Publications

The French government is hoping to help consumers – and increase growth – by making it illegal to manufacture products with artificially shortened lifetime. We argue that proving such case will be nearly impossible in modern technology and the ban will act as a tax, with consequences even worse than the status quo. If governments want to artificially boost production, they should in fact subsidise products with shortened lifetime, instead of banning them.

The Greek bankruptcy of 2010 was the latest impetus for reviving the debate on robustness of governments’ budgets in the Eurozone. It became clear that in order to assess the long-term fiscal health, it is not enough to look at the much used public debt-to-GDP ratio. Additional indicators need to be considered which take a broader picture.

Negative interest rates here, there, everywhere. What used to be taught as “impossible” in textbook is now a reality throughout the EU. And for the first time it even affects corporate bonds, not just “safe” sovereign ones. Why would anyone lend more than they receive, when they can just hang on to cash? We explain.

The poorest poor in Croatia are having their debts wiped out by the government. The motivation may be noble, but the apportioning of the costs is despicable. Once again, government’s power and reach grows, yet it keeps this fact under the carpet. Who’s next?

Is the standoff between the ECB and Greece in any sense subtle, or simply a car crash waiting to happen? We explain why being the first to defect may in fact
benefit Greece. With low sympathy for formal (fiscal) debt forgiveness, we expect pressure to increase further on the ECB.

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Deutsche Bank’s CEO hails the new banking regulations. His counterpart at JP Morgan denigrates them. This, and further misconduct news just confirm that banking is still in worse shape than nearly all commentators and regulators appear to recognise.

Earlier this week, Russian borrowers with Euro or Dollar mortgages called upon Putin to relieve them of their now increased interest payments. Banks should bear the costs, whilst the borrowers bore the benefits until now. We show that this bailout is just a repeated story of bank and government bailouts of recent years.

WP 2015-03. Executive Summary During the past five years, emerging markets have experienced a significant rise in the credit to the private sector. In the countries that have recently joined…

Greece is said to be suffering under crippling burden of debt servicing. However, the official debt servicing is already lower than in other EU countries with much smaller debts. Furthermore, the actual interest payments payable by Greece are close to those that Germany is having to make on its incomparably healthier debt. When the general public learn about these relations, political support for any renegotiation of Greek debt is likely to fall even further.

Transatlantic Trade and Investment negotiations are resuming. Popular support varies across Europe, we identify four distinct groups. Removing trade protectionism will generally benefit ordinary people. However, some protectionism may increase, especially in investment chapters. If governments rather give in to corporations than risk being sued by them frivolously, corporatism will strengthen, not weaken.

New rules about deficits run by Member State governments have been announced by the European Commission. They are phrased as “guidance” so no Parliamentary approval is needed. They are said to “encourage structural reforms and investment”, but IREF shows that they discourage structural reforms and encourage only “investment”.