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71. Who leads the new EMU? Implications of the Economic Crisis for the EU's Institutions

Author:
Teija Tiilikainen
Publication Date:
02-2014
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Reforms made to the EU's economic and fiscal policies have served to reinforce the fragmentation of the division of competences between the EU and its member states in this field. It has also impacted the way in which these competences are exerted by the European and national institutions. Resulting from a differentiation of responsibilities between the eurozone countries and the rest of the EU, fragmentation is increasingly taking place even inside the EU institutions. The current fragmentation of competences and institutions complicates the democratic scrutiny of economic and fiscal policies. The biggest challenge is to accommodate the differentiated responsibilities of the eurozone countries and the rest of the EU within the framework of existing institutions in a w ay that would ensure the unity of this framework, but also the proper democratic anchoring of the EU's economic and fiscal powers.
Topic:
Economics and Monetary Policy
Political Geography:
Europe

72. Comparing the Incidence of Taxes and Social Spending in Brazil and the United States

Author:
Nora Lustig, Timothy Smeeding, Sean Higgins, and Whitney Ruble
Publication Date:
03-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We perform the first comprehensive fiscal incidence analyses in Brazil and the US, including direct cash and food transfers, targeted housing and heating subsidies, public spending on education and health, and personal income, payroll, corporate income, property, and expenditure taxes. In both countries, primary spending is close to 40 percent of GDP. The US achieves higher redistribution through direct taxes and transfers, primarily due to underutilization of the personal income tax in Brazil and the fact that Brazil's highly progressive cash and food transfer programs are small while larger transfer programs are less progressive. However, when health and non-tertiary education spending are added to income using the government cost approach, the two countries achieve similar levels of redistribution. This result may be a reflection of better-off households in Brazil opting out of public services due to quality concerns rather than a result of government effort to make spending more equitable.
Topic:
Economics, Political Economy, Monetary Policy, and Food
Political Geography:
United States and Brazil

73. Falling short of expectations? Stress-testing the European banking system

Author:
Viral V. Acharya and Sascha Steffen
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The eurozone is mired in a recession. In 2013, the GDP of all 17 eurozone countries fell by 0.5% and the outlook for 2014 shows considerable risks across the region. To stabilise the common currency area and its (partly insolvent) financial system, a eurozone banking union is being established. An important part of the banking union is the Single Supervisory Mechanism (SSM), which will transfer the oversight of Europe's largest banks to the European Central Bank (ECB). Before the ECB takes over this responsibility, it plans to conduct an Asset Quality Review (AQR) in 2014, which will identify the capital shortfalls of these banks.
Topic:
Economics, International Trade and Finance, Regional Cooperation, and Monetary Policy
Political Geography:
Europe

74. Framing Banking Union in the Euro Area: Some empirical evidence

Author:
Diego Valiante
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Evidence shows that financial integration in the euro area is retrenching at a quicker pace than outside the union. Home bias persists: Governments compete on funding costs by supporting 'their' banks with massive state aids, which distorts the playing field and feeds the risk-aversion loop. This situation intensifies friction in credit markets, thus hampering the transmission of monetary policies and, potentially, economic growth. This paper discusses the theoretical foundations of a banking union in a common currency area and the legal and economic aspects of EU responses. As a result, two remedies are proposed to deal with moral hazard in a common currency area: a common (unlimited) financial backstop to a privately funded recapitalisation/resolution fund and a blanket prohibition on state aids.
Topic:
Economics, International Trade and Finance, and Monetary Policy
Political Geography:
Europe

75. Inflation-Targeting, Flexible Exchange Rates and Macroeconomic Performance since the Great Recession

Author:
Thomas Barnebeck Andersen, Nikolaj Malchow-Møller, and Jens Nordvig
Publication Date:
03-2014
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Has inflation targeting (IT) conferred benefits in terms of economic growth on countries that followed this particular monetary policy strategy during the crisis period 2007-12? This paper answers this question in the affirmative. Countries with an IT monetary regime with flexible exchange rates weathered the crisis much better than countries with other monetary regimes, predominantly countries with fixed exchange rates. Part of this difference in growth performance reflects differences in export performance during the initial years of the crisis, which in turn can be explained by real exchange rate depreciations. However, IT seems also to confer other benefits on the countries above and beyond the effects from currency depreciation.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
Denmark

76. The EMS Crisis of the 1990s: Parallels with the present crisis?

Author:
Daniel Gros
Publication Date:
03-2014
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The EMS crisis of the 1990 s illustrated the importance of a lack of confidence in price or exchange rate stability, whereas the present crisis illustrates the importance of a lack of confidence in fiscal sustainability. Theoretically the difference between the two should be minor since, in terms of the real return to an investor, the loss of purchasing power can be the same when inflation is unexpectedly high, or when the nominal value of government debt is cut in a formal default. Experience has shown, however, that expropriation via a formal default is much more disruptive than via inflation.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Italy

77. Working for the Many: Public services fight inequality

Publication Date:
04-2014
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
Economic inequality – the skewed distribution of income and wealth – is soaring. Oxfam's own research has found that the 85 richest individuals in the world have as much wealth as the poorest half of the global population. Economic inequality is also putting lives on the line – more than 1.5 million lives are lost each year due to high income inequality in rich countries alone. A recent study of 93 countries estimated that reducing the income share of the richest 20 per cent by just one percentage point could save the lives of 90,000 infants each year. Estimates also show that failing to tackle inequality will add hundreds of billions of dollars to the price tag of ending poverty, putting the achievement of any new post-2015 poverty goals in jeopardy.
Topic:
Development, Economics, Education, Poverty, Monetary Policy, and Reform
Political Geography:
India

78. China's Long March Toward Economic Rebalancing

Author:
Hongying Wang
Publication Date:
04-2014
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation
Abstract:
China's role in the global imbalance is closely linked to its domestic imbalance. Chinese policy makers have long been aware of the dual imbalance and the imperative to shift to economic growth driven by domestic consumption. They have taken limited steps in changing the development model, but political obstacles have slowed the pace of reform. The new leadership seems serious about deepening economic reform despite political resistance, but without political reform, the prospect of success remains dim.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Governance
Political Geography:
China and Asia

79. A Case against Taxes and Quotas on High-Skill Emigration

Author:
Michael Clemens
Publication Date:
05-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Skilled workers have a rising tendency to emigrate from developing countries, raising fears that their departure harms the poor. To mitigate such harm, researchers have proposed a variety of policies designed to tax or restrict high-skill migration. Those policies have been justified as Pigovian regulations to raise efficiency by internalizing externalities, and as non-Pigovian regulations grounded in equity or ethics. This paper challenges both sets of justifications, arguing that Pigovian regulations on skilled emigration are inefficient and non-Pigovian regulations are inequitable and unethical. It concludes by discussing a different class of policy intervention that, in contrast, has the potential to raise welfare.
Topic:
Economics, Human Rights, Human Welfare, Immigration, and Monetary Policy
Political Geography:
India

80. What future for the eurozone? Combining discipline, solidarity and institutional reforms

Author:
Stijn Verhelst and Xavier Vanden Bosch
Publication Date:
03-2014
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
This Policy Brief discusses the challenges that await policymakers in reforming the EMU. A balance between discipline and solidarity will have to be found, while institutional reforms should improve the eurozone's legitimacy and efficiency. The key decisions on EMU reforms will have to be made during the 2014-2019 parliamentary term, as the window of opportunity for major reforms is likely to be closed afterwards.
Topic:
Economics, Monetary Policy, Financial Crisis, and Reform
Political Geography:
Europe