Current publications

Cover of EconPol Policy Report 11

The design of a sovereign debt restructuring mechanism for the euro area: Choices and trade-offs

Christophe Destais, Frederik Eidam, Friedrich Heinemann

This paper critically assesses several dimensions of a sovereign debt restructuring mechanism (SDRM) for the euro area, while abstaining from recommending one ideal model for a restructuring mechanism. Instead, authors apply a menu-type approach. For five key institutional SDRM dimensions, they discuss the underlying fundamental trade-offs and the pros and cons of different design choices. The analysis implies that there is no convincing reason to further taboo the search for a euro area SDRM, as there are ways to combine the opportunities of a credible SDRM with financial stability.

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Cover of EconPol Policy Report 12

Towards more feasible sovereign debt restructurings in the euro area

Edited by Frederik Eidam and Friedrich Heinemann

Over the last year, exchanges that were initiated by the ZEW’s SEEK-conference on ‘regulating sovereign debt restructuring in the eurozone’ resulted in vivid discussions on more feasible sovereign debt restructurings in the euro area. This policy report, edited by Frederik Eidam and Friedrich Heinemann, summarizes these discussions by collecting several contributions on different aspects of the topic. Founded in different perspectives, contributors sometimes provide different conclusions, or highlight different choice options and their underlying trade-offs. However, common to all authors is the aim to increase the resilience of the European Monetary Union and to contribute on the debate on the European reform agenda.

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Cover of EconPol Policy Brief 16

Government debt in times of low interest rates: the case of Europe

Clemens Fuest and Daniel Gros

In this paper we discuss to what extent the declining difference between interest rates and growth rates (r-g) pointed out recently by Olivier Blanchard (2019) for the case of the US also characterizes the economic situation in Europe. We show that r-g has been positive on average but declining over the last decades in Europe as well. But r-g differs across considerably across European countries, and a continuation of current fiscal policies even under existing conditions would increase the debt ratios further in some countries. We conclude that the current low levels of r-g should be used to make progress in fiscal consolidation in countries with high debt levels. At the same time it would be desirable to benefit from the currently low interest rates to boost one time investment projects.

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Cover of EconPol Policy Brief 15

Applying nominal expenditure rules in the euro area

Clemens Fuest and Daniel Gros

In the debate on euro area fiscal governance, the current deficit rules of the EU have repeatedly been criticised to have a pro-cyclical effect, leading to overly lax fiscal policies in good times and a too restrictive regime in bad times. An analysis by EconPol researchers Clemens Fuest (ifo) and Daniel Gros (CEPS) shows that most major EU countries are over-spending at a level not compatible with spending rules for sustainable public finances.

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Cover of EconPol Working Paper 22

The effects of macroeconomic, fiscal and monetary policy announcements on sovereign bond spreads: an event study from the EMU

António Afonso, João Tovar Jalles, Mina Kazemi

In this EconPol working paper, the authors assess the impact of announcements corresponding to different fiscal and monetary policy measures on 10-year sovereign bond yield spreads. They find that the European Commission’s releases of excessive deficit procedure have a significant impact on the yield spreads. EC releases of higher debt and better budget balance forecasts contribute to the rise and decline of spreads, respectively.

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Cover of EconPol Working Paper 21

On the political feasibility of increasing the legal retirement age

Benjamin Bittschi and Berthold U. Wigger

Increasing the legal retirement age is politically feasible if policy contains the generosity of public pensions, conclude the authors of this EconPol working paper. After establishing three hypotheses within a politico-economic model and employing micro data for Germany, they demonstrate that a one percentage point increase in the share of the elderly increases the legal retirement age by 0.3 to 0.5 years, and that a 10 percentage point increase in the replacement rate reduces the legal retirement age by 0.5 to 3 years.

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Cover of EconPol Opinions

Activism pressure and the market for corporate assets

Ulrich Hege and Yifei Zhang

Does activism affect the acquisition and asset sale decisions of firms that are only indirectly affected by activists? Has activism grown sufficiently in importance that it influences the equilibrium in corporate asset markets, and what is its impact on the liquidity and efficiency of these markets? These are the questions posed by EconPol researcher Ulrich Hege and his co-author Yifei Zhang in this EconPol opinion examining the rise of shareholder activism and its international expansion.

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Cover of EconPol Policy Brief 14

Incentivising structural reforms in Europe?

A blueprint for the European Commission’s Reform Support Programme

Mathias Dolls, Clemens Fuest, Carla Krolage, Florian Neumeier, Daniel Stöhlker

How can a faster implementation of structural reforms fostering the process of economic convergence in Europe be achieved? In our latest policy brief, EconPol researchers discuss the rationale and potential adverse effects of providing financial incentives for structural reforms and present a proposal of national convergence roadmaps. Although these proposals deviate from the Commission proposal in some key dimensions, they reflect the fact that ensuring progress towards convergence targets is primarily a responsibility of the individual member states - not of the EU or European institutions and bodies like the European Commission and the Eurogroup.

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Cover EEAG Report 2019

EEAG Report on the European Economy 2019: A Fragmenting Europe in a Changing World

Andersen, Torben M., Giuseppe Bertola, John Driffill, Clemens Fuest, Harold James, Jan-Egbert Sturm and Branko Uroševic

Europe is becoming increasingly similar to the late Habsburg Empire, a powerful example of fragmentation and tendencies towards disintegration arising in multinational, multi-linguistic, and multi-ethnic integrated economic entities. To understand why and what the consequences may be, this year’s report by the European Economic Advisory Group (EEAG) at CESifo looks inside EU member states, where much besides European integration has been happening, and outside Europe, where powerful economic and geopolitical challenges have shaken many European countries and sectors.

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