European Politics

European Parliament  &  Social Europe

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). 06.02.2010
Photography by: Peter Cunningham. More pictures of this event here)

European Parliament

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

  • EU Treaties – Why They Need Targeted Changes an Approach Based on European Public Goods, Citizenship, and Democracy
     An approach based on European public goods, citizenship and democracy
    Study published in October 2023 by the Foundation for European Progressive Studies and supported by the European Parliament.

    With the debate around EU treaty changes back on the agenda, a group of renowned European experts from a large diversity of countries and disciplines, and after two years of systematic work, launch an innovative report on the topic: ‘EU Treaties – Why they need targeted changes. An approach based on European public goods, citizenship, and democracy’.

  • Unconventional Monetary Policy and Financial Market Fragmentation in the Euro Area. Note for the European Parliament’s Commitee on Economic and Monetary Affairs,Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE for the Monetary Dialogue IP/A/ECON/NT – November 2014.
    Abstract: At the brink of deflation and a third recession in 7 years, the Euro Area needs stimulative policies. While quantitative easing has pulled the US and UK economies out of the crisis, unconventional policies in the Euro Area have not had this effect.
    The note explains why that is so and what could be done to remedy the situation. It also produces new evidence for the success for ECB unconventional policies, although they do not significantly overcome financial fragmentation and remove the home bias in banks’ portfolios.

  • Central Bank Accountability in Times of Crisis. The Monetary Dialogue: 2009-2014. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE for the Monetary Dialogue IP/A/ECON/NT – February 2014.
    Abstract: The Monetary Dialogue between the European Parliament and the ECB is a major factor in assuring the legitimacy of European institutions. This note provides new evidence in the efficiency of the Dialogue for the crisis management and presents the results of a survey conducted among the members of the ECON Committee.
  • Explaining the strength of the euro. Note for the European Parliament’s Commitee on Economic and Monetary Affairs,Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE for the Monetary Dialogue IP/A/ECON/NT – February 2014.
    Abstract:The appreciation of the euro is less detrimental to the Euro Area economy than often claimed. The recent strength of the euro is explained by current account surpluses due to excessive austerity and it is estimated that interventions by the ECB in the forex market are prohibitively expensive. Rather than asking the ECB to intervene in markets, policy makers should stimulate domestic demand in the Euro Area.
  • The various roles of the ECB in the new EMU architecture. Note for the European Parliament’s Commitee on Economic and Monetary Affairs. Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE 507.482 for the Monetary Dialogue IP/A/ECON/NT/2013-03 September 2013
    Abstract: The ECB has emerged as the single most decisive and most successful player among all European institutions during the crisis, but this is not sustainable over the long run. The note shows why this is so and how some flaws in Europe’s architecture could be remedied.
  • Finance of small business firms in times of austerity. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, July 2013. Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE 507.469 for the Monetary Dialogue. IP/A/ECON/NT/2013-02 July 2013
    Abstract : This Briefing Note looks at the problems of SME finance in the euro area. It describes the extraordinarily large share of SMEs in the EU political tissue. It finds that SMEs are more handicapped in accessing bank finance than large companies, but they have alternative ways of finding finance notably by delaying payments of bills.
    It is then argued that the financial difficulties of small businesses are caused by the austerity policies pursued in most Member States, which destroy financial wealth. SMEs are handicapped by their corporate structure to get a fair share in a shrinking pie of available finance.
  • Implications of the Low Interest Rate Environment for the Real Economy. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE 492.474 for the Monetary Dialogue. IP/A/ECON/NT/2013-01 February 2013.
    Abstract : As nominal policy interest rates are hitting the lower zero bound in many industrialised countries, questions are raised about possible unintended consequences. This note argues that low interest rates reduce the long run rate of potential economic growth, but exiting “ultra-easy” policies now would be premature.
  • Economic Growth versus Austerity. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. Part of the compilation PE 492.471 for the Interparliamentary Committee Meeting. IP/A/ECON/NT/2013-05 January 2013
    Abstract :Optimal economic growth requires that there is enough effective demand to absorb the potential output the economy can generate. If demand is too high, it leads to inflation, which will be countered by restrictive monetary policies. If it is
    too low, investment will fall and lower actual GDP growth will also have detrimental effects on long run growth. It is shown that the Euro Area is presently compounding its economic woos by an excessively restrictive fiscal policy stance. A reform of the Stability and Growth Pact is proposed.

    See also the debate at the European Parliament on this link.

  • Towards a Genuine Economic and Monetary Union. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. December 2012.
    IP/A/ECON/NT/2012-06, Part of the compilation PE 492.455 for the Monetary Dialogue.
    Abstract : While the European Central Bank has managed to calm markets, the persistent political cacophony and institutional inability to conduct coherent macroeconomic policies at the euro level have undermined trust in the viability of the euro.
    The paper reviews the arguments, which show EMU as an indispensable complement to market integration and then assesses ideas for reforming the euro area’s governance with respect to Banking Union, Economic Union and the crucial question of democratic legitimacy.
  • ECB Interventions, OMT and the Bankruptcy of the No-Bailout Principle. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. September 2012. IP/A/ECON/NT/2012-05. Part of the compilation PE 492.450 for the Monetary Dialogue.
    Abstract : Under the Outright Monetary Transactions (OMT) programme, the ECB will buy bonds of distresses Member States in order to restore the efficiency of the transmission mechanism of monetary policy. This is necessary in order to maintain the euro as a stable currency. However, it exposes the ECB to additional risks. To minimise these risks, deeper integration of financial markets and European economic policies are required. To support the ECB, the ESM should issue Union Bonds, which are technically different from Eurobonds insofar they do not create additional liabilities for Member States.

  • Stefan Collignon, with Piero Esposito and Yuming Cui. Unconventional Monetary Policy Measures: A Comparison of the ECB, FED and BoE. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies. June 2012.
    Abstract : When interest rates are close to the lower bound of zero, unconventional measures are needed to preserve the monetary policy transmission mechanism. In addition, the Global Financial Crisis has caused important disturbances in interbank markets, which had required the ample provision of liquidity. This was true in the Euro Area, the UK and the USA, but the European debt crisis has further complicated matters. Our empirical estimates show that the unconventional measures have generally helped to deal with the liquidity crisis, but not with the confidence crisis in the Euro Area’s sovereign debt market.

  • Competitiveness and Excessive Imbalances: A Balance Sheet Approach. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies, Part of the compilation PE 475.100 for the Monetary Dialogue. April 2012 .
    Abstract : This note argues that some imbalances in the euro Area are actually a sign of successful economic integration and should not be repressed. The mechanisms of monetary union will hold the Euro Area together as long as the ECB assures banks of the necessary liquidity.
    Imposing limits on TARGET balances between national central banks would end monetary union.
    The real issue is competitiveness, which is measured by shifts in trade shares and unit labour cost levels. A new indicator for wage developments is presented, which allows assessing when labour costs are under- or overvalued.
    9 concrete policy proposals are made.
  • The ECB, the ESM and Stability Bonds: a way out of the crisis. Note for the European Parliament’s Commitee on Economic and Monetary Affairs, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies, Part of the compilation PE 464.463 for the Monetary Dialogue. December 2011.
    Abstract : The Euro Area is on the brink of a melt down unless urgent action is taken. The paper looks at the constraints on the EFSF and for ECB interventions, which limit the capacity to bail out Member States. The issue of Eurobonds could solve some of these issues, although the Commission’ Stability Bonds may take to long for their realisation. A transition proposal is made, that would give both the EFSF and the ECB a constructive role in overcoming the crisis.
  • European Monetary Policy under Jean-Claude Trichet. Note for the European Parliament, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies, Economic and Monetary Affairs. September 2011. (Download in PDF).
    Abstract : The change of the ECB’s president is a moment to take stock. Since January 1999, the ECB has gone through three major phases: foundation, consolidation and financial crisis. Through all this period it has achieved its primary and secondary objectives with remarkable precision. We estimate a reaction function and find that under Trichet, increased credibility and a more stable macroeconomic environment allowed monetary policy to shift focus in favour of employment and financial stability. Handling the financial crisis was Trichet’s master piece, although member states have not made it easier for the bank. We conclude by saying: “Bravo et merci, Monsieur Trichet! And Buona fortuna, Presidente Draghi!”
  • Debt Restructuring is No Free Lunch. Note for the European Parliament, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies, Economic and Monetary Affairs. June 2011 (Part of the compilation PE 464.418 for the Monetary Dialogue). Download in PDF.
    Abstract : This paper emphasises the cost of sovereign defaults and voluntary debt restructuring. It argues that the debt crisis is a crisis of liquidity and recommends rolling over public debt and providing liquidity to Member States in distress. This view is based on the analytic assessment that sovereign debt in Europe is sustainable and no Member State is insolvent, provided European authorities and Member State governments avoid accelerating the crisis. It concludes by calling for a European Institute of Economic Reconstruction that could buy assets from Member States, restructure them and then either keep them in the collective European interest or privatize them.
  • Eurobonds: The financial equivalent of the single Currency. Note for the European Parliament, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies, Economic and Monetary Affairs. March 2011 (Part of the compilation PE 457.357 for the Monetary Dialogue). Download in PDF
    Abstract : The euro area needs deep and fully-integrated financial markets in order to return to sustained economic growth and high levels of employment. Today’s fractioned markets are dominated by Germany and discriminate against small peripheral Member States. Eurobonds could help to overcome these difficulties by creating a large integrated bond market, but not by serving to weaken the budget constraint in highly indebted Member States.
  • How to Avoid Currency Wars. Note for the European Parliament, Directorate General for Internal Policies, Policy Departement A: Economic and scientific policies, Economic and Monetary Affairs. Nov. 2010 (download in PDF here).
    Abstract : The stability of the global economy is at risk because policy makers ignore cooperative solutions to the imbalances and tensions that have emerged with the integration of China into the world economy. The paper presents evidence that the Chinese yuan is not undervalued and that there is no evidence that the Fed will generate inflation by its QE2 program. However, there is an increased risk of financial bubbles being created in emerging economies.
    A strong appreciation of the yuan would destroy the world’s most important growth pole, while the US economy needs more flexibility to adjust. The paper proposes a constructive role for the euro and recommends a shift in China’s pegging policy to a basket mainly containing euros and yen and deeper monetary cooperation between Europe and Asia.
  • 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. (Download in PDF)
    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.
  • How to Handle Global Imbalances: a Role for European Monetary Cooperation with Asia.
    Briefing Paper for the Monetary Dialogue March 2010. European Parliament, Committee on Economic and Monetary Affairs.
    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.

Social Europe

Social Europe Journal's Columns: https://www.socialeurope.eu/

  • ‘They’re taking our jobs’—really? In: Social Europe (07/02/2022)
  • Merkel’s Failure In: Social Europe (28/11/2017)
  • Don’t Forget What Europe Is All About! In: Social Europe (30/06/2015)
  • How To Create A Real European Social Market Economy In: Social Europe (03/02/2015)
  • Europe After The Blues – Elect Jean-Claude Juncker In: Social Europe (27/05/2014)
  • In Bed With Dracula – A Grand Coalition With Angela Merkel (30/09/2013)
  • Austerity Versus Growth (III): Fiscal Policy And Debt Sustainability (30/05/2013)
  • How To Measure Competitiveness in: Social Europe Report 1 – Towards a European Growth Strategy, Edited by Henning Meyer, February 2013. Free online e-book.
  • Austerity Versus Growth (II): The Sources Of Europe’s Demand Gap (22/05/2013)
  • Austerity Versus Growth : Why We Can’t Go On Like This (29/04/2013)
  • Italy And The Disintegration Of The European Union (28/02/2013)
  • Social Justice and the Outright Purchase of Government Bonds by Central Banks (17/10/2012)
  • The Bankruptcy of the No-bailout Principle (04/10/2012)
  • Three Economic Errors and a Funeral (17/07/2012)
  • How to measure Competitiveness (07/06/2012)
  • Francois Hollande is right – Why Fiscal Stimulus would reduce Debt (04/05/2012)
  • Europe’s Paradox and Social Democracy (26/03/2012)
  • The End of the Franco-German Axis (13/02/2012)
    French translation: La fin de l’axe franco-allemand.
  • Merkel’s Autobahn to Disaster (26/01/2012)
  • How to bring Germany on Board and save the Euro (08/12/2011)
  • European Catharsis (03/11/2011)
  • And if the Crisis Awakened Europe? Ideas for a New Eurozone (04/10/2011)
  • How to Save the Euro (07/09/2011)
  • Greece Does Not Have To Go Bust (04/07/2011)
  • The Role of Parties in the European Union (08/06/2011)
  • Germany’s Strategic Interest (12/05/2011)
  • Merkel’s Small and Isolated Strategy (19/04/2011)
  • Eurobonds: The Financial Equivalent Of The Single Currency (15/03/2011)
  • Mubusconi (07/02/2011)
  • Europe and China (11/01/2011)
  • A Question of Sovereignty (01/12/2010)
  • Miliband Must Take Britain Back Into Europe (06.10.2010)
  • Proposed Reforms of Europe’s Economic Governance are Flawed (07.09.2010)
  • Who is reforming Europe’s Economic Governance? (03.08.2010)
  • A European Economic Government Could Solve Europe’s Democracy Deficit (07.07.2010)
  • Europe’s Keynesian Turn? (04.06.2010)
  • After Greece, the European Republic! (03.05.2010)
  • The Challenge of New Chauvinism in Europe (06.04.2010)
  • What Conservatives do not understand about the Euro (03.03.2010)
  • The Greek Drama and the Social Justice of Responsible Fiscal Policies (03.02.2010)
  • Does Europe need a Strategy for China? (12.01.2010)
  • The Winner is: Democracy! (26.01.2009)
  • Does Europe’s Social Democracy still have a Future? (03.11.2009)
  • Taking Democracy in Europe seriously (24.09.2009)
  • Testing the European Parliament (31.08.2009)
  • The Dawn of a New Era: Social Democracy after the Financial Crisis (06.04.2009)
  • The Dawn of a New Era: Social Democracy after the Financial Crisis. Autumn 2008
    Democratizing Europe. Vol 2. issue 3, Winter 2007: 126-132.
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