Wednesday , June 28 2017
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The IMF’s New Role in Greece Proves Its Value for Europe and the United States

Greece’s economic problems are far from solved, but the International Monetary Fund (IMF) deserves part of the credit for the glimmers of progress on official debt relief in the Eurogroup announcement on June 15. The IMF is expected to issue its “approval in principle” for Greek policy commitments under the European Stability Mechanism (ESM) program, but it will not contribute money until it gets more comfort on debt relief from European governments and institutions. On balance, this makes...

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Forget About Brexit, Focus on the Euro Area Future

The Anglophone financial press is still giving prime coverage to the negotiations over Britain’s exit from the European Union. But Brexit has become a sideshow. The real economic news in Europe is being made in France and Germany, and it is of the good, potentially very good, type. The Brexit reality has finally caught up with David Davis, the UK Secretary of State for Exiting the European Union, who quickly capitulated to all EU-27 demands on the scope and sequencing of the negotiations on...

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The Eurogroup on Greece: Debt Relief with a Fiscal Straitjacket

Greece’s latest deal with the Eurogroup—the group of eurozone finance ministers—is bigger news than you might think from the press reactions so far. As expected, Greece got its next disbursement of funds to avoid default, the International Monetary Fund (IMF) gave a symbolic stamp of approval, no actual debt relief will transpire until the end of Greece’s EU-supported reform program, and the IMF will not be prepared to disburse until that happens (if at all). This feels like business as...

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Higher Education Is Increasingly Valuable in the United States, Less So in France

How much of an economic advantage is there to having a higher education in the United States versus France? A study of the latest data demonstrates that people with more education are better off in both countries, but in the last 20 years, higher education has become even more valuable in the United States, and less so in France. That conclusion is reached via a comparison of the evolution of relative average wages by education level over the period going from 1990 to 2012 in the two...

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Are Germany and France Trying to Get the UK to Rescind Brexit?

Bolstered by his likely parliamentary election victory on Sunday, President Emmanuel Macron of France appears poised to join with the increasingly formidable Chancellor Angela Merkel of Germany to launch a new drive for European integration in the coming years. If—or rather when—that happens, the British confusion over how to proceed with negotiations to exit the European Union will take on an entirely new dynamic, weakening Prime Minister Theresa May’s negotiating position to the point of...

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Mobile Phones and Monetary Policy

By the standards of recent Federal Open Market Committee (FOMC) meetings, today's meeting and press conference were packed with interesting news. The main policy action was a widely expected increase in the federal funds rate by 0.25 percent to a range of 1.00 to 1.25 percent. Three other items were less expected. First, Chair Janet Yellen pointed to "one-off" price reductions in mobile phone service plans in March as the main reason the FOMC's preferred measure of inflation has moved away...

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A Defeated UK Leadership Clouds the Brexit Outlook

The surprise rejection of UK Prime Minister Theresa May’s Conservative Party by British voters reveals the great difficulties in achieving a national consensus on almost any major policy issue facing the United Kingdom (UK), not least the imminent negotiations on Brexit with the rest of the European Union (EU). As a result, Britain enters into the Brexit negotiations with the weakest possible hand, a fact not likely to be lost on the politically strong leaders of France and Germany. Despite...

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Perils Ahead in European Politics

European politics in 2017 were beginning to look stable in the wake of elections in the Netherlands and France, where voters rejected populist candidates in favor of mainstream pro-European alternatives. But recent developments in Italy, Germany, and Britain have injected new uncertainties and risks. The latest polls suggest that President Emmanuel Macron’s “La Republique En Marche” (LREM) party will win the  parliamentary elections later in June, improving the chances of approval for his...

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Trump to Pull Out of Paris Agreement, But Not Until Late 2020

President Trump has fulfilled his campaign promise to pull the United States out of the Paris Agreement, the United Nations accord that commits almost every country in the world to reduce its emissions of greenhouse gases. But today's announcement only anticipates legal actions to follow several years from now; under the terms of the Paris Agreement, the United States cannot notify the United Nations of its intention to withdraw until November 4, 2019. By opting to withdraw from the Paris...

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The United Kingdom’s Loss Is Europe’s Gain

One year after Brexit was approved by British voters, the United Kingdom is no longer as attractive to European nationals for work and living as it was in prior years. The May 2017 figures published by the Office for National Statistics show that compared to 2015, there is a 36 percent increase in the number of EU citizens leaving the United Kingdom to return home permanently (to 117,000) and a 14 percent decrease in first-time EU entrants to the UK job market (to 247,000). This negative...

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