Jean Pisani-Ferry believes that there is a danger that central banks will today be more hesitant to get to grips with deflation and that it is therefore up to governments to set the rules for reducing the deficit resulting from their stimulus packages. This will mean saying that, in order to pay for the crisis, people will need to work for longer, pay higher taxes and/or spend less. For Jean Pisani-Ferry, one thing is clear the more governments manage to establish credible disciplines for the medium term, the more margin they will have to act in the short term, and the more they will be able to count on parallel action by central banks. Some are secretly calling for… Read more
Bruegel blog
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Between a rock and a hard place
3rd May 2009
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What form will the recovery take?
19th April 2009
In this column, Jean Pisani-Ferry believes a zombie economy‘ is the worse threat to growth in the coming years. To avoid such an outcome, the author suggests policy measures outline in the policy brief 'Handle with care! Post-crisis growth in the EU' written by himself and Bruno van Pottelsberghe: countries should not try to diminish unemployment by driving people out of the labor force but keeping workers close to the labor market through temporary work-sharing schemes to avoid the costly destruction of human capital; the banking sector should be swiftly restructured; and finally, R&D should be supported. A falling R&D today would translate into a lagging productivity tomorrow. After months where the main concern was to deal with the possibility… Read more
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The Ruses of the crisis
5th April 2009
Jean Pisani-Ferry believes that while the G20 countries did not agree to change their individual policies, they did rally round what is starting to look like a global policy. He looks at the creation of Special Drawing Rights (SDRs); the significant increase in the resources of the international financial institutions; decisions and shortcomings regarding governance of the IMF and Wolrd Bank and finally regulation. For the author, the contours of economic and financial governance at a global level have been defined during the summit. At the world economic conference of 1933 in London, it was with a killer telegram about the [monetary] ‘fetishes of so-called international bankers’ that Roosevelt put paid to already very wobbly international cooperation. Given a Barack… Read more
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Eastern European currencies need help now
12th March 2009
Zsolt Darvas and Jean Pisani-Ferry warn that markets are worried that the EU has no real response to the crisis in the postcommunist member states. Decisive action is therefore needed, which the authors outline in six different possible steps: avoid further excessive exchange-rate depreciations; temporarily substitute missing private capital inflows with public capital inflow; make the entry to the euro criteria not softer, but economically sensible; have the ECB further recoginise the extent of its regional responsibilities; put the issue of private debt restructuring on the agenda; avoid Europe displaying the lack of coordination it has openly demonstrated in recent time. Click here to download this comment. Read more
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We need a proper Stability Pact
8th March 2009
A realistic assessment of the EU wide stimulus package is at 0,9% of GDP, substantially below what the US Congress has recently approved, at 2% of US GDP. In this context, Jean Pisani-Ferry warns against Member States relying on their neighbours‘ stimulus packages to boost their own economy. But he also observes that government promises are not credible and, in spite of the arsenal of criteria and procedures of the so-called Stability Pact, European surveillance is no more credible. So it is up to each Member State to fix budgetary discipline and invest in institutions guaranteeing its well being. And the sooner, the better for everyone. Three to four percentage points of GDP expected in 2009 in Germany, five to… Read more
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The crisis multiplier
15th February 2009
Jean Pisani-Ferry believes that for governments it is critical to agree on a set of fail-safe measures which distinguish between what action is temporarily permitted and what action is to be avoided at all costs. Agreeing a code of conduct of this kind could be one of the objectives of the April G20 in London. The exact numbers remain up in the air but the trend gives cause for concern. Global trade is contracting at a rate of knots, is spreading the crisis from country to country and is everywhere magnifying the impact of the fall‐off in domestic demand. The mechanism which before transmitted increasing growth rates has now been thrown into reverse. The shock is especially abrupt for heavily… Read more
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La zone euro à l’épreuve
10th February 2009
Le premier janvier 1999, l’euro a eu dix ans. Mais au lieu des célébrations attendues, c’est à un test sévère que la monnaie européenne a été soumise à l’occasion de son anniversaire. Si les pays de la zone euro se sont en général réjouis de l’effet protecteur de la monnaie unique – et si certains de ceux qui avaient choisi de ne pas y participer, comme le Danemark, s’apprêtent à réviser leur décision – il n’en reste pas moins que la crise a exposé les faiblesses, les incohérences et les non-dits de l’édifice économique et monétaire européen. Les derniers mois ont été riches de leçons et renouvellent des débats anciens sur la gouvernance de la zone euro. Ils suggèrent des… Read more
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The euro sorely tested by national crises
27th January 2009
Jean Pisani-Ferry takes a closer look at Greece's economic difficulties which in an ideal world should be solved by a better equipped euro group. Click here to download the comment. This comment was also published by Le Monde Economie. Read more
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The looming divide within Europe
22nd January 2009
The financial crisis is now hitting several of the non-euro-area new member states hard, highlighting the shortcomings of Europe‘s monetary architecture. Crisis management in the euro area has had the unintended consequence of putting non euro-area new member states at disadvantage. Without decisive action, a new political and economic divide within Europe may emerge. Click here to download this comment. This column first appeared on Eurointelligence. Read more
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Europe is against a wall
2nd December 2008
For Jean Pisani-Ferry the next EU summit, on 11 December, will show whether Europe is capable of a much needed concerted action. This would imply that member states resist the temptation to merely go through the motions, that Brussels be tough in its assessment of national efforts, and that a serious debate be held about burden-sharing. Pisani-Ferry believes it would be best for each country to contribute equally to the stimulus, with those whose initial fiscal position is poor having to specify upfront how they intend to put their house in order tomorrow. Only those in absolutely dire budgetary situations, he suggests, should be exempted. Click here to download this comment. This comment was also published in Le… Read more