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% of EZ GDP: No more than current commitments
Confidence level:
Confident
Comment:
I think 5% is rather a lot as EU contribution. Of course, on the national level much more is going to be needed. However, the taxation power and the control over the extent of spending is still on the national level. Further, in this major crisis the EU has rightly allowed member states to exceed deficit limits and forego policies aiming to return to debt limits. If a high-debt member state is in danger of loosing market access the combination of ECB intervention with an ESM program is the best bet to prevent a debt crisis.
To my knowledge there is no comprehensive scientific assessment that looks at all the economic benefits and costs of the common currency on a country per country basis. There are studies of partial aspects. Thus, I do not agree to a statement that claims certainty that the euro has had more benefits than costs (I add "in economic terms").
To give an example, giving up an independent monetary policy implies that a country cannot use monetary policy anymore as a stabilization tool directed towards national objectives. Monetary union policy is necessarily directed towards union-wide variables. Thus, inflation and output variability on a national level will be greater than in the case of national currencies and effective (credible) nationally-oriented monetary policies. There's evidence for that. See, for example, Wieland JIMF 1996, "Monetary policy targets and the stabilization objective ..." for an early study of EMS crisis and potential benefits and costs of a common currency and monetary policy. Of course, the relative improvement or loss relative to what existed pre-EMU likely differs across countries.
On the other side, common monetary policy may help in improving credibility and independence of the monetary authority, and there by to maintain a low average inflation. That was an argument for some to join EMU. Recall "The advantage of tying one's hands .." Giavazzi-Pagano, EER 1988.
My understanding is that it is a fact already that all EU member states except Denmark and Great Britain are required to adopt the euro once they fulfil the conditions. This is also what Juncker repeated in his speech. I am somewhat surprised that he received so much attention with this statement. I agree that it is a fact at this point.
I would not recommend starting an initiative to change the current rules. I would disagree with now requiring those EU members that received an opt-out to adopt the euro. I think great care should be given to the economic conditions. Clearly, there've been mistakes in the past, and countries admitted based on faulty data or insufficiently sustainable conditions.
So , I agree with Juncker's statement to the extent it reflects the facts and disagree with wider interpretations suggesting that countries should adopt the euro without clearly fulfilling the conditions.
Finally, whether it was a good idea in the first place is another question.
Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?
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.
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The Eurozone COVID-19 Crisis: EU Policy Options
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?
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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Question 1; Do you agree that euro membership should be compulsory for all EU member states?
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Wages and economic recoveries
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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?
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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?
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