The understanding of the working of the European Monetary Union poses a major challenge for economists, policy makers, and the general public. Economists can hardly apply the same toolkit they used for the analysis of each country in the Union, because of the important economic, social and political changes that have occurred in the recent years. Policy makers have to identify the key issues in the new context, characterized not only by a single currency and monetary policy, but also by a higher mobility of capital, global competition, a local aging population accompanied by increased migration, and substantial regional unbalances that could widen even more with the enlargement of the Union. The general public has to learn how to live in a new larger home, where many previously foreign problems are now their own.
We have gathered people and institutions with different backgrounds and current interests, in order to be able to tackle the above issues from many diverse points of view. In particular, the European Forecasting Network (EFN) combines together the economic expertise of Departments of Economics (Bocconi, Carlos III, the European University Institute, University of Cambridge), the quantitative skills of Departments of Statistics and Econometrics (University of Barcelona, Carlos III and Erasmus University), and the practical experience of research centers (CEPII and the Halle Institute for Economic Research). Each of them will contribute in an original way to the development and to the release of analyses of the economic situation and outlook for the Euro area, which will take the form of semi-annual reports.
The reports include an overview of the current situation and a critical analysis of the main recent economic and political events, together with short-term forecasts of the main macroeconomic and financial variables. The policy implications of the forecasts are then discussed, and the economic effects of these policies are formally evaluated in a large-scale multi-country model. Finally a set of topics of particular relevance for the working of the EMU are analyzed in depth.