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Grégory Claeys

Gregory Claeys

Grégory Claeys, a French and Spanish citizen, joined Bruegel as a research fellow in February 2014. Grégory’s research interests include international macroeconomics and finance, central banking and European governance. From 2006 to 2009 Grégory worked as a macroeconomist in the Economic Research Department of the French bank Crédit Agricole.

Articles by Gregory Claeys

The European Union’s SURE plan to safeguard employment: a small step forward

May 20, 2020

The new EU instrument to mitigate unemployment risks during an emergency (SURE) is too modest to have a significant impact the COVID-19 crisis beyond being a first step in the overall recovery plan.
By:
Grégory Claeys
Date: May 20, 2020
Topic: European Macroeconomics & Governance

The European Union’s new instrument, the so-called temporary Support to mitigate Unemployment Risks in an Emergency (SURE), will provide temporary support of up to €100 billion in loans to EU countries that request financial assistance to fund job-saving initiatives. While the creation of the instrument has generated a lot of interest, its main benefit is to show that, if needed, the EU can create a borrowing capacity and issue a common safe asset. In terms of having a significant impact on the EU’s

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The European Central Bank in the COVID-19 crisis: whatever it takes, within its mandate

May 20, 2020

To keep the euro-area economy afloat, the European Central Bank has put in place a large number of measures since the beginning of the COVID-19 crisis. This response has triggered fears of a future increase in inflation. However, the ECB’s new measures and the resulting increase in the size of its balance sheet, even if it were to be permanent, should not restrict its ability to achieve its price-stability mandate, within its legal obligations.
By:
Grégory Claeys
Date: May 20, 2020
Topic: European Macroeconomics & Governance

This Policy Contribution was prepared for the European Parliament’s Committee on Economic and Monetary Affairs (ECON), as an input to the Monetary Dialogue of 8 June 2020 between ECON and the President of the European Central Bank. The original paper is

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What should be done to reduce euro-area spreads?

March 18, 2020

Spreads are rising again in the euro-area at the worst possible time, when fiscal policy is needed to fight the coronavirus pandemic and the related economic shock. This blog post reviews the main options available to European policymakers, their feasibility and potential effectiveness to deal with this issue.
By:
Grégory Claeys
Date: March 18, 2020
Topic: European Macroeconomics & Governance

As a result of an unfortunate declaration by European Central Bank President Christine Lagarde during the bank’s 12 March press conference that “we are not here to close spreads”, Italian yields have increased significantly in recent days. Despite ECB backpedalling[1], the spread with the German yield quickly reached the level prevailing during the 2018-2019 Five Star-Lega coalition, when

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The European Green Deal needs a reformed fiscal framework

December 10, 2019

The European Green Deal should include a sustainable investment strategy that will help citizens change behaviour and companies switch technologies. But to finance it, the EU will have to increase the flexibility of its fiscal rules to encourage member states to invest in the transition.The European Commission is set to present the outline of its European Green Deal plan. As discussed in our recent paper, the plan should include a sustainable investment strategy that will help companies switch technologies and citizens change behaviour, offsetting the rising costs they will face because of higher carbon prices.The European Commission’s most recent estimate of the ‘green investment gap’ – i.e. the additional investments necessary to achieve the EU’s 2030 climate target – is €260 billion per

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How visible are independent fiscal institutions in public debate?

April 3, 2019

Independent fiscal institutions have no formal powers to act and have to rely on soft power to influence the budgetary process. This blog post investigates how they exercise this soft power by enhancing public scrutiny of fiscal policies.
By:
Grégory Claeys
Date: April 3, 2019
Topic: European Macroeconomics & Governance

In the aftermath of the crisis, new EU legislation[1] was introduced requiring member states to put in place independent bodies in charge of monitoring compliance with fiscal rules at the member-state level (to increase ownership). These bodies should also assess government forecasts used in budgetary plans in order to improve their quality (or at least to avoid overly optimistic forecasts), with the ultimate

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Make euro-area sovereign bonds safe again

May 25, 2018

In their recent Policy Insight, the team of French and German authors suggest introducing sovereign bond-backed securities to play the role of safe asset in the euro area. This column, part of the VoxEU debate on euro-area reform, argues that an improved euro-area architecture would, in the long run, make all euro-area sovereign bonds safer, and thus make the provision of safe assets through untested and potentially disruptive sovereign bond-backed securities unnecessary.

This opinion piece has been published in VoxEU. This column is a lead commentary in the VoxEU Debate “Euro Area Reform“

The proposal for how to complete the monetary union’s architecture, made by a group of 14 economists from France and Germany (Bénassy-Quéré et al. 2018), constitutes a timely attempt to build a

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New EMU stabilisation tool within the MFF will have minimal impact without deeper EU budget reform

May 9, 2018

The European Commission’s proposal for a new stabilisation instrument inside the EU budget for the countries of the economic and monetary union is disappointing. This analysis highlights the proposed instrument’s main limitations, as well as the restrictive factors that will persist without a deeper EU budget reform.
By:
Grégory Claeys
Date: May 9, 2018
Topic: European Macroeconomics & Governance

On May 2, the European Commission put on the table a number of proposals for the future of the EU budget after 2020. The most disappointing part of the Commission’s plan for the next MFF 2021-27 is the means by which it wants to establish a stabilisation instrument inside the EU budget for countries of the economic and monetary union

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The missing pieces of the euro architecture

October 26, 2017

What are the remaining fragilities of the Euro architecture? This policy contribution assesses the institutional reforms put in place during and after the crisis and make some proposals for a coherent economic governance framework to make Europe’s monetary union more resilient.
By:
Grégory Claeys
Date: October 26, 2017
Topic: European Macroeconomics & Governance

A version of this paper was prepared for the conference ‘20 years after the Asian Financial Crisis: Lessons, Challenges, Way Forward’, Tokyo, 13-14 April 2017, organised jointly by the Asian Development Bank and the Asian Development Bank Institute, and was published as ADBI Working Paper No. 778, September 2017, ‘How to build a resilient monetary union?

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Debunking 5 myths about Frexit

March 10, 2017

French elections are fast approaching and the debate on euro membership is now in full swing. ‘Frexit’ supporters promise that the benefits of leaving the euro would be substantial for the French economy, that economic policy would be greatly improved, and most importantly that the exit process would be a piece of cake. This blog post shows that these claims are greatly exaggerated if not outright lies.

A debate is raging in France about the benefits and drawbacks of the Euro. The argument echoes that of the first half of the 1990s – between those in favour of joining the Euro and those against. However, the parallels are misleading and should not inform today’s debate. The Euro has been the official currency of France for almost two decades now, and exiting it would be very different from choosing not to join in the first place. In this blog post, I expose five myths about the supposed benefits of Frexit.

Myth 1: Frexit would unambiguously boost French competitiveness
Advocates of leaving the Euro claim that Frexit would provide a competitiveness boost to French exports and essentially solve two alleged problems: the persistent trade deficit and the decline in market share for French goods, especially compared to Germany (see graphs below).
Indeed, in theory, a flexible exchange rate provides an automatic adjustment mechanism to correct external imbalances.

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What role for the financial markets in Europe?

November 16, 2016

The European European financial system is too strongly bank-based. How can it be rebalanced to become favourable to growth and employment again? (This paper is only available in French).

This paper is published in Revue trimestrielle de l’association d’économie financière, no. 123, October 2016.

Please note that this paper is only available in French.
An efficient financial system is essential to the good functioning of the economy. The various functions of the financial system can be provided either by banks or by markets.
These two sources of funding are complementary and the exact composition between banks and markets is usually not decisive.
Nevertheless, the European financial system is too strongly bank-based and its markets are underdeveloped. It is absolutely necessary to rebalance it to make it favourable to growth and employment again.
Developing and integrating European financial markets will allow firms to access a diversified source of funding, adapted to their needs, and increase risk-sharing between European countries to help them absorb shocks.
The capital markets union is a long-term project, but a series of ambitious reforms and a new institutional architecture could steer the financial system in the right direction.

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Low long-term rates: bond bubble or symptom of secular stagnation?

September 26, 2016

Yields on European sovereign bonds have reached historically low levels in 2016. This secular decline in long-term sovereign yields is not limited to the euro area. Why are interest rates currently so low? Are low long-term trates justified by fundamental factors or is it an artificial phenomenon?

Yields on European sovereign bonds have reached historically low levels in 2016. The goals of this paper are to understand why interest rates are currently so low and to determine if this level is justified by fundamental factors, or if rates are artificially low because of unconventional monetary policies.
The decline in yields over the last 30 years is the result of various factors: the fall in inflation, lower risk premia in European countries, and most importantly the fall in the real interest rate driven by a secular decline in the ‘neutral’ rate.
Consequently, central banks are not fully responsible for the actual level of long-term real rates, because they adopt, to fulfil their price stability mandates, the necessary policies to influence market rates in order to make them consistent with neutral rates, over which they have little influence.
Low rates are the symptoms of our diseases, not their cause.

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