A Primer on Public Investment in Europe, Old and New

We take stock of what is known about public investment in the member states of the European Union, old and new alike. The interesting features about the long-term evolution of public investment have been its downtrend in old EU member states, bar the cohesion countries, and its volatility in new member states. The downtrend in the old member states cannot be traced back to EMU's fiscal rules per se, nor can it be explained by the emergence of innovative financing mechanisms for infrastructure, such as public-private partnerships. Rather, it is the result of drawn-out episodes of fiscal adjustment and consolidation, necessitated by long periods of unsustainable fiscal policies and deterioration of governments' net worth. We also examine the composition of public investment and conclude that only half of it comprises infrastructure investment in EU-15 and in EU-8, with a slightly higher share in the cohesion countries. The share of infrastructure investment, especially in traditional transport and other communications infrastructure, is in EU-8 somewhat higher than in old EU member states, but below the level in the cohesion countries. All this suggests for the new member states that the on-going build-up of their public capital stocks, especially infrastructure capital, requires the safeguarding of sufficient fiscal space to accommodate adequate public investment.Public investment; European Union; Fiscal rules; public-private partnership

FISCAL RULES AND PUBLIC INVESTMENT

This paper examines the link between fiscal rules and public investment both normatively and empirically. We first review the arguments for and against including public investment spending in a fiscal deficit rule. We then seek to assess the determinants of public investment, with a special focus on the role of the fiscal rules embodied in EMU. We conclude that there are practical difficulties precluding the introduction of a "golden rule" and that there is virtually no evidence that EMU would have affected public investment. Therefore, the focus on safeguarding the level of public investment is somewhat misplaced; instead, one should focus on safeguarding its productivity.Fiscal rules; public investment; fiscal deficit; European Monetary Union

THE EURO AND CAPITAL MARKETS: A NEW ERA

This paper is organised as follows. Section 2 examines the forces that have changed the financial landscape at the world level over the last two decades. Section 3 summarises the arguments of how the introduction of the euro should add to these broader economic forces in reshaping euro financial markets. Section 4 verifies whether the actual experience since January 1999 has been in line with the ex ante expectations. Most of the analysis will be based on developments of the bond market. Section 5 offers some conclusions.Euro; capital markets; bonds

Exchange rate uncertainty and foreign trade

Digitised version produced by the EUI Library and made available online in 2020

The transformation of finance in Europe:introduction and overview

This paper introduces the topic of Europe's changing financial landscape and highlights the findings of the contributions to this volume of the EIB Papers. Key points emerging from this overview include: (i) a variety of factors are reshaping Europe's finance, notably the Single Market, EMU, demographic trends, increasing wealth, technological progress, and financial innovation; (ii) further integrating Europe's financial systems, across borders and segments, should significantly increase economic welfare; (iii) although the functions that financial systems perform are being reallocated - implying a move towards the Anglo-Saxon paradigm - banks will remain important and should maintain their comparative advantage in financing small and medium-sized enterprises; (iv)the economic case in favour of a move towards funded pension systems - which would boost capital markets - is not as compelling as often assumed.Single Market; EMU; demographic trends; banks; SMEs; Capital Markets; financial innovation

Mapping the human genetic architecture of COVID-19

The genetic make-up of an individual contributes to the susceptibility and response to viral infection. Although environmental, clinical and social factors have a role in the chance of exposure to SARS-CoV-2 and the severity of COVID-191,2, host genetics may also be important. Identifying host-specific genetic factors may reveal biological mechanisms of therapeutic relevance and clarify causal relationships of modifiable environmental risk factors for SARS-CoV-2 infection and outcomes. We formed a global network of researchers to investigate the role of human genetics in SARS-CoV-2 infection and COVID-19 severity. Here we describe the results of three genome-wide association meta-analyses that consist of up to 49,562 patients with COVID-19 from 46 studies across 19 countries. We report 13 genome-wide significant loci that are associated with SARS-CoV-2 infection or severe manifestations of COVID-19. Several of these loci correspond to previously documented associations to lung or autoimmune and inflammatory diseases3–7. They also represent potentially actionable mechanisms in response to infection. Mendelian randomization analyses support a causal role for smoking and body-mass index for severe COVID-19 although not for type II diabetes. The identification of novel host genetic factors associated with COVID-19 was made possible by the community of human genetics researchers coming together to prioritize the sharing of data, results, resources and analytical frameworks. This working model of international collaboration underscores what is possible for future genetic discoveries in emerging pandemics, or indeed for any complex human disease