• June 18, 2010

    A Downgraded Europe?

    A Downgraded Europe?

    In 2007, a group presided by Felipe González was set up to write a report on “the future of Europe”, which was delivered to the European Counsel on June 17th. One understands that right now the priorities may be concentrated on finding parades to the attacks of the markets, rather than to envision the distant future of the Union. But this report is capital in more than one way. First because the relief that followed the signature of the Lisbon Treaty gave place to the question of what to do in the next twenty years. Second because the financial crisis obviously imposes to reform the European model of governance and the European policies. (in French)

  • Feb. 17, 2010

    When Ukraine meets with China

    When Ukraine meets with China

    No wonder that Ukraine remains a country profoundly torn between a pro-West and a pro-East vector, i.e. EU and Russia. Beyond this oft-described black-and-white opposition, the striking geopolitical reality for the coming years may not be the swing toward one or the other pole, but rather the arrival of China as a central player in the EU neighbourhood.

  • July 8, 2009

    Attempting the Impossible: constructing Life out of Digital Records

    Attempting the Impossible: constructing Life out of Digital Records

    Human living and knowing are bound to vacillate between the sensible and the intelligible, what can be experienced through the senses and what can be thought (including counting and calculation) without immediate reference to palpable reality. Perception is a vital and inseparable component of living and, though shaped by culture, it is firmly anchored into the human sensorium. At the same time, living and knowing always transcend the givens of perception and entail cognitive operations that lack ostensive reference, being conceptual or abstract.

  • March 18, 2009

    The WTO’s transparency challenge

    Multilateral liberalization has often been described as a bicycle that has to keep moving to maintain stability. Undeniably, the bicycle has come to a standstill: as the Doha Round drags on since 2001 with little result, countries have worked off their liberalization commitments from the Uruguay Round (1986-94) and face few incentives to reform their policies in preparation of new WTO obligations.

  • Jan. 28, 2009

    Illusory Virtue

    Illusory Virtue

    The European Commission has just released gloomy, updated macroeconomic forecasts, with Euro area GDP now projected to decline by 1.9% in 2009. In eleven out of 16 Member states, GDP is expected to fall in 2009, with an especially sharp decline in Ireland (-5%). Due to automatic stabilizers and fiscal stimulation plans, half of the countries are expected to run fiscal deficits exceeding the 3%-of-GDP red line. The European Commission forecasts very large deficits in Ireland (11% of GDP) and in Spain (6.2%). Strikingly, these two countries used to be part of the most virtuous members of the Euro area until 2007. Indeed, from 1999 to 2007, none of these two reached or even approached the 3% bound. General government budget was close to balance on average in Spain while Ireland ran a 1.6% surplus on average. All other Euro Members except Belgium, Finland and Luxembourg crossed the red line at least once, and five of them (France, Germany, Greece, Italy, Portugal) did it several times.

  • Oct. 30, 2008

    Not another Bretton Woods

    Not another Bretton Woods

    The Washington meeting of the Heads of State to take place shortly reflects recognition of the need for international cooperation in the regulation of financial institutions and markets. There has been international cooperation in recent months, mainly among the major central banks, notably the coordinated interest-rate cuts that took place recently, and the provision of dollar financing by the Federal Reserve to the European Central Bank, which needed dollars to relend to European banks that could not obtain them commercially.

  • Oct. 30, 2008

    Despite the history of a weak dollar would you rather buy a Mercedes or a Ford?

    Despite the history of a weak dollar would you rather buy a Mercedes or a Ford?

    We are entering in different phase in stock market weakness, one that gives me some cause for optimism. I believe that in recent weeks what we have witnessed is a transition from “liquidity fear” to “recession fear” or for the more technical, from liquidity risk to credit risk. It may be hard to notice the difference. Both forces are bad for stock markets in general. But they have a different impact on individual stocks and therein lies the opportunity for opportunistic investors who don’t mind a bare-knuckle ride in search of superior returns.

  • Oct. 29, 2008

    Some ways out of the financial crisis

    Some ways out of the financial crisis

    Everyday, as a matter of urgency, central banks and governments are fighting against the fire. An amazing blow to confidence has burst within the most sophisticated financial system which has ever been experienced. Before smoke and dust fall down, it is wise to investigate the ways out on which governments should drive the players of this drama in order to contain damages and speed up reconstruction.

  • Oct. 10, 2008

    Not a G7 but an Emergency meeting of a new G16 to stabilize the world economic crisis

    Not a G7 but an Emergency meeting of a new G16 to stabilize the world economic crisis

    The 1980s have seen the 2nd wave of economic globalization of modern history. It should not end like the first during the 19th century. Economic crises and wars often keep pace. The first energy shock of 1973, the start of the economic reforms in China at the end of the 1970s then in India and finally the fall of the Berlin Wall in 1989, gradually led to a huge transformation of the world economy. The idea to gather a G7 or even the G8 under the current format is clearly unsuitable when we see clouds accumulating on emerging countries, China and India included.

  • June 3, 2008

    Seismic Change in the Middle Kingdom - and why we should take note

    Seismic Change in the Middle Kingdom - and why we should take note

    In the wake of the tragic Sichuan earthquake, something big is astir in China. It was not just the earth that shook on this peaceful afternoon of May 12, 2008. Society and political world moved as well. Future historians may well remember this month as a watershed moment. The time has come for us to take note and change course in our understanding of China. This is probably one of the most important tasks in front of us when we map out our future decades. The stakes could not be higher.

  • May 21, 2008

    Is Sarkozy’s Fiscal Policy Supporting reforms?

    Is Sarkozy’s Fiscal Policy Supporting reforms?

    The ‘fiscal package’ passed on 21 August 2007 (known in France under its acronym ‘TEPA’) was sold by the new government as an important tool to bolster confidence and thus make reforms easier. Since then, it has become the main target of the government critics in the French political debate. When the project was made public, we had concluded that, from a strict economic angle, the fiscal side of the first reforms announced by PM Francois Fillon was ‘an unnecessary fiscal stimulus without long-term merits’. Real life has confirmed this diagnosis: the ‘fiscal shock’ was based on flawed economics, namely that fiscal stimulus generate high growth returns, and proved counter-productive in the French political debate. Yet, the new government’s fiscal policy is not as negative as some critics are saying, and it is not too late to re-design it so that budget decisions would support structural reforms.

  • April 23, 2008

    Databasing Life Patterns

    Over the last two decades, many of us have felt the gradual and expanding involvement of technological information and the internet in our lives. However, more often than not, we fail to appreciate the subtle and pervasive implications these developments may have for the ways we think and behave. The accumulation of information, from the growing expansion of the trivial to the serious aspects of life that are recorded in databases (e.g. financial, medical or legal records, online habits) and the increasing sophistication of computer technology converge to confer to data and information a new and interesting role in the lives of people and the functioning of institutions. Information is not any longer confined within the world of computer-based experts.

  • Feb. 15, 2008

    Normative Empire

    Normative Empire

    On October 25th 2007 the Wall Street Journal published a blistering attack on Europe entitled “Regulatory Imperialism”. The editorial took issue with Europe’s intent to force its norms on the rest of the world by taking advantage of the dynamism of its internal market both affluent and attractive and in addition highly organized. Examples cited included the Microsoft Affair, the ban on the importation of chlorine-rinsed poultry, the Reach legislation on chemical products, as well as the plan to tax airline companies as part of the battle against climate change.

  • Dec. 19, 2007

    Minimum wages, maximum wages and the level of economic discourse in Germany

    Minimum wages, maximum wages and the level of economic discourse in Germany

    The past few weeks have been economically challenging for economists who live in or deal with Germany. For starters, the parliament just passed a minimum wage for postal workers. Second, the country is in the grips of a national discussion of “the excesses of managerial pay”- and a significant number of politicians have argued for caps on executive pay – maximum wages! And precisely because the quality of economic discourse surrounding these issues is so abysmal, one may need to think twice when assessing whether Germany has made any fundamental progress on labor market reforms.

  • Oct. 13, 2007

    The French Mark on Globalization

    The French Mark on Globalization

    On September 28, Dominique Strauss-Kahn became the new Managing Director of the International Monetary Fund. He follows in the footsteps of his French predecessors, Pierre-Paul Schweitzer (1963-1973), Jacques de la Rosière (1979-1987) and Michel Camdessus (1987-2000). Indeed, French bureaucrats have led the IMF for almost half of its existence. Look beyond 19th Street, and you will find the mark of Frenchmen in many more of the world's most influential economic organizations, from Pascal Lamy, who has been Director General of the World Trade Organization since 2005, to Jean-Claude Trichet, who has headed the European Central Bank since 2003.

  • Oct. 10, 2007

    Financial crisis: why it may last

    Financial crisis: why it may last

    Since the month of August, economists have been trying to understand why something that was supposed to be positive for global growth, namely the diversification of risk through securitization, had turned out to be the source of the recent crisis. The first reaction was to characterize this as a liquidity crisis - some banks were having undue difficulties in securing funds in the interbank market, and thus central banks reacted by providing liquidity through open market operations. Many central bankers and academics started smiling with an "I told you so, there was so much excess liquidity, this was bound to happen", and adopted a tough anti-moral hazard stance. More than a month, and many billions of dollars of extra liquidity injections, later the situation in money and credit markets has not improved. Central banks have added liquidity to a situation of already "excess liquidity" to tackle an apparent liquidity crunch, and yet nothing has got better. Perhaps it was not about liquidity, after all.

  • July 11, 2007

    Unemployed: are sanctions efficient?

    Unemployed: are sanctions efficient?

    In the 1990s, a number of European countries undertook far-reaching labour market reforms to combat high unemployment. At their heart, these reforms were essentially a “carrot & stick” approach, where the “carrot” consisted of (mandatory) activation measures such as job search assistance, on-the-job training, or subsidized employment, while the “stick” consisted of sanctions on unemployment benefits for failure to comply with job search requirements. Specific sanctions ranged from the short-term discontinuation of benefits to permanent and in some cases substantial benefits reductions. As I read the current evaluation literature especially combinations of “assistance and sanctions” were successful in increasing the exit rate to work. -->

  • June 30, 2007

    EU Foreign and Security Policy with the Mini-Treaty

    EU Foreign and Security Policy with the Mini-Treaty

    The prescriptions of the 2004 Constitutional Treaty which proved to be the least controversial were, paradoxically, those in the field of the common foreign and security policy (CFSP). The arrangements agreed to in Berlin last weekend represent little change from the 2004 text. The most important elements are the creation of the new post of “High Representative”, the post of President of the Council and the development of a European diplomatic service. These measures will not, by themselves, turn the EU into a new type of international power-broker, but they will help the Union formulate joint policy and, above all, will assist in the coherent presentation of that policy to the outside world.

  • June 30, 2007

    The European Treaty: why France wants to move quickly

    The European Treaty: why France wants to move quickly

    The election of Nicolas Sarkozy as President of the French Republic has been widely regarded as the signal of a shift in France’s policy towards Europe. In a campaign where European issues were conspicuous by their absence, Mr Sarkozy was by far the clearest of all the principal candidates regarding his ideas for the EU. A quick fix was needed to overcome the stalemate created by the French and Dutch rejection of the draft constitutional treaty. Turkey, as an Asian country, had no justification to join the EU: instead, a type of “privileged partnership” had to be established to anchor this country to the Union. Having settled these two thorny issues, Europe should then focus on topics that matter most to ordinary citizens, such as how to create growth and jobs.

  • June 25, 2007

    Thanks, Asia, for your prudent policies

    Economists tend to say that markets have short memories, in an attempt to explain why, seemingly, markets do not apply large enough discounts to some asset prices even after episodes of turmoil. However, economists typically ignore the fact that they also seem to have short memories and that, often, simplification prevails over careful analysis. A clear example is the ongoing commentary bashing Asian countries for a variety of assorted reasons: adopting mercantilist policies, having learnt the wrong lessons from the 1997 crisis, risking heavy capital losses from their exchange rate reserves, managing their currencies, self-inflicting standard of living costs, etc. While this commentary is largely the result of the fashionable discussion on the global imbalance, and while this is a very convenient way of providing arguments for politicians so that they can tackle, in a partial, biased and inefficient way, the problem of rising income inequality in the Western world, the truth of the matter is that few people seems to remember the conclusions of the post-crisis analysis back in 1997-98 and the policy implications of such conclusions. Ten years later, the Asian crisis feels like a very old event and memories seem to be blurring.