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Research Overview We are now almost 17 years old, and have grown into an active and productive network, with over 500 Research Fellows, Affiliates and Associates based throughout Europe as well as in North America and elsewhere. Our focus remains policy-relevant economic research, but within that remit we aim to be inclusive, bringing into our networks the best researchers working in a variety of fields. Since we are a network and not a think tank with in-house research staff, the directions in which we expand are influenced by the emergence of new research frontiers within economics. The creation of two new Programme Areas in 1998 – Labour Economics and Public Policy – offers a good example of this evolution. The size of our research network and the scale of our activities continue to be impressive: during 1999/00 there were 530 CEPR researchers and we organized 92 meetings. We have attempted to maintain a balance between research excellence and policy relevance in the face of this rapid growth by fostering interchanges between researchers working at the frontiers of their field and the business and policy communities. One by-product of this process is an impressive Discussion Paper series: we published 290 Papers in 1999/00. Most of these will appear in due course in leading journals. We also published ten reports, books and journals in this period: these are aimed not only at researchers, but also at decision-makers in the private sector and the policy community. Our workshops and conferences play an equally important role in the process, bringing researchers together, often at an early stage in the research process, to exchange ideas. In 1999/00 we held 49 workshops and conferences, including our series of annual symposia, which play a particularly important role in sustaining our commitment to research excellence. Each symposium brings together CEPR Research Fellows and Affiliates, as well as other leading researchers, to discuss the most relevant research topics in the field and to help push back the frontiers of our understanding. International Macroeconomics (IM) IM is our largest Programme, with over 140 Fellows and Affiliates, led by Jordi Galí, Lucrezia Reichlin and Charles Wyplosz. Research spans a wide range of topics, but the key areas include:
The international financial system: the Mexican, Asian, and Russian crises, origins and responses; international capital flows; Europe's links to the global economy and its role in the management of the international financial system. EMU features prominently in the Centre's activities. In April 1998, for example, Economic Policy published a special issue, entitled 'EMU: Prospects and Challenges for the Euro'. In autumn 1998 we completed four studies for Directorate General II of the European Commission, each focusing on aspects of EMU:
The results of 'Monetary Policy in Stage 3: Implications of Different Debt Structures' were published earlier this year in our new Policy Paper series. In the summer of 1998, we were awarded contracts to carry out further studies on the impact of the single currency for Directorate General II. One of the studies, completed in early 2000, examines the impact of EMU on portfolio adjustment, focusing on the indirect effect of the euro (in terms of transaction costs and changing investment opportunities) on portfolio allocations. The institutional structure and the policies pursued by the European Central Bank (ECB) have also been an important focus for the IM programme. In October 1998 we launched a new series of reports, Monitoring the ECB (MECB), which aims to play a key role in establishing the accountability of the ECB and ensuring that its actions receive thorough and detailed scrutiny. We published the first MECB report, 'Safe At Any Speed', in October 1998. The Report argued that many operational issues facing the ECB remained unresolved: targeting, supervision, openness and accountability, and the respective roles of the ECB Executive Board and national central banks. In May 1999 we published an 'MECB Update', a shorter report which assessed the developments in the European economy and ECB policy in the first months of 1999. 'One Money, Many Countries', the second full MECB Report, was published in February 2000. It provides an assessment of the key issues facing European monetary policy, focusing in particular on the political economy of the ECB and on banking in EMU. April 1999 saw the launch of our new series of Policy Papers. In the first Policy Paper, 'Alice in Euroland', Willem Buiter argued strongly for more transparency in the formulation of ECB policy. This Paper provoked a vigorous response from Otmar Issing, a former member of our Executive Committee, whose response was published in June 1999 as our second Policy Paper, 'The Eurosystem: Transparent and Accountable or Willem in Euroland'. In 1996 we launched one of the first networks in economics funded by the European Commission's 'Training and Mobility of Researchers' (TMR) programme. This network aims to carry out basic research and postdoctoral training on 'The Economic Analysis of Political Institutions: Coalition Building and Constitutional Design'. Its output provided an important input into a conference designed to address a very policy relevant topic: 'The Political Economy of Fiscal and Monetary Stability in EMU'. Our second TMR network, on 'New Approaches to the Study of Economic Fluctuations', began work in 1998. In September 1999, in conjunction with the International Center for Monetary and Banking Studies (ICMBS) in Geneva, we published a report entitled 'An Independent and Accountable IMF'. It analyses the performance of the Fund in predicting, averting and managing new types of financial crises. These crises have become more violent, disruptive and difficult to predict and manage because they are now centred on the capital account, in contrast to earlier crises which were rooted in imbalances in the current account. The Report concludes that the IMF has yet to integrate this evolution into its diagnoses, procedures and conditions. The second Report in this series was published in July 2000, entitled 'Asset Prices and Central Bank Policy'. International Trade (IT) Research in the IT Programme, led by Richard Baldwin and Tony Venables, currently focuses on topics such as:
The IT Programme's annual 'symposium', the European Workshop in International Trade (ERWIT), focused in 1998 on economic geography and in particular the connection between trade and labour market outcomes. Work on economic geography continued with an August 1998 conference on 'New Issues in Trade and Location', held in Lund; an October 1998 conference in Bonn on 'Regionalism in Europe'; and a July 1999 workshop in Paris on 'Economic Geography and Public Policies'. The tenth Monitoring European Integration Report, published in April 2000 and entitled 'Integration and the Regions of Europe: How the Right Policies Can Prevent Polarization', also drew on the new economic geography literature, exploring the factors influencing the location of economic activity in Europe. In the summer of 1998 we were awarded two contracts from Directorate General II of the Commission to carry out studies on the impact of market integration in Europe. The first study, on 'EMU and the Integration of European Product Markets', involves researchers drawn from both the IT and the IO Programmes. It aims to analyse the impact of monetary integration on European product markets. The second project, on 'Factors Affecting the Location of Activities within the EU' draws on the IT Programme's work on location and the new economic geography. Our third TMR network, on 'Foreign Direct Investment and the Multinational Corporation' began work in 1998. The network contains several of the leading doctoral programmes in economics, and the cooperation among the network partners is allowing them to improve the training of young European researchers in International Trade. The network held its first workshop in London at the end of November 1998 and a second in Vouliagmeni in September 1999. We held a workshop on 'New Issues in the World Trading System' in February 1999, funded by the UK Foreign and Commonwealth Office. The new WTO Round was also the focus of the 1999 International Seminar on International Trade (ISIT), which took place in June 1999 in Cambridge MA. The role of the developing countries in the WTO was the subject of our fourth Policy Paper, entitled 'Putting "Humpty" Together Again: Including Developing Countries in a pro-WTO Consensus'. It was published in April 2000. Labour Economics (LE) Juan Dolado joined Klaus Zimmermann as Co-Director of the LE Programme in August 1998. The first European Summer Symposium in Labour Economics (ESSLE) was held in Gerzenesee in September 1998. It focused on issues of education and training, skill-biased technical change, and migration and its economic consequences. The second Symposium took place in Ammersee in September 1999. Researchers in the LE Programme are currently focusing on the following research areas: Regulation and deregulation in European labour markets: the impact of labour market policies on productivity and growth, the development of new techniques for evaluating the effectiveness of European labour market policies.
Our project on migration and social exclusion explores the post-1970 effects of technological change and market integration on the demand for labour with different levels of education and skills, and on unemployment and the process of social exclusion across Europe. The first conference held under the auspices of this project, entitled 'Labour Demand, Education and the Dynamics of Social Exclusion', took place in Lisbon in November 1998. A second conference, on 'Marginal Labour Markets in Metropolitan Areas', was held in Dublin in October 1999. Financial Economics (FE) Bruno Biais joined Marco Pagano as Co-Director of the FE Programme in the summer of 1998. Activities have grown steadily, with a variety of initiatives under way in areas which include:
The European Summer Symposium in Financial Markets held its tenth meeting in Gerzensee in July 1999. The 'focus sessions' were devoted to Legal Rules and Corporate Structures; Bank Risk Management; Liquidity and Experimental Finance Markets. A conference on 'Europe's Changing Financial Landscape' was held in Brussels in September 1998. The meeting focused primarily on the current consolidation and restructuring of European banking, analysing its causes and effects, and comparing it with the American experience. The ninth Monitoring European Integration Report, entitled 'The Future of European Banking', was published in February 1999. It also dealt with the issue of structural change in the European financial sector, examining the restructuring of European banking and its impact on European monetary policy and on the provision of financial intermediation to firms and households. The Report argued that in the medium term European banks' need to diversify will be satisfied by consolidation within – and not across – national boundaries. An April 1999 conference in Helsinki, on 'The Future of the Financial Services Industry and New Challenges for Supervision', returned to this theme. Our fourth TMR network, on 'The Industrial Organization of Banking and Financial Markets in Europe', began work in the summer of 1998. The first workshop, on 'Banking and Financial Markets', was held in November 1999 and a second took place in London in February 2000. The Programme also launched new collaborations with two leading finance journals. In March 1999, in conjunction with The Review of Financial Studies, we organized a conference on 'Price Formation', which dealt with a number of issues in market microstructure. In May 1999, in conjunction with the Journal of Financial Intermediation, we organized the 'Symposium on Competition, Regulation and Financial Integration'. Other conferences held under the auspices of the FE programme include 'European Venture Capital: Financing of Innovation for Long-Term Growth', held in Milan in November 1998; 'Security Prices in Secondary markets: The Impact of Incentives, Regulation and Market Structure', held in Louvain-la-Neuve in May 1999; and 'Core Competencies, Diversification and the Role of Internal Capital Markets', held in Naples in January 1999. During 1998/9 the research foundation of the Banque de France agreed to support two research projects involving FE researchers:
The second project falls within a new area of research for the FE Programme – 'law and finance'. A new network on this topic, entitled 'Understanding Financial Architecture: Legal Framework, Political Environment and Economic Efficiency', began work in mid-2000. Industrial Organizatioin (IO) Phillipe Aghion joined Lars-Hendrik Röller as Programme Director in the summer of 1998. Activities in the Programme currently focus on themes which include:
Our TMR network on 'The Evolution of Market Structures in European Network Industries' began work in 1998 and held its first workshop in the autumn of the same year. The regulation of 'network industries' has emerged as a key issue on the European policy agenda, yet there is little high-quality research capable of informing debates on this issue. In September 1998 we launched a new series of reports on Monitoring European Deregulation, which attempt to address this problem. The first Report concentrated on the general issues that arise in the regulation in network industries, with a second section focusing on the telecoms industry. The second Report, entitled 'A European Market for Electricity?', was published in October 1999. The IO programme has for some years played a leading role in the analysis of competition policy in Europe, and the Programme made a number of key contributions to the policy debate during the last two years. In September 1998 we published 'Trawling for Minnows: European Competition Policy and Agreements Between Firms'. Researchers from the IO Programme have carried out a study on 'Efficiency Gains from Mergers' for Directorate General II of the European Commission. This study, completed in late 1999, suggests a methodology to measure and evaluate efficiency gains from mergers, and ways in which such measures could be used in the design and implementation of European competition policy. The report has been welcomed by the Directorate General for Competition of the European Commission, which has already taken steps to implement some of the proposals put forward by the report. Transition Economics (TE) Research in the TE Programme, led by Gérard Roland and Jan Svejnar, currently focuses on issues which include:
Monetary and exchange rate policies were the focus of a number of the Programme's recent activities. The project on 'Policy-making in a Small Open Economy Aiming at Joining the European Union: The Case of Hungary' aimed to transfer to Hungarian researchers the skills and knowledge necessary to carry out basic research on the implementation of monetary and exchange rate policy. As part of the Economic Policy Initiative (EPI), a conference on 'Monetary Policy and Accession to the European Union', held in November 1998, discussed the design of monetary policy and the choice of exchange rates regimes in Central and Eastern Europe. In September 1999 a revised version of the report presented at the conference was published as Economic Policy Initiative No. 5. We also held EPI workshops on the regulation of network industries and on corporate governance. The Economic Policy Initiative drew to a close in April 1999 with a Forum on the implications of the structural funds for the Associated Countries. Work was also completed on 'Inside the Transforming Firm: A Study of Enterprise Restructuring in the CIS'. The project aimed to analyse the restructuring process using firm-level survey data for Russia, by identifying how the structure and the behaviour of firms is affected by factors such as the economic environment, state policies, harder budget constraints, new private owners and governance structures. Our new 'Transition Economics Summer Workshop for Young Academics', launched in 1998, aims to promote the research of young economists from Central and Eastern Europe (and the EU) who are working in the field of transition economics. The first workshop took place in Prague in June 1998, and the second in Budapest in May 1999. The Centre has also been involved in administering RECEP in Moscow. It has succeeded in attracting back a number of Russians who have recently received doctorates from leading American and European universities. RECEP held its first annual research conference in September 1998, in the aftermath of the August crisis. The Programme’s third annual symposium took place in Beijing in July 1999, and focused on 'Twenty Years After: China's Reforms and its Place in the World Economy'. Public Policy (PP) In early 1999 Raquel Fernández joined Tim Besley as a Programme Director. Research so far has focused on the following issues:
Although activities in the Programme are only in their initial stages, a number of conferences have been held over the past year, including 'Psychology and Economics' held in Toulouse in June 1999, and 'Institutions of Restraint' held in Toulouse in June 2000. Mathias Dewatripont (Research Director) Stephen Yeo (Chief Executive Officer) |
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