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292. The Single Market in need of a strategic relaunch
- Author:
- Tinne Heremans
- Publication Date:
- 01-2011
- Content Type:
- Working Paper
- Institution:
- EGMONT - The Royal Institute for International Relations
- Abstract:
- On the 27th of October 2010 the Commission finally published its long-awaited Communication “Towards a Single Market Act” with the ambitious objective of relaunching the Single Market. It is beyond doubt that the market integration project is indeed in need of a serious boost. On the one hand, the “acquis” should be buttressed more firmly against protectionist reactions, citizen distrust and integration lethargy more generally. On the other hand, the untapped growth potential – in domains suffering from persistent bottlenecks as well as in new sectors – needs to be better exploited. It will however be argued in this contribution that, in its present form, the Commission's “Draft Single Market Act” (Draft SMA) does not contain all the strategic building blocks needed to address the key challenge of reengaging the different actors in the market integration project and genuinely revamp the Single Market. Therefore, on the basis of an examination of the gaps and defaults in the Draft SMA's approach, and against the background of the preparatory documents presented by Mario Monti and the European Parliament, some suggestions for possible strategic improvements to be included in the final SMA will be made.
- Topic:
- Economics, Markets, Regional Cooperation, and Monetary Policy
- Political Geography:
- Europe
293. Renewed Financial Supervision in Europe – Final or transitory?
- Author:
- Stijn Verhelst
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- EGMONT - The Royal Institute for International Relations
- Abstract:
- In order to obtain financial sector stability, adequate financial regulation and supervision are paramount. Despite their crucial role, both failed to prevent or at least mitigate the financial crisis. While financial regulation strives to impose a set of rules that ensure a safe and resilient financial sector, it has proven to contain too many gaps and loopholes.
- Topic:
- Debt, Economics, Markets, Monetary Policy, Financial Crisis, and Governance
- Political Geography:
- Europe
294. A Generalized Fact and Model of Long-Run Economic Growth: Kaldor Fact as a Special Case
- Author:
- Daniel Danxia Xie
- Publication Date:
- 02-2011
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This paper provides new evidence on the long-run relationship between economic growth and labor's share in national income, based on a comprehensive panel data set for 123 countries from 1950 to 2004. Xie's primary finding is that labor's share follows a cubic relationship with real GDP per capita over the long process of development. At the beginning of the modern economic growth process, the share of labor in national income first decreases until an initial threshold is reached. After that, labor's share keeps increasing until the country's GDP per capita reaches a second threshold before falling again. Xie argues that these dynamics apply not only to the less developed countries in the postwar years, but also to the advanced countries like the United States and the United Kingdom during their early economic take-offs, starting in the late 18th and 19th century, respectively. Finally, he proposes a two-sector constant elasticity of substitution (CES)-type growth model and simulate the model to replicate and explain the possible mechanism behind such a nonlinear pattern of movements in labor's share.
- Topic:
- Economics, International Trade and Finance, Labor Issues, and Monetary Policy
- Political Geography:
- United States and United Kingdom
295. Current Account Imbalances Coming Back
- Author:
- Joseph Gagnon
- Publication Date:
- 01-2011
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This paper finds statistically robust and economically important effects of fiscal policy, external financial policy, net foreign assets, and oil prices on current account balances. The statistical model builds upon and improves previous explanations of current account balances in the academic literature. A key advance is that the model captures the effect of external financial policies, including exchange rate policies, through data on net official financial flows. Based on current and expected future policies, current account imbalances in major G-20 economies are likely to widen much more in the next five years than projected by the International Monetary Fund (IMF). This paper concludes with a discussion of appropriate policies to prevent widening imbalances.
- Topic:
- Economics, International Trade and Finance, Markets, and Monetary Policy
296. Exchange Rate Regimes and Trade: Is Africa Different?
- Author:
- Mahvash Saeed Qureshi and Charalambos G. Tsangarides
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper revisits the link between exchange rate regimes and trade in the context of Africa's exchange rate arrangements. Applying an augmented gravity model that includes measures of currency unions and pegged regimes, the paper compares Africa's experience with that of the world. Our results suggest that both currency unions and direct pegs promote bilateral trade in Africa vis-à-vis more flexible exchange rate regimes,and that their effect is almost double for the region than that for an average country in the world sample. Further, we find evidence that the effect of conventional pegs is at least as large as that of currency unions in Africa, and that the benefits of fixed exchange rate regimes stem through channels in addition to reduced exchange rate volatility.
- Topic:
- Economics, International Trade and Finance, Bilateral Relations, and Monetary Policy
- Political Geography:
- Africa
297. The EU's Response to the Financial Crisis: A mid-term review
- Author:
- Karel Lannoo
- Publication Date:
- 04-2011
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Two years after the London G-20, CEPS Chief Executive Karel Lannoo finds that the EU is well advanced in delivering on the commitments made for the 2013 target date. Important steps have been taken on the institutional side, and regulatory changes are moving ahead. On some issues, in fact, such as remuneration, the EU has made even greater headway than the US. But certain key sensitive matters remain, such as bank resolution or structural changes.
- Topic:
- Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, Europe, and London
298. Can the eurozone countries still live together happily ever after?
- Author:
- Marcello Messori
- Publication Date:
- 03-2011
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- After the Greek public debt crisis and the bilateral loans to Greece from the other members of the European Monetary Union (EMU), in May 2010 the Ecofin Council launched the European Financial Stabilization Mechanism (EFSM). In June of the same year the EMU countries instituted the European Financial Stability Facility (EFSF). These two mechanisms, which are charged with providing support to EMU countries in “exceptional difficulty”, received their baptism of fire with Ireland in January 2011 and successfully made their first bond issue on the market.
- Topic:
- Debt, Economics, and Monetary Policy
- Political Geography:
- Europe and Greece
299. Restoring financial stability in the euro area
- Author:
- Christian Kopf
- Publication Date:
- 03-2011
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The pricing of sovereign credit risk is a necessary component of the financial architecture of the European Monetary Union. However, unnecessarily high and volatile risk premia on government bonds are currently preventing effective financial intermediation within the euro area, thereby inhibiting its economic recovery. Several proposals have been made on how these risk premia should be brought down, namely i) permanent pooling of funding through joint bond issuance, ii) temporary liquidity assistance through multilateral funds, iii) debt buybacks using multilateral funds, and iv) debt restructuring.
- Topic:
- Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
300. On the Tasks of the European Stability Mechanism
- Author:
- Stefano Micossi, Fabrizia Peirce, and Jacopo Carmassi
- Publication Date:
- 03-2011
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- In recent weeks pressures on the euro and eurozone sovereign debtors have subsided. Buoyant growth in the global economy, increasingly benefiting also the European economy, has of course played an important role in calming financial markets. But even more important has been the perception that France and Germany are again working constructively for a strong economic Europe. More broadly, the acute turbulence in financial markets since the spring of 2010 may have finally convinced our political leaders, notably including the German political establishment, that the benefits of a stable currency far outweigh the costs that may have to be borne to make it work properly. The euro will only be trusted if the member states effectively coordinate their economic policies not only to ensure fiscal stability, but also to eliminate persistent divergences in productivity leading to unsustainable imbalances between national savings and investment (Schäuble, 2011).
- Topic:
- Security, Economics, Regional Cooperation, Monetary Policy, Financial Crisis, and Governance
- Political Geography:
- Europe, France, and Germany