Question 2: What is the best mechanism to pay for economic support provided by and to EU member states to combat the COVID-19 crisis?
Answer:
Joint borrowing by member states (e.g. Coronabonds)
Confidence level:
Confident
Comment:
This is a genuine emergency. If there was ever an argument in favour of solidarity, now is the right time to proceed with coronabonds. That said, I also have some sympathy for those Eurozone members that object to the idea. If they cannot agree on joint borrowing, can, at least, member states consider issuing GDP-linked bonds? This will give everybody the chance to pay back more when they can afford it and pay back less when they cannot. Countries like Greece or Italy that experienced lower average growth and higher growth volatility (since the launch of the Euro) will face higher GDP-linked borrowing costs than Germany. Nevertheless, countries like Germany or the Netherlands should also benefit from issuing these types of bonds. No country is immune to the coronavirus-related recession. Why not put in place the insurance mechanism on offer by GDP-linked bonds?
Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?
Answer:
5-10% of GDP
Confidence level:
Confident
Comment:
It is likely that we will face a U-shaped recession or, in case there is a second wave of infections, a W-shaped one. The W-shaped scenario appears likely as (some) Eurozone countries appear keen to relax restrictions (too) fast. Consequently, a support around 10% of GDP looks appropriate. Needless to say, if things turn out worse, support can increase further.
Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?
Answer:
No opinion
Confidence level:
Confident
Comment:
I wouldn't be comfortable to specify a 'debt ceiling'. The main point here is to make sure that enough is done to save lives, support the most vulnerable and those that will lose their jobs, for instance. The hope is that the shock will only be temporary so that debt will not have to climb wildly...
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
COVID-19 and UK Public Finances
Question 2: What is the best way to (eventually) reduce public deficits and debt?
Question 1: How urgently should the UK government address the rise in public debt?
The Eurozone COVID-19 Crisis: EU Policy Options
Question 2: What is the best mechanism to pay for economic support provided by and to EU member states to combat the COVID-19 crisis?
Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?
Covid-19: Economic Policy Response
Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?
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