How product market reforms lubricate shock adjustment in the euro area

The essay sets out what product market reforms are, as well as the main measurement issues, followed by an analysis of how such reforms lubricate adjustment processes in EMU, in particular via the “competitiveness channelâ€. Attention is paid to the short-run and longer-run aspects of adjustments to shocks and the scant empirical evidence on the role of product markets in adjustment is discussed.  The essay investigates empirically the need for product market reforms in the euro area, based on the KLEMS data set. Two questions are addressed: how likely is it for euro area countries to experience an asymmetric shock, and what empirical evidence can we deduce about eurozone countries' capacities to adjust to asymmetric shocks? The approach is disaggregated and highlights (especially services) sectors with relatively greater adjustment problems.  The record of product market reforms of the euro area countries is briefly summarized. The paper shows that substantial reforms have been undertaken, yet, there is considerable evidence that the eurozone, and in particular with respect to services, could significantly intensify product market reforms and thereby augment the net benefits of having a single currency. Subsequently, product market reforms are placed in the context of wider reforms efforts (complementarities e.g. with labour and financial markets) as well as in the two-tier institutional structure of the euro area and the EU at large (given cross-border spillovers and the case for coordination). Designing reforms in this euro area context is briefly discussed. A final section with five “policy messages†concludes the essay.adjustment, product market reforms, asymmetric shocks, Pelkmans, Acedo Montoya, Maravalle

Regional Business Cycle Synchronization in Europe? Bruges European Economic Research (BEER) Papers 11/June 2007

We analyse regional business cycle synchronization in the Euro Area, using Gross Value Added in 53 NUTS 1 regions for a period of thirty years (1975-2005), detrended by Hodrick-Prescott and the Christiano-Fitzgerald filters. We conclude that, on average, synchronization has increased for the period considered with exceptions during the eighties and the beginning of the nineties. Still, the correlation of the business cycle in some regions with the benchmark remained low or even decreased. Our findings also support the hypothesis of the existence of a ‘national border’ effect

Policy-Making in the EU: Achievements, Challenges and Proposals for Reform. CEPS Paperbacks. June 2009

This report is the product of a joint project initiated by the Centre for European Policy Studies and the Swedish Confederation of Enterprise. Three expert groups of academics, policy-makers, business representatives and other stakeholders were formed to analyse the major issues and challenges facing the European Union today and to put forward recommendations for reform that can realistically be implemented in the short and medium term. The expert groups focused on EU Decision-Making, Better Regulation and Implementation & Subsidiarity