Intereconomics - Review of European Economic Policy

Intereconomics - Review of European Economic Policy

Volume 48, March/April 2013

The March/April issue of Intereconomics features a Forum that examines the concept of convergence in the European Union. Other articles in this issue include a discussion of the problem of banking regulation, a model of public subsidies for R&D and a study of the determinants of economic growth in the new member states. The Editorial examines ways to tackle the oversupply of carbon allowances, while this issue’s Letter from America addresses President Obama’s proposal to raise the minimum wage.


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Convergence in the EU

The EU has long viewed economic and institutional convergence as important goals, but the results thus far have been decidedly mixed, and there remain several open questions: How exactly should convergence be defined? How much convergence is necessary? What steps can be taken to improve convergence in the EU, and how can success be defined? Finally, how much convergence can be achieved by improving the economic performance in underperforming regions, and how can convergence in the form of harmonisation towards lower welfare levels be avoided? European experts answer these questions and more in this issue’s Forum.


Banking Union with a Sovereign Virus: The Self-serving Treatment of Sovereign Debt

Daniel Gros (Centre for European Policy Studies) details how banks can be weaned off of their massive investments in their home government’s bonds. Despite the experience of the ongoing sovereign debt crisis, European banks continue to hold large amounts of bonds from their home governments. This ties the fates of the sovereign and the banks together, leading to the disruptive self-reinforcing feedback loops that brought the euro area to the brink of collapse.

Carbon Tax: Still the Best Way Forward for Climate Policy

In this issue's Editorial, Richard S.J. Tol (University of Sussex) reviews possible solutions to the slump in the price of carbon dioxide emission permits. He addresses a number of problems with the EU Emissions Trading System and suggests that it would be better to replace it with a carbon tax. Earlier attempts to introduce an EU-wide carbon tax failed, but with public finances as they are, this may be the right time to again push for a carbon tax.

What Can Sector Accounts Tell About the Financial Crisis?

Gunther Tichy (Austrian Institute of Economic Research) suggests that the current concentration on a speedy cutback of public debt is premature at best. The financial sector accounts reveal that public as well as private borrowing in the euro area was dwarfed by the synchronised explosion of assets and liabilities of financial corporations. Policy should therefore pay more attention to the main causes of the crisis: the excesses of the financial sector and the flaws in the design of the heterogeneous currency union.

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Why do we typically expect Slovakia, Slovenia and the Baltic countries to converge towards core EU countries in terms of GDP per capita while we have got used to the fact that the Mezzogiorno is not converging towards Northern Italy?

from Pierre Wunsch's Forum contribution Is the European Integration Machine Broken?

About Intereconomics - Review of European Economic Policy

Intereconomics is jointly produced by ZBW - Leibniz Information Centre for Economics and the Centre for European Policy Studies (CEPS). The journal appears bimonthly and features papers by economists that deal with economic and social policy issues and trends in Europe or affecting Europe. To submit a paper for publication, please visit the Call for Papers section of our website for relevant information.

Intereconomics is published by Springer-Verlag Berlin Heidelberg.

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