The Baltic Challenge and Euro-Area Entry
by Zsolt Darvas on 30 November 2009
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Category: POLICY CONTRIBUTIONS
Topics: New Member States, Enlargement and Neighbourhood
Resident Fellow Zsolt Darvas takes a look at the issue of the Baltic states - Estonia, Latvia and Lithuania - and the challenges facing those three countries in the aftermath of the financial crisis. He argues that because it is in the broader European interest to prevent a collapse in the Baltics, the best option is immediate euro entry at a suitable exchange rate supported by appropriate resolution in order to manage the resulting debt overhang. However, there seems to be no legal basis for this under the current euro accession criteria. Furthermore, the economic foundations of the criteria are fundamentally flawed, as euro-area members continue to violate the criteria while the EU's expansion to 27 members has made the criteria tougher for new member states to meet themselves. Ultimately, the European Council has the ability to reform the criteria without a formal treaty change. The Council should do so, the author argues, and allow for more meaningful benchmarks for all future euro-area applicants.
Alternatives Internationales: Après l'euphorie, l'addition
by Zsolt Darvas on 31 August 2009
Category: OPINION PIECES AND COLUMNS
Topics: New Member States, Enlargement and Neighbourhood
Resident Scholar Zsolt Darvas discusses the disproportionately negative effect the financial crisis has had on Central and Eastern European countries. He proposes a few recommendations to help the CEE countries get back on their feet, including more financial assistance from the Western European countries that helped cause the crisis, and a change in attitude toward euro introduction. The published op-ed is available in French, as well as the full-length piece written in English.
Memos to the new Commission- Europe's economic priorities 2010-2015
by Zsolt Darvas, Jürgen von Hagen, Jean Pisani-Ferry, Bruno van Pottelsberghe , Lars-Hendrik Röller, Indhira Santos, André Sapir, Reinhilde Veugelers, Nicolas Véron, Jakob von Weizsäcker on 27 August 2009
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Category: BOOKS
Topics: Budgetary and monetary policies, Climate change and energy, Competition and single market, Currencies and International finance, Emerging economies and development, Financial markets and regulation, European and global governance, Labour, migration and ageing, Research, innovation and growth, Trade, investment and competitiveness, New Member States, Enlargement and Neighbourhood
These Memos, addressed to the next Commission President and to the new European commissioners, are written by Bruegel Scholars and edited by Senior Research Fellow André Sapir and focus on key economic aspects of EU policy-making.
The new Commission will enter office at a challenging time for Europe, the EU and the Commission itself. The crisis has clearly exposed weaknesses in EU governance which need to be addressed and 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.
Addressing the next Commission President, André Sapir and Jean Pisani-Ferry propose that effective leadership will be necessary to give strategic direction to the Commission, ’you [the president] should therefore be ready to fight for ideas and take risks" (JPF-AS). The Memos suggest that the EU will need to assert a position on commonly agreed rules, propose new solutions and, importantly, has an opportunity now to redefine the European narrative in the global arena.
Focusing on the most important economic questions at EU level, the Bruegel memos are intended to be strategic, outlining the state of affairs that will be met by the new Commission and the key challenges and priorities they will need to consider over the next five years.
FT.com Economists' Forum: How the EU Could Stop the Global Crisis Becoming a European Problem
by André Sapir on 22 August 2009
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Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies, Financial markets and regulation, European and global governance, New Member States, Enlargement and Neighbourhood
Resident Scholar André Sapir argues that organizational problems in Europe may cause the crisis to deepen within the EU. He says that four major issues must be tackled in the near future: banking regulation and supervision; global governance issues dealing with the G20; the economic situation of new member states outside the euro area; and the EU institutions' response mechanisms.
The impact of the crisis on budget policy in Central and Eastern Europe
by Zsolt Darvas on 30 July 2009
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Category: WORKING PAPERS
Topics: Budgetary and monetary policies, New Member States, Enlargement and Neighbourhood
After drawing some lessons for fiscal policy from previous emerging market crises, Zsolt Darvas concludes with some thoughts on the appropriate policy response from a more normative perspective. The key message of the paper is that the crisis should be used as an opportunity to introduce reforms to avoid future pro-cyclical fiscal policies, to increase the quality of budgeting and to increase credibility. These reforms should include fiscal responsibility laws comprising medium-term fiscal frameworks, fiscal rules, and independent fiscal councils. When fiscal consolidation is accompanied by fiscal reforms that increase credibility, non- Keynesian effects may offset to some extent the contraction caused by the consolidation.