Wirtschaftsdienst - Zeitschrift für Wirtschaftspolitik

Newsletter – Volume 50, July/August 2015

The July/August issue of Intereconomics is highlighted by two powerful essays on the recent extension of additional loans to Greece – and the harsh conditions that accompany them. While Sebastian Dullien's Editorial remains optimistic that a viable long-term solution to the ongoing Greek crisis can still be achieved, Mark Weisbrot's Letter form America sees little chance of a Greek recovery anytime soon. This issue's Forum examines the European power market, which is undergoing seismic shifts as renewable energy sources reshape the energy landscape. Additional articles cover topics such as the potential threats of the ECB's quantitative easing programme, the impact that credit availability has on public support for redistribution, and intellectual property rights for pharmaceuticals.

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Featured Topic

The Future of the European Power Market

In this issue's Forum, Fabio Genoese, Christian Egenhofer, Michael Hogan, Christian Redl, Markus Steigenberger, Patrick Graichen and Graham Weale examine the significant changes taking place in the European power market. The EU has set an ambitious goal of reducing its greenhouse gas emissions by 40 per cent by 2030. This will require significant investment in renewable energy sources such as wind and photovoltaics as well as measured policies to deal with the fluctuating capacity offered by these renewables. The integration of national power systems into a single European system would provide huge benefits in smoothing such fluctuations, enabling the EU power market to further increase its reliance on renewables. Current power generators and government regulators will inevitably face challenges adapting to the new market environment, but experience from other countries and regions could provide useful guidance.

Additional Highlights from the Current Issue

How to Turn the Greek Deal into a Success

In exchange for more austerity and structural reforms, Greece is set to receive yet another loan programme. However, the new loans don't change a fundamental fact: Greece is insolvent. Sebastian Dullien (HTW Berlin and European Council on Foreign Relations) argues that without a debt restructuring, Greece will never be able to repay its new loans. However, such a restructuring is unpopular in creditor countries, and German leaders in particular would have to expend political capital to convince a sceptical public that reducing the net present value of Greek debt is also in their interest.

Despite Pressure from Washington, Greek Bailout Increases Grexit Odds

Mark Weisbrot (Center for Economic and Policy Research and Just Foreign Policy) argues that the new deal that the Greek government was forced to agree to is a guaranteed extension of the country's ongoing economic depression. The terms of the deal make little economic sense and should instead be interpreted as punishment for Greece for challenging the European neoliberal elites and as a warning to other vulnerable eurozone economies not to elect left parties. Meanwhile, the U.S. has a strong interest in a united Europe and has been lobbying EU authorities not to push Greece out of the eurozone – for example, by forcing the release of an IMF analysis showing Greek debt is unsustainable without a restructuring. However, even Washington's efforts may not be enough to save Greece from expulsion.

Income Inequality, Credit and Public Support for Redistribution

Credit affects individuals' perceptions and experiences of inequality. Having access to credit enables those in lower- and middle-income groups to consume an array of products and services that they otherwise would not be able to afford, thereby taking the edge off discontent. Citizens with higher incomes who tend to be less supportive of redistribution in the first place may be further convinced that inequality is not a major issue and redistribution need not be a policy goal. All in all, credit may help smooth out class and status differences. This article looks at the impact of credit on citizens' support for redistributive policies. Controlling for a set of national and individual level variables, the findings show a negative association between credit use and public support for redistribution.

Current Issue of Intereconomics Online


Quote of the Month

The open question remains whether key players in Berlin actually want Greece to remain in the euro area.

from Sebastian Dullien's Editorial How to Turn the Greek Deal into a Success

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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Editorial Office

ZBW – Leibniz Information Centre for Economics
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Phone: +49 (0)40 42834-306/307
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Centre for European Policy Studies (CEPS)
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Fax: +32 (0)2 219 41 51



Derek Kruse
Phone: +49 (0)40 42834-412