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Action Policy Digest May 2019

Author:

Date: 13 May 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.
FINANCE
 “The effectiveness of the global financial safety net depends on the tools and shocks“. This column evaluates the effectiveness of the use of IMF support and foreign reserves in globally driven crises. It finds that actual use of IMF support helps during currency crises – the type of crisis for which the support was originally designed. Use of reserves is of limited effectiveness and only during sudden stops.

 “Developing resilient bail-in capital“. Europe’s largest banks have made progress in issuing bail-inable securities that shelter taxpayers from bank failures. But the now-finalised revision of the bank resolution directive and a new policy of the SRB will make requirements to issue such securities more onerous for other banks.

 “Credit denial in the age of AI“. Banks have been in the business of deciding who is eligible for credit for centuries. But in the age of artificial intelligence (AI),machine learning (ML), and big data, digital technologies have the potential to transform credit allocation in positive as well as negative directions.

 “Public debt and the risk premium: A dangerous doom loop“. The current environment of low to ‘ultra-low’ interest rates fosters the view that ‘deficits do not matter’. However, debt does matter. Countries with high debt levels often pay a risk premium. The combination of a high debt level with a high risk premium creates self-reinforcing loops.

INNOVATION AND DEVELOPMENT

 “Getting better all the time: The benefits of learning for decarbonisation“. The technological development will dramatically impact decarbonisation cost. In this blog post, the author suggests that national decarbonisation strategies should put a special emphasis on the benefits of learning.

 “Europe’s big tech contradiction“. Why are all the tech giants American or Chinese? Should Europe have its own Facebook? Why aren’t any of the top digital companies European?

 “AI technology and gender inequality“. Computerisation and robotics have had a profound effect on labour markets. Using data from Japan, this column finds that female workers are more exposed to risks of computerisation than male workers, and that this tendency is more pronounced in larger cities.

 “Trends in the Information Technology sector“. The U.S. leads the global landscape in technology innovation. The country’s competitive edge, according to the World Economic Forum’s 2018 Global Competitive Index, is due to its business dynamism, strong institutional pillars, financing mechanisms, and vibrant innovation ecosystem.

EUROPEAN AFFAIRS

 “When facts change, change the pact“. “When facts change, I change my mind,” John Maynard Keynes famously said. With long-term interest rates currently near zero, the European Union should reform its fiscal framework to allow member states to increase their debt-financed public investments.

 “Not so fast! Westminster’s (continuous) oversight of European Affairs post-Brexit“. The UK will not be able to make a clean break from the EU and its lawspost-Brexit. Westminster should develop new scrutiny structures which would enable parliamentarians to better navigate yet unknown post-Brexit reality.

 “Equilibrium Real Interest Rates and the Financial Cycle: Empirical Evidence for Euro Area Member Countries“. The authors estimate the equilibrium real interest rate for nine Euro area member countries and the Euro area as a whole using quarterly data from 1995 to 2015.
 “European Commission starts planning for €91.4B Horizon Europe implementation“. The final budget is not yet agreed, but shadow committee has begun work on bringing the outline agreement on the programme to life.

SOCIAL POLICY

 “Forty years of inequality in Europe: Evidence from distributional national accounts“. Despite the growing importance of inequalities in policy debates, it is still difficult to compare inequality levels across European countries and to tell how European growth has been shared across income groups. This column draws on new evidence combining surveys, tax data, and national accounts to document a rise in income inequality in most European countries between 1980 and 2017.

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