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2. Let's Stop Being Gloomy About Europe
- Author:
- Paul De Grauwe
- Publication Date:
- 05-2008
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Pessimism has been rampant in many EU-countries over the past decade, largely fed by lagging productivity growth in the EU since the late 1990s and a perception that the US has a superior economic model. This perception has led to the view that the only way to restore higher levels of productivity growth is by introducing deep structural reforms in the EU, making goods and labour markets more flexible. This paper presents the argument that such pessimism is excessive: a significant part of the productivity growth differential between the US and the EU is cyclical, and is already turning around. In addition, there are areas in which the EU is structurally better prepared than the US to face the challenges of globalisation.
- Topic:
- Political Economy
- Political Geography:
- United States and Europe
3. Perspectives on EU-India Relations
- Author:
- Feng Geng
- Publication Date:
- 10-2006
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Since the 1960s, relations between the EU and India have developed rapidly. Nowadays, EU–India relations have a strong institutional architecture, including regular summits (political and commercial), meetings of ministers and senior officials and so on. Within this institutional framework, the EU and India have launched a comprehensive and fruitful cooperation. There is much active political collaboration, such as in the reform of the United Nations and the fight against terrorism, based on common values. Trade and investment between the EU and India are experiencing strong growth but lack symmetry.
- Topic:
- International Relations, Political Economy, and United Nations
- Political Geography:
- Europe, India, and Asia
4. Reverse Balkanisation? Trade Integration in South-East Europe
- Author:
- David Kernohan
- Publication Date:
- 08-2006
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Recent research from the World Bank and elsewhere suggests that openness to trade was a vital ingredient in the transition of the former Central and Eastern European Countries (CEECs) that joined the EU in May 2004. Current EU association agreements in South East Europe indicate that future enlargements may need to accommodate the remaining former Yugoslav Republics as well as the existing candidate countries. This paper examines persistent concerns that trade openness in South East Europe generally, and the former Yugoslav Republics in particular, is much less advanced than it was for the former CEECs in the mid to late 1990s. In particular we examine the issue of whether the present network of bilateral trade arrangements put in place under the Stability Pact has had much effect in boosting trade integration and whether trade within the region is currently at or below its potential. Given the small size of many of the countries in the region, we find that trade patterns remain problematic. In some cases they are smaller than might be expected but in several cases there is an overdependence on trade with old Yugoslav neighbours. In view of this, we consider that current plans to extend the Stability Pact matrix of bilateral trade agreements into a pan-regional trade association are likely to be inadequate. A better option, and one more likely to have a more immediate effect, would be to extend the present Customs Union with Turkey to include trade with the entire South East European zone of countries linked to the EU.
- Topic:
- International Relations and Political Economy
- Political Geography:
- Europe, Turkey, Eastern Europe, Yugoslavia, and Balkans
5. It's a long way to Copenhagen
- Author:
- Willem H. Buiter
- Publication Date:
- 03-2006
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- On October 3, 2005, Turkey officially started negotiations for membership in the European Union. Whether Turkey becomes a full member of the EU is likely to be a defining decision, both for the existing EU members and for Turkey. The regional - and geo-political consequences of success or failure of the negotiations, and its cultural and ideological impact, are likely to be even more significant than its economic consequences, although even from an economic perspective the stakes are very high. Turkey's population of over 70 million is larger than that of the ten countries that joined the EU on 1 May 2004 combined. Unlike the EU-25 (and in particular the ten new member states), the Turkish population is young and growing. Its present per capita income is lower than that of any of the EU-25 countries – about at the level of Romania and Macedonia, using Purchasing Power Parity (PPP) estimates of per capita Gross Domestic Product (GDP). However, with the right institutions and policies, Turkey could become a true tiger economy. But this is not guaranteed. With the institutions and policies of the second half of the 20th century, it could end up a mangy cat instead of a tiger.
- Topic:
- International Relations and Political Economy
- Political Geography:
- Turkey, Eastern Europe, Romania, and Macedonia
6. Making EU Trade Agreements Work: The Role of Rules of Origin
- Author:
- Paul Brenton and Miriam Manchin
- Publication Date:
- 03-2002
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- A key element of the EU's free trade and preferential trade agreements is the extent to which they deliver improved market access and so contribute to the EUs foreign policy objectives towards developing countries and neighbouring countries in Europe, including the countries of the Balkans. Previous preferential trade schemes have been ineffective in delivering improved access to the EU market. The main reason for this is probably the very restrictive rules of origin that the EU imposes, coupled with the costs of proving consistency with these rules. If the EU wants the 'Everything but Arms' agreement and free trade agreements with countries in the Balkans to generate substantial improvements in access to the EU market for products from these countries then it will have to reconsider the current rules of origin and implement less restrictive rules backed upon by a careful safeguards policy.
- Topic:
- Foreign Policy, Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe and Balkans
7. The Development of European Citizenship and its Relevance to the Integration of Refugees
- Author:
- Joanna Apap
- Publication Date:
- 01-2002
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Achieving an integrated Europe involves political and social unity as much as economic integration. Thus, the issue of European citizenship is central to the debate about European integration. Union citizenship needs to be distinguished from national citizen ship. Every citizen of the Union enjoys a first circle of nationality rights within a member state and a second circle of new rights enjoyed in any member state of the EU. The presence of immigrants in Europe also raises wider questions for government policy in the field of citizenship. There are various issues that arise in the European context with respect to the boundaries of citizenship. One of the main questions in this regard is the extent to which the division between European Union citizens and third country nationals will continue to prevail.
- Topic:
- Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe
8. Consumer Credit Rates in the Eurozone: Evidence on the Emergence of a Single Retail Banking Market
- Author:
- Stefanie Kleimeier and Harald Sander
- Publication Date:
- 01-2002
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This study provides new evidence on the emergence of a single eurozone retail banking market with particular reference to consumer credit. Given the heterogeneous nature of consumer credit products in the eurozone, the authors reject the earlier proposition of the Cecchini study, which equates banking market integration with identical interest rates throughout the eurozone. The present study advocates the use of the co-integration methodology, which allows us to investigate integration in the presence of country-specific credit rates. The empirical results indicate only very limited evidence of an integrated retail banking market prior to 1 January 1999, pointing to the limited effectiveness of the single market cum Second Banking Directive in particular in integrating consumer credit markets.
- Topic:
- Economics and Political Economy
- Political Geography:
- Europe
9. The Declining Use of Unskilled Labour in Italian Manufacturing: Is Trade to Blame?
- Author:
- Paul Brenton and Anna Maria Pinna
- Publication Date:
- 12-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- As in other industrialised countries, the manufacturing sector in Italy has recently experienced a substantial increase in the use of skilled relative to unskilled workers — skill upgrading. In this paper we estimate a model, based upon the notion of outsourcing, of the relative demand for skilled labour which allows identification of the roles of technological change and trade, the two main culprits, in skill upgrading. Compared to previous studies of Italy the model is applied to highly disaggregated industrial data and in addition the impact of trade is more precisely measured through the separate identification of import flows from low-wage labour abundant countries and those from OECD partners. Furthermore we also introduce a measure of trade variability. Our results show firstly that economic variables played little or no role in determining the relative demand for unskilled workers in the 1970s in Italy, reflecting the nature of Italian labour market institutions in the period. Subsequently, in the 1980s and 1990s, following some labour market reforms, we find that international competition, in terms of import penetration and the variability of trade prices, had a significant effect on the relative demand for blue-collar workers in Italy in skilled intensive sectors. In unskilled intensive sectors, such as textiles and clothing, where the impact of imports from low-wage countries might be expected to be more pronounced, we do not find a significant effect from imports but rather that the most important role has been played by technological change. The result is consistent with previous studies that indicate that Italian textile and clothing firms have remained internationally competitive by increasingly switching to high quality segments of the industry.
- Topic:
- Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe and Italy
10. Shaping Europe's Migration Policy
- Author:
- Joanna Apap
- Publication Date:
- 12-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- During the 1990s, Justice and Home Affairs moved, in an unexpected way, to centre stage in the European debate. Concern had been growing about immigration policy since the Maastricht Treaty institutionalised the third pillar of the European Union. This concern had been stimulated by several factors – the persistence of irregular migration and tragic incidents, such as the one in Dover in July 2000 in which 58 Chinese nationals lost their lives trying to enter illegally into the United Kingdom, the need for immigrant workers in some sectors, and the spectre of an ageing European population. More generally, the Treaty of Amsterdam, since its entry into force in 1999, represents a major development in overall Justice and Home Affairs policy, and the implementation of the treaty provisions in Justice and Home Affairs was described as the next major EU initiative after the single currency.
- Topic:
- Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe
11. What Are the Limits to Economic Integration?
- Author:
- Paul Brenton
- Publication Date:
- 11-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This paper discusses the continuing importance of borders, even within the EU, for the volume of international trade and global capital flows. It suggests that a range of factors, including the nature of the commercial, social and legal fabric of a country and the structure of consumers' preferences, act to constrain cross-border exchanges relative to internal transactions. Hence, whilst the process of globalisation may continue, there are likely to be distinct limits to the extent of economic integration. This entails that the traditional roles of governments in OECD countries in providing social welfare and regulating the market economy within national boundaries will not be seriously undermined. However, the situation may differ in developing countries where existing social and legal institutions may be compromised by globalisation rather than acting to dampen its impact.
- Topic:
- Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe
12. Fiscal Policy Spillovers in the Euro Area: Where Are They?
- Author:
- Daniel Gros and Alexandr Hobza
- Publication Date:
- 11-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- What impact would a fiscal expansion in Germany have on the rest of the euro area? It has been generally suggested that it could go in either of two opposite directions, depending on the relative strength of two effects: the direct trade linkage and the financial market repercussions. A review of the results from four major macroeconomic models shows that the cross-country spillover effects of fiscal policy are indeed of uncertain sign and magnitude. Different models give quite different results if used in standardised simulations in terms of the sign, magnitude and time profile of the impact of a fiscal expansion in one member country (e.g. Germany) on other euro area countries. Fewer results are available concerning the potential spillover effects of structural policies, but they are similar to the ones concerning a budgetary stimulus: the magnitude of the spillover is small and varies across countries and over time.
- Topic:
- Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe and Germany
13. Seigniorage: An Argument for a National Currency?
- Author:
- Fransizka Schobert
- Publication Date:
- 10-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Seigniorage has often been mentioned as one of the most important and most readily quantifiable arguments for a government not to give up its monopoly in base money. The analysis shows that the measurement of seigniorage may lead to very different results and that it eventually depends on the monetary environment, in which central banks issue and manage base money. For less advanced countries in Central and Eastern Europe seigniorage has only been fiscally significant in high inflationary economies and even then the success in exploiting seigniorage has been limited. Widespread currency substitution has contributed to the results. Governments in these countries which are willing to stabilise prices but which lack crediblity to do so, may be increasingly interested in euroisation. More advanced EU-accession countries have received low revenues from having a national currency over the recent years. Seigniorage has arisen as a by-product of other central bank's objectives such as price and exchange rate stability. This caused high sterilisation costs and valuation gains of the central bank's asset portfolio have often been the main reason for positive results of seigniorage. In search for a viable monetary regime and in face of further liberalisations of capital markets these countries may look at euroisation as a choice to achieve price stability without exchange rate volatility.
- Topic:
- Economics and Political Economy
- Political Geography:
- Europe
14. Extending Citizenship Rights to Third Country Nationals
- Author:
- Joanna Apap
- Publication Date:
- 10-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Various issues arise in the European context with respect to the boundaries of citizenship; one of the main questions is to what extent the division between the European Union citizens and third country nationals will increase, especially if “deepening” of the Union leads to more tightening of its external borders. This paper addresses the question of how far citizenship rights can be extended to third country migrants in the EU?
- Topic:
- Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
- Political Geography:
- Europe
15. What Drove Relative Wages in France? Structural Decomposition Analysis in a General Equilibrium Framework, 1970-92
- Author:
- Sébastien Jean and Olivier Bontout
- Publication Date:
- 09-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This paper confronts a CGE model to observed evolutions in France, between 1970 and 1992, through a structural decomposition analysis. The choice of the model and the assumption of constant elasticities over time enable the structural change of the economy between two equilibria to be summarised through a set of four types of state variables, reflecting the effect of technical change, changes in factor supplies, shifts in consumption patterns, and international trade. Simulations then allow the contribution of each of these shocks to be assessed. We find that technical change had a strong positive impact on the relative wage of skilled to unskilled workers, while the impact of changes in factor supplies is strongly negative. The effect of international trade is far less important. However, if we take into account a trade-induced effect on productivity, then we find that trade substantially increased wage inequalities.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- China, Europe, and France
16. Is the ECB Sufficiently Accountable and Transparent?
- Author:
- Daniel Gros and Lorenzo Bini-Smaghi
- Publication Date:
- 09-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- More than two years after its inception, the ECB is still perceived as lacking transparency by many academics and market participants. Our analysis, based on a series of indicators, suggests instead that the ECB is, at least on paper, one of the most transparent and accountable central banks. The discrepancy between theory and public perception suggests that much remains to be done within the given institutional framework to improve the transparency of the ECB. What is the best way to achieve this goal? Several suggestions have been put forward, such as publishing the detailed minutes of the ECB Governing Council meetings. This would result in shifting the true debate to informal meetings of the Governing Council, while formal meetings would only record pre-packaged consensus with no or little discussion. In our view, the best way to make the ECB more accountable is to engage it in substantive discussions about its policy. The ECB should provide more information about the background analysis that leads to policy decisions. For example, the ECB should transform its 'staff projections' into true inflation forecasts and it should be more open about the arguments that shape the internal debates, which precedes decisions. Accountability cannot be ensured by the ECB alone. An important role has to be played by its counterparts, such as the European Parliament, the Council of EU Finance Ministers and the public at large.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Europe
17. Maastricht the Choice of Exchange Rate Regime in Transition Countires During the Run-Up to EMU
- Author:
- György Szapáry
- Publication Date:
- 05-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This paper raises some specific issues concerning the choice of exchange rate regime in transition countries during the run-up to EU/EMU membership. It argues that there is no "one-size-fits-all" exchange rate regime that accession countries should uniformly adopt. It also argues that the Maastricht criterion on inflation is inconsistent with the catching-up process because of the Balassa-Samuelson effect and that this inconsistency will encourage a "weighing-in" syndrome: like the boxer who refrains from eating for hours prior to the weigh-in only to consume a big meal once the weigh-in is over, the candidate country will maintain very tight monetary policy and resort to all sorts of techniques (freezing of administered prices, lowering of consumption taxes, etc.) to squeeze down inflation prior to accession only to shift back gears after it has joined the EMU. Indeed, the convergence of short-term interest rates to EMU levels that will come with accession will automatically mean a loosening of monetary policy after the country has become a member of the monetary union. That loosening will be reinforced if the country had previously allowed its exchange rate to appreciate against the euro. The result of this stop-go cycle is that the efficiency of economic management will suffer. It would be better to recognize the principle of the Balassa-Samuelson effect explicitly in the Maastricht criteria by giving more room for maneuver than the one provided by the present rule. The paper makes suggestions on how the Maastricht criterion on inflation could be adjusted and discusses their merits. It concludes that a reasonable compromise would be to define the permissible inflation deviation in reference to the average inflation rate of the euro zone, not the three EU members with the lowest inflation rate.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Europe
18. Foreign Direct Investment and Company Taxation in Europe
- Author:
- Agnès Bénassy-Quéré, Lionel Fontagné, and Amina Lahrèche-Révil
- Publication Date:
- 04-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The growing globalisation of OECD economies, associated to the progresses in European integration, tends to increase the mobility of capital and to deepen the pressure on tax policies. On the one hand, tax policies are tied by the Stability Pact criteria: the limit imposed on budget deficits leaves little scope for tax rates to decrease. On the other hand, the growing mobility of capital tends to increase the elasticity of tax bases to tax rates, hence reducing the autonomy of governments in increasing taxes.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Europe
19. Economic Integration Between the EU and the CEECS: A Sectoral Study
- Author:
- Francesca di Mauro
- Publication Date:
- 04-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Economic integration between the EU and the CEECs has proceeded at high speed over the 90's, with the main channels of such integration being trade and FDI. Some authors believe that the 'commercial transition' is now complete and that a new, deeper phase of integration has started, with growing flows of FDI in the region. Following a gravity-type approach, in this paper I tackle two difficult issues surrounding the EU-CEECs integration: has FDI in the CEECs region substituted EU exports, therefore harming employment at home? Has FDI in the CEECs region been redirected away from similarly attractive countries, such as Spain and Portugal? By using a unique database on FDI broken down by country and by sector, which allows more detailed qualifications than possible in previous work, the answers to these two questions appear to be negative.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Europe, Spain, and Portugal
20. Who Needs an Extenal Anchor?
- Author:
- Daniel Gros
- Publication Date:
- 03-2001
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This paper argues that there might be non-monotonic relationship between the strength of the domestic framework for fiscal policy and the interest of a country to use an external anchor to achieve price stability. Countries with a strong domestic framework, e.g. low public debt, little pressure for excessive expenditure and an efficient tax system, would anyway enjoy low inflation rates and therefore have little need for an external anchor. Countries with high debt or very weak institutions would greatly benefit from an external anchor to save them from the extreme inflation rates they would otherwise have to endure because the market knows that the temptation for them to inflate public debt away is so strong. By contrast, countries with moderately weaknesses might be in a situation where they need some inflation to supplement government revenues with seigniorage, but the inflation resulting from the interaction with the market, which knows about this, is still moderate.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Europe