Did quantitative easing affect interest rates outside the US? New evidence based on interest rate differentials. CEPS Working Document No. 416/January 2016

This paper explores the effects of non-standard monetary policies on international yield relationships. Based on a descriptive analysis of international long-term yields, we find evidence that long-term rates followed a global downward trend prior to as well as during the financial crisis. Comparing interest rate developments in the US and the eurozone, it is difficult to detect a distinct impact of the first round of the Fed’s quantitative easing programme (QE1) on US interest rates for which the global environment – the global downward trend in interest rates – does not account. Motivated by these findings, we analyse the impact of the Fed’s QE1 programme on the stability of the US-euro long-term interest rate relationship by using a CVAR (cointegrated vector autoregressive) model and, in particular, recursive estimation methods. Using data gathered between 2002 and 2014, we find limited evidence that QE1 caused the break-up or destabilised the transatlantic interest rate relationship. Taking global interest rate developments into account, we thus find no significant evidence that QE had any independent, distinct impact on US interest rates.

Do Too Many Chefs Really Spoil the Broth? The European Commission, Bureaucratic Politics and European Integration, CES Germany & Europe Working Papers, No. 09.2, 5 August 1999

There is a puzzling, little-remarked contradiction in scholarly views of the European Commission. On the one hand, the Commission is seen as the maestro of European integration, gently but persistently guiding both governments and firms toward Brussels. On the other hand, the Commission is portrayed as a headless bunch of bickering fiefdoms who can hardly be bothered by anything but their own in­ ternecine turf wars. The reason these very different views of the same institution have so seldom come into conflict is quite apparent: EU studies has a set of relatively autonomous and poorly integrated sub­ fields that work at different levels of analysis. Those scholars holding the "heroic" view of the Com­ mission are generally focused on the contest between national and supranational levels that character­ ized the 1992 program and subsequent major steps toward European integration. By contrast, those scholars with the "bureaucratic politics" view are generally authors of case studies or legislative his­ tories of individual EU directives or decisions. However, the fact that these twO images of the Commis­ sion are often two ships passing in the night hardly implies that there is no dispute. Clearly both views cannot be right; but then, how can we explain the significant support each enjoys from the empirical record? The CommiSSion, perhaps the single most important supranational body in the world, certainly deserves better than the schizophrenic interpretation the EU studies community has given it. In this paper, I aim to make a contribution toward the unraveling of this paradox. In brief, the argument I make is as follows: the European Commission can be effective in pursuit of its broad integration goals in spite of, and even because of, its internal divisions. The folk wisdom that too many chefs spoil the broth may often be true, but it need not always be so. The paper is organized as follows. 1 begin with an elaboration of the theoretical position briefly out­ lined above. 1 then tum to a case study from the major Commission efforts to restructure the computer industry in the context of its 1992 program. The computer sector does not merely provide interesting, random illustrations of the hypothesis 1 have advanced. Rather, as Wayne Sandholtz and John Zysman have stressed, the Commission's efforts on informatics formed one of the most crucial parts of the en­ tire 1992 program, and so the Commission's success in "Europeanizing" these issues had significant ripple effects across the entire European political economy. I conclude with some thoughts on the fol­ lowing question: now that the Commission has succeeded in bringing the world to its doorstep, does its bureaucratic division still serve a useful purpose?