G20, Not G7*

A striking outcome of the global financial crisis has been the substitution of the G7 for the G20 as the key forum for international coordination. There is something like a paradox in such substitution since the agenda of G20 meetings has so far focused on financial regulation issues, which are of more concern for G7 […]

The Design of Financial Regulation in the G20 Debate: Tata or Ferrari?

The urgency of strengthening the regulation and supervision of financial institutions was highlighted in the first two G20 meetings in November 2008 and in April 2009. Over the last few months, a large number of academic papers, official reports and white papers have been published in the US and in Europe, and international organizations have […]

Illusory virtue

The European Commission has just released gloomy, updated macroeconomic forecasts, with Euro area GDP now projected to decline by 1.9% in 2009. In eleven out of 16 Member states, GDP is expected to fall in 2009, with an especially sharp decline in Ireland (-5%). Due to automatic stabilizers and fiscal stimulation plans, half of the countries are expected to run fiscal deficits exceeding the  3%-of-GDP red line. The European Commission forecasts very large deficits in Ireland (11% of GDP) and in Spain (6.2%). Strikingly, these two countries used to be part of the  most virtuous members of the Euro area until 2007. Indeed, from 1999 to 2007, none of these two reached or even approached the 3% bound. General government budget was close to balance on average in Spain while Ireland ran a 1.6% surplus on average. All other Euro Members except Belgium, Finland and Luxembourg crossed the red line at least once, and five of them (France, Germany, Greece, Italy, Portugal) did it several times.