510 research outputs found

    How has the macroeconomic imbalances procedure worked in practice to improve the resilience of the euro area? March 24 2020

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    This paper shows how the Macroeconomic Imbalances Procedure (MIP) could be streamlined and its underlying conceptual framework clarified. Implementation of the country-specific recommendations is low; their internal consistency is sometimes missing; despite past reforms, the MIP remains largely a countryby-country approach running the risk of aggravating the deflationary bias in the euro area. We recommend to streamline the scoreboard around a few meaningful indicators, involve national macro-prudential and productivity councils, better connect the various recommendations, simplify the language and further involve the Commission into national policy discussions. This document was prepared for the Economic Governance Support Unit at the request of the ECON Committee

    "The Euro’s Surprises"

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    On 22 September last, the ECB and the Fed intervened to support the euro, which had fallen to $0.84. Two years previously, most economists had guessed that the euro would be a strong currency. They were optimistic about the outlook for growth in Europe and worried over the prospects of America’s trade deficit. Accordingly, they felt that the euro would provide an attractive alternative investment to the dollar. In practice, the strength of the American economy, fired by the New Economy, has attracted record investments across the Atlantic. Trends in the real economy continue to play a vital role in setting exchange rates. The capacity of the euro-zone to enter this “New Era” will largely determine the future parity of the single currency. In the short term, better predictability of European policy would help to reduce uncertainties that currently penalise the currency

    The G20 in the aftermath of the crisis: a Euro-Asian view

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    In 2009 the global economy switched from recession to recovery. However, the pace of the recovery has been very different in different parts of the world, with the divergence between emerging and mature economies becoming greater than expected. Europe and emerging Asia are in this respect in clearly opposite situations, while the Japanese situation is closer to that of Europe than to those of its neighbours (Figure 1 on the next page).

    What international monetary system for a fast-changing world economy

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    Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the euro and the renminbi as its key likely pillars. This shift corresponds to the long-term evolution of the balance of economic weight in the world economy. Such an evolution may mitigate some of the flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balance of-payments adjustments or what remains of the Triffin dilemma. However it may exacerbate other problems, such as short-run exchange rate volatility or the scope for Ăą??currency warsĂą??, while leaving key questions unresolved, such as the response to capital flows global liquidity provision. Hence, in itself, a multipolar regime can be both the best and the worst of all regimes.Which of these alternatives will materialise depends on the degree of cooperation within a multilateral framework.

    The G20 is not just a G7 with extra chairs

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    The G20 is not just a G7 with Extra Chairs is a joint paper written by Agnes Benassy-Quere, Rajiv Kumar and Jean Pisani-Ferry (Director of Bruegel) following the International Cooperation in Times of Global Crisis: Views from G20 Countries conference in Delhi  on 14th and 15th of September, organised by Bruegel, CEPII and ICRIER. The publication draws together the authorsù?? conclusions from the Delhi conference and reviews the real role of the G20, while questioning where the non-G7 interests fit into the groupù??s agenda.

    Comment définir les "circonstances exceptionnelles" ?

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    Dans sa version initiale, le Pacte de Stabilité et de Croissance (PSC) fixe à 3% le déficit public maximumpour chacun des pays membres de la zone euro. Toutefois, afin d'éviter de subir les procéduresde déficit public excessif, les pays peuvent éventuellement se prévaloir de "circonstances exceptionnelles".Celles-ci sont parfaitement codifiées : avec une récession supérieure à 2%, un pays peut lesinvoquer et donc s'affranchir de la limite de 3% de déficit public. Avec une récession comprise entre0,75 et 2%, des négociations sont engagées pour le déclenchement éventuel des sanctions

    Reform of the international monetary system: Some concrete steps

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    Reform of the international monetary system is under discussion after three decades of apathy. Tectonic shifts in the balance of international power have made reform more urgent. However, in the short term, there is little chance of a grand redesign of the international monetary system. Nevertheless, concrete steps should be taken. First, consensus is needed on exchange rates, capital flows and reserves. Second, financial safety nets must be improved so that countries do not have to self-insure by accumulating  reserves or rely on possible bilateral swap lines to access liquidity. Third, a change in the composition of the Special Drawing Right should be planned for, to strengthen the multilateral framework. The most workable short-term deliverables seem to be (i) guidelines on and surveillance of capital controls; (ii) a new regime for deciding on SDR allocations that would facilitate more frequent use of this instrument; and (iii) the inclusion of the renmimbi in the SDR basket. These reforms would be a partial move, preparing the ground for further developments.

    Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU countries

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    International audienceWe provide a first attempt to include off-balance sheet, implicit insurance to SIFIs into a consistent assessment of fiscal sustainability, for 27 countries of the European Union. We first calculate tax gaps Ă  la Blanchard (1990) and Blanchard et al. (1990). We then introduce two alternative measures of implicit off-balance sheet liabilities related to the risk of a systemic bank crisis. The first one relies on microeconomic data at the bank level. The second one is based on econometric estimations of the probability and the cost of a systemic banking crisis. The former approach provides an upper evaluation of the fiscal cost of systemic banking crises, whereas the latter one provides a lower one. Hence we believe that the combined use of these two methodologies helps to gauge the range of fiscal risk

    Comment définir les "circonstances exceptionnelles" ?

    Get PDF
    Dans sa version initiale, le Pacte de Stabilité et de Croissance (PSC) fixe à 3% le déficit public maximumpour chacun des pays membres de la zone euro. Toutefois, afin d'éviter de subir les procéduresde déficit public excessif, les pays peuvent éventuellement se prévaloir de "circonstances exceptionnelles".Celles-ci sont parfaitement codifiées : avec une récession supérieure à 2%, un pays peut lesinvoquer et donc s'affranchir de la limite de 3% de déficit public. Avec une récession comprise entre0,75 et 2%, des négociations sont engagées pour le déclenchement éventuel des sanctions.définition ; circonstances exceptionnelles; Pacte de Stabilité et de Croissance

    The Crisis: Policy Lessons and Policy Challenges

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    Bruegel Director Jean Pisani-Ferry, with AgnÚs Bénassy-Quéré (CEPII, University Paris-Ouest and Ecole Polytechnique, Paris), Benoßt Coeuré (Ecole Polytechnique, Paris) and Pierre Jacquet (ENPC, Paris, and Agence Française de Développement) provide an in-depth analysis of the financial crisis. The authors review the main causes of the crisis, pointing to three different, non-mutually exclusive lines of explanation: wrong incentives in the financial sector, unsustainable macroeconomic outcomes, and misunderstood and mismanaged systemic complexity. They also discuss supervisory and regulatory reform going forward, including an examination of the issues of moral hazard, the separation of retail and investment banking, the desirable size of financial institutions, risk management, the role of central banks, and other issues. This working paper was previously published as CEPII (Centre d'études prospectives et d'informations internationales) working document 2009-28.
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