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252. An Update on EU Financial Reforms
- Author:
- Nicolas Véron
- Publication Date:
- 12-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- In the context of a transatlantic comparison, the first thing to be mentioned is the difference between the time sequence of financial reforms in the European Union and its equivalent in the United States. The financial crisis started simultaneously on both sides of the Atlantic, with the initial disruption of some financial market segments in August 2007 and the major panic episode of September through October 2008. But they are not at the same stage of policy reaction and especially regulatory reform now. At least four reasons can be identified for this difference.
- Topic:
- Economics, Global Recession, Monetary Policy, and Financial Crisis
- Political Geography:
- United States and Europe
253. Strengthening IMF Surveillance: A Comprehensive Proposal
- Author:
- Edwin M. Truman
- Publication Date:
- 12-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The central challenge facing the global economy and financial system today is the failure of countries to limit the negative effects of their policies on other countries and on global economic and financial stability. The most prominent manifestations of this challenge are the balance-of-payments adjustment process and the notorious asymmetry therein, spillovers from other countries' financial-sector policies such as those involved in the crisis of 2007–10, and the prospect of sustained unbalanced growth in the global economy with some countries overheating and others facing substantial excess capacity. Against this background, I propose an approach to strengthened IMF surveillance over the economic and financial policies of its member countries.
- Topic:
- Economics, Globalization, International Monetary Fund, Monetary Policy, and Financial Crisis
254. How Europe Can Muddle Through Its Crisis
- Author:
- Jacob Funk Kirkegaard
- Publication Date:
- 12-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- As Europe's financial market contagion spreads to systemically important eurozone members, the region is echoing with "end-game scenarios" (Johnson and Boone 2010) and demands for major new steps by European policymakers (Financial Times 2010). Among these would be a European "fiscal transfer union," a new common eurozone bond, action by the European Central Bank (ECB) to monetize sovereign debts, and finally a eurozone breakup itself.
- Topic:
- Debt, Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
255. Adjustment Difficulties in the GIPSY Club
- Author:
- Daniel Gros
- Publication Date:
- 03-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- This paper describes the key economic variables and mechanisms that will determine the adjustment process in those euro area countries now under financial market pressure. (Greece, Ireland, Portugal, Spain and Italy = GIPSY) The key finding is that the adjustment will be particularly difficult for Greece (and Portugal) because these are two relatively closed economies with low savings rates. Both of these countries are facing a solvency problem because they combine high debt levels with low growth and high interest rates. Fiscal and external adjustment is thus required for sustainability, not just to satisfy the Stability Pact. By contrast, Ireland and Spain face more of a liquidity than a solvency problem. Italy seems to have a much better starting position on all accounts. Fiscal adjustment alone will not be sufficient to ensure sustainability. Without significant reductions in labour costs, these economies will face years of stagnation at best. Especially in the case of Greece, it is imperative that the cuts in public sector wages are transmitted to the entire economy in order to restore competitiveness, and thus ensure that export growth can become a vital safety valve. Without an adjustment of wages in the private sector, the adjustment will become so difficult that failure cannot be excluded.
- Topic:
- Debt, Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe, Greece, Spain, Italy, Portugal, and Ireland
256. Information Sharing and Cross-Border Entry in European Banking
- Author:
- Caterina Giannetti, Nicola Jentzsch, and Giancarlo Spagnolo
- Publication Date:
- 02-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- Asymmetries can severely limit the cross-border border expansion of banks, if entering banks can only obtain incomplete information about potential new clients. Such asymmetries are reduced by credit registers, which distribute financial data on bank clients. Asymmetrically distributed information and adversely selected pools of borrowers constitute severe barriers for foreign banks when they enter new markets. In many instances, these problems force banks to either form 'alliances with incumbents' or simply enter through mergers and acquisitions (M). Yet such entry modes do not automatically lead to intensified competition as they may leave the number of competitors unchanged. Thus, institutions that reduce information asymmetries in credit markets (thereby encouraging entry through branches) may be very important if the objective is strengthening competition in addition to market integration. Recently, these institutions – credit registers – have received greater attention among academics and policy-makers in Europe, although there is still a remarkable lack of understanding of their empirical impact on banking.
- Topic:
- Economics, International Trade and Finance, Markets, and Monetary Policy
- Political Geography:
- Europe
257. Towards a Euro(pean) Monetary Fund
- Author:
- Daniel Gros and Thomas Mayer
- Publication Date:
- 02-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- Despite cobbling together an impressive $1 trillion rescue package for countries with potential funding problems, the threat of a disorderly default still looms over the eurozone, creating systemic financial instability at the EU and possibly global level. Against this background, Daniel Gros and Thomas Mayer renew their call for the creation of a European Monetary Fund (EMF) in an update to their Policy Brief issued in February.
- Topic:
- Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe and Greece
258. The Taxation of Multinational Enterprises in the European Union
- Author:
- Stefano Micossi and Paola Parascandolo
- Publication Date:
- 02-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- As a rule, multinational enterprises (MNEs) are taxed separately by the countries in which they operate on the basis of the income produced in each jurisdiction ('source' taxation). To this end, they must keep separate accounts for business units in each country (“separate accounting”, SA) ascribing each item of expenditure and income to each business unit on the basis – by universally accepted convention – of 'arm's-length' pricing (ALP), that is, of comparable or estimated prices for similar market transactions between unrelated companies.
- Topic:
- Economics, Globalization, International Trade and Finance, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
259. Comparing EU and US Responses to the Financial Crisis
- Author:
- Karel Lannoo
- Publication Date:
- 01-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- Since 2003, the EU and the US have conducted a vibrant regulatory dialogue on financial regulation, but domestic priorities seem to have taken precedence in response to the financial crisis. This paper compares the institutional and regulatory changes occurring on both sides of the Atlantic. On the institutional side, it compares macro- and micro-prudential reforms. On the regulatory side, it compares four key areas: bank capital requirements, reform of the OTC derivative markets, and the regulation of credit ratings agencies and hedge funds. It concludes by highlighting certain implications for the regulatory dialogue.
- Topic:
- Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- United States and Europe
260. They Spend WHAT? The Real Cost of Public Schools
- Author:
- Adam B. Schaeffer
- Publication Date:
- 03-2010
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Although public schools are usually the biggest item in state and local budgets, spending figures provided by public school officials and reported in the media often leave out major costs of education and thus understate what is actually spent.
- Topic:
- Economics, Education, Government, and Monetary Policy