EconPol Policy Briefs

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.

A modern general equilibrium trade model to simulate the effects of the Chinese-American trade dispute finds that both economies lose, but China loses absolutely and relatively much more. In our latest policy brief, the authors analyse the potential impacts of an escalating trade war and find that while the bilateral tade balance of the US with China improves, it deteriorates with the EU and forebodes further transatlantic conflict.

With negotiations between the EU and UK reaching deadlock, the only way forward seems to be a hard Brexit. In this policy brief, the authors suggest a model which will avoid a ‘no deal’ scenario and find that a minimum three-month extension is necessary in order to establish a European Customs Association.

Import tariffs introduced by the United States and China in September will see Chinese exporters bear approximately 75% of the costs, with the US extracting a net welfare gain of USD 18.4 billion, according to new research from EconPol Europe. The tariffs affect around 50% of Chinese products imported to the US, with a value exceeding USD 250 billion. The tariffs introduced by China affect around USD 60 billion worth of goods. The research shows these new tariffs, introduced on 24 September, will increase US consumer prices on affected Chinese products by an average of 4.5%, while the producer price of Chinese firms declines by 20.5%.

The lack of cross-border risk sharing in the banking sector is one of the biggest barriers to better integrated financial markets in Europe. In this EconPol policy brief, the authors emphasize the potential of the securitization market for bank-based financial integration. To effectively increase cross-border risk sharing through securitization in the EU, they suggest further improving the existing regulatory framework in order to reduce barriers to a thriving securitization market.  A further recommendation is to introduce explicit incentives for risk sharing, and securitization in Europe entering EU regulation and EU programs.