European Economic Experts Panel

 

 

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. 

There is much debate about whether the patents on Covid-19 vaccines should be waived to allow low-income countries to produce doses for themselves. We invited both our European and US panels to express their views on this issue and the broader challenges of vaccinating the world.

 

This week's European Economic Experts Panel statements:

The Bank for International Settlements defines a central bank digital currency as follows: ‘In simple terms, a central bank digital currency (CBDC) would be a digital banknote. It could be used by individuals to pay businesses, shops or each other (a 'retail CBDC'), or between financial institutions to settle trades in financial markets (a ‘wholesale CBDC').’

A) For developed countries, a central bank digital currency that is available to the public at large would offer social benefits that exceed the associated costs or risks.

B) Central banks that do not introduce their own digital money risk losing the ability to conduct effective monetary policy.

C) The introduction of a central bank digital currency is unlikely to have major effects on the economy. 

This week's European Economic Experts Panel statements:

A) Removing intellectual property protections on Covid-19 vaccines would substantially improve availability of the vaccines in developing countries.

B) Removing intellectual property protections on Covid-19 vaccines would have a negative impact on vaccine development efforts for future variants of SARS-CoV-2 or for the next pandemic.

C) Without an international agreement that facilitates vaccine trade, countries’ incentives to limit exports of vaccines and/or key production inputs are likely to prolong the adverse effects of the pandemic in advanced countries. 

This week's European Economic Experts Panel statements:

A) Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values.


B) Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would result in significantly less short selling.


C) Regulatory restrictions on short selling - such as no naked shorts, temporary bans in times of crisis - make it difficult for optimists and pessimists to have equal influence on asset prices. 

This week's European Economic Experts Panel statements:

A) Offering substantially higher prices per dose would have resulted in larger capacity investments by vaccine makers and accelerated distribution in Europe significantly.

B) In the current situation, paying for more production capacity would be better than offering higher prices for vaccines.

C) If the EU started paying prices above 100 euros per dose, it would on net reduce the cost of the pandemic to the EU via more lives saved and shorter lockdowns.