This chapter addresses questions about the effect of the introduction of the euro on price differentials across the Union and also on the cost of capital in its member countries, which may account for capital flows from the slow growing centre to the more buoyant peripheral states. Nominal...

Huge global imbalances have emerged as a result of the massive current account deficits of the US. The US deficit is largely matched by surpluses in Asia, oil-exporting countries and a few European countries. Correction of global imbalances will require substantial depreciation of the US dollar,...

This chapter analyses macroeconomic adjustment within the euro area. The focus is on the adjustment problems in Ireland (which has had a booming economy) and Italy (which has instead been exposed to strong contractionary shocks). The analysis stresses how adjustment processes may be much more...

This chapter analyses corporate taxation within the EU and asks whether the new EU states expose the old ones to unfair tax competition. Various policy approaches are discussed. The chapter recommends an increase in VAT and a reduction in labour income taxes as a way of “simulating” an...

This chapter presents evidence on the brain drain from European countries towards the US, identifying possible causes and costs for the economy, and looks at factors and policies that could reduce the net outflows of skilled people from Europe.

This chapter analyses the role of fiscal policy as a tool of macroeconomic stabilisation and proposes changes in the EU fiscal rules with the aim of making them more flexible while at the same time maintaining fiscal discipline.

This chapter addresses the weakness of the euro against the US dollar and the yen since its launch in 1999. The report stresses the effects on the euro of a dramatic decline in the demand for base money which probably reflected a flight of black money from within the euro countries as well as of...