Communication from the Commission - Actions programme for the promotion of research and analysis of issues related to the European Economic and Monetary Union
Date: 2006-07-14
Institutions: European Commission
Subjects: Economic and Monetary Union, action programme, coordination of EMU policies, dissemination of information, economic analysis, economic policy, research programme

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.7.2006 
COM(2006) 389 final 

COMMUNICATION FROM THE COMMISSION  

ACTIONS PROGRAMME FOR THE PROMOTION OF RESEARCH AND 
ANALYSIS OF ISSUES RELATED TO THE EUROPEAN ECONOMIC AND 
MONETARY UNION 

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COMMUNICATION FROM THE COMMISSION  

ACTIONS PROGRAMME FOR THE PROMOTION OF RESEARCH AND 
ANALYSIS OF ISSUES RELATED TO THE EUROPEAN ECONOMIC AND 
MONETARY UNION 

1. 

INTRODUCTION 

The Ecofin Council report to the European Council on 11 and 12 December 1999 in 
Helsinki  on  “Economic  policy  co-ordination”  (13123/1/99  Rev  1)  called  for  an 
effective  monitoring  of  economic  policies  in  stage  three  of  the  Economic  and 
Monetary  Union  (EMU).  For  this  purpose,  the  Council  considered  the  improved 
understanding  of  economic  developments  and  economic  policy  issues  related  to 
EMU an essential prerequisite. 

According  to  the  Treaty,  the  European  Commission  has  an  important  role  in 
informing the EU authorities, the Member States and the various economic agents on 
both  the  economic  situation  and  prospects  and  on  the  impact  of  economic  policy 
measures  on  the  functioning  of  EMU.  To  give  informed  advice  on  economic 
developments and economic policy issues in EMU a thorough economic analysis and 
research is paramount. While a substantial part of this analysis and research is carried 
out inside the Commission and its services, a great variety of relevant contributions 
is produced by other institutions such as international organisations and the research 
community at large. The main objective of the actions programme for the promotion 
of  research  and  analysis  of  issues  related  to  EMU  is  to  create  a  platform  through 
which the results of this external research can be channelled more effectively into the 
policy debate within Community institutions. 

2. 

THE  NEED  FOR  A  COMPREHENSIVE  AND  INTEGRATED  APPROACH  TO  PROMOTE 
EMU RELATED RESEARCH AND ANALYSIS 

The  creation  of  EMU  requires  a  strengthening  of  the  analytical  basis  for  economic 
policy decisions. Moreover, the awareness of the policy requirements of EMU in the 
Member  States  needs  to  be  improved  so  as  to  raise  the  understanding  for  greater 
economic policy co-ordination.  

To benefit to the greatest extent from the output of external analysis and research of 
EMU  related  issues,  a  comprehensive  and  integrated  approach  governing  the 
relations, contacts and communications with the institutions producing such analysis 
is required. On the one hand, this is necessary to channel the results of this research 
in an appropriate way into the various circuits dealing with economic policy matters 
within  the  European  institutions.  On  the  other,  this  allows  for  feedback  from  the 
European Commission and other EU fora that can guide and direct this research into 
areas, which are most important and fruitful for the work of EU policy makers. 

The European Commission has responded to the need for such a comprehensive and 
integrated approach by establishing a broad-based  actions  programme  implemented 

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by  Directorate  General  for  Economic  and  Financial  Affairs1.  While  some  of  these 
actions  were  instigated  at  the  explicit  request  from  Member  States,  others  were 
created  on  the  initiative  of  the  European  Commission.  Such  actions  include,  for 
instance,  the  establishment  of  an  external  expert  group  on  analysis  and  forecasting 
macro-economic  developments  in  the  euro  area  (the  “European  Forecasting 
Network”);  the  organisation  of  research  conferences,  workshops  and  seminars  both 
on  a  regular  and  on  an  ad  hoc  basis;  the  creation  of  a  visiting  fellows  programme 
within the Commission services; or the setting-up of a study programme in the area 
of  EMU  related  research  with  the  purpose  of  soliciting  specifically  focused 
contributions from external researchers.  

3. 

IMPLEMENTATION OF THE PROGRAMME 

A detailed description of the various components making up the programme and the 
supporting activities are listed below  

(a) The European Forecasting Network 

The creation of the European Forecasting Network (EFN) was proposed in 2001 by a 
Franco-German  initiative  .  This  initiative  aimed  at  improving  the  analysis  of  euro-
area  economic  conditions  and  policy  options  through  the  production  of  regular 
independent  assessments  of  the  economic  outlook  and  policy  challenges  by  a 
network of leading EU research institutes. 

The proposal received broad support by the Economic and Financial Committee and 
the  Eurogroup  and  the  Commission  was  invited  to  initiate  the  creation  of  such  a 
network.  The  Commission  responded  positively  to  this  request  and  selected  a 
consortium of eight research institutes based in six different Member States for the 
period 2002-2004.  

This  research  network  produced  its  first  report  in  Spring  2002.  The  network 
produced  five  further  reports  on  a  semi-annual  frequency,  the  last  one  in  Autumn 
2004. In addition to a regular conjunctural analysis and a macro-economic forecast 
for the euro area, the various reports covered a wide variety of EMU relevant themes. 
Topics  included  the  development  of  labour  cost  and  productivity  in  the  euro  area, 
macro-economic shock absorption in the euro area, cyclical convergence in EMU or 
the economic effects of enlargement on EMU.  

On  the  whole,  the  experience  with  the  EFN  during  the  period  2002-2004  was  very 
positive,  with  the  EFN  reports  providing  a  valuable  complementary  contribution  to 
the Commission services’ internal analysis of euro-area economic developments and 
policy  issues.  In  the  light  of  this  favourable  overall  assessment,  the  Commission 
launched  in  spring  2005  the  procedure  for  the  establishment  of  a  new  EFN  for  the 
period 2005-2007. The selected network consists of ten research institutes from nine 
Member  States.  The  new  network  presented  its  first  report  in  March  2005.  The 
special  topic  of  the  report  dealt  with  the  challenges  of  relocation  for  the  euro  area 
economy, which provided input into the Economic Review 2005. The special policy 

1 

This programme of actions is part of the annual work programme of the Directorate General Economic 
and Financial Affairs and is authorised by means of a financing decision adopted by the Commission. 

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issue  of  the  spring  2006  report  was  the  convergence  and  integration  of  the  new 
Member States.  

The  reports  are  usually  presented,  on  a  date  commonly  agreed  between  the 
Commission  and  the  network,  at  a  press  conference  organised  by  the  EFN.  The 
reports are being sent to the Commissioner for Economic and Monetary Affairs and 
the  chairpersons  of  the  Economic  and  Financial  Committee,  the  Economic  Policy 
Committee and the Committee on Economic and Monetary Affairs of the European 
Parliament. The reports can be downloaded from the website of the EFN, which can 
be 
website: 
a 
http://europa.eu.int/comm/economy_finance/efn_en.htm.  

Commission 

accessed 

link 

via 

the 

on 

In 2006 an evaluation is currently underway (in the context of an overall evaluation 
of the economic research framework and output of Directorate General for Economic 
and  Financial,  Affairs)  to  assess  whether  the  EFN  initiative  has  attained  its  goals, 
namely the promotion of assessments of the economic outlook and policy challenges 
of the euro area by independent EU research institutes. The results of this evaluation 
will be an important element in the decision on whether the EFN initiative should be 
continued after 2007 or whether it can be phased out. 

(b)  The  Economic  Research  Conferences  and  Workshops  and  the  Economic 
Seminar Programme 

The  Economic  Research  Conferences  and  Workshops  and  the  Economic  Seminar 
Programme  aim  to  strengthen  dialogue  between  the  Commission  services  and  the 
research  community.  The  main  purpose  of  these  programmes  is  to  bring  to  the 
attention  of  Commission  staff  relevant,  original  research  on  EMU  related  matters, 
which  has  been  carried  out  by  academia  and  other  research  institutions.  While  the 
programme is mainly targeted at the staff of Directorate-General for Economic and 
Financial  Affairs,  staff  of  other  Directorate-Generals  is  informed  about  activities 
carried out and has the possibility to attend these conferences and seminars. 

The Economic Research Conferences 

The  Economic  Research  Conferences  and  Workshops  and  the  Economic  Seminar 
Programme  are  designed  to  enhance,  by  improving  connections  with  the  economic 
research community, the overall quality of the work carried out by the services of the 
Commission.  To  this  effect,  leading  economists  in  the  academic  world,  in 
international  organisations  and  in  research  institutions  are  encouraged  to  expound 
and discuss original research work related to the formation and working of the EMU 
in  the  framework  of  research  conferences  and  staff  seminars.  Apart  from  giving 
these 
Commission  staff  better  access 
programmes  aim to increase  exposure to new approaches  and  give new insights on 
issues  of  relevance  for  the  Commission.  Conversely,  outside  participants  in  the 
programme have an opportunity to discuss their research results with staff from the 
Commission and other officials from EU institutions and, in doing so, contribute to 
developing their perception of the policy relevance of their research activity.  

to  on-going  original  research  work, 

Several conferences have been organised over the past years in the framework of the 
Research  Conference  Programme.  In  general,  these  conferences  were  organised  by 
Commission  staff,  but  in  some  cases  conferences  were  co-organised  with  other 

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institutions.  Depending  on  the  conference,  attendance  varied  between  50  and  300 
the 
participants  and 
internationalisation  of  asset  ownership  in  the  EU,  statistical  tools  in  business  cycle 
analysis, the economic and budgetary implications of global ageing and the analysis 
of business cycles and growth in Europe.  

topics  covered  a  wide  spectrum  of 

issues  such  as 

Special conferences were organised to discuss major analytical documents published 
by  the  Commission  services  such  as  the  “Public  Finance  Report”  or  the  report  on 
“Five years of EMU”. The interaction with the academic world and policy makers is 
helpful  in  improving  mutual  understanding  of  policy  constraints  and  theoretical 
advice. Issues such as economic governance have to be discussed openly in order to 
raise the credibility of the respective policy framework.  

The Economic Seminar Programme 

A  newly-designed  Economic  Seminar  Programme  (ESP)  was  established  in  2003 
with a view to enhancing synergy effects between EMU research inside and outside 
the  Commission.  With  this  new  approach,  the  Commission  seeks  to  attract  leading 
economists in the academic world, international organisations, governments and top 
research  institutions.  The  Commission  invites  selected  researchers  to  present  a 
seminar and discuss original research work related to the formation and working of 
European  Economic  and  Monetary  Union,  both  from  a  macroeconomic  and  a 
microeconomic perspective. 

The general aim of this programme is to enhance the overall quality of work done by 
the  Commission  services,  strengthening  in-house  know-how  by  improving  its 
connections  with  the  economic  research  community.  The  programme  allows 
Commission staff to gain better access to ongoing research work and to be confronted 
with  new  approaches  and  insights  on  issues  of  relevance  for  the  Commission. 
Conversely, the programme gives seminar speakers the opportunity to learn about the 
policy-making environment in which the Commission services operate.  

This programme is mainly managed by the members of the Advisers’ Group of the 
Directorate-General  for  Economic  and  Financial  Affairs.  The  advisers  are  in  close 
contact with the research community, enabling them to assess the relevant frontiers 
in economic research and to disseminate this information to Commission staff. The 
programme  also  constitutes  a  valuable  component  in  the  training  strategy  of  the 
Commission services.  

During  their  one-day  visit  to  the  Commission  services,  speakers  present  their 
research at a seminar of  one-and  a half hours, after which they remain available to 
further discuss their research with Commission staff. As a rule, the background paper 
on  which  the  seminar  is  based  is  made  available  prior  to  the  event.  In  2003,  15 
speakers  gave  a  seminar  under  this  programme,  and  the  figure  in  2004  was  24  In 
2005,  a  further  17  speakers  were  hosted.  Together  with  the  seminars  given  by  the 
Visiting Fellows and other, no-cost seminars, roughly one seminar is organised per 
week. 

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(c)  The Visiting Fellows Programme 

Within  the  framework  of  the  Visiting  Fellows  Programme  (VFP)  the  European 
Commission  seeks  to  strengthen  in-house  knowledge  on  topical  issues  by  bringing 
leading economists in academic circles, international organisations, governments and 
top  research  institutions  for  a  short-term  visit  to  the  Commission  services.  These 
visits are usually of one or two weeks duration, with a possibility of up to six weeks, 
in  order  to  benefit  from  more  in-depth  analysis.  Such  a  period  would  merge  better 
with  the  traditional  sabbaticals  in  academic  research  institutions  and  therefore 
enhance the interest for potential participants. 

During  their  stay  at  the  Commission,  Visiting  Fellows  are  required  to  actively 
participate  in  the  work  carried  out  by  the  Commission  services,  primarily  by 
engaging, in areas related to their own research programme, in discussions with, and 
giving  advice  to,  Commission  staff  dealing  with  work  in  the  same  areas. 
Furthermore,  fellows  are  required  to  give  one  or  more  seminars  on  topics  that  are 
part  of  their  research  agenda.  Finally,  fellows  are  requested  to  prepare  a  seminar 
paper  on  their  recent  original  work,  which  may  later  be  published  in  the  working 
paper  series  “Economic  Papers”  of  the  Directorate-General  for  Economic  and 
Financial Affairs.  

Alongside the Economic Seminar Programme, the general aim of this programme is 
to  enhance  the  overall  quality  of  the  Commission  services’  work,  strengthening  in-
house  know-how  through  improved  connections  with  the  economic  research 
community. The programme aims to give Commission staff better access to on-going 
research  work,  increase  exposure  to  new  approaches  and  insights  on  issues  of 
relevance for the Commission services. Visiting Fellows will have an opportunity to 
experience the policy-making environment in the Commission services operate. 

The  VFP  was  launched  in  October  2001.  The  number  of  visitors  invited  has 
increased from 6 in 2002 to 10 in 2003 and 11 in 2004. In 2005, a further 8 fellows 
were  hosted.  The  visitors  covered  a  broad  range  of  research  topics  regarding 
macroeconomic policy issues in EMU.  

The  VFP  has  been  able  to  attract  a  number  of  high-profile  visitors.  The  seminars 
have usually been well attended and presentations have been of a high quality. Most 
of  the  papers  delivered  by  the  visiting  fellows  have  met  the  standard  criteria  for 
publication  in  scientific  or  policy-oriented  economic  journals  and,  some  of  them 
have also been published as the “Economic Papers” series of the Directorate-General 
for Economic and Financial Affairs. 

Communication,  effective  interaction,  and  in  some  cases  even  specific  working 
relations  with  operational  units  within  the  Commission  services,  have  been 
successfully  established  in  most  cases.  Visiting  fellows  have  been  involved  in 
discussing specific work-plans and projects, they contributed directly to the drafting 
of  chapters  for  the  Annual  Economic  Review,  and  as  a  rule,  their  detailed 
suggestions and comments have been incorporated into Commission staff’s notes. 

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(d) The Economic Studies Programme 

The  Economic  Studies  Programme  is  a  further  instrument  of  involving  outside 
expertise  in  the  work  of  the  Commission  services.  In  the  framework  of  this 
programme  studies  are  commissioned  to  the  best  qualified  experts  in  academic 
institutions and other research bodies2.  

Studies are launched by the operational directorates/units and supervised by qualified 
staff. Given the decentralised nature of these studies, topics vary in accordance with 
the  different  requests.  They  can  comprise  theoretical  analyses  and/or  empirical 
analysis of specific economic issues, e.g. estimates of the effects of further economic 
integration (financial market integration, etc.). Studies mainly serve as a background 
material to ongoing work of the Commission staff but when they are of interest to a 
wider public they are published in the “European Economy” series or the “Economic 
Papers” series of the Directorate-General for Economic and Financial Affairs. Over 
the  recent  past  such  studies  have  served  in  the  preparation  of  the  EU  Economic 
Review (e.g. determinants of productivity growth in the EU, effects of globalisation) 
and  the  Public  Finance  Report  or  helped  to  underpin  the  analysis  of  EMU 
surveillance  issues,  such  as  the  reform  of  the  Stability  and  Growth  Pact,  or  of 
economic reform policy in the EU, such as the Lisbon agenda. 

4. 

SUPPORTING ACTIVITIES  

(a) External databases and other information supporting the Programme 

The  analysis  of  EMU  related  issues  requires  a  comprehensive  array  of  relevant, 
reliable and timely information of statistical and other more general nature. As a rule, 
this  information  is  to  be  provided  for  the  evaluation  at  national,  European  and  at  a 
global 
requirements  principally  cover  macro-economic 
developments,  financial  data  (on  financial  structures,  financial  assets,  asset  prices 
and  issuance  volumes),  and  specific  data  on  financial  risk  management.  The  latter 
concerns  all  kind  of  information  on  financial  institutions  (primarily  balance  sheets, 
income statements and ownership information).  

Information 

level. 

The  bulk  of  official  macro-economic  statistical  information  on  the  EU  is  produced 
through  the  European  Statistical  System,  and  is  conveniently  accessible  through 
official  sources  for  users  in  the  Commission.  However,  user  requirements  go  far 
beyond this stock of publicly available data.  

Macro-economic  data  for  non-European  countries  has  to  be  acquired  from  other 
sources. This includes for the main non-EU industrial countries essentially (i) the full 
sequence  of  national  accounts  for  the  total  economy  and  the  institutional  sectors 
(corporations, general government, households, non-profit institutions, the rest of the 
world), (ii) indicators related to economic activity (qualitative business and consumer 
surveys,  indexes  of  production,  prices,  order  books,  etc.)  and  (iii)  labour  market 
indicators (population, employment, unemployment, wages, etc.).  

2 

This programme of actions is part of the annual work programme of the Directorate General Economic 
and Financial Affairs and is authorised by means of a financing decision adopted by the Commission. 

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As for financial data, comprehensive coverage for EU25 and the US is vital and is 
not  generally  available  from  official  sources.  This  refers  to  all  frequencies  of  (i) 
financial structure related statistics (monetary and financial aggregates, bank lending, 
data on financial intermediaries, stock market capitalisation, etc.), (ii) financial asset 
prices (money market rates, exchange rates, bank lending rates, bonds market yields, 
equity markets, housing prices), and (iii) financial asset issuance data (record of bond 
issuance with information on issuer, amount, maturity, rating coupon type etc.; and 
for equity markets initial placement offers and additional offerings).  

As  with  financial  data,  the  bulk  of  data  for  financial  risk  management  has  to  be 
obtained  from  commercial  databases.  There  are  a  few  highly  specialised  firms 
providing this information on the potential risks of loans, financial investments and 
worldwide  financial  institutions.  The  data  relates  mainly  to  balance  sheets  and 
income  statements  of  financial  institutions,  and  ownership  information  on  financial 
institutions,  and  extensive  use  is  made  of  comparisons  with  peer  groups  using 
specialised analysis tools. 

While  statistical  information  constitutes  the  backbone  of  an  informed  analysis  of 
economic developments in EMU there exists a host of analytical information, which 
can greatly facilitate the work of the economic analyst. The use of such information 
may often be an efficient means of gauging rapidly the major features of economic 
and financial developments. While such information is sometimes provided as part of 
the access to commercially offered databases, such products are often also offered on 
a  stand-alone  basis.  For  this  reason,  responding  to  the  need  for  a  broad-based  and 
rapid information on economic and financial developments may be most effectively 
achieved by a subscription to such specialised products.  

(b) Publication programme on EMU related matters  

The annual publication programme on EMU related matters is an important part of 
the  Commission  services’  external  communication  policy.  The  programme  aims  to 
effectively  promulgate  current  and  topical  intellectual  output  on  EMU  related 
matters.  Its  primary  target  audience  comprises  national  and  international  economic 
institutions  and  academia,  policy  makers,  specialised  media  and  multipliers. 
Established  yearly,  the  programme  is  incorporated  in  the  global  European 
Commission’s Programme ordinaire de publication (POP).  

The main series of the Commission services publications on EMU related matters is 
the  “European  Economy”  series.  Reformed  in  2002,  several  additional  series  have 
eventually been added in order to complement and further develop its editorial line 
and  scope  in  a  flexible  manner.  Its  core  editions  are  the  “Broad  Economic  Policy 
Guidelines”,  the  annual  report  on  “Public  Finances  in  EMU”,  the  “Macroeconomic 
Forecasts”,  and  the  annual  “EU  Economy  Review”,  which  are  accompanied  by 
topical analyses of economic policy. Likewise former series such as “Euro Papers”, 
written during the main phase of introducing the euro, were discontinued while new 
products of economic policy debate, such as “Country Focus”, the Quarterly Report 
on the Euro Area and the Annual Report on the Euro Area are inserted. In this light, 
the publication activities of the Commission services remain elastic and flexible so as 
to adequately include forthcoming results and new focuses stemming from economic 
research,  under  certain  conditions  extending  also  to  cooperation  with  commercial 
publishers.  

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To  facilitate  academic  discussion  and  ensure  broad  access  to  ongoing  original 
research  work  also  to  a  wider  audience,  all  paper  series  are  also  available  on  the 
Internet: http://europa.eu.int/comm/economy_finance/publications_en.htm 

5. 

EVALUATION 

With  a  view  to  gauging  the  effectiveness  and  efficiency  of  the  programme,  the 
Directorate-General for Economic and Financial Affairs included, in its multi-annual 
evaluation  programme  for  the  period  2005  to  2010,  an  external  evaluation  of  the 
economic research activities of the Directorate-General. The exercise will focus, on 
the one hand, on the use of the outputs of these activities in policymaking within the 
Commission  and  their  contribution  to  the  maintenance  and  enhancement  of 
intellectual capital within the Directorate-General. On the other hand, an examination 
will take place of the effects on external users reached. As part of the exercise, it is 
envisaged  that  some  sort  of  benchmarking  exercise  against  the  work  of  research 
departments of similar organisations could take place. The evaluation was begun in 
2005 and the final report will be delivered in the summer of 2006. 

6. 

CONCLUSION  

The  action  programme  for  the  promotion  of research  in  EMU  related  fields  is  well 
implemented within the Commission services. It enables Commission staff to remain 
at  the  frontier  of  economic  research  in  their  economic  analysis.  The  broadening  of 
genuine research in the context of the 6th framework programme of research allows 
the Commission services also to contribute to basic economic research activities.  

Research activities are not a one-way street. Through the enhanced co-operation with 
the  research  community  and  broad-based  discussion  of  economic  policy  issues 
academia but also the public at large is informed about strategic policy decisions and 
policy  co-ordination  aimed  at  making  EMU  a success. As a counterpart, the policy 
framework  is  strengthened  and  gaining  credibility  in  academia  and  among  policy 
makers. 

The research and analytical activities have proven to be an indispensable tool in the 
process of strengthening economic surveillance in EMU. They should, therefore, be 
maintained and enhanced where necessary.  

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