The internal energy market is the cornerstone of European energy policy. Most consumers like it because it increases competition and eventually reduces their energy bills. Suppliers are partly released from their dependence on the whims of national politicians. Climate activists like it because it allows the renewable resources of an entire continent to be used. And energy security enthusiasts appreciate that internal rebalancing within the single market allows individual foreign supplies to be replaced if needed. The European Commission's energy market communication (to be) published on November 15 indicates that there are major obstacles blocking the implementation of the internal energy market by the political target date, 2014. The communication points frankly to numerous core issues: due to national renewable… Read more
Bruegel blog
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Internal energy market: The pieces of the puzzle do not fit
15th November 2012
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Blogs review: Empirical and theoretical multiplier uncertainty
12th November 2012
What’s at stake: A recent “box” in the first chapter of the WEO, co-authored by IMF Chief Economist Olivier Blanchard and his colleague Daniel Leigh, have reinvigorated the debate over whether austerity measures imposed on struggling eurozone countries has contributed to a deepening recession. On Wednesday, the European Commission responded with its own “box” pointing to the importance of distinguishing permanent from temporary fiscal adjustments. Contrary to what the battle of the boxes suggests, if there is multiplier uncertainty, it is very unlikely to come from the empirical front. Rather, it may come from recent challenges to previously accepted theoretical results. Read more
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Filling Europe’s bottomless pit
9th November 2012
After so many packages, the Greek parliament passed another round of austerity measures on Wednesday night. As reported by the Financial Times, the new measures include cuts of between 5 and 35 per cent in pensions and public sector salaries, tax increases on fuel and cigarettes, and higher charges for state healthcare. The retirement age will rise from 65 to 67 for recent entrants to the workforce. Yet this will not at all solve the budget gap, which may seem like a bottomless pit from the eyes of euro-area partners. Greece has been granted two financial assistance programmes by euro-area partners and the IMF (the first in May 2010 and the second in March 2012), totalling almost €240 billion. But… Read more
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Chart of the week: fiscal deficits in the euro area under the new forecast
8th November 2012
The 2012 Autumn Economic Forecast of the European Commission confirms the Spring Forecast expectation that several euro area countries, including France, will breach their commitment to return below a 3 percent deficit in 2013, unless they change their budget plans or the EU gives them more time to meet their commitment. However, most of these countries, including France, appear to be taking EU rules seriously as their structural balance figures have improved since the Spring Forecast. Read more
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A sunset clause for Europe's banking union
7th November 2012
Europe is determined to move ahead quickly with a banking union, after EU leaders gave it the green light at summits in June and October. Most of the discussion is focused on the supervisory mechanism while work on bank resolution is still in its infancy. A strong central supervisor will certainly be of great importance in overcoming the crisis around the euro. On 12 September, the European Commission published its proposal for the single supervisory mechanism, which would give the European Central Bank substantial supervisory powers. The October summit agreed to move ahead with the proposals and discussions now focus on how to improve the proposal. However, the proposal has shortcomings. These arise because of the Commission and EU Council… Read more
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Compétitivité : les trois débats
5th November 2012
Un seul suffirait au malheur du gouvernement. Mais sur la compétitivité, trois débats s’enchevêtrent : ils portent sur l’urgence d’une réponse ; sur la nature du mal ; et sur les solutions. Le premier est simple à trancher. En août 2012 le déficit extérieur cumulé sur un an était de 41 milliards ; en 2007 il était de 12 milliards; et en 2002, il s’agissait d’un excédent de 22 milliards. Il y a dix ans la France comptait 130.000 entreprises exportatrices et sa part dans les exportations de l’OCDE était de 8% Read more
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Tim Geithner and Europe’s phone number
4th November 2012
According to a famous (yet apocryphal) joke by Henry Kissinger, there is no telephone number to call to speak to Europe. Indeed the fragmentation of European power and representation makes it difficult to determine who can speak for the EU or the euro area. US Treasury Secretary Tim Geithner however has found out with whom to speak to discuss responses to the euro crisis. This, at least, is what his official schedule indicates: from January 2010 to June 2012, the last date for which his calendar is publicly available, he had no less than 168 meetings or phone calls with Euro-area officials, plus 114 with the IMF. And the person he spoke most often with, apart from the IMF chief, was the ECB president. Read more
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Blogs review: The economics and politics of migration in the economic crisis
2nd November 2012
What’s at stake: Rising unemployment in rich Western states fundamentally changes the context of migration. High unemployment among immigrants reduces the pull exerted by richer countries on potential immigrants, whilst economic hardships suffered by native citizens or perceptions of competition for scarce jobs between immigrants and natives can fuel anti-immigrant sentiments, leading to a tightening of immigration policies or even outright xenophobia. Read more
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Intellectual Property Rights and Antitrust – is there light at the end of the tunnel? Part 2
30th October 2012
Part 2/2 In my previous blog I wrote about the work of the European Union and United States competition authorities’ chief economists on a set of common principles that could improve standard-setting processes and limit ex-post abuse. To recap, the preliminary list circulated two weeks ago in the US contains four suggested principles (see Fiona Scott Morton’s, DOJ’s chief economist, slides): (1) commitments remain with IP regardless of owner; (2) well – specified procedure to lower cost of dispute resolution; (3) cash option; (4) well-specified process before an injunction/exclusion sought. Below are some first impressions on that list. Principle 1 makes lot of economic sense. Imagine a licensor could commit to FRAND and then sell a FRAND-free patent to another… Read more
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The Great Austerity Debate
30th October 2012
Is it time for fiscal consolidation or stimulus? Should governments cut or increase spending? Once again the issue is a matter of dispute among policy-makers and economists in Europe and the United States. Citizens, having been told in 2008-09 that the imperative was to stimulate the economy, and in 2010-2011 that the time had come for retrenchment, are understandably confused. Should priorities once again be reversed? Read more