AA. VV. – Edited by Luigi Paganetto
Eurilink University Press – February 2017
Authors: Massimo Bagarani, Michele Bagella, Gloria Bartoli, Salvatore Biasco, Luigi Bonatti, Rocco Cangelosi, Marcello Clarich, Lorenzo Codogno, Giampaolo Galli, Franco Gallo, Adriano Giannola, Paolo Guerrieri, Martino Lo Cascio, Alfredo Macchiati, Rainer Masera, Maurizio Melani, Alessandro Minuto Rizzo, Roberto Pasca Di Magliano, Alberto Pera, Riccardo Perissich, Pasquale Lucio Scandizzo, Giovanni Tria, Salvatore Zecchini
This Report was realized by Tor Vergata Economic Foundation thanks to the contributions of distinguished academics and experts. The Report addresses the issue of widespread pessimism and confirms the validity of European Union and Euro choices, 60 years after the European Treaties. The ideas exposed in this Report come from an intense series of meetings where authors express a common belief, even if not in an unified vision. This belief arises from the need and the importance to keep in place and grow up the European effort, questioning how to “Revitalize”, more then leave, the European challenge.
European Union and global change. The need of Europe
Eurozone requires a recipe whereby a strong rate of investment, innovation and growth is pursued together with a reduction income inequality. A good recipe is a policy for inclusive growth because it could be the right remedy against the increasing Euroscepticism dominating EU scenario. Globalization looses, inequality, unemployment and low wages for medium skills depending from technological change To make inclusive growth working the creation of a fiscal space and a deal and the reduction of the excessive amount of public debt of Eurozone is needed. Euro is not the main cause of the low rate of growth of some European countries His incomplete construction explains its limits. Nevertheless it has been working facing the 2007 crisis by way of the European Stability Mechanism. The fiscal space needed by Eurozone could be created using a “bottom up” methodology, starting from some common problem as the expenses for controlling borders an immigration, security and defence needs, programs of investment in green technologies and innovation.
The 2016 Villa Mondragone International Economic Seminar devoted one single session to the main challenges that the EU is called to address in the coming decades: EU integration after the Brexit vote, the ongoing migration crisis, and the stagnant economic growth.
The recent inflow of refugees to Europe is determined by multiple shocks. Despite the fact that refugees are often poor, the main motivation behind their decision to migrate is their high vulnerability in their country of origin. As highlighted by Economic theory, the cause of the migratory flows is given by the gap between living conditions in the countries of origin – affected by shocks – and those in the host countries (e.g. salary, well-being, and conflicts).
Host countries and humanitarian organisations such as UNHCR call for a different institutional and financial framework in order to cope with the needs of refugees in the short and medium term. In particular, medium term policies for refugees’ assistance must be seen as an integral part of growth and development policies. Indeed, these policies should not differ from the standard growth policies. Examples of these policies are investing in education and health, performing the labour demand—supply matching, allowing firms to access to more financial instruments, and boosting the regional economy. These are the policies often applied to developing countries affected by shocks, and they can also be applied to the European migration crisis which does not seem to be a short-term phenomenon.
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In the last years the EU GDP suffered the effects of different shocks:
- The fall of global demand in 2008-2009
- Shocks on financial markets since 2010
- Sovereign debt crisis
- Strict fiscal contraction since 2010
- The fall in the trend component of Total Factor Productivity
The macroeconomic measures adopted were inadequate to restore reasonable levels of employment and inflation in Eurozone, as the following analyses underline.
Francesco Felici(Ministry of Economy and Finance),using the ITEM simulation (econometric model of Italian Treasury),demonstrateshow the adverse fiscal strengthening stabilized but not reduced the debt-to-GDP ratio. Since the Eurozonedoesn’t have national exchange rates, the “relative price mechanism” could face asymmetric shocks, but we require structural reforms. For example, Philipp Mohl and Thomas Walsh of the European Commission suggest to start with the following reforms: more flexible labour and goods markets and less ‘nervous’ financial markets.Michael Mitsopoulos (Hellenic Federation of Enterprises) also suggests that a “deadlock breaking rule” could be useful to support the expectations formation on the EU ability to protect and maintain its own integrity.
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The Joseph Rowntree Foundation published a report showing UK cities declining in employment, share of high-qualified workers, fulltime jobs, immigration, and population dynamics. The link between economic difficulties and the ‘Leave’ vote is clear.
The two-topped cities of the 20-declining list, Rochdale and Burnley, voted massively for ‘Leave’, 60.1% and 66.6% respectively. And so it was for most of the other cities like Hull (67.6%), Middlesbrough (65.5%), Stoke (69.4). By contrast, dynamic cities like Oxford (70.3%) Edinburgh (74.4%), Cambridge (73.8%) massively voted for ‘Remain’.
However, we can’t underestimate that some high-level areas of immigration, as well as some declining cities, voted for ‘Remain’. According to the Report the link between economic and immigration issues and EU is “at least in part a conscious political construction used for electoral purposes”.
The JRF Report makes us realizing the importance of going out from a mainly technocratic approach that has largely characterized the EU decision-making system. UK vote represents a traumatic break of direct democracy mechanisms and made clear, on the both sides of the Manica Channel, the distance between ruling classes and citizens’ opinion. This distance comes from many reasons but its roots are the increased economic and social uncertainty and insecurity.
We should not forget the role, very important, of a badly managed globalization that led the hasty conclusion that a “responsible nationalism” is a better solution.
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Monthly GDP: flat profile in May
In May, industrial production decreased (-0.6% m/m) more than expected. However, the outcome is in line with developments in the rest of Europe. All the main sectors posted a reduction with capital goods sector recording the worst performance (-1.8%). On the contrary, durable goods were the only component to rise (0.4%). Favorable signals on the economy were provided by the business climate indicator in the manufacturing sector and by export and import data in volume terms. The new GDP estimate for May points at flat m/m profile (-0.02% m/m) with year on year growth remaining at +0.8%.
The diffusion of the monthly GDP indicator by CEIS Tor Vergata Economics University Foundation is scheduled on the 16th of each month. Next release is foreseen for Friday the 16th of September.
19 luglio 2016 – h. 11:00 – Scuola Nazionale dell’Amministrazione – Aula Magna
L’incontro si svolge all’interno del Diploma in Management pubblico europeo e politiche economiche della SNA e delle attività del Gruppo dei 20 “Revitalizing Anaemic Europe”, sviluppate in collaborazione fra la Fondazione Economia e la Scuola Nazionale dell’Amministrazione. Dopo il voto che ha visto prevalere in UK i favorevoli all’uscita dalla EU e dopo le tante analisi costi-benefici pre– referendum sul “remain” e “leave”, occorre chiedersi oggi quali siano in EU le alternative e gli scenari aperti dalla scelta dell’exit.
La questione più immediata è certo quella delle scelte da fare nella trattativa negoziale con UK. Ma non c’è dubbio che il voto, nonché la frattura tra generazioni e tra “città e campagna” emersa dal voto del 23 giugno ha dato tinte ancora più forti alle posizioni degli“euroscettici” e ai conflitti di policy in EU con le conseguenti crescenti difficoltà nell’adottare iniziative condivise. L’incontro nasce dalla comune convinzione, all’interno del “Tor Vergata Group of 20”, che sia possibile, oltre che necessario, un rilancio della EU, evitando di trascurare come si è fatto finora il malessere sociale e l’alienazione rispetto alle Istituzioni europee. Tenendo conto,
allo stesso tempo, delle critiche alle politiche adottate fino ad oggi in EU nonché dell’esigenza di raccogliere i messaggi che sono venuti dal dibattito e dalle risultanze del voto in UK.
Bruno DENTE, Commissario Straordinario Scuola Nazionale dell’Amministrazione
Stefano BALASSONE, Giornalista e Blogger – MODERATORE
Luigi PAGANETTO, SNA e Fondazione Economia Tor Vergata
Massimiliano DONA*, Unione Nazionale Consumatori (*da confermare)
Paolo GUERRIERI, Senato della Repubblica e Sapienza Università di Roma
Maurizio MELANI, Link Campus University
Giovanni PITRUZZELLA, Autorità garante della concorrenza e del mercato
Pasquale Lucio SCANDIZZO, Fondazione Economia Tor Vergata
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XXVIII Villa Mondragone International Economic Seminar
June, 23rd, 24th, 2016
“Facing EU Challenges, Relaunching Sustainable Growth”
Monthly GDP: positive signs in April
Quarterly national accounts have confirmed the preliminary estimate on GDP growthin 1Q16 (0.3%q/q). House holds consumption shave continued to grow that the same rate of the previous quarter. Gross fixed investments in machinery and equipment have returned to growth. Imports and exports have almost off set the increase in 4T15. The net foreign demand has curbed 0,2pp to growth while domestic demand excluding inventories has provided a positive contribute to 0,2pp. In April, industrial production posted a rise of 0.5%m/m, slightly above the expectations. Favorable signals come from the paper and paper board production and traffic of trucks. The new estimate of GDP foresees an increase of monthly GDP by 0.09% m/m in April and the annual growth rate at 0.8% y/y.
The diffusion of the monthly GDP indicator by CEIS Tor Vergata Economics University Foundation is scheduled on the 16th of each month. Next release is foreseen for Monday the 18th of July.
Monthly GDP: growth speeds up in the first quarter