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351. Economic Policy Coordination in EMU: What Role for the SGP?

Author:
Jørgen Mortensen
Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The present paper discusses the implications of the recent institutional crisis in the EU provoked by the failure of the Economic and Financial Affairs Council (ECOFIN) to impose the sanction on Germany and France provided for in the Stability and Growth Pact, along with Article 104 and the associated protocol of the Maastricht Treaty. The paper situates the debate concerning the application of the Stability and Growth Pact (SGP) in a broader evolution of the struggle between two schools of thought concerning macroeconomic policy–making in the European Union: the school calling for a strengthening of competences at the EU level (federal economic government) and the school arguing for preserving national competences for budgetary policy even in the face of the transfer of competence for monetary policy to the European Central Bank (ECB). The paper argues that the SGP represents an acceptable comprise between the two views of the schools in so far as it establishes rules to be respected without actually transferring competence to the Council in the field of budgetary policy. Consequently, the SGP has not and does not add to the 'democratic deficit' within the EU institutional framework. The paper argues, nevertheless, that the excessive deficit procedure (EDP) puts too strong an emphasis on the government budget deficit and suggests that emphasis on the sustainable level of public debt would ensure a stronger basis for assessing whether a given budget deficit may be considered excessive or not.
Topic:
Defense Policy, Economics, and Treaties and Agreements
Political Geography:
Europe, France, and Germany

352. Theorising European Strategic Culture: Between Convergence and the Persistence of National Diversity

Author:
Christoph O. Meyer
Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This working document focuses on the dynamics and scope of strategic culture–building in the context of the European Union's aspirations to develop a European security and defence policy (ESDP). It argues that the notion of strategic culture can be useful in assessing the context in which the ESDP will develop further as well as its performance in matters of conflict prevention, management and resolution. Nevertheless, in order to be conceptually and empirically useful, strategic culture needs to be disaggregated into collective norms about the means and ends of security policy, as well as its different carriers such as political elites, societies and armed forces. The paper examines the convergence thesis and suggests three theories to explain convergence informed by realist, constructivist and regional theories of political change. Yet the paper also argues that these forces can affect national strategic cultures differently, depending on the countries' geopolitical positions, the institutional stickiness of domestic ideas, values and norms, and the degree to which such norms are subject to partisan or societal contention. On this basis, the paper advances some hypotheses about the actual extension of the convergence process, which will need to be validated by further empirical study.
Topic:
Defense Policy, Economics, and International Trade and Finance
Political Geography:
Europe

353. Economic Prospects for Kaliningrad: Between EU Enlargement and Russia's Integration into the World Economy

Author:
Evgeny Vinokurov
Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The Kaliningrad oblast of Russia is currently an important focal point of discussions between the European Union and Russia. Although small in terms of geography and population, Kaliningrad has grown in importance due to the EU enlargement process. Since the break–up of the Soviet Union, the oblast has become an exclave of Russia, and it is now set to also become an enclave within the EU. This paper examines the state of Kaliningrad's economy and trade. The economic crisis that took place in Russia in the 1990s had severe consequences for Kaliningrad, as old patterns of production and trade were disrupted. Since 1999, however, the regional economy has grown with impressive speed. Kaliningrad's Special Economic Zone (SEZ) status has played a crucial role in determining its new patterns of production and trade specialisation. The paper argues that the SEZ regime has made the region's economic growth faster but also vulnerable.
Topic:
Economics and International Trade and Finance
Political Geography:
Russia, Europe, and Asia

354. Can Labour Market Institutions Explain Unemployment Rates in New EU Member States?

Author:
Sjef Ederveen and Laura Thissen
Publication Date:
07-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This study poses the question about whether labour market institutions can explain unemployment rates in the ten new European Union member states. In five out of the ten new member states, unemployment rates lie above the average in the 15 member states of the European Union (EU-15) that comprised the EU prior to May 2004. The study finds that labour market institutions in the acceding countries are less rigid than in the EU-15. Moreover, labour market institutions explain only a minor part of unemployment in the new EU member states. This does not mean that these countries have no labour market problems. Just as in the EU-15, a great deal of heterogeneity exists among the acceding countries. In some of them, labour market reforms could prove a key issue in improving employment performance. The main worry is the poor labour market performance in Poland and the Slovak Republic, where unemployment has risen to almost 20%. The main reasons for this growth are i) postponed restructuring in combination with tight monetary policy; ii) poor governance; and iii) an increasing labour force.
Topic:
Economics and Human Welfare
Political Geography:
Europe

355. Business Cycle Synchronisation in the Enlarged EU: Co-Movements in the New and Old Members

Author:
Zsolt Darvas and Gyorgy Szapary
Publication Date:
03-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
It is generally recognised that countries wanting to join a monetary union should display the optimal currency area properties. One such property is the similarity of business cycles. We therefore undertook to analyse the synchronisation of business cycles between the EMU-12 and the eight new EU members from Central and Eastern Europe (CEECs), for which the next step to be considered in the integration process is entry into the EMU. In contrast to the usually analysed GDP and industrial production data, we extend our analysis to the major expenditure and sectoral components of GDP and use several measures of synchronisation. The main findings of the paper are that Hungary, Poland and Slovenia have achieved a high degree of synchronisation with EMU for GDP, industrial production and exports, but not for consumption and services. The other CEECs have achieved less or no synchronisation. There has been a significant increase in the synchronisation of GDP and also its major components in the EMU members since the start of the run-up to EMU. While this lends support for the existence of OCA endogeneity, it cannot be unambiguously attributed to it because there is also evidence of a world business cycle. Another finding is that the consumption-correlation puzzle remains, but its magnitude has greatly diminished in the EMU members, which is good news for common monetary policy.
Topic:
Economics, International Cooperation, and International Trade and Finance
Political Geography:
Europe

356. Searching for the Determinants of IT Investment: Panel Data Evidence on European Countries

Author:
Paolo Guerrieri, Cecilia Jona-Lasinio, and Stefano Manzocchi
Publication Date:
01-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The aim of this paper is to identify the degree of information technology (IT) adoption in individual European economies and to analyse the determinants of IT investment among a panel of EU countries. We first analyse the dynamics of IT investment expenditure in 15 European countries from 1992 until 2001 and, by means of a cluster analysis, we draw a picture of IT diffusion in Europe. By clustering the European countries according to their shares of IT spending over GDP, we identify three fairly stable groups of fast, medium and slow adopters. We then build an econometric equation of the determinants of IT investment to use with panel data in estimations for five European economies over the period of 1980 to 2001. We consider aggregate IT investment as well as separate investment in hardware or software. Financial conditions, income growth and comparative advantage turn out to affect IT investment, but we find that the determinants of hardware investment only partially overlap with those of software.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
Europe

357. Can Europe deliver growth? The Sapir Report and Beyond

Author:
Jean-Pierre Casey and Jacques Pelkmans
Publication Date:
01-2004
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The SAPIR report (Sapir et al., 2003) is important for Europe. The justification of and search for higher economic growth in the EU ought to be on the very top of the EU agenda everywhere. Offering a very rich and useful survey of many issues related to European growth, or indeed the lack of it, the report's analysis is insightful and should be compulsory reading for policy-makers and political leaders. Sapir et al.'s policy recommendations are numerous and rightly touch economic as well as institutional aspects at EU level.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

358. European Homeland Security Post-March 11th and Transatlantic Relations

Author:
Didier Bigo, Jeremy Shapiro, and Andrei Fedorov
Publication Date:
10-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
In the oral presentation of their papers, Didier Bigo, Jeremy Shapiro and Andrei Fedorov generally highlighted their respective region's specificities rather than dwelling on the elements of commonality. Although this was in part a consequence of the European Security Forum's modus operandi – with its differentiated European, American and Russian perspectives, rarely in our meetings has the contrast been so clearly highlighted.
Topic:
Security, Foreign Policy, and Terrorism
Political Geography:
Russia, United States, Europe, and Asia

359. Russia and the West

Author:
Michael Emerson and Irina Kobrinskaya
Publication Date:
09-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Russia and the EU talk in their summit communiqués about their strategic partnership, but it seems like an awkward partnership. The relationship is not that bad, certainly not life-threatening, but it is not that good either.
Topic:
Security and International Cooperation
Political Geography:
Russia, Europe, and Asia

360. Welfare and the Labour Market in the EU

Author:
Marie-Laure Michaud
Publication Date:
09-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Over the last two decades, EU institutions have been increasingly concerned with the issues of unemployment reduction and job creation. The EU has recommended that member states develop welfare systems that moderate the negative effects of market relationships on the one hand, and enhance the efficiency of market performance on the other.
Topic:
Economics and Human Welfare
Political Geography:
Europe