Condorcet Workshop: 27 April, 2012

Rennes, Faculty of Economics

The Political Economy of Redistribution

Program

9:00 , Welcome remarks, Fabio Padovano (Director, Centre Condorcet for Political Economy) and Yvon Rocaboy (Director, CREM-CNRS, France)

9:10 Fabio Padovano (CREM-CNRS and Centre Condorcet, France) and Gilberto Turati* (University of Torino, Italy): Redistribution through a “leaky bucket”: what explains the leakages?

Discussant:  Stanley Winer (Carleton University)

10:10 Vincenzo Galasso* (Università della Svizzera Italiana, Switzerland) and Paola Profeta (Bocconi University, Italy): When the State Mirrors the Family: The Design of Pension Systems

Discussant: Yvon Rocaboy (CREM-CNRS and Centre Condorcet, University of Rennes 1)

11:10 Coffee Break

11:30 Vani K. Borooah* (University of Ulster, UK) and Catherine Bros (University of Paris-Est Marne La Vallée): The Distribution of Social Capital, Confidence in Public Bodies, and Electoral Participation in India

Discussant: Benoit le-Maux (CREM-CNRS and Centre Condorcet, France)

12:30 David Bardey (Toulouse School of Economics, France) and Fernando Jaramillo* (Universidad del Rosario, Colombia): Optimal Unemployment Insurance in Presence of Informal Sector

Discussant: Vani K. Borooah (University of Ulster, UK)

13:30 Lunch

15:00 Klaus Abbink (Department of Economics, Monash University), David Masclet* (CREM-CNRS, Université de Rennes 1) and Daniel Mirza (Université François Rabelais de Tours): Inequality and Inter-group Conflicts–Experimental Evidence

Discussant: Massimiliano Piacenza, (University of Turin)

16:00 Micael Castanheira (Université Libre de Brussels, Belgium), Gaetan Nicodème (Université Libre de Brussels, Belgium) and Paola Profeta* (Bocconi University, Italy):   On the Political Economics of Tax Reforms: survey and empirical assessment

Discussant:  Jean-Michel Josselin (CREM-CNRS and Centre Condorcet, France)

17:00 Coffee Break

17:20 Ilaria Petrarca* and Fabio Padovano (CREM-CNRS and Centre Condorcet, France): Redistribution by means of legislation

Discussant: Fabien Moizeau (CREM-CNRS and Centre Condorcet, France)

20.00 Workshop dinner

Common Agricultural Policy

 

As I am going to work on the Common Agricultural Policy (CAP) during my internship in Caen I decided to write something about this topic here. The future of the CAP (which will celebrate its 50^th anniversary this year) is currently a burning issue while the new reform for the period 2014-2020 is in debate.

Agriculture covers more than 50% of the land area of the European Union and the community is the biggest exporter and importer of agricultural products in the world. As a consequence the Common Agricultural Policy is one of the most important components of the European Union in terms of budget (43% of the budget of EU in 2010) and its impact on the European economy and population is crucial. However it has always been a very controversial policy.

Decided in 1957 in the treaty of Rome, the Common Agricultural Policy was implemented in 1962 with the main idea of providing agricultural subsidies through intervention in the markets. Its initial objectives were:

-          to increase productivity in agriculture

-          to ensure a fair standard of living for the agricultural Community

-          to stabilise markets

-          to secure availability of supplies

-          to provide consumers with food at reasonable prices

Over time the preservation of the environment and the rural development also became priorities of the CAP.

3 main principles characterise the Common Agricultural Policy:

-          a single agricultural market meaning that trade barriers between members no longer exist and that health rules and technical standards are harmonized

-          a financial solidarity meaning that resources are allocated to common expenditures and don’t depend on the contributions of the states.

-          a community preference meaning that products from EU are prefered to imported products

The Common Agricultural Policy has been substantially reformed since its creation in 1962.

In the 1970’s Europe already managed to guarantee food self-sufficiency to member states but the CAP became a victim of its own success and problems quickly appeared. The combination of high and stable prices with quick technological improvements made the production grow faster than the consumption. In many sectors (milk, cereals) surpluses occurred while their storage or even their destruction had a high budgetary cost for the EU. The reaction to these problems came with the control of the production, for instance by the establishment of quotas for milk production in 1983.  At the same time the productivity increased in the primary sector, some problems of water pollution or soil nutrient depletion occurred and the environment became a more important issue to take into account in the CAP.

Successive reforms followed afterwards. In 1992 an important reform started the process of reducing elements of market support in favour of direct payments to farmers. Support prices were blocked or even reduced and some land was taken out of production with the aim to prevent farmers from overproducing.  The next important reform was in 1999 with further cuts in guaranteed prices compensated by direct payments to farmers, but also with stricter measures in favour of the environment and wider rural development plans. Furthermore the CAP was in the same year divided into 2 main “pillars”: the first one supporting markets and agricultural prices and the second one focusing on the rural development. These 2 main reforms made finally the weight of the CAP in the European budget considerably decrease, from around 80% in the beginning of the 80’s to 45% in the beginning of the new millennium.

In 2003 a new reform introduced single farm income payments for most of the producers instead of the former production-linked subsidies. This Single Farm Payment (SFP) encouraged farmers to produce in response to consumer demand and introduced the concept of conditionality as the subsidies will be from then on given to farmers only under the conditions they respect agricultural and environmental rules and the animal welfare.

2008 is also an important year for the CAP as an agreement on the Health Check of the Common Agricultural Policy was reached by European agriculture ministers to evaluate the implemented policies and to anticipate the next evolutions by 2013 representing the end of the financing period.

In October 2011 the European commission finally presented its proposals to reform the CAP after 2013. The budget of the CAP will remain the same over the period 2014-2020 (418 billion Euros) but will be reduced if we consider its proportion in the whole budget of the EU. Its 3 main objectives will be from now on a “viable food production”, a “sustainable management of natural resources” and a “balanced territorial development”. A greater emphasis will be placed on environmental measures for the period 2014-2020 and the reform has the goal to make the CAP fairer by fixing an upper limit in the subsidies for the biggest farms and fixing a minimum guaranteed level for the smallest ones. Moreover new measures in favour of the rural development should be taken.

Whereas 50 years ago the Common Agricultural Policy was rather an answer to the worries of Europeans to have enough food on their territory, it seems that now among the most important goals of this policy, the preservation of the environment and the sustainable use of natural resources have essential places.

 

Have fun during your internships or on your master’s thesis !

Efflam

2012 Summer School, Shandong University

Veuillez trouver ci-joint des informations concernant l’école d’été de notre université partenaire en Chine, l’Université de Shandong (SDU) du 1er au 28 août 2012.

Comme les années précédentes, l’Université de Shandong offre une bourse à un étudiant de l’Université de Rennes 1 pour participer à l’école d’été. La bourse couvre les frais d’inscription, de scolarité et de logement. Les autres dépenses sont à la charge de l’étudiant.

La date limite au SAI pour toutes les demandes concernées par la bourse est le *15 mai 2012.

*La date limite pour les inscriptions sans demande de bourse est le 31 mai 2012.

Vous souhaitant bonne réception de ces informations

ISSpromotion12

ApplicationISS_SDU2012

Standard & Poor’s Takes Various Rating Actions On 16 Eurozone Sovereign Governments

On Jan. 13, 2012, Standard & Poor’s Ratings Services announced its rating actions on 16 members of the European Economic and Monetary Union (EMU or eurozone) following completion of its review.

They have lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by two notches; lowered the long-term ratings on Austria, France, Malta, Slovakia, and Slovenia, by one notch; and affirmed the long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands. All ratings have been removed from CreditWatch, where they were placed with negative implications on Dec. 5, 2011.

According to S&P, these rating actions are primarily driven by its assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone. In addition, the outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers, indicate that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone’s financial problems.

 In its view, it is increasingly likely that refinancing costs for certain countries may remain elevated, that credit availability and economic growth may further decelerate, and that pressure on financing conditions may persist. However, S&P confirms that eurozone monetary authorities have been instrumental in averting a collapse of market confidence. They think the European Central Bank has successfully eased collateral requirements, allowing an ever expanding pool of assets to be used as collateral for its funding operations, and has lowered the fixed rate to 1% on its main refinancing operation, an all-time low. Most importantly , it has engaged in unprecedented repurchase operations for financial institutions, greatly relieving the near-term funding pressures for banks.

 

Fan chenchen

 

The economic blogosphere

The huge development of the Internet in the last years has made information more accessible than ever. However, it is not always easy to find pertinent information. This is particularly true in economics where there is a huge number of sites, blogs, forum etc. The aim here will be to give students or people interested in economics some links about where they can find relevant information. We will focus on blogs because the posts are short, not very formal and therefore easy to read. Going around the economic blogosphere can also be a good read for anyone who wants to have a summary of what is going on in economics.

There will be a first category for the blogs which are in English and a second one for the ones in French. This list is not exhaustive; it is just an indication for students who want to read about economics of where they can begin.

Calculated risks: It started as a blog specialized in the housing market, but now it posts about more general economic subjects. It is written by Bill Mc Bride, who posts several articles every day. The articles are often illustrated with data or graphs. It is a reference for all subjects concerning the real estate and the housing markets.

Marginal revolution: It is written by Tyler Cowen and Alex Tabarrok, both economists at George Mason University. They write about all economic-related subjects. You have articles about ongoing economic subjects as well as about various others subjects such as food, arts or education. They provid several articles every day with links to lots of relevant articles.

Vox.eu:  It does not have the typical form; it is a platform with articles from well-known economists, such as Olivier Blanchard, IMF’s Chief Economist. The articles concern mostly macroeconomic issues, they are slightly longer than in the others sites and do not have much mathematics in them. They organize from time to time ”VoxEU debates”, the most recent one was about the question: “Why do we need a financial sector?”. They also present articles from the Centre for Economic Policy Research (CEPR).

The conscience of a liberal: It is the famous blog written by Paul Krugman. It is very well read and followed by all the blogosphere. He presents alternative macroeconomic theories and models (the “wonkish” posts) and his opinion on the American politic and economic system. This blog is very interesting because of its great influence. It is, however, very politically oriented.

And now for French students, who do not wish to read blogs in English, let’s talk briefly about the blogs in French. There are unfortunately not so many of them. Blogs are culturally less developed in Europe as there are in the United States. It is, however, possible to find some high-quality sites in French. Here is one of them:

Rationalité Limitée: This blog is mostly written by Cyril Hédoin. It is specialized in institutional economics and in rationality in economics. It also gives links to other articles and has a list of recommended lectures. However, the posting is here less frequent than in the previous sites.

What about public economics? There are unfortunately very few sites dedicated to public economics. There used to be a blog in french ecopublix, but they don’t post since a year ago.

This is just a sample of what exists on the Internet. By going to these sites, you will have links to other blogs, which might be more suitable to your interests.

Have fun reading

Léo

Economic Snapshot: Italy

 

Ladies and gentlemen, here is my two cents about Italy..

 

Strength :

Italy is 8^th largest economy in the world, one of G7 member.

The debt market liquidity is huge, included in all global market benchmark.

Italy has abundant of population around 60 million. More than 70% is in productive ages.

Domestic hold more than 50% of the total domestic bond, it is better than the other peripheral.

Weakness :

Loss of competitiveness, ranked number 48 according to World Economic Forum, it is worse than Indonesia.

Economic growth is lagging behind. The 10 years average of economy growth is only about 0,6% YoY, lower than Euro average which is around 1,4% YoY.

Highly correlated with global economy momentum. Italy has the degree of openness around 57% of GDP, compare with Euro area around 27% of GDP.

Economic disparity between north and south region is quite evident in many sectors .

Economy Performance

Both of hard and soft data describes that Italian economy is losing momentum. Both PMI and Industrial production confirm in contraction area. Retail sales growth is sluggish. Export performance has been slowing down due to decrease in external orders.  

Political Condition

This a very very hot issue

For your information, Berlusconi’s coalition not even has majority seat in parliament. The coalition only locked 47% of seats.

The opposition, who lead by W.Veltroni take 38% of seats.

In the recent poll, majority of Italian people disbelieve Berlusconi’s leadership. 60% of Italian not satisfied with government performance.

If this current circumstance continues, it is possible for an early election before 2013.

Fiscal Condition

It is so simple and not a secret that Italy is a peripheral.

Their debt to GDP goes to the sky, approaching 125% of GDP. Therefore Italy is vulnerable against volatility in borrowing cost

Debt trap makes Italy always face budget deficit even though operation balance is surplus.

Rating : Still possible for another downgrade

Moodys : A2 (3 notches above Investment grade), negative outlook, last update : October 2011

S&P : A (3 notches above investment grade), negative outlook, last update : September 2011

Fitch : AA- (5 notches above investment grade), Stable outlook, last update : October 2006

Outlook

Economy of Italy will growth in sluggish mode, and even possible will fall to recession due to several factors:

Business and consumer pessimism

Austerity measures will make purchasing power lower and restrain employment expansion.

Higher borrowing cost not only will hurt government but also to corporate sector

Global economy slowdown will make hurt export side

Banking sector problem due to another peripheral problem like in Greece, Portugal and Spain.

Rating downgrade

                                                                                                                 Rizki