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52. The Global Impact of Brexit Uncertainty
- Author:
- Tarek A. Hassan, Laurence van Lent, Stephan Hollander, and Ahmed Tahoun
- Publication Date:
- 01-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the share of discussions in quarterly earnings conference calls on costs, benefits, and risks associated with the UK’s intention to leave the EU. Using this approach, we identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate the effects of these different kinds of Brexit exposure on firm-level outcomes. We find that concerns about Brexit-related uncertainty extend far beyond British or even European firms. US and international firms most exposed to Brexit uncertainty have lost a substantial fraction of their market value and have reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects of Brexit (the first moment), should it come to pass. Most prominently, firms expect difficulties resulting from regulatory divergence, reduced labor mobility, trade access, and the costs of adjusting their operations post-Brexit. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet had significant effects on firm actions.
- Topic:
- Economics, Political Economy, Regional Cooperation, Brexit, Global Political Economy, and Economic Policy
- Political Geography:
- Britain, United States, United Kingdom, Europe, and European Union
53. The Political Economy of Europe since 1945: A Kaleckian perspective
- Author:
- Joseph Halevi
- Publication Date:
- 06-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- This paper analyzes the early stages of the formation of the Common Market. The period covered runs from the end of WW2 to 1959, which is the year in which the European Payments Union ceased to operate. The essay begins by highlighting the differences between the prewar political economy of Europe and the new dimensions and institutions brought in by the United States after 1945. It focuses on the marginalization of Britain and on the relaunching of French great power ambitions and how the latter determined, in a very problematical way, the European complexion of France. Because of France’s imperial aspirations, France, not West Germany, emerged as the politically crisis prone country of Europe acting as a factor of instability thereby jeopardizing the process of European integration, Among the large European nations, Germany and Italy appear, for opposite economic reasons, as the countries most focused on furthering integration. Germany expressed the strongest form of neomercantilism while Italy the weakest.
- Topic:
- Economics, Political Economy, Global Political Economy, World War II, and Common Market
- Political Geography:
- United States, Europe, Germany, and Global Focus
54. Europe 1957 to 1979: From the Common Market to the European Monetary System
- Author:
- Joseph Halevi
- Publication Date:
- 11-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- This essay deals with the contradictory dynamics that engulfed Europe from 1959 to 1979, the year of the launching of the European Monetary System. It focuses on how the macroeconomic frame- work of stop-go policies in the 1960s ended up privileging external – intra-European - exports at the expense of domestic demand. The paper offers a very tentative explanation as to why stop-go policies, by weakening domestic demand, did not put an end to the to the ‘long boom’ earlier as they should have. The French crisis of 1968-69 leading to the demise of De Gaulle is discussed at length, as is the renewal of the German export drive in the wake of a nominal revaluation of the D-Mark in 1969. Finally, the revival of labor struggles in Italy in the same year is put in the context of the structural weaknesses of the Italian economy as analyzed by the late Marcello de Cecco. The conclusion is that European countries had neither the political culture nor the institutional mechanisms to coordinate mutually advantageous policies. Their so-called cooperation was an exercise in establishing hegemony while defending the interests specific to the dominant economic groups of each country. The essay then deals with the formation of the EMS as an expression of efforts to establish and enforce economic dominance.
- Topic:
- Economics, Markets, History, Monetary Policy, Capitalism, Common Market, and Macroeconomics
- Political Geography:
- Europe
55. From the EMS to the EMU and...to China
- Author:
- Joseph Halevi
- Publication Date:
- 11-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
- Topic:
- Economics, International Political Economy, Political Economy, History, and Macroeconomics
- Political Geography:
- Africa, China, Europe, Asia, Germany, and Global Focus
56. Lost in Deflation: Why Italy’s woes are a warning to the whole Eurozone
- Author:
- Servaas Storm
- Publication Date:
- 04-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- Using macroeconomic data for 1960-2018, this paper analyzes the origins of the crisis of the ‘post-Maastricht Treaty order of Italian capitalism’. After 1992, Italy did more than most other Eurozone members to satisfy EMU conditions in terms of self-imposed fiscal consolidation, structural reform and real wage restraint—and the country was undeniably successful in bringing down inflation, moderating wages, running primary fiscal surpluses, reducing unemployment and raising the profit share. But its adherence to the EMU rulebook asphyxiated Italy’s domestic demand and exports—and resulted not just in economic stagnation and a generalized productivity slowdown, but in relative and absolute decline in many major dimensions of economic activity. Italy’s chronic shortage of demand has clear sources: (a) perpetual fiscal austerity; (b) permanent real wage restraint; and (c) a lack of technological competitiveness which, in combination with an overvalued euro, weakens the ability of Italian firms to maintain their global market shares in the face of increasing competition of low-wage countries. These three causes lower capacity utilization, reduce firm profitability and hurt investment, innovation and diversification. The EMU rulebook thus locks the Italian economy into economic decline and impoverishment. The analysis points to the need to end austerity and devise public investment and industrial policies to improve Italy’s ‘technological competitiveness’ and stop the structural divergence between the Italian economy and France/Germany. The issue is not just to revive demand in the short run (which is easy), but to create a self-reinforcing process of investment-led and innovation-driven process of long-run growth (which is difficult).
- Topic:
- Economics, Capitalism, Global Political Economy, Macroeconomics, and Eurozone
- Political Geography:
- Europe and Italy
57. Cross-Border E-Commerce: WTO discussions and multi-stakeholder roles – stocktaking and practical ways forward
- Author:
- Michael Kende1 and Nivedita Sen
- Publication Date:
- 01-2019
- Content Type:
- Working Paper
- Institution:
- Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
- Abstract:
- E-commerce has long been recognized as a driver of growth of the digital economy, with the potential to promote economic development. The benefits come from lower transaction costs online, increased efficiency, and access to new markets. The smallest of vendors can join online marketplaces to increase their sales, while larger companies can use the Internet to join global value chains (GVCs), and the largest e-commerce providers are now among the most valuable companies in the world.
- Topic:
- Development, Economics, Science and Technology, World Trade Organization, Digital Economy, Economic Growth, and Free Trade
- Political Geography:
- United States, Europe, Switzerland, and Global Focus
58. WTO'ing a Resolution to the China Subsidy Problem
- Author:
- Chad P. Bown and Jennifer A. Hillman
- Publication Date:
- 10-2019
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The United States, the European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It first provides a brief history of subsidy disciplines in the General Agreement on Tariffs and Trade and the World Trade Organization (WTO) predating any concerns introduced by China. It then describes contemporary economic problems with China’s approach to subsidies, their impact, and the apparent ineffectiveness of the WTO’s Agreement on Subsidies and Countervailing Measures to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems—in a manner analogous to how the Organization for Economic Cooperation and Development took on agricultural subsidies in the 1980s—before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
- Topic:
- Economics, World Trade Organization, Tariffs, and Trade
- Political Geography:
- Japan, Europe, Asia, North America, United States of America, and European Union
59. Creating a Euro Area Safe Asset without Mutualizing Risk (Much)
- Author:
- Alvaro Leandro and Jeromin Zettelmeyer
- Publication Date:
- 08-2019
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper explains and evaluates three proposals to create “safe assets” for the euro area based on sovereign bonds, in which sovereign risk is limited through diversification and some form of seniority. These assets would be held by banks and other financial institutions, replacing concentrated exposures to their own sovereigns. The paper focuses on three ideas: (1) to create multitranche “sovereign bond-backed securities” (SBBS), of which the senior tranche would constitute a safe asset; (2) to create a senior, publicly owned financial intermediary that would issue a bond backed by a diversified portfolio of sovereign loans (“E-bonds”); and (3) to issue sovereign bonds in several tranches and induce banks to hold a diversified pool of senior sovereign bonds (“multitranche national bond issuance”). Public attention (including public criticism) has so far focused on the first idea; the other two have not yet been seriously debated. The authors find that none of the competing proposals entirely dominates the others. SBBS do not deserve most of the criticism to which they have been subjected. At the same time, E-bonds and multitranche national bond issuance have several interesting features—including inducing fiscal discipline—and warrant further exploration.
- Topic:
- Economics, Sovereign Wealth Funds, Banks, and Risk
- Political Geography:
- Europe and Global Focus
60. Brexit: Everyone Loses, but Britain Loses the Most
- Author:
- Maria C. Latorre, Zoryana Olekseyuk, Hidemichi Yonezawa, and Sherman Robinson
- Publication Date:
- 03-2019
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper examines 12 economic simulation models that estimate the impact of Brexit (Britain’s exit from the European Union). Most of the studies find adverse effects for the United Kingdom (UK) and the EU-27. The UK’s GDP losses from a hard Brexit (reversion to World Trade Organization rules due to a lack of UK-EU agreement) range from –1.2 to –4.5 percent in most of the models analyzed. A soft Brexit (e.g., Norway arrangement, which seems in line with the nonbinding text of the political declaration of November 14, 2018, on the future EU-UK relationship) has about half the negative impact of a hard Brexit. Only two of the models derive gains for the UK after Brexit because they are based on unrealistic assumptions. The authors analyze more deeply a computable general equilibrium model that includes productivity and firm selection effects within manufacturing sectors and operations of foreign multinationals in services. Based on this latest model, they explain the likely economic impact of Brexit on a wide range of macroeconomic variables, namely GDP, wages, private consumption, capital remuneration, aggregate exports, aggregate imports, and the consumer price index.
- Topic:
- Economics, World Trade Organization, Brexit, and Multinational Corporations
- Political Geography:
- Britain, Europe, and European Union
61. EU Trade Policy amid the China-US Clash: Caught in the Cross-Fire?
- Author:
- Felipe González and Nicolas Véron
- Publication Date:
- 08-2019
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- China's rapid rise and unique economic system and the increasingly aggressive and disruptive US trade policy are posing an unprecedented threat to the global rules-based trading and economic system. The European Union has critical interests at stake in the current escalation, even as it has so far been comparatively spared from US trade policy belligerence and China's reactions. In this context, the European Union should adopt an independent and proactive stance, building on recent efforts and going beyond them. The European Union, even more than the United States or China, has a strategic interest in the preservation of the global rules-based order embodied by the World Trade Organization (WTO). It must play a leading role in steering WTO reform and modernization, working closely with broadly aligned third countries such as Japan and other players. It should expand its outreach beyond its immediate negotiating counterparts in both the United States and China, and leading European officials at both the EU and member state levels should work at better understanding China. While strengthening its domestic policy instruments to address new challenges, such as the screening of foreign direct investment for security purposes, the European Union must also resist its own temptations of protectionism and economic nationalism. In support of these objectives, the European Union should prepare itself for difficult decisions, which may involve revising some of its current red lines in international trade negotiations. Conversely, the European Union should stand firm on principles such as refusing one-sided agreements and rejecting abusive recourse to national security arguments in trade policies. The European Parliament, in working with the European Council and the European Commission, will have a critical role to play in steering the European Union through these challenging times.
- Topic:
- International Relations, Economics, Trade Wars, and Trade Policy
- Political Geography:
- China, Europe, Asia, North America, United States of America, and European Union
62. Creating a Euro Area Safe Asset without Mutualizing Risk (Much)
- Author:
- Alvaro Leandro and Jeromin Zettelmeyer
- Publication Date:
- 08-2019
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper explains and evaluates three proposals to create “safe assets” for the euro area based on sovereign bonds, in which sovereign risk is limited through diversification and some form of seniority. These assets would be held by banks and other financial institutions, replacing concentrated exposures to their own sovereigns. The paper focuses on three ideas: (1) to create multitranche “sovereign bond-backed securities” (SBBS), of which the senior tranche would constitute a safe asset; (2) to create a senior, publicly owned financial intermediary that would issue a bond backed by a diversified portfolio of sovereign loans (“E-bonds”); and (3) to issue sovereign bonds in several tranches and induce banks to hold a diversified pool of senior sovereign bonds (“multitranche national bond issuance”). Public attention (including public criticism) has so far focused on the first idea; the other two have not yet been seriously debated. The authors find that none of the competing proposals entirely dominates the others. SBBS do not deserve most of the criticism to which they have been subjected. At the same time, E-bonds and multitranche national bond issuance have several interesting features—including inducing fiscal discipline—and warrant further exploration.
- Topic:
- Economics, Regional Integration, Risk, and Fiscal Policy
- Political Geography:
- Europe
63. The Impact of Income Inequality on Household Indebtedness in Euro Area Countries
- Author:
- Stefan Jestl
- Publication Date:
- 12-2019
- Content Type:
- Working Paper
- Institution:
- The Vienna Institute for International Economic Studies (WIIW)
- Abstract:
- This paper examines the impact of income inequality on consumption-related household indebtedness at the household level. Using the first wave of the Eurosystem Household Finance and Consumption Survey data, the analysis sheds light on heterogeneous effects across euro area countries. The results suggest a positive impact of income inequality on consumption-related household indebtedness in a small sample of countries. We further employ a multilevel regression model to also take country’s macroeconomic characteristics into account, such as credit market and welfare state design. In this setting, we find an overall positive impact of income inequality on consumption-related household indebtedness.
- Topic:
- Economics, Inequality, Economic Inequality, and Macroeconomics
- Political Geography:
- Europe
64. The state of China-European Union economic relations
- Author:
- Uri Dadush, Marta Dominguez-Jimenez, and Tianlang Gao
- Publication Date:
- 11-2019
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- China and the European Union have an extensive and growing economic relationship. The relationship is problematic because of the distortions caused by China’s state capitalist system and the diversity of interests within the EU’s incomplete federation. More can be done to capture the untapped trade and investment opportunities that exist between the parties. China’s size and dynamism, and its recent shift from an export-led to a domestic demand-led growth model, mean that these opportunities are likely to grow with time. As the Chinese economy matures, provided appropriate policy steps are taken, it is likely to become a less disruptive force in world markets than during its extraordinary breakout period.
- Topic:
- Economics, Governance, European Union, Investment, and Trade
- Political Geography:
- China, Europe, and Asia
65. How does China fare on the Russian market? Implications for the European Union
- Author:
- Alicia Garcia-Herrero and Jianwei Xu
- Publication Date:
- 11-2019
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- China’s economic ties with Russia are deepening. Meanwhile, Europe remains Russia’s largest trading partner, lender and investor. An analysis of China’s ties with Russia, indicate that China seems to have become more of a competitor to the European Union on Russia’s market. Competition over investment and lending is more limited, but the situation could change rapidly with China and Russia giving clear signs of a stronger than ever strategic partnership.
- Topic:
- Economics, Markets, Bilateral Relations, Governance, Investment, and Exports
- Political Geography:
- Russia, China, Europe, Eurasia, and Asia
66. The economic impact of Boris Johnson’s Brexit proposals
- Author:
- Anand Menon
- Publication Date:
- 10-2019
- Content Type:
- Working Paper
- Institution:
- UK in a Changing Europe, King's College London
- Abstract:
- The Prime Minister has set out a means of escaping the Brexit stalemate, but his new Brexit proposals have, as yet, not managed to overcome the impasse. What, though, would the plan mean for the UK economy? That is the question we seek to answer in what follows. As ever, we have been lucky enough to be able to draw on the skills and expertise of some of the leading experts in the field. The bulk of the work was done by Hanwei Huang, Jonathan Portes and Thomas Sampson, with contributions from Matt Bevington and Jill Rutter. Hanwei and Thomas used the LSE’s Centre for Economic Performance trade model to carry out the modelling. We hope you find the report interesting and informative. Brexit is clearly about more than economics, but the economic impact of leaving the EU nevertheless merits careful scrutiny.
- Topic:
- Economics, Politics, European Union, Brexit, and Boris Johnson
- Political Geography:
- United Kingdom and Europe
67. An Overview of German New Economic Sociology and the Contribution of the Max Planck Institute for the Study of Societies
- Author:
- John Wilkinson
- Publication Date:
- 02-2019
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have giv- en NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociol- ogy of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.
- Topic:
- Economics, Globalization, Sociology, and Capitalism
- Political Geography:
- Europe, Germany, and Central Europe
68. Migration and Post-Conflict Reconstruction: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia
- Author:
- Dany Bahar, Hillel Rapoport, Cem Özgüzel, and Andreas Hauptmann
- Publication Date:
- 10-2019
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- During the early 1990s Germany offered temporary protection to over 600,000 Yugoslavian refugees fleeing war. By 2000, many had been repatriated. We exploit this natural experiment to investigate the role of migrants in post-conflict reconstruction in the former Yugoslavia, using exports as outcome. Using confidential social security data to capture intensity of refugee workers to German industries –and exogenous allocation rules for asylum seekers within Germany as instrument– we find an elasticity of exports to return migration between 0.08 to 0.24. Our results are stronger in knowledge-intensive industries and for workers in occupations intensive in analytical and managerial skills.
- Topic:
- Conflict Resolution, Economics, International Political Economy, Migration, Refugee Issues, Refugees, and Exports
- Political Geography:
- Europe, Yugoslavia, and Germany
69. The Primary Cause of European Inflation in 1500-1700: Precious Metals or Population? The English Evidence
- Author:
- Anthony Edo and Jacques Melitz
- Publication Date:
- 10-2019
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- We perform the first econometric test to date of the influences of inflows of precious metals and population growth on the “Great Inflation” in Europe following the discovery of the New World. The English evidence strongly supports the near-equivalent importance of both influences. For 1500-1700, silver is the only relevant precious metal in the estimates. The study controls for urbanization, government spending, mortality crises and climatic changes. The series for inflows of the precious metals into Europe from America and European mining are newly constructed based on the secondary sources.
- Topic:
- Economics, Government, International Political Economy, Urbanization, and Inflation
- Political Geography:
- Europe and England
70. Sectoral reallocations, Real estate shocks, and productivity divergence in Europe
- Author:
- Fabien Tripier, Jérôme Héricourt, and Thomas Grjebine
- Publication Date:
- 09-2019
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- This paper investigates the role of sectoral reallocations in the divergence of productivity in Europe, based on a database for 33 sectors and 14 countries between 1995 and 2015. Using the contribution of sectoral productivity growth to Total Factor Productivity (TFP) at the country level, we highlight that variations in the relative size of sectors - less productive sectors growing relatively to more productive ones - have been at the origin of variable productivity losses in main European countries. Parallel to this divergence, European countries experienced heterogeneous real estate price dynamics, which took the form, in some economies, of massive boom-bust cycles. We investigate real estate shocks as a potential source of sectoral reallocations through a collateral mechanism. These shocks turn out to be a strong driver of productivity divergence between European countries.
- Topic:
- Economics, International Political Economy, Real Estate, and Productivity
- Political Geography:
- Europe
71. Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure
- Author:
- Valérie Mignon and Antonia Lopez-Villavicencio
- Publication Date:
- 06-2019
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
- Topic:
- Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Eurozone, Trade, and Imports
- Political Geography:
- China, Europe, and Eastern Europe
72. Heterogeneity within the Euro Area: New Insights into an Old Story
- Author:
- Virginie Coudert, Cécile Couharde, Carl Grekou, and Valérie Mignon
- Publication Date:
- 03-2019
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- We assess cross-country heterogeneity within the eurozone and its evolution over time by measuring the distances between the equilibrium exchange rates’ paths of member countries. These equilibrium paths are derived from the minimization of currency misalignments, by matching real exchange rates with their economic fundamentals. Using cluster and factor analyses, we identify two distinct groups of countries in the run-up to the European Monetary Union (EMU), Greece being clearly an outlier at that time. Comparing the results with more recent periods, we find evidence of rising dissimilarities between these two sets of countries, as well as within the groups themselves. Overall, our findings illustrate the building-up of macroeconomic imbalances within the eurozone before the 2008 crisis and the fragmentation between its member countries that followed.
- Topic:
- Economics, International Political Economy, Monetary Policy, and European Monetary Union
- Political Geography:
- Europe
73. Approach to the Spanish External Image Applied to the Economic Intelligence / Aproximación a la imagen exterior española como herramienta de inteligencia económica
- Author:
- José Pablo Martínez Romera
- Publication Date:
- 12-2019
- Content Type:
- Working Paper
- Institution:
- International Security Studies Group (GESI) at the University of Granada
- Abstract:
- The measurements of external image carried out in recent years to guide the "country-brand" strategies could have the potential to be used as economic intelligence tools. This way, public authorities would be able to foresee variations in those variables linked to the preferences of foreign citizens, such as investments, exports, tourism or immigration; helping them to design politics in these fields.
- Topic:
- Economics and Intelligence
- Political Geography:
- Europe and Spain
74. Why does the IMF assign labor conditions? The Burden of Adjustment, Exchange Rate Regimes, and Labor Conditions
- Author:
- Saliha Metinsoy
- Publication Date:
- 09-2019
- Content Type:
- Working Paper
- Institution:
- Centre for Global Political Economy, University of Sussex
- Abstract:
- Why does the International Monetary Fund (IMF) assign more stringent labor conditions in some cases and not others? This paper argues that the Fund’s bureaucratic organizational culture and neoliberal economic beliefs dictate its interpretation of international economics and predict the stringency of labor conditions in its programs. Particularly, the Fund staff envisage that lower unit labor costs would indirectly increase competitiveness, boost exports, and contribute to the balance of payments in fixed exchange rate regimes, where currency depreciation is not possible. To this end, the Fund assigns more stringent labor conditions in fixed regimes compared to floating ones. To test this theory, the paper uses a mixed method. It firstly demonstrates the association between exchange rate regimes and the stringency of labor conditions in Fund programs in a global sample. It then complements this analysis by showing particular organizational habits and beliefs at work in two cases, namely in Latvia and Hungary in 2008 under their respective IMF programs. Furthermore, the paper shows that distribution of income away from labor groups (i.e. lowered wages) is in fact by design in IMF programs in an attempt to increase competitiveness in fixed regimes.
- Topic:
- Economics, International Monetary Fund, International Development, and Neoliberalism
- Political Geography:
- Europe, Eastern Europe, Hungary, and Latvia
75. An Overview of German New Economic Sociology and the Contribution of the Max Planck Institute for the Study of Societies
- Author:
- John Wilkinson
- Publication Date:
- 02-2019
- Content Type:
- Working Paper
- Institution:
- Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
- Abstract:
- New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have given NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociology of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.
- Topic:
- Economics, Markets, Sociology, and Discipline
- Political Geography:
- Europe and Germany
76. Soft vs Hard Governance for Labour and Environmental Commitments in Trade Agreements: Comparing the US and EU Approaches
- Author:
- Vandana Gyanchandani
- Publication Date:
- 08-2018
- Content Type:
- Working Paper
- Institution:
- Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
- Abstract:
- Three methodologies are used to enforce labour and environmental commitments in the US and EU trade agreements: cooperative, sanctions and composite. In-depth analysis of the scope of commitments, level of protection, institutional framework as well as types of informal and formal dispute processes elucidates the pros and cons of such methodologies. Sanctions approach weakens cooperation by misjudging the complexity of domestic policy adjustments through transnational governance. Cooperative mechanism within the NAAEC's composite design emerges as the best approach: Submission on Enforcement Matters (SEM). As it provides for an independent secretariat supported by civil society group and factual records as a sunshine remedy to review citizen submissions. However, the process is constrained by political clout, lack of managerial capacity and legal dilemmas around informal lawmaking (IN-LAW) procedures.
- Topic:
- Economics, Environment, International Cooperation, International Trade and Finance, Labor Issues, Sustainable Development Goals, and Global Political Economy
- Political Geography:
- United States, Europe, Global Focus, and European Union
77. Personal Income Tax Policy Choices of Spanish Autonomous Communities in 2016: A Comparison with Canada of the Rate Structure
- Author:
- François Vallancourt, Jesús Ruiz-Huerta, and Violeta Ruiz Almendral
- Publication Date:
- 01-2018
- Content Type:
- Working Paper
- Institution:
- Fundación Alternativas
- Abstract:
- Since 2009 Autonomous Communities have started to set their own Personal Income Tax rates for the first time. This is both the result of the 2009 rule change and the difficulties to get other public revenues during the years of the Great Recession. We will examine what the Autonomous Communitie s explicit choices have been and see how they compare to what Canadian Provinces have done. Before 2000, these provinces other than Québec were required to use a surtax approach that saw provinces collect personal income tax as a% of federal taxes (tax on tax) using the same number of brackets, boundaries of brackets and progressivity structure. Since 2000 they can and have chosen to use a tax on income approach as noted above. Thus they must make similar choices to those of Autonomous Communities for their Personal Income Tax since 2000.
- Topic:
- Economics, Global Recession, Tax Systems, and Recovery
- Political Geography:
- Europe, Canada, Spain, North America, and Western Europe
78. PeSCo – Anything There for European Defence?
- Author:
- Sandro Knezović
- Publication Date:
- 02-2018
- Content Type:
- Working Paper
- Institution:
- Institute for Development and International Relations (IRMO)
- Abstract:
- The European strategic landscape has changed dramatically over the course of the last decade. The post-Cold War mantra about the obsolescence of conventional threats in the wider European space proved to be short-sighted with developments at its eastern �lanks, while security dysfunctions in the MENA region and their immanent consequences for the safety of European citizens have loaded a heavy burden on compromise-building and decision-making in the �ield of the Common Security and Defence Policy (CSDP) of the EU. Furthermore, the approach of the new US administration to European security and the strategic consequences of Brexit have changed the wider framework in which security of 'the Old Continent' is to be determined, hence stimulating European leaders to rethink European security in a strive for strategic autonomy of their own. The very ambitiously phrased EU Global Strategy that came out in June 2016, served as both catalyst and umbrella document for such an endeavour. However, in order to achieve measurable progress in responding to contemporary security challenges, it was clear that the EU needs to develop a structural way for member states to do jointly what they were not capable of doing at the national level. This is so especially in the environment in which China, Russia and Saudi Arabia are championing the defence spending, right after the US, while European states are signi�icantly trailing behind. The fact that the EU collectively is the second largest military investor and yet far from being among the dominant military powers only emphasises the burning issue of ef�iciency of military spending and the level of interoperability among member states’ armies. High-level fragmentation of the European defence market and the fact that defence industries are kept in national clusters is clearly contributing to that. The reality on the ground is obviously challenging traditional methods of co-operation that operate mainly in ‘national boxes’ and calling for a paradigm change in the wider policy context of CSDP. However, it remains to be seen to which extent will this new security environment actually be able to push the European defence policy context over the strict national boundaries.
- Topic:
- Security, Economics, Military Strategy, and European Union
- Political Geography:
- United States, China, Europe, Middle East, Asia, and Saudi Arabia
79. Economic Sanction Games among the US, the EU and Russia: Payoffs and Potential Effects
- Author:
- Dong Yan and Li Chunding
- Publication Date:
- 07-2018
- Content Type:
- Working Paper
- Abstract:
- Economic sanction of the US and EU on Russia because of Ukraine crisis in 2014 lasts for a long time and is still a hot policy topic. This paper uses a 16-country or region numerical general equilibrium model with trade cost and exogenous trade imbalance to explore this three-country economic sanction game payoffs, and simulate the effects of sanctions on individual countries. Our analysis find that all sanction involved countries will be hurt, but comparatively Russia will be hurt more, and the US and EU will be hurt less. Sanction measures of EU have larger impacts to Russia than the US measures, and meanwhile Russian counter-sanction measures will generate larger impacts on the EU than on the US. From the economic perspective, the optimal choice for US and EU is to give up sanction measures to Russia, and retaliation is Russia’s optimal choice when faced with sanction measures. Countries out of the sanction game will gain because of trade diversion effects.
- Topic:
- Economics, Sanctions, European Union, and Economy
- Political Geography:
- Russia, Europe, and United States of America
80. Political and Economic Governance in the Balkans and Eastern Europe Compared
- Author:
- Michael Emerson and Gergana Noutcheva
- Publication Date:
- 07-2018
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The not-yet EU member states of the Balkans and three states of Eastern Europe – Georgia, Moldova and Ukraine – have much in common: geographic proximity to the EU, political priority to become members of the EU, and similar struggles to improve their political and economic governance in line with EU standards and values. The EU’s main differentiation between the two groups is over the ‘membership perspective’, which has been offered to the Balkans but not to the East Europeans. Beyond this formal political stance, however, in practice the EU been extending virtually the same comprehensive array of economic and political instruments to both groups by signing Association Agreements with the three Eastern European states. This paper breaks new ground by comparing the record of both groups in terms of the quality of their political and economic governance. Using original material and existing sources, it finds that the two groups are comparable at two levels; it looks at both the frontrunners and laggards in each group. Most striking is that the East European frontrunner, Georgia, ranks even slightly ahead of the Balkan frontrunners. This leads into a case for reconsidering the EU’s present political doctrines over both its enlargement and neighbourhood policies, which are manifestly obsolescent. The paper concludes with three options for how the EU might adapt to these realities and make consequential policy changes.
- Topic:
- Economics, Politics, Governance, and Regional Politics
- Political Geography:
- Europe, Ukraine, Moldova, Eastern Europe, Balkans, and Georgia
81. Incomplete Hegemonies, Hybrid Neighbours: Identity games and policy tools in Eastern Partnership countries
- Author:
- Andrey Makarychev
- Publication Date:
- 02-2018
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This paper applies the concepts of hegemony and hybridity as analytical tools to help understand the structural changes taking place within the Eastern Partnership (EaP) countries and beyond. The author points to the split identities of many post-Soviet societies and the growing appeal of solutions aimed at balancing Russia’s or the EU’s dominance as important factors shaping EaP dynamics. Against this background, he explores how the post-Soviet borderlands can find their place in a still hypothetical pan-European space, and free themselves from the tensions of their competing hegemons. The EaP is divided into those countries that signed Association Agreements with the EU and those preferring to maintain their loyalty to Eurasian integration. Bringing the two groups closer together, however, is not beyond policy imagination. The policy-oriented part of this analysis focuses on a set of ideas and schemes aimed at enhancing interaction and blurring divisions between these countries. The author proposes five scenarios that might shape the future of EaP countries’ relations with the EU and with Russia: 1) the conflictual status quo in which both hegemonic powers will seek to weaken the position of the other; 2) trilateralism (EU, Russia plus an EaP country), which has been tried and failed, but still is considered as a possible option by some policy analysts; 3) the Kazakhstan-Armenia model of diplomatic advancement towards the EU, with some potential leverage on Russia; 4) deeper engagement by the EU with the Eurasian Economic Union, which has some competences for tariffs and technical standards; and 5) the decoupling of security policies from economic projects, which is so far the most difficult option to foresee and implement in practice.
- Topic:
- Diplomacy, Economics, European Union, Partnerships, Identity, and Post-Soviet Space
- Political Geography:
- Russia, Europe, and Eastern Europe
82. Factors Driving Wealth Inequality in European Countries
- Author:
- Sebastian Leitner
- Publication Date:
- 11-2018
- Content Type:
- Working Paper
- Institution:
- The Vienna Institute for International Economic Studies (WIIW)
- Abstract:
- This paper analyses how microeconomic factors drive inequality in household wealth across nine European countries when applying the Shapley value approach to decomposition. The research draws on micro data from the Eurosystem Household Finance and Consumption Survey 2014. Disparity in inheritance and gifts obtained by households are found to have a considerable effect on wealth inequality that is on average stronger than that of income differences and other factors. In Austria, Germany, France, Portugal and Spain, the contribution of real and financial assets received as bequests or inter vivos transfers attains more than 30% to explained wealth inequality. The distribution of household characteristics (age, education, size, number of adults and children in the household, marital status) within countries however also shapes the observed wealth dispersion. The results resemble those obtained in a similar study (Leitner, 2016) based on data from the first wave of the Eurosystem Household Finance and Consumption Survey (HFCS 2010).
- Topic:
- Economics, Labor Issues, European Union, Inequality, Wealth, Inheritance, and Income Distribution
- Political Geography:
- Europe
83. Fundamental uncertainty and unconventional monetary policy: an info-gap approach
- Author:
- Yakov Ben-Haim, Maria Demertzis, and Jan Willem Van Den End
- Publication Date:
- 02-2017
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- This paper applies the info-gap approach to the unconventional monetary policy of the Eurosystem and so takes into account the fundamental uncertainty on inflation shocks and the transmission mechanism. The outcomes show that a more demanding monetary strategy, in terms of lower tolerance for output and inflation gaps, entails less robustness against uncertainty, particularly if financial variables are taken into account. Augmenting the Taylor rule with a financial variable leads to a smaller loss of robustness than taking into account the effect of financial imbalances on the economy. However, in some situations, the augmented model is more robust than the baseline model. A conclusion from our framework is that including financial imbalances in the monetary policy objective does not necessarily increase policy robustness, and may even decrease it
- Topic:
- Economics, International Political Economy, and International Trade and Finance
- Political Geography:
- Europe
84. Moldova: What it Should Expect from the West and What it Should Expect from Itself
- Author:
- Hans Martin Sieg
- Publication Date:
- 03-2017
- Content Type:
- Working Paper
- Institution:
- Center for Transatlantic Relations
- Abstract:
- This paper is part of CTR's Working Paper Series: "Eastern Voices: Europe's East Faces an Unsettled West." Since Moldova's November 2014 election, the country's image has changed drastically from the “success story” of the EU´s Eastern Partnership to that of a “captured state.” Moldova's politics continue to be defined by corruption and vested interests, which take advantage of weak state institutions and public administration, an ineffective judiciary and law enforcement agencies. This environment has enabled hostile takeovers of financial companies, often through concealed offshore operations, for criminal purposes, money-laundering schemes and a spectacular banking fraud, which was uncovered in autumn 2014. Low incomes have prompted hundreds of thousands of Moldovans to leave the country in search of a better life. Rivalries for political power, control over institutions, and economic assets have generated growing crises within different ruling coalitions, resulting in rapid changeover in governments, the break-up of major political parties and the formation of new parliamentary majorities with precarious democratic legitimacy. All of these factors have subjected Moldova to an unrelenting series of governmental, economic, financial and social crises since early 2015. The deeper causes of these crises can be traced to much earlier developments, however, and are deeply rooted in local structures.
- Topic:
- International Relations, Corruption, Development, Economics, Reform, Elections, and Geopolitics
- Political Geography:
- Russia, Europe, Moldova, and European Union
85. Economic Constraints on Russian Foreign Policy
- Author:
- Christopher Smart
- Publication Date:
- 11-2017
- Content Type:
- Working Paper
- Institution:
- Council on Foreign Relations
- Abstract:
- The recent collapse in the U.S.-Russia relationship has roots that stretch back to fundamental misunderstandings at the end of the Cold War. Western democracies have watched with dismay as tightening political controls in Russia have throttled domestic pluralism, while Moscow’s roughshod foreign policy and military tactics have driven its neighbors into submission or open hostility. Russia has bemoaned what it sees as Western arrogance and a stubborn refusal to recognize its security concerns and great-power status. Today, Russia’s annexation of Crimea, support of Syrian repression, and, above all, meddling in the U.S. presidential election have shattered any desire in Washington—at least outside the Oval Office—to search for common ground. Indeed, amid congressional logjams on nearly every issue, overwhelming bipartisan majorities passed a stiffer sanctions regime. The narrative in Moscow, meanwhile, paints a consistent picture of Washington actively rallying Europeans to expand footholds around Russia’s borders with an ultimate goal of regime change in the Kremlin itself. In spite of President Donald J. Trump’s apparent eagerness to improve relations, deepening resistance across the political spectrum makes any progress fanciful at this stage.Whether either side understands how to get relations back on track remains uncertain. What is clear is that neither side wants to. Deep-seated U.S. mistrust and an unyielding Russian government seem likely to confine the bilateral relationship to a series of sour exchanges and blustery confrontations for now. Yet one persistent weakness will ultimately limit Russia’s foreign agenda: an economy that is likely to fall increasingly behind those of its major neighbors and partners. For now, Russia has largely learned to tolerate Western economic sanctions, and its companies have found ways to live with restricted access to finance. Without reform and economic integration with the West, however, Russian influence will drift toward the margins of global diplomacy. Russia’s economy will atrophy from a combination of hyperconcentrated decision-making, continuing dependence on hydrocarbons, and persistent financial isolation. Core goals of Russia’s foreign policy will steadily recede from view, including important elements of the economic agenda with its immediate neighbors, the European Union and China. Though a snapback of oil prices would undoubtedly delay any day of reckoning, even large new inflows of petro-profits will not fundamentally close the widening gap with major partners.
- Topic:
- Foreign Policy, Economics, International Cooperation, and Military Strategy
- Political Geography:
- Russia, United States, Europe, and North America
86. Exploring the Uncharted Export: An Analysis of Tourism-Related Foreign Expenditure with International Spend Data
- Author:
- Michele Coscia, Ricardo Hausmann, and Frank Neffke
- Publication Date:
- 11-2016
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- Tourism is one of the most important economic activities in the world: for many countries it represents the single largest product in their export basket. However, it is a product difficult to chart: "exporters" of tourism do not ship it abroad, but they welcome importers inside the country. Current research uses social accounting matrices and general equilibrium models, but the standard industry classifications they use make it hard to identify which domestic industries cater to foreign visitors. In this paper, we make use of open source data and of anonymized and aggregated transaction data giving us insights about the spend behavior of foreigners inside two countries, Colombia and the Netherlands, to inform our research. With this data, we are able to describe what constitutes the tourism sector, and to map the most attractive destinations for visitors. In particular, we find that countries might observe different geographical tourists' patterns - concentration versus decentralization -; we show the importance of distance, a country's reported wealth and cultural affinity in informing tourism; and we show the potential of combining open source data and anonymized and aggregated transaction data on foreign spend patterns in gaining insight as to the evolution of tourism from one year to another.
- Topic:
- Economics, Political Economy, and Tourism
- Political Geography:
- Europe, Colombia, South America, and Netherlands
87. The problem with ‘embedded liberalism’: the World Bank and the myth of Bretton Woods
- Author:
- Samuel Appleton
- Publication Date:
- 10-2016
- Content Type:
- Working Paper
- Institution:
- Centre for Global Political Economy, University of Sussex
- Abstract:
- The Bretton Woods conference is conventionally understood as a radical break between the laissez faire order and its ‘embedded liberal’ successor, in which finance was suppressed in the interest of trade and productive growth. The new institutions, particularly the IBRD are often considered emblematic of this. In response to this, the paper argues that the Bretton Woods order required the enlistment, not repression, of private American finance. Firstly, laissez-faire era proposals for international financial institutions provided important precedents for the Bretton Woods institutions. Second, these were predicated on the uniquely deep liquidity of American financial markets following upon Progressive-era reforms, in the legacy of which the Roosevelt administration sought to locate the New Deal. Thirdly, they found new relevance in the 1940s as the IBRD turned by necessity to American financial markets for operating capital. Negotiating the imperative of commercial creditworthiness had two important consequences. First, it entailed the structural and procedural transformation of the IBRD, and allowed management to carve out a proprietary terrain in which its agency was decisive. Second, this suggests that US agendas were mediated by the Bank’s institutional imperatives – and that finance was no more ‘embedded’ during the Bretton Woods era than its predecessor.
- Topic:
- Development, Economics, World Bank, Global Markets, International Development, and Global Political Economy
- Political Geography:
- United States, Europe, and Latin America
88. Being Special: The Rise of Super Clubs in European Football
- Author:
- Matt Andrews
- Publication Date:
- 01-2015
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- Professional football clubs are ubiquitous in Europe. Every small to medium sized city has one. But most cities do not have an F.C. Barcelona or Bayern Munich or Manchester United. These are among the ‘super clubs’ of Europe: they win more games, attract more supporters, and make more money than other clubs. These clubs were not always the juggernauts one sees today, however. This paper looks at how they emerged. It tells more of an economic story than a sporting one, recounting a narrative similar to that one might tell about the emergence of successful multinational companies. According to this narrative, super clubs rise by producing increasingly more complex products because of expanding productive capabilities, providing growing opportunities for economic spillovers in the process. As indicated, this narrative focuses particularly on the ‘capabilities’ that have helped super clubs emerge. This focus draws on an emerging theory about economic complexity, which is used to frame the paper and is briefly introduced in section two (following an introduction to super clubs). The theory posits that production results from the creative combination of economic capabilities—or know-how. Some products require few common capabilities, are produced by everyone, and have relatively low value: like the average football club. Other products require many capabilities (including some that are rare), have high value, and are produced by a select group: like the super club. This theory is used to suggest two hypotheses about how football clubs become super: First, clubs do not become super by just producing better versions of the same products (a successful football team). Instead, over time, these clubs produce more complex, higher-value, globally consumed products. Second, clubs become super by accumulating new capabilities (or know-how) over time, manifest in new skills and people accessed through a range of ‘catalyst capabilities’ that source the skills. The catalyst capabilities include engagement mechanisms (through which skills are located and contracted), capital, infrastructure, and adaptive leadership. These hypotheses are put to the test in this study.
- Topic:
- Economics, Sports, and Economic Complexity
- Political Geography:
- Europe and European Union
89. The New European Parliament: Towards Economic Recovery
- Author:
- Michael Dauderstädt, Jose Enrique de Ayala, Domenec Ruiz Devesa, Vicente Palacio, and Vicente Palacio
- Publication Date:
- 02-2015
- Content Type:
- Working Paper
- Institution:
- Fundación Alternativas
- Abstract:
- The new European Parliament (EP) elected in May 2014 is facing a state of emergency in Europe. As 2014 draws to a close, austerity policies and the threat of populism are jeopardizing the present and the future of the European project. Unemployment rates in Europe are double the unemployment rate in the US and growth in the Eurozone is expected to fall below 1% in 2015. Although “the worst of the crisis” would appear to be behind us, Europe continues to be vulnerable to further economic shocks going forward. In fact, the EU could well be teetering on the brink of a third recession, the immediate threats on the horizon being current deflationary trends and a growing periphery crisis that is already manifest in Greece and could well spread to France and Italy. There is much uncertainty about the short- and medium-term future. It is not clear whether institutions such as the EP or the European Central Bank (ECB) will exercise their powers to the limit in order to counterbalance those of the governments of Member States and the Council, whether and when Germany will step up and assume a more active role in Eurozone stimulus, whether some kind of reform of the Lisbon treaty is in the cards or what kind of solutions will be provided to countries like Greece whose economies remain on the verge of collapse. ECB Governor Mario Draghi’s July 2014 speech in Jackson Hole, during which he strongly emphasized job creation rather dwelling on inflation and alluded to the possibility of implementing demand-side policies, structural reforms linked to a rise in 5 productivity, and enhancing competitiveness on a basis other than lower labour costs, was a very good sign. More recently, ECB authorities announced a new round of quantitative easing (QE) to take place in early 2015, and EC President Jean Claude Juncker made a commitment to devote €315 billion to infrastructure as part of his investment plan. Although we cannot expect a radical shift in economic policy any time soon, at least a minimal “Brussels consensus” if the EU is ever to put itself on the sure track towards a sustained recovery, structural reforms will need to be accompanied by fiscal stimulus. The time looks ripe for revising the economic policies that failed to achieve the objectives for which they were devised: pulling Europe out of the crisis and accelerating growth and employment. The time also looks ripe for a deep political and institutional shift: restoring the role of EU institutions – mainly the EP and the Commission – in forging the destinies of European citizens. If we accept the viewpoint that the EP is the institution that best embodies the concept of a European democracy built on the will of average citizens, the question we must subsequently ask ourselves whether the incoming EP elected in May 2014 will be able to bring about the change of tack that Europe needs. If viewed from a strictly quantitative perspective, the final outcome of the May elections was less damaging than originally feared. The European People’s Party once again won a majority (with 221 seats compared to 265 in 2009), and the breakdown for the rest of the parties and groups, in order of representation, was: the Progressive Alliance of Socialists and Democrats (191/184); the Conservatives and Reformists (70/51); the Alliance of Liberals and Democrats (67/84); the Greens (50/55); the European United Left (52/35), the Non-attached Members group (52/27) and the anti-Union Europe of Freedom and Democracy (48/32). Voter turnout across the EU fell very slightly from the 43% registered in 2009 to 42.5% in May, but did not break the crucial “psychological barrier” of 40%. 6 Table 1. Current distribution of seats and Parliamentary Groups in the EP (2014- 19 legislature) Source: Europarl http://www.europarl.europa.eu/elections2014-results/en/electionresults-2014.html If one takes a tally of only the seats now held by the traditional “big three” (the European People’s Party, the Socialists and the Liberal-Democrats), it is obvious that the pro-European forces still enjoy a solid majority in the EP – a very welcome majority in the sense that it signals that a majority of European voters continue to believe in a more united Europe, even in the context of the current economic, social and institutional crisis. The good news, therefore, is that there may be a sufficient “critical mass” in favour of going forward with the integration process rather than reversing it. Moreover, if the big three are successful in building ad hoc alliances with other parties such as the European Left and the Greens regarding a social and economic platform for a better Europe, it might even be possible to muster a majority willing to go even further in a federalist direction. However, these new distribution figures reveal only a small part of the entire story. Firstly, they should not keep us from recognizing the qualitative significance of the rise of a heterogeneous group of anti-integration and anti-European forces in the EP that represent a growing number of Europeans willing to cast their votes for Eurosceptic, nationalistic, populist, or xenophobic parties. The rising tide of Eurosceptics and Europhobia within the EP could well be perceived as a potential Trojan horse that could eventually undermine the stability of the EU and its very existence. Even if divided by 7 country, ideology, opportunity and other criteria and unable (or unwilling) to forge strong, sustained parliamentary coalitions, taken together, these forces hold 170 out of 751 seats in the current EP – an impressive 22%. The number of MEPs of the French National Front increased from 3 in 2009 to 24 in 2014, the new German right-wing antiEuro party Alternative for Germany (AFD) won 7 seats, and UKIP - which won the popular vote in Britain - moved up to 24 (from 13 in 2009). The situation is more worrying if we take into consideration that an overwhelming number of European citizens (almost 58%) did not go to the polls to vote. Had they chosen to make their voices heard, their vote would have supposed a turning point for Europe in one direction or another. Secondly, Euroscepticism and Europhobia are also having a considerable impact on the national politics of Member States (MS), and the most alarming examples of this phenomenon have surfaced in the major, “hard core” countries upon which European construction heavily depends such as France, Italy, Germany, or even for that matter, the UK. What these diverse parties ultimately have in common is their fierce defence of national sovereignty. They have reached the point of setting national policy agendas throughout the EU. As of the end of November 2014, the National Front was still ahead in voter intention polls in France, the AFD was gaining support according to polls conducted in Germany, and similar surveys in the UK showed that support for the anti-immigration UKIP was holding strong. The rise of UKIP is putting David Cameron’s government under intense pressure to hold a referendum on Britain’s exit from the EU. The victory of Matteo Renzi’s centre-left Democratic Party in the May EP elections does not obscure the fact that the fiercely populist and Eurosceptic Five-Star movement remains the largest party in the Italian Chamber of Deputies since February 2013. Sweden’s xenophobic Democratic Party could hold the key to governance in that country after the March 2015 elections. For the first time, a majority of citizens in both France and Germany regard the EU as a problem. Parallel to these developments, the anti-Muslim street demonstrations are becoming more and more frequent in Germany and the Netherlands. Should the economic situation in Europe worsen, the diverse range of tensions originating in northern and southern MSs, not to mention the tensions between them, could ratchet support for populist movements to dangerously high levels.
- Topic:
- Economics, Europe Union, Election watch, and Unemployment
- Political Geography:
- United Kingdom, Europe, Germany, and Brussels
90. The Economic Impact of Huawei in the UK
- Author:
- Oxford Economics
- Publication Date:
- 06-2015
- Content Type:
- Working Paper
- Institution:
- Oxford Economics
- Abstract:
- In September 2012, Huawei commited to spending £1.3 billion in the UK. Almost three years later, the global information and communications leader is well on its way to doing just that—and with vast social and economic significance. In this report, Oxford Economics explores the contribution of Huawei to the UK economy over the three years 2012-2014, and assesses the company’s recent UK expenditure record over the five years 2013-2017, split equally between investment and procurement.
- Topic:
- Economics, Communications, and Investment
- Political Geography:
- United Kingdom and Europe
91. Relations Between Russia and Europe: No Simple Solutions in Sight
- Author:
- S. Karaganov
- Publication Date:
- 06-2015
- Content Type:
- Working Paper
- Abstract:
- The Crisis between Russia and the West is associated with Crimea and Russia’s actions in Donbass and Ukraine; in fact, it has deeper roots while its long-term repercussions might prove to be much graver than expected. a large-scale armed clash cannot be excluded even if this possibility is gradually reducing; we should be ready to political confrontation and contracted economic ties. Today, Europe is facing an even greater threat: a civilizational divorce with Russia.
- Topic:
- Political Violence, Economics, Armed Struggle, and Geopolitics
- Political Geography:
- Russia, Europe, Ukraine, and Crimea
92. The Hour of Truth: The Conflict in Ukraine–Implications for Europe’s Energy Security and the Lessons for the U.S. Army
- Author:
- Dr. Ariel Cohen and Ivan Benovic
- Publication Date:
- 11-2015
- Content Type:
- Working Paper
- Institution:
- The Strategic Studies Institute of the U.S. Army War College
- Abstract:
- Since the breakup of the Soviet Union, a number of gas disputes between Russia and Central and Eastern European countries have unveiled the strategic dependence of Europe on Russian piped gas. The recent Ukrainian crisis demonstrated that Europe has a desperate need to improve the security of its gas supply. The United States is interested in the economic stability and growth of Europe, because the European Union (EU) is its principal and largest economic partner. The United States and the EU enjoy the largest trade and investment relationship in the world, which should not be jeopardized by disruptive, anti-status-quo powers. Europe’s energy independence is not only an economic interest of America, but also a political and security one. Europe’s dependence on Russian natural gas undermines European unity and weakens the primary U.S. allies in their relations with Russia. U.S. Armed Forces in Europe and the U.S. Army in particular can and should play an important role in promoting energy security. This involvement includes: increased situational awareness; deployment to the sensitive areas; and enhanced training activities, including with the allies of the U.S. military in Central and Eastern Europe.
- Topic:
- Security, Economics, Energy Policy, Natural Resources, Military Affairs, and Gas
- Political Geography:
- Russia, Europe, Eastern Europe, and Soviet Union
93. Keeping EU-Asia Reengagement on Track
- Author:
- Richard Youngs
- Publication Date:
- 01-2015
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- The relationship between the European Union (EU) and Asia is in flux. The EU intensified its economic ties to Asia and boosted its security cooperation in the region in 2011 and 2012. But new challenges, including the crises in Ukraine and the Middle East, have made it difficult to sustain this incipient momentum. There are a number of steps that EU and Asian governments can and should take to continue to strengthen their relations.
- Topic:
- Security, Diplomacy, and Economics
- Political Geography:
- Europe, Ukraine, Middle East, and Asia
94. Three Myths Behind the Case for Grexit: A Destructive Analysis
- Author:
- Photis Lysandrou
- Publication Date:
- 06-2015
- Content Type:
- Working Paper
- Institution:
- City Political Economy Research Centre (CITYPERC), University of London
- Abstract:
- Greece faces a stark choice: either to compromise on the terms laid down by its international creditors and thereby remain in the eurozone or reject any compromise on the terms and exit the eurozone. The Syriza government was elected in January, 2015, on the double promise that it would tear up the deeply unpopular memorandum imposed by the Troika while at the same keeping the euro. It was a promise that it could not keep. After several months of tough negotiations it has become clear that Greece's creditors, led by the German government, have no intention of accepting a renegotiated deal that substantively lightens Greece's debt burden and thus the need for the type of harsh austerity measures contained in the memorandum.
- Topic:
- Debt, Economics, Government, and Financial Crisis
- Political Geography:
- Europe and Greece
95. Understanding Digital Intelligence and the Norms That Might Govern It
- Author:
- David Omand
- Publication Date:
- 03-2015
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- This paper describes the nature of digital intelligence and provides context for the material published as a result of the actions of National Security Agency (NSA) contractor Edward Snowden. Digital intelligence is presented as enabled by the opportunities of global communications and private sector innovation and as growing in response to changing demands from government and law enforcement, in part mediated through legal, parliamentary and executive regulation. A common set of organizational and ethical norms based on human rights considerations are suggested to govern such modern intelligence activity (both domestic and external) using a three-layer model of security activity on the Internet: securing the use of the Internet for everyday economic and social life; the activity of law enforcement — both nationally and through international agreements — attempting to manage criminal threats exploiting the Internet; and the work of secret intelligence and security agencies using the Internet to gain information on their targets, including in support of law enforcement.
- Topic:
- Security, Economics, and Government
- Political Geography:
- Europe
96. The Politics of 2 Percent: NATO and the Security Vacuum in Europe
- Author:
- Jan Techau
- Publication Date:
- 09-2015
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- The members of the North Atlantic Treaty Organization (NATO) pledged in 2014 to increase their defense spending to 2 percent of their gross domestic products by 2024. It is unrealistic to assume that this goal will ever be reached by all 28 allies, and yet the 2 percent metric persists—and it has assumed a significance beyond its face value. It is about addressing Europe’s growing security vacuum and defining who will be in charge of European security.
- Topic:
- Security, NATO, Economics, and Military Affairs
- Political Geography:
- Europe
97. Financing SMEs in Europe: Stylised Facts, Policies, Challenges
- Author:
- Daniele Ciani, Paolo Finaldi Russo, and Valerio Vacca
- Publication Date:
- 12-2015
- Content Type:
- Working Paper
- Institution:
- Istituto Affari Internazionali
- Abstract:
- This paper describes the main features of European SMEs’ financial behaviour and the policies recently put in place to support their funding. European SMEs are structurally more leveraged and charged with higher interest rates than large firms. Moreover, the crisis has deeply affected their fund-raising capacity, as banks reduced credit supply while non-bank funding was unavailable to most SMEs. Against this background, EU has focussed its policies on long-term investment and on a more favourable environment for SMEs financing, including through the launch of the Capital Markets Union. At the national level, most governments have provided guarantees and enhanced the role of national development banks. Nevertheless, key issues are still outstanding, such as the funding of innovative firms and the improvement of transparency and of the legal and regulatory frameworks.
- Topic:
- Economics, International Trade and Finance, Markets, and European Union
- Political Geography:
- Europe
- Publication Identifier:
- 978-88-98650-71-2
- Publication Identifier Type:
- ISBN
98. China's New Silk Road Initiative
- Author:
- Zhao Minghao
- Publication Date:
- 10-2015
- Content Type:
- Working Paper
- Institution:
- Istituto Affari Internazionali
- Abstract:
- The European Council has mandated the High Representative of the Union for Foreign Affairs and Security Policy, Federica Mogherini, to draft a Global Strategy by June 2016. Given Europe’s status as a global power, such a strategy must respond to Europe’s own challenges as well as to the new grand strategies of other major players in world politics, like China. To better understand the central tenets of the Chinese leadership’s strategic thinking, two keywords are most important – the “Four Comprehensives” and the “One Belt and One Road” (OBOR). As an initiative mainly focusing on promoting Eurasian integration and reshaping Chinese geo-economic advantages, the OBOR is highly consequential to China’s interactions with Europe and the rest of the world at large in the decades to come. How to take advantage of the OBOR, create new EU-China synergies, and tackle relevant challenges are questions the EU leaders should be attentive to.
- Topic:
- Economics, International Cooperation, International Trade and Finance, Markets, and Bilateral Relations
- Political Geography:
- Europe and Asia
- Publication Identifier:
- 978-88-98650-61-3
- Publication Identifier Type:
- ISBN
99. The Greek “Rescue”: Where Did the Money Go?
- Author:
- Pablo Gabriel Bortz
- Publication Date:
- 11-2015
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- This paper analyses the financial assistance provided to Greece in the first two rescue packages granted by the Troika (European Union, European Central Bank and IMF). It looks particularly carefully at claims by Sinn that a third of the public credit granted to Greece financed its current account deficit, while another third funded capital flight by Greek nationals, with only the remaining third used to pay creditors. The paper shows that Sinn inflates the assistance given to Greece by mixing several different concepts in the total. It also critically reviews the claim that the assistance was used to finance the current account deficit or capital flight by Greek citizens. Realistic accounting shows that 54% of the financial assistance provided to Greece was used to repay (foreign) debt, while another 21% was used to recapitalize Greek banks (some of which were owned by foreign institutions). Other claims about the rescue package are also analysed in relation to the treatment of Greek and foreign banking exposure to sovereign debt.
- Topic:
- Economics, Finance, Banking, and Development Assistance
- Political Geography:
- Europe and Greece
100. The Cyclically Adjusted Budget: History and Exegesis of a Fateful Estimate
- Author:
- Orsola Costantini
- Publication Date:
- 10-2015
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- This paper traces the evolution of the concept of the cyclically adjusted budget from the 1930s to the present. The idea of balancing the budget over the cycle was first conceived in Sweden in the 1930s by the economists of the Stockholm School and was soon reinterpreted and incorporated into the fiscal program of the American political coalition supporting the New Deal, especially by the Committee for Economic Development during and after World War II. In the 1960s, Keynesian economists associated with the Kennedy and Johnson administrations reformulated the notion. Despite their claims at the time, their version differed only in degree from the earlier CED approach, the transformation being largely conditioned by changing political circumstances. In the 1980s, however, the concept changed substantially. Methods for calculating it transformed dramatically, as the notion became a device to limit and direct governments’ fiscal policies in a wide sense, that is, including institutional (or “structural”) reforms. The final section of the paper considers the shifting uses of the notion in the European Growth and Stability Pact.
- Topic:
- Economics, Budget, Economic Growth, and Fiscal Policy
- Political Geography:
- Europe, North America, and United States of America