The paper uses quarterly GDP data for some 30 years up to and including 2001, to examine the identity and development of the European business cycle. Cycles are identified by using a band-pass filter version of the Hodrick-Prescott filter and affiliations are examined using clustering techniques...

To make the no-bailout clause credible and enhance the effectiveness of crisis assistance, a consistent institutional and legal framework is needed to ensure that private creditors contribute to crisis resolution. Getting activated as part of ESM crisis assistance, we propose a two-stage...

Despite large automatic stabilizers, the performance of the Euro area as a whole in terms of fiscal stabilization is relatively poor. This report argues that a meaningful fiscal stance for the Euro area should rely on the current account as a complement to the output gap, and be coordinated only...

We analyse the voting pattern in the June 23rd referendum on the continued participation of the United Kingdom in the European Union and evaluate the reasons for the results. We find that regions where GDP per capita is low, a high proportion of people have low education, a high proportion is...

In this paper we analyse debt stabilization in a monetary union that features endogenous risk premia. In particular, we analyse debt stabilization in two diametrically opposed regimes. In the first regime, the "national fiscal discipline regime", financial markets impose sovereign risk premia...

We analyze different options for the design of a common unemployment insurance system for the euro area (EA). We assess their effectiveness to act as an insurance device in the presence of asymmetric macroeconomic shocks. Running counterfactual simulations based on micro data for the period...

This paper discusses the process of European institutional integration from a political-economy perspective, linking the long-standing political debate on the nature of the European project to the recent economic literature on political integration and disintegration. First, we introduce the...

It is widely debated whether a monetary union has to be accompanied by a fiscal transfer scheme to accommodate asymmetric shocks. We build a model of a monetary union with a central bank and two heterogeneous countries that are linked by a fiscal transfer scheme with repercussions on monetary...

The recent increase of interest rate spreads in Europe and their apparent detachment from underlying fundamental variables has generated a debate on multiple equilibria in the sovereign bond market (see De Grauwe and Ji (2012)). We critically evaluate this hypothesis, by pointing towards an...

The paper surveys the characteristics of the common European VAT system, proposed by the EU-Commission to overcome the weaknesses of the transitional European VAT system, which was enacted in 1993 and is still in force. We argue that a harmonized VAT rate will generate substantial costs for EU...