Past Event

Lessons for the euro from early US monetary and financial history

The United States has a monetary union that many look to when considering the future of the EU. But how easy was it really to create such a union and what can Europe learn from the US process?

Date: May 25, 2016, 12:30 pm European Macroeconomics & Governance Tags & Topics

SUmmary

Professor Jeffry Frieden’s lecture highlighted that establishing a functioning monetary union in such a large and culturally-diverse country as the United States was a long, arduous, and crisis-laden process. The United States did not have a common currency until 1863, a modern central bank until 1913, or even a real fiscal union until the 1950’s.

Crafting a union which provided monetary, fiscal and financial stability was extremely hard in a country with massive macroeconomic divergences and banking fragmentation. In particular, the cultural differences between the economic centre of the country and its frontier, and their differing economic and political needs, created a lot of tension and disagreements on how to run monetary and fiscal policy: the frontier was expanding incredibly rapidly, which warranted easy credit and expansionary fiscal policy, while these policies were not seen as desirable by the creditors in the country’s more developed areas.

These differing economic situations, the balance of power between creditors and debtors, and the rise of economic populism ensured that the process towards the current financial and fiscal architecture of the United States was very slow and difficult, and are reminiscent of the current situation in Europe.

Professor Frieden drew a number of lessons for Europe from the American experience. Firstly, not everyone can be satisfied at all times: monetary policy is inherently political, and therefore it behoves us to think about the interests that are behind monetary policy. Fiscal and financial policy are also inherently political, especially during recoveries from debt crises.

Secondly, crafting a union is a long, hard road. The core difficulty in this process is the need to find a politically sustainable compromise between the legitimate concerns of the sub-units (states or nations), and the broader entity of the union. It took the United States an extremely long time and a civil war to resolve this issue.

Event summary by Álvaro Leandro, Research Assistant

VIDEO RECORDING

 

DSC_0381
DSC_0364
DSC_0392
DSC_0361

Schedule

May 25, 2016

12:30-13:00

Check-in and lunch

13:00-13:45

Lecture

Jeffry Frieden, Professor of Government, Harvard University

13:45-14:30

Audience Q+A

Chair: Guntram B. Wolff, Director

14:30

End

Speakers

Jeffry Frieden

Professor of Government, Harvard University

Guntram B. Wolff

Guntram B. Wolff

Director

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevón

Matilda Sevon

matilda.sevon@bruegel.org

Read about event More on this topic

Upcoming Event

Mar
7
12:30

Trump’s energy policy: America first, climate last?

This event seeks to discuss the potential way forward for the US energy and climate policy, and its implications for both global energy markets and global climate change mitigation efforts.

Speakers: Kristine Berzina, Tim Boersma, Connie Hedegaard, Simone Tagliapietra and Zhang Xumin Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article Download PDF

Policy Brief

Screen Shot 2017-02-17 at 16.42.38

Europe in a new world order

In this paper the authors explore what the EU’s strategic reaction should be to US diminishing giant policies, and the EU’s role in a world of declining hegemony and shifting balances

By: Maria Demertzis, André Sapir and Guntram B. Wolff Topic: European Macroeconomics & Governance, Global Economics & Governance Date: February 17, 2017
Read article More on this topic More by this author

Blog Post

Marek Dabrowski

The EU should not retaliate against Trump’s protectionism

If the US moves ahead with Republican plans to introduce a border adjustment tax, the EU will need to decide on its response. Marek Dabrowski argues that the EU would be unwise to retaliate with its own anti-import policies: the border adjustment tax would be difficult to implement and damaging to the global trade order. Instead the EU should build a broad coalition of allies to defend free trade.

By: Marek Dabrowski Topic: Global Economics & Governance Date: February 9, 2017
Read article More on this topic More by this author

Blog Post

photo2016

The border adjustment tax: a dangerous proposal

Reflecting the fact that the United States imports more than it exports, border adjustment tax is considered by its proponents as an essential part of the Trump tax reform package.

By: Uri Dadush Topic: Global Economics & Governance Date: February 9, 2017
Read article More on this topic More by this author

Blog Post

Scott Marcus

How good a shield is Privacy Shield?

Privacy Shield was put in place in 2016 to ensure that transfers of personal data from the EU to the US would be in compliance with European Union privacy law, and thus permissible. The institutional framework of Privacy Shield was weak, and depended on the good will of the US administration. Recent actions by the new administration, including the famous executive order forbidding residents from 7 predominantly Muslim countries to enter the US, may have (presumably unintended) effects on Privacy Shield. To preserve the validity of Privacy Shield in European Courts, strong EU-US cooperation and potentially additional agreements may become necessary.

By: J. Scott Marcus Topic: Innovation & Competition Policy Date: February 7, 2017
Read about event

Past Event

Past Event

Brexit and trade: what EU and WTO rules imply

Bruegel in collaboration with Leuven Centre For Global Governance Studies organizes an event at which we will discuss the options for redesigning trade relations in the post-Brexit era.

Speakers: Viktoria Dendrinou, Hosuk Lee-Makiyama, Petros C. Mavroidis, André Sapir and Prof. Jan Wouters Topic: European Macroeconomics & Governance, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 6, 2017
Read article More on this topic More by this author

Blog Post

Emmanuel Mourlon-Druol

The EU must stand ready to confront US leadership

This is not the first time that the United States has antagonised Europe. And Europe can provide an effective response to such external challenges when it stands united.

By: Emmanuel Mourlon-Druol Topic: Global Economics & Governance Date: February 3, 2017
Read article More on this topic More by this author

Blog Post

Mark Hallerberg

Border adjustment tax could help Europe find common voice on Trump

The Trump administration seems more than willing to break with liberal orthodoxy on trade. Could this lead them to introduce a "destination tax", essentially penalising imports? If the USA moves ahead with this idea, Mark Hallerberg argues that the EU should seriously consider doing the same. Not only would it balance out some of the trade effects of the US move, it might also have positive political implications for Europe.

By: Mark Hallerberg Topic: Global Economics & Governance Date: February 1, 2017
Read about event More on this topic

Past Event

Past Event

State Aid and Tax Rulings

When do national tax rulings violate EU state aid rules? Does the European Commission's approach raise concerns about Member State Sovereignity and what is the impact on corporate investments in Europe?

Speakers: Clemens Fuest, Damien Neven, Gert-Jan Koopman, Nicole Robins and Guntram B. Wolff Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 1, 2017
Read about event More on this topic

Past Event

Past Event

Europe’s growth champion: will Poland’s success continue?

An event at which Marcin Piatkowski will present the key messages from a book on Poland that he is writing for Oxford University Press.

Speakers: Dan Bucşa, Maria Demertzis, Alexander Lehmann, Marcin Piatkowski and Paweł Samecki Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: January 31, 2017
Read article More on this topic

Blog Post

dsc_0809
OLYMPUS DIGITAL CAMERA

Trade flows between the US, UK and EU27: what goes where?

As US President Trump and UK Prime Minister Theresa May meet in Washington, Bruegel researchers look at bilateral trade flows between the US, UK and EU27.

By: Filippo Biondi and Robert Kalcik Topic: Global Economics & Governance Date: January 27, 2017
Read about event More on this topic

Past Event

Past Event

Achieving inclusive growth: what have we learnt?

Inclusive growth has been the exception globally, and will be a greater challenge in the future. Achieving it has to be central to our agenda, but requires rethinking and reprioritisation.

Speakers: Tharman Shanmugaratnam and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: January 26, 2017
Load more posts