Action Policy Digest April 2019


Date: 8 April 2019

Type: Other

Topic: Action Institute

Organized as a monthly newsletter, it presents an overview of the current international policy debate. You find below a selection of the best ideas from the most influential think tanks, structured in four areas: (i) Finance, (ii) Innovation and Development, (iii) European Affairs and (iv) Social Policy.

 “The missing link: Monetary policy and the labour share“. Despite its importance, there is no systematic empirical evidence on the effect of monetary policy shocks on the share of output allocated to wages. Using data for five developed economies, this column finds that standard models generate the ‘wrong sign’ for the effect when compared to the empirical results, and that the labour share temporarily increases following a positive shock to the interest rate.

 “New financial stability governance structures and central banks“. The global financial crisis prompted many countries to set up new authorities to address financial stability risks. But the extent to which these institutional arrangements afford authorities the ability to implement macroprudential and, in particular time-varying policies, is unclear.  In this updated paper, the authors study these authorities to determine their ability to set macroprudential policies to reduce potential systemic risks that could arise.
 “Government debt in times of low interest rates: the case of Europe“. In this paper the authors discuss to what extent the declining difference betweeninterest rates and growth rates (r-g) pointed out recently by Olivier Blanchard (2019) for the case of the US also characterizes the economic situation in Europe.


 “Monetary policy, macroprudential policy, and financial stability“. This column discusses the effectiveness of monetary policy and macroprudential policy in responding to the build-up of risks in the financial sector. While both policies are useful, macroprudential policy is more effective in terms of financial stability and can lead to higher welfare gains.



 “Low funding jeopardises the European Commission’s innovation missions“. The European Commission plans to spend about €120 billion on research and innovation under mission-oriented programmes between 2021 and 2027. This column shows that planned spending is small both relative to the total R&D spending of individual EU countries and relative to previous missions.


 “The European Union’s response to the trade crisis“. The global trading system is under attack on various fronts. In this Policy Contribution, the authors examine the root causes of the current problems, develop good and bad scenarios for what could happen next, and provide recommendations for how the EU should respond.

 “Europe Without the UK: Liberated or Diminished?“. In 2016 the CER made ten predictions about the effect of Brexit on future EU policy. How do they stand up now, on the eve of the UK’s departure?


 “Finance for Sustainable Growth“. Ahead of the 2019 institutional reconfiguration of the EU, CEPS researchers took stock of the European integration process and recommended which priorities should define the strategic agenda of the next generation of incumbents in a report addressed to the one actor that has a more direct role in fleshing out the policy agenda for Europe: the European Commission.


 “What’s on the horizon for Horizon Europe“.A timeline of what to expect as the EU works out the details of its €94.1 billion research and innovation programme.



 “Female leadership and the gender gap within firms: Evidence from an Italian board reform“. Mandated gender quotas in Italy have been successful at increasing the number of women on boards. But the relevant law is temporary and affects only a small number of firms. The column uses evidence on employment and earnings to show no increase in female representation at the top executive level or among top earners.


Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.

Herbert Hoover


Good health is essential to social and economical development and it empowers all of the public sectors.

World Health Organization


Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Peter Drucker

Human Capital

Talent is a source from which water flows constantly renewed. But this source loses its value unless it is properly used.

Ludwig Wittgenstein