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Begin New Search Topic Economic Stability Content Type Policy Brief

1. Rethinking EU economic governance: The Stability and Growth Pact

Author:
Francesco De Angelis and Frederico Mollet
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
It is time to reimagine the EU’s economic governance. In early 2021, the EPC set out to do just that in its Rethinking EU Economic Governance Task Force. Drawing on insights from participating experts, academics and policymakers, this first Policy Brief in a series of EPC publications outlines how the debate on the Stability and Growth Pact (SGP), the EU’s framework for fiscal and macroeconomic surveillance, has evolved and the reform options that have surfaced. There is broad dissatisfaction with the SGP and how it has fared in an environment of prolonged low-interest rates, missed inflation targets and low growth. In February 2020, the European Commission launched a review of the SGP in an attempt to address its shortcomings, but it was quickly put on hold by COVID-19, when the fiscal rules were suspended. Half a year later, the Commission is finishing what it started. We are in a drastically different world since the European Commission launched the review. Not only has government debt increased significantly, but regional, economic and social divides have worsened, policymakers face inflationary pressures for the first time in decades, and the Recovery and Resilience Facility and accompanying EU-level bond issuance fundamentally changed the EU’s economic architecture. In parallel, there is a widespread acknowledgement that averting, as well as adapting to, the climate crisis requires a steep increase in public investment. Thanks to the EPC Task Force’s ongoing work, Francesco De Angelis and Frederico Mollet can pinpoint the SGP’s major flaws, post-COVID-19 challenges, and five broad categories of reform options: Interpretative flexibility to smooth fiscal adjustment paths and potentially place less emphasis on problematic indicators. Moderate non-treaty reforms to reduce complexity and procyclicality and increase enforceability. The ‘golden rule’ to exempt some public investments from the fiscal rules. Central fiscal capacity for macroeconomic stabilisation. Off-balance-sheet investments to increase public investment.
Topic:
Political Economy, Governance, European Union, Economic Growth, COVID-19, Economic Stability, and European Commission
Political Geography:
Europe

2. ‘A careful foot can step anywhere’: The UAE and China in the Horn of Africa: Implications for EU engagement

Author:
Jos Meester and Guido Lanfranchi
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Over the last decade, the UAE and China have vastly expanded their economic, political and military footprint in the Horn of Africa, and their actions now have the potential to shape developments in the region. Room for cooperation between Abu Dhabi and Beijing exists on issues such as maritime security, regional stability, and economic development. Moreover, the two countries’ interaction could lead to improvements in the Horn’s underdeveloped infrastructure by triggering a race to investment. Yet, development and stability in the region might suffer if the strategic interests of external players take precedence over local ones, or if local elites (mis)use external support for narrow domestic political calculations. The EU and its member states have high stakes in the Horn’s stability. To optimise their engagement, European policymakers should be aware of the implications of the Emirati and Chinese presence, and they should strive to improve cooperation among the wide range of external players active in the Horn.
Topic:
Economics, International Cooperation, Politics, Military Affairs, Economic Development, and Economic Stability
Political Geography:
Africa, China, Asia, and Horn of Africa

3. Afghanistan Stabilization Program: A Summary of Research and Key Outcome Trends

Author:
Radha Iyengar and Jacob N. Shapiro
Publication Date:
04-2017
Content Type:
Policy Brief
Institution:
Empirical Studies of Conflict Project (ESOC)
Abstract:
To provide evidence about which programs best foster stability in fragile and conflict-affected areas we systematically review the relationship between stabilization programming and a broad range of outcomes in Afghanistan. Following a pre-analysis plan, we reviewed 89 existing studies from government, policy think tanks, and academic journals from over 15 years and statistically analyzed data from a range of sources from 2009 to 2015. While we compile a relatively comprehensive set of data, our analysis is based on a subset of stabilization programming the lack of a central repository of reliable data on program spending limited the analysis—because data were kept in disparate locations and never consolidated our quantitative analysis. Overall, we find that some stabilization programming is correlated with small, short-term improvements in support for the Afghan government, perceived access to health care, and economic activity despite the fact that these programs typically targeted more violent areas. We note that the size of this effect was small relative to the overall trends in key security, economic, and attitudinal outcomes over the same period and does not necessarily indicate a direct causal impact of these programs. This positive correlation was primarily observed for relatively low dollar programs (which in some cases were conducted over large parts of a region or country). Qualitative evidence suggests this may be because these smaller programs are easier to administer and less susceptible to corruption. These effects were not sustained beyond one year, suggesting limited scope for long-term or sustainable changes. The lessons our analysis suggest that modest programs with bounded expectations on the size and duration of impact must be included in considerations of future stabilization efforts. We also recommend that future programs collect higher quality data, coordinate their evaluation efforts among donors, plan ahead by building in reporting requirements, and make effective use of new technologies to be facilitated programming that is more adaptive to the conditions on the ground. As these best practices are incorporated, policymakers and implementers can enable better design and implementation of stabilization projects in conflict-affected areas in the future.
Topic:
Conflict Resolution, Economics, International Security, War on Terror, Strategic Stability, and Economic Stability
Political Geography:
Afghanistan

4. Azerbaijan’s Fiscal Policy after the Oil Boom

Author:
Dmytro Boyarchuk
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Center for Social and Economic Research - CASE
Abstract:
Azerbaijan’s current fiscal stance is quite strong; however, this stability is completely based on oil-related revenues. In the meantime, the situation with alternative sources of fiscal revenues is uncertain. A large part of fiscal management is built on opacity and an assessment of budget spending efficiency has never been done. It is likely that Azerbaijan will only be able to maintain its fiscal stability through the next ten years or so, i.e. until the end of the active oil-extraction period. In the more distant future, a substantial fiscal correction will be necessary.
Topic:
Oil, Reform, Budget, Fiscal Policy, and Economic Stability
Political Geography:
Central Asia, Caucasus, Eastern Europe, and Azerbaijan

5. Counter-Cyclical Economic Policy

Author:
The Organization for Economic Co-operation and Development
Publication Date:
05-2010
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
The effects of the recent economic crisis have stretched policy frameworks in many OECD countries close to breaking point. Recent work by the OECD has examined how policies have interacted with the economic cycle over time and during the recent crisis. The main policy lessons are as follows: • Policy-makers should take into account uncertainties about the functioning of the economy, the nature of economic shocks or the effects of policy and take their decisions accordingly. • Policy in various areas will have to build in greater safety margins and to be more prudent during upswings. • Appropriate fiscal rules can help prepare fiscal policy for the next downturn by leading to swifter consolidation during the upturn. • The monetary and financial policy framework needs to achieve a better articulation between economic and financial stability. • Financial policy needs to strengthen micro-prudential regulation, regulatory interventions may need to target emerging credit-driven bubbles and macro-prudential policies should address systemic risks. • There may be a case for monetary policy leaning against the wind, if asset prices are driven by a credit boom and financial regulation is judged to be insufficiently robust. • Changes to structural policy settings can improve the resilience of the economy to shocks and affect the degree of leverage households and firms take on.
Topic:
Economics, Fiscal Policy, Economic Stability, and Economic Crisis
Political Geography:
Global Focus