What’s at stake: On 22 January 2003, the idea of setting up what would become Bruegel had been given a strong impetus by the Chirac-Schröder declaration issued on the occasion of the 40th anniversary of the Elysée Treaty. Ten years after that first impulse, Bruegel has been ranked as 1st think-tank in Western Europe, 2nd outside the US, and 1st worldwide in International Economic Policy in the 2012 Global Go To Think Tanks Report. In the spirit of the Stability and Growth Pact, we decided to grant an exception the rules governing our blogs review and survey some of our very own publications for those of you (especially in the blogosphere since we were pretty late at joining the dance) who may have missed these. Read more
Bruegel blog
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Blogs review: A bird’s eye view on Bruegel’s research in the crisis
25th January 2013
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Some light in the fog
20th June 2012
The good news is that the G20 summit seems to have been more forceful in addressing the impending risks to the international economy than last minute expectations implied. A dubitative form is necessary, however, because the signs from Los Cabos are uncertain and partly contradictory and also because a lot will depend on follow-ups. The central message in the final statement, “Euro Area members of the G20 will take all necessary policy measures to safeguard the integrity and stability of the area” would in itself be quite significant if it could be taken literally. Good part of the summit and a host of meetings and contacts on the side were centred on Europe’s contingencies and how to deal with them.… Read more
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The G20 should rise to the challenge (but probably won’t)
12th June 2012
Everybody knows the euro area is at a critical juncture. A financial reform program is being prepared and should be on the table of the European Council on June 28-29. If things go well (read: if financial markets are reassured that Europe will eventually sort out its financial mess) this should not only redefine the institutional landscape of the zone for many years, but also lift some of the uncertainty overshadowing the global economy. Not by coincidence, President Obama has issued urgent calls for action to Europeans leaders, followed shortly after by the British Chancellor of the Exchequer and by the IMF Managing Director. The decision by Spain to seek EU financial assistance increases the urgency of reform, because it… Read more
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G20: Decreasing returns
16th May 2012
Macroeconomic coordination, the hallmark of the first few G20 summits, went through three successive phases. The first phase, from Washington to Pittsburgh, focused on stimulating the global economy across the board. The second phase, from Toronto to Cannes, shifted towards a more complex set of objectives, with the aim of avoiding a resurgence of global imbalances. The third phase, from Cannes onwards, put the focus on the European crisis. The initial achievement was major. But the story is one of diminishing returns. The effectiveness of the G20 in macroeconomic coordination declined from one phase to the next. Read more
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Can the G20 save globalisation?
3rd April 2012
The current of wave of globalisation that started at the end of the twentieth century has a lot in common with the previous wave that began one century earlier. The same factors are behind both: technological change and political decisions to open up markets for freer trade and capital movements. Likewise both created huge economic opportunities and wealth, but also huge economic and political tensions within and across countries. Domestic tensions arise because not everyone in a country is able to take advantage of the opportunities created by globalisation and some clearly lose out from technological change or freer trade. International tensions result from an unequal distribution of the gains and pains from globalisation across nations. During the first wave… Read more
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Reflections after the G20 meeting in Mexico
29th February 2012
In diplomatic language there is a difference between saying “event B cannot happen because condition A is not fulfilled” and saying “event B will happen if – or even as soon as – condition A is fulfilled”. This distinction helps understand what happened last weekend in the G20 ministerial meeting in Mexico City. A few hours ahead of the meeting, an agreement on a replenishment of IMF resources of the size asked by Managing Director Christine Lagarde (a “global firewall”), was a non-starter. The US, followed by almost everybody not located between the Atlantic and the Urals, opposed the move arguing that Europe should mobilize its resources first – in the implicit assumption that new IMF money would be used,… Read more
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The turn of emerging countries
24th February 2012
The distinguishing trait of the G20 is the inclusion of the emerging economies (EME) alongside with the advanced ones. The main industrial countries have long had their proprietary policy forum: the G7. On the contrary, until the launch of the G20 summit in November 2008, the group of EME, that together with the developing bloc represent 85 percent of the people on earth and produce half of global output (a share that is rising quickly), did not enjoy this privilege. True, they are members of the IMF and the World Bank; but their influence on 19th Street still does not match their actual economic weight, let alone the prospective one. Their presence is substantial in the development banks; but these… Read more
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Exchange rates and global rebalancing
5th November 2011
Since the beginning of the fall, the Framework for Strong, Sustainable and Balanced Growth launched at the G20 meeting of Pittsburgh one year ago seems to have degenerated into a “currency war” whereby each country would like to enjoy a weak currency.The logic of the Pittsburgh framework was to engineer a rebalancing of world demand from the public to the private sector, and from deficit to surplus countries. Consistently, domestic demand would be boosted in countries like China, Germany or oil-exporting countries, whereas it would grow more slowly in the United States or the United Kingdom. An agnostic view was initially taken on exchange rates, since the aim was that of rebalancing, not of exchange-rate coordination.True, the rebalancing of the… Read more
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The G20 is urgently needed
2nd November 2011
In August, as the euro crisis worsened and its focus shifted on Spain and Italy, the G20 issued a statement committing to take “all necessary initiatives in a coordinated way to … ensure financial stability and liquidity in financial markets”. Since then, two things have happened. First, sovereign risks have increased, lacking decisive action by some governments and a convincing European response. Second, such response in the end came about, on October 26, in the form of a convoluted but substantive agreement by the euro Summit on all three crucial fronts – Greece, banks and the rescue fund. Can the G20 leaders convening in Cannes assume that those globally coordinated initiatives have become unnecessary? Hardly. Not only because many details… Read more
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The European Summit and its aftermath
28th October 2011
What’s at stake: European policymakers eventually came to an agreement at 4am on Thursday after 11 hours of talk. The package consists of three related parts: (i) reducing Greece’s debt to a sustainable level by a voluntary agreement with private creditors to accept the loss of half the value of the bonds; (ii) recapitalizing Europe’s banks to the tune of €106 billion; and (iii) creating a larger firewall to prevent the spread of panic with a leverage of the EFSF. There has therefore been an agreement on all the sticking points but it could be weeks before the details that underpin the entire package are finally ironed out. Many hope that a significant amount of details will to be filled… Read more