In 2003 Chancellor Schroeder launched an ambitious structural reform package (Agenda 2010), that simultaneously reformed the pension system and the labour market (following the proposition of the Hartz commission report, of August 2002). This program reinforced a trend already visible since the...

Assessing the ECB’s performance is unusually difficult because both the Bank and the context within which it operates - the integration of 12 national foreign exchange markets - are so radically new. There is no historical precedent. Nor are there any criteria against which to judge monetary...

The large (and increasing) output gap that characterizes the euro area suggests that aggregate demand can physically be boosted. Only fiscal policy could fulfil this task though, being monetary policy at the limit, and structural reforms linked to long term growth. The usual arguments against...

Why since at least two decades macroeconomic policies have been so active in the US and so passive in Europe? I contend that social norms have changed and that the new norms call for a greater degree of inequality. Then macroeconomic policies have to be active in the United States and passive in...

The long wave of globalization will most probably lose part of its strength in the next few years. As a consequence inflation will not remain as low as it has been for the past three decades, where the growth strategy of emerging countries, especially China, has mainly relied on exports to the...

Both the action and the communication strategy of the ECB rely on the assumption, explicitly stated, that inflation is always a monetary phenomenon, and that the interest rate instrument should be devoted exclusively to dealing with inflation pressures. According to this prior, the ECB...

This paper should be read as complementary to my last briefing paper (N3, September 2001) The European policy mix At its meeting on 8 November, the Governing Council of the ECB decided to reduce the minimum bid rate on the main refinancing operations of the Eurosystem by 50 basis points to...

The reversal in the trend of productivity growth between the US and the UK on one side, and the main countries of continental Europe on the other, appears with great evidence from the data. The current debate focuses on differences in labour market performance, which should account for the...

Current forecasts for Europe are currently grounded on a compromise between two alternative hypothesis, which I will describe in a stylised way. According to the first which may be called the big economy assumption, the European economy not being poisoned by structural desequilibria – the huge...

The two recent macroeconomic shocks that hit the world economy - the surge of oil and food prices and the subprime crisis – have revived the attention of policy makers and economists on the consequences of shocks, symmetric and asymmetric, and on the appropriateness of the EMU institutional...