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Jacob Funk Kirkegaard

Jacob Funk Kirkegaard

Jacob Funk Kirkegaard, senior fellow, has been associated with the Institute since 2002. Before joining the Institute, he worked with the Danish Ministry of Defense, the United Nations in Iraq, and in the private financial sector. He is a graduate of the Danish Army's Special School of Intelligence and Linguistics with the rank of first lieutenant; the University of Aarhus in Aarhus, Denmark; the Columbia University in New York; and received his PhD from Johns Hopkins University, School of Advanced International Studies.

Articles by Jacob Funk Kirkegaard

Europe’s latest step toward fiscal integration

16 days ago

The elusive goal of establishing collective European responsibility for funding the battle against the COVID-19 pandemic got a big boost this week with an endorsement from German chancellor Angela Merkel and French president Emmanuel Macron. In a joint announcement on May 18, the two leaders stole the limelight from the European Commission, declaring their agreement on a far-reaching proposal for the new €500 billion EU Pandemic Recovery Fund backed by joint indebtedness. It was another step in the “Hamiltonian moment” in Europe of “joint struggles addressed with joint expenditure” in the face of dire necessity.[1]
The plan calls for jointly funded debt to support the European pandemic recovery under the EU Treaty’s Article 122, covering “a spirit of solidarity between Member States…if

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Europe’s next budget is another twist in long road to solidarity

April 29, 2020

Despite the failure of European leaders to agree on next steps battling the COVID-19 pandemic, their meeting on April 23 hinted that progress toward economic recovery and a pro-European approach is becoming more likely.
The political and financial proof of such progress would come in the form of the European Union’s forthcoming €170 billion annual budget. Member states have begun political negotiations on the next multiannual financial framework (MFF) budget, scheduled to start in 2021. Europe should reorganize the 7-year regular MFF to better address the aftermath of the pandemic, and to agree to an additional temporary recovery fund aimed “towards the sectors and geographical parts of Europe most affected” by the health crisis.
Why choosing the MFF budget signals EU solidarity
This

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The Europe makes a down payment on economic solidarity

April 13, 2020

In the face of skepticism and even derision, the Eurogroup and the European Union’s beleaguered 27 EU finance ministers agreed on April 9 to a package of mutually financed emergency rescue measures, signaling European economic solidarity over the COVID-19 pandemic. The agreement includes several important precedent setting decisions and should help facilitate a more ambitious joint economic recovery plan by the EU Council of national leaders later in April.
The ministers’ action was not without drama, including a video conference over several days, broken up by angry episodes for everyone to posture to domestic audiences. In the end, they agreed to a package that contains four main components.
First, the European Investment Bank (EIB) gets an additional €25 billion to establish a

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It is decision time for EU leaders—what should fiscal response to pandemic be?

April 6, 2020

European leaders have been unable to agree to a joint fiscal policy response to the economic crisis created by the COVID-19 virus, a striking failure in light of the European Central Bank’s (ECB) forceful actions. Decision time is approaching for the Eurogroup and EU Council, the representative groups that are the EU’s top decision-making bodies. EU governments have put several concrete proposals on the table (see below), as well as have outside economists.1
EU leaders need to agree because the political future of the "European Project" as a relevant body able to protect Europeans is at stake. If they fail, European populists will target their impotence in Europeans’ hour of need. Italy’s populist leader Matteo Salvini has already made it clear this will be his strategy.
If EU leaders

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Europe should seize oil price windfall to fund its pandemic response

April 2, 2020

The global economic and health crisis is causing consumer demand to fall and oil prices to decline, which is what one would expect. But this collapse is also taking place against the backdrop of an all-out price war between Russia and Saudi Arabia, leading to the lowest fossil fuel prices in nearly a generation. Governments should seize on this trend as a windfall. They should tax the oil price decline away and use the revenue to fund emergency measures fighting the COVID-19 pandemic.
In typical recessions, governments in oil-consuming emerging and advanced economies hardly mind that the price of oil imports goes down. Such declines restore consumer purchasing power, acting as a de facto OPEC-financed fiscal stimulus that puts more money into the pockets of consumers. But the price

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After its COVID-19 emergency, Europe should issue joint recovery bonds

March 26, 2020

As exceptional as efforts by the European Central Bank (ECB) and European states have been at the onset of the COVID-19 pandemic, it is not too soon to think beyond the crisis. The ECB has waived its self-imposed restriction on the amount of bonds it can buy from each member state in its Pandemic Emergency Purchase Program (PEPP), signaling that it has the eurozone’s back for the duration of the emergency. European leaders must now ensure that the same solidarity is adopted for the long-term economic recovery. Europe’s symmetric crisis must not turn into an(other) asymmetric recovery.
Italy, for example, will find it hard to launch as large and comprehensive a post-crisis economic recovery program and fiscal stimulus as Germany will. To help all member states recover, the eurozone will

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Europe is at last channeling Alexander Hamilton

March 23, 2020

Europe’s collective and  forceful intervention to rescue Italy and other euro area countries at economic risk from the coronavirus (COVID-19) plague has been unprecedented in more ways than one. The €750 billion ($810 billion) to address the pandemic was itself unparalleled, comparable to current estimates of the US rescue.[1] But with its de facto open-ended Pandemic Emergency Purchase Program (PEPP), the European Central Bank (ECB) has brought the continent closer to political and financial unity than was previously imaginable, rescuing a dream that has receded in the last few years.
 To understand why, look no further than America’s own “Hamiltonian moment” in 1790.
In the historic constitutional compromise forged by the first US Treasury secretary Alexander Hamilton, James Madison, and

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Europe must go big in its macroeconomic response to COVID-19

March 17, 2020

With more citizens infected than in China, the European Union (EU) is now the world’s COVID-19 epicenter. At the same time, by restricting movement more forcefully, Europe is proving that democracies, too, can take many of the measures China had taken. Targeted and free testing widely available across the EU is part of the reason why Europe has a high number of new confirmed COVID-19 cases. European welfare states also generally provide paid sick leave, and European children do not need to rely on their shuttered schools for their main daily meal.
At the same time, Europe, and noticeably the euro area, is finding it politically challenging to implement timely and comprehensive macroeconomic stabilization measures in a crisis, mainly because of its incomplete institutional framework with no

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Poland’s myopia on climate change

March 11, 2020

The European Union (EU) has ambitiously committed itself to becoming climate neutral by 2050—except for one holdout. To protect its large coal-based energy sector and extract more climate transition rent from the rest of the EU, Poland has to date refused to join the effort, potentially undercutting the EU’s ability to rapidly begin to implement its new Green Deal. Ironically, this position places Poland at odds with its own professed strategic national interest, while helping its historic adversary, Russia.
Poland’s resentment over Russian meddling and aggression dates back centuries. But Russia’s status as a petrostate has been most recently dramatized by its refusal to cut back energy production even when that has meant helping to lower world oil prices, apparently because President

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The refugee crisis returns to Europe—or does it?

March 5, 2020

Violent clashes along the Turkish border, with Greek riot police using tear gas and rubber bullets to repel would-be migrants and refugees, have become a familiar specter in Europe. As in 2015, the immigration issue threatens to fracture European unity and torment its conscience. But the crisis of 2020 is not likely to repeat the one five years ago. This time, Greek and virtually all EU political leaders support a firm response to protect their external border and will likely be able to block the entry of most illegal entrants. The prospects for agreement on a new genuine common EU migration and asylum policy may be receding, however.
President Recep Tayyip Erdogan of Turkey precipitated the crisis last weekend when he opened his country’s borders for migrants—many of whom, at least among

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Is Denmark the new “American dream”?

February 21, 2020

If there was an undisputed winner in the Democratic presidential debate on February 19, it was…Denmark! Its star turn came first when presidential candidate Pete Buttigieg stated flat out that the “Number One place to live out the American dream right now is Denmark,” because of the upward mobility of its citizens. Meanwhile, Senator Bernie Sanders once again invoked universal health care and other benefits as comparable to “what goes on in countries like Denmark, where…they have a much higher quality of life in many respects than we do.”
Are these assertions a sort of Hans Christian Andersen fairy tale? Not exactly. Buttigieg’s comment appeared to have come from a recent study of social mobility in different member states of the Organization for Economic Cooperation and Development

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The UK seeks its own “phase one” deal on Brexit

January 16, 2020

After two years of threats and bluster, President Trump and China reached a “phase one” trade deal incorporating some minor wins while kicking the hard stuff down the road. Prime Minister Boris Johnson, in gearing up for trade negotiations over the economic relationship with the European Union, may well take note and look for an early ceasefire while postponing tough choices into the future.
Like Trump with his China trade war, Johnson goes into the EU negotiations trying to minimize the fallout from the damaging policies he had pushed for—a potentially “hard” Brexit that he championed last year.
Trump’s phase one deal is a limited trade ceasefire, pulling back on some tariff hikes but leaving most others in place in return for China increasing purchases of US agricultural products[1] and

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Will Boris Johnson Go Full Speed Ahead or Wobbly on Brexit?

December 17, 2019

The sweeping victory of British Prime Minister Boris Johnson and his Conservative Party in December 2019 hands him a mandate to "get Brexit done" quickly, as he has promised. In theory, he has the latitude and the votes to engineer a Brexit that is either a "no deal" type of clean break or a lesser break that preserves large portions of the trading and commercial relationship with the European Union. No one knows what he will do, but it is too early to bet against a "soft Brexit" in the end.
The Tories swept back into power with 365 members of parliament (MPs) and a comfortable 40+ majority, leaving just 203 Labour members in parliament. But beneath this massive triumph lie some subtle factors that offer clues to what Prime Minister Johnson can accomplish.
Despite the triumphal results,

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A German Anti-Establishment Victory Could Fuel Fiscal Activism

December 4, 2019

A little-noticed skirmish between left-leaning and left-of-center factions over the future leadership of Germany’s Social Democratic Party (Sozialdemokratische Partei Deutschlands or SPD) at the end of November 2019 could lead to a quick collapse of Chancellor Angela Merkel’s government. More likely, however, the battle, which was won by the more left-oriented anti-establishment side, is likely to push Germany toward more activist fiscal and environmental policies—hopeful news for the economic future of Europe.
The internal fight among Social Democrats, the junior partner in Chancellor Merkel’s government, ended with the defeat of the party’s establishment wing and its candidates for party leadership, Finance Minister Olaf Scholz and co-chair Klara Geywitz. Instead, a small majority voted

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The US H-1B Visa: A Boon for High-Skilled Immigrants from India

November 19, 2019

The Trump administration’s preference for a “merit-based” immigration system over one that welcomes migrants fleeing poverty and persecution became clear in May 2019. It was then that the administration unveiled an immigration reform proposal favoring English-speaking professionals with skills to fill jobs in such fields as medicine and computer programming.
An outcry erupted after these preferences were disclosed, many critics citing the famous poem at the base of the Statue of Liberty declaring: “Give me your tired, your poor, your huddled masses, yearning to breathe free.” But the most recent US data available suggest that the policy has already been implemented for H-1B visas, a category that allows US employers to hire foreign nationals in certain job categories when it can be

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Perplexed by Brexit? Here Is a Guide

November 18, 2019

After weeks of ridiculous stops and starts, Prime Minister Boris Johnson is finally presenting the British electorate with (more or less) the Brexit deal that he wanted. Yes, he was forced to renege on his “do or die” promise to leave the European Union by October 31. But a path toward the exit door is clear if the electorate returns Johnson and the Tories to office in December. If Johnson is defeated, it will likely spell another Brexit referendum.
No matter what happens, the economic specifics of Brexit will not “get done” any time soon. A Conservative victory would set another “cliff edge” in motion for the end of 2020, the expiration date of the status quo transition period. A Johnson victory would have to be followed up with a new treaty to govern the future trade and economic

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An EU “Green New Deal” Requires a Far Higher Price on Carbon

September 16, 2019

Taxing carbon is probably the most effective way of curbing greenhouse gases that cause climate change. But because taxing carbon emissions will raise gasoline and other energy costs for households and industry, it may be the most politically treacherous step any government can take. Undaunted, Europe should forge ahead with an ambitious plan to make the cost of using fossil fuels effectively exorbitant. The economic impact on Europe would be enormous. But Europe’s actions could also have a significant impact on the United States.
Several Democratic presidential candidates recently endorsed some form of carbon tax at a town hall meeting. But you won’t find much about carbon taxes in the various “Green New Deal” plans called for by candidates or members of Congress. Instead, most Green New

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Back to the Center: Italy’s New Governing Coalition Faces Tough Choices

September 4, 2019

Italy’s new governing coalition, combining the populist Five Star Movement and the center-left Democratic Party, has done more than sideline the right-wing forces of League Party leader Matteo Salvini. The new more centrist alliance is certain to calm nervous financial markets and reassure the European Union that its appointments to the European Commission and the European Central Bank will provide greater stability and cooperation on European matters. But Salvini, leading the opposition, is hardly likely to slink away from the Italian political scene.
Prime Minister Giuseppe Conte continues in office under the new political arrangement; clearly Salvini’s electoral gamble in leaving his coalition with Conti’s Five Star Movement to try to force new elections backfired spectacularly. Perhaps

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Boris Johnson Enters Democracy’s Twilight Zone

August 30, 2019

British Prime Minister Boris Johnson’s power grab, in which he has suspended the UK Parliament for five weeks from September 9, 2019, has recklessly undermined democracy at a time of historic decision making on the future of the United Kingdom. Because of his actions, the parliament cannot formally debate government policies, submit legislation, raise parliamentary questions, or scrutinize government activity while the executive can continue to govern in the face of questions about its command over a majority in parliament and its own legitimacy.
Johnson’s supporters argue that he is merely playing two games simultaneously: trying to renegotiate the Brexit deal with the EU-27 and trying to prevent hardline anti-Brexiteers from weakening his negotiating leverage. Under this argument,

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A Pragmatic New European Leadership Team Could Supply Tools to Face the Next Downturn

July 10, 2019

After a turbulent year of predictions that extremism was on the rise, the European Union (EU) has ended up with a capable and pragmatic leadership team, committed to continuing the continent’s economic reform processes, institutional deepening, and support for the global multilateral institutions and trading system. The team was completed in early July with the election of David Sassoli, the center-left Italian politician, as the new European Parliament president.  His selection makes it likely that the European Parliament will endorse the entire personnel lineup.
Others in that lineup include Ursula Von der Leyen, the German center-right defense minister (and ally of Chancellor Angela Merkel), as the new president of the European Commission and Charles Michel, Belgium’s liberal prime

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The Euro Area Falls Short on Fiscal Reform

June 19, 2019

If Europe’s recent economic travails have delivered one lesson, it is that there is a need for a coordinated fiscal and monetary counterattack in the face of the next downturn.  It was thus disappointing that the euro area decisions regarding the new Budgetary Instrument for Convergence and Competitiveness (BICC) fell short of achieving further fiscal integration. Waiting for a “crisis response” to put this capacity in place means that the response will come too late.
According to latest documents, the BICC will be designed explicitly without a countercyclical stabilization function and without its own sources of funding, cannibalizing the EU budget for resources. Funds are intended to be disbursed only among member states “within an acceptable range” of the money they contribute. The BICC

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The Euro Area Falls Short on Fiscal Reform

June 19, 2019

If Europe’s recent economic travails have delivered one lesson, it is that there is a need for a coordinated fiscal and monetary counterattack in the face of the next downturn.  It was thus disappointing that the euro area decisions regarding the new Budgetary Instrument for Convergence and Competitiveness (BICC) fell short of achieving further fiscal integration. Waiting for a “crisis response” to put this capacity in place means that the response will come too late.
According to latest documents, the BICC will be designed explicitly without a countercyclical stabilization function and without its own sources of funding, cannibalizing the EU budget for resources. Funds are intended to be disbursed only among member states “within an acceptable range” of the money they contribute. The BICC

Read More »

European Elections: Barking Populists Failed to Bite

May 29, 2019

In the months before the European elections of May 23–26, it was taken for granted that the long-running  centrist “grand coalition” in European politics between the center-right European People’s Party (EPP) and the center-left Socialists and Democrats (S&D) political groups would lose their majority in the new European Parliament. The question that voters would determine was: Which party would fill the power vacuum left by the two traditional parties?
EU voters have now answered that question emphatically in two surprising ways. First, the surprisingly large turnout of more than 50 percent is being widely interpreted as a boost to the European Parliament’s own legitimacy.
Second, EU voters clearly handed the greatest gains to the Liberals (market-oriented) and Greens political groups,

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European Elections: Barking Populists Failed to Bite

May 29, 2019

In the months before the European elections of May 23–26, it was taken for granted that the long-running  centrist “grand coalition” in European politics between the center-right European People’s Party (EPP) and the center-left Socialists and Democrats (S&D) political groups would lose their majority in the new European Parliament. The question that voters would determine was: Which party would fill the power vacuum left by the two traditional parties?
EU voters have now answered that question emphatically in two surprising ways. First, the surprisingly large turnout of more than 50 percent is being widely interpreted as a boost to the European Parliament’s own legitimacy.
Second, EU voters clearly handed the greatest gains to the Liberals (market-oriented) and Greens political groups,

Read More »

Brexit: From Bad to Terminal?

May 20, 2019

The cross-party talks between Labour and the Conservatives, aimed at a “soft” exit by Britain from the European Union, have collapsed—abandoned by Labour leader Jeremy Corbyn. His move was precipitated by Prime Minister Theresa May’s imminent departure from office. The uberadvocate of Brexit, Boris Johnson, is now increasingly certain to become the Conservatives’ pick for prime minister, in order to block the entry of Nigel Farage, the longtime Brexit advocate, from entering British mainstream politics. The risk of a “no deal” Brexit, in which Britain crashes out of the European Union, has risen to perhaps as high as 50 percent.
These worrisome developments are compounded by what is shaping up to be an electoral disaster at the European elections on May 26, with Conservative Party losses

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Brexit: From Bad to Terminal?

May 20, 2019

The cross-party talks between Labour and the Conservatives, aimed at a “soft” exit by Britain from the European Union, have collapsed—abandoned by Labour leader Jeremy Corbyn. His move was precipitated by Prime Minister Theresa May’s imminent departure from office. The uberadvocate of Brexit, Boris Johnson, is now increasingly certain to become the Conservatives’ pick for prime minister, in order to block the entry of Nigel Farage, the longtime Brexit advocate, from entering British mainstream politics. The risk of a “no deal” Brexit, in which Britain crashes out of the European Union, has risen to perhaps as high as 50 percent.
These worrisome developments are compounded by what is shaping up to be an electoral disaster at the European elections on May 26, with Conservative Party losses

Read More »

Europe’s New Leaders Need to Think Now about the Next Economic Downturn

April 18, 2019

Europe has rebounded nicely, if unevenly, after its last double-dip recession by relying on the monetary stimulus of the European Central Bank (ECB) and other central banks. Today, however, Europe faces a potential economic iceberg when its next recession hits, though this issue seems strangely absent from the debate over who should run Europe’s major institutions later this year. Because the ECB and other European central banks will not be able to provide sufficient macroeconomic stimulus in the next downturn, a boost will have to be forthcoming instead from fiscal policy in Europe.[1]
This is both good and bad news. On the monetary front, policy rates remain at zero or negative and the ECB has accumulated a sizeable €2.6 trillion (22 percent of euro area GDP) bond portfolio, complicating

Read More »

Europe’s New Leaders Need to Think Now about the Next Economic Downturn

April 18, 2019

Europe has rebounded nicely, if unevenly, after its last double-dip recession by relying on the monetary stimulus of the European Central Bank (ECB) and other central banks. Today, however, Europe faces a potential economic iceberg when its next recession hits, though this issue seems strangely absent from the debate over who should run Europe’s major institutions later this year. Because the ECB and other European central banks will not be able to provide sufficient macroeconomic stimulus in the next downturn, a boost will have to be forthcoming instead from fiscal policy in Europe.[1]
This is both good and bad news. On the monetary front, policy rates remain at zero or negative and the ECB has accumulated a sizeable €2.6 trillion (22 percent of euro area GDP) bond portfolio, complicating

Read More »

How the Brexit Extension Could Scramble British and European Political Party Fortunes

April 16, 2019

The latest Brexit deadline extension seems likely to prolong Britain’s nervous breakdown over its association with the European Union until October 31. But deferral could also lead to a significant and more immediate change in the political makeup of Europe itself. That is because, as EU and UK leaders agreed, Britain will participate in European parliamentary elections in May, potentially making the UK Labour Party the biggest party in the new parliament, and strengthening the center left against rightist nationalist parties. This makeup could even tip the selection process for the next president of the European Commission.
The situation is admittedly murky. Having assumed last year that Britain would not participate in the elections, the European Parliament adjusted the distribution of

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How the Brexit Extension Could Scramble British and European Political Party Fortunes

April 16, 2019

The latest Brexit deadline extension seems likely to prolong Britain’s nervous breakdown over its association with the European Union until October 31. But deferral could also lead to a significant and more immediate change in the political makeup of Europe itself. That is because, as EU and UK leaders agreed, Britain will participate in European parliamentary elections in May, potentially making the UK Labour Party the biggest party in the new parliament, and strengthening the center left against rightist nationalist parties. This makeup could even tip the selection process for the next president of the European Commission.
The situation is admittedly murky. Having assumed last year that Britain would not participate in the elections, the European Parliament adjusted the distribution of

Read More »