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132. Fiscal Policy Coordination and Competitiveness Surveillance: What solutions to what problems?
- Author:
- Daniel Gros and Cinzia Alcidi
- Publication Date:
- 09-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- In June 2010, both the European Commission and the European Central Bank published documents containing ideas for enhancing European economic governance. Both proposals stress the need for stronger surveillance on a country-by-country basis and the effective enforcement of surveillance through incentives and a wider spectrum of sanctions.
- Topic:
- Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
133. Does intangible capital affect economic growth?
- Author:
- Felix Roth and Anna-Elisabeth Thum
- Publication Date:
- 09-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- Using new international comparable data on intangible capital investment by business within a panel analysis from 1995-2005 in an EU-15 country sample, we detect a positive and significant relationship between intangible capital investment by business and labour productivity growth. This relationship is cross-sectional in nature and proves to be robust to a range of alterations. Our empirical analysis confirms previous findings that the inclusion of business intangible capital investment into the asset boundary of the national accounting framework increases the rate of change of output per worker more rapidly. In addition, intangible capital is able to explain a significant portion of the unexplained international variance in labour productivity growth and when incorporating business intangibles, capital deepening becomes an even more significant source of growth. The relationship is slightly stronger in the time period 1995-2000 and seems to be driven by the coordinated countries within the EU-15.
- Topic:
- Economics, International Trade and Finance, Regional Cooperation, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
134. Do the European Union's bilateral investment treaties matter?
- Author:
- Selen Sarisoy Guerin
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- Several policy-relevant issues regarding the EU's bilateral investment treaties (BITS) are addressed in this paper. First and foremost, we explore the question of whether EU's BITs have a significantly positive impact on outflows or not. Second, we ask the question which member states and which BIT partners have had a significant experience after the implementation of the BIT. In our sample we find that both OECD BITs and EU BITs have a statistically significant and positive impact on FDI outflows. This result is robust to the inclusion of variables such as privatisation proceeds that control for the level of economic reform, the level of trade linkages, the level of democratic freedom and a measure of risk of expropriation among other standard controls. We control for endogeneity in our estimations by using the fixed-effects estimator as our preferred estimator on a large panel dataset. We also test the strict exogeneity of our results by using a method suggested by Baier and Bergstrand (2007) and we find no feedback effect in our sample.
- Topic:
- Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
135. The financial crisis and citizen trust in the European Central Bank
- Author:
- Daniel Gros and Felix Roth
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- Trust in the ECB, as measured by the standard Eurobarometer (and other) surveys has fallen to an unprecedented low – especially in the larger euro area countries. The authors find that up to the start of the recession in 2008, trust in the ECB was little affected by business cycle variables such as growth and inflation. This changed radically with the recession, with trust in the ECB becoming correlated quite closely with growth. However, even the recovery of growth in 2009 was not sufficient to restore trust in the ECB to previous levels. This finding implies that European citizens seem to have placed a heavy share of the blame on the European Central Bank for the real economic downturn caused by the financial crisis.
- Topic:
- Economics, International Trade and Finance, and Monetary Policy
- Political Geography:
- Europe
136. 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
137. Restoring Investor Confidence in European Capital Markets
- Author:
- Diego Valiante
- Publication Date:
- 02-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- Investors have a longer memory than the sell‐side of the market. To regain their trust, intensive work needs to be done in the coming years. The new European Commissioner of the Internal Market, Michel Barnier, will play a pivotal role here. In the area of capital markets, he will need the support of a determined European Parliament, a strong commitment from the Council and Member States, as well as active contributions from the CESR/ESMA , other Level 3 Committees/Authorities and national supervisors. We believe that participants in capital markets share the same goal: to make them as efficient and effective as possible. The ability to collect savings and allocate them to investment, and to allow all participants to defray risk, is at the heart of any successful modern economy. This requires effective regulation that not only mandates common standards, but also promotes accountability, responsibility and transparency, while at the same time encouraging innovation. Effective regulation must not impose undue costs, if markets are to remain efficient and effective. However, we should be conscious that the crisis has been so deep that there is a collective need to go back to the basic principles of financial regulation and supervision.
- Topic:
- Economics, International Trade and Finance, and Financial Crisis
- Political Geography:
- Europe
138. Future Impacts of Climate Change across Europe
- Author:
- Arno Behrens, Anton Georgiev, and Maelis Carraro
- Publication Date:
- 02-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- This CEPS Working Document reviews the potential impacts of climate change on 11 key indicator categories and 3 large regions covering the entire European Union. Although there remains a considerable degree of uncertainty about local and regional effects, the paper highlights strong distributional patterns. Northern Europe might even experience some positive effects, while the Mediterranean will mostly be negatively affected. Still, the cumulative impacts of climate change on poorer countries will also affect northern European countries, as growing water scarcity and other repercussions in Mediterranean countries could pose social and security challenges through increasing risks of conflicts and migration pressures.
- Topic:
- Climate Change, Energy Policy, and Industrial Policy
- Political Geography:
- Europe
139. 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
140. On Thin Ice? (Mis)interpreting Russian Policy in the High North
- Author:
- Roderick Kefferputz
- Publication Date:
- 02-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- Climate change in the Arctic is expected to make the region a lot busier as new strategic resources become available. The Russian Federation is a key player in this context, having put forth a comprehensive Arctic strategy. Russian policy towards the so-called High North, however, is oftentimes not seen in its entirety and has received a plethora of criticism in the Western media and foreign policy community. This paper aims to contribute to a better understanding of Russian actions in the High North by providing a succinct overview of Russian policies in the region and identifying the fundamental rationale behind them. The paper concludes that Russia's Arctic policy is not only a lot more nuanced but also not very different from the policies conducted by other riparian states.
- Topic:
- Climate Change and Energy Policy
- Political Geography:
- Russia and Europe