The Sound Of Economics

Bruegel director Guntram Wolff welcomes Brad Setser, senior fellow at the Council on Foreign Relations, and Jean Pisani-Ferry, mercator senior fellow at Bruegel, to discuss the deterioration of Turkey's economy. Although a recent souring of relations with the US has provided the immediate prompt for Turkey's current crisis, the country's underlying economic malaise is more deeply rooted.  Headlines have tracked the plummeting value of the lira, while the trust of external investors has been challenged by recent policy decisions. Though Turkey's case bears some of the hallmarks of a textbook emerging-market meltdown, there are key divergences. Meanwhile, President Erdogan's previous refutation of IMF policy recommendation does not bode well for potential assistance in the event that Turkey needs help brokering extension agreements with its creditors.  In conversation with Brad Setser, senior fellow at the Council on Foreign Relations, and Jean Pisani-Ferry, Mercator senior fellow at Bruegel, Guntram Wol

More than two months after the Italian elections and its turbulent political negotiations, Italy finally has a new government. While this has had a calming effect on the financial markets, Italy's medium and long term economic outlook is yet to be determined. Bruegel affiliate fellow, Silvia Merler, is joined by Marcello Minenna, PhD lecturer at the London Graduate School and Head of Quants at Consob, and Lorenzo Codogno, LSE visiting professor, to examine the different ways the country can move forward. Starting off this Sound of Economics, Silvia examines the new government's policy priorities and discusses the message of uncertainty it sends to financial markets and investors. Indeed, the way in which the government will finance its promises is still uncertain, thus leaving room for unpredictability. In the short and medium term, Lorenzo puts forward the proposal that the new government should tread carefully by introducing policies gradually in order to maintain fiscal stability and discipline. The

Bruegel director Guntram Wolff and Ashoka Mody – visiting professor in international economic policy at Princeton University – explore subjects addressed in the latter’s latest book, Euro tragedy: a drama in nine acts. Kicking off this Director’s Cut of the 'The Sound of Economics', the two explore the historical development behind the EU's creation. Ashoka Mody argues that the adoption of the euro as a single currency has exacerbated economic divergences between EU Member States as some do not have the institutional maturity or capabilities to fully adopt monetary policy measures. Guntram Wolff points out that in the view of Helmut Kohl, the adoption of the euro was a means to further reunite the continent and support peace-building. They also discuss the role of social democracy in the drama on the future of Europe. The conversation from this episode explores the development of the EU from its early history until its present-day situation. Member States’ commitments to the European project from a poli

According to Annamaria Lusadi, academic director at the Global Financial Literacy Excellence Center, financial literacy requires both a knowledge of financial concepts and the confidence to make effective financial decisions in order to maximise one's well-being. Financial literacy is not only limited to knowledge of monetary calculations, but is also measured by the extent to which individuals understand their financial rights and obligations, in addition to their ability to educate themselves on financial matters. People are increasingly expected to have the appropriate skills to manage their own financial decisions; however, the rapidly shifting financial environment often proves to be extremely complex to understand and, thus, leaves many with poor financial literacy abilities. The young, the elderly, women, and people with low-education levels are particularly susceptible to the negatives effects of low financial literacy. The consequences of the situation are harmful both for the individual and at a n

Paul Tucker, former deputy governor of the Bank of England, joins Bruegel director Guntram Wolff to discuss the thesis of his new book, as well as the current tensions within current models of central banking governance. On the agenda is the contention that there is, and even should be, a limit to the level of responsibility that a central bank can reasonably be expected to shoulder. Some decisions have such far-reaching consequences that we might prefer they be made by elected, rather than appointed, officials. [Paul Tucker presented his book in an event at Bruegel](http://bruegel.org/events/unelected-power-the-quest-for-legitimacy-in-central-banking-and-the-regulatory-state/) in May 2018, with Bruegel deputy director Maria Demertzis hosting a debate between Paul Tucker, Joanne Kellermann, former member of the Single Resolution Board, and Jean Pisani-Ferry, mercator senior fellow at Bruegel. For further reading, consider 'Central Banking in Turbulent Times' - a book co-written by Bruegel senior fell

Technological advancements continue to drive change in every industry. In a recent working paper co-written with Francesco Chiacchio and David Pichler, Bruegel research fellow Georgios Petropoulos has explored the impact of the increasing number of robots on employment and wages in Europe. The introduction of robots constitutes only one industrial advance among many, and each automated technology has different impacts on employment. The impacts across social strata can also be disparate. In this episode of ‘The Sound of Economics’, Georgios Petropoulos discusses the findings of his study, which focuses on six EU countries (Finland, France, Germany, Italy, Spain, Sweden) that account for 85% of robots in the EU market. Specifically this work sought to answer the question of whether robots have a positive or negative effect on EU employment and wages, and to place its conclusions in the context of other studies of automated technologies and their consequences for labour. The research pertinent to this podcas

The coalition agreement between Italy’s Five Star Movement and the League puts the country’s new government on a potential collision course with the European Union, and has prompted fears that the country could nosedive out of the euro zone. Markets have already born witness to investor nervousness over the coalition’s proposed agenda, and the new government’s priorities run counter to the prevailing fiscal and monetary policies of the euro area. If Italy were to follow through on its new plans for spending, the expected reaction in among bond-buyers would make it very difficult for Italy to finance its already-significant amount of public debt. Any discussion of a possible default necessarily involves the euro area – as Bruegel’s database of sovereign bond holdings illustrates. Just how exposed are the other members of the currency bloc, and what paths might be taken in order to avert a crisis? In this week’s Director’s Cut, Bruegel senior fellow Francesco Papadia joins Guntram Wolff to assess the problem

The global financial crisis exposed flaws in the methods and theories of macroeconomics. Certain aspects of the crisis were completely unexpected; other burgeoning problems were flagged up but explained away, and thus allowed to get worse. As the profession seeks to reinvent itself post-crisis and reassert its worth, what exactly has been learned and what changes have been made to the practice of macroeconomics? New models appear to be flourishing, but debate continues over whether we have improved our understanding and mitigated the potential for misreading the results that these models present. In this Director's Cut of 'The Sound of Economics' podcast, Bruegel deputy director hosts a conversation with Nicola Viegi, South African Reserve Bank professor of monetary economics at the University of Pretoria, and Frank Smets, director general of economics at the European Central Bank.  For further reading on this topic, consider our overview of the [‘Rebuilding Macroeconomic Theory Project’](http://br

The deepening and enlargement of Europe’s capital markets has long been a policy target for the EU – indeed, it is a flagship priority of the current Commission. Many legislative proposals have been forwarded, and there is widespread agreement on the necessity of the Capital Markets Union (CMU) project, but few tangible measures have been formally adopted. Joining Bruegel director Guntram Wolff for this week’s Director’s Cut of ‘The Sound of Economics’ is Valdis Dombrovskis, vice-president of the European Commission, overseeing the department of Financial Stability, Financial Services and Capital Markets Union. The Bruegel director met Vice-President Dombrovskis at the informal meeting of the EU’s Ecofin Council in Sofia, where the former presented a research paper (co-written by André Sapir and Nicolas Véron) advocating significant steps forward in the CMU project. The vice-president here expounds on the Commission’s own planned measures to have significant initial elements in place before the end of the

The EU's transport sector is now a significant burden in the context of commitments made under the Paris Agreement to reduce carbon emissions. Transport is the only sector in which Europe's CO2 emissions are now higher than in 1990\. Countermeasures are imperative, but it is not a simple challenge to abandon car-friendly policies; policymakers are not blind to economic benefits brought about by the automotive industry in the past. In this episode of 'The Sound of Economics', Bruegel fellows Simone Tagliapietra and Georg Zachmann discuss the findings of a Policy Brief that they have co-written containing policy prescriptions for cleaning up Europe's transport sector. Utilising taxation, as well as funds already allocated within the current multiannual financial framework, the EU can incentivise change not only in the habits of Europe's citizens but its industry leaders too, promoting the policy discussion at country- and city-level where locally appropriate plans and changes can be introduced. Though

As global trade war continues to unfold, Bruegel director Guntram Wolff is joined for this Director's Cut of 'The Sound of Economics' podcast by Bernd Lange MEP, chair of the Committee on International Trade (INTA), to discuss Europe's options. Increasingly it appears that the EU will have to choose between standing strong with the established laws of the World Trade Organisation (WTO), or striking a deal for a permanent reprieve from the US trade tariffs. There is no question that [the tariffs have significant implications for European industry](http://bruegel.org/2018/03/which-sectors-would-be-most-vulnerable-to-eu-us-trade-war/). Indeed, as the US and China brandish lists of further products on which they would consider imposing tariffs, the full scale of the potential future damage to EU exporters is unclear. Yet there remains some hope that the EU could align with other nations to use the WTO to bring US President Trump back on side. To discuss what opportunities as well as threats this current

In this week’s Director’s Cut of ‘The Sound of Economics’ podcast, Bruegel director Guntram Wolff talks with Nicolas Véron, senior fellow at Bruegel, about the implementation of a European Deposit Insurance Scheme (EDIS), one of the three pillars needed for the completion of banking union. Significant progress has been made on European banking supervision and resolution schemes, but the debate on a common framework for deposit insurance has remained stuck since the first consistent proposal in 2012. Member States are currently enjoying their own deposit insurance system, an example of financial fragmentation through the various national differentiations of policy instruments. The Cyprus case highlights the flaws of a national-level system, based only on a presumption of financial assistance between Member States in case of bail-out. The financial crisis has proven this is not sufficient. Referring to his own research, Nicolas Véron, senior fellow at Bruegel, recommends strengthening trust by setting up a

Proponents of blockchain see it as the future – but when might it become the present? In this latest episode of ‘The Sound of Economics’ we welcome Julio Faura, global head of innovation at Banco Santander, and Johan Pouwelse, associate professor at Delft University of Technology, to help illuminate the blockchain concept and where it could be taking us. The development and implementation of blockchain networks is meant to give everyone an opportunity to participate in a market that is not controlled by a central body. Questions remain, however, over the practicality of blockchain networks; how to transition from proof-of-concept to real-world usefulness, how to integrate with and provide benefits for the world economy, and where the greatest benefits of such decentralisation might lie. Shining a light on the brave new blockchain world in this latest episode of ‘The Sound of Economics’ is Julio Faura, the global head of innovation at Banco Santander, and Johan Pouwelse, associate professor at Delft Univers

**In this week’s Director’s Cut of ‘The Sound of Economics’ podcast, Bruegel director Guntram Wolff hosts a discussion with Bruegel fellows Alicia García-Herrero and André Sapir on where Europe will position itself between the two major trading powers of China and the United States if relations continue to cool.** Bruegel director Guntram Wolff begins his regular Director’s Cut of ‘The Sound of Economics’ podcast with a broad assessment of the recent fomentation of global trade tension, joined in conversation by Bruegel fellows Alicia García-Herrero and André Sapir. Amid escalating trade tensions, Europe is still working out where it stands between China and the United States. Reprieved – for now at least – of inclusion in the US tariff on steel and aluminium imports, the EU remains regretful of the prospect of global trade war. China, and Asia more broadly, faces a range of difficulties in the event of a tariff tit-for-tat. Some countries will have to choose where they align themselves; other countr

Ongoing negotiations over the next multiannual financial framework represent an opportunity for the EU to support its new priorities, such as increased investment in border control and defence. However, new investment necessitates either an expansion in the size of the budget or cuts to other sectors – each a difficult sell to different Member States. Brexit compounds the problem of finding funds for the seven-year framework, which will run from 2021-27. The Common Agricultural Policy (CAP) accounts for a sizeable portion of the current budget, and Bruegel director Guntram Wolff here elaborates on the possibility of freeing up more space in the budget by freezing funding for CAP – either in real or nominal terms – based on a research paper he has co-authored with Bruegel senior fellow Zsolt Darvas. Joining the conversation in this episode of ‘The Sound of Economics’ is Lars Hoelgaard, former deputy director general at the Directorate-General for Agriculture and Rural Development, who explores specific opti

In this episode our senior fellow, André Sapir discusses with Uri Dadush, non-resident scholar here at Bruegel about President Trump's announcement to apply a 25% tariff on all steel and a 10% tariff on all aluminium imports into the United States.

What comes next for the euro area? Europe has emerged from crisis, and progress has been made with banking union; but more can be done to reform the EU budget and improve the public perception not only of EU money but of the Union itself. Gideon Rachman, chief foreign affairs correspondent at the Financial Times, and Manfred Weber, chair of the EPP Group in the European Parliament, discuss their thoughts on current state and future direction of the euro area alongside Bruegel director Guntram Wolff.  Guntram Wolff, Gideon Rachman and Manfred Weber enjoyed a lengthier debate on this same topic at the third Bruegel-Financial Times Forum earlier this week.

Bruegel senior fellow André Sapir clarifies the UK's options for a new relationship with the EU in the wake of Brexit. The UK's position relative to the European Union following Brexit remains undecided. With negotiations ongoing, Bruegel senior fellow André Sapir explains the UK's options, and explores the scope for a new kind of relationship between the two parties. This latest episode of 'The Sound of Economics' considers what it might mean, in reality, for the UK to remain in a customs union with the EU but to leave the single market, as well as what the examples of Turkey and Norway can indicate about the UK's potential future dealings with the EU. André Sapir has also co-authored a blog post with Bruegel deputy director, Maria Demertzis, elaborating on the various paths open to the UK [in phase two of the Brexit negotiations](http://bruegel.org/2017/12/brexit-phase-two-and-beyond-the-future-of-the-eu-uk-relationship/). Maria Demertzis has more recently considered [in a blog post](http://brue

Bruegel director Guntram Wolff frames the two debates that will dominate the upcoming meeting of the European Council on 23 February 2018 – the shape of the next EU budget, and the method by which a new European Commission president will be appointed. Major questions still hang over the next EU budget, or multiannual financial framework (MFF), and not just because of Brexit. The next budget, another seven-year MFF that will run from 2021 through to 2027, will likely reflect Europe’s developing priorities in sectors such as defence, border control and fighting climate change. Other sectors may face a cut in spending, particularly given the shortfall left as a result of the UK’s departure. Elsewhere, the European Council and European Parliament have still to reach agreement over the future of the Spitzenkandidaten process, by which the appointment of current European Commission president Jean-Claude Juncker was decided in 2014\. These topics are lead items on the agenda for the European Council meet

**Bruegel fellow Georg Zachmann joins Richard Tol, professor in the Department of Economics at the University of Sussex, and Pieter-Willem Lemmens, head of analysis at the climate policy think-tank Sandbag, for this episode of 'The Sound of Economics', to discuss the impact of Brexit on climate and energy policy in the European Union** Britain's departure from the European Union poses questions not only for the EU energy market, but the bloc-wide climate-change targets and emissions trading system. Presented by Sean Gibson, edited by Giuseppe Porcaro In the energy context, Brexit not only marks the separation of Britain from the EU but also places Ireland in a uniquely difficult position, having previously utilised infrastructure in Britain to connect to the rest of the EU. On the matter of climate change, the loss of Britain might make it more difficult for Europe to meet current targets, and set further ambitious goals for the future. In this episode of 'The Sound of Economics', senior Bruegel fellow G