Newsletter / House of Finance, Goethe-Universität Frankfurt 4/09

Editorial: Jens Weidmann : "Central Banks and Monetary Policy after the Crisis" Research Finance: Holger Kraft,Claus Munk : "Optimal Housing, Consumption, and Investment Decisions over the Life Cycle" Research Money/Macro: Ester Faia, Eleni Iliopulos : "Financial Globalization and Monetary Policy" Research Law: Andreas Cahn, D. Schöneberger : "Shareholder Governance in Europe" Policy Platform: Michael Haliassos, Dimitri Vayanos : "Getting Greece Back on Track: How?" Interview: Raimond Maurer, Ralph Rogalla : "Longevity Risk and Capital Markets Solutions

Attitudes and behaviours of private sector landlords towards the energy efficiency of tenanted homes

The UK’s housing stock generates approximately 27 per cent of the country's total annual carbon emissions. In light of the legally binding targets to reduce carbon emissions, new housing is subject to a tightening of regulations governing energy demand and efficiency resulting in a gradual improvement in carbon emissions. The question is how to achieve the deep carbon emission reductions from existing domestic properties, of which 75 per cent will still be in use in 2050. Government has sought to provide incentives to homeowners to improve the energy efficiency of their households, and mandate improvements in socially rented housing using a range of fiscal measures, most recently the ‘Green Deal’. There has however been little consideration of the 18 per cent of UK households who privately rent their home, a tenure that is growing fast. The aim of this research is to investigate the factors that influence private sector landlords when considering energy efficiency improvements to their tenanted homes. The results indicate that Government policy has consistently failed to engage private sector landlords in the issue of energy efficiency and thus measures must be taken to understand the motivations of landlords in order to design effective incentives and interventions

NO ESCAPE FROM POLITICS FOUR TESTS FOR A SUCCESSFUL FISCAL INSTRUMENT IN THE EURO AREA. Bertelsmann Stiftung Policy Paper No. 220 26 March 2018

With his proposal for a euro area budget, Emmanuel Macron has put a common fiscal instrument back at the center of the euro area reform debate. The discussion about whether or not the euro area needs more fiscal integration may be older than the currency union itself, but there is good reason to believe that the coming months will be a critical juncture for European fiscal policy. This policy paper makes two contributions to the debate. We start out by arguing that a common fiscal instrument is desirable. We suggest that proponents and opponents of fiscal integration alike should take heed of the unprecedented role the European Central Bank (ECB) played in safeguarding the stability of the euro area and facilitating its recovery. In our view, the more ill-at-ease one feels with the scale of the ECB measures, the stronger the case for joint fiscal policy becomes. From this perspective, alleviating the excessive dependence on monetary policy is a key rationale for developing a common fiscal instrumen

Sustainability and Corporate Responsibility: A Comparison Between Greece and the UK

Over the last five years companies are increasingly looking towards corporate responsibility (CR) as a means of satisfying stakeholder demands and improving company environmental and social performance. The terminology for corporate responsibility is interchangeable with sustainability and can vary depending upon the country or region the company operates. Non-financial reporting of companies helps to provide an indicator of which direction companies are taking, but does not always specify whether a company is benefitting the wider community outside of shareholders and employees. Although a great wealth of information is included in these reports, it is often difficult to compare them and in some cases not substantiated by assurance of the data or claims in the reports. Leading companies, in particular multinational companies, are decentralising CR/Sustainability functions to national levels to pursue different national or regional priorities. With little formal regulation from the EU on CR, the field is mainly self-regulated. Sustainable development is regulated more clearly with a particular focus on environmental management. The main purpose of this paper is to investigate different approaches to sustainability and corporate responsibility between Greek and UK companies. A particular focus will be on how companies operating in both countries manage environmental and social issues as a multinational. The priorities of these companies will also be examined to see if there are national or regional trends and if EU enlargement provides any opportunities or threats in the corporate view.

Revisiting Sovereign Bankruptcy

Sovereign debt crises occur regularly and often violently. Yet there is no legally and politically recognized procedure for restructuring the debt of bankrupt sovereigns. Procedures of this type have been periodically debated, but so far been rejected, for two main reasons. First, countries have been reluctant to give up power to supranational rules or institutions, and creditors and debtors have felt that there were sufficient instruments for addressing debt crises at hoc. Second, fears that making debt easier to restructure would raise the costs and reduce the amounts of sovereign borrowing in many countries. This was perceived to be against the interests of both the providers of both creditors and major borrowers. This report argues that both the nature and our understanding of sovereign debt problems have changed, over the course of the last decade, in a direction that creates a much stronger case for an orderly sovereign bankruptcy regime today than ten years ago. Pre-crisis policy mistakes are now recognized to be a much more severe problem for borrowing countries than the costs or limited availability of private financing. Recent court rulings – particularly a recent U.S. ruling that gives holdout creditors that decline a restructuring offer the right to interfere with payments to the creditors that accept such an offer. This will complicate efforts to resolve future debt crises on an ad hoc basis. Finally, sovereign debt crises are no longer just a problem in emerging markets, but a core concern in advanced countries as well – particularly in the Euro area. If the Euro is to survive, this will require both better ways to resolve debt crises and stronger, market-based incentives that prevent debt problems from occurring in the first place. To address these problems, policy proposals are presented at two levels: for the Euro area, and globally. A Euro area sovereign debt restructuring regime could be developed by amending the Treaty establishing the European Stability Mechanism (ESM). This would both restrict the scope for lending to highly indebted countries without also restructuring their debts, and protect Euro area members receiving ESM financial assistance from legal action by holdout creditors. At the global level, a number of proposals are discussed, ranging from a coordinated introduction of aggregate collective action clauses that would allow a supermajority of bondholders across all bonds to amend bond payment terms to an amendment of the IMF articles that would limit the legal remedies of holdouts when a debt restructuring proposal has been accepted both by a majority of creditors and endorsed by the IMF

Efficient use of energy

World energy demand is projected to grow by more than 50% by 2030.[21] Improving energy efficiency is one of the most economical and short to medium term ways Scotland can reduce its dependence on fossil fuels and reduce its emissions of greenhouse gases. Transportation and buildings, which account for two thirds of energy usage [16], consume far more than they need to, but even though there are many affordable energy efficient technologies that can save consumers money, current utilisation is small. To overcome this, the government must adopt policies that invest in research and development programs that target energy efficiency. Incentives schemes if properly implemented can stimulate and encourage energy efficiency which is one of Scotland's great hidden energy opportunities. This paper outlines the position of the Institution of Engineers and Shipbuilders in Scotland and makes recommendations for the Scottish Government by two separate means of improving energy efficiency; reducing wastage and providing the same end need using less energy

The Euro Area Crisis Management Framework: Consequences and Institutional Follow-Ups

The current instruments in the EU to deal with debt and liquidity crises include among others the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). Both are temporary in nature (3 years). In terms of an efficient future crisis management framework one has to ask what follows after the EFSF and the EFSM expire in 3 years time. In this vein, this briefing paper addresses the question of the political and economic medium-to long-term consequences of the recent decisions. Moreover, we assess what needs to be done using this window of opportunity of the coming 3 years. Which institutions need to be formalized, into what format, in order to achieve a coherent whole structure? This briefing paper presents and evaluates alternatives as regards the on-going debate on establishing permanent instruments to support the stability of the euro. Among them are the enhancement of the effectiveness of the Stability and Growth Pact combined with the introduction of a "European semester" and a macroeconomic surveillance and crisis mechanism, fiscal limits hard-coded into each country's legislation in the form of automatic, binding and unchangeable rules and, as the preferred solution, the European Monetary Fund.EU governance, European Financial Stability Facility, European Financial Stabilisation Mechanism, European Monetary Fund, policy coordination, Stability and GrowthPact

The Euro Area Crisis Management Framework – Consequences and Institutional Follow-ups

The current instruments in the EU to deal with debt and liquidity crises include among others the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). Both are temporary in nature (3 years). In terms of an efficient future crisis management framework one has to ask what follows after the EFSF and the EFSM expire in 3 years time. In this vein, this briefing paper addresses the question of the political and economic medium- to long-term consequences of the recent decisions. Moreover, we assess what needs to be done using this window of opportunity of the coming 3 years. Which institutions need to be formalized, into what format, in order to achieve a coherent whole structure? This briefing paper presents and evaluates alternatives as regards the on-going debate on establishing permanent instruments to support the stability of the euro. Among them are the enhancement of the effectiveness of the Stability and Growth Pact combined with the introduction of a “European semester” and a macroeconomic surveillance and crisis mechanism, fiscal limits hard-coded into each country’s legislation in the form of automatic, binding and unchangeable rules and, as the preferred solution, the European Monetary Fund.EU governance; European Financial Stability Facility; European Financial Stabilisation Mechanism; European Monetary Fund; policy coordination; Stability and Growth Pact

Strategic policy advice: group-based processes as a tool to support policymaking

This deliverable is about the group discussions (STAVE trials) that have been carried out in the partner countries of project PACHELBEL on various substantive policy issues in the field of sustainability. It focuses on the methods that have been used to interact with lay citizens in the STAVE groups, and on the feedback that has been provided to policy makers on findings from the groups. Building upon these elaborations, conclusions will be drawn as to STAVE as a policy tool. Furthermore, this deliverable provides key features of STAVE groups on a country-by-country basis