INTERECONOMICS – REVIEW OF EUROPEAN ECONOMIC POLICY
Newsletter – Volume 54,
September/October 2019

Featured Topic

Public Debt and Growth in Times of Low Interest Rates

The discussion about low interest rates and appropriate debt rules gained renewed impetus after Olivier Blanchard’s 2019 presidential address to the American Economic Association. Interest rates are persistently below growth rates in most advanced economies, including euro area sovereigns. Under these conditions, could an active use of fiscal policy lead to a more stable growth rate? What are the main obstacles standing in the way of this? In this issue's Forum, Daniel Gros, Carl Christian von Weizsäcker, Ángel Ubide, Paul De Grauwe, Yuemei Ji and Yoshiyasu Ono provide insight and answers to the questions surrounding one of the most pressing issues in fiscal policy today.

A Closer Look

The Fall of the Iron Curtain: 30 Years On

This autumn marks 30 years since the fall of the Berlin Wall. The events that followed - the end of one-party communist rule and the dissolution of the Soviet Union - set off a global transformation. While European unification became a reality through the enlargement of the EU, the economic dimension of this politically driven process has proven to be much more difficult. Former EU Commissioner László Andor assesses the progress that has been made towards achieving economic convergence as well as social and political cohesion and lays out the tasks ahead of the incoming European Commission of Ursula von der Leyen.

The US Unemployment Insurance Scheme: A Model for the EU?

The system of unemployment insurance (UI) used in the United States has often been cited as a model for Europe, write Christiaan Luigjes, Georg Fischer and Frank Vandenbroucke. The American model illustrates the possibility of creating and maintaining a UI system based on federal-state co-financing that intensifies during economic crises and thus reinforces protection and stabilisation. It also, however, financially incentivises states to organise retrenchment of their own efforts for UI, which leads to a divergence of benefit generosity and coverage levels. The authors examine both the encouraging conclusions and as well as the cautionary lessons of the US model.

US States Lead the Way on Climate Policy

The societal price of harmful emissions is not reflected in the private market cost of producing or consuming energy, and as a result, energy markets produce too much carbon emission in the absence of policy, write Karen Palmer and Kathryne Cleary in the lead up to Climate Week at the United Nations in New York City. In the absence of federal action, several states have implemented Renewable Portfolio Standards (RPS) that cost-effectively limit emissions and encourage deployment of renewable resources to help provide a solid foundation for future policy.

From the Next Issue

Forum: Industrial Implications of Decarbonisation

with articles by Tomas Wyns, Stefan Schleicher, Claudia Kemfert and more

Rare Earths as a Geopolitical Instrument in the Trade Dispute Between the US and China: A Déjà Vu

by Marc Schmid

The Eastern German Growth Trap: Structural Limits to Convergence?

by Ulrich Blum

Quote of the Month

Very low real interest rates and inflation may appear to be a great outcome, but they are not. Excessively low nominal rates reduce welfare, as they limit the policy scope to cushion recessions and the business cycle - in other words, the expected future output gap increases.

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 Submissions section of our website for relevant information.

Intereconomics is published by Springer-Verlag Berlin Heidelberg.

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