A budget for Europe's Monetary Union. Bruegel Policy Contribution 2012/22, December 2012

In a monetary union, national fiscal deficits are of limited help to counteract deep recessions; union-wide support is needed. A common euro-area budget (1) should provide a temporary but significant transfer of resources in case of large regional shocks, (2) would be an instrument to counteract severe recessions in the area as a whole, and (3) would ensure financial stability. The four main options for stabilisation of regional shocks to the euro area are: unemployment insurance, payments related to deviations of output from potential, the narrowing of large spreads, and discretionary spending. The common resource would need to be well-designed to be distributionally neutral, avoid free-riding behaviour and foster structural change while be of sufficient size to have an impact. Linking budget support to large deviations of output from potential appears to be the best option. A borrowing capacity equipped with a structural balanced budget rule could address area-wide shocks. It could serve as the fiscal backstop to the bank resolution authority. Resources amounting to 2 percent of euro-area GDP would be needed for stabilisation policy and financial stability.

The Market for Tractors in the EU: Price Differences and Convergence. Factor Markets Working Documents No. 35, February 2013

This study evaluates the degree of segmentation of the market for agricultural machinery and equipment in the EU. We focus on agricultural tractors, the most common and biggest investment in machinery and equipment in the agricultural sector. By using country price data for individual tractor models, we test the law of one price, i.e. the existence of a common price for tractors across EU member states. We find that significant price differences exist, yet unlike most other studies we find that large price deviations are penalised within a short time. The study also shows that transport costs are an important source of price differences, as domestic production leads to lower prices on the domestic market and as price convergence is negatively correlated with distance. Finally, price differences should not solely be understood from a geographical perspective, as evidence supports the idea that farmers’ buying power is significant in explaining price differences within countries.

Europe's LNG Strategy in the Wider EU Gas Market. CEPS Policy Brief No. 333, October 2015

In its Communication on an Energy Union published in February 2015, the European Commission committed itself to “explore the full potential of liquefied natural gas (LNG), including as a back-up in crisis situations when insufficient gas is coming into Europe through the existing pipeline system” and to address the potential of gas storage in Europe by developing a comprehensive LNG and storage strategy by the end of 2015 or early in 2016. This is a comprehensible move in the current context. Geopolitical tensions between the EU and Russia explain the EU’s willingness to further diversify its supply sources of natural gas to reinforce its long-term energy security on the one hand, and to strengthen its ability to solve future crises on the other hand. Moreover, the current market dynamics could support diversification towards LNG. Increasing the flexibility of LNG trade, decreasing LNG prices and LNG charter rates and an apparent price convergence between the European and the Asia-Pacific LNG imports would all reinforce the economic viability of such a strategy. This Policy Brief makes three main points: • For the LNG and gas storage strategy to work, it needs to be embedded in the realities of the natural gas market. • The key to a successful LNG strategy is to develop sufficient infrastructure. • The LNG strategy needs an innovation component.

What strategy for a genuine Single Market? CEPS Special Report No. 126/January 2016

This strategy paper focuses on making the most of the EU single market. The EU should pursue a genuine single market, and treat it as a common asset of all its citizens, economic operators and member states. The economic case to be made on behalf of the genuine single market is powerful and even more so due to the findings of recent empirical economic research. However, only the genuine single market can realise the expectations of such large gains. Weak, ‘feasible’ action plans cannot! The strategy is based, first of all, on a clear design of the genuine single market and subsequently concentrates on ‘what it takes’. Ten types of actions sum up ‘what it takes’: five at the EU level, four at the EU-member state interface, and finally, the realisation of legitimacy and acceptance.

China’s foreign direct investments within the ‘16+1’ cooperation formula: strategy, institutions, results. OSW Commentary Number 191|27.11.2015

The ‘16+1’ formula of cooperation between the countries of Central and Eastern Europe (CEE) and China was launched in 2012. One of its priorities involved increasing the inflow of China’s foreign direct investments (FDI) to the region. China has been interested in carrying out investments which are likely to help Chinese companies gain competitive advantage in areas such as advanced technologies, recognizable brands and distribution channels. The following sectors were identified as areas of priority importance in CEE: construction and modernisation of transport infrastructure, including motorways; development of the network of railways, airports and sea ports; energy, in particular renewable sources of energy and nuclear energy; companies trading in commodities; the food production sector. China’s strategy mainly involves purchasing existing companies, preceded by cherry picking the most favourable candidates for investment, rather than making large greenfield investments.