APD1-2

Action Policy Digest July 2020

Author:

Date: 13 July 2020

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.

 

FINANCE

Bank insiders impede equity issuances in times of crisis . Banks with more equity tend to lend more, create more liquidity, have higher probabilities of surviving crises and if they do, they tend to recover faster. This column shows that ownership structure is an important determinant of a bank’s new stock issuance during a crisis.

Global currencies during a crisis“. The current crisis has confirmed the importance of the currency swap lines offered by the Federal Reserve. They enhance the role of the USD as the dominant global currency. However, one should not expect much impact on the international role of the euro if the European Cenrtal Bank offers similar currency swap lines. Currency competition is not won by competing on the generosity of currency swap lines.

Trade shocks and credit reallocation: Lessons from Italy. In a period where the backlash against trade and globalisation is at a historical high point, it is crucial to understand the frictions that prevent a full realisation of the gains from trade. This column takes evidence from Italy and contributes to the debate by identifying a novel channel: the endogenous funding constraint of banks whose loan portfolios are affected negatively by the liberalisation.

 

INNOVATION AND DEVELOPMENT

Europe’s digital verification opportunity“. Europe should move fast to allow the private sector to leverage its public digital verification system, especially in view of the changes to communication brought about by the COVID-19 crisis, concludes this new study.

 

EUROPEAN AFFAIRS

Three-quarters of Next Generation EU payments will have to wait until 2023. Because of hurdles in designing, approving and implementing European Union programmes, less than a quarter of the €438 billion in grants planned under the new EU recovery instruments is expected to be spent in the next two and a half years, when recovery needs will be greatest.

CERDon’t let UK-EU foreign policy co-operation be collateral damage of Brexit. Six months have passed since Brexit, but there has been no significant progress in the negotiations to define the future UK-EU relationship. And the clock is most definitely ticking. In a joint statement Boris Johnson and EU leaders made clear that the transition period for agreeing a deal would end on December 31, as per the UK’s wishes.

Study on up- and re-skilling in micro and small enterprises“. Skills development is necessary to face changes in the labour market, led by important transformations such as digitalisation, ageing populations and climate change. Given the importance of micro and small enterprises for the EU economy and employment, the study provides insights into the main challenges faced by those companies.

EU firms in the post-COVID-19 environment: Investment-debt trade-offs and the optimal sequencing of policy responses . COVID-19 and the related lockdowns have taken their toll on the EU corporate sector. This column uses an accounting approach and ORBIS firm-level data to assess the medium-term strategic choices for firms.

 

SOCIAL POLICY

The slowdown in productivity growth and policies that can restore it“. Labor productivity growth powers economic growth. Yet growth in productivity has generally slowed over the past half century. In this paper the authors identify explanations for the slowdown in productivity growth as well as the public policies that can help restore it.

Credit

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

Herbert Hoover

Health

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

World Health Organization

Innovation

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