The Secret Life of Mundane Transaction Costs

Transaction costs, one often hears, are the economic equivalent of friction in physical systems. Like physicists, economists can sometimes neglect friction in formulating theories; but like engineers, they can never neglect friction in studying how the system actually does let alone should work. Interestingly, however, the present-day economics of organization also ignores friction. That is, almost single-mindedly, the literature analyzes transactions from the point of view of misaligned incentives and (especially) transaction-specific assets. The costs involved are certainly costs of running the economic system in some sense, but they are not obviously frictions. Stories about frictions in trade are not nearly as intriguing as stories about guileful trading partners and expensive assets placed at risk. But I will argue that these seemingly dull categories of cost what Baldwin and Clark (2003) call mundane transaction costs actually have a secret life. They are at least as important as, and quite probably far more important than, the more glamorous costs of asset specificity in explaining the partition between firm and market. These costs also have a secret life in another sense: they have a secret life cycle. I will argue that these mundane transaction costs provide much better material for helping us understanding how the boundaries among firms, markets, and hybrid forms change over time.

Impacto de la obra Presa Potrerillos en los habitantes de la villa y su entorno inmediato

A fines de la década de los noventa se inicia en Mendoza la construcción de la presa Potrerillos, obra hidroeléctrica que tiene el propósito de regular las aguas del río Mendoza, del cual depende el riego y la vida de gran parte del oasis Norte de la provincia. En la serie de beneficios que se esperan de esta obra no figura la población local, que es la directamente afectada. Los resultados obtenidos permiten descubrir aspectos de la realidad y del estilo de vida de Potrerillos hasta el momento desconocidos y que hacen predecir el fuerte impacto socioeconómico que tendrá esta obra, al tener que trasladar población y al constituirse en un polo de atracción para grandes contingentes de turistas ocasionales que buscan aprovechar el espejo de agua o disfrutar del medio natural. El diagnóstico obtenido permite descubrir las alteraciones socioeconómicas a producirse debido a la relocalización de familias, cuyos lotes y viviendas quedarán bajo el agua, aspectos que no se tienen en cuenta en la evaluación de impacto ambiental, en donde se pone el acento en aquellos impactos que pueden llegar a alterar el ecosistema local y regional, pero no en los efectos que ocasionará en la calidad de vida de los lugareños.

Fricciones entre pedagogía y sociología en el Uruguay : Una (re)lectura desde el magisterio de Emile Durkheim

En el siguiente artículo pretendemos dar cuenta de algunos aspectos que contribuyen a pensar la forma de constitución de un campo pedagógico. Proponemos hacer esto mediante un recorrido que permita explicitar las diferentes formas de relación entre dos disciplinas que toman a la educación como objeto: la sociología y la pedagogía. Para esto vamos a realizar un análisis histórico que va a tomar como referencia tres momentos en el desarrollo de las investigaciones en educación a lo largo del siglo XX. En cada uno de estos momentos podremos ver formas de articulación diferente entre las disciplinas. Posteriormente, la idea es avanzar en el análisis de cómo se produjo este proceso en el caso del Uruguay, analizando finalmente cómo esta articulación se trasunta en el diseño de dos políticas educativas: Las Escuelas de Tiempo Completo (ETC) y el Programa de Maestros Comunitarios (PMC).

Fricciones entre pedagogía y sociología en el Uruguay : Una (re)lectura desde el magisterio de Emile Durkheim

En el siguiente artículo pretendemos dar cuenta de algunos aspectos que contribuyen a pensar la forma de constitución de un campo pedagógico. Proponemos hacer esto mediante un recorrido que permita explicitar las diferentes formas de relación entre dos disciplinas que toman a la educación como objeto: la sociología y la pedagogía. Para esto vamos a realizar un análisis histórico que va a tomar como referencia tres momentos en el desarrollo de las investigaciones en educación a lo largo del siglo XX. En cada uno de estos momentos podremos ver formas de articulación diferente entre las disciplinas. Posteriormente, la idea es avanzar en el análisis de cómo se produjo este proceso en el caso del Uruguay, analizando finalmente cómo esta articulación se trasunta en el diseño de dos políticas educativas: Las Escuelas de Tiempo Completo (ETC) y el Programa de Maestros Comunitarios (PMC).

Fricciones entre pedagogía y sociología en el Uruguay : Una (re)lectura desde el magisterio de Emile Durkheim

En el siguiente artículo pretendemos dar cuenta de algunos aspectos que contribuyen a pensar la forma de constitución de un campo pedagógico. Proponemos hacer esto mediante un recorrido que permita explicitar las diferentes formas de relación entre dos disciplinas que toman a la educación como objeto: la sociología y la pedagogía. Para esto vamos a realizar un análisis histórico que va a tomar como referencia tres momentos en el desarrollo de las investigaciones en educación a lo largo del siglo XX. En cada uno de estos momentos podremos ver formas de articulación diferente entre las disciplinas. Posteriormente, la idea es avanzar en el análisis de cómo se produjo este proceso en el caso del Uruguay, analizando finalmente cómo esta articulación se trasunta en el diseño de dos políticas educativas: Las Escuelas de Tiempo Completo (ETC) y el Programa de Maestros Comunitarios (PMC).

Road to 1966 : caminos hacia "complejidad y contradicción en la arquitectura", en la cultura arquitectónica de la segunda posguerra en EE.UU

Complejidad y contradicción en la arquitectura ha resultado ser una de las referencias capitales más aludidas, citadas y reproducidas de la literatura arquitectónica de los tiempos recientes. No en vano, en la introducción de la propia obra, Vincent Scully afirmó que «probablemente es el texto más importante sobre arquitectura desde ‘Vers une Architecture’, escrito por Le Corbusier en 1923». Sin embargo, sus fuentes parece que están inexploradas o, al menos, no examinadas. Por ello, Road to 1966 se plantea como un trabajo de investigación con tres objetivos de partida fundamentales: (1) el interés en estudiar el debate arquitectónico candente, creado con las fricciones surgidas entre los protagonistas de unos años que cambiaron el estado de lo que se consideraba una obra legítima en arquitectura; (2) se pretende ampliar la cronología del desarrollo intelectual de un texto, el de Venturi, que marcó la segunda mitad del siglo xx, de manera retroactiva hasta los años de la II Guerra Mundial, cuando parece que empezaban a ser coherentes y reconocibles unas nuevas posiciones desde las que aproximarse a las cuestiones de la práctica, la teoría y la historia de la arquitectura; (3) poder ofrecer una nueva interpretación de dicho texto de Venturi, entendido no como el origen primigenio de parte de las grandes transformaciones de la arquitectura reciente (de los últimos cincuenta años), sino como el resultado necesario de esa cronología intelectual previa. La arquitectura norteamericana de estos años de posguerra ha resultado ser crucial en su posterior desarrollo, y, especialmente, en relación al libro de Venturi. De hecho, Scully en la introducción de la edición original de Complejidad y contradicción, señalaba que «el principal argumento del libro está expuesto a finales de los cincuenta». Que la arquitectura del siglo xx tiene en la Norteamérica de los años sesenta -cuando se consolida la figura de Venturi- uno de sus capítulos más decisivos, frecuentemente asumido como el paso siguiente a la importada modernidad heroica europea, hoy parece no ser discutido por casi nadie. Ahora bien: ¿qué ocurre con los años intermedios? ¿Qué acontece entre el final de la II Guerra Mundial y esos años sesenta? La posible carencia de una postura dominante y clara quizás haya sumido esta etapa en un cierto olvido o descuido por parte de historiadores y críticos. Así, este trabajo se estructura alrededor del papel que ocupa el texto venturiano, sin ser éste su único protagonista. Tomado más bien como excusa, la tesis va profundizando de manera deductiva en el conjunto de circunstancias que pudieron llevar a su autor hacia las conclusiones que desarrolló, detectando los ambientes biográficos y formativos, pensamientos compartidos e influencias epistemológicas y profesionales mutuas, que justificarían una novedosa interpretación de dicho texto como el corolario necesario de un panorama de crisis y cambios - éste sí protagonista en este trabajo-, al contrario de cómo habitualmente se ha venido entendiendo dicha obra. La investigación se centra predominantemente en el rastreo de las fuentes citadas por el propio Venturi en su libro, así como de los textos de mayor difusión (generalmente revistas profesionales no exclusivamente académicas, además de libros, catálogos de exposiciones, actas de simposios…), y no tanto en las obras construidas o proyectadas; sí, quizás, en los términos en los que dichas obras fueron publicadas, comentadas o reseñadas. Así, se ha adoptado una aproximación concebida sub specie bibliotecae, donde se han aplicado unos métodos de trabajo caracterizados por su componente cronológica, y, después, analítico-comparativa: dicho de otro modo, un método historiográfico-periodístico capaz de relacionar las historias o cursos de ciertas ideas o nociones, dentro de un contexto general más amplio en sus derivadas arquitectónicas, estéticas, socio-generacionales, culturales, filosóficas, científicas, políticas, literarias… Con ello, se pretende establecer una relectura del primer libro de Venturi y sus años de gestación desde unas nuevas concepciones, más modernas que postmodern(ist)as, proponiendo una posible evolución en la arquitectura más reciente cuyas raíces, a fin de cuentas, tendrían su origen en la Norteamérica de 1946 a 1966. ABSTRACT Complexity and Contradiction in Architecture has proved to be one of the capital, alluded references cited and reproduced in the architectural literature of the recent times. Not surprisingly, in the Introduction to the book, Vincent Scully wrote that "yet it is probably the most important writing on the making of architecture since Le Corbusier´s ‘Vers une Architecture’, of 1923". However, its sources seem to be unexplored or at least not examined. Therefore, Road to 1966 is presented as a research with three fundamental starting objectives: (1) first, the interest in studying the burning architectural debate, created within the arising frictions among the protagonists of the years that changed the status of what was considered a legitimate work in architecture; (2) second, it seeks to extend the chronology of the intellectual background of the book written by Venturi, which marked the second half of the twentieth century, in a retroactive manner to the years of the World War II, when it seems that some new positions from which to approach the issues of practice, theory and history of architecture began to be consistent and recognizable; (3) lastly, to offer a new interpretation of Venturi’s text, now understood not as the primal source of the great transformations of the recent architecture (of the last fifty years), but as the necessary result of that background intellectual chronology. The American architecture of these post-war years has proved to be crucial in its later stages, and especially in relation to the book of Robert Venturi. In fact, Scully in the Introduction to the first edition of Complexity and Contradiction, noted that "the major argument of this book was laid out in the late fifties". The fact that the architecture of the twentieth century –when the leading figure of Venturi was consolidated- has in the North America of the sixties one of its most decisive chapters, (often assumed as the next step to the imported European heroic modernism) today seems to be discussed by almost anyone. Now, what about the intervening years? What happens between the end of the World War II and the sixties? The potential lack of a clear dominant position of this stage may have plunged it into oblivion or oversight by historians and critics. Thus, this research is structured around the role that occupies Venturi’s work, whereas this is not its only subject. Rather taken as an excuse, the thesis deepens deductively in the set of circumstances that could lead its author to the conclusions he developed in 1966, detecting biographical and academic environments, shared thoughts and epistemological and mutual professional influences, that would justify a new interpretation of this book as a necessary corollary of an outlook of crisis and change (this major and center subject in this dissertation), contrary to what has been commonly understood upon this work. The research focuses predominantly on tracing the sources cited by Venturi himself in his book, as well as other texts of wider dissemination and outreach (usually professional journals not exclusively academic, as well as books, catalogs of exhibitions, symposia proceedings...), and not so much in the buildings or unbuilt projects; but also, perhaps, it is focused in the terms in which these works were published, commented or reviewed. Hence an approach conceived sub specie bibliotecae has been adopted, with working methods characterized by their chronological component, and then the analytical-comparative one: in other words, a historiographicaljournalistic method able to relate stories or courses of certain ideas or notions, within a broader general context in its architectural, aesthetic, sociological-generational, cultural, philosophical, scientific, political, literary... sides. This approach intends to establish a re-reading of Venturi’s first book and its years of gestation, from some new understandings, more modern than postmodern(ist), proposing a possible evolution of the latest architecture whose roots, after all, would have their origin in the North America of 1946-1966.

Essays in dynamic optimal taxation: working experience, unemployment scarring and poverty

This thesis investigates the design of optimal tax systems in dynamic environments. The first essay characterizes the optimal tax system where wages depend on stochastic shocks and work experience. In addition to redistributive and efficiency motives, the taxation of inexperienced workers depends on a second-best requirement that encourages work experience, a social insurance motive and incentive effects. Calibrations using U.S. data yield higher expected optimal marginal income tax rates for experienced workers for most of the inexperienced workers. They confirm that the average marginal income tax rate increases (decreases) with age when shocks and work experience are substitutes (complements). Finally, more variability in experienced workers' earnings prospects leads to increasing tax rates since income taxation acts as a social insurance mechanism. In the second essay, the properties of an optimal tax system are investigated in a dynamic private information economy where labor market frictions create unemployment that destroys workers' human capital. A two-skill type model is considered where wages and employment are endogenous. I find that the optimal tax system distorts the first-period wages of all workers below their efficient levels which leads to more employment. The standard no-distortion-at-the-top result no longer holds due to the combination of private information and the destruction of human capital. I show this result analytically under the Maximin social welfare function and confirm it numerically for a general social welfare function. I also investigate the use of a training program and job creation subsidies. The final essay analyzes the optimal linear tax system when there is a population of individuals whose perceptions of savings are linked to their disposable income and their family background through family cultural transmission. Aside from the standard equity/efficiency trade-off, taxes account for the endogeneity of perceptions through two channels. First, taxing labor decreases income, which decreases the perception of savings through time. Second, taxation on savings corrects for the misperceptions of workers and thus savings and labor decisions. Numerical simulations confirm that behavioral issues push labor income taxes upward to finance saving subsidies. Government transfers to individuals are also decreased to finance those same subsidies.

International Capital Flows and Monetary Policy Spillovers

This dissertation examines the drivers and implications of international capital flows. The overarching motivation is the observation that countries not at the centre of global financial markets are subject to considerable spillovers from centre countries, notably from their monetary policy. I present new empirical evidence on the determinants of the observed patterns of international capital flows and monetary policy spillovers, and study their effect on both financial markets and the real economy. In Chapter 2 I provide evidence on the determinants of a puzzling negative correlation observed between productivity growth and net capital inflows to developing and emerging market economies (EMEs) since 1980. By disaggregating net capital inflows into their gross components, I show that this negative correlation is explained by capital outflows related to purchases of very liquid assets from the fastest growing countries. My results suggest a desire for international portfolio diversification in liquid assets by fast growing countries is driving much of the original puzzle. In the reminder of my dissertation I pivot to study the foreign characteristics that drive international capital flows and monetary policy spillovers, with a particular focus on the role of unconventional monetary policy in the United States (U.S.). In Chapter 3 I show that a significant portion of the heterogeneity in EMEs' asset price adjustment following the quantitative easing operations by the Federal Reserve (the Fed) during 2008-2014 can be explained by the degree of bilateral capital market frictions between these countries and the U.S. This is true even after accounting for capital controls, exchange rate regimes, and domestic monetary policies. Chapter 4, co-authored with Michal Ksawery Popiel, studies unconventional monetary policy in a small open economy, looking specifically at the case of Canada since the global financial crisis. We quantify the effect Canadian unconventional monetary policy shocks had on the real economy, while carefully controlling for and quantifying spillovers from U.S. unconventional monetary policy. Our results indicate that the Bank of Canada's unconventional monetary policy increased Canadian output significantly from 2009-2010, but that spillovers from the Fed's policy were even more important for increasing Canadian output after 2008.

Essays on the Effects of Corporate Taxation

Cette thèse est une collection de trois articles en macroéconomie et finances publiques. Elle développe des modèles d'Equilibre Général Dynamique et Stochastique pour analyser les implications macroéconomiques des politiques d'imposition des entreprises en présence de marchés financiers imparfaits. Le premier chapitre analyse les mécanismes de transmission à l'économie, des effets d'un ré-échelonnement de l'impôt sur le profit des entreprises. Dans une économie constituée d'un gouvernement, d'une firme représentative et d'un ménage représentatif, j'élabore un théorème de l'équivalence ricardienne avec l'impôt sur le profit des entreprises. Plus particulièrement, j'établis que si les marchés financiers sont parfaits, un ré-échelonnement de l'impôt sur le profit des entreprises qui ne change pas la valeur présente de l'impôt total auquel l'entreprise est assujettie sur toute sa durée de vie n'a aucun effet réel sur l'économie si l'état utilise un impôt forfaitaire. Ensuite, en présence de marchés financiers imparfaits, je montre qu'une une baisse temporaire de l'impôt forfaitaire sur le profit des entreprises stimule l'investissement parce qu'il réduit temporairement le coût marginal de l'investissement. Enfin, mes résultats indiquent que si l'impôt est proportionnel au profit des entreprises, l'anticipation de taxes élevées dans le futur réduit le rendement espéré de l'investissement et atténue la stimulation de l'investissement engendrée par la réduction d'impôt. Le deuxième chapitre est écrit en collaboration avec Rui Castro. Dans cet article, nous avons quantifié les effets sur les décisions individuelles d'investis-sement et de production des entreprises ainsi que sur les agrégats macroéconomiques, d'une baisse temporaire de l'impôt sur le profit des entreprises en présence de marchés financiers imparfaits. Dans un modèle où les entreprises sont sujettes à des chocs de productivité idiosyncratiques, nous avons d'abord établi que le rationnement de crédit affecte plus les petites (jeunes) entreprises que les grandes entreprises. Pour des entreprises de même taille, les entreprises les plus productives sont celles qui souffrent le plus du manque de liquidité résultant des imperfections du marché financier. Ensuite, nous montré que pour une baisse de 1 dollar du revenu de l'impôt, l'investissement et la production augmentent respectivement de 26 et 3,5 centimes. L'effet cumulatif indique une augmentation de l'investissement et de la production agrégés respectivement de 4,6 et 7,2 centimes. Au niveau individuel, nos résultats indiquent que la politique stimule l'investissement des petites entreprises, initialement en manque de liquidité, alors qu'elle réduit l'investissement des grandes entreprises, initialement non contraintes. Le troisième chapitre est consacré à l'analyse des effets de la réforme de l'imposition des revenus d'entreprise proposée par le Trésor américain en 1992. La proposition de réforme recommande l'élimination des impôts sur les dividendes et les gains en capital et l'imposition d'une seule taxe sur le revenu des entreprises. Pour ce faire, j'ai eu recours à un modèle dynamique stochastique d'équilibre général avec marchés financiers imparfaits dans lequel les entreprises sont sujettes à des chocs idiosyncratiques de productivité. Les résultats indiquent que l'abolition des impôts sur les dividendes et les gains en capital réduisent les distorsions dans les choix d'investissement des entreprises, stimule l'investissement et entraîne une meilleure allocation du capital. Mais pour être financièrement soutenable, la réforme nécessite un relèvement du taux de l'impôt sur le profit des entreprises de 34\% à 42\%. Cette hausse du taux d'imposition décourage l'accumulation du capital. En somme, la réforme engendre une baisse de l'accumulation du capital et de la production respectivement de 8\% et 1\%. Néanmoins, elle améliore l'allocation du capital de 20\%, engendrant des gains de productivité de 1.41\% et une modeste augmentation du bien être des consommateurs.

Climate Conundrums at High Altitude. EU Diplomacy Paper 01/2014, January 2014

The European Union (EU) was the frontrunner for the establishment of the world’s first multinational emissions trading scheme (ETS). Committed to combating climate change, the EU sought to overcome the multilateral paralysis within the International Civil Aviation Organization (ICAO) to mitigate aviation emissions. Unsuccessful in pushing for a global market-based measure (MBM) within the organisation, the EU was ready for take-off to include the sector in the EU emissions trading system (EU ETS). The geographical scope, however, including all flights from and to Europe in their entire trajectory, caused frictions with the international community about sovereignty issues. Ultimately, Climate Commissioner Connie Hedegaard announced a ‘stop-the-clock’ for international flights, a temporary derogation until the 2013 ICAO Assembly in order to find a global agreement. The ’stop-the-clock’ initiative provides ample opportunity to analyse EU leadership in curbing aviation emissions based on an analytical framework specifying different types of leadership. Its shows the global challenge to the EU’s claim of structural leadership on various levels in and beyond ICAO. The paper aims to analyse to what extent the EU is a global leader in mitigating aviation emissions and to identify the kind of EU leadership according to a threefold analytical framework. In addition, it will factor in the 'stop-the-clock' initiative and to what extent it altered the perception of EU leadership in the field. The paper comes to the conclusion that EU leadership in mitigating aviation emissions is not stalling. On the contrary, the EU, by pursuing the extension of the EU ETS, has put aviation emissions on everybody’s radar – and thus showed idea-based leadership. Proving the scheme’s feasibility further underlined EU leadership, in the form of directional leadership. The 'stop-the-clock' decision, however, already indicated what was later on confirmed in the 38th ICAO Assembly: Unilateral structural leadership of the EU in the field of aviation emissions is not credible at the moment.

Rebalancing the EU-Russia-Ukraine gas relationship. Bruegel Policy Contribution ISSUE 2014/15, DECEMBER 2014

The October 2014 agreement on gas supplies between Russia, Ukraine and the European Union did not resolve the Ukraine-Russia conflict over gas. The differences between parties in terms of objectives, growing mistrust and legacy issues make it unlikely that a long-term stable arrangement will be achieved without further escalation. Without EU pressure and support, Ukraine is likely to enter a new unfavourable gas arrangement with Russia, which could have repercussions beyond the energy sector. Key highlights: To reduce prices and increase the security of imports, the EU as a bloc should redefine its gas relationship with Russia and Ukraine and overcome the diverging interests of EU member states on second-order issues. Implementation of a joint strategy rests on enforcement of EU competition and gas market rules, a strengthened role for the Energy Community and the establishment of a market-based instrument for supply security. For Ukraine, the EU should serve as an anchor for comprehensive gas sector reform. Contingent on Ukraine’s reform efforts, EU financial and technical assistance, the enabling of reverse flows from the EU to Ukraine and pressure on Gazprom, should eventually enable Ukraine to obtain a sustainable gas-supply contract with Russia. This should make a sustainable and mutually beneficial Russia-Ukraine-EU gas relationship possible. However, during the transition, the EU should be prepared for possible frictions.

Support as a means of subordination. Russia's policy on Belarus. OSW Point of View Number 34, May 2013

Despite the conflicts and frictions in their bilateral relations, Russia has for years regularly invested in Belarus. Moscow’s support has become an important factor allowing the Belarusian economic model to continue, which in turn helps maintain the stability of the Belarusian political system. Russia's continued readiness to offer assistance to its neighbour reflects the importance Moscow attaches to Belarus.Belarus also features prominently in Moscow’s current policy objectives – especially with regard to the expansion of the Customs Union. The implementation of this project is seen as crucial in Russia, particularly in relation to Ukraine. For this reason, since 2011 we have been witnessing a rise in Russian aid for Belarus. In 2012, the support intensified and moved beyond purely financial help to include political assistance also. Russia’s support, however, has come at a price. Moscow’s long-term goal is to establish control over the Belarusian economy, which would also, in effect, allow the Kremlin to influence the way other areas of the Belarusian state are governed. As Minsk’s dependence on Russian support deepens, Alexander Lukashenko will ultimately have no choice but to gradually accede to Russia’s demands.

Consensus, contradiction, and conciliation of interests: the geo-economics of the Energy Union. EPC Policy Brief, 8 July 2015

European Union energy policy calls for nothing less than a profound transformation of the EU's energy system: by 2050 decarbonised electricity generation with 80-95% fewer greenhouse gas emissions, increased use of renewables, more energy efficiency, a functioning energy market and increased security of supply are to be achieved. Different EU policies (e.g., EU climate and energy package for 2020) are intended to create the political and regulatory framework for this transformation. The sectorial dynamics resulting from these EU policies already affect the systems of electricity generation, transportation and storage in Europe, and the more effective the implementation of new measures the more the structure of Europe's power system will change in the years to come. Recent initiatives such as the 2030 climate/energy package and the Energy Union are supposed to keep this dynamic up. Setting new EU targets, however, is not necessarily the same as meeting them. The impact of EU energy policy is likely to have considerable geo-economic implications for individual member states: with increasing market integration come new competitors; coal and gas power plants face new renewable challengers domestically and abroad; and diversification towards new suppliers will result in new trade routes, entry points and infrastructure. Where these implications are at odds with powerful national interests, any member state may point to Article 194, 2 of the Lisbon Treaty and argue that the EU's energy policy agenda interferes with its given right to determine the conditions for exploiting its energy resources, the choice between different energy sources and the general structure of its energy supply. The implementation of new policy initiatives therefore involves intense negotiations to conciliate contradicting interests, something that traditionally has been far from easy to achieve. In areas where this process runs into difficulties, the transfer of sovereignty to the European level is usually to be found amongst the suggested solutions. Pooling sovereignty on a new level, however, does not automatically result in a consensus, i.e., conciliate contradicting interests. Rather than focussing on the right level of decision making, European policy makers need to face the (inconvenient truth of) geo-economical frictions within the Union that make it difficult to come to an arrangement. The reminder of this text explains these latter, more structural and sector-related challenges for European energy policy in more detail, and develops some concrete steps towards a political and regulatory framework necessary to overcome them.

TTIP’s Hard Core: Technical barriers to trade and standards. Paper No. 13 in the CEPS-CTR project ‘TTIP in the Balance’ and CEPS Special Report No. 117/August 2015

Michelle Egan and Jacques Pelkmans provide an overview of the TBT chapter in TTIP and the various issues between the US and the EU in this area, which in turn requires extensive expositions of domestic regulation in the US and the EU. TBTs, outside heavily regulated sectors such as chemicals, automobiles or medicines (which have separate chapters in TTIP), can be caused by divergent (voluntary) standards, technical regulations and conformity assessment. Indeed, in all three the US and the EU have long experienced frictions with considerable trading costs. The 1998 Mutual Recognition Agreement about conformity assessment only succeeded in two out of six sectors. The US and European standardisation traditions differ and this paper explains why it is so hard, also economically, to realise convergence. However, the authors reject the unproductive ‘stand-off’ between US and EU negotiators on standardisation and suggest to clarify the enormous economic ‘installed base’ of prominent US standards in the world economy and build a solution from there. As to technical regulation, the prospect of converging regulation (via harmonisation) is often dim, but equivalence (given similar levels of regulatory protection) can be an option.

Rule-Makers or Rule-Takers? Exploring the Transatlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership (TTIP) is an effort by the United States and the European Union to reposition themselves for a world of diffuse economic power and intensified global competition. It is a next-generation economic negotiation that breaks the mould of traditional trade agreements. At the heart of the ongoing talks is the question whether and in which areas the two major democratic actors in the global economy can address costly frictions generated by their deep commercial integration by aligning rules and other instruments. The aim is to reduce duplication in various ways in areas where levels of regulatory protection are equivalent as well as to foster wide-ranging regulatory cooperation and set a benchmark for high-quality global norms. In this volume, European and American experts explain the economic context of TTIP and its geopolitical implications, and then explore the challenges and consequences of US-EU negotiations across numerous sensitive areas, ranging from food safety and public procurement to economic and regulatory assessments of technical barriers to trade, automotive, chemicals, energy, services, investor-state dispute settlement mechanisms and regulatory cooperation. Their insights cut through the confusion and tremendous public controversies now swirling around TTIP, and help decision-makers understand how the United States and the European Union can remain rule-makers rather than rule-takers in a globalising world in which their relative influence is waning.