In sickness and in health: protecting and supporting public investment in Europe. Bruegel Policy Contribution 2014/02, February 2014

The long-term decline in gross public investment in European Union countries mirrors the trend in other advanced economies, but recent developments have been different: public investment has increased elsewhere, but in the EU it has declined and even collapsed in the most vulnerable countries, exaggerating the output fall. The provisions in the EU fiscal framework to support public investment are very weak.The recently inserted ‘investment clause’ is almost no help. In the short term, exclusion of national co-funding of EU-supported investments from the fiscal indicators considered in the Stability and Growth Pact would be sensible. In the medium term, the EU fiscal framework should be extended with an asymmetric ‘golden rule’ to further protect public investment in bad times, while limiting adverse incentives in good times. During a downturn, a European investment programme is needed and the European Semester should encourage greater investment by member states with healthy public finances and low public investment rates. Reform and harmonisation of budgeting, accounting, transparency and project assessment is also needed to improve the quality of public investment

In sickness and in health: Protecting and supporting public investment in Europe

The long-term decline in gross public investment in European Union countries mirrors the trend in other advanced economies, but recent developments have been different: public investment has increased elsewhere, but in the EU it has declined and even collapsed in the most vulnerable countries, exaggerating the output fall. The provisions in the EU fiscal framework to support public investment are very weak.The recently inserted 'investment clause' is almost no help. In the short term, exclusion of national co-funding of EU-supported investments from the fiscal indicators considered in the Stability and Growth Pact would be sensible. In the medium term, the EU fiscal framework should be extended with an asymmetric 'golden rule' to further protect public investment in bad times, while limiting adverse incentives in good times. During a downturn, a European investment programme is needed and the European Semester should encourage greater investment by member states with healthy public finances and low public investment rates. Reform and harmonisation of budgeting, accounting, transparency and project assessment is also needed to improve the quality of public investment

Dual interest rates and the transmission of monetary policy

The recent experience in the euro area with dual interest rates, that is, central bank funding at rates below the level at which central bank reserves are remunerated, showed that such a tool can constitute a new form of monetary accommodation. On top of supporting bank credit, central bank funding with dual interest rates enables an easing of bank lending conditions without the increased risk appetite that a standard rate cut might bring about, especially if considered after a prolonged period of low or negative interest rates

Stabilization of Hubbard-Thouless pumps through nonlocal fermionic repulsion

Thouless pumping represents a powerful concept to probe quantized topological invariants in quantum systems. We explore this mechanism in a generalized Rice-Mele Fermi-Hubbard model characterized by the presence of competing onsite and intersite interactions. Contrary to recent experimental and theoretical results, showing a breakdown of quantized pumping induced by the onsite repulsion, we prove that sufficiently large intersite interactions allow for an interaction-induced recovery of Thouless pumps. Our analysis further reveals that the occurrence of stable topological transport at large interactions is connected to the presence of a spontaneous bond-order-wave in the ground-state phase diagram of the model. Finally, we discuss a concrete experimental setup based on ultracold magnetic atoms in an optical lattice to realize the newly introduced Thouless pump. Our results provide a new mechanism to stabilize Thouless pumps in interacting quantum systems.Comment: 6.5 pages, 4 figures. Comments are welcom

Revealing the topological nature of the bond order wave in a strongly correlated quantum system

8openJulià-Farré, Sergi; González-Cuadra, Daniel; Patscheider, Alexander; Mark, Manfred J.; Ferlaino, Francesca; Lewenstein, Maciej; Barbiero, Luca; Dauphin, AlexandreJulià-Farré, Sergi; González-Cuadra, Daniel; Patscheider, Alexander; Mark, Manfred J.; Ferlaino, Francesca; Lewenstein, Maciej; Barbiero, Luca; Dauphin, Alexandr

Manufacturing Europe's Future. Bruegel Blueprint 21, 2 October 2013

‘Industrial policy is back!’ This is the message given in the European Commission’s October 2012 communication on industrial policy (COM (2012) 582 final), which seeks to reverse the declining role of the manufacturing industry, and increase its share of European Union GDP from about 16 percent currently to above 20 percent. Historical evidence suggests that the goal is unlikely to be achieved. Manufacturing’s share of GDP has decreased around the world over the last 30 years. Paradoxically, this relative decline has been a reflection of manufacturing’s strength. Higher productivity growth in manufacturing than in the economy overall resulted in relative decline. A strategy to reverse this trend and move to an industrial share of above 20 percent might therefore risk undermining the original strength of industry – higher productivity growth. This Blueprint therefore takes a different approach. It starts by looking in depth into the manufacturing sector and how it is developing. It emphasises the extent to which European industry has become integrated with other parts of the economy, in particular with the increasingly specialised services sector, and how both sectors depend on each other. It convincingly argues that industrial activity is increasingly spread through global value chains. As a result, employment in the sector has increasingly become highly skilled, while those parts of production for which high skill levels are not needed have been shifted to regions with lower labour costs

Enteral versus intravenous approach for the sedation of critically ill patients: a randomized and controlled trial

Background. ICU patients must be kept conscious, calm, and cooperative even during the critical phases of illness. Enteral administration of sedative drugs might avoid oversedation, and would be as adequate as intravenous for awake patients, with fewer side effects and lower costs. This study compares two sedation strategies, in order to early reach and maintain the light sedation target. Methods. Multicenter, single-blind randomized and controlled trial carried out in 12 Italian ICUs, involving patients with expected mechanical ventilation duration >72 hours at ICU admission and predicted mortality >12% (Simplified Acute Physiology Score II >32 points) during the first 24 ICU hours. Patients were randomly assigned to receive intravenous (midazolam, propofol) or enteral (hydroxyzine, lorazepam, and melatonin) sedation. Primary outcome: percentage of work shifts with an observed Richmond Agitation-Sedation Scale (RASS) = target RASS \ub1 1. Secondary outcomes: protocol feasibility, delirium- and coma-free days, costs of drugs, length of ICU and hospital stay, ICU, hospital, and one-year mortality. Results. 348 patients were enrolled. There were no differences in the primary outcome: enteral 89.8 [74.1-100], intravenous 94.4 [78-100]%, p=0.20. Enteral-treated patients had more protocol violations: 81 (46.6%) vs 7 (4.2%), p<0.01, more self-extubations: 4 (2.4%) vs 14 (8.1%), p=0.03, a lighter sedative target (RASS = 0): 93 [71-100] vs 83 [61-100]%, p<0.01, and lower total costs for drugs: 2.39 [0.75- 9.78] vs 4.15 [1.20 -20.19] \u20ac/day with mechanical ventilation (p=0.01). Conclusions. Although enteral sedation of critically ill patients is cheaper and permits a lighter sedation target, it is not superior to intravenous sedation for reaching the RASS target. Trial registration. ClinicalTrials.gov, Clinical Trial #NCT01360346, registered 25 March 2011, https://clinicaltrials.gov/ct2/show/NCT01360346. Registered on 25 March 2011

Debt overhang and investment efficiency

Using a pan-European data set of 8.5 million firms, this paper finds that firms with high debt overhang invest relatively more than otherwise similar firms if they are operating in sectors facing good global growth opportunities. At the same time, the positive impact of a marginal increase in debt on investment efficiency disappears if firm debt is already excessive, if it is dominated by short maturities, and during systemic banking crises. The results are consistent with theories of the disciplining role of debt, as well as with models highlighting the negative link between agency problems at firms and banks and investment efficiency