The Euro: only for the agile

Alan Ahearne and Jean Pisani-Ferry explore the implications of economic divergence in the euro area for policy makers, as well as the discipline required to be part of the single currency. From this analysis they derive policy recommendations, both for the policies and monitoring of existing euro area members and for the selection of those of the new Member States that may adopt the euro in the next years.

Zombie Firms and Economic Stagnation in Japan

It is often claimed that one contributing factor to Japan's weak economic performance over the past decade is that Japanese banks have continued to provide financial support for highly inefficient, debt-ridden companies, commonly referred to as "zombie" firms. Such poor banking practices in turn prevent more productive companies from gaining market share, strangling a potentially important source of productivity gains for the overall economy. To explore further the zombie-firm hypothesis, we use industry- and firm-level Japanese data and find evidence that productivity growth is low in industries reputed to have heavy concentrations of zombie firms. We also find that the reallocation of market share is going in the wrong direction in these industries, adding to already weak productivity performance. In addition, we find evidence that financial support from Japanese banks may have played a role in sustaining this perverse reallocation of market share.Productivity, banking system, creative destruction

European perspectives on global imbalances

Alan Ahearne and Jürgen von Hagen explore the options European policy makers have in the context of global current account imbalances. Some Europeans are concerned that a disproportionately large burden of adjustment will fall on Europe when the European economy is not flexible enough to cope with a substantial appreciation of the euro. This paper was prepared for the Asia Europe Economic Forum conference.

Paying the Price: Sex Workers in Prison and the Reality of Stigma

Sex workers are a hidden demographic of the female prison estate. The Corston Report2 called for a new Reducing Reoffending Pathway 9 for women who have engaged in prostitution. Yet this involves having to locate the women who sell sex and having the support in place inside prison. Those engaging in sex work have specific needs relating to health care, securing housing, engaging with charities who assist with safer worker practices and exiting support, and coping with the additional stigma of being a prisoner who also works in the sex industry, particularly in a street-based setting. This paper derives from my Ph.D research at HMP New Hall. There are no official records kept for the number of sex workers in custody. And despite the plethora of research on various elements of the sex industry,3 there is little on the specific group of sex workers in prison.4 My study seeks to be a small part of remedying that shortfall

The EU and the Governance of Globalisation. Bruegel Working Papers, 2006/02, September 2006

Bruegel Scholars Alan Ahearne, Jean Pisani-Ferry, André Sapir and Nicolas Véron contributed this paper to the project Globalisation Challenges for Europe and Finland organised for the secretariat of the Economic Council of Finland. The project is part of Finland's EU presidency programme and its objective is to add momentum to the discussion in the European Union on golbalisation, Europe's competitiveness policy and the Lisbon Strategy

Ireland's great depression

We argue that Ireland experienced a great depression in the 1980s comparable in severity to the better known and more studied depression episodes of the interwar period. Using the business cycle accounting framework of Chari, Kehoe and McGrattan (2005), we examine the factors that lead to the depression and the subsequent recovery in the 1990s. We calculate efficiency, labor, investment and government wedges, and evaluate the contribution of each to the downturn and subsequent recovery. We find that the efficiency wedge on its own can account for a significant portion of the downturn, but predicts a stronger recovery in output. The labor wedge also helps account for what happened during the depression episode. We also find that the investment wedge played no role in the depression.

China and emerging Asia: comrades or competitors?

We explore whether increases in China’s exports reduce exports of other emerging Asian economies. We find that correlations between Chinese export growth and that of other emerging Asian economies are actually positive (though often not significantly so), even after controlling for the effects of income growth of trading partners and real effective exchange rates. We also present results from a VAR estimation of aggregate trade equations on the relative importance of foreign income and exchange rates in the determination of Asian export growth. An important finding is that, while exchange rates do matter for export performance, the income growth of trading partners matters even more. In addition, we examine specific products and find evidence that a considerable shifting of trade patterns is taking place, consistent with a ‘flying geese’ pattern in which China and ASEAN-4 move into the product space vacated by the NIEs. Overall, our results suggest that China and emerging Asia are both comrades and competitors. Disclaimer: The views expressed here are those of the authors and should not be attributed to the Federal Reserve Board, the Federal Reserve Bank of Chicago, or the International Monetary Fund.Exports ; Foreign exchange rates ; Trade ; Economic conditions - China ; Exports - China

Global governance: an agenda for Europe

Governance of the global economy is becoming a pressing matter and the situation is compounded by the growing number and diversity of players in the global economy. The authors argue that Europe is now in a position to take a leading role. Not only is it in Europeâ??s interest to reform the global governance system, but it also has the experience necessary to do so. The vacuum created by the seeming reluctance of the US to drive the agenda forward could be filled by the European Union.

Cultural policy through the prism of fiction (Michel Houellebecq)

Cultural policy studies tends to talk about fiction without actually using it. A typical move is to place it in an aesthetic realm to be protected, situated and/or critiqued. This is an eminently worthwhile activity. However, this paper explores some ways in which works of fiction may, following their own dynamic, yield significant perspectives upon the world of cultural policy itself. In what ways do fictional works offer us prisms through which to reappraise the worlds of cultural policy? What are the effects of the reconfigurative imaginative play to which they subject the institutions of that world? How are the discourses of cultural policy reframed when redeployed by novelists within free indirect style or internal monologue? The article begins by distinguishing four broad modes in which fictional works refract the world of cultural policy, and then analyses in more fine-grained detail two novels by the leading French writer Michel Houellebecq