2012年-CEPS欧洲政策研究中心_EMU_at_Risk_7th_Annual_Report_of_the_CEPS_Macroeconomic_Policy_Group_80页_429kb

EMUATRISK: 7th Annual Report of the CEPS Macroeconomic Policy Group (June 2005)

Core Content

This report by the CEPS Macroeconomic Policy Group (MPG) evaluates the macroeconomic performance of the euro area and the United States (US) in 2005, highlighting the structural and policy-related challenges facing Euroland. It also addresses the risks to the Eurozone Monetary Union (EMU) due to policy inaction, structural weaknesses, and emerging intra-area divergences.

Main Viewpoints

• Euroland's Weak Performance: The euro area has experienced weak growth and productivity, with 2005 likely to be the fifth consecutive year of disappointing performance. Growth projections for 2005 are around 1.5%, significantly lower than the US's consistent growth above 3%.

• Policy Immobilism: European macroeconomic policies have been characterized by a lack of responsiveness to the economic cycle. Fiscal and monetary policies have been "frozen" and not sufficiently accommodative to stimulate demand, leading to weak growth and fiscal imbalances.

• Transatlantic Policy Differences: The US has been more active in its fiscal and monetary policy responses, particularly in managing the economic downturn following the 2000-2001 stock market crash. The US has implemented more expansionary fiscal policies and more aggressive monetary easing.

• Structural Constraints in Europe: Europe's structural issues, including low productivity growth and an aging population, have limited the flexibility of macroeconomic policies. These constraints have forced European policymakers to prioritize long-term fiscal discipline over short-term stabilization, leading to a lack of policy activism.

• Intra-area Divergences: The report highlights growing disparities within the euro area, particularly between Germany and Italy. Germany has improved its price and cost competitiveness, while Italy has lost competitiveness, leading to diverging economic performances.

• EMU Stress Test: The report warns that these divergences could threaten the long-term cohesiveness of EMU. The ECB is under pressure to maintain low interest rates and a weak euro, which could lead to a "lira-isation" of the euro. However, a more desirable outcome would be the "euro-isation" of Italy, which would require significant reforms and ECB commitment to stability.

Key Information

Fiscal Policy

• Cyclically Adjusted Deficit: The US started with a surplus of over 1% of GDP and moved to a deficit of over 4% by 2004, a swing of over 5% of GDP. In contrast, the eurozone's cyclically adjusted deficit hovered around 2.19% of GDP, with minimal changes over the period.

• Stability and Growth Pact (SGP): The SGP has been undermined by "short-terminism" in fiscal policy, where weak growth has led to more expansionary fiscal measures. This has weakened the SGP's effectiveness in maintaining fiscal discipline.

• Debt Sustainability: The report shows that in slow-growing economies like Germany and Italy, even a 2% deficit could push debt-to-GDP ratios close to the 60% threshold. In the US, with higher growth rates, a 4% deficit would still keep the debt ratio at 70% of GDP.

Monetary Policy

• Monetary Conditions Index (MCI): The MCI in the US was much more volatile, with a standard deviation of 13.6% since 1999, compared to 2.7% in the eurozone. The US MCI fluctuated between 120 and 80, while the eurozone MCI remained stable between 90 and 100.

• ECB Activism: The ECB has been relatively passive in monetary policy, with interest rates remaining unchanged for two years. The central bank has also shown a tendency to respond to economic indicators with delayed or inconsistent policy actions.

• Monetary Overhang: Since 1999, money and credit growth in the eurozone have consistently outpaced nominal GDP growth. This monetary overhang could lead to asset price inflation, particularly in the housing market, and potentially to economic weakness when these bubbles burst.

Structural Reforms

• Lack of Progress: Structural reforms in the euro area have been half-hearted due to fears of short-term political and economic consequences. This has limited the potential for long-term growth and employment gains.

• Services Directive Rejection: The rejection of the services directive is cited as an example of short-term political concerns overriding long-term economic needs.

Policy Recommendations

1. ECB Should Focus on Long-term Stability: The ECB should reduce its short-term focus and prioritize the long-term preservation of the euro's value.

2. Fiscal Discipline for Core Countries: Core countries should return to fiscal discipline to set an example for other members, particularly those with weaker competitiveness.

3. Reforms and Flexibility: The euro area needs more flexible and responsive policies to address structural weaknesses and divergences.

Conclusion

The report concludes that the lack of policy activism in Europe is due to the conflict between short-term and long-term objectives. European policymakers have attempted to manage too many goals at once, resulting in weak growth, fiscal instability, and minimal structural reforms. The report calls for a more realistic and long-term approach to macroeconomic policy, especially in light of the emerging intra-area divergences and the potential stress on EMU.