The Crowding-out Effect of Mandatory Labour Market Pension Schemes on Private Savings. Evidence from renters in Denmark. CEPS Working Document No. 389, February 2014

This paper aims to estimate the crowding-out effect of the Danish mandatory labour market pension reforms begun in 1993 on the level of total household savings for renters. The effect is identified via a large panel of individual administrative records utilising the differences in speed, timing and sectoral coverage of the implementation of the reform in the period 1997 to 2005. Little substitutability was found between current mandatory labour market pension savings and private voluntary savings. Each euro paid into mandatory labour market pension accounts results in a reduction in private savings of approximately 0 to 30 cents, depending on age. This low rate of substitution is only, to a minor extent, explained by liquidity constraints. The results point to mandatory pension savings having a large effect on total household savings. Thus, pension reforms that introduce mandatory savings have macroeconomic implications.

Towards a New (European Research) Deal: The Case for Enhanced Fiscal Policy Coordination on Research and Innovation. Bruges European Economic Policy (BEEP) Briefing 20/2008

The paper reviews the evolution of research and innovation in the EU and assesses how current policies and programmes have influenced the development of Europe's research landscape. Based on existing literature, evaluation reports and practice, the paper critically examines the effectiveness of current European research funding instruments in a context of open innovation and in the presence of global spillovers. It therefore develops a subsidiarity test to assess whether current rationales still prove sufficient to justify policy intervention in this area. The paper sheds light on how to improve the effectiveness of EU action by enriching it by the use of coordinated fiscal policy for research funding. This will constitute an incentive to genuine bottom-up research, development and innovation (R&D&I) and a stimulus to local investments in innovation. The paper also assesses the potentials of a reinforced open method of coordination as well as a review of state aid law in the field of research funding in the EU.

The finance-welfare state nexus. ACES Cases No. 2013.1

At the height of the financial crisis, the Western welfare state prevented a repeat of the Great Depression. But there were also suggestions that social policy had contributed to the crisis, particularly by promoting households’ access to credit in pursuit of welfare goals. Others claim that it was the withdrawal of state welfare that led to the disaster. Against this background that motivated our interest, we propose a systematic way of assessing the relationship between financial market and public welfare provisions. We use structural vector auto-regression to establish the causal link and its direction. Two hypotheses about this relationship can be inferred from the literature. First, the notion that welfare states ‘decommodify’ livelihoods or that there is an equity-efficiency tradeoff would suggest that welfare states substitute to varying degrees for financial market offers of insurance and savings. By contrast, welfare states may support private interests selectively and/or help markets for households to function better; thus the nexus would be one of complementarity. Our empirical strategy is to spell out the causal mechanisms that can account for a substitutive or complementary relationship and then to see whether advanced econometric techniques find evidence for the existence of either of these mechanisms in six OECD countries. We find complementarity between public welfare (spending and tax subsidies) and life insurance markets for four out of our six countries, notably even for the United States. Substitution between welfare and finance is the more plausible interpretation for France and the Netherlands, which is surprising. Data availability constrains us from testing the implications for the welfare state contribution to the crisis directly but our findings suggest that the welfare state cannot generally be blamed for the financial crisis.

The summit of our ambition? European defence between Brussels and Wales. Egmont Security Policy Brief No. 55, March 2014

When they meet at NATO’s Wales Summit in Newport on 4-5 September, the European Heads of State and Government should not see this as the first chapter of a new book, but as the next chapter of an existing one. The previous chapter was their meeting in Brussels last December for the European Council. The title of the book is European defence.

Britain’s Future in Europe: The known Plan A to remain or the unknown Plan B to leave. CEPS Paperback 2nd Ed., March 2016

Following the agreement made by Prime Minister David Cameron with the EU on 18-19 February 2016, the day for the referendum for the UK to remain in or leave the EU is set for 23 June 2016. This will be the most important decision taken by the British people in half a century, and whose consequences will live on for another half century. The first edition of this book, published in March 2015, laid the foundations for any objective assessment of the workings of the EU and the UK’s place in it. It was widely acclaimed and rated as “a myth-breaking exercise of the best kind”. This second edition adds a substantial new chapter following Cameron’s agreement with the EU and announcement of the referendum. It reviews both the ‘Plan A’, namely the status quo for the UK in the EU as amended by the new agreement, and three variants of a ‘Plan B’ for secession. The key point is that the ‘leave’ camp have not done their homework or ‘due diligence’ to specify the post-secession scenario, or how the British government would face up to the challenges that this would bring. The authors therefore do the ‘leave’ camp’s homework for them, setting out three Plan Bs more concretely and in more depth than the ‘leave’ camp have been able or wanted to do, or any other source has done. The book is therefore unique and essential reading for anyone concerned with the fateful choice that lies soon ahead.