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on European Economics |
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Issue of 2024–12–30
28 papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Koeniger, Winfried; Kress, Peter |
| Abstract: | We use novel transaction-level card expenditure data to estimate the effect of the temporary value-added tax (VAT) cut in Germany 2020. We find that the annualized growth rate of expenditures for durables increased by 6 percentage points (pp) during the tax cut, with a particularly strong increase of up to 11 pp for consumer electronics. The expenditure growth rate for semi-durables and non-durables did not change by and large. The estimates imply a consumption multiplier of 0.2 and an elasticity of fiscal revenues to a VAT rate reduction of two thirds. |
| Keywords: | Consumption expenditure, Transactional data, Temporary VAT cut, Unconventional fiscal policy |
| JEL: | D12 E21 E62 E65 H31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cfswop:306861 |
| By: | Patrick Gruning (Latvijas Banka); Zeynep Kantur (Baskent University) |
| Abstract: | This paper introduces financial intermediaries, who engage in lending to firms for investments and buying public bonds issued by the government, and unconventional monetary policy in the form of quantitative easing or tightening into a rich New- Keynesian multi-sector E-DSGE model with production and investment networks. Due to the strong input-output linkages between sectors, almost all policies are found to be not effective in facilitating a green transition. The policies considered are sector-specific bank regulation policies, unconventional monetary policies, various carbon tax revenue recycling schemes, public green capital investment, and sector- specific investment tax/subsidy policies. Only if carbon tax revenues are used to build public green capital, thereby boosting productivity of the green sectors, the trade-off between achieving positive economic growth and reducing carbon emissions is fully resolved. |
| Keywords: | Production network, Investment network, Climate change, Financial intermediation, Financial stability, Stranded assets, Monetary policy |
| JEL: | E22 E32 E52 G21 L14 Q50 |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:ltv:wpaper:202406 |
| By: | Anttonen, Jetro; Laine, Olli-Matti |
| Abstract: | According to the efficient-market hypothesis, forecasts derived from efficient market prices should be unbeatable. However, numerous institutions, including the European Central Bank, regularly publish forecasts for future inflation that deviate from market expectations. We investigate the relative predictive accuracy of the ECB's short-term inflation projections against predictions derived from the market prices of short-term inflation-linked swaps (fixings) in 2018-2023. We show that the predictive accuracy of fixings and the ECB projections have been very comparable during times of low and stable inflation, but during recent times of economic volatility the market prices of fixings have provided significantly more accurate predictions. We find that the efficiency of financial markets to process new information may result in more accurate short-term inflation forecasts than produced by Eurosystem insiders, and that risk premia and market inefficiencies do not seem to play a significant role in the context of short-term inflation-linked swaps. Overall, our findings suggest that making use of the information in the market prices for fixings could potentially improve the accuracy of the ECB's short-term inflation projections. |
| Keywords: | Inflation, fixings, swaps, financial market, forecasting |
| JEL: | E31 G14 G17 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofecr:306300 |
| By: | Roth, Felix; Mitra, Alessio |
| Abstract: | The European Union (EU) faces challenges such as an ageing population, migratory pressures, geopolitical vulnerabilities, and climate change, highlighting the need to enhance its ability to do more with less. This paper examines the drivers of EU labour productivity before and after the 2007 financial crisis, across goods and services sectors, tangible and intangible assets, and Information and Communication Technologies (ICT) and non-ICT tangibles. Using the EUKLEMS 2022 dataset for 14 EU countries and the UK from 1995-2019 and growth regression analysis, we find that Research & Innovation (R&I) is crucial for productivity growth. Labour productivity in the goods sector benefits most from non-ICT tangible assets, while in the service sector, it benefits more from the non-R&D intangibles software, training, and organisational capital. On the other hand, training and ICT tangibles became more important drivers of labor productivity growth after the economic crisis. We argue that the productivity gap between the EU and the United States is largely due to insufficient investment in non-R&D intangibles like software, training, and organizational capital. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:uhhhdp:19 |
| By: | Clodomiro Ferreira (BANCO DE ESPAÑA); Stefano Pica (BANK OF ITALY) |
| Abstract: | Using granular data on household subjective expectations for several countries, we uncover a robust positive reaction of inflation expectations to a contractionary monetary policy shock, a result at odds with standard equilibrium theories with nominal rigidities. We then investigate what lies behind such result. Although households disagree, their expectations are correlated in the cross-section. Two principal components account for a significant portion of the variance of all expectations. These components capture households’ perceptions of the sources of macroeconomic dynamics, with the first capturing either a supply-side view or an overall dislike for inflation, and the second component reflecting a perception about demand pressures. This structure of disagreement is stable across countries and over time and does not vary with demographic or socioeconomic characteristics. We then use these insights to identify two common factors driving expectations over time. These factors are consistent with a narrative based on perceived supply-side inflationary pressures after the invasion of Ukraine in February 2022, as well as with the overall downward inflation dynamics intensified by the reaction of the ECB. |
| Keywords: | survey, expectations, disagreement, monetary policy |
| JEL: | D1 D8 E2 E3 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2445 |
| By: | Gabriela Chmelikova (Department of Regional and Business Economics, Faculty of Regional Development and International Studies, Mendel University in Brno, Czech Republic); Renata Kucerova (Department of Management, Faculty of Business and Economics, Mendel University in Brno, Czech Republic); Helena Chladkova (Department of Management, Faculty of Business and Economics, Mendel University in Brno, Czech Republic); Jindrich Spicka (Department of Statistics, Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic) |
| Abstract: | This paper investigates the role of the institutional business environment with favourable conditions for conducting business in the process of the EU transition towards sustainability. We draw on the theory of institutional economics and empirically investigate our overarching research question as to which extent the conditions conducive to do business are linked to increased levels of irresponsible corporate behaviour in the EU.. Pursuing an econometric approach, we test a set of hypotheses using various measures of favourable conditions for conducting business as drivers for corporate social irresponsibility. We build a unique dataset that includes observations of irresponsible corporate behaviour in 16 EU countries over the period 2015 – 2020. Our findings show that institutions conducive to support the ease of doing business lead to an increased ESG (Environmental, Social, and Governance) crime rate measured by the share of firms acting irresponsibly and that the intensity of past ESG incidents is associated with a lower current occurrence of offences against sustainability. Our conclusion could help drive progress toward sustainability by the recommendation to orient policies more toward countries with attractive business environments, as they tend to harbour a concentration of the most harmful firms. Further, it is recommended to harmonise corporate tax rates and other business conditions across EU member states. |
| Keywords: | Corporate Social Irresponsibility, Institutional Economics, Attractive Business Environments, Sustainability, ESG |
| JEL: | K42 L51 M14 O17 Q56 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:men:wpaper:97_2024 |
| By: | Baute, Sharon |
| Abstract: | Europe's transition towards climate neutrality by 2050 requires major shifts in the structure of our economy and society - and wide societal backing. But how do citizens perceive climate change and what kind of EU climate policies do they support? New survey among German vot- ers shows that Germans generally prefer policy packages that (1) target financial support within the renewable energy sector, (2) include social investment policies, (3) are financed by increasing taxes on the wealthy, and (4) distribute resources across EU member states based on popu- lation size. Based on these findings, this policy paper formulates recom- mendations for climate policy making - inter alia to - couple climate mitigation policies with social investment or compensatory measures for lower-income households. |
| Abstract: | Klimaneutralität ist in Europa bis 2050 nicht ohne erhebliche Veränderungen in unserer Wirtschafts- und Gesellschaftsstruktur zu erreichen - und nicht ohne breite gesellschaftliche Unterstützung für diese Transformation. Doch wie nehmen die Bürger:innen den Klimawandel wahr - und welche Art von EU-Klimapolitik findet gesellschaftliche Zustimmung? Einer neuen Umfrage zufolge bevorzugen deutsche Bürger:innen allgemein Maßnahmenpakete, die (1) Subventionen vor allem im Bereich der erneuerbaren Energien einsetzen, (2) sozialinvestive Maßnahmen beinhalten, (3) durch Steuererhöhungen für Reiche finanziert werden und (4) EU-Mittel auf Grundlage der Bevölkerungsgröße auf die Mitgliedstaaten verteilen. Ausgehend von diesen Befunden werden im vorliegenden Policy Paper Implikationen und im Empfehlungen für die Klimapolitik formuliert. |
| Keywords: | Climate policy, EU environmental policy, Public opinion, Germany |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexpps:307118 |
| By: | Karlheinz Walch; Benjamin Weigert |
| Abstract: | AbstractThe idea of a Banking Union emerged in the aftermath of the global financial crisis. Ten years on, two of its three pillars, the Single Supervisory Mechanism and the Single Resolution Mechanism, have proven to be a success with regard to financial integration and stability. In this Policy Brief, experts from the Deutsche Bundesbank explain why, in times of structural change, it is crucial to complete the Banking Union and advance the Capital Markets Union.Key MessagesIn times of structural change and periods of upheaval, a resilient financial system plays a key role in the successful transformation of the economy.Two of the three pillars of the still unfinished Banking Union have proven to be important elements of financial integration and stability.To realize the full potential of the European financial system, the EU should complete the Banking Union and progress the Capital Markets Union.The Commission’s proposals to strengthen the existing EU bank crisis management are a step in the right direction. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_67 |
| By: | Brennan, Louis; Eszterhai, Viktor; He, Shaowei |
| Abstract: | China's EV industry is investing heavily in Hungary giving it an additional mode of entry into the European market. As the EU attempts to protect European incumbent firms with the imposition of tariffs on EV imports from China, this investment creates a challenge for European policy makers. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:colfdi:306298 |
| By: | Vicente Ferreira; Joao Pedro Ferreira; Dario Guarascio; Francesco Zezza |
| Abstract: | The return of inflation in Western economies has fueled the debate on its main drivers, bringing sector-specific shocks and supply chain bottlenecks to the forefront. Building on the seminal approach of Weber et al. (2024), this paper develops a method to assess the degree of exposure to these shocks in EU countries. Using inter-country input-output data stemming from the FIGARO database, we identify systemically significant sectors in four regions within the EU: Core, Southern Periphery, Eastern Periphery, and financial hubs. We also analyze exposure to foreign shocks. Two main conclusions can be drawn: on the one hand, periphery countries are more exposed to shocks originating in the EU core than the other way around; on the other hand, all EU regions are considerably exposed to price shocks originating from non-EU countries (namely, Russia and China). The strategic dependencies of the block pose challenges for price stability and require targeted policies. |
| Keywords: | Inflation; Supply chain shocks; Input-Output; Core-periphery |
| JEL: | C67 E31 E61 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:sap:wpaper:wp254 |
| By: | Bagliano Fabio C. (Department of Economics, Social Studies, Applied Mathematics and Statistics, and Collegio Carlo Alberto University of Turin, Torino, Italy); Morana Claudio (University of Milano-Bicocca, Center for European Studies (CefES); Center for Research on Pensions and Welfare Policies (CeRP); Rimini Centre for Economic Analysis (RCEA)) |
| Abstract: | The paper yields a structural account of economic integration in the Eurozone from its inception to post-pandemic developments by considering a broad range of convergence measures. We introduce a novel FAVAR framework, extracting the structural shocks driving the Eurozone business and financial cycles directly from the cyclical components they generate. Productivity advancements have been the critical trend convergence factor, shaping long swings in real, labor market, and financial dispersion. Subdued cost-push shocks were the key driver of Eurozone nominal and competitiveness convergence throughout 2015 but have become an all-rounded divergence force since then. Fiscal discipline imposed by the Stability and Growth Pact (SGP) increased real and financial divergence during all recessionary episodes, while the ECB expansionary monetary policy was a convergence factor. The SGP suspension during the recent pandemic recession and recovery has partially counteracted divergence pressures. Looking forward, convergence will crucially depend on how productivity dynamics and economic growth will fend off further unfavorable cost-push developments, which might become pervasive in a deglobalization-driven new macroeconomic regime. |
| Keywords: | Real, nominal and financial convergence and divergence; Eurozone; Economic integration; Recessions; Financial crises; Subprime financial crisis; Sovereign debt crisis; Pandemic recession; FAVAR models. |
| JEL: | E30 E50 C32 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:tur:wpapnw:096 |
| By: | Fritz, Benedikt; Krüger, Ulrich; Wong, Lui Hsian |
| Abstract: | We examine the impact of introducing a digital euro, as currently conceptualized in the proposal by the European Commission, on the liquidity situation of banks in Germany. The analyses are the basis for assessing the effects of a digital euro on banks' liquidity, as presented in the 11th Annual Report of the German Financial Stability Committee. This paper extensively addresses the technical details of the analyses and substantiates the robustness of the discussed findings. Our analysis focuses on short-term effects. In this environment, deposits are swiftly withdrawn and converted into digital euros, leaving banks with limited opportunities to adapt. We consider a scenario where users fully utilize the holding limit of the digital euro, along with additional scenarios that account for risk-mitigating factors. We employ a unique dataset that combines banking supervisory data with payment transaction information. Our analysis demonstrates that particular savings banks and cooperative banks are vulnerable to retail deposit outflows from exchanges into digital euro. However, only few banks would experience a liquidity shortfall if liquidity in the form of high-quality liquid assets could be redistributed within the banking associations (liquidity balancing). Furthermore, our analysis indicates that based on a holding limit of €3, 000 the liquidity shortfall based on the Liquidity Coverage Ratio remains relatively small in aggregate compared to the level of high-quality liquid assets of the entire banking system in all scenarios (up to 2%). |
| Keywords: | Central bank digital currency, holding limits, bank liquidity, systemic risk |
| JEL: | G21 G32 G38 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubtps:307139 |
| By: | Baute, Sharon |
| Abstract: | Klimaneutralität ist in Europa bis 2050 nicht ohne erhebliche Veränderungen in unserer Wirtschafts- und Gesellschaftsstruktur zu erreichen - und nicht ohne breite gesellschaftliche Unterstützung für diese Transformation. Doch wie nehmen die Bürger:innen den Klimawandel wahr - und welche Art von EU-Klimapolitik findet gesellschaftliche Zustimmung? Einer neuen Umfrage zufolge bevorzugen deutsche Bürger:innen allgemein Maßnahmenpakete, die (1) Subventionen vor allem im Bereich der erneuerbaren Energien einsetzen, (2) sozialinvestive Maßnahmen beinhalten, (3) durch Steuererhöhungen für Reiche finanziert werden und (4) EU-Mittel auf Grundlage der Bevölkerungsgröße auf die Mitgliedstaaten verteilen. Ausgehend von diesen Befunden werden im vorliegenden Policy Paper Implikationen und im Empfehlungen für die Klimapolitik formuliert. |
| Abstract: | Europe's transition towards climate neutrality by 2050 requires major shifts in the structure of our economy and society - and wide societal backing. But how do citizens perceive climate change and what kind of EU climate policies do they support? New survey among German vot- ers shows that Germans generally prefer policy packages that (1) target financial support within the renewable energy sector, (2) include social investment policies, (3) are financed by increasing taxes on the wealthy, and (4) distribute resources across EU member states based on popu- lation size. Based on these findings, this policy paper formulates recom- mendations for climate policy making - inter alia to - couple climate mitigation policies with social investment or compensatory measures for lower-income households. |
| Keywords: | Klimapolitik, EU-Umweltpolitik, Öffentliche Meinung, Deutschland |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexpps:307109 |
| By: | Niccolò Cannarsa; Jean-Marie Grether |
| Abstract: | Do technologies embedded in imports boost domestic productivity? This paper investigates empirically the role of complementarities between absorptive capacity and imports. Different import categories are combined with different proxies for absorptive capacity. The database covers 18 manufacturing industries across 16 European countries over the 2008-2014 period. Our findings suggest that complementarities do exist but are limited to certain types of imports (capital goods) and certain proxies of absorptive capacity (education level). These findings are robust to altering specifications or controlling for endogeneity, and reinforced when the potential non-linearity of the interaction is considered. |
| Keywords: | Capital Imports, Intermediate Imports, Absorptive Capacity, Labour Productivity |
| JEL: | F14 L60 O4 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:irn:wpaper:24-07 |
| By: | Cristiana Belu Manescu |
| Abstract: | Leveraging insights from the academic literature, this paper discusses the challenges and practical solutions in the planning of public investment projects and illustrates them with survey evidence from the EU Member States. The paper starts with strategic planning, which covers a 10-to-20-year planning horizon and can help to identify shared rather than competing goals across sectors and regions. It then moves to the appraisal and selection of large investment projects and discusses the benefits of multiple decision gates and external quality assurances. Finally, it outlines budgeting tools such as multi-annual commitment appropriations and multi-annual budgeting of capital and maintenance costs that bring clarity on the available resources and protect availability of capital during and beyond implementation. Each of these three stages is supported with available evidence from the EU Member States, which helps to identify good practices but also hints at areas for improvement. Overall, the analysis suggests there is much room for improvement across the EU in the early stages of planning as well as in terms of the use of long-term budgeting tools. |
| JEL: | H54 H82 H41 H3 E2 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:213 |
| By: | Alessandro Turrini; Julien Guigue; Áron Kiss; Alexander Leodolter; Kristine Van Herck; Frank Neher; Chrysa Leventi; Andrea Papini; Fidel Picos; Mattia Ricci; Federica Lanterna |
| Abstract: | Tax expenditures are tax relief measures targeted at some socially desirable activities or specific groups of taxpayers. This paper reviews issues related to tax expenditures in the EU and presents some stylised facts related to tax expenditures in personal income taxation (PIT), value-added taxation (VAT), and corporate taxation. Like spending programmes, tax expenditures can be used for allocative or redistributive purposes. At the same time, tax expenditures can make the tax system more complex, less transparent, may have adverse distributional impacts, and they can result in substantial revenue loss. They may also, in some cases, result in harmful tax competition among Member States. The tax-benefit microsimulation model EUROMOD is employed to simulate the fiscal and distributional impacts of two specific sets of tax expenditures. Tax expenditures in PIT that are covered by this study are estimated to represent about 16% of tax revenues from PIT in the EU27 (corresponding to about 1.2% of GDP on average). Reduced VAT rates represent a similar magnitude at about 16% of VAT paid by households in the EU27 (corresponding to about 1.1% of GDP on average). Regular reporting, monitoring and assessment of tax expenditures is crucial as it allows Member States to review and revise their tax policies. Eliminating or reducing (ineffective or cost-ineffective) tax expenditures can, in some cases, create crucial fiscal space that allows for stronger fiscal consolidation, a revenue-neutral reduction in statutory tax rates, or growth-friendly tax shifts. |
| JEL: | H23 H24 H25 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:212 |
| By: | Jan Nill |
| Abstract: | The EU agreed to phase out fossil fuel subsidies (FFS). Nevertheless, FFS strongly increased in 2022 to address the effects of the energy price spikes reached during the energy crisis. Phasing out FFS is therefore also a critical element analysed as part of the European Semester. This paper provides a detailed picture of recent trends and discusses the methodological challenges in analysing FFS. The majority of FFS in the EU are usually tax-related measures, though in the responses to the energy crisis price-related transfers have been dominant. As the part of FFS in price-related support measures cannot always be identified, the crisis-related FFS in EU Member States are likely to be underestimated. Aggregating Member States projections of those FFS in their budgets indicates that the strong rise in directly targeted FFS amounts in 2022 and to a lesser extent in 2023, in particular to support households, is likely to be temporary. Going forward, still around half of EU Member States have only limited or no known plans to phase-out FFS. There are different and partly complementary approaches to define and measure FFS. All approaches have specific challenges. Further reflection is needed on whether all public support which benefits fossil fuels should be treated the same way, or whether particular attention should be paid to FFS linked to a clear economic advantage provided to fossil fuels over other fuels and energy sources. Also, the definition and scope of FFS related to income support may require further scrutiny. The same holds for ways to improve comparability of tax-related FFS, and a possible combined analysis of FFS and implicit and explicit carbon pricing. Finally, further reflection is needed how to take account of the EU and international qualifying criteria for the phase out of fossil fuel subsidies. |
| JEL: | C8 H2 H5 Q3 Q4 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:214 |
| By: | Samartzidis, Lasare; Mundt, Philipp; Schulz-Gebhard, Jan |
| Abstract: | This article examines how input relationships in fragmented production systems shape functional income inequality. We argue that input specificity - reflecting the degree of specialization in intermediate goods production - affects workers' bargaining power and, consequently, the labor share through skill premia and the disruptive potential of strikes. Using regional input-output data for European economies and a novel methodology for constructing sectoral production trees, we measure input specificity and analyze its impact on the functional income distribution. Our results suggest significant regional and sectoral differences in input specificity and reveal a robust positive association between input specificity and labor share, offering new insights into regional economic inequality. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bamber:306854 |
| By: | Maria Teresa Medeiros Garcia; Tiago Miguel Batista Raimundo |
| Abstract: | This paper examines how player transfers influence the stock prices of publicly traded football clubs through an event study approach. The analysis focus on five prominent European teams—Manchester United, Juventus, Borussia Dortmund, Olympique Lyon, and Ajax—focusing on 230 player transactions that occurred between 2018 and 2023. The study assesses abnormal returns (AR) and cumulative abnormal returns (CAR) within a 10-day event window, encompassing five days prior to and following the announcements of transfers. Findings indicate that high-value transfers typically result in positive abnormal returns, which reflect investor optimism regarding the new player's potential impact on the team's success. In contrast, sales and loans of players tend to elicit negative reactions from the market, indicating concerns about possible adverse effects on team performance. These results support the Efficient Market Hypothesis by demonstrating that stock prices quickly adjust to new information such as player transfers. This research adds to the expanding literature at the intersection of sports events and financial markets, providing valuable insights for clubs operating in capital markets and investors aiming to understand the dynamics of football markets. |
| Keywords: | Event Studies; Football Transfers; Abnormal Returns; Stock Market; Efficient Market Hypothesis. |
| JEL: | G14 L83 M41 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03612024 |
| By: | Svend E. Hougaard Jensen; David Pinkus; Nina Ruer |
| Abstract: | A comprehensive study of the long-term care (LTC) systems in Germany, France, Slovenia, Italy and Denmark |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bre:wpaper:node_10560 |
| By: | RENDA Andrea |
| Abstract: | This paper focuses on ways to ensure coherence between place-based innovation and EU industrial policy, and proposes a new approach to sustainable, resilient and secure development in the EU. Underlying the proposed approach is the recognition that past attempts at goal-based policymaking, including the European Green Deal, have overlooked key trade-offs such as those involving socio economic impacts and territorial impacts. This in turn created discontent and a significant polarisation of public opinion, with non-metropolitan areas witnessing a rise in the anti-European sentiment. The paper argues that mono-dimensional approaches to industrial development (e.g. decarbonisation pathways) are unlikely to deliver prosperity and well-being, which stand as the ultimate goals of the European Union; and that a multi-dimensional approach aimed at addressing key trade-offs are much more suitable to such enterprise. In outlining a backcasting, mission-oriented and foresight-inspired approach, this paper suggests that the EU fully embraces economic complexity when looking at its geography, and that of the rest of the world. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc139506 |
| By: | Giovanni Carnazza; Paolo Liberati; Agnese Sacchi |
| Abstract: | In recent times, many countries have continued to deal with political instability due to difficulties in improving democratic practices and limiting episodes of violence and terrorism. Using a sample of 27 European Union (EU) countries observed yearly during the period 1999-2021, we empirically analyze how the domestic political instability of a given country can be affected by the degree of trade diversification adjusted for the political instability of the nonEU countries it trades with. We adopt a network-based approach and build a novel geopolitical dependency index. We find there is a risk of importing political instability along with international trade by increasing trade concentration or the import share from more politically unstable non-EU countries. Given the relevance of the United States and China for European economic activity, we also test our main hypothesis by adjusting the geopolitical dependency index. We see China’s prominent role in trade and political tension in EU countries compared to the US. |
| Keywords: | political instability, trade diversification, network analysis, geopolitical dependency, EU countries |
| JEL: | D74 D85 F10 F50 |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:pie:dsedps:2024/319 |
| By: | Bernhard Mayr |
| Abstract: | An increased frequency and intensity of climate-related natural catastrophes has created significant challenges for both the private and the public sector. Existing risk-sharing approaches are reaching their efficacy limits, pushing governments to take on an increasing share of the burden as private-sector solutions become less affordable or available. This paper outlines how adding a European loan-based backstop facility to the risk-sharing hierarchy can contribute to a more efficient solution and why it may enhance private insurers’ risk-taking capacity. We elaborate on the mechanics of such an approach and show how it could increase private sector insurance capacity without additionally burdening the public. |
| Date: | 2024–11–27 |
| URL: | https://d.repec.org/n?u=RePEc:stm:dpaper:24 |
| By: | FABIANI Josefina (European Commission - JRC); SOGUERO ESCUER Jorge (European Commission - JRC); CALZA Elisa (European Commission - JRC); DUNKER Cesare; DE PRATO Giuditta (European Commission - JRC) |
| Abstract: | The Advanced Manufacturing (ADMAN) study, launched in 2023, aims to support EU policymakers, industrial stakeholders, and Member States in assessing the performance of the advanced manufacturing industry in Europe and shaping EU industrial strategy. Focused on advanced technologies applied to manufacturing processes, the ADMAN study builds on the recommendations of the Industrial Forum’s Task Force on Advanced Manufacturing and aims at addressing existing data gaps by deploying a methodological approach that provides a comprehensive and comparative overview of the advanced manufacturing industry. This report describes the results of the study by DG GROW and JRC on advanced manufacturing worldwide, defining the metrics proposed to map the advanced manufacturing industry at global level as well as the main findings, with a special emphasis on the EU's position relative to global competitors. The report finds that the EU is a strong international advanced manufacturing player; however, it is increasingly under international competitive pressure. The ADMAM study includes also an online tool, allowing readers to further deep dive into the key findings of the report. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc139092 |
| By: | Ton?i SVILOKOS (University of Dubrovnik, Department of Economics and Business) |
| Abstract: | The COVID-19 pandemic led to unconventional monetary policies, such as large-scale asset purchases and near-zero interest rates, which contributed to rising inflation. As inflation increased, central banks responded by tightening policies, including raising interest rates to reduce money supply. This study evaluates the effectiveness of these measures in controlling inflation during the post-pandemic recovery, focusing on the European Union and the United States. It examines the relationship between M2 monetary aggregates and inflation, using the Harmonized Index of Consumer Prices (HICP). Granger causality tests on data from January 2018 to July 2024 show a significant causal link between M2 and inflation, highlighting the importance of interest rate adjustments in managing inflation. |
| Keywords: | Inflation Control, Money Supply, Granger Causality Analysis, Central Bank Actions |
| JEL: | E52 E58 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:14716501 |
| By: | OESCH Daniel; LIPPS Oliver; SHAHBAZIAN Roujman; BIHAGEN Erik; MORRIS Katy |
| Abstract: | Social stratification is interested in unequal life chances and assumes the existence of a hierarchy of more or less advantageous occupations. Yet occupations are not easily translated into a linear hierarchical measure. Influential scales combine multiple indicators and lack intuitive interpretation. We present a new scale based on occupations’ earnings potential (OEP). The OEP scale measures the median earnings of occupations and expresses them as percentiles of the overall earnings structure: If machine mechanics earn the national median wage, their OEP is 50. We construct national OEP scales using annual microdata pooled over several decades for Germany, Sweden, Switzerland, the UK and US. Consistent with the Treiman constant, these national scales are highly correlated over time (r=0.90) and across countries (r=0.80), justifying the use of one common OEP scale. When applied to another European database, the common OEP scale explains a quarter of the variance in earnings – and performs as well for countries used to construct the scale as for countries not used. Moreover, it is associated with the causes (education) and consequences (social mobility) that theory expects it to be. OEP provides a simple, clear and parsimonious indicator of economic advantage that can be meaningfully interpreted. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:laedte:202406 |
| By: | Roel Beetsma; Marco Buti |
| Abstract: | This paper studies the consequences of placing conditions on access to sources of central financing |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bre:wpaper:node_10505 |
| By: | Florian Dorn |
| Abstract: | Key MessagesDefense spending above the NATO target of 2% of GDP would be necessary for Europe to be able to provide sufficient security and to defend itself without the protective umbrella of the US.European countries must increase their efforts to catch up with an adequate defense capability, as defense budgets andmilitary investments have been too low for years.Many European countries must compensate for higher real military costs – including wages for soldiers and costs formilitary equipment – than, for example, in Russia or China.More efficient and integrated military structures need to be established in Europe in the long term. The currentgeopolitical situation immediately requires higher defense spending.European governments need a credible plan to sustainably increase defense capabilities without jeopardizing budgetarystability and economic competitiveness. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_66 |