When he presents the forecasts on Friday, should Olli Rehn, the commission’s vice-president, coerce governments in France and other countries into further adjustment to ensure they meet their 2013 deficit targets? Or should he give them more time? It is a difficult balancing act. Read more
Bruegel blog
-
What Mr Rehn should tell France.
21st February 2013
-
Competition policy trends in South Korea
20th February 2013
Economists often talk about a strong correlation between market development and enforcement of competition policy rules. That is not surprising: competition policy aims at removing obstacles to economic activity, such as barriers to market entry, and it encourages new businesses to challenge incumbent players’ market power. Economic theory suggests that this dynamic brings about an increase in total production. It also suggests that the pressure from competition can trigger a ‘Darwinian selection’, so that firms are forced to be as efficient as possible if they want to survive in the market. This generally means lower production costs, higher quality and lower prices paid by consumers. Conversely, in specific circumstances, excessive competitive pressure may reduce incentives to invest (reducing profit expectations); and therefore, slow down the growth pace. Read more
-
Basel III: Europe’s Interest Is to Comply
18th February 2013
On February 14, European Commissioner Michel Barnier and Federal Reserve Governor Daniel Tarullo indicated their agreement to quickly give the Basel III accord binding force over, respectively, European and American banks. This is welcome. But even more important than the exact timing of adoption is that it should stay true to what the accord actually stipulates. At this point, and contrary to many perceptions in Europe, this is likely to be the case of the US but not in the EU. Read more
-
Blogs review: Asset prices and monetary policy redux
15th February 2013
What’s at stake: Federal Reserve Governor Jeremy Stein gave serious consideration to the idea that monetary policy has a role to play in managing financial stability (read asset prices) in a speech titled “Overheating in Credit Markets: Origins, Measurement, and Policy Responses” given last week at a conference hosted by the St. Louis Fed. Governor Stein provided evidence that risk was building in certain segments of financial markets and discussed policy tools that go beyond countercyclical macroprudential regulation or the simple use of the Federal Funds rate to address these risks. Read more
-
Same old Europe
14th February 2013
The deal on the Multiannual Financial Framework 2014-2020, which will regulate the EU’s annual budget, is a missed opportunity. As in the past, the EU was captive to agonising negotiations in two separate European Councils for just a handful of money. The process clearly indicates that the EU budget is still perceived as an entitlement budget, from which each national government tries to extract the highest possible return. Read more
-
How to read the EU budget deal? II
13th February 2013
Structural and Cohesion Funds, if properly used, can represent an important instrument for economic growth. The European Council conclusions of 8 February 2013 include the decision to impose a capping to the maximum amount of Structural and Cohesion Funds each member state can receive per year. The capping is set at 2.35 percent of GDP or 2.59 percent if average real growth over 2008-2010 was lower than - 1 percent. Read more
-
How to read the EU budget deal? I
12th February 2013
Now that the European Council has approved the MFF 2014-2020 commentators are indulging on an evaluation of “who wins, who losses”, whether at stake are policy objectives or countries. The variety of opinions is disorienting at best. Read more
-
L’Europe en morceaux
12th February 2013
Avec un David Cameron acharné à préserver son rabais et à dégraisser la bureaucratie bruxelloise et un François Hollande soucieux de sauvegarder les intérêts des agriculteurs hexagonaux, les négociations budgétaires de la semaine dernière ont offert l’apparence d’une dramaturgie familière. L’Europe, pourtant, n’est plus la même que lorsque Tony Blair et Jacques Chirac s’affrontaient sur ce même budget. Si elle s’est révélée à l’épreuve impuissante à faire des choix porteurs d’avenir et à y affecter des moyens, c’est pour beaucoup parce qu’elle est écartelée entre des pays aux situations économiques disparates, dont les priorités diffèrent au moins autant par nécessité que par fidélité à des positions doctrinales. Read more
-
Good deal for Ireland, but no magic bullet
12th February 2013
The promissory note deal announced last week by the Irish government and the Central Bank of Ireland will bring benefits to Ireland’s public finances and to the country’s financial stability. As a result, Ireland’s prospects for economic recovery and its chances of emerging from its EU/IMF programme of financial assistance have improved markedly. Indeed, yields on long-term Irish government bonds are now well below those of Italy and Spain. Read more
-
L’euro fort : fausses frayeurs et vrais dangers
11th February 2013
Les dirigeants français, François Hollande en tête, s’alarment de la remontée de l’euro. Leurs homologues allemands rétorquent qu’il n’est pas surévalué. Qui a raison ? L’affaire est assez compliquée pour mériter une réponse en plusieurs temps. Read more