Eurosystem collateral policy and framework: Was it unduly changed? Bruegel Policy Contribution 2014/14, 17 November 2014

All Eurosystem credit operations, including the important open market operations, need to be based on adequate collateral. Liquidity is provided to banks against collateral at market prices subject to a haircut. The Eurosystem adapted its collateral framework during the crisis to accept lower-rated assets as collateral. Higher haircuts are applied to insure against liquidity risk as well as the greater volatility of prices of lower-rated assets. The adaptation of the collateral framework was necessary to provide sufficient liquidity to banks in the euro area periphery in particular. In crisis countries, special emergency liquidity assistance was provided. More than 80 percent of the European Central Bank’s liquidity (Main Refinancing Operations and Long Term Refinancing Operations) is provided to banks in five countries (Greece, Ireland, Italy, Portugal and Spain). The changes in the collateral framework were necessary for the ECB to fulfil its treaty-based mandate of providing liquidity to solvent banks and safeguarding financial stability. The ECB did not take on board excessive risks.

Adapting to climate change from a regional perspective: in search of a requisite policy and legal framework. Jean Monnet Occasional Paper No. 8/2014

This paper aims to identify the Mediterranean States’ potential in adopting a regional strategy on climate change adaptation. The author proposes a Mediterranean Strategy on Adaptation to Climate Change as the first step to a political/legal regional approach to climate change issues that would supplement the multilateral process under the United Nations Framework Convention on Climate Change and the Kyoto Protocol. According to the author such a strategy would enhance cooperation between the EU and other Mediterranean states in various ways. The experience of the EU in regulating climate change and its ever growing knowledge-base on its impacts could serve to guide the other Mediterranean states’ and help bridge their knowledge-base gap on the topic. On the other hand, the support and cooperation of the EU’s Mediterranean partners would provide an opportunity for the EU to address better the challenges the climate change threatens to bring in its southernmost regions. The strategy could eventually even pave the way for the very first regional treaty on climate change that could be negotiated under the auspices of the Regional Seas Programme and the Union for the Mediterranean.

Sitting on the fence: Swedish defence policy and the Baltic Sea region. OSW Point of View Number 33, April 2013

Sweden finds itself in the midst of the most heated debates about defence policy and the direction of military reforms since the end of the Cold War, as Stockholm faces the challenge of finding a new military security formula. From the Swedish point of view, the post-Cold War strategic timeout in Europe is coming to an end. The international environment is reverting to a situation in which the use of force among states is no longer an improbable scenario. Stockholm cannot rule out the emergence of crises or conflicts in Northern Europe in the future, which could directly or indirectly affect Sweden. In this context, the transformations of Sweden’s defence policy over the past twenty years have become a problem. Sweden has moved from neutrality, i.e. non-involvement on any side of an armed interstate conflict, to non-alignment, whereby it stays outside military alliances and freely shapes its policies during wartime. It has joined the European Union and co-operates closely with NATO on foreign missions. Its ability to defend its own territory, however, has diminished.

Influence of the Common Agricultural Policy and Heterogeneous Land Quality on Land Rent and Land Allocation. Factor Markets Working Paper No. 38, March 2013

Against the background of the current discussion about the EU’s common agricultural policy (CAP) after 2013, the question of the impact of government support on land prices is crucially important. Validation of the CAP’s success also hinges on a proper assessment of a choice of policy instruments. This study therefore has the objective of investigating on a theoretical basis the effects of different government support measures on land rental prices and land allocation. The different measures under consideration are the price support, area payments and decoupled single farm payments (SFPs) of the CAP. Our approach evaluates the potential impact of each measure based on a Ricardian land rent model with heterogeneous land quality and multiple land uses. We start with a simple model of one output and two inputs, where a Cobb-Douglas production technology is assumed between the two factors of land and non-land inputs. In a second step, an outside option is introduced. This outside option, as opposed to land use of the Ricardian type, is independent of land quality. The results show that area payments and SFPs become fully capitalised into land rents, whereas in a price support scheme the capitalisation depends on per-acreage productivity. Moreover, in a price support scheme and a historical model, the capitalisation is positively influenced by land quality. Both area payments and price supports influence land allocation across different uses compared with no subsidies, where the shift tends to be larger in an area payment scheme than in a price support scheme. By contrast, SFPs do not influence land allocation.

Farm/Household-Level Simulation: Results of Testing Policy and Other Scenarios. Factor Markets Working Document No. 54, June 2013

Among the different production factors, land is the one that most often limits farm development and one of the most studied. The connection between policy and other context variables and land markets is at the core of the policy debate, including the present reform of the Common Agricultural Policy. The proposal of the latter has been published in October 2011 and in Italy it will include the switch of the payment regime from an historical to a regional basis. The authors’ objective is to simulate the impact of the proposed policy reform on the land market, particularly on land values and propensity to transaction. They combine insights and data from a farm household investment model revised and extended in order to simulate the demand curve for land in different policy scenarios and a survey of farmers stated intention carried out in the province of Bologna (Italy) in 2012. Based on these results, the authors calibrate a mathematical programming model of land market exchanges for the province of Bologna and use this model form simulation. The results of the model largely corroborate the results from the survey and both hint at a relevant reaction of the land demand and supply to the shift from the historical to the regionalised payments. As effect, the regionalisation would result in increased rental prices and in a tendency to the re-allocation of land.

The Euro blame game and its implications for policy and financial markets. ACES Cases No. 2012.2

The recent financial crisis in some of the eurozone member countries has received a great deal of attention by investors, policy makers and commentators alike. Often these events are interpreted as a failure of the euro and the sustainability of the eurozone is called into question. This paper shows that this analysis and its emphasis are flawed. Fiscal imbalances and financial market imperfections are at the core of the problem, and they need to be addressed directly to prevent future crises.

Linking Policy and Practice:The Case of EU-UNICEF Cooperation on the Rights of the Child in Third Countries. IES WORKING PAPER 4/2013

This Working Paper offers detailed analysis of EU-UNICEF cooperation on the rights of the child in the European Union's external relations, in particular as regards linkages between the EU policy priorities and concrete actions to advance the protection and promotion of child rights in third countries. It addresses a number of crucial questions: how has the EU’s external policy on the rights of the child developed over the past decade, what were these developments influenced by and what role did UNICEF play in these processes; what is the legal and policy framework for EU-UNICEF cooperation in foreign policy and what added-value it brings; what mechanisms are used by the EU and UNICEF to improve child rights protection in third countries and what are the motivations behind their field cooperation. The study starts by examining the development of the EU’s foreign policy on the rights of the child and covers the legal basis enshrined in EU treaties, the policy framework, and the implementation instruments and then investigates the evolution of the EU’s relations with the United Nations. The paper focuses on the EU’s cooperation with UNICEF by looking into the legal and political framework for EU-UNICEF relations, the policy-oriented cooperation and joint implementation of projects on the ground in third countries. This section outlines the rationale behind the practical cooperation as well as the factors for success and obstacles hindering the delivery of sustainable results. Finally, the Working Paper concludes with suggestions on how EU-UNICEF cooperation could be further enhanced following recent developments, namely the 2012 EU Strategic Framework and the Action Plan on Human Rights as well as human rights country strategies.