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  • Author: Daniel Gros
  • Publication Date: 03-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper describes the key economic variables and mechanisms that will determine the adjustment process in those euro area countries now under financial market pressure. (Greece, Ireland, Portugal, Spain and Italy = GIPSY) The key finding is that the adjustment will be particularly difficult for Greece (and Portugal) because these are two relatively closed economies with low savings rates. Both of these countries are facing a solvency problem because they combine high debt levels with low growth and high interest rates. Fiscal and external adjustment is thus required for sustainability, not just to satisfy the Stability Pact. By contrast, Ireland and Spain face more of a liquidity than a solvency problem. Italy seems to have a much better starting position on all accounts. Fiscal adjustment alone will not be sufficient to ensure sustainability. Without significant reductions in labour costs, these economies will face years of stagnation at best. Especially in the case of Greece, it is imperative that the cuts in public sector wages are transmitted to the entire economy in order to restore competitiveness, and thus ensure that export growth can become a vital safety valve. Without an adjustment of wages in the private sector, the adjustment will become so difficult that failure cannot be excluded.
  • Topic: Debt, Economics, Monetary Policy, Financial Crisis
  • Political Geography: Europe, Greece, Spain, Italy, Portugal, Ireland
  • Author: Diego Valiante
  • Publication Date: 02-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: Investors have a longer memory than the sell‐side of the market. To regain their trust, intensive work needs to be done in the coming years. The new European Commissioner of the Internal Market, Michel Barnier, will play a pivotal role here. In the area of capital markets, he will need the support of a determined European Parliament, a strong commitment from the Council and Member States, as well as active contributions from the CESR/ESMA , other Level 3 Committees/Authorities and national supervisors. We believe that participants in capital markets share the same goal: to make them as efficient and effective as possible. The ability to collect savings and allocate them to investment, and to allow all participants to defray risk, is at the heart of any successful modern economy. This requires effective regulation that not only mandates common standards, but also promotes accountability, responsibility and transparency, while at the same time encouraging innovation. Effective regulation must not impose undue costs, if markets are to remain efficient and effective. However, we should be conscious that the crisis has been so deep that there is a collective need to go back to the basic principles of financial regulation and supervision.
  • Topic: Economics, International Trade and Finance, Financial Crisis
  • Political Geography: Europe
  • Author: Caterina Giannetti, Nicola Jentzsch, Giancarlo Spagnolo
  • Publication Date: 02-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: Asymmetries can severely limit the cross-border border expansion of banks, if entering banks can only obtain incomplete information about potential new clients. Such asymmetries are reduced by credit registers, which distribute financial data on bank clients. Asymmetrically distributed information and adversely selected pools of borrowers constitute severe barriers for foreign banks when they enter new markets. In many instances, these problems force banks to either form 'alliances with incumbents' or simply enter through mergers and acquisitions (M). Yet such entry modes do not automatically lead to intensified competition as they may leave the number of competitors unchanged. Thus, institutions that reduce information asymmetries in credit markets (thereby encouraging entry through branches) may be very important if the objective is strengthening competition in addition to market integration. Recently, these institutions – credit registers – have received greater attention among academics and policy-makers in Europe, although there is still a remarkable lack of understanding of their empirical impact on banking.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy
  • Political Geography: Europe
  • Author: Ilaria Maselli
  • Publication Date: 05-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: 'Flexicurity' might be defined as a mix of flexible contractual arrangements, income support measures, active labour market policies and lifelong learning. The successful shift in approach of the Danish and Dutch labour markets from passive to active labour market policies, and to flexicurity, has attracted considerable attention among academics and policy-makers. The objective of this Working Document is to contribute to the debate with the creation of a composite indicator to measure flexicurity, based on the definition provided in the European Commission's Communication on Flexicurity (COM(2007)359). Our indicator confirms that preferences in the balance of flexibility and security are highly heterogeneous among countries; a finding that supports the 'pathway' approach as proposed by the European Commission. A second important conclusion is that the idea of flexibility being in favour of employers and security being in favour of employees needs to be overcome. Flexicurity is 'both for both', although it does not apply uniformly to all age groups but is two and three times greater for older and younger workers respectively.
  • Topic: Economics, International Trade and Finance, Labor Issues
  • Political Geography: Europe
  • Author: Roderick Kefferpütz, Félix Krawatzek
  • Publication Date: 09-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: The modernisation of Russia has been a topic of vigorous debate for centuries. It has also been an intensely divisive issue among Russia's elite, and since President Dmitry Medvedev came to power, modernisation has become the leitmotif of the presidency. The global economic crisis hit Russia hard, meaning that the status quo in political, economic and social terms is no longer acceptable. However, there are a number of competing visions on modernisation within the Russian political elite and society as a whole. This Working Document aims to illustrate the diversity of and competition for the dominance of views on Russia's future. In a second step, authors Félix Krawatzek, Visiting Researcher at CEPS and Roderick Kefferpütz, Associate Research Fellow, analyse the obstacles to a successful realisation of the ambitious modernisation agenda and outline the implications for the new EU-Russia modernisation partnership.
  • Topic: Economics, Globalization
  • Political Geography: Russia, Europe
  • Author: Felix Roth, Anna-Elisabeth Thum
  • Publication Date: 09-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: Using new international comparable data on intangible capital investment by business within a panel analysis from 1995-2005 in an EU-15 country sample, we detect a positive and significant relationship between intangible capital investment by business and labour productivity growth. This relationship is cross-sectional in nature and proves to be robust to a range of alterations. Our empirical analysis confirms previous findings that the inclusion of business intangible capital investment into the asset boundary of the national accounting framework increases the rate of change of output per worker more rapidly. In addition, intangible capital is able to explain a significant portion of the unexplained international variance in labour productivity growth and when incorporating business intangibles, capital deepening becomes an even more significant source of growth. The relationship is slightly stronger in the time period 1995-2000 and seems to be driven by the coordinated countries within the EU-15.
  • Topic: Economics, International Trade and Finance, Regional Cooperation, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Selen Sarisoy Guerin
  • Publication Date: 07-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: Several policy-relevant issues regarding the EU's bilateral investment treaties (BITS) are addressed in this paper. First and foremost, we explore the question of whether EU's BITs have a significantly positive impact on outflows or not. Second, we ask the question which member states and which BIT partners have had a significant experience after the implementation of the BIT. In our sample we find that both OECD BITs and EU BITs have a statistically significant and positive impact on FDI outflows. This result is robust to the inclusion of variables such as privatisation proceeds that control for the level of economic reform, the level of trade linkages, the level of democratic freedom and a measure of risk of expropriation among other standard controls. We control for endogeneity in our estimations by using the fixed-effects estimator as our preferred estimator on a large panel dataset. We also test the strict exogeneity of our results by using a method suggested by Baier and Bergstrand (2007) and we find no feedback effect in our sample.
  • Topic: Economics, International Trade and Finance, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Felix Roth
  • Publication Date: 07-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: Trust in the ECB, as measured by the standard Eurobarometer (and other) surveys has fallen to an unprecedented low – especially in the larger euro area countries. The authors find that up to the start of the recession in 2008, trust in the ECB was little affected by business cycle variables such as growth and inflation. This changed radically with the recession, with trust in the ECB becoming correlated quite closely with growth. However, even the recovery of growth in 2009 was not sufficient to restore trust in the ECB to previous levels. This finding implies that European citizens seem to have placed a heavy share of the blame on the European Central Bank for the real economic downturn caused by the financial crisis.
  • Topic: Economics, International Trade and Finance, Monetary Policy
  • Political Geography: Europe
  • Author: Jørgen Mortensen
  • Publication Date: 12-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper provides evidence on past growth of productivity, analysing the evolution of labour productivity, capital deepening and multi-factor productivity. Based on a literature review of recent studies, it shows that economic growth is increasingly attributable to the accumulation of intangible capital and that consequently, an increasing share of conventionally measured rise in labour productivity has, in fact, been ploughed back into the economy as intangible capital formation. In addition, it shows that on average for the developed countries examined, the growth of total factor productivity has been the main determinant of the increase in living standards over the 50 years from 1960 to 2010. It also demonstrates a striking slowdown in the growth of both productivity and living standards during this period. Looking ahead, it argues that the period 2010 to 2030 is likely to see a considerable expansion of tangible and intangible capital formation and lower growth of multi-factor productivity. The paper therefore concludes that over the next 20 years the scope for growth in living standards in the developed economies will be very limited, on average around half a percent per annum, with serious consequences for social conditions and a likely aggravation of inequalities.
  • Topic: Economics, Globalization, Human Welfare, Labor Issues
  • Political Geography: Europe
  • Author: Christian von Hirschhausen, Johannes Herold, Sophia Rüster
  • Publication Date: 11-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper summarises the findings of work package 5.3 of the SECURE project, with regard to the role of carbon capture, transport and storage (CCTS) for the future European supply security of coal. The real issue in European supply security with respect to coal is the absence of an economically and politically sustainable use of coal for electricity, liquefaction, gasification, etc. Whereas earlier papers delivered for work package 5.3 on the coal sector indicated that there are few risks to the European energy supply of (steam) coal, there is an implicit supply security threat, i.e. that coal will no longer be an essential element of European energy supply because the CCTS rollout will be delayed or not be carried out at all. This thesis is substantiated in this subsequent paper, with more technical details and some case study evidence.
  • Topic: Security, Economics, Energy Policy
  • Political Geography: Europe
  • Author: Miroslav Beblavý
  • Publication Date: 11-2010
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper looks at the Slovak experience with euro adoption from the point of view of perceived versus actual inflation and with a focus on a specific set of non-tradable prices. It examines whether Slovak consumers experienced or perceived (or both) an unusual price jump at the time of euro adoption and the possible explanations for such a phenomenon.
  • Topic: Economics, Monetary Policy
  • Political Geography: Slovakia
  • Author: Christian Egenhofer, Noriko Fujiwara
  • Publication Date: 02-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: India has become an important partner for the EU in both multilateral and bilateral relations in a wide range of policy areas, including energy and climate change. Despite the strategic importance of this partnership, there may be insufficient awareness and understanding among EU stakeholders a bout India's development needs and challenges, its high degree of vulnerability to the impacts of climate change and the actions it has taken domestically and in international fora to address climate change. The country is among those rapidly and steadily growing economies with an increasing share of greenhouse gas (GHG) emissions, although it starts from a very low emissions base.
  • Topic: Climate Change, Development, Economics, Energy Policy, Industrial Policy
  • Political Geography: India
  • Author: Paul De Grauwe
  • Publication Date: 02-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The crisis that started in Greece culminated into a crisis of the Eurozone as a whole. How did we get into this mess? To answer this question it is useful to distinguish the three actors that have played a role in the development of the crisis: Greece, the financial markets (including the rating agencies) and the eurozone authorities. Let us analyse the role of these three actors in the drama.
  • Topic: Economics, Markets
  • Political Geography: Europe, Greece
  • Author: Daniel Gros, Thomas Mayer
  • Publication Date: 02-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Despite cobbling together an impressive $1 trillion rescue package for countries with potential funding problems, the threat of a disorderly default still looms over the eurozone, creating systemic financial instability at the EU and possibly global level. Against this background, Daniel Gros and Thomas Mayer renew their call for the creation of a European Monetary Fund (EMF) in an update to their Policy Brief issued in February.
  • Topic: Economics, Monetary Policy, Financial Crisis
  • Political Geography: Europe, Greece
  • Author: Stefano Micossi, Paola Parascandolo
  • Publication Date: 02-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: As a rule, multinational enterprises (MNEs) are taxed separately by the countries in which they operate on the basis of the income produced in each jurisdiction ('source' taxation). To this end, they must keep separate accounts for business units in each country (“separate accounting”, SA) ascribing each item of expenditure and income to each business unit on the basis – by universally accepted convention – of 'arm's-length' pricing (ALP), that is, of comparable or estimated prices for similar market transactions between unrelated companies.
  • Topic: Economics, Globalization, International Trade and Finance, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi
  • Publication Date: 01-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: This crisis was caused by a combination of asset price bubbles, mainly in the real estate sector, and a credit bubble that led to excessive leverage. This is wellknown. What is less well-known is that on both accounts the euro area was affected by both 'bubble' symptoms as much as the US.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: United States, Europe
  • Author: Karel Lannoo
  • Publication Date: 01-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Since 2003, the EU and the US have conducted a vibrant regulatory dialogue on financial regulation, but domestic priorities seem to have taken precedence in response to the financial crisis. This paper compares the institutional and regulatory changes occurring on both sides of the Atlantic. On the institutional side, it compares macro- and micro-prudential reforms. On the regulatory side, it compares four key areas: bank capital requirements, reform of the OTC derivative markets, and the regulation of credit ratings agencies and hedge funds. It concludes by highlighting certain implications for the regulatory dialogue.
  • Topic: Economics, Monetary Policy, Financial Crisis
  • Political Geography: United States, Europe
  • Author: Yonghyup Oh
  • Publication Date: 04-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The euro area is facing a challenge with Greece in danger of falling into sovereign default and some of its other members, the so-called 'GIPSY' nations, finding themselves in serious financial distress. Creation of a European Monetary Fund to deal more effectively with this type of situation is gaining support. This paper draws lessons from the Asian experience that might be applied to the current European development.
  • Topic: Debt, Economics, International Trade and Finance, Monetary Policy
  • Political Geography: Europe
  • Author: H. Onno Ruding
  • Publication Date: 05-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Financial reform is needed now in the EU not only to reduce the likelihood of another financial crisis in the coming years but also to reinforce the internal market. A primary financial as well as political goal should be to create a truly single market in Europe for financial services and institutions. The current state of affairs is, however, still too far removed from this goal.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Thomas Mayer
  • Publication Date: 05-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The case of Greece has ushered in the second phase of the financial crisis, namely that of sovereign default. Members of the euro area were supposed to be shielded from a financial market meltdown. But, after excess spending during the period of easy credit, several euro area members are now grappling with the implosion of credit-financed construction and consumption booms. Greece is the weakest of the weak links, given its high public debt (around 120% of GDP), compounded by a government budget deficit of almost 13% of GDP, a huge external deficit of 11% of GDP and the loss of credibility from its repeated cheating on budget reports.
  • Topic: Economics, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Paul De Grauwe
  • Publication Date: 09-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The survival of the eurozone hinges on the capacity of its leaders to improve its governance. This has become very clear since the eruption of the government debt crisis in the eurozone in 2009, which can be said to result from a failure of economic governance. In order to answer the question of how the economic governance of the eurozone should be reformed, we should first make a diagnosis of the crisis in which the eurozone has been mired since 2009.
  • Topic: Economics, Regional Cooperation, Governance
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi
  • Publication Date: 09-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: In June 2010, both the European Commission and the European Central Bank published documents containing ideas for enhancing European economic governance. Both proposals stress the need for stronger surveillance on a country-by-country basis and the effective enforcement of surveillance through incentives and a wider spectrum of sanctions.
  • Topic: Economics, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Francesco Paolo Mongelli
  • Publication Date: 12-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The headwinds facing the euro area are many and substantial: there is no pretence of denial. While most attention is correctly devoted to the size of rescue packages for some countries and the terms of crisis management and resolution mechanisms, we argue that these challenges must also be met from within the euro area. We are aided by a simple framework illustrating how the benefits the euro can generate depend on the degree of openness, flexibility and income correlation among euro area countries. Sharing the euro has steadily transformed euro area economies that are now deeply interconnected. This is generating largely benign effects that represent the intrinsic value of the euro area: it is a shared asset. Yet, such integration has provided the ground for the transmission of the sovereign crisis: through financial exposure, trade linkages and cross-country asset ownership.
  • Topic: Economics, Global Recession, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Stefano Micossi, Richard Baldwin, Giuliano Amato, Pier Carlo Padoan
  • Publication Date: 12-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Under current policies, the European Union will only be able to pull itself out of low growth and high unemployment very slowly – too slowly to exclude dangerous economic and political assaults on the Union's continuing cohesion and viability. What is needed is a substantial increase in the EU output growth rate, which has been persistently low for too long a time. With low growth, sovereign debt sustainability in a number of member states will remain uncertain, possibly leading to renewed strains in financial markets and rising spreads that will aggravate the costs of budgetary consolidation. The divergences in productivity and competitiveness and the current external imbalances they engendered can be unwound at an acceptable cost only if growth accelerates in the core and the periphery. On present trends, the adjustment burden might be unbearable for peripheral countries and generate strains that may eventually undermine the euro.
  • Topic: Economics, Regional Cooperation, Monetary Policy, Governance
  • Political Geography: Europe
  • Author: Christian Fahrholz, Cezary Wójcik
  • Publication Date: 11-2010
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: Roger Ailes, a former advisor to Ronald Reagan, recalls in his book an intriguing practice of the ancient Romans: when they finished building a bridge or an arch, they enforced accountability by placing the engineer in charge beneath the construction when the scaffolding was removed. If the edifice did not hold, he was the first to know. We do not follow such drastic practices these days in Europe, but with some European economies shaking and the Greek sovereign debt crisis still not over, the architecture of the euro area has been certainly come under severe stress. Unfortunately, the 28-29 October 2010 European Council Summit has not made this architecture much safer.
  • Topic: Economics, Regional Cooperation, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi
  • Publication Date: 05-2009
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper explores three areas in which the experience of the Great Depression might be relevant today: monetary policy, fiscal policy and the systemic stability of the banking system. We confirm the consensus on monetary policy: deflation must be avoided. With regard to fiscal policy, the picture is less clear. We cannot confirm a widespread opinion according to which fiscal policy did not work because it was not tried. We find that fiscal policy went to the limit of what was possible within the confines of sustainability, as they existed then. Our investigation of the US banking system shows a surprising resilience of the sector: commercial banking operations (deposit-taking and lending) remained profitable even during the worst years. This suggests one policy conclusion: At present the authorities in both the US and Europe have little choice but to make up for the losses on 'legacy' assets and wait for banks to earn back their capital. But to prevent future crises of this type, one should make sure that losses from the investment banking arms cannot impair commercial banking operations. At least a partial separation of commercial and investment banking thus seems justified by the greater stability of commercial banking operations.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: United States, Europe
  • Author: Daniel Gros
  • Publication Date: 07-2009
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper presents a simple, basic model to compute the welfare consequences of the introduction of a tariff on the CO 2 content of imported goods in a country that already imposes a domestic carbon tax. The main finding is that the introduction of a carbon import tariff increases global welfare (and not just the welfare of the importing country) if there is no (or insufficient) pricing of carbon abroad. A higher domestic price of carbon justifies a higher import tariff. Moreover, a higher relative intensity of carbon abroad increases the desirability of high import tariff imposed by the home country because a border tax shifts production to the importing country, which in this case leads to lower environmental costs.
  • Topic: Climate Change, Economics, Energy Policy, Environment
  • Author: Felix Roth
  • Publication Date: 07-2009
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: The financial crisis had a significant impact on the levels of trust that citizens place in the system and its institutions. Recent data from Eurobarometer show a significant fall in confidence on the part of European citizens in the EU's institutions. For the first time since its creation, a majority of European citizens no longer trust the European Central Bank. However, confidence levels in national governments have actually risen, supporting a contrasting trend between confidence levels in European and national institutions. This decrease in confidence towards the ECB is flanked in the case of Germany by strong anti-capitalist sentiments and a sharp decline in support for the social market economy.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: Europe, Germany
  • Author: Sébastien Peyrouse
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: Agriculture constitutes one of the main sectors in the economies of Central Asia: cotton production and export, mainly in Uzbekistan and Turkmenistan, and to a lesser extent in Kazakhstan and Tajikistan; a booming grain sector in Kazakhstan; and a long tradition of vegetable cultivation throughout the region. The agrarian question is a sensitive one since the population is still predominantly rural in four of the five republics (all except Kazakhstan) and because food safety is not ensured in the two poorest states (Kyrgyzstan and Tajikistan). Land reform would be a priority for the growth of investment, increased productivity, and, consequently, the reduction of rural unemployment and poverty. However, pressed by the choice of cotton versus self-sufficiency in food production, the Central Asian states remain hesitant. They must also manage many structural problems, including high levels of corruption in the agrarian administrative organs, the opacity of decisionmaking structures for the export of production, quasi-slavery in some impoverished rural areas, child labour, and serious environmental problems related to the overuse of the soil.
  • Topic: Agriculture, Development, Economics
  • Political Geography: Europe, Central Asia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan
  • Author: Felix Roth
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: The financial crisis has damaged citizens' trust in public institutions, especially the confidence that European citizens invest in the European institutions. The results of major public opinion surveys show a severe decrease in citizens' trust in the immediate aftermath of the financial crisis with a slight recovery nine month later. In particular, citizens' net trust in the European Central Bank hit an historical low point in the aftermath of the financial crisis with a majority of people distrusting that institution. A variety of other surveys also show that confidence levels in the free market economy have decreased in most of the largest economies and demand for stronger state regulation has increased on both sides of the Atlantic. The key question now is whether this loss of confidence is a temporary or permanent phenomenon, which would have important consequences for the economy and for the proper working of the European institutions.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: Europe
  • Author: Michael Emerson, Elena Gnedina
  • Publication Date: 01-2009
  • Content Type: Policy Brief
  • Institution: Centre for European Policy Studies
  • Abstract: The 2009 gas dispute between Ukraine and Russia has led to a severe drop in Russian gas supplies to some EU member states. The dispute has once again shown that the status quo is defective and unsustainable as a policy. This Policy Brief argues that – beyond ad hoc temporary measures, such as the monitoring by EU experts agreed on January 12th and the 2009-10 price agreement apparently reached on January 18th – the problem needs a comprehensive and robust solution. This would be a gas transit consortium, bringing all major stakeholders – Gazprom, Naftohaz, one or a few European energy companies, and the international financial institutions – to jointly manage the trans-Ukrainian trunk pipeline. The consortium agreement would be underwritten politic ally and legally by a tripartite treaty to be ratified by the EU, Russia and Ukraine. The consortium should be bound by European standards of transparency, corporate governance and accounting in order to tackle the major problem – the lack of trust – in the EU- Ukraine-Russia energy triangle.
  • Topic: Economics, Energy Policy, Treaties and Agreements
  • Political Geography: Russia, Europe, Ukraine