Financial-Transaction Tax: Small is Beautiful
Policy Contribution, 8 February 2010
Based on their contribution to the European Parliament Economic and Monetary Affairs Committee, in this Policy Contribution Resident Fellows Zsolt Darvas and Jakob von Weizsäcker discuss the merits of the much-discussed financial-transaction tax. They argue that the case for taxing financial transactions for the sake of not raising revenue is relatively weak, but a financial-transaction tax could be useful in limiting socially-undesirable transactions. On this basis, they say, a very small, coordinated tax on financial transactions could be implemented successfully. [download it]
Memo to the New Commissioner for Energy
Policy Contribution, 30 December 2009
In this supplement to Bruegel's Memos to the European Commission, Resident Fellow Georg Zachmann analyses the recent developments in European energy policy and looks at the upcoming challenges in the area, making a number of recommendations to the newly-appointed Energy Commissioner. Zachmann notes that while liberalising energy markets and combating climate change will remain top priorities in the next term of office, securing energy supplies and energy price issues might temporarily lose some appeal due to the crisis-induced dip in the demand for energy. He claims that mitigating climate change, directing investments towards network infrastructure and creating a single energy market should be the three interlinked priorities for the Energy Commissioner. [Download it]
Think Global Act European II
The contribution of 14 European think tanks to the Spanish, Belgium and Hungarian Trio Presidency of the European Union
Publication Launch, 4 March 2010
On 4 March Notre Europe launched the second edition of Think Global Act European. This issue, dedicated to the Spanish, Belgian and Hungarian Trio Presidency, compiles analysis and recommendations from 14 different think tanks on the different issues concerning the changing role of the rotating presidency and the trio themselves. Bruegel has contributed with three papers: the first one by Bruegel Director Jean Pisani-Ferry on Internal and external challenges for the EU -coauthored by András Inotai, Director of the Institute for World Economics of the Hungarian Academy of Sciences / GKI-; and the other two by Senior Fellow Bruno van Pottelsberghe on The governance of the European patent system, and Research Fellow Jakob von Weizsäcker on Greening the Stimulus Debt. [Read More]
Memo to the New Digital Agenda Commissioner
Policy Contribution, 25 January 2010
Senior Resident Fellows Reinhilde Veugelers and Bruno van Pottelsberghe provide recommendations for the term of new Digital Agenda Commissioner Neelie Kroes in this supplement to Bruegel's Memos to the New Commission: Europe's Economic Priorities 2010-2015. They argue that Kroes should move past a focus on infrastructure and concentrate more on ICT's potential to contribute to growth in the European Union. This should include a focus on emerging ICT products and services to help foster an ICT single market and more public support for R&D and innovation, through tailored programmes designed to aid high-risk innovative projects conceived by new ICT companies. [Download it]
The EU’s Role in Supporting Crisis-Hit Countries in Central and Eastern Europe
Policy Contribution, 31 December 2009
The crisis has hit central and eastern European countries harder than other regions of the world. In this Policy Contribution, Resident Fellow Zsolt Darvas looks at the role of the EU and its institutions in supporting crisis-hit CEE countries, the stabilising effects of the EU’s coordinated multilateral financial assistance, and the commitment shown by Western European banks to the region. However, Darvas argues that there were certain actions, or lack thereof, coming from EU institutions and governments, that have amplified the effects of the crisis on CEE countries. The European Central Bank has given little direct support to non-euro-area countries, and the EU has done little for EU neighbourhood countries. Meanwhile, euro-area membership has shielded from the crisis some countries with worse fundamentals than many CEE countries. [Download it]
Monetary Policy on the Way Out of the Crisis
Policy Contribution, 17 December 2009
Senior Non-Resident Fellow Jürgen von Hagen recommends the proper steps for European monetary policy in order to lead the eurozone out of the crisis. He argues that the tentative recovery in the euro area indicates that both monetary and fiscal policy can be normalised soon. However, because delaying fiscal consolidation would result in greater debt burdens whereas monetary policy can be quickly adjusted to respond to unforeseen developments, there is less risk involved if a fiscal exit comes first. In any case, the two strategies must be coordinated and the European Central Bank must be very clear on its interest rate policies. This paper was prepared as part of testimony for the European Parliament Economic and Monetary Affairs Committee's Monetary Dialogue with ECB President Jean-Claude Trichet. [download it]
Bruegel in the media
Financial Regulation: A New Fortress Europe?
Op-Ed, February 2010
EU policy leaders are becoming increasingly aware that the necessary re-regulation of Europe’s financial system must not be allowed to lead to a damaging fragmentation of its internal market for financial services. However, they still seem oblivious of the risk of global financial fragmentation inherent in some of their regulatory initiatives, however well-intended. In his monthly column, Senior Fellow Nicolas Véron takes a brief look at the difficult and complex corresponding trade-offs. This op-ed was published in the Turkish weekly Referans.
Businesses shouldn't pay for banks' difficulties
Op-Ed, Il Corriere della Sera, 18 February 2010
In this column, Visiting Scholar Ignazio Angeloni argues that the exit phase from the financial crisis will prove particularly dangerous for European small and medium sized enterprises. Many of them, though viable in the long run, are endangered by a prolonged negative cash flow, tight lending by banks and shifting patterns of international demand and competitiveness. Public intervention (eg. through credit guarantees) to temporarily protect SMEs is justified in these circumstances. [Download it]
'Volcker remedy' may not be enough
Op-Ed, Il Corriere della Sera, 15 February 2010
In this column published in the Italian Il Corriere della Sera, Visiting Scholar Ignazio Angeloni argues that the
'Volcker rule'(the recent proposal by the US administration to ban proprietary trading for comercial banks) is neither necessary nor sufficient to reduce systemic risks in the financial sector. Risks in recent years have mainly come from non-bank intermediaries (hedge funds like LTCM, investment banks, insurance companies). Pridential regulation should be as uniform as possible across types of intermediaries and jurisdictions. [Download it]
Wirtschaftsregierung, user manual
Op-Ed, Handlesblatt, 25 February 2010
In this column Bruegel Director Jean Pisani-Ferry writes about European economic governance. Pisani-Ferry points out that the Greek crisis has highlighted the need to reinforce prevention and monitoring systems as well as to develop effective crisis management mechanisms. He concedes that the creation of the Euro had some mistakes, which were probably inevitable; however he emphasizes the need to learn from experience and to start proposing feasible solutions in the current European frame. This article was also published in the French newspaper Le Monde and the Chinese Century Weekly.
The Best Course for Greece is to Call in the Fund
Op-ed, The Financial Times, 2 February 2010
Director Jean Pisani-Ferry and Senior Fellow André Sapir argue that the best option to solve the 'Greek crisis' is to bring in the IMF for a stand-by agreement involving conditional lending to the Greek government. While the EU is hesitant to bring in the IMF, Pisani-Ferry and Sapir maintain that the IMF is better suited to handle the political problems that would accompany such a bailout. This op-ed was published in The Financial Times (2 Feb) and NRC Handelsblad (3 Feb). [download it]
Retraites: réformer une bonne fois pour toutes
Op-ed, Le Monde, 1 February 2010
In French daily Le Monde, Director Jean Pisani-Ferry takes a look at the issue of retirement system reform in France in light of President Nicolas Sarkozy's proposed plans. Pisani-Ferry argues that reforming the retirement system is necessary to tackle rising public deficits and has the added advantage of not burdening current consumption. [download it]
Recent Bruegel Publications
The Crisis: Policy Lessons and Policy Challenges
Working Paper, 2 December 2009
Bruegel Director Jean Pisani-Ferry, with Agnès Bénassy-Quéré (CEPII, University Paris-Ouest and Ecole Polytechnique, Paris), Benoît 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 several macroeconomic and financial-sector issues. [download it]
No Green Growth Without Innovation
Policy Brief, 23 November 2009
This Policy Brief, co-written by Senior Non-Resident Fellow Philippe Aghion, Senior Resident Fellow Reinhilde Veugelers and David Hemous of Harvard University, attempts to change the terms of the debate surrounding climate change policy. The authors argue that policymakers should do more to encourage innovation and investment in ‘green’ research and development rather than focusing solely on the setting of a carbon price. Using a model developed by Aghion in a previous paper, they argue that a carbon price would have to be about 15 times higher in the first five years and 12 times higher in the next five years if innovation is not properly subsidised by governments. The authors also provide several policy recommendations for incentivising this type of ‘green growth’ in the private sector. [download it]
Memos to the New Commission
Book, 27 August 2009
As the new team of European Commissioners begin their new term, interested parties can look to these Memos, written by Bruegel scholars and edited by Senior Resident Fellow André Sapir, for a to-do list for the next Commission. The new Commission will enter office at a challenging time for Europe, the EU and the Commission itself, and the crisis has clearly exposed weaknesses in EU governance that need to be addressed. The memos make a number of concrete recommendations of relevance for major economic fields, as well as for the EU and Commission as a whole. [download it]
A video of Sapir's introduction to the Memos' launch is now available online.
The first memo, addressed to the Commission President, has also been translated into French, Spanish, German and Polish.