Vigorous debate over the effectiveness of the fiscal adjustment programmes for the crisis-stricken countries in the eurozone has grown quite polarised. In this Forum, several experts use analytical, evidence-based approaches to gauge the effectiveness of these programmes. The role played by the estimates of the fiscal multipliers that the Commission, IMF and ECB used to structure the adjustment programmes is crucial to this debate. If these multipliers were underestimated, as the IMF itself claims, then the negative impact of the fiscal restructuring on already fragile economies would also have been underestimated. Several authors examine the available evidence to determine whether the adjustments programmes were flawed from the outset. Another contribution analyses the effectiveness of structural reforms when monetary policy rates are near the zero lower bound. A final paper uses a case study of Ireland's recovery thus far to examine the actual effects that the programmes have had on the crisis-stricken countries' economies.
On 12 January 2015, 6 p.m. Massimo D’Alema will present his book "It’s Not Just About Euro" at the Leibniz Information Centre for Economics (ZBW) in Hamburg. His new book proposes a different Europe. It develops a concrete proposal for Europe to finally move beyond austerity to a more democratic and inclusive Union, able to recover its role on the international stage. This is a passionate exhortation for progressives to address the crucial decisions that lie ahead.
Carsten Hefeker argues that the ongoing conflict between Mario Draghi and Jens Weidmann, presidents of the European Central Bank and German Bundesbank respectively, is grounded in matters of both substance and style. Weidmann finds himself isolated due to his opposition to the ECB’s loose monetary policy. Meanwhile, Draghi has come under fire for relying on a small group of council members for policy deliberations, leaving the others – including Weidmann – feeling cut out. Weidmann’s isolation within the ECB Governing Council is perhaps analogous to Germany’s increasingly lonely hard-line position on monetary and fiscal matters, as more and more countries and international organisations have begun voicing criticism.
This paper reviews the novel policy measures developed by the EU to deal with insolvent member states and assesses their impact on Greece's political economy. Greece represents a major test case as a recipient of two bailout loans plus debt relief from private creditors. The paper examines the degree to which EU policies have been successful, evaluates the challenges that remain after four years of reforms and traces their implications for the future of European integration.
"The personal conflict between Draghi and Weidmann is certainly extreme, but it also stands for a broader conflict between views on monetary policy in Europe."
- from Carsten Hefeker's Editorial Conflicts in Substance and Style in European Monetary Policy
This figure from Irene Kyriakopoulos’s article In the Name of the Euro: What Have the EU's Policies Achieved in Greece? shows how the ongoing economic depression in Greece has surpassed the 1930s U.S. Great Depression in many ways. Click on the figure for further information.
With disparities in national unemployment rates reaching record levels, the debate on fiscal stabilisers in Europe has gained new momentum. Can a European unemployment insurance scheme help to absorb asymmetric shocks and bring about the desired level of macroeconomic stabilisation? What should such an unemployment benefit system look like?
by Carsten Hefeker
by Ansgar Belke, Daniel Gros, Cinzia Alcidi, Lukas Vogel, Tim Callan, Claire Keane, Michael Savage, John R. Walsh, Alessandro Giovannini, Brian Colgan
by Daniel Nepelski, Giuditta De Prato
by Irene Kyriakopoulos
by Manfred Gärtner
by Ulrich Koester
by Eileen Appelbaum
Vanessa Rossi, Carmen M. Reinhart, Vincent Reinhart, Klaus Abberger, Dean Baker, Justin Yifu Lin
Davide Viaggi, Jean-Christophe Bureau, Stefan Tangermann, Alan Matthews, Christophe Crombez, Louise Knops, Johan Swinnen
Vassilis Monastiriotis, Niamh Hardiman, Aidan Regan, Chiara Goretti, Lucio Landi, J. Ignacio Conde-Ruiz, Carmen Marín, Ricardo Cabral
A. Bongardt, F. Torres, P. Pochet, I. Begg, L. Csaba, K. Lannoo, L. Soete, C. Egenhofer