The Sovereign Debt Crisis: Placing a curb on growth (updated edition). CEPS Paperbacks. September 2013

This book provides an update to the major 2012 study by the same authors on the dual role of the public sector as the provider of the ultimate riskless asset and, at the same time, the source of a potential major systemic risk. In this second edition, Brender and his colleagues concentrate again on the tension between the need for the public sector to sustain demand in the face of a deleveraging private sector and the longer-term challenges of sustainability for fiscal policy in the major developed economies of the US, Japan and the euro area. In short, their principal thesis is that sovereign debt is in crisis. This crisis is apparent in the euro area, but it is also real, if at present only latent, in the US and Japan. The book shows how this process has evolved in these three big developed economies – and how their policy choices impact on global financial markets.

The Sovereign Debt Crisis: Placing a curb on growth. CEPS Paperbacks. May 2012

To ward off the threat of a worldwide depression that loomed at the end of the 2000s, governments opted to run up substantial fiscal deficits. In doing so, they sowed the seeds of the sovereign debt crisis. Saddled with often high debt burdens and modest growth prospects, developed countries’ governments must now rebalance their budgets. Doing so too rapidly, however, will choke growth. Faced with this dilemma, Japan and the United States have pursued growth policies while the euro area members are quickly trying to rebalance their budgets. This book explores the respective risks associated with these two strategies. It further investigates the consequences for the international monetary and financial system of developing countries’ public debts ceasing to be risk-free.

The G-20 in the aftermath of the crisis: a Euro-Asian view. Bruegel Policy Brief, 24 March 2009

In 2009 the global economy switched from recession to recovery. However, the pace of the recovery has been very different in different parts of the world, with the divergence between emerging and mature economies becoming greater than expected. Europe and emerging Asia are in this respect in clearly opposite situations, while the Japanese situation is closer to that of Europe than to those of its neighbours (Figure 1 on the next page).

Money, Finance and the Real Economy: What went wrong? CEPS Paperback, 17 March 2015

The functions of the financial system of a developed economy are often badly understood. This can largely be attributed to free-market ideology, which has spread the belief that leaving finance to its own devices would provide the best possible mechanism for allocating savings. The latest financial crisis has sparked the beginnings of a new awareness on this point, but it is far from having led to an improved understanding of the role of the financial institutions. For many people, finance remains more an enemy to be resisted than an instrument to be intelligently exploited. Its institutions, which issue and circulate money, play an important role in the working of the real economy that it would be imprudent to neglect. The allocation of savings, but also the level of activity and the growth rate depend on it. In this book, the authors carefully analyse the close links between money, finance and the real economy. In the process, they show why today the existence of a substantial potential of saving, instead of being an opportunity for the world economy, could threaten it with ‘secular stagnation’.

Comparing fiscal multipliers across models and countries in Europe. National Bank of Belgium Working Paper No. 278, March 2015

This paper employs fifteen dynamic macroeconomic models maintained within the European System of Central Banks to assess the size of fiscal multipliers in European countries. Using a set of common simulations, we consider transitory and permanent shocks to government expenditures and different taxes. We investigate how the baseline multipliers change when monetary policy is transitorily constrained by the zero nominal interest rate bound, certain crisis-related structural features of the economy such as the share of liquidity-constrained households change, and the endogenous fiscal rule that ensures fiscal sustainability in the long run is specified in terms of labour income taxes instead of lump-sum taxes.

Building a Capital Markets Union….or designing a financial system for the euro area? CEPS Commentary, 2 June 2015

In this CEPS Commentary, economists Anton Brender, Florence Pisani and Daniel Gros challenge the foundation on which the European Commission launched a key debate earlier this year on the development of the EU’s financial system, with publication of its Green Paper "Building a Capital Markets Union". While acknowledging that a single capital market could be useful in the European Union, they argue that it is extremely dangerous to conduct one and the same monetary policy in an area with broadly varying financial practices and structures – as the first 15 years of the euro area's history have vividly shown. They conclude that financial integration of the countries in EMU must receive top priority in a process that the rest of the European Union may then subsequently join.

Dinoflagellate cysts analyses from sediment cores of the Po River discharge plume over the last two centuries

To obtain insight into the natural and/or human-induced changes in the trophic state of the distal portion of the Po River discharge plume over the last two centuries, high temporal resolution dinoflagellate cyst records were established at three sites. Cyst production rates appear to reflect the natural variability in the river's discharge, whereas cyst associations reflect the trophic state of the upper waters, which in turn can be related to agricultural development. The increased abundances of Lingulodinium machaerophorum and Stelladinium stellatum found as early as 1890 and 1920 correspond to the beginning of the industrial revolution in Italy and the first chemical production and dispersion of ammonia throughout Europe. After 1955, the increased abundances of these species and of Polykrikos schwartzii, Brigantedinium spp. and Pentapharsodinium dalei correspond to agriculturally induced alterations of the hypertrophic conditions. A slight improvement in water quality can be observed from 1987 onward.

Organic matter based proxies from surface sediments along three transects on the Pakistan continental margin

A valid assessment of selective aerobic degradation on organic matter (OM) and its impact on OM-based proxies is vital to produce accurate environmental reconstructions. However, most studies investigating these effects suffer from inherent environmental heterogeneities. In this study, we used surface samples collected along two meter-scale transects and one longer transect in the northeastern Arabian Sea to constrain initial OM heterogeneity, in order to evaluate selective aerobic degradation on temperature, productivity and alteration indices at the sediment-water interface. All of the studied alteration indices, the higher plant alkane index, alcohol preservation index, and diol oxidation index, demonstrated that they are sensitive indicators for changes in the oxygen regime. Several export production indices, a cholesterol-based stanol/stenol index and dinoflagellate lipid- and cyst-based ratios, showed significant (more than 20%) change only over the lateral oxygen gradients. Therefore, these compounds do not exclusively reflect surface water productivity, but are significantly altered after deposition. Two of the proxies, glycerol dibiphytanyl glycerol tetraether-based TEX86 sea surface temperature indices and indices based on phytol, phytane and pristane, did not show any trends related to oxygen. Nevertheless, unrealistic sea surface temperatures were obtained after application of the TEX86, TEX86L, and TEX86H proxies. The phytol-based ratios were likely affected by the sedimentary production of pristane. Our results demonstrate the selective impact of aerobic organic matter degradation on the lipid and palynomorph composition of surface sediments along a short lateral oxygen gradient and suggest that some of the investigated proxies may be useful tracers of changing redox conditions at the sediment-water interface.