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Demography and globalisation: reversing trends

A conversation on ageing societies, waning inequality, as well as an inflation revival. In this episode of The Sound of Economics, we invite Charles Goodhart and Manoj Pradhan to talk about their most recent book: ‘The Great Demographic Reversal’. They argue that trends in demography and globalisation, especially the stunning rise of China combining both, have greatly weakened labour bargaining power and led to subsequent disinflation, inequality and falling interest rates. But just as these...

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The pandemic will structurally change the global economy more than we think

It is time to rethink many of the basic principles of our economic model to mitigate the impacts of the COVID-19 pandemic. Those who say there are no letters left in the alphabet to describe the evolution of the world economy after the pandemic are absolutely right. It is abundantly clear now that we cannot expect to see a rapid V-shaped recovery — nor should we expect a complete stagnation or a L-shaped recovery. The square root-shaped economy The newest version of recovery, the K-shape,...

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The Economic growth and income distribution implications of public spending and tax decisions

European Union countries can reduce inequality of opportunity through public spending and tax decisions. Broadly, the most effective approach includes progressive taxes and inheritance taxes, spending on education, health and public infrastructure, and better government effectiveness. Better fiscal rules and institutions also increase resilience against crises. By: Zsolt Darvas Date: October 19, 2020 Topic: European Macroeconomics & Governance The level and composition of...

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New life for an old framework: redesigning the European Union’s expenditure and golden fiscal rules

This briefing paper focuses on two aspects of the EU fiscal framework: whether an expenditure rule would be more reliable than a structural budget balance rule and the possible benefits and drawbacks of introducing a golden rule to exclude certain types of investment from the operational fiscal rule. This study was prepared for the European Parliament’s Committee on  Economic and Monetary Affairs. The study is available on the European Parliament’s online database, ‘ThinkTank‘. Copyright...

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The future of EU-UK relations (again!)

At the eleventh hour of negotiations, what will the future of the EU-UK relationship look like? By: The Sound of Economics Date: October 13, 2020 Topic: European Macroeconomics & Governance On 15-16 October the European Council will take stock of the implementation of the withdrawal agreement and review the state of the negotiations on the future EU-UK partnership. Leaders will discuss preparatory work for all scenarios after 1 January 2021. The timetable is very tight, with...

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For the euro there is no shortcut to becoming a dominant currency

As an international currency, the euro has always been a distant second to the dollar. The idea of a greater international role for the euro has been floated, but without major institutional reform, the euro will not become a dominant currency. This blog post was originally posted by Makronom. When created two decades ago, the euro immediately became the world’s second most important currency. But it has remained a distant second to the US dollar. Its internationalisation peaked in 2005 and...

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What role for the European Semester in the recovery plan?

In this paper, the author looks at the implications arising from the focus of the Recovery and Resilience Plans in the context of the European Semester. By: Thomas Wieser Date: October 12, 2020 Topic: European Macroeconomics & Governance This study was prepared for the European Parliament’s  ECON Committee. The study is available on the European Parliament’s online database, ‘ThinkTank‘. Copyright remains with the European Parliament at all times. Accessing funds of the...

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What should Europe expect from American trade policy after the election?

A Joe Biden Administration would have to decide to what extent to unpick the major United States trade policy shifts of the last four years. A quick return to comprehensive trade talks with the European Union is unlikely and the US will remain focused on its rivalry with China. Nevertheless, there would be areas for EU/US cooperation, not least World Trade Organisation reform. The European Union-United States trade and investment relationship remains the world’s most intensive even after...

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Without good governance EU recovery could fail

Guntram Wolff and Luis Garicano discuss how to ensure that the EU borrowing mechanism would successfully boost economic recovery. By: The Sound of Economics Date: October 7, 2020 Topic: European Macroeconomics & Governance The European Union recovery fund could greatly increase the stability of the bloc and its monetary union. But the fund needs clearer objectives, sustainable growth criteria and close monitoring so that spending achieves its goals and is free of corruption....

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Eastern Germany’s New Growth Engine

Eastern Germany has suffered from three decades of deindustrialization since the collapse of communism, largely because of poor policy decisions. But by becoming an electric-vehicle powerhouse, the region can help to drive Europe's green transition and secure its own future prosperity. By: Dalia Marin Date: October 7, 2020 Topic: European Macroeconomics & Governance MUNICH – This week, Germany celebrates the 30th anniversary of its reunification. After years of frustration...

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