Fredrik NG Andersson
Fredrik NG Andersson
Negative interest rates were once seen as impossible outside the realm of economic theory. However, recently several central banks have imposed such rates, with prominent economists supporting this move. In a column, associate professor Fredrik N G Andersson, Department of Economics at Lund School of Economics and Management and member of Intelligence Watch’s Economic Council, together with professor Lars Jonung, Knut Wicksell Centre for Financial Studies at Lund University, investigate the actual effects of negative interest rates, taking evidence from the Swedish experience during 2015-2019. It is evident that the policy’s effect on the inflation rate was modest, and that it contributed to increased financial vulnerabilities. The lesson from the experiment is clear: Do not do it again.
Read the column here
Associate professor Fredrik N G Andersson, Department of Economics at Lund School of Economics and Management and member of Intelligence Watch’s Economic Council, argues that the problem for the euro area of today is not the return of the nation-state, but that the nation-states never disappeared. A common currency requires common economic policies, which is largely lacking in the euro area. As a result, large economic and social imbalances have emerged. In a chapter in the book The European Union and the Return of the Nation State he examines proposals from the European Commission to increase the level of co-operation to reduce the imbalances, but finds the proposals backward-looking and insufficient. Instead he explores the possibility of some countries leaving the euro area and finds that a friendly divorce is costly in the short term, but likely needed to restore economic balance in the long run. According to Andersson, a smaller euro area may mean more European co-operation down the line.
Read the chapter ”The Euro and the Nation-State That Never Disappeared: Would Europe Benefit from the Return of National Currencies?”
The global coverage and the need for consensus explain why the UN Paris agreement, in several critical dimensions, is characterized by low levels of commitment and reciprocity. Hence, complementary designs are needed. In a paper in Policy Design and Practice Håkan Pihl, vice-chancellor of Kristianstad University and vice chairman of Intelligence Watch, analyzes the parameters of such designs. New agreements should cover only nations that are willing to high levels of commitments and reciprocity. They should use measures that governments can control and be made accountable for. Commitments should be short-term and few-dimensional and they should incentivize efficient reductions, prevent leakages to outside nations and provide sanctions for noncompliance. Further, they should provide incentives to outsiders to reduce emissions and encourage them to join the agreement. A Climate Club that harmonizes minimum national carbon prices (i.e. carbon taxes), introduces a common carbon tariff, and welcomes new members to meet these criteria. Such a complementary design also has the potential to expand and, with time, provide a global price on carbon.
Read the full paper here
Countries with high ambitions should form a climate alliance, harmonize their national carbon dioxide taxes and introduce a common carbon dioxide tariff on imports, suggests Håkan Pihl, vice-chancellor of Kristianstad University and vice chairman of Intelligence Watch, in an article in Svenska Dagbladet. The climate impact of all domestic consumption would then be priced. If the alliance is open to all countries which introduce a corresponding price (carbon dioxide tax and import tariff) a mechanism is created that gives countries outside the alliance a strong reason to consider an entry, argues Pihl.
Håkan Pihl