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Author: Bruegel

The single monetary policy and its decentralised implementation: An assessment

This policy contribution was prepared for the Committee on Economic and Monetary Affairs of the European Parliament (ECON) as an input for the Monetary Dialogue of 25 September 2017 between ECON and the President of the ECB. (http://www.europarl.europa.eu/committees/en/econ/monetary–dialogue.html). Copyright remains with the European Parliament at all times.” While the Eurosystem has considerably improved its operational transparency in the last few years, it is still lagging the Federal Reserve System (Fed), especially in terms of the information it provides on operating costs and staff numbers, for which it provides very scarce data. In addition, the available information is scattered throughout different publications, rather than being...

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An innovation deficit behind Europe’s overall productivity slowdown?

This paper was published as a chapter of Investment and Growth in Advanced Economies, conference volume of the European Central Bank’s Forum Europe maintains lofty ambitions for building its future prosperity and safeguarding its social model through innovation. An ambitious target of devoting 3% of GDP to R&D was already set in 2002. The same 3% was again targeted in the EU2020 strategy. Despite attention to innovation as a driver of growth and despite R&D targeting, Europe’s performance on innovation remains weak to date. At the same time, Europe’s TFP growth continues to display a lacklustre performance. Rather than looking at productivity...

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The Economics of Healthcare

Greg Mankiw  argues that healthcare is so complicated because the magic of the free market sometimes fails us when it comes to this sector, for several reasons. First, externalities abound. When a new treatment is discovered, for example, that information enters society’s pool of medical knowledge, but without research subsidies or an effective patent system, too few resources will be devoted to research. Second, when people get sick, they often do not know what they need and sometimes are not in a position to make good decisions. The inability of health care consumers to monitor product quality leads to...

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Employment in Europe and the US: the EU’s remarkable strength

The global financial crash had a lasting impact in Europe. Most EU countries faced long recessions and labour market weakness after 2008. In contrast, recovery in the US economy and job market started much earlier. Much has been said about the reasons for this discrepancy between the two regions, and in our view some of the pain of post-2008 Europe could have been avoided. However, beyond the doom and gloom, comparing the EU and US is a not as simple as it seems. And the balance is not monolithically favourable to the US. In fact, it is worth emphasising...

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A European perspective on overindebtedness

The euro-area crisis, which nearly destroyed Europe’s Economic and Monetary Union (EMU) in 2011-12, was a result of perverse incentives and inadequate institutions. The perverse incentives included excessive implicit national guarantees of domestic banks, and a lack of clarity on what would happen in case of sovereign debt distress, which was interpreted as an implicit guarantee of euro-area sovereigns by each other. Correspondingly, Europe had no institutions that could credibly declare a bank to be failing or likely to fail, manage a bank resolution process, or manage a sovereign debt restructuring. As a consequence, in the decade before the...

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A resilient Euro needs Franco-German compromise

This op-ed was published – in French and German, respectively, and in slightly shortened form – in Le Monde and Frankfurter Allgemeine Zeitung on 9/27/2017     The euro area has recently seen some good news. A broad-based economic recovery is under way. Significant institutional reforms have been achieved, particularly in the area of banking union. Significant economic reforms are under way in several countries, including in France. As French and German economists committed to Europe and to the friendship between our countries, we are nonetheless concerned that the Euro area continues to face significant fragilities.  Addressing these requires...

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Can roaming be saved after Brexit?

The referendum where UK voters chose to exit the European Union has many unanticipated consequences. One that is gaining visibility in the UK just now is the impact of Brexit on mobile roaming arrangements. UK citizens should not count on continuing to enjoy inexpensive mobile roaming when travelling in EU Member States unless measures are taken to preserve it. The issue has had far greater visibility in the UK than in the EU because the price increases that can be expected have proportionally far greater impact on UK subscribers than on EU subscribers. With that in mind, this post...

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Reinforcing the EU energy industry transformation: stronger policies needed

This blog summarises the arguments of one chapter of the recent Bruegel Blueprint by the same authors Towards a 3D European energy system: decarbonised, digital and decentralised The European energy system is going through a profound transformation as two trends reshape it: decarbonisation and digitalisation. Based on strong public policies, decarbonisation is changing the European energy mix, while innovation in digital technologies is enabling disruptive change in the way energy systems are operated. Digitalisation can be an important catalyst for decarbonisation. Digital technologies, such as smart meters, give consumers more control over their energy use and offer benefits from...

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