Policy papers written for
the Economic and Monetary Affairs Committee
of the European Parliament


In a dinner with Helmut Schmidt.
On the pictures: Danuta Hübner, Guy Verhofstadt, Poul Nyrup Rasmussen (members of the European Parliament), and Angelica Schwall-Düren (member of the German Parliament).
Photography by: Peter Cunningham. More pictures of this event here)


  • Europe's economic government or how to use the Treaty for more effective economic coordination in the euro area? (08.06.2010)
    This document was requested by the European Parliament's Committee on Economic and Monetary Affairs.

    Abstract:
    This paper deals with the need for macroeconomic policy coordination in the aftermath of the financial crisis and the reasons for coordination failure in an increasingly important domain of policies.
    It discusses the stimulative effects of budget deficits in the present economic environment, the conditions for debt sustainability and the causes for
    competitiveness imbalances in the Euro Area.
    For each of these policy areas, it makes suggestions for the improvement of Europe’s economic governance.

 

Abstract:
The crisis happened because misguided monetary policies in the US, and high savings from Asia have also allowed Americans to live above their means. Now the party is over, but global imbalances will not disappear.
China’s model based on unlimited labour supply and a competitive exchange peg to the dollar is under threat. Reforms must preserve Asia‘s growth, give the US flexibility to adjust, and prevent Europe from carrying the burden of global adjustment:
1. Asia should re-peg from the dollar to a basket of euros and Japanese yen.
2. Euro-yen volatility must be minimized.
3. Surpluses are invested in euro and yen, stimulating demand.
4. The basket leads to a future international reserve currency.
5. Coordination should be led by a G4 and ASEM.

 

  • Bubly economics
    Directorate General for Internal Policies - Policy department A : economic and scientific policies - Economic and Monetary Affairs. Nov 2009.

    Abstract:
    The policy-induced rebound of the Euro Area economy still has to be transformed into self-sustaining growth. Monetary policy can contribute to this development by not exiting accommodative policies too early. At the moment, there is no evidence for inflation pressures caused by excessive liquidity creation, nor for the emergence of a new asset bubble in the Euro Area, although the environment needs to be monitored very carefully. The real bubble danger is in Asia and Europe should engage in global economic policy concertation.