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Working Paper

Cross-country insurance mechanisms in currency unions

Countries in a monetary union can adjust to shocks either through internal or external mechanisms. We quantitatively assess for the European Union a number of relevant mechanisms suggested by Mundell’s optimal currency area theory, and compare them to the United States.

By: , and Date: March 27, 2014 Topic: Finance & Financial Regulation

Countries in a monetary union can adjust to shocks either through internal or external mechanisms. We quantitatively assess for the European Union a number of relevant mechanisms suggested by Mundell’s optimal currency area theory, and compare them to the United States.

For this purpose, we update a number of empirical analyses in the economic literature that identify (1) the size of asymmetries across countries and (2) the magnitude of insurance mechanisms relative to similar mechanisms and compare results for the European Monetary Union (EMU) with those obtained for the US.

To study the level of synchronization between EMU countries we follow Alesina et al. (2002) and Barro and Tenreyro (2007). To measure the effect of an employment shock on employment levels, unemployment rates and participation rates we perform an analysis based on Blanchard and Katz (1992) and Decressin and Fatas (1995). We measure consumption smoothing through capital markets, fiscal transfers and savings, using the approach by Asdrubali et al. (1996) and Afonso and Furceri (2007). To analyze risk sharing through a common safety net for banks we perform a rudimentary simulation analysis.

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Opinion

Grading the big pandemic test

COVID-19 almost one year on, it is time to assess who passed the test, and who failed.

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: November 27, 2020
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Blog Post

Europe is losing competitiveness in global value chains while China surges

The European Union owes much of its economic weight to its regional value chain and integration into the global value chain. But the EU’s global value chain role is shrinking, and while EU trade integration with China is increasing, it is mainly to China’s benefit, undermining the EU’s external competitiveness.

By: Alicia García-Herrero and David Martínez Turégano Topic: Global Economics & Governance Date: November 27, 2020
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Policy Contribution

Green certificates: a better version of green bonds

"The current design of green bonds means they aren't fulfilling their potential. We propose an alternative: issuance of regular bonds with attached green certificates that ensure earmarking for green purposes. The new design would reduce financing costs and in turn would provide incentives to start a greater number of environmentally-friendly projects."

By: Dion Bongaerts and Dirk Schoenmaker Topic: Energy & Climate, Finance & Financial Regulation Date: November 26, 2020
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Podcast

Podcast

Steering the boat towards an unknown destination

Shocks pass, but change remains a constant. We need to start focusing on permanent changes in the economy and how to adapt to them.

By: The Sound of Economics Topic: European Macroeconomics & Governance, Global Economics & Governance Date: November 25, 2020
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Upcoming Event

Dec
15-16
11:30

India-EU Partnership: Vistas for the New Decade

Serving and retired government officials, representatives of the private sector, media and institutions/academia come together to review the of India-EU relations and point to a promising direction for the future.

Speakers: Yamini Aiyar, Suman Bery, Navroz K Dubash, Ignacio Garcia Bercero, Alicia García-Herrero, Rajat Kathuria, Gautam Mukhopadhaya, Ananth Padmanabhan, Georgios Petropoulos, André Sapir, Shyam Saran, Simone Tagliapietra and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Upcoming Event

Dec
10
09:30

Towards post-pandemic green multilateralism?

How could we achieve a trilateral relationship between China, the EU and the US and consolidate it with climate goals?

Speakers: Huiyao Wang and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Blog Post

The impact of the new Asian trade mega-deal on the European Union

Although the economic implications of the Regional Comprehensive Economic Partnership (RCEP) for the EU are modest, the geopolitical and strategic implications are not. With the arrival of a new US administration and the central role of China in the bloc, the EU needs to outline an Asian commercial strategy that reconciles the importance of China and the transatlantic relationship.

By: Uri Dadush Topic: Global Economics & Governance Date: November 19, 2020
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Podcast

Podcast

Sizing up the world's largest trade deal

What should be Europe's strategy towards the Regional Comprehensive Economic Partnership (RCEP)?

By: The Sound of Economics Topic: Global Economics & Governance Date: November 18, 2020
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Opinion

RCEP might not stop reshuffling of Asian value chains

China is no doubt bound to benefit, but other members of the regional trade pact may benefit even more

By: Alicia García-Herrero Topic: Global Economics & Governance Date: November 17, 2020
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Parliamentary Testimony

European Parliament

China-EU economic relations in the era of US-China economic competition

Testimony before the European Parliament on the subject of China-EU economic relations.

By: Alicia García-Herrero Topic: European Parliament, Global Economics & Governance, Testimonies Date: November 17, 2020
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Upcoming Event

Dec
2
14:00

The forthcoming reform of EU Anti-Money Laundering Policy

At this event John Berrigan will be in discussion with Nicolas Veron and an invited-audience on how to create an strategy for countering money-laundering in Europe.

Speakers: John Berrigan and Nicolas Véron Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Past Event

Past Event

Economic reform in Belarus: how can we overcome old legacies and dependency and what can Europe do?

Political change in Belarus also requires deep economic reforms - what next for the country?

Speakers: Aleś Alachnovič, Anders Åslund, Marek Dabrowski, Vassilis Maragos and Elina Ribakova Topic: European Macroeconomics & Governance, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 13, 2020
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