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Begin New Search Topic Economics Political Geography Europe Content Type Policy Brief Publishing Institution Peterson Institute for International Economics

11. Stability Bonds for the Euro Area

Author:
Angel Ubide
Publication Date:
12-2015
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The rules and buffers created in the last few years to enable the euro area to withstand another sudden stop of credit and market-driven panic in one or more of its member states are welcome steps, but they are widely recognized as inadequate. Ubide proposes creating a system of stability bonds in the euro area, to be issued by a new European Debt Agency, to partially finance the debt of euro area countries—up to 25 percent of GDP. These stability bonds should be initially backed by tax revenues transferred from national treasuries, but ultimately by the creation of euro area–wide tax revenues, and used to fund the operations of national governments. They could also be used for euro area–wide fiscal stimulus, to complement the fiscal policies of member states. Such bonds would strengthen the euro area economic infrastructure, creating incentives for countries to reduce their deficits but not forcing them to do so when such actions would drive their economies further into a downturn. The bonds would permit the euro area to adopt a more flexible or expansionary fiscal policy during recessions.
Topic:
Economics, International Trade and Finance, Monetary Policy, and GDP
Political Geography:
Europe

12. Is the European Central Bank Failing Its Price Stability Mandate?

Author:
Ángel Ubide
Publication Date:
02-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Inflation in the euro area is too low, just 0.9 percent year-on-year in December 2013, and inflation expectations, measured from inflation derivative contracts, have shifted lower, indicating that markets expect some small probability of deflation in 2014 and average inflation over the next five years in the 1.25 to 1.5 percent range. The European Central Bank (ECB), however, seems to be content with this outlook. Its current projections show a very slow economic recovery and inflation at just 1.3 percent in two years' time. Yet the ECB describes the risks to inflation as balanced. This puzzling assessment might be due to the fact that the ECB's definition of price stability is less precise than that employed by other central banks, and some ECB members may interpret the definition as setting a ceiling, rather than a target, for inflation at close to but below 2 percent. But if one considers the ECB's self-assessment of success since its creation—achieving 2 percent inflation on average—its current inflation forecast of 1.3 percent would fall short of achieving its price stability mandate.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Europe

13. Making Labor Market Reforms Work for Everyone: Lessons from Germany

Author:
Jacob Funk Kirkegaard
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Mark Twain once wrote an essay about the difficulties of learning what he called "The Awful German Language." Similar barriers to comprehension seem to plague those trying to explain recent German economic performance. By most measures, Germany has the best functioning labor market among large economies in the West, with levels of employment reaching those in the United States at the end of the turbo-charged 1990s. A debate has stirred, however, about whether this success has come with a price—specifically, whether Germany's domestic structural reforms have lowered living standards for Germany's low income workers and worsened income inequality and whether Germany is fortuitously and perhaps selfishly riding a wave of strong foreign demand for German exports.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Labor Issues
Political Geography:
United States, Europe, and Germany

14. An Economic Strategy to Save Ukraine

Author:
Anders Åslund
Publication Date:
11-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Ukraine has experienced a year of unprecedented political, economic, and military turmoil. The combination of Russian military aggression in the east and a legacy of destructive policies leading to pervasive corruption has plunged the country into an existential crisis. The West, meanwhile, has been largely paralyzed with uncertainty over how to assist Ukraine without reviving Cold War hostilities. Yet all is not lost for Ukraine. A tenuous ceasefire, along with the successful elections of President Petro Poroshenko in May and a new parliament in October offer an opportunity for economic reform. If the current ceasefire in the east holds, Ukraine has a great opportunity to break out of its vicious circle of economic underperformance. Yet, the window of opportunity is likely to be brief. The new government will have to act fast and hard on many fronts to succeed.
Topic:
Conflict Resolution, Security, Economics, and Politics
Political Geography:
Russia, Europe, and Ukraine

15. Alternatives to Currency Manipulation: What Switzerland, Singapore, and Hong Kong Can Do

Author:
Joseph E. Gagnon
Publication Date:
06-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
For the major advanced economies and the world as a whole, insufficient aggregate demand—that is, too little spending—impeded recovery from the Great Recession of 2008-09. By manipulating their currencies to boost their net exports, many countries made a bad situation worse for their trading partners, which saw demand shifted away. The world needs policies that increase total demand rather than policies that fight over the allocation of the existing amount of demand.
Topic:
Economics, International Trade and Finance, and International Monetary Fund
Political Geography:
Europe, Asia, Switzerland, and Singapore

16. Financial Services in the Transatlantic Trade and Investment Partnership

Author:
Simon Johnson and Jeffrey J. Schott
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In July 2013, the United States and the European Union launched negotiations on a Transatlantic Trade and Investment Partnership (TTIP). The talks aim to craft a comprehensive accord matching or exceeding the reforms achieved in their previous trade pacts. Since both sides have included financial services in prior free trade agreements (FTAs), they implicitly recognized that the TTIP accord would also cover this sector. But what will be included in the financial services chapter is still subject to debate.
Topic:
Economics, International Trade and Finance, Treaties and Agreements, and Bilateral Relations
Political Geography:
United States and Europe

17. Role of Apprenticeships in Combating Youth Unemployment in Europe and the United States

Author:
Natalia Aivazova
Publication Date:
08-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Five years since the global economic crisis began in 2008, many of the world's advanced economies are still struggling with sluggish growth and high levels of joblessness, especially among younger workers. In June 2013 the European Council expressed concern that “youth unemployment has reached unprecedented levels in several Member States” and called for “urgent action.” Much of the debate in Europe and the United States has focused on fiscal and monetary measures; while macroeconomic policy can address cyclical problems, a wide consensus recognizes the need to address structural challenges. One such challenge is a mismatch between the skills demanded by employers and those available among the population, especially younger workers. This mismatch can be addressed in part through the implementation of apprenticeship programs. The European Council recently concluded that “high quality apprenticeships and work-based learning will be promoted, notably through the European Alliance for Apprenticeships.” However, in the United States, where many are struggling to find jobs after graduating, apprenticeship programs hardly draw government and private-sector resources. Boosting apprenticeships could give both European and US workers the much-needed skills and competitive edge.
Topic:
Economics, Markets, Labor Issues, and Youth Culture
Political Geography:
United States and Europe

18. How to Form a More Perfect European Banking Union

Author:
Ángel Ubide
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The euro area has made significant strides in the last six months in designing a banking union. The goal has been to centralize supervisory decision making and improve the management of failing banks while protecting European taxpayers and imposing costs on creditors through so-called bail-ins to reduce moral hazard. Euro area leaders have reached some political agreements, and legislation is being prepared for eventual adoption by the European Parliament and then the various member states. This progress has been hailed as a step in the right direction, with particular praise for the euro area leaders' plan to endow the European Central Bank (ECB) with supervisory powers and create new rules for managing troubled banks.
Topic:
Economics, Markets, Regional Cooperation, and Monetary Policy
Political Geography:
Europe

19. Ukraine's Choice: European Association Agreement or Eurasian Union?

Author:
Anders Åslund
Publication Date:
09-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Since gaining independence in December 1991, Ukraine has vacillated between the European Union and Russia for economic and political cooperation. Until recently neither had offered Ukraine much, but in the last few months, things have heated up. Ukraine's intention to sign an Association Agreement for political association and economic integration with the European Union has raised a furor in the Kremlin, which is now trying to block Ukraine from aligning itself with the European Union. Moscow has imposed trade sanctions in clear violation of its obligations in the World Trade Organization (WTO) and is pursuing an intense confrontation.
Topic:
Economics, Treaties and Agreements, World Trade Organization, and Bilateral Relations
Political Geography:
Russia, Europe, Ukraine, Asia, and Moscow

20. Updated Estimates of Fundamental Equilibrium Exchange Rates

Author:
William R. Cline and John Williamson
Publication Date:
11-2012
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In 2008 we introduced a semiannual series providing estimates of fundamental equilibrium exchange rates, or FEERs (Cline and Williamson 2008a). The economic concept of FEERs was first set forth by Williamson (1983). An operational method for arriving at multilaterally consistent estimates of FEERs was developed by Cline (2008) and has been applied over the past five years in this series of estimates. This issue marks the valedictory round of the series for Williamson, who is retiring.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Europe and Lisbon