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31. Why the ECB should cut borrowing costs in periphery

Publication Date:
06-2013
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
The European Central Bank has postponed any plans to introduce targeted measures to reduce the cost of borrowing for small and medium-sized businesses in the credit-starved peripheral Eurozone economies. Given the widening gap between the lower costs of borrowing for companies in Germany and France and the higher costs in the periphery, we think that there is a strong case for the ECB to take action. Simulations using our Global Macroeconomic Model show that if half the tightening in credit conditions seen since 2008 were to be reversed within two years, Eurozone GDP would be 0.7% higher by the end of 2017 than under our baseline forecast. There would be over 400,000 fewer people unemployed. This would be particularly beneficial for peripheral Eurozone risk assets.
Topic:
Debt, Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Europe and Germany

32. Towards a Deeper EMU: An assessment of political divisions within the EU

Author:
Juha Jokela
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Policymakers, observers and the media have referred to a vast number of divisions in crisis-torn Europe. The EU is divided between north and south or creditors and debtors. Some have emphasised the emerged division between anti-EU and pro- EU forces. Significantly, these divisions are also manifested within the eurozone, in the form of the current differences between the French and German views, and the increasing role of the populist movements in many euro countries. Yet others have highlighted the boundary between the eurozone and the rest of the EU, and suggested that the euro countries now form the core of the Union. Relatedly, some of the non-euro members are distancing themselves from the EU – most notably the UK – while many others aim to secure their influence in the Union, even if euro membership may have been put on the back burner.
Topic:
Debt, Economics, Monetary Policy, and Financial Crisis
Political Geography:
United Kingdom, Europe, and Germany

33. The Decline and Fall of France

Author:
Milton Ezrati
Publication Date:
11-2013
Content Type:
Journal Article
Journal:
The National Interest
Institution:
Center for the National Interest
Abstract:
FRANCE's ECONOMY is not just doing badly. It is in profound decline. The slide has proceeded far enough now that businesspeople and politicians across the Continent increasingly refer to France as the "sick man of Europe"-quite a distinction at a moment when Greece, Portugal, Spain and Italy share the hospital ward. For decades, European Union structures were strong enough to allow Paris to ignore the country's economic shortcomings. No longer. Unless Paris reforms its economic policies and practices, it could have a disastrous effect. Further economic woes may undermine the Franco-German cooperation on which the EU has relied, confronting the union with either dissolution or, more likely, an increasingly Germanic future.
Topic:
Economics and Reform
Political Geography:
United States, France, and Germany

34. Climate Policy Outcomes in Germany: Environmental Performance and Environmental Damage in Eleven Policy Areas

Author:
Roger Karapin
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
German Politics and Society
Institution:
German Politics and Society Journal
Abstract:
Germany has reduced its emissions of greenhouse gases more than almost any other industrialized democracy and is exceeding its ambitious Kyoto commitment. Hence, it is commonly portrayed as a climate-policy success story, but the situation is actually much more complex. Generalizing Germany's per-capita emissions to all countries or its emissions reductions to all industrialized democracies would still very likely produce more than a two-degree rise in global temperature. Moreover, analyzing the German country-case into eleven subcases shows that it is a mixture of relative successes and failures. This analysis leads to three main conclusions. First, high relative performance and high environmental damage can coexist. Second, we should see national cases in a differentiated way and not only in terms of their aggregate performances. Third, researchers on climate policies should more often begin with outcomes, work backward to policies, and be prepared for some surprises. Ironically, the most effective government interventions may not be explicit climate policies, such as the economic transformation of eastern Germany. Moreover, the lack of policy-making in certain areas may undercut progress made elsewhere, including unregulated increases in car travel, road freight, and electricity consumption. Research on climate and environmental policies should focus on somewhat different areas of government intervention and ask different questions.
Topic:
Economics
Political Geography:
Germany

35. What Germany should fear most is its own fear: An analysis of Target2 and current account imbalances

Author:
Paul De Grauwe and Yuemei Ji
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyzes two claims that have been made about the Target2 payment system. The first one is that this system has been used to support unsustainable current account deficits of Southern European countries. The second one is that the large accumulation of Target2 claims by the Bundesbank represents an unacceptable risk for Germany if the eurozone were to break up. We argue that these claims are unfounded. They also lead to unnecessary fears in Germany that make a solution of the eurozone crisis more difficult. Ultimately, this fear increases the risk of a break-up of the eurozone. Or to paraphrase Franklin Roosevelt, what Germany should fear most is simply its own fear.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

36. Much ado about nothing? State-controlled entities and the change in German investment law

Author:
Thomas Jost
Publication Date:
06-2012
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
The rise of sovereign wealth funds (SWFs) and state-owned enterprises (SOEs) -- together state-controlled entities (SCEs) -- has led to concerns that SCEs could threaten national security by following political rather than mere commercial goals with respect to their foreign direct investment (FDI). While developed countries acknowledged that the rise of SCEs should not lead to new barriers to FDI, several have changed their legislation to expand government oversight of FDI flows. In 2009, Germany also tightened its foreign investment regime. What are the first experiences with this change in German investment law?
Topic:
Economics, Markets, Foreign Direct Investment, and Law
Political Geography:
Europe and Germany

37. Country Economic Forecasts: Germany

Publication Date:
06-2012
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
The German economy is clearly slowing in the face of the latest phase of the Eurozone crisis. We expect the impact of the crisis on business investment and exports to cause the economy to contract in Q2 before recovering slowly in H2. As a result, GDP growth is now forecast to slow to 0.7% in 2012 overall from 3.1% last year, before accelerating to 1.4% in 2013.
Topic:
Economics, Industrial Policy, Markets, and Financial Crisis
Political Geography:
Europe and Germany

38. Germany's Unsustainable Growth

Author:
Adam Tooze
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
With the euro in crisis, Germany has come to seem like a lone island of fiscal stability in Europe. Its debt levels are modest, its government bonds are safe havens for investors around the world, and it has avoided the kinds of private credit booms and housing bubbles that have destabilized the rest of the continent. The German economy, fueled by record exports, has grown steadily, expanding by a quarter over the last decade. But beneath the glowing headlines lies a darker story: Germany's economic position is simply unsustainable. For starters, much of its trade surplus has been earned at the expense of the corresponding current account deficits of the European countries in crisis. At the same time, this outsized surplus goes hand in hand with major imbalances within Germany's domestic economy. German businesses have invested their profits abroad, helping finance foreign imports. Meanwhile, as German money has flowed out of the country, domestic investment has languished at unprecedentedly low levels. Germany, like other rich, polluting, and aging countries, faces enormous long-term challenges. Its work force is shrinking, its energy sector needs to be remade, and its public infrastructure has gone too long without improvement. For all the talk of its financial strength, Germany has so far squandered the opportunity to secure long-term economic growth by addressing these challenges through badly needed domestic investments.
Topic:
Economics
Political Geography:
Europe and Germany

39. After austerity: futures for Europe's defence industry

Author:
Andrea Gilli
Publication Date:
11-2012
Content Type:
Policy Brief
Institution:
European Union Institute for Security Studies
Abstract:
In October 2012, the merger between BAE Systems (GB) and EADS (France, Germany and Spain), two of the biggest defence contractors in the world, failed. Despite this setback, further consolidation within the European defence industry is likely to occur in the near future. Because of the eurozone crisis, in recent years EU countries have significantly curtailed their public expenditure, defence included. This has important implications for the structure of the European defence industrial base. Specifically, defence companies are dependent on public defence expenditure. When defence spending declines, industrial overcapacity results. This, in turn, calls for restructuring and consolidation. Inevitably, EU countries will have to go down this road. However, given their ongoing concerns regarding sovereignty, technology and jobs, there are good reasons to think that they will promote the consolidation of their defence industry through a mix of Europe, NATO, extra-EU and purely national solutions.
Topic:
Defense Policy, Economics, and Industrial Policy
Political Geography:
Europe, France, Germany, and Spain

40. Constructing a German Europe? Germany's Europe Debate Revisited

Author:
Timo Behr and Niklas Helwig
Publication Date:
02-2012
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Germany's ambiguous role during the eurozone crisis has stoked fears that a more self-confident and dynamic Germany is threatening the political independence and economic well-being of its neighbours and will lead to a “German Europe”. German weakness, not power, is the main challenge to EU integration. In order to build a supranational EU and a “European Germany”, Germans will have to overhaul their Cold War institutions and traditions that have become a brake on EU integration. Germany's political elite continues to favour a federalist vision for the EU, but faces a somewhat more sceptical public as well as strong domestic veto players, such as the Federal Constitutional Court, which limit their pro-integrationist tendency. While Germany continues to support the use of the “Community method”, Angela Merkel has increasingly resorted to the “Union method” that places function over form and prioritizes pragmatic problem-solving to address the current crisis. Germany's uncompromising attitude towards the eurozone crisis and its sometimes erratic foreign policy are the product of its deeply embedded stability culture and instinctive pacifism, rather than a sign of growing global ambitions. European partners will have to help Germany in its indispensable leadership role by jointly formulating a vision for the European integration project and by assisting Germany in adapting its political institutions and culture.
Topic:
Cold War, Economics, Regional Cooperation, and Financial Crisis
Political Geography:
Europe and Germany