Defining Europe's Capital Markets Union. Bruegel Policy Contribution Issue 2014/12, 13 November 2014

The new European Commission has signalled that it will work to create a ‘capital markets union’. This is understood as an agenda to expand the non-bank part of Europe’s financial system, which is currently underdeveloped. The aim in the short term is to unlock credit provision as banks are deleveraging, and in the longer term, to favour a more diverse, competitive and resilient financial system. Direct regulation of individual non-bank market segments (such as securitisation, private placements or private equity) might be useful at the margin, but will not per se lead to significant capital markets development or the rebalancing of Europe’s financial system away from the current dominance by banks. To reach these goals, the capital markets union agenda must be broadened to address the framework conditions for the development of individual market segments. Six possible areas for policy initiative are, in increasing order of potential impact and political difficulty: regulation of securities and specific forms of intermediation; prudential regulation, especially of insurance companies and pension funds; regulation of accounting, auditing and financial transparency requirements that apply to companies that seek external finance; a supervisory framework for financial infrastructure firms, such as central counterparties, that supports market integration; partial harmonisation and improvement of insolvency and corporate restructuring frameworks;and partial harmonisation or convergence of tax policies that specifically affect financial investment.

Economic Implications of Enlargement. Bruges European Economic Policy (BEEP) Briefing 1/2002

The Eastern enlargement is about to be decided by the European Council. As expected, the “end game “ of the negotiations and assessments is heavily biased by a narrow perspective on net transfers, on income compensations to Central European farmers and on the psychological politics of a single “big bang “. None of these three so-called key items of the end game are of much relevance to appreciate the significance of enlargement. Net transfers have little to do with the costs and benefits of club membership for countries which pay, and can lead to addiction and lethargy rather than extra growth if market integration, macro-economic stability and domestic reforms are not taken serious (as the case of Greece before 1997 has demonstrated). Income compensations for Eastern farmers are crucial for this pressure group, and symbolically of some importance in domestic politics because of the perversity that rich farmers get more, but their absence is likely to serve the public interest in candidate countries far better. And being part of the big bang, as against getting in one or three years later, has assumed a dramatic meaning during this end game, far beyond its true proportions. This hectic European theatre tends to obscure what enlargement is mainly about, now that the stability and values have been secured for the peoples from Central Europe. In a guaranteed setting of peace, freedom and security, enlargement is about greater prosperity.

European Industrial Policy. Bruges European Economic Policy (BEEP) Briefing 15/2006

This survey of European industrial policy aims to set out and explain the great significance of European integration in determining (changes in) structure and performance of industry in the EU. This influence is explored from the policy side by analysing the transformation of the framework within which both EU and Member States' industrial policy can be pursued. Empirical economic analysis is not included because this BEEP Briefing was originally written for a handbook3 in which other authors were assigned a range of industrial economics subjects. In the last 25 years or so, the transformation is such that the nature and scope of industrial policy at both levels of government has profoundly changed as well. Indeed, the toolkit of measures has shrunk considerably, disciplines have been tightened and the economic policy views behind industrial policy have altered everywhere. The pro-competitive logic of deeper market integration itself is rarely questioned nowadays and industrial policy at the two levels takes on different forms. The survey discusses at some length the division of powers between, and the complementarity of, the Member States' and EU levels of government when it comes to industrial policy, based on a fairly detailed classification of industrial policy instruments. The three building blocks of the wide concept of industrial policy as defined in this BEEP Briefing consist of the EU framework of market integration, EU horizontal industrial policy and its EU sectoral or specific counterpart. Each one is surveyed at the EU level. Preceding these three sections is a discussion of three cross-cutting issues, namely, the indiscriminate use of the 'competitiveness' label in the EU circuit of business and policy makers, the relation between services and EU industrial policy and, finally, that of European infrastructure. One major conclusion is that, today, the incentive structure for industry and industrial markets is dominated by the stringency of the overall EU framework and to some moderate degree by the horizontal approach.

Services in European Policies. Bruges European Economic Policy (BEEP) Briefing 16/2007

This paper’s objective is twofold. Firstly, it presents the case for services-related policies in the current European Union (EU). The services economy is frequently misunderstood, due to old and new myths that stem from the classic economic tradition. These myths obscure the role of the services economy in economic development. Nonetheless, the European services economy faces specific problems, such as lack of market integration, which amplifies arguments that justify policy actions toward services within a framework where market and systemic failures do apply. Secondly, this paper focuses on existing services-policies at the EU level, paying special attention to the internal market for services policies and to the complementary role of primarily non-regulatory policies. Within a comprehensive policy framework, each individual policy will have a higher impact, improved implementation and easier acceptance. Synergies among services-related policies should be promoted; the internal market policies, enterprise and industrial policies, competition policies and regional policies may take the lead in such a framework. Since the Lisbon Strategy, services have begun to gain recognition in EU policy agendas. This paper attempts to increase their visibility and to highlight their crucial role in European integration and in economic growth and social welfare.

Mutual Recognition: economic and regulatory logic in goods and services. Bruges European Economic Research (BEER) Papers 24/June 2012

Mutual recognition is one of the most appreciated innovations of the EU. The idea is that one can pursue market integration, indeed "deep' market integration, while respecting 'diversity' amongst the participating countries. Put differently, in pursuing 'free movement' for goods, mutual recognition facilitates free movement by disciplining the nature and scope of 'regulatory barriers', whilst allowing some degree of regulatory discretion for EU Member States. This BEER paper attempts to explain the rationale and logic of mutual recognition in the EU internal goods market, its working in actual practice for about three decades now, culminating in a qualitative cost/benefit analysis and its recent improvement in terms of 'governance' in the so-called New Legislative Framework (first denoted as the 2008 Goods package) thereby ameliorating the benefits/costs ratio. For new (in contrast to existing) national regulation, the intrusive EU procedure to impose mutual recognition is presented as well, with basic data so as to show its critical importance to keep the internal goods market free. All this is complemented by a short summary of the scant economic literature on mutual recognition. Subsequently, the analysis is extended to the internal market for services. This is done in two steps, first by reminding the debate on the origin principle (which goes further than mutual recognition EU-style) and how mutual recognition works under the horizontal services directive. This is followed by a short section on how mutual recognition works in vertical (i.e. sectoral) services markets.

Integrating Europeans: The Political Economy and Social Aspects of Europeanization. ACES Working Papers (Curriculum Development), 2012

This course, then, investigates the effects of integration on European citizens as well as the duality of the EU as a competitive and social model. It is sensitive to the involvement of social groups, protest, and domestic politics in the study of market integration. Some of the questions we explore are: What are the effects of regulatory policy-making on social actors, how do such actors’ strategies and behaviors change as a consequence, and how to they overcome their collective action problems? Why is it that the logic of integration has at times followed a logic of “permissive consensus” while at other times it has been described as a “constraining dissensus”? What is the importance of discourse in domestic politics in order to articulate and legitimate Europeanization? How do European identities change as a consequence of policymaking as well as of protest? To what extent do ordinary Europeans matter in terms of accepting and opposing the project of European integration, how do European citizens in core and peripheral EU states experience Europeanization, and how is their involvement in the integration project to be conceptualized?

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.

Das Prinzip der Freizügigkeit: eine Idee für alle

"Das Prinzip der Freizügigkeit. Eine Idee für alle". Presentation (in German) by Charlotte Sieber-Gasser at the 2d Doctoral Seminar of the Center for Migration Law held in Oberdorf (Switzerland) on 30 November and 1 December 2012. In the presentation (in German), Charlotte Sieber-Gasser argues that there is a direct link between regional labour market integration, economic development and migration pressure. The link consists of the impact of labour market integration on added-value production: Through more added-value production in the global South, economic development in the region is more sustainable, jobs are created and brain drain is to a certain extent reversed. As this is acknowledged also by developing countries, more and more regional labour market integration measures emerge in the global South. These newer forms of regulation of the movement of labour is in some cases relatively unique and innovative. Charlotte Sieber-Gasser presents five examples of such newer regulation. The different models range from liberalisation restricted to high skilled labour and indirect liberalisation through the recognition of certificates to relatively far reaching liberalisation for particular groups of professionals and their families, also covering low skilled labour.

Consumption habit and international stock returns

We use the consumption-based asset pricing model with habit formation to study the predictability and cross-section of returns from the international equity markets. We find that the predictability of returns from many developed countries' equity markets is explained in part by changing prices of risks associated with consumption relative to habit at the world as well as local levels. We also provide an exploratory investigation of the cross-sectional implications of the model under the complete world market integration hypothesis and find that the model performs mildly better than the traditional consumption-based model. the unconditional and conditional world CAPMs and a three-factor international asset pricing model. (C) 2004 Elsevier B.V. All rights reserved.

UMA ANÁLISE DA RELAÇÃO ENTRE VARIÁVEIS MACROECONÔMICAS E O COMPORTAMENTO DAS AÇÕES DE MAIOR LIQUIDEZ DO ÍNDICE IBOVESPA

As ações de maior liquidez do índice IBOVESPA, refletem o comportamento das ações de um modo geral, bem como a relação das variáveis macroeconômicas em seu comportamento e estão entre as mais negociadas no mercado de capitais brasileiro. Desta forma, pode-se entender que há reflexos de fatores que impactam as empresas de maior liquidez que definem o comportamento das variáveis macroeconômicas e que o inverso também é uma verdade, oscilações nos fatores macroeconômicos também afetam as ações de maior liquidez, como IPCA, PIB, SELIC e Taxa de Câmbio. O estudo propõe uma análise da relação existente entre variáveis macroeconômicas e o comportamento das ações de maior liquidez do índice IBOVESPA, corroborando com estudos que buscam entender a influência de fatores macroeconômicos sobre o preço de ações e contribuindo empiricamente com a formação de portfólios de investimento. O trabalho abrangeu o período de 2008 a 2014. Os resultados concluíram que a formação de carteiras, visando a proteção do capital investido, deve conter ativos com correlação negativa em relação às variáveis estudadas, o que torna possível a composição de uma carteira com risco reduzido.

Financial liberalization and dynamics of firm-level financing and investment decisions in the Southeast Asian countries

This thesis examines the dynamics of firm-level financing and investment decisions for six Southeast Asian countries. The study provides empirical evidence on the impacts of changes in the firm-level financing decisions during the period of financial liberalization by considering the debt and equity financing decisions of a set of non-financial firms. The empirical results show that firms in Indonesia, Pakistan, and South Korea have relatively faster speed of adjustment than other Southeast Asian countries to attain optimal debt and equity ratios in response to banking sector and stock market liberalization. In addition, contrary to widely held belief that firms adjust their financial ratios to industry levels, the results indicate that industry factors do not significantly impact on the speed of capital structure adjustments. This study also shows that non-linear estimation methods are more appropriate than linear estimation methods for capturing changes in capital structure. The empirical results also show that international stock market integration of these countries has significantly reduced the equity risk premium as well as the firm-level cost of equity capital. Thus stock market liberalization is associated with a decrease in the cost of equity capital of the firms. Developments in the securities markets infrastructure have also reduced the cost of equity capital. However, with increased integration there is the possibility of capital outflows from the emerging markets, which might reverse the pattern of decrease in cost of capital in these markets.

Changes in the comovement of european equity markets

This paper investigates the impact that the removal of exchange controls within major European economies has had on the interdependence of European equity markets. For five years prior to the removal of exchange controls and five years following their removal, we use impulse responses and variance decompositions from vector autoregressions to illustrate that European equity markets have become substantially more integrated after the removal of exchange controls. We undertake further tests that demonstrate that, even if we allow for parallel macroeconomic harmonization, the removal of exchange controls has been a major cause of increased equity market integration within Europe.

English: its role as the language of comity in an employment programme for Canadian immigrants.

This study explores the experiences of a culturally and linguistically diverse group of immigrant adult students as they attended a 12-week employment preparation course for newcomers to Canada. The main aim of the course was to equip the immigrants with knowledge and skills, including English for employment purposes, which are necessary to be competitive in the labour market. Using ethnographic methods, mainly participant observation with audio recording, to collect data, this paper analyses the communicative strategies that this group of multilingual speakers and their Canadian teachers deployed to discursively construct a ‘heterotopia’ defined here as ‘intensely affective spaces that redefine the experiential feeling of being and becoming’. Analysis of transcribed audio recordings reveals that despite differences in communication conventions and sociocultural backgrounds, the research participants from Congo, Haiti, India, Bangladesh, Jordan and the Philippines managed to establish a socially cohesive team that emphasises shared relational identity and in-group membership. The findings show how they creatively mobilised previously acquired pragmatic strategies and resources from their L1 to suit the demands of the ongoing interaction in English. It is suggested that language teaching in the context of preparing immigrants for labour market integration entails a pedagogical approach that foregrounds the affordances of English not only as the language of employment but perhaps more importantly as the ‘language of comity’. It is therefore suggested that the teaching of the host country’s language should focus less on grammatical correctness and focus more on providing the adult learners with opportunities to activate existing pragmatic resources and strategies which have to do with establishing rapport and friendly relations.

A critical analysis of the prospects for the effective development of a regional approach to competition law in the ASEAN region

This thesis is an examination of the ASEAN’s prospects in establishing regional competition policy in the Southeast Asia region, a topic of contemporary relevance in light of the ASEAN’s recent foray into the economic integration field on 31 December 2015. It questions whether the current approach undertaken by the ASEAN could contribute to an effective regional competition policy under the regional market integration. In answering this question, the thesis first critically surveys the current terrain of regional competition laws and policies in order to determine the possible existence of an optimal template. It argues that although the EU model is oft used as a source of inspiration, each regional organisation conceives different configurations of the model in order to best adjust to the local regional contexts. The thesis makes an inquiry into the narratives of the ASEAN’s competition policy, as well as the ASEAN’s specific considerations in the development of competition policy, before comparing the findings to the actual approaches taken by the ASEAN in its pursuit of regional competition policy. This thesis reveals that the actual approach taken by the ASEAN demonstrates an important discrepancy from the economic integration goal. The ASEAN applies a soft harmonisation approach regarding substantive competition law while refraining from establishing a centralised institution or a representative institution. The sole organ with regards to competition policy at the regional level is an expert organ. The thesis also conducts an investigation into the reception of the ASEAN’s regional policy by the member states in order to ascertain the possibility of the achievement of the ASEAN’s aspiration of regional competition policy. The study reveals that despite some shared similarities in the broad principles of competition law amongst the member states, the various competition law regimes are not harmonised thus creating challenging obstacle to the ASEAN’s ambition. The thesis then concludes that the ASEAN’s approach to regional competition law is unlikely to be effective.

Addressing the technical and market challenges to high wind power integration in Ireland

Over the last decade there has been a rapid global increase in wind power stimulated by energy and climate policies. However, as wind power is inherently variable and stochastic over a range of time scales, additional system balancing is required to ensure system reliability and stability. This paper reviews the technical, policy and market challenges to achieving ambitious wind power penetration targets in Ireland’s All-Island Grid and examines a number of measures proposed to address these challenges. Current government policy in Ireland is to address these challenges with additional grid reinforcement, interconnection and open-cycle gas plant. More recently smart grid combined with demand side management and electric vehicles have also been presented as options to mitigate the variability of wind power. In addition, the transmission system operators have developed wind farm specific grid codes requiring improved turbine controls and wind power forecasting techniques.