VoxEU & CEPR Coverage of the Covid-19 Global Pandemic

Reflections on the EU’s Carbon Border Adjustment Mechanism

Yasuo Tanabe, 23 January 2022

In July 2021, the EU announced a Carbon Border Adjustment Mechanism aimed at avoiding carbon leakage from the EU and promoting emissions reductions worldwide. This column summarises and reflects on a recent conference on the topic held by the EU-Japan Centre for Industrial Cooperation. It discusses the mechanism’s proposed implementation schedule, consistency with WTO rules, and implications for EU–Japan trade relations. It highlights the important role Japan should play in the decarbonisation effort, especially by harnessing its strengths in technology and innovation.

Identifying state dependence in brand choice

Julia Levine, Stephan Seiler, 23 January 2022

Consumers tend to be loyal to products they have purchased in the past, which companies may exploit to raise prices. To better understand whether this brand loyalty is driven by preferences or state dependence, this column looks at how households react when stockouts due to hurricanes force them to purchase different brands of bottled water. The authors do not find evidence of state dependence in bottled water brand. Although there is a large and significant decrease in loyalty during the stockout weeks, there is no effect in the post-hurricane period.

Ramadan intensity and subsequent student achievement

Erik Hornung, Guido Schwerdt, Maurizio Strazzeri, 22 January 2022

The observance of fasting during Ramadan has been widely associated with detrimental health effects as well as poor economic performance. Less attention has been given to the potential benefits generated by the social aspects of this religious practice. This column argues that Muslim students achieve higher scores in educational performance tests following a more intensive Ramadan. By sharing the religious experience, students can build their social capital and social identities, which in turn boosts educational performance.

The triple impact of school closures on educational inequality

Francesco Agostinelli, Matthias Doepke, Giuseppe Sorrenti, Fabrizio Zilibotti, 21 January 2022

How have school closures during the Covid-19 pandemic affected children's education? This column argues that channels operating through schools, peer effects, and parental investments have all contributed to massively growing educational inequality during the pandemic. Among 9th graders, children from low-income neighbourhoods in the US are predicted to suffer a learning loss equivalent to almost half a point on the four-point GPA scale, whereas children from high-income neighbourhoods remain unscathed.

Consumption inequality in the digital age

Kai Arvai, Katja Mann, 21 January 2022

When considering the effect of digitalisation on inequality, researchers usually focus on income inequality. This column compares the consumption baskets of US households to study the effect of digitalisation on consumption inequality. High-income households have a higher share of ICT-intensive products in their consumption, and thus benefit more from price declines in these goods due to digitalisation. The price channel accounts for 22.5% of the increase in consumption inequality between 1960 and 2017.

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