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 reconsiders and assesses subsidiarity as one of the general principles to guide the political and institutional development of the European Union, and proposes a framework to assess the consistency of alternative plans.

This chapter examines how well the ten member states that entered the EU in 2004 have been doing. It is a follow-up of earlier extensive analyses in our 2004 report. The finding is that the growth performance of the EU-10 has been very good in general. The chapter warns about the dangers of...