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Begin New Search Topic Monetary Policy Political Geography Germany Content Type Policy Brief

1. Germany and the Future of the Eurozone

Author:
Sebastian Plóciennik
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
The Polish Institute of International Affairs
Abstract:
Although the euro has survived the most severe phase of the current crisis, its future is still uncertain. The fate of the common currency will depend not only on the condition of the European economy, but also the priorities of its biggest player—Germany. So far that country has been strong enough to enforce its own vision of integration based on neoliberal reforms and austerity measures. Since the side effects of this prescription have been rising costs and risks, Berlin's new government will consider a range of different solutions, including in extremis a controlled and partial break-up of the Eurozone. For Poland, this volatility creates a challenging environment with risks, but also creates chances for Warsaw to increase its influence over the evolution of EU integration in this field.
Topic:
Debt, Economics, Monetary Policy, Financial Crisis, and Reform
Political Geography:
Europe and Germany

2. Why the ECB should cut borrowing costs in periphery

Publication Date:
06-2013
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
The European Central Bank has postponed any plans to introduce targeted measures to reduce the cost of borrowing for small and medium-sized businesses in the credit-starved peripheral Eurozone economies. Given the widening gap between the lower costs of borrowing for companies in Germany and France and the higher costs in the periphery, we think that there is a strong case for the ECB to take action. Simulations using our Global Macroeconomic Model show that if half the tightening in credit conditions seen since 2008 were to be reversed within two years, Eurozone GDP would be 0.7% higher by the end of 2017 than under our baseline forecast. There would be over 400,000 fewer people unemployed. This would be particularly beneficial for peripheral Eurozone risk assets.
Topic:
Debt, Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Europe and Germany

3. Towards a Deeper EMU: An assessment of political divisions within the EU

Author:
Juha Jokela
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Policymakers, observers and the media have referred to a vast number of divisions in crisis-torn Europe. The EU is divided between north and south or creditors and debtors. Some have emphasised the emerged division between anti-EU and pro- EU forces. Significantly, these divisions are also manifested within the eurozone, in the form of the current differences between the French and German views, and the increasing role of the populist movements in many euro countries. Yet others have highlighted the boundary between the eurozone and the rest of the EU, and suggested that the euro countries now form the core of the Union. Relatedly, some of the non-euro members are distancing themselves from the EU – most notably the UK – while many others aim to secure their influence in the Union, even if euro membership may have been put on the back burner.
Topic:
Debt, Economics, Monetary Policy, and Financial Crisis
Political Geography:
United Kingdom, Europe, and Germany

4. The Macroeconomic Imbalance Procedure and Germany: When is a current account surplus an 'imbalance'?

Author:
Daniel Gros and Matthias Busse
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The Macroeconomic Imbalance Procedure (MIP) was designed to prevent the emergence of imbalances like the large and persistent current account deficits that occurred in Spain and Ireland. But within this mechanism, a current account surplus is also viewed as a source of concern. Indeed, last year's Alert Mechanism Report (AMR), issued by the European Commission signalled an excessive current account surplus for the Netherlands and Luxembourg, while Germany just barely scraped by with a 5.9% surplus, marginally evading the 6% threshold (over a 3-year average). With the most recent report, however, Germany's status has changed. Along with the Netherlands and Luxembourg, it too has now been singled out as a euro-area country with a surplus above the upper threshold.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

5. On the Tasks of the European Stability Mechanism

Author:
Stefano Micossi, Fabrizia Peirce, and Jacopo Carmassi
Publication Date:
03-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
In recent weeks pressures on the euro and eurozone sovereign debtors have subsided. Buoyant growth in the global economy, increasingly benefiting also the European economy, has of course played an important role in calming financial markets. But even more important has been the perception that France and Germany are again working constructively for a strong economic Europe. More broadly, the acute turbulence in financial markets since the spring of 2010 may have finally convinced our political leaders, notably including the German political establishment, that the benefits of a stable currency far outweigh the costs that may have to be borne to make it work properly. The euro will only be trusted if the member states effectively coordinate their economic policies not only to ensure fiscal stability, but also to eliminate persistent divergences in productivity leading to unsustainable imbalances between national savings and investment (Schäuble, 2011).
Topic:
Security, Economics, Regional Cooperation, Monetary Policy, Financial Crisis, and Governance
Political Geography:
Europe, France, and Germany

6. Getting Surplus Countries to Adjust

Author:
John Williamson
Publication Date:
01-2011
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The world has witnessed two distinct attempts to build a multilateral mechanism to discipline surplus countries that declined to adjust their surpluses, and several proposals are currently on the table to do the same. On the two previous occasions the major surplus country of the day defeated attempts to create such a mechanism, and today China (not to mention Japan or Germany) exhibits no enthusiasm for the idea. Despite the importance of the issue, there has been remarkably little discussion of these proposals.
Topic:
Economics, International Trade and Finance, International Monetary Fund, and Monetary Policy
Political Geography:
Japan, China, and Germany

7. Agreement needed on liquidity provision to restore confidence in the eurozone

Author:
Stefano Micossi
Publication Date:
11-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Some eighteen months after the first Greek rescue (May 2010), there is little doubt that the multiple attempts at crisis management in the eurozone have failed to restore confidence. Indeed, following each round of emergency measures agreed by the eurozone summits, matters have turned for the worse (see Figure 1 for the widening spreads, over the German Bund, for sovereign borrowing in the eurozone). At the time of writing, contagion has spread beyond Spain and Italy to the core sovereigns, with France close to losing its triple A rating and even Germany experiencing partial failure in a Bund auction on November 23rd. Spreads are also opening up for Austria, Belgium, Finland and even the virtuous Netherlands. Meanwhile, the banking system Europe- wide is under increasing strain, with term funding all but closed for any bank with significant exposure to distressed sovereign debtors and the interbank market close to seizing up. Deposit withdrawals have surfaced in a number of large banks from the periphery. The euro has started to weaken in foreign exchange markets, narrowing the room for a distinction between eurozone debt crisis and euro-currency crisis from which some observers were until recently drawing comfort.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

8. How Do We Know This is Not Another Great Depression? Lessons for Policymakers from the 1930s

Author:
Jeffrey Frankel
Publication Date:
07-2009
Content Type:
Policy Brief
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
The current economic crisis is fundamentally different from those we have experienced in recent past. The proximate causes of previous recessions (1980-2 and 1990-91) were increases in interest rates in response to inflation. This time around, however, low interest rates and loose monetary policy during the period 2003-2005 had contributed to a bubble in asset prices, rather than to inflation. This-coupled with an underestimation of risk in our financial system, failures of corporate governance, and excessive debt by both households and government-caused the crisis of 2007-09.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
United States, Japan, and Germany