Wednesday, March 29, 2006
THE EURO. ONLY FOR THE NIMBLE!
. Alan Ahearne & Jean Pisani-Ferry: "The Euro: Only for the Agile", Bruegel Policy Brief, February 2006
Warning! The euro may bring many benefits, but there are some costs attached too. Ahearne and Pisani-Ferry argue that, among other things, "the loss of the exchange rate as an instrument for coping with economic shocks can be costly". As Dr. Johnson would put it: "You've been warned!"
. Alan Ahearne & Jean Pisani-Ferry: "The Euro: Only for the Agile", Bruegel Policy Brief, February 2006
Warning! The euro may bring many benefits, but there are some costs attached too. Ahearne and Pisani-Ferry argue that, among other things, "the loss of the exchange rate as an instrument for coping with economic shocks can be costly". As Dr. Johnson would put it: "You've been warned!"
ECB WATCH. AN INDEX OF CENTRAL BANK TRANSPARENCY!
. Sylvester Eijffinger & Petra Geraats: "How transparent are central banks?", European Journal of Political Economy, Vol. 22, 2006, 1-21.
According to a study by Sylvester Eijffinger of Tilburg University and Petra Geraats of Cambridge University (*), the Reserve Bank of New Zealand and the Swedish Riksbank are the most transparent central banks. The ECB shares the fourth spot with Canada's central bank ― just ahead of the US Federal Reserve!
(*) See also "The end of surprises", The Economist.
. Sylvester Eijffinger & Petra Geraats: "How transparent are central banks?", European Journal of Political Economy, Vol. 22, 2006, 1-21.
According to a study by Sylvester Eijffinger of Tilburg University and Petra Geraats of Cambridge University (*), the Reserve Bank of New Zealand and the Swedish Riksbank are the most transparent central banks. The ECB shares the fourth spot with Canada's central bank ― just ahead of the US Federal Reserve!
(*) See also "The end of surprises", The Economist.
ECONOMICS & INNOVATION. NOTES ON EUROPE & INNOVATION (III). BRIEF NOTES
- "The growth that is driven by innovation and the catching-up process spurred by technology imitation relies on education-based human capital and related agglomeration", argues Hannu Piekola in a paper on Finland published by the Center for European Policy Studies (CEPS).
- Interested in "Neo-Schumpeterian Economics"? Check out the details of the upcoming conference, to be held a Trest (Czech Republic). Yuichi Shionoya, author of a wonderful book on Schumpeter (Schumpeter and the Idea of Social Science, Cambridge University Press, 1998) will be among the keynote speakers.
- The think tank Friends of Europe recently organized a "Lunch Debate" on the topic: Technology, Globalization and Inclusion: Is Innovation a Development Tool? You can read a summary here.
- The website Euroactive.com, which calls itself the EU Policy Portal, has a section on "Innovation &Jobs". Check it out here.
- "The growth that is driven by innovation and the catching-up process spurred by technology imitation relies on education-based human capital and related agglomeration", argues Hannu Piekola in a paper on Finland published by the Center for European Policy Studies (CEPS).
- Interested in "Neo-Schumpeterian Economics"? Check out the details of the upcoming conference, to be held a Trest (Czech Republic). Yuichi Shionoya, author of a wonderful book on Schumpeter (Schumpeter and the Idea of Social Science, Cambridge University Press, 1998) will be among the keynote speakers.
- The think tank Friends of Europe recently organized a "Lunch Debate" on the topic: Technology, Globalization and Inclusion: Is Innovation a Development Tool? You can read a summary here.
- The website Euroactive.com, which calls itself the EU Policy Portal, has a section on "Innovation &Jobs". Check it out here.
Monday, March 27, 2006
ECONOMICS & INNOVATION. NOTES ON EUROPE & INNOVATION (II). THE OECD JOINS THE FRAY
. OECD. Economic Policy Reform: Going for Growth 2006
Innovation, it would seem, is the new mantra for businesses, economists and even policy-makers. The OECD has joined the fray with its annual periodical on structural policy developments, Going for Growth. The 2006 edition seeks to extend "the scope of performance and policy indicators to the area of innovation":
"Innovation has long been a key source of progress in material living standards but the outcomes of innovation efforts are generally highly uncertain and the benefits for society as a whole may exceed those for private firms. To encourage innovation, governments have therefore put in place various measures such as financial support for private R&D projects and funding for research in universities. [Chapter 3] provides a cross-country comparison of innovation efforts and outcomes as well as of the main policy areas having an influence on those outcomes."
Individual EU countries are assessed, in terms of their "innovation performance", in chapter 4.
. OECD. Economic Policy Reform: Going for Growth 2006
Innovation, it would seem, is the new mantra for businesses, economists and even policy-makers. The OECD has joined the fray with its annual periodical on structural policy developments, Going for Growth. The 2006 edition seeks to extend "the scope of performance and policy indicators to the area of innovation":
"Innovation has long been a key source of progress in material living standards but the outcomes of innovation efforts are generally highly uncertain and the benefits for society as a whole may exceed those for private firms. To encourage innovation, governments have therefore put in place various measures such as financial support for private R&D projects and funding for research in universities. [Chapter 3] provides a cross-country comparison of innovation efforts and outcomes as well as of the main policy areas having an influence on those outcomes."
Individual EU countries are assessed, in terms of their "innovation performance", in chapter 4.
ECONOMICS & INNOVATION. NOTES ON EUROPE & INNOVATION (I). MICROSOFT AND THE EU
. "Its window may be closing", Los Angeles Times
One of Joseph Schumpeter's key insights was that an innovative entrepreneur was driven by the (almost impossible) dream of becoming a monopolist. Thus, inasmuch as it acts to stifle innovation, overzealous anti-trust regulation can be harmful.
This is all the more important since Schumpeter thought that such monopolies were usually a passing affair: competition would surely prevent them from lasting too long. This last point is made, with respect to software giant Microsoft, by a recent Los Angeles Times editorial:
"Since XP was released in 2001, however, there has been an accelerating shift away from programs that run entirely on your own computer, such as Microsoft Word, to applications and services based on the Web, such as Google's Blogger. You can tap into your corporate computer network, communicate with friends, assemble photo albums, listen to music and manage your finances using little more than a Web browser. And the list of Web-based applications is only growing".
In spite of all this, llegal disputes involving Microsoft and the European Commission never seem to end. In February 2006, the European Committee for Interoperability Systems, or ECIS, accused Microsoft once again of abusing its dominance:
"The committee asked the European Commission, which regulates antitrust issues for the European Union, to investigate Microsoft's business practices regarding its Office suite of software, including Word and Excel. The Redmond, Wash., tech giant, which has already faced sanctions in the United States and Europe for misusing its monopoly power, countered that its competitors are simply complaining about its superior products. 'ECIS is a front for IBM and a few other competitors who constantly seek to use the regulatory process to their business advantage', a Microsoft spokeswoman said in an e-mail. When faced with innovation, they choose litigation."
. "Its window may be closing", Los Angeles Times
One of Joseph Schumpeter's key insights was that an innovative entrepreneur was driven by the (almost impossible) dream of becoming a monopolist. Thus, inasmuch as it acts to stifle innovation, overzealous anti-trust regulation can be harmful.
This is all the more important since Schumpeter thought that such monopolies were usually a passing affair: competition would surely prevent them from lasting too long. This last point is made, with respect to software giant Microsoft, by a recent Los Angeles Times editorial:
"Since XP was released in 2001, however, there has been an accelerating shift away from programs that run entirely on your own computer, such as Microsoft Word, to applications and services based on the Web, such as Google's Blogger. You can tap into your corporate computer network, communicate with friends, assemble photo albums, listen to music and manage your finances using little more than a Web browser. And the list of Web-based applications is only growing".
In spite of all this, llegal disputes involving Microsoft and the European Commission never seem to end. In February 2006, the European Committee for Interoperability Systems, or ECIS, accused Microsoft once again of abusing its dominance:
"The committee asked the European Commission, which regulates antitrust issues for the European Union, to investigate Microsoft's business practices regarding its Office suite of software, including Word and Excel. The Redmond, Wash., tech giant, which has already faced sanctions in the United States and Europe for misusing its monopoly power, countered that its competitors are simply complaining about its superior products. 'ECIS is a front for IBM and a few other competitors who constantly seek to use the regulatory process to their business advantage', a Microsoft spokeswoman said in an e-mail. When faced with innovation, they choose litigation."
Friday, March 24, 2006
THE EURO. A SKEPTICAL VIEW ON THE EUROZONE EXTENSION
. Desmond Lachman: "Europe's Economic Fantasy", TCS
Desmond Lachman, a scholar at the American Enterprise Institute (AEI), argues that the idea of extending the eurozone to include countries from the former Soviet bloc amounts to an economic time-bomb:
"Not content with the idea of having the current 12 member countries participate in the euro, European leaders keep alive the pipedream of having another 15 countries, mainly from the former Soviet bloc, join the hitherto exclusive club. Yet pursuit of this dream runs the very real risk of accelerating the unraveling of the present currency union, which is already straining under the weight of its internal contradictions".
Read the whole thing. Lachman, by the way, is on the record for comparing Italy's current economic performance to that of Argentina during the second half of the 1990s. Not a very reassuring prospect...
. Desmond Lachman: "Europe's Economic Fantasy", TCS
Desmond Lachman, a scholar at the American Enterprise Institute (AEI), argues that the idea of extending the eurozone to include countries from the former Soviet bloc amounts to an economic time-bomb:
"Not content with the idea of having the current 12 member countries participate in the euro, European leaders keep alive the pipedream of having another 15 countries, mainly from the former Soviet bloc, join the hitherto exclusive club. Yet pursuit of this dream runs the very real risk of accelerating the unraveling of the present currency union, which is already straining under the weight of its internal contradictions".
Read the whole thing. Lachman, by the way, is on the record for comparing Italy's current economic performance to that of Argentina during the second half of the 1990s. Not a very reassuring prospect...
EU ECONOMY WATCH. THE LISBON AGENDA SCOREBOARD
. Aurore Wanlin. THE LISBON SCORECARD VI: Will Europe's economy rise again? London: Center for European Reform, 2006
In this Center for European Reform pamphlet, Aurore Wanlin assesses the progress of the various member-states in terms of the Lisbon Agenda goals. Here's a list of her findings:
- The pace of reform has remained slow in the big European economies, but increasing competition from the East is "turning up the heat" on the slow growing core economies of France, Germany, and Italy.
- In spite of "a new spirit of national proteccionism", a wave of cross-border mergers suggests that the single market is making an impact.
- Rankings of economic performance show Denmark topping the list, with Sweden and Austria not far behind. The UK, the Netherlands, Finland and Ireland also score highly, while the Mediterranean countries (Italy, Portugal, Spain) score poorly on many indicators.
- Due to its lack of product market competition, and to its complicated tax system, Poland is the "villain" of the CER's 2006 scoreboard.
. Aurore Wanlin. THE LISBON SCORECARD VI: Will Europe's economy rise again? London: Center for European Reform, 2006
In this Center for European Reform pamphlet, Aurore Wanlin assesses the progress of the various member-states in terms of the Lisbon Agenda goals. Here's a list of her findings:
- The pace of reform has remained slow in the big European economies, but increasing competition from the East is "turning up the heat" on the slow growing core economies of France, Germany, and Italy.
- In spite of "a new spirit of national proteccionism", a wave of cross-border mergers suggests that the single market is making an impact.
- Rankings of economic performance show Denmark topping the list, with Sweden and Austria not far behind. The UK, the Netherlands, Finland and Ireland also score highly, while the Mediterranean countries (Italy, Portugal, Spain) score poorly on many indicators.
- Due to its lack of product market competition, and to its complicated tax system, Poland is the "villain" of the CER's 2006 scoreboard.
Monday, March 20, 2006
BLOGS & INTERNET. MR. ZALM HAS A BLOG!
. Ministerie van Financiën: Weblog
Gerrit Zalm, the Netherlands' finance minister, has a blog. On a typical day, he informs the reader about his morning meeting with his South Korean counterpart, his lunch with Spain's economy minister, and his late evening concert-soirée with his wife. Call it transparency in action!
. Ministerie van Financiën: Weblog
Gerrit Zalm, the Netherlands' finance minister, has a blog. On a typical day, he informs the reader about his morning meeting with his South Korean counterpart, his lunch with Spain's economy minister, and his late evening concert-soirée with his wife. Call it transparency in action!
EUROPE & GLOBALIZATION. THE 2005 GLOBALIZATION INDEX AND THE "EU EFFECT"
. A.T. Kearney: Measuring Globalization
Management consultants A.T.Kearney, in association with Foreign Policy, have released the 2005 Globalization Index. The index measures up to twelve variables arranged into four "baskets": (1) economic integration; (2) technological connectivity; (3) personal contact; (4) political engagement (commitment to multilateral initivatives).
Overall, European countries show up in prominent positions, especially Ireland, the Netherlands and the Nordic countries. However, Ireland lost the top position, as Singapore deepened both its "multilateral" commitments and its trade relations with the U.S. to capture to # 1 spot.
Interestingly enough, the report mentions the so-called EU effect: countries that aspire to become members tend to score big improvements in the index. This was especially the case for Croatia, Romania and the Ukraine, which saw big jumps in trade and investment flows. Excellent news!
. A.T. Kearney: Measuring Globalization
Management consultants A.T.Kearney, in association with Foreign Policy, have released the 2005 Globalization Index. The index measures up to twelve variables arranged into four "baskets": (1) economic integration; (2) technological connectivity; (3) personal contact; (4) political engagement (commitment to multilateral initivatives).
Overall, European countries show up in prominent positions, especially Ireland, the Netherlands and the Nordic countries. However, Ireland lost the top position, as Singapore deepened both its "multilateral" commitments and its trade relations with the U.S. to capture to # 1 spot.
Interestingly enough, the report mentions the so-called EU effect: countries that aspire to become members tend to score big improvements in the index. This was especially the case for Croatia, Romania and the Ukraine, which saw big jumps in trade and investment flows. Excellent news!
Friday, March 17, 2006
ECB WATCH. A NEW ERA AT THE ECB?
. Ralph Atkins: "Missing Issing? How the loss of an ECB pivot will be felt", Financial Times
Ralph Atkins wonders whether the retirement of Ottmar Issing, due in May, will render the ECB's approach to monetary policy less Bundesbank-like (that is, less influenced by broad money supply measures like M3). Mr. Issing is the ECB's influential chief economist.
Already, Lucas Papademos, the former Greek central bank governor (who could well inherit Issing's position), is developing the concept of "output gaps" to help formulate policy. Says Atkins: "Mr. Issing regarded such ideas as too vague and dependent on unreliable data".
Also, there are signs that recent financial innovations are altering the links between money growth, the economy, and asset prices. This may undermine the value of M3 as a guide to monetary policy (*).
(*) The idea that globalization would render monetary indicators obsolete was put forward ten years ago by Manuel Johnson & Robert Keleher in their book Monetary Policy: A Market Price Approach. Westport: Quorum Books, 1996.
. Ralph Atkins: "Missing Issing? How the loss of an ECB pivot will be felt", Financial Times
Ralph Atkins wonders whether the retirement of Ottmar Issing, due in May, will render the ECB's approach to monetary policy less Bundesbank-like (that is, less influenced by broad money supply measures like M3). Mr. Issing is the ECB's influential chief economist.
Already, Lucas Papademos, the former Greek central bank governor (who could well inherit Issing's position), is developing the concept of "output gaps" to help formulate policy. Says Atkins: "Mr. Issing regarded such ideas as too vague and dependent on unreliable data".
Also, there are signs that recent financial innovations are altering the links between money growth, the economy, and asset prices. This may undermine the value of M3 as a guide to monetary policy (*).
(*) The idea that globalization would render monetary indicators obsolete was put forward ten years ago by Manuel Johnson & Robert Keleher in their book Monetary Policy: A Market Price Approach. Westport: Quorum Books, 1996.
ECONOMICS & INNOVATION. THE WORLD IS FLAT ... OR IS IT?
. Richard Florida: "The Worl is Spiky", The Atlantic Monthly
These impressive graphics give a us a sense of the "topography of innovation". Europe seems to be doing OK, but it looks increasingly surrounded by North America and ... Asia. Definitely worth a look.
. Richard Florida: "The Worl is Spiky", The Atlantic Monthly
These impressive graphics give a us a sense of the "topography of innovation". Europe seems to be doing OK, but it looks increasingly surrounded by North America and ... Asia. Definitely worth a look.
DEMOGRAPHICS & ECONOMICS. ASSESSING EUROPEAN DEMOGRAPHICS
. Guiseppe Carone, Delclan Costello & al.: "The economic impact of ageing populations in the EU25 Member States", Economic Papers, European Commision, December 2005
The paper provides a comprehensive analysis of upcoming "dramatic changes" in European demographics. The authors' projections point to "pressing economic challenges for the EU". Interesting! (Hat tip: Edward Hugh).
. Guiseppe Carone, Delclan Costello & al.: "The economic impact of ageing populations in the EU25 Member States", Economic Papers, European Commision, December 2005
The paper provides a comprehensive analysis of upcoming "dramatic changes" in European demographics. The authors' projections point to "pressing economic challenges for the EU". Interesting! (Hat tip: Edward Hugh).
BLOGS & INTERNET. MARGOT WALLSTROM DECONSTRUCTED
. Helen Szamuely: "Pap Europa", TCS
As part of her aggressive communications campaign, Margot Wallström ―Commissioner for Institutional Relations and Communication― introduced a novelty: her own blog. In this piece, Helen Szamuely deconstructs Wallström and the blog. Check it out for some interesting comments on the meaning of "European values".
. Helen Szamuely: "Pap Europa", TCS
As part of her aggressive communications campaign, Margot Wallström ―Commissioner for Institutional Relations and Communication― introduced a novelty: her own blog. In this piece, Helen Szamuely deconstructs Wallström and the blog. Check it out for some interesting comments on the meaning of "European values".
Thursday, March 16, 2006
ECB WATCH. JEAN-CLAUDE TRICHET ON CENTRAL BANK INDEPENDENCE ... IN POLAND
. Ralph Atkins, Jan Cienski & George Parker: "Europe frets as Poland heads down populist path", Financial Times
According to the FT, a battle is raging between Poland's nationalist 'Law and Justice Party' and leaders of "independent institutions such as the central bank and the banking commission". Alarm bells have sounded accross Europe. On Monday,
"Jean-Claude Trichet, European Central Bank president, who fought his own battles against political interference as head of the Banque de France in the 1990s, argued that the principle of central bank independence was of extreme importance. The ECB las week said Poland's proposed bank supervision law, stripping the central bank of many of its powers, threatened Poland's chances of joining the eurozone".
. Ralph Atkins, Jan Cienski & George Parker: "Europe frets as Poland heads down populist path", Financial Times
According to the FT, a battle is raging between Poland's nationalist 'Law and Justice Party' and leaders of "independent institutions such as the central bank and the banking commission". Alarm bells have sounded accross Europe. On Monday,
"Jean-Claude Trichet, European Central Bank president, who fought his own battles against political interference as head of the Banque de France in the 1990s, argued that the principle of central bank independence was of extreme importance. The ECB las week said Poland's proposed bank supervision law, stripping the central bank of many of its powers, threatened Poland's chances of joining the eurozone".
THE EURO. ON THE "INTERNATIONAL" ROLE OF THE EURO
. André Sapir: "Is the euro ready for an international role?", Europe's World, Spring 2006
A short but insightful paper on the so-called "international role" of the euro. "Take it easy", says Sapir:
"The euro is still a very young currency, and there is plenty of time for it to become a truly global player".
. André Sapir: "Is the euro ready for an international role?", Europe's World, Spring 2006
A short but insightful paper on the so-called "international role" of the euro. "Take it easy", says Sapir:
"The euro is still a very young currency, and there is plenty of time for it to become a truly global player".
ECB WATCH. THE EUROPEAN CENTRAL BANK AND EUROPE'S "MIXED CONSTITUTION"
. Werner Bonefeld: "Europe, the Market and the Transformation of Democracy", Journal of Contemporary European Studies, Vol. 13, No. 1, 93-106, April 2005
In his discussion of EMU and ECB independence, Werner Bonefeld argues that the European Union is "characterised by a mixed constitution". Not that he favors such an arrangement: a mixed constitution, in his view, is the proper form of a "bourgeois state" in which the people are not sovereign.
Beyond Mr. Bonefeld's politics, what's relevant here is the checks and balances approach to the European Central Bank. In a June 2000 paper, Philip Keefer and David Stasavage argued that central bank independence does indeed yield low inflation rates, but only in the context of political checks and balances (*).
Watching Argentina's recent inflation troubles, it seems that they do have a point. In spite of what Bonefeld calls the EU's "democratic deficit", a mixed constitution is, perhaps, not such a bad thing after all.
(*) Philip Keefer & David Stasavage: "Bureaucratic Delegations and Political Institutions: When Are Independent Central Banks Irrelevant?", World Bank, June 2000.
. Werner Bonefeld: "Europe, the Market and the Transformation of Democracy", Journal of Contemporary European Studies, Vol. 13, No. 1, 93-106, April 2005
In his discussion of EMU and ECB independence, Werner Bonefeld argues that the European Union is "characterised by a mixed constitution". Not that he favors such an arrangement: a mixed constitution, in his view, is the proper form of a "bourgeois state" in which the people are not sovereign.
Beyond Mr. Bonefeld's politics, what's relevant here is the checks and balances approach to the European Central Bank. In a June 2000 paper, Philip Keefer and David Stasavage argued that central bank independence does indeed yield low inflation rates, but only in the context of political checks and balances (*).
Watching Argentina's recent inflation troubles, it seems that they do have a point. In spite of what Bonefeld calls the EU's "democratic deficit", a mixed constitution is, perhaps, not such a bad thing after all.
(*) Philip Keefer & David Stasavage: "Bureaucratic Delegations and Political Institutions: When Are Independent Central Banks Irrelevant?", World Bank, June 2000.
Wednesday, March 15, 2006
BOOKS & ESSAYS. SOME RECENT BOOKS ON EUROPE
. London Review of Books
- Gerard Delanty & Chris Rumford. Rethinking Europe: Social Theory and the Implications of Europeanization. (London: Routledge, 2005). When I saw this book at Scheltema, I immediately thought: "Another boring book written by sociologists". In fact, from what I've read, it looks like the authors do a pretty good job at describing things like nationality, governance, enlargement, etc. More info: Rumford's website.
- Franz Fischler & Christian Ortner. Europa. Der Staat, den keiner will. (Zürich: ecowin Verlag, 2006). In this book about the Unwanted State, co-written with Christian Ortner, an Austrian journalist, Mr Fischler (former Austrian EU farm commissioner) tries to map out answers to stop the EU from "collapsing". He recently told the Financial Times on that EU enlargement may never reach Ukraine and possibly Turkey, and that both countries could instead be granted some kind of special partnership arrangement with the EU.
- Mark Leonard. Why Europe will run the 21st Century. (London: Fourth Estate, 2005). The always optimisitic Leonard sees Europe "not as a tangle of bureaucracy and regulation, but as a revolutionary model for the future". Why not? (Warning: the book was written before the French and Dutch referenda). More info: read over 15 reviews here.
- Glyn Morgan. The Idea of a European Superstate: Public Justification and European Integration. (Princeton: Princeton University Press, 2005). Harvard scholar Glyn Morgan argues that Europe has "centralized what it should not have centralized, and has not centralized what it should have". He argues for an American-style European Union.
. London Review of Books
- Gerard Delanty & Chris Rumford. Rethinking Europe: Social Theory and the Implications of Europeanization. (London: Routledge, 2005). When I saw this book at Scheltema, I immediately thought: "Another boring book written by sociologists". In fact, from what I've read, it looks like the authors do a pretty good job at describing things like nationality, governance, enlargement, etc. More info: Rumford's website.
- Franz Fischler & Christian Ortner. Europa. Der Staat, den keiner will. (Zürich: ecowin Verlag, 2006). In this book about the Unwanted State, co-written with Christian Ortner, an Austrian journalist, Mr Fischler (former Austrian EU farm commissioner) tries to map out answers to stop the EU from "collapsing". He recently told the Financial Times on that EU enlargement may never reach Ukraine and possibly Turkey, and that both countries could instead be granted some kind of special partnership arrangement with the EU.
- Mark Leonard. Why Europe will run the 21st Century. (London: Fourth Estate, 2005). The always optimisitic Leonard sees Europe "not as a tangle of bureaucracy and regulation, but as a revolutionary model for the future". Why not? (Warning: the book was written before the French and Dutch referenda). More info: read over 15 reviews here.
- Glyn Morgan. The Idea of a European Superstate: Public Justification and European Integration. (Princeton: Princeton University Press, 2005). Harvard scholar Glyn Morgan argues that Europe has "centralized what it should not have centralized, and has not centralized what it should have". He argues for an American-style European Union.
