Second RAstaNEWS Report15-12-2015
RAstaNEWS just issued its Second Annual Report.
The RAstaNEWS project is based upon the premise that rethinking the future of macroeconomic and monetary integration in Europe requires a substantial revision and integration of underlying macroeconomic models, and a new vision about what markets and policymakers can accomplish. In a nutshell, since its inception the project has aimed at providing different but interrelated policy outputs to EU and Eurozone policymakers:
1) proposals to reform EMU macroeconomic policies in a way that would contribute to decrease the likelihood of the occurrence of future crises, while at the same time supporting overall growth in the currency union. The project aims at addressing EMU design and policy weaknesses that only emerged after the onset of the Great financial crisis, particularly those that: (a) hamper the proper functioning and the uniform transmission of monetary policy throughout the euro area; and (b) limit the coordination of fiscal policies, prevent their use as countercyclical buffers, and impede the emergence of a politicalconsensus over the design of redistributional mechanisms at EMU level;
2) proposals to reform EMU macro-prudential policies, improving the functioning of the Banking Union as a way to enhance convergence of economic conditions and a smoothing of the business cycle, all the while serving as prudential tools at the EMU level that shelter the monetary union from a renewed negative feedback loop of financial crises and inter-country contagion;
3) proposals to devise Early Warning Signals (EWS) that could serve as improved and timely indicators of problematic disequilibria at the macro level, with the aim to allow European and national policymakers, regulators and supervisors to act as early as possible in order to rebalance national economies or the EMU as a whole before a full-fledged crisis can develop.
Point 1 of this list has been thoroughly addressed in the First RAstaNEWS Annual Report. This Second Annual Report will aim at shedding some insights and offer policy recommendations as to a feasible way to address points 2 and 3, i.e. how to strengthen macro-prudential regulation and supervision at the EMU level, and how to develop EWS indicators that could help highlight economic disequilibria that have the potential to destabilise national countries within the EMU or the euro area as a whole.