INTERNATIONAL INSIGHT

European Economies

Can entrepreneurship be encouraged in Europe if the continent’s social welfare policies remain unchanged? Is the European Central Bank too focused on inflation? Is Italy the new "sick man of Europe"?

These types of questions are the focus of Project Syndicate's monthly commentaries on European economics, edited by one of the continent's leading economists, Niels Thygesen of the University of Copenhagen.

RECENT COMMENTARIES

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How to Save the Euro

Daniel Gros Series: European Economies

2010-03-12

The euro zone was created on two assumptions: member countries would adhere to strict deficit and debt limits, and those who violated the limits would not be bailed out. Now that the Greek crisis has proved both assumptions invalid, the only hope for imposing market discipline throughout the euro zone is the creation of a European Monetary Fund.... read

Comments: 1 Recommended: 1 Read: 1767

Turning the Corner in Eastern Europe

Thomas Mirow Series: European Economies

2010-03-01

Many countries in Central and Eastern Europe were hit hard by the global financial crisis, owing to a massive build-up of debt - much of it in foreign currencies - during the boom years that preceded it. Sustainable recovery will require the development of strong local capital markets, as well as stronger institutional and regulatory frameworks – and not just at the national level.... read

Comments: 0 Recommended: 0 Read: 3113

The Greek Conundrum

George Soros Series: European Economies

2010-02-23

Otmar Issing, one of the fathers of the euro, correctly stated the principle on which the common currency was founded: it was meant to be a monetary union, not a political one. But that principle is patently flawed, because, as the Greek crisis has demonstrated, a fully-fledged currency requires both a central bank and a treasury. ... read

Comments: 4 Recommended: 0 Read: 5623

The Euro’s Final Countdown?

Sylvester Eijffinger and Edin Mujagic Series: European Economies

2010-02-08

The introduction of the euro in 1999, it was claimed, would narrow the economic differences between the member countries of the monetary union. After the common currency’s first decade, however, increased divergence, rather than rapid convergence, has become the norm within the euro area, and tensions can be expected to increase further.... read

Comments: 0 Recommended: 1 Read: 5811

An Antitrust Counter-Revolution?

Xavier Vives Series: European Economies

2010-01-12

The current crisis, with its government bailouts and subsidies, has placed tremendous pressure on competition policy on both sides of the Atlantic. As a result, whereas antitrust policy had come to focus on efficiency since its inception in late nineteenth-century America, it may revert to its original populist focus on the size of firms.... read

Comments: 0 Recommended: 0 Read: 3123

The Euro’s Greek Tragedy

Edin Mujagic Series: European Economies

2009-12-10

When the euro was introduced in 1999, European countries agreed that fiscal discipline was essential for its stability. While the common currency has benefited all countries that have adopted it – not least as an anchor in the current economic crisis – the failure of euro-zone members to abide by their agreement risk could yet lead to disaster.... read

Comments: 0 Recommended: 0 Read: 6158

Saving Europe’s Lost Generation of Workers

Tito Boeri Series: European Economies

2009-12-09

The many post-mortems of the economic crisis that are now being written are misleading and dangerous, not only because the labor market has not yet recovered, but also because they contribute to complacency, thereby reducing pressure for reform. The crisis will be truly over only when new cohorts of workers are able to enter the labor market quickly and through the main door.... read

Comments: 0 Recommended: 0 Read: 4752

Transition in Crisis?

Erik Berglof Series: European Economies

2009-11-02

Thanks to the global economic crisis, Europe’s emerging markets have this year experienced their worst output collapse since the great “transitional recession” that followed the end of communism. Nevertheless, financial and trade integration is unlikely to be reversed - though many countries may move more slowly on completing the remaining reform agenda.... read

Comments: 0 Recommended: 0 Read: 6037

Sweden’s Lessons for Managing Financial Crisis

Urban Bäckstrom Series: European Economies

2009-10-12

Although Sweden is a small country, its experiences managing its financial crisis of the early 1990’s may provide valuable lessons for others. Most importantly, adopting protectionist measures would merely increase fiscal problems, ultimately deepenening the international downturn and delaying recovery.... read

Comments: 0 Recommended: 1 Read: 5111

European Financial Regulation’s Wrong Turn	Erik Berglof and Katharina Pistor
The European Union, heeding calls for more effective financial regulation, has just unveiled a plan for a new pan-European watchdog. But, by retaining the principle that financial institutions' home countries are responsible for regulating their activities in other EU countries, the plan may threaten decades of integration by encouraging host countries to re-impose capital controls.... read

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The Case for a Global Financial-Transaction Tax

Peer Steinbrück Series: European Economies

2009-09-21

Despite all economic pain caused by their recklessness, financial-market participants gained significant benefits from government bailouts. It is time for them to pay their fair share of the costs, and the most just and efficient way to ensure this is for the G-20 to implement a global financial-transaction tax.... read

Comments: 2 Recommended: 0 Read: 5238

Beggar-Thy-Neighbor Exchange Rates?

Charles Wyplosz Series: European Economies

2009-04-09

The Swiss National Bank's recent announcement that it was intervening on the foreign-exchange market with the aim of reversing the appreciation of the franc has been met not by protest at the prospect of competitive depreciations, but by silence. Does this indicate that all other central banks entertain the possibility of using that option?... read

Comments: 0 Recommended: 0 Read: 8963

What Corporate Tax for Europe?

Stefano Micossi Series: European Economies

2006-01-27

The European Commission is considering a common model of corporate taxation for the European Union that cannot possibly work. Instead, it should consider a simpler, and more viable, alternative that already exists.... read

Comments: 0 Recommended: 0 Read: 22134

The ECB’s Path Not Taken

Olivier Blanchard and Francesco Giavazzi Series: European Economies

2005-12-01

It is now clear that the European Central Bank views higher interest rates as the right response to rising oil prices. As a result, the ECB risks painting itself into a corner, for the logic behind this week’s interest-rate hike implies that more increases will follow – a series of policy mistakes that will cost the Eurozone economies heavily.... read

Comments: 0 Recommended: 0 Read: 22128

An Agenda for Growth in Europe

Niels Thygesen Series: European Economies

2006-02-23

A recent OECD study reminds us, once again, that per capita income levels are roughly 30% lower in the euro area, as well as in the three largest Continental countries – France, Germany, and Italy – that dominate its performance, than in the United States. That gap is likely to widen as Europe’s demographic profile darkens, and if productivity continues to grow more slowly than elsewhere in the industrial economies.... read

Comments: 0 Recommended: 0 Read: 20687

Europe, An Engine of Peace

Wim Duisenberg Series: European Economies

2005-08-01

Critics of European monetary integration often point out that, in the absence of political union, monetary union is doomed to fail. I agree with the critics’ conclusion, but not with their premise, for the success of the single currency so far has been due precisely to the political commitments of the Union’s member countries.... read

Comments: 0 Recommended: 0 Read: 20679

The Scoundrels of Economic Patriotism

Harold James Series: European Economies

2006-03-20

Samuel Johnson called patriotism “the last refuge of a scoundrel.” If that is true, what should we think of today’s mounting economic nationalism, sometimes euphemistically described as “economic patriotism”?... read

Comments: 0 Recommended: 0 Read: 20503

The Next Gas Crisis Awaits

Yuliya Tymoshenko Series: European Economies

2006-01-06

Europe’s sigh of relief at the supposed end of the dispute between Russia and Ukraine over gas pricing was audible here in Kyiv. But the settlement raises more questions than it answers. By placing Ukraine’s energy needs in the hands of a shadowy company linked to international criminals, the agreement has planted the seeds of new and perhaps more dangerous crises.... read

Comments: 0 Recommended: 0 Read: 20353

Europe’s Leisure Trap

Heleen Mees Series: European Economies

2006-06-23

Black Friday in the United States traditionally is the day after Thanksgiving that signals the start of the holiday season sale. At daybreak, people line up before department stores to get the special “early bird” bargains. In Europe, black Saturday falls in the last weekend of July, when the French and other Europeans set off in droves for their Mediterranean holiday destinations, and highways get jammed with traffic. ... read

Comments: 0 Recommended: 0 Read: 20224

France’s Ghetto Economy

Guido Tabellini Series: European Economies

2005-11-17

The youngsters who are ravaging France realize that they don’t have a future. That is why they are burning cars. But how many French politicians realize that their beloved “social model” is partly to blame?... read

Comments: 0 Recommended: 0 Read: 19866

The EU’s Small Leaders

Harold James Series: European Economies

2005-07-29

The defeat of the EU’s Constitutional Treaty in referendums in France and the Netherlands has, it seems, given rise to a new consensus that further enlargement of the Union should be slowed down, or even stopped. Advocates of this position see EU voters as terrified by the consequences of the May 2004 enlargement of the EU, when eight formerly communist states joined, and angry that they were not consulted about it. ... read

Comments: 0 Recommended: 1 Read: 19709

The Right Populism for Poland	Lucjan T. Orlowski
Poland’s parliamentary and presidential elections this month saw the death of a left-leaning postcommunist party that mostly dominated the country since 1995. But the demise of the left does not mean that the right has a coherent economic program. For the victorious coalition of the Law and Justice (PiS) party and Civic Platform (PO) is torn between liberal (PO) and populist instincts (PiS). ... read
Paying the Price of Reform	Charles Wyplosz
Angela Merkel’s poor showing in Germany’s recent election has now put into cold storage any hope of a serious overhaul of the country’s famously rigid economy. Tony Blair was waiting for her to help launch a drive to make the current British Presidency of the European Union a historical turning point for the Union’s economy. Now Blair has no project, and all would-be reformers are most likely downsizing their ambitions. Europe appears to be more stuck than ever. But is it?... read

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