Editorial

The Economics of a Brexit

Michael Emerson (Centre for European Policy Studies) argues that it is time to clarify the consequences of the UK’s seemingly simple choice: in or out. After the UK's vote for secession, the EU can be expected to play a tough game in negotiations and would be in no hurry to end the uncertainty. EU member states would be tempted by the opportunity to gain advantages in commercial competition over the UK’s current economic strengths. Furthermore, the UK would face years of strategic uncertainty as the negotiations dragged on.

50 Years of Intereconomics

Why Growth Is So Important

Our anniversary website contains many interesting articles from the Intereconomics archives, including this Editorial from 2003. Thomas Straubhaar writes that growth is not everything, but without growth there is nothing! In view of the demographic ageing of the societies in the EU, growth becomes even more important to finance the increasing burden of social pension systems. Without growth there will be no solid financing of social policy in the long run and thus no social justice.

Figure of the Month

GDP Growth per Capita

This figure from Henry Goecke and Michael Hüther’s article “Regional Convergence in Europe” shows the varying levels of GDP growth per capita of regions within Europe and also within European countries themselves.

Letter from America

Reforming Fannie Mae and Freddie Mac? Don't Hold Your Breath

Over the past eight years, there have been many proposals to reform the US housing finance system, which currently is dependent on Fannie Mae and Freddie Mac. Unfortunately, none have gotten far in Congress, mainly due to sharp disagreement on the structure of a new system and how to get there. Laurie Goodman describes the obstacles standing in the way of the creation of a more stable system of mortgage financing.

Forum

Why Is Austria's Pension System So Much Better Than Germany's?

The pension systems in both Germany and Austria have undergone substantial reforms, though only one of the countries appears to have had success. Average earners in Austria will receive gross pensions equivalent to 78.1% of their average earnings, whereas in Germany they will receive just 37.5%. The authors argue that Germany has been left with a system that has abandoned the goal of protecting people's standard of living.

Quote of the Month

Pension Systems in Austria and Germany

"To all intents and purposes, Germany has been left with a system that has abandoned the goal of protecting people's standard of living."

from Florian Blank, Camille Logeay, Erik Türk, Josef Wöss and Rudolf Zwiener's Forum article "Why Is Austria's Pension System So Much Better Than Germany's?"

Editorial

The Organization and Economics of Sports Mega-Events

In light of the imminent commencement of the UEFA Championship in France and the Olympics in Rio, as well as the prospective bids of Rome and Paris for the 2024 Olympics, it is an opportune time to shed some light on the benefits and costs of hosting a mega-event. Andrew Zimbalist casts doubt on the economics of these events for the host countries, arguing that they inflict unnecessary debt on their hosts and undermine sustainability concerns.

Editor's Choice

The Impact of the Financial Crisis on the Real Economy

The cost of the financial crisis to the real economy has so far remained underexamined, probably because of the difficulty in making such an assessment. The crisis was precipitated by an unsustainable bubble that artificially inflated economic figures, so what should be used as a benchmark for measuring the effects of the crisis on the real economy? How reliable are current estimates of the output gap? Could overestimating this indicator lead to underestimating the current risk of inflation? Finally, what effect will the crisis have on the declining long-term productivity gains in Europe and the USA, and what does this mean for potential output?