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:
Once again, as we did during the recent financial crisis, we are discussing whether the policy response of the EU should go beyond the actions of the ECB. This is a critical time to think about the future of the EU as a fiscal union, with its taxes, transfers, unemployment programs, and borrowing mechanisms. The very survival of the EU might hinge on it.
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?
Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?
The key challenge for the policy makers is to judge the cost of raising interest prematurely rates in an environment with growing income inequality, income uncertainty and populism. I do not think we have good models to judge this trade-off, in particular how an economic slowdown can fuel populist sentiments with potentially important long-run consequences.
I think our current perspective on the Euro is shaped by the recent crisis and in particular by the Greek experience. Would Greece get out of the crisis faster and be better off without Euro? This is a difficult counterfactual to contemplate. I believe the problems at root of the Greek (or Spanish or Italian) economic problems, such as slow growth and high unemployment, are structural and there are limits what the independent monetary policy could do. With the recent rise of populist policies, being part of a monetary union might have more benefits than harms, as countries cannot avoid facing their structural problems. Yet, as Greek experience demonstrated there is an important human toll of this approach, and a common fiscal policy, with European-wide welfare-state measures, should be an important item in the EU agenda moving forward.
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).
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?
Labour Markets and Monetary Policy
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Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?
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Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?
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Juncker's State of the Union Address
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Question 2: Do you agree that the euro has had more benefits than costs?
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