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Konstantinos Efstathiou and Guntram B. Wolff



Articles by Konstantinos Efstathiou and Guntram B. Wolff

EU policy recommendations: A stronger legal framework is not enough to foster national compliance

July 23, 2019

In 2011, the EU introduced stricter rules to monitor the implementation of country-specific policy recommendations. Using a new dataset, this column investigates whether these new laws have increased national compliance. There is no evidence that these stricter processes matter for implementation rates, whereas macroeconomic fundamentals and market pressure are important determinants of implementation progress. These results suggest ways to improve the effectiveness of European policy coordination that go beyond stronger legal processes.

Macroeconomic imbalances in EU countries and their fallout during the crisis have led the EU to adopt stronger surveillance laws. In particular, a new mechanism called the Macroeconomic Imbalance Procedure (MIP) was introduced in 2011 to deal with

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What drives national implementation of EU policy recommendations?

April 25, 2019

The authors use a newly-compiled dataset to investigate whether and why European Union countries implement the economic policy recommendations they receive from the EU.

We use a newly-compiled dataset to investigate whether and why European Union countries implement the economic policy recommendations they receive from the EU. We find that implementation rates are modest and have worsened at a time when the economic environment has improved and market pressure on sovereigns has subsided. Implementation has deteriorated in particular among countries designated as having ‘excessive’ macroeconomic imbalances. We then empirically test three factors that could influence implementation rates: (i) the macroeconomic environment; (ii) pressure from financial markets; and (iii) the

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What to look out for in the latest European Semester package

February 26, 2019

Implementation of the European Commission’s country-specific policy recommendations (CSRs) is at a low rate overall. Whether this trend has continued, particularly among those countries judged to have excessive macroeconomic imbalances, will be evident in the soon-to-be-released reports of the Commission.

This Wednesday, the European Commission is expected to adopt the winter package of the so-called European Semester, the cycle of surveillance and coordination of economic policies at the EU level. The package will include the categorisation of countries in the Macroeconomic Imbalances Procedure (MIP) for 2019 and, thus, mark a significant juncture in this year’s process.
Specifically, for a number of member states[1], an in-depth review (IDR) will determine the existence and nature

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Is the European Semester effective and useful?

June 13, 2018

The authors study whether and to what extent EU countries implement recommendations on macroeconomic imbalances given by the EU in the so-called European Semester. Overall implementation of recommendations by EU countries has worsened in the last few years, in particular when it comes to recommendations addressed to countries with excessive macroeconomic imbalances.

The authors study whether and to what extent EU countries implement recommendations on macroeconomic imbalances given by the EU in the so-called European Semester. They assess how recommendations have evolved since 2013, based on a new database. Konstantinos Efstathiou and Guntram B. Wolff also study how EU recommendations on addressing macroeconomic imbalances compare to recommendations given by the International

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How export growth achieved adjustment of massive trade deficits in the euro area

May 31, 2017

The reduction of current account deficits in euro-area countries since the 2008 crisis is strongly driven by increases in exports that dampened the effect on production of the fall in demand and imports.

The correction of several euro area countries’ external imbalances began almost 10 years ago. A number of euro area countries ran massive current account deficits in 2007/8. With 15.2% of GDP, Greece had the largest deficit, followed by Portugal with a deficit of 12.1%, Spain of 9.6% and Ireland at 6.9%. Those deficits were not only large but had been large for a number of years leading to a significant build-up of external liabilities.
As funding dried-up, deficits came down. A popular myth of the history of the euro area is that the correction of these external deficits became a

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