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Policy Contribution

An effective economic response to the Coronavirus in Europe

'Whatever it takes' needs to be the motto to preserve lives and reduce the impact on the economy of the epidemic.

By: , , and Date: March 12, 2020 Topic: European Macroeconomics & Governance

The COVID-19 pandemic represents a major shock to the global and European economy. Most European countries need to take bold quarantine and lock-down measures, as has been done in Italy, to prevent an explosion of the epidemic which would lead to many deaths and the collapse of healthcare systems.

The economic consequences of such measures are major, and are felt through both supply and demand-side channels.

A coordinated and bold response by authorities is necessary:

  • Ample national funds need to be provided to national health services.
  • Targeted measures to support individuals (such as the self-employed), companies and the local communities most affected should be put in place or reinforced.
  • Broad macroeconomic insurance needs to be provided because targeted measures will not cover the many second-round effects of the shock. To alleviate financial and cash-flow constraints, and to provide incentives to preserve employment, we recommend all EU member states agree to halve companies’ social security contributions for three months, or cut the payroll tax. Such measures could amount to support of some 2.5 percent of GDP and would be funded by increased national deficits.
  • The European Central Bank should provide abundant liquidity, increase swap lines to ensure sufficient dollar liquidity and increase its sovereign-bond purchase programme to prevent distress in sovereign bond markets.

‘Whatever it takes’ needs to be the motto to preserve lives and reduce the impact on the economy of the epidemic.

This Note was prepared at the request of the Croatian presidency of the EU for the meeting of EU finance ministers on the 17th March 2020.

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Opinion

The Challenges of the Post-Pandemic Agenda

This opinion piece has previously been published in Project Syndicate. PARIS – There is a growing possibility that the COVID-19 crisis will mark the end of the growth model born four decades ago with the Reagan-Thatcher revolution, China’s embrace of capitalism, and the demise of the Soviet Union. The pandemic has highlighted the vulnerability of […]

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: July 28, 2020
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Blog Post

Government-guaranteed bank lending: beyond the headline numbers

Loan guarantees have been a major part of the COVID-19 support packages offered by European governments to companies. The actual take-up numbers so far follow very different patterns from the headline announcements, and might allay early concerns about single market distortions caused by the different sizes of packages in different countries.

By: Julia Anderson, Francesco Papadia and Nicolas Véron Date: July 14, 2020
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Past Event

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An EU budget for Europe's future with Johannes Hahn

How do we make the EU fit for future?

Speakers: Zsolt Darvas, Johannes Hahn and Mehreen Khan Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 7, 2020
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Opinion

Credible emerging market central banks could embrace quantitative easing to fight COVID-19

Emerging economies are fighting COVID-19 and the economic sudden stop imposed by the containment and lockdown policies, in the same way as advanced economies. However, emerging markets also face large and rapid capital outflows as a result of the pandemic. This column argues that credible emerging market central banks could rely on purchases of local currency government bonds to support the needed health and welfare expenditures and fiscal stimulus. In countries with flexible exchange rate regimes and well-anchored inflation expectations, such quantitative easing would help ease financial conditions, while minimising the risks of large depreciations and spiralling inflation.

By: Gianluca Benigno, Jon Hartley, Alicia García-Herrero, Alessandro Rebucci and Elina Ribakova Topic: Global Economics & Governance Date: July 6, 2020
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Blog Post

EU recovery plans should fund the COVID-19 battles to come; not be used to nurse old wounds

In its proposed Recovery Fund, the European Commission uses allocation criteria mainly linked to infection rates and past economic performance. To foster an efficient economic rebound post COVID-19 crisis, we propose instead to allocate funds through a forward-looking approach based on specific industrial and economic structure of EU regions.

By: Carlo Altomonte, Andrea Coali and Gianmarco Ottaviano Topic: European Macroeconomics & Governance Date: July 6, 2020
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Podcast

Podcast

Redefining Europe’s role after the Covid-19 Pandemic

How will the Covid 19 crisis change the role of the EU in Europe and the world?

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: June 25, 2020
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Opinion

A tale of two pandemics

The two narratives briefly examined here cast light on different aspects of the EU in the times of Covid-19. Euroskeptic nationalists typically propagate claims of EU failure but have been rather subdued during the pandemic as mainstream governments have taken over their trademark policy of closing borders to foreigners. Nonetheless, the grip on power of several pro-EU mainstream leaders, including President Emmanuel Macron in France, Prime Minister Conte in Italy and Prime Minister Pedro Sanchez in Spain, remains tenuous.

By: Michael Leigh Topic: European Macroeconomics & Governance Date: June 23, 2020
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The role of AI in healthcare

How can AI help us fight through a pandemic crisis?

Speakers: Dimitris Bertsimas, Georgios Petropoulos, Effy Vayena and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 23, 2020
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Parliamentary Testimony

Italian Parliament

EU priorities and the recovery during Covid19

Testimony at the Committee on EU Policies of the Italian Chamber of Deputies.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance, Italian Parliament, Testimonies Date: June 18, 2020
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Biological threats and EU preparedness: How can we make the system more resilient?

Can the EU handle biological threats?

Speakers: Maria Demertzis, Magnus Normark, Ilkka Salmi, Jukka Savolainen, Anne Sénéquier and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 18, 2020
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Blog Post

The EU’s recovery fund proposals: crisis relief with massive redistribution

Poorer European Union countries and those hardest hit economically by the COVID-19 crisis could obtain up to 15% of their GNI in grants and guarantees from the EU’s proposed recovery instruments. Yet the proposal would represent a net benefit for all EU countries, even if there is only a small positive economic impact over the long-term. The proposed very long-maturity loans would lead to non-negligible benefits, exceeding 1% of GDP for some countries.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: June 17, 2020
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Past Event

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Reopening: Upper Rhine

As European borders reopen this is a unique and valuable time to conduct a “temperature reading” of diverse actors about the local impact of the Covid-19 response.

Speakers: Giuseppe Porcaro, Jean-Baptiste Cuzin, Lioba Markl-Hummel and Frédéric Pfliegersdoerffer Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 16, 2020
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