A Fiscal Stabilisation Function for the Eurozone
The Five Presidents' Report of 2015 called for a macroeconomic stabiliser that would be capable of dealing with asymmetric shocks. A European unemployment benefits scheme (EUBS) is one of many potential stabilisation mechanisms. The papers in this Forum, based on a recent Intereconomics conference, seek to provide solutions that can overcome the political resistance to risk sharing in order to secure the economic benefits of risk reduction.
Figure of the Month
Share of the Premium Automotive Market
This figure from Autonomous Driving – A Challenge for the Automotive Industry by Hubertus Bardt shows the global dominance of Germany in the market for premium automobiles. Click on the figure for additional information.
Fiscal Rules and the Scope for Risk Sharing
Iain Begg looks at fiscal stabilisation from the perspective of rules controlling the spending of national governments in the Eurozone. He finds that contradictions often exist between the various EU directives on fiscal rules, as well as constitutional rules in the member states themselves. The conclusion points to the limits of rules as a useful tool to meet fiscal stabilisation goals.
Letter from America
Hints of Progress for Labor in the US
Dean Baker describes the current state of affairs in US labor rights. While the libertarian-leaning Trump Administration should spell doom for the enshrined rights of American workers, Baker suggests that there are actually a few glimmers of hope, specifically with regard to a higher minimum wage and more paid time off for family leave or sick days.
Quote of the Month
“If the [U.S.] minimum wage had continued to track productivity growth in the years since 1968, it would be almost $20 an hour today, more than two and a half times its current level.”
from Dean Baker's Letter from America "Hints of Progress for Labor in the United States"
Comprehensive Trade Agreements: Eroding the European Model?
Annette Bongardt and Francisco Torres offer a criticism of the EU’s current strategy of pursuing comprehensive bilateral trade agreements underpinned by far-reaching bilateral rules that govern the relationship. They argue that these comprehensive deals centralise trade decisions at the supranational level, leaving little room for the heterogeneous competences of the member states to be taken into account.
From the Archives
Will the Politics or Economics of Deflation Prove More Harmful?
In his 2015 Letter from America, Mark Blyth explained how continued deflation would lead to a decline of the political centre and why this would be "bad for the EMU project and all that flows from it". Blyth sees the anti-creditor, anti-market populist movements that have arisen since the crisis as threats not only to macroeconomic stability but to the "very idea of Europe".