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.
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 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.
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.
Forum: Industrial Implications of Decarbonisation
with articles by Tomas Wyns, Stefan Schleicher, Claudia Kemfert and more
by Marc Schmid
by Ulrich Blum
from Ángel Ubide's Forum article Fiscal Policy at the Zero Lower Bound
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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