Future of the European Economy after the French Election

On May 15, 2017, the Peterson Institute for International Economics held discussions on the future of the European economy after the French election. Institute senior fellows and influential European experts Olivier Blanchard, Jacob Funk Kirkegaard, Nicolas Véron, Jeromin Zettelmeyer, Jérémie Cohen-Setton, and Adam S. Posen set out practical and constructive priorities for the necessary next steps in assuring long-term economic stability for the European Union.

In the first discussion panel, Jacob Kirkegaard, Jeromin Zettelmeyer, and Adam Posen spoke on the fiscal issues the European Union must face to sustain and deepen the union. Kirkegaard, one of the most widely cited analysts in the United States and Europe on the political economy of euro area, addressed European budget reform. Zettelmeyer, previously director-general for economic policy at the German Federal Ministry for Economic Affairs and Energy and deputy chief economist at the EBRD, analyzed the scope for moving away from rules-based disciplining of national fiscal policies. Adam Posen, president of the Institute, discussed how to rethink the EU convergence funds and defense spending in response to the rise of populism and economic nationalism.

In the second panel, Olivier Blanchard, Jérémie Cohen-Setton, and Nicolas Véron covered needed changes in monetary and financial policies. Olivier Blanchard has been the C. Fred Bergsten Senior Fellow at the Institute since October 2015, after his service as economic counsellor and director of research at the International Monetary Fund during the global financial crisis, and his distinguished academic career at MIT. Blanchard gave his assessment of whether price and wage adjustments in the euro area have been sufficient to at least reduce destabilizing and persistent current account imbalances. Jérémie Cohen-Setton joined PIIE as a research fellow in September 2016 after completing his PhD in economics at the University of California, Berkeley. He presented insights from US economic history on the effectiveness of a common currency area. Nicolas Véron, visiting fellow at the Institute since October 2009 and senior fellow at Bruegel, addressed the progress and shortfalls of Europe’s banking and financial union.