1. Interventionism Vs Non-Interventionism: The Third way Delphine Tatot

2. Presentation Part I: Theoritical aspects – Keynesian view – Classical view Part II: Co-financing system – Decision to invest – Implication of a co-financing with private firms Part III: Economic policy issues – European institutions superposition – Towards a new policy-mix

3. Part I Theorical aspects

4. A. Keynesian theory Equilibrium of under-employment – Origins of unemployment – Effective demand concept Multiplier of public expenditure Y=C+I+G with C and I constant  Δ Y= (1/(1-c)) ΔG  In favour of public intervention

5. B. Classical Theory useless and harmful – Adaptative expectations – Rational expectations Crowding-out effects – Quantity effect – Price effect  Against public intervention

6. Part II Co-financing system

7. A. General equation

8. Three cases for the investment decision IRR > R : investment profitable IRR < R : investment non-profitable IRR = R : indifference between investment and non-investment

9. B. Equation with co-financing x : share of the external financing (1-x) : share covered by the firm I = xI + (1-x)Iwith x  [0, 1]

10. The co-financing case If x = 0 : classical financing If x = 1 : case to exclude If 0 < x < 1 : co-financing situation

11. Consequences of co-financing system Decision of investment depends of – Interest rate – Share of external financing More the external share is important and more chances for the project to be profitable External financing accompanies private investments and does not crowd-out them

12. Part III Economic policy issues

13. Current European institutions roles European Commission – Determine the co- financing rate European Central Bank – Determine interest rates

14. ECB strategies Internal Position External position Low growth rate High growth rate Negative net flows(1)(2) Positive net flows(3)(4)

15. Others perspectives Considering different co-financing rate The budget-balance principle

16. Conclusion Co-financing system like a compromise between interventionism and non- interventionism theories Coordination between European institutions for a double objective: growth + price stability