Hostname: page-component-78c5997874-j824f Total loading time: 0 Render date: 2024-11-13T09:44:22.275Z Has data issue: false hasContentIssue false
  • English
  • Français

Policy Design and Macroeconomic Stability in Europe

Published online by Cambridge University Press:  26 March 2020

Ray Barrell  and
E. Philip Davis
Ray Barrell*
Affiliation:
National Institute of Economic and Social Research (NIESR)
E. Philip Davis*
Affiliation:
Brunel University and NIESR
*
e-mail: r.barrell@niesr.ac.uk
e-mail: e_philip_davis@msn.com
Get access Rights & Permissions [Opens in a new window]

Abstract

Macroeconomic policy in Europe is now oriented to creating a stable environment in which the scope for output growth is enhanced. However, we maintain that not all dimensions of a stability-oriented policy framework appear to be in place. Fiscal policy rules and arrangements have been much discussed, but their design is not yet settled. The Single Market Programme has transformed competition in Europe, but its full implications for macroeconomic stability, especially its implications for financial market stability in combination with the Single Currency, have not yet been fully appreciated by policymakers. Future pension issues in the context of population ageing will pose a major challenge. We discuss the design of fiscal policy in (a Single Market) Europe, looking at fiscal pacts and the need for Europe-wide financial regulation in an integrated financial market as well as pension reform aspects.

Keywords

Fiscal PolicyPolicy DesignE61E62
Type
Articles
Information
National Institute Economic Review , Volume 191 , January 2005 , pp. 94 - 105
Copyright
Copyright © 2005 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We would like to thank Martin Weale for very useful discussions on these topics. Sylvia Gottschalk, Ali Al Eyd and Olga Pomerantz also made an input to this paper, and we would like to thank them also. Errors remain our own responsibility. The work was financed under ESRC grant L13825012 and by the European Commission.

References

Al-Eyd, A. and Barrell, R. (2004), ‘Estimating tax and benefit multipliers in Europe’, National Institute Discussion Paper No. 252.Google Scholar
Artis, M.J. and Winkler, B. (1998), ‘The Stability Pact: safeguarding the credibility of the European Central Bank’, National Institute Economic Review, January.CrossRefGoogle Scholar
Balls, E., Grice, J. and O'Donnell, A. (2004), Microeconomic Reform on Britain, Palgrave for H.M. Treasury.CrossRefGoogle Scholar
Balls, E. and O'Donnell, A. (2002), Reforming Britain's Economic and Financial Policy, Palgrave for H.M. Treasury.CrossRefGoogle Scholar
Barrell, R. (2003), ‘Is there a common (European) Business Cycle’, in Business Cycles and the Economy’, Kiel University Conference volume.Google Scholar
Barrell, R. and Davis, E. P. (2004), ‘Financial liberalisation, consumption and wealth effects in 7 OECD countries’, National Institute Discussion Paper No 247.Google Scholar
Barrell, R., Davis, E.P. and Pomerantz, O. (2003), ‘Basel 2, banking crises and the EU financial system’, Report for the EU Commission.Google Scholar
Barrell, R., Davis, E.P. and Pomerantz, O. (2004), ‘Costs of financial instability, household-sector balance sheets and consumption’, National Institute Discussion Paper No. 243.Google Scholar
Barrell, R. and Gottschalk, S. (2004), ‘The determinants of the volatility of the output gap in the G7’, National Institute Economic Review, April.CrossRefGoogle Scholar
Barrell, R. and Mitchell, J. (2004), ‘Cyclicity and international financial developments: cycles and systemic risks, contagion and globalisation and institutions and financial stability’, Monetary Policy, Economic Cycles and Financial Dynamics, Bank of France Bulletin.Google Scholar
Barth, J.R., Caprio, G. and Levine, R. (2000), ‘Banking systems around the globe: do regulation and ownership affect performance and stability?’, Conference on Prudential Supervision: What Works and What Doesn't, National Bureau of Economic Research Inc, January.Google Scholar
Begg, I. and Schelkle, W. (2004), ‘The pact is dead: long live the pact’, National Institute Economic Review, 189, July.CrossRefGoogle Scholar
Blanchard, O. and Simon, J. (2001), ‘The long and large decline in U.S. output volatility’, Brookings Papers on Economic Activity, 1, pp. 135–173.CrossRefGoogle Scholar
Borio, C. and White, W. (2004), ‘Whither monetary and financial instability?’, BIS Working Paper No. 147.Google Scholar
Caprio, G. and Klingebiel, D. (2003), ‘Episodes of systemic and borderline financial crises’, mimeo, World Bank.Google Scholar
Davis, E.P. (2000), ‘Financial stability in the Euro Area - some lessons from US financial history’, LSE Financial Markets Group Special Paper No. 123.Google Scholar
Davis, E.P. (2001), ‘Multiple channels of intermediation, corporate finance and financial stability’, Working Paper No. 0-115, International Monetary Fund, Washington DC.Google Scholar
Davis, E.P. (2005), ‘Demographic and pension system challenges to monetary and financial stability’, Geneva Papers on Risk and Insurance (forthcoming).Google Scholar
Davis, E.P. and Salo, S. (1998), ‘Excess capacity in EU and US banking sectors - conceptual, measurement and policy issues’, LSE Financial Markets Group Special Paper No. 105.Google Scholar
Demirguc-Kunt, A. and Detragiache, E. (1998b), ‘Financial liberalisation and financial fragility’, IMF Working Paper No. WP/98/83.CrossRefGoogle Scholar
European Central Bank (2004), ‘Financial stability review, December 2004’, ECB Frankfurt.Google Scholar
European Monetary Institute (1998), ‘Convergence Report’, EMI, Frankfurt.Google Scholar
Giavazzi, F., Jappelli, T. and Pagano, M. (2000), ‘Searching for nonlinear effects of fiscal policy: evidence from industrial and developing countries’, CEPR Discussion Paper 2374.CrossRefGoogle Scholar
Hoggarth, G. and Sapporta, V. (2001), ‘Costs of banking crises, some empirical evidence’, Financial Stability Review, June, pp. 148–161, Bank of England, London.Google Scholar
Honohan, P. and Klingebiel, D. (2000), ‘Controlling fiscal costs of banking crises’, World Bank Policy and Research Working Paper 2441.CrossRefGoogle Scholar
IMF (1998), ‘Financial crises: characteristics and indicators of vulnerability’, World Economic Outlook (Chapter 4), May.Google Scholar
Laubach, T. (2003), ‘New evidence on the interest rate effects of budget deficits and debt’, mimeo, Board of Governors of the federal reserve System, May.Google Scholar
Melitz, J. (2002), ‘Some cross country evidence about fiscal policy behaviour and consequences fro EMU’, in Buti, M., von Hagen, J. and Martinez-Mongay, C. (eds), The Behaviour of Fiscal Authorities, Palgrave.Google Scholar
Metz, R., Riley, R. and Weale, M. (2004), ‘Economic performance in France, Germany and the UK 1997 to 2002’, National Institute Economic Review, April.CrossRefGoogle Scholar
O'Mahony, M. (2002), ‘Productivity and convergence in the EU’, National Institute Economic Review, April.CrossRefGoogle Scholar
O'Mahony, M. and Crafts, N. (2000), ‘Productivity comparisons for the UK, France, Germany and the US’, Fiscal Studies.Google Scholar
Regling, K. and Costello, D. (2003), ‘The economic and budgetary implications of ageing populations; an EU perspective’, Presentation to conference organised by DG-Economic and Financial Affairs, Brussels, 4-5 March.Google Scholar
Tanzi, V. and Chalk, N. (2000), ‘Impact of large public debt on growth: a discussion of potential channels’, European Economy - Reports and Studies, no 2.Google Scholar
Turrini, A. and in't Veld, J. (2004), ‘The impact of the EU fiscal framework on economic activity’, European Commission, DGII, Brussels, presented at the Euroframe Conference, Paris, June.CrossRefGoogle Scholar
Wallis, K. (2004), ‘Comparing fiscal and monetary responses’, Economic Modelling.Google Scholar
Pomerantz, O. and Weale, M. (2005), ‘Are we saving enough? The macroeconomics of the savings gap’, National Institute Economic Review, 191, January.CrossRefGoogle Scholar
Wyplosz, C. (2005), ‘Fiscal policy: institutions versus rules’, National Institute Economic Review, 191, January.CrossRefGoogle Scholar