Action Policy Digest – May 2018

Author: Action Institute

Date: 14 May 2018

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.

null “Non-performing loans and the credit allocation mechanism” It has recently been argued that high non-performing loan stocks can limit banks’ lending ability, and thus impair the effectiveness of monetary policy. This column questions this claim and argues for a more nuanced view.


“The European ETF Market: What can be done better?” Growing demand in recent years for low-cost, easily tradeable, liquid and transparent investment products, resulted in the global expansion of the Exchange-Traded Fund (ETF) industry. Despite the fact that US and European markets have each grown at a yearly average rate of approximately 18%, the latter represents only 16% of the global market.


“How will FinTech and digital currencies transform central banking” While the advent of decentralized cryptocurrencies such as Bitcoin has dominated the headlines, a broader set of changes wrought by advances in technology are likely to eventually have a more profound and lasting impact on central banks.


“Corporate investment in Europe: The role of finance” Despite an extensive literature examining the optimal financing mix, little work exists on firms’ preferences over specific debt financing characteristics. This column uses experimental data from Europe to analyse the link between different external financing characteristics and investment decisions.


“The impact of industrial robots on EU employment and wages: A local labour market approach” In theory, robots can directly displace workers from performing specific tasks (displacement effect). This working paper adopts the local labour market equilibrium approach developed by Acemoglu and Restrepo to assess which effects dominate and the impact of robots on wage growth and employment rate in Europe.

“Solving the European Productivity Puzzle” In recent years, advanced economies around the globe have experienced a pronounced slowdown in productivity growth. The causes of this so-called secular stagnation still remain unclear.

“How artificial intelligence is transforming the world” Most people are not very familiar with the concept of artificial intelligence (AI). As an illustration, when 1,500 senior business leaders in the US in 2017 were asked about AI, only 17 percent said they were familiar with it.


“€100B? €86.6B? A Brussels puzzle: How big is the new research budget?” For many people scouring through the European Commission’s proposed budget last week, there was little clarity on what it actually means for the EU’s research spend.


“Addressing Europe’s infrastructure gaps: Fiscal constraints and planning capacity matter” Adequate infrastructure is essential for growth. Since the financial crisis, however, public sector infrastructure investment in the EU has been scaled back. This column uses data from a recent survey to explore the causes of Europe’s infrastructure gaps.


“Building a stable european deposit insurance scheme” Deposit insurance, like any insurance scheme, raises moral hazard concerns. Such concerns arising from European deposit insurance can be alleviated through a country-specific component in the risk-based premium for deposit insurance and limits on sovereign bond exposures on bank balance sheets.


“Convergence in the European Union: Inside and outside the euro” The convergence process in Europe has bifurcated: the new member states (NMSs) from Central and Eastern Europe are catching up in terms of income per capita. Within the euro area, however, the North has diverged from the South since the start of the financial crisis.


“It may get worse before it gets better: The short-term employment consequences of structural reforms” Structural reforms can trigger and sustain economic growth. This column analyses the short-term response of employment levels to product and labour market reforms.


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