This chapter argues against using industrial policy to protect European firms from international competition because of the long-run costs that are likely to arise. Industrial policy should be horizontal rather than sector-based and it should be located mainly at the regional and EU level, but...

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...

The credit crunch was most likely viewed as a mixed blessing by many private equity executives. On the one hand, it signalled the end of the most favourable set of economic conditions the private equity industry had ever witnessed: abundant capital, low interest rates, increasing stock market...

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...

The financial turmoil that originated in 2007 and developed into an unprecedented crisis battering financial and real markets is the latest manifestation, on a grand scale and with new attributes, of a welldefined pathology in the process of market liberalization and integration in the...

This chapter provides an in-depth analysis of the phenomenon of economic nationalism, as practiced by many governments in the EU, for example in the form of opposition to cross-border mergers, promotion of national champions and bailing out of domestic firms. Even though such measures usually...