Roel Beetsma's picture
Affiliation: 
University of Amsterdam
Credentials: 
Professor of Economics

Voting history

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?

Answer:
Expanded EU budget (with possible borrowing at the EU level)
Confidence level:
Confident
Comment:
The EU budget / multi-annual framework has already the infrastructure in place (via the BICC, which also has some conditionality built in). Increasing the "head room" (difference between maximum revenues that can be raised minus current spending commitments) would provide headroom for guarantees for loans to Member States (the headroom probably allows for lending 8 - 12 times over) as well as grants. An appropriate mix of loans and grants to be decided. The composition of the spending of the funds will be as important, where infrastructure spending with a European / cross-border effect could tilt the composition more towards grants relative to loans to Member States.

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:
Notice that in addition to discretionary expansion there is a dampening effect on the size of about 3.5% coming from the automatic stabilizers. The current discretionary package will obviously not prevent very sharp economic downturn. A recovery fund will be needed to in addition to the measures so far agreed up on. Also the recovery fund will not prevent a very sharp downturn. The size of the recovery fund, and its design (grants versus loan component) will need to take account of the effects on (medium run) debt sustainability. The composition of the recovery fund will also be important. A sufficiently large public investment component or more generally growth-friendly spending component will be important, as these components will generally suffer most from budgetary pressure and the effect is largest for the high debt countries as the experience of the previous crisis has shown. See last autumn's European Fiscal Board review report for a more detailed account.

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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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
I think there are transition shifts (such as inflow of new workers, intensifying global competition) hiding the effects of falling unemployment rate on price and wage pressures.

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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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Answer:
Disagree
Confidence level:
Not confident
Comment:
I am not too familiar with the specific situation in the UK, but if I understand correctly, there are signals about increasing inflationary pressures in particular increasing costs of imports, while at the same time monetary policy changes take about one-and-a half years to feed through into real activity.

Bitcoin and the City

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Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

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Answer:
Agree
Confidence level:
Not confident
Comment:
Important reasons are already mentioned above: to reduce money laundering, tax evasion and the like.

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