European Economic Experts Panel

 

 

With the emergence of a new strain of the virus that causes Covid-19 re-opening debates about the economic impact of the pandemic, the success of efforts to achieve global distribution of vaccines and the value of travel bans, we invited our panels to express their views on these issues. In early December, we asked the experts whether they agreed or disagreed with the following statements, and, if so, how strongly and with what degree of confidence:

 

 

The 2021 Nobel Prize in Economic Sciences was recently awarded to David Card of the University of California, Berkeley, ‘for his empirical contributions to labour economics’, and to Joshua Angrist of MIT and Guido Imbens of Stanford University ‘for their methodological contributions to the analysis of causal relationships’. As has become an annual tradition at the IGM, we invited our panels to express their views on the work of the new laureates. We asked the experts whether they agreed or disagreed with the following statements, and, if so, how strongly and with what degree of confidence:

 

 

This week's European Economic Experts Panel statements:

A) The current combination of US fiscal and monetary policy poses a serious risk of prolonged higher inflation.

B) Current EU and national fiscal policy plans are likely to leave European output below potential a year from now. 

Peter Neary, a member of IGM’s panel of European economic experts, passed away in June 2021 – a sad loss for the whole economic research community. On VoxEU, Patrick Honohan of Trinity College Dublin, a fellow Irishman and member of the European panel, co-authored an appreciation of Peter, whom he and Cormac o’Grada describe as ‘one of the profession’s European leaders, both in terms of the depth and range of his research and his role as a wizard of organizational development’.

 

Leaders of the advanced economies of the G7 recently made what they described as a ‘historic commitment’ on taxation of multinational corporations. We invited both our European and US panels to express their views on some of the issues surrounding the global deal on corporate taxes: the impact of a global minimum rate on investment, profit-shifting and low-tax jurisdictions; whether a stable international tax system that includes a global minimum rate can be achieved; and a potential move from levying taxes based on where firms’ headquarters and production are located to where they make their sales.

 

This week's European Economic Experts Panel statements:

A) Under a fixed exchange rate and fully liberalized capital flows, a country loses domestic control of monetary policy.

B) For emerging and developing economies open to the world capital market, a flexible exchange rate confers little advantage over a pegged exchange rate in terms of economic stability.

C) The key feature making the US a more natural optimum currency area than the euro area is higher labor mobility.