Jean Pisani-Ferry, 07 November 2014

A triple-dip recession in the Eurozone is now a distinct possibility. This column argues that additional monetary stimulus is unlikely to be effective, that the scope for further fiscal stimulus is limited, and that some structural reforms may actually hurt growth in the short run by adding to disinflationary pressures in a liquidity trap. The author advocates using tax incentives and tighter regulations to encourage firms to replace environmentally inefficient capital.

Mark Hoekstra, Steve Puller, Jeremy West, 03 September 2014

‘Cash for Clunkers’ was billed as a stimulus programme that would boost sales to the ailing US auto industry in 2009. This column shows that the design of the programme actually caused it to reduce revenues to the industry it was designed to help. The authors estimate that the entire increase in sales during the programme would have happened anyway in the following eight months. Moreover, since more fuel-efficient cars tend to be less expensive, the fuel economy requirement of the programme incentivised households to buy cheaper cars.

Nina Leheyda, Frank Verboven, 05 December 2013

Scrapping subsidies were a popular policy to protect car sales in the beginning of the crisis. This column presents new research showing that the subsidies had a strong effect on stabilising sales, but only a small environmental impact. There may thus be more productive investments to stabilise the economy during times of crisis.

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