Preventing the rise of sovereign borrowing costs in the Eurozone: what can the ESM and the ECB achieve? Egmont Paper No. 56, November 2012

This paper focuses on the possible instruments for ‘ex-ante’/’preventive’/’precautionary’ interventions which can be deployed by the ESM and the ECB in order to prevent a debt crisis in a eurozone country. The potential of Eurobonds will also be discussed in this crisis management perspective. The first part of this paper traces the underlying trends of the evolution of interest rates in eurozone countries over the last decades. The second part discusses the principles of a preventive intervention in sovereign bond markets for the purpose of lowering borrowing costs of countries facing refinancing constraints; the limits and main issues of an ex-ante intervention will be underlined. In the third part, the properties of the ESM’s precautionary financial assistance and secondary market support facility will be discussed in details. The ECB preemptive intervention policies and, in particular, the OMT will be analyzed in the fourth part of the paper. The most likely course of action – a combined intervention by the ESM and the ECB – will be discussed in the fifth part. Finally, I will point out the core challenges of introducing Eurobonds as additional instruments to mitigate the rise of borrowing costs in the short term.

The Opportunity Costs of STEM Degrees and the Unmet Needs of the Low-Skilled: Two labour market problems explained. CEPS Policy Brief No. 295, 26 June 2013

There is general consensus that to achieve employment growth, especially for vulnerable groups, it is not sufficient to simply kick-start economic growth: skills among both the high- and low-skilled population need to be improved. In particular, we argue that if the lack of graduates in science, technology, engineering and mathematics (STEM) is a true problem, it needs to be tackled via incentives and not simply via public campaigns: students are not enrolling in ‘hard-science’ subjects because the opportunity cost is very high. As far as the low-skilled population is concerned, we encourage EU and national policy-makers to invest in a more comprehensive view of this phenomenon. The ‘low-skilled’ label can hide a number of different scenarios: labour market detachment, migration, and obsolete skills that are the result of macroeconomic structural changes. For this reason lifelong learning is necessary to keep up with new technology and to shield workers from the risk of skills obsolescence and detachment from the labour market.