Go big or go home - How to make European industrial policy work (Jacques Delors Centre Policy Paper, June 2021) [ Link ]
When it comes to industrial policy, the EU remains big in ambitions but meager in substance. This is not surprising. The EU aims to follow the international trend towards more active industrial policy. But it has to do so within a framework that was designed to discourage – indeed even prevent – the kind of investment-centered policies that seem the most effective. For the EU’s industrial strategy to grow some teeth, three fundamental changes are needed: first, new financial instruments for more common resources; second, a stronger macroeconomic focus on growth and employment; and third, better European governance.
Taking a closer look: How to improve the design of the Solvency Support Instrument (with Theresa Kuespert, Jacques Delors Centre Policy Paper, July 2020) [ Link ]
The Solvency Support Instrument (SSI) is central to the European Commission’s proposal to mitigate economic damage of the pandemic. The new tool would use part of the money raised under the Recovery Instrument to provide equity support to struggling firms. It could become a powerful tool for the recovery. However, Nils Redeker and Theresa Küspert argue in their Policy Paper that the instrument, in its current form, risks providing free lunch bailouts for owners and private investors without ensuring that public support secures jobs, avoids market concentration, and puts firms on a growth path more conducive with the EU’s broader industrial policy goals. To remedy these shortcomings, the instrument needs clear political criteria for equity support; it should be linked to binding social and environmental conditions; public banks should be put in the lead of its rollout and political control of the instruments needs to be improved.
Flattening the Recession Curve: Fiscal Responses to the Corona Crisis (with Natascha Hainbach, Jacques Delors Centre Policy Paper, April 2020) [ Link ]
The ongoing Covid-19 crisis affects all European economies, however the crisis causes much more economic damage in some member states than in others. A joint European policy response to share the fiscal burden of this crisis is, therefore, urgently needed. This Policy Paper by Dr. Nils Redeker analyses to what extent these costs are likely to differ across member states and how governments are trying to mitigate them. This initial analysis suggests two important takeaways that need to be considered. First, economic vulnerabilities differ substantially across member states. Second, initial fiscal crisis responses, so far, do not seem to match the distribution of economic risks. Nevertheless, crisis measures need to converge swiftly or else risk aggravating economic disparities across member states as well as seriously harming the European recovery.
Unlocking Europe’s Piggy Bank: Corporate Saving, Labor Power and Policies for Investment (Jacques Delors Centre Policy Paper, December 2019) [ Link ]
European companies invest too little. Instead, firms increasingly retain profits and build up large savings which contributes to low growth, rising inequality and financial instability. Boosting private investment, therefore, has become main priority for the new Commission. Based on new empirical evidence this policy paper by Nils Redeker proposes a novel strategy to achieve this goal: strengthening the bargaining position of labor.
Misremembering Weimar: Unpacking the Historic Roots of Germany’s Monetary Policy Discourse (with Lukas Haffert and Tobias Rommel, Jacques Delors Centre Policy Paper, November 2019) [ Link ]
Many Germans are highly sceptical of the ECB’s monetary policy of recent years. To explain this scepticism, experts often point to the collective memory of the hyperinflation in the early 1920s. Based on new survey data, our policy paper shows that German memory of this period in fact is deeply flawed. Many Germans, therefore, today draw the wrong lessons from history.