Political Geography:
United States and Europe

37. 'Outsourcing' de facto Statehood: Russia and the Secessionist Entities in Georgia and Moldova

Author:
Daniel Gros and Stefano Micossi
Publication Date:
12-2006
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The European Union is suffering a deep crisis: disdain, disillusionment and distrust top the list of prevailing sentiments towards the European institutions, as was brought home dramatically by the failed referenda on the Constitutional Treaty in France and the Netherlands.
Topic:
International Relations
Political Geography:
Russia, Europe, Moldova, Middle East, France, Georgia, and Netherlands

38. Employment and Competitiveness: The Key Role of Education

Author:
Daniel Gros
Publication Date:
02-2006
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
More than half way into the decade, it is clear that the ambitious goal to make the EU the 'most competitive economy' by 2010 will be missed. This contribution shows that investing more in education would be the key in terms of employment, a central element in the Lisbon goal. Improving the skills of the EU's population would have, inter alia, a direct impact on the employment rate. Reaching the Lisbon goal of an employment rate of 70% would be possible even without labour market reforms if the average level of qualification of the EU were to reach the benchmarks in this area (which in turn are very close to the values reached by the best performing member states).
Topic:
Development, Economics, and Human Welfare
Political Geography:
Europe and Lisbon

39. Reforming the Composition of the ECB Governing Council in View of Enlargement: An Opportunity Missed!

Author:
Daniel Gros
Publication Date:
05-2003
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
It is widely accepted that enlargement requires reform of the highest decision-making bodies of the European Central Bank (ECB). In particular, there are concerns that the Governing Council, which is composed of the six-member Executive Board of the ECB plus the governors of the participating national central banks (NCBs), will grow too large to work efficiently. In the absence of reform, it could end up having over 30 members - resembling more a mini-parliament than a decision-making body that has to manage a global currency in fast-moving financial markets. Moreover, the accession of a number of small countries is often perceived as a threat to the "power balance" in the Governing Council.
Topic:
Government, Human Rights, and International Organization
Political Geography:
Europe

40. A Public Stability Pact for Public Debt?

Author:
Daniel Gros
Publication Date:
01-2003
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
There is an urgent need to link the excessive deficit procedure with the issue of sustainability and hence the evolution of public debt. This note shows that there exists a simple way to introduce the evolution of public debt in the Stability Pact, which so far has focused exclusively on deficits. The link starts from the Maastricht criterion for participation in EMU concerning public debt and its reference value of 60% of GDP. The Maastricht criterion on public debt stipulates that if public debt exceeds 60% of GDP, it must be 'sufficiently diminishing and approaching the reference value at a satisfactory pace''.This note provides a numerical rule for evaluating whether public debt is indeed diminishing 'at a satisfactory pace'. This numerical rule is in accordance with the reference values in the Treaty and could be used as the basis for an 'excessive debt procedure'.
Topic:
Government, Human Rights, and International Organization
Political Geography:
Europe