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.
Economic Growth and Happiness
The Asymmetric Effects of Macroeconomic Performance on Happiness
Edsel L. Beja, Jr., looks at how economic growth effects reported happiness of individuals. He finds that the negative effect of an economic recession on happiness can be at least twice the positive effect of economic growth, and that a single year of recession can undo the happiness gains from years of economic growth. This indicates that stable rather than rapid economic growth is a more sensible target for policymakers, because macroeconomic stability can lead to conditions that allow the pursuit of happiness and thus secure greater well-being.
Differentiation Could Become the Next EU Integration Concept
Josef Janning looks at the future of the European Union in light of the recent Juncker White Paper, in which Juncker seemed to legitimise the idea of a multispeed Europe. The author looks at the rationale behind the declaration, as well it's possible results.
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"
What the EU Can Learn from the American Experience with Unemployment Insurance
Suzanne Simonetta provides an overview of US experience with it's federal unemployment benefits scheme, and looks at whether this model could be applicable to the European Union. She finds many points of relevance , but ultimately concludes that the federal-state system of the US is much different to the EU-member state relationship, and thus Europe must go it's own way in developing this worthwhile safety net.
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".