William De Vijlder

Group Chief Economist BNP Paribas

Structural policy

What determines a country’s long-term growth? Industrial and energy policies, innovation and R&D, infrastructure and the environment, competitiveness and competition… William De Vijlder focuses on the structural characteristics and performances of a country or region.

European Union

Reforming EU economic governance: the start of a marathon

The European Commission has relaunched a comprehensive review of the economic governance framework of the European Union. This initiative is necessary considering the impact of the Covid-19 pandemic on public finances as well as the investment needs in the context of the green and digital transformation. The review process comes with several challenges: an agenda which is particularly broad, the inclusive nature of the debate, involving many stakeholders and, as far as fiscal governance is concerned, the necessity for EU member states to strike a balance between committing to policy discipline whilst keeping national fiscal policy leeway. Given the state of public finances in most EU countries, sensible fiscal rules are necessary to gradually create the much-needed fiscal room for manoeuvre.

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Green finance

Green investments, public debt and financial markets

Limiting global warming will require huge investments, which will partly have to come from the public sector. This could lead to a crowding-out effect. Higher public borrowing requirements could push up interest rates and weigh on private investments. In the near-term such a risk seems remote. On the contrary, there could be a crowding-in effect with a reduction in climate-related risk and positive second-round effects from green public investments stimulating private investments. To reduce the risk that financial markets would exclusively focus on the impact on public indebtedness, governments should communicate clearly on the nature of their investments, insisting that they should have a return which is a multiple of the borrowing cost.

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eurozone tagcloud2

Strengthening the eurozone: prospect of progress at last?

The German finance minister has made a plea for the creation of a pan-European unemployment fund. Being able to borrow from the fund would require having contributed in the past as well as having met certain criteria in terms of economic policy. This form of risk-sharing would soften the impact of downturns and hence would be an important contribution to strengthen the eurozone.

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Internalising climate change externalities: leading by example

Climate change and climate-related events can have profound consequences for society, the economy and business. Coping with these externalities does not depend solely on government initiative. The decision of the private sector to take them into account when buying or producing—internalising them—can make a big difference.

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The right timing of structural reforms

The importance of structural policy is unquestionable. This was clearly explained by Mario Draghi at the ECB Conference in Sintra. However, their impact not only depends on the timing but also on the types of measures, the credibility and the interaction with other policy measures.

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The key known unknowns for 2016

Of the many unknowns we face going into 2016, two are of particular importance: will China achieve a soft landing and how will the US economy react to the Federal Reserve rate hikes? The answer to these questions will determine the evolution of global growth, commodity prices and financial markets next year.                                             http://economic-research.bnpparibas.com/ecotvweek/en-US/known-unknowns-2016-12/11/2015,c24888

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The US manufacturing slowdown: a dollar story ?

The ISM index has dropped below 50 which suggests the US manufacturing sector is in contraction. The Eurozone manufacturing PMI is well above the 50 level and shows a healthy business environment. The evolution of the cyclical momentum in the US versus the Eurozone is closely correlated with the evolution of the EUR/USD exchange rate.

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