News Archive

Finnish VATT Institute for Economic Research scientists Jarkko Harju, Ilpo Kauppinen and Olli Ropponen have studied the interesting effects of an interest barrier that was introduced in Finland to restrict the profit-shifting opportunities of multinational enterprises (MNEs). Our Nordic EconPol Europe Partners found that Finnish MNEs responded to the interest barrier by decreasing their financial expenses, but not only.

The EMU has been founded on the exclusive national responsibility doctrine, except for monetary sovereignty devoted to a single bank. Italian economist Roberto Tamborini, Università di Trento, speaks out on why the strong interdependent linkages among the partner countries impair the national responsibility notion and make the country-by-country approach of the EMU policies so dramatically harmful.

Are convergent growth rates a sine-qua-non condition for a monetary union? Is there any economic tendency towards this outcome? Economist Roberto Tamborini, Università di Trento, says: "Higher growth across Europe is a valuable aim but is the devotion to pro-growth and convergence policies and to the formalisation of the convergence process in Europe's Economic and Monetary Union the correct answer? The EconPol Europe network partner recommends quickly having a closer look.

The recent unravelling of the Eurozone’s financial integration raised concerns about feedback loops between sovereign and banking insolvency. Jean Tirole, Nobel Memorial Prize Winner in Economic Sciences, and French Harvard top economist Emmanuel Farhi provide their theory of the feedback loop that allows for both domestic bailouts of the banking system and sovereign debt forgiveness by international creditors or solidarity by other countries. The theory has extremely important implications for the re-nationalization of sovereign debt, macroprudential regulation, and the rationale for banking unions.

The lead story in the Economist earlier this month, “Why the German current-account surplus is bad for the world economy”, starts from the assumption that the rest of the world would benefit if Germany were to spend more. But this holds true only in a world that is constrained by demand, which is less and less the case. The global output gap has already fallen below 0.5% (of potential output) and is projected to disappear within a year or two. Read here why, under these conditions, the German current account surplus, which amounts to 0.33% of global output, cannot do a lot of damage to the global economy.