May 2018

Haskel, Westlake, 31 May 2018, 19636 reads

Many economists have suggested that slowing technical innovation is behind the secular stagnation and slowdown in total factor productivity growth that have plagued many advanced economies since the Global Crisis. This column, first published in January 2018, argues that the recent rise of the intangible economy could play an important role. An assessment of measurement trends and the properties of intangible investment across the globe suggests that total factor productivity growth will continue to be low until governments design the institutions an intangible economy needs, and until its commercial, legal, and ethical norms are worked out.

Decarolis, Giuffrida, Iossa, Mollisi, Spagnolo, 31 May 2018, 4945 reads

Governments across the world procure a huge range of goods and services, and ensuring that procurement contracts are negotiated and executed properly can save a great deal of time and money. This column uses evidence from the US to show the effect of staff competence on procurement wastage. Improving the competence of bureaus to the 90thpercentile of the distribution would save an average of $102,619 and 54.5 days per contract.

Hartmann, Huang, Schoenmaker, 31 May 2018, 3897 reads

The financial crisis and subsequent low-inflation recovery forced central banks to explore novel policy options and to take on new responsibilities. This column gathers the views of leading academics and policymakers on what the expanded range of central bank policies implies for the future. Though consensus is limited, a common thread is that the economics profession has still not succeeded in integrating some main post-crisis lessons into the standard economic curriculum. Moreover, questions remain not only for monetary policy, financial stability policy and their interaction, they also touch on what the future role of the central bank should be, both in the state and in society at large.

Cerina, Moro, Rendall, 30 May 2018, 3701 reads

The polarisation of employment by skill level is a phenomenon that has emerged in several industrialised economies in the last decades. This column argues that a substantial fraction of the phenomenon in the US is due to women’s increasing participation in the labour market during a period of sustained skill-biased technological change.

Buiter, Sibert, 30 May 2018, 3651 reads

In December 2017 the US federal corporate tax rate on profits over $10 million was reduced from 35% to 21%. This column examines the plausibility of the Council of Economic Advisers’ estimates of how a cut in the corporate profit tax rate would boost average household income, and argues that three other features of the corporate tax regime and the wider economy are central to determining the effects of such a cut: the deductibility of capital expenditure and of interest payments from the corporate profit tax base and the impact of the corporate tax cut on private and public consumption demand.

Selaya, 30 May 2018, 1598 reads

Recent evidence suggests that infrastructure put in place by the Roman empire over 2,000 years ago might have lasting economic consequences to this day. In this Vox Talks, Tim Phillips talks to Pablo Selaya about his recent research on the persistence of historical public goods provision, in the form of road network development in Roman times. The specific features of these roads - originally built for military access into newly-conquered territories - meant the transport network grew to be uniquely extensive and efficient, with lasting benefits for economic development.

Campos, Sturm, 29 May 2018, 7298 reads

Economists have discussed what to do to reform the European project and how, but have been silent on who and when. Which institutions and rules are needed and when? This column introduces a new eBook that makes the case such institutional questions are of fundamental importance for the future of Europe. The individual chapters distil the lessons from the institutional framework underpinning the Bretton Woods system and the globalisation wave that followed it. 

Dahl, Gielen, 29 May 2018, 3855 reads

Although an extensive literature has documented intergenerational correlations in welfare receipt, there is little evidence on whether this relationship is causal. Do benefit schemes create a culture of dependency within families? This column finds that children of parents in the Netherlands who were pushed out of disability insurance following a reform were less likely to participate in the programme as adults. The fiscal spillovers from these intergenerational links have a sizable effect on the government’s long-term budget.

Nyreröd, Spagnolo, 28 May 2018, 4796 reads

The European Commission has recently proposed a directive that provides horizontal protection for whistleblowers in the EU. This could put the EU on a par with the US with respect to protection, but recent episodes of retaliation suggest that it may not be enough. This column compares the whistleblower protection policies in the EU and the US and argues that reward programmes are particularly appropriate for specific regulatory areas where wrongdoing can cause substantial harm.

Baldwin, 28 May 2018, 6791 reads

VoxEU has today launched a new feature – the Blogs&Reviews page – which will gather blog posts and book reviews from leading economists from around the world. The page starts with a dozen or so well-established bloggers who are reposting their blogs on the new page. The idea is to raise the profile and boost the dissemination of these blogs, and to eventually attract a wider range of economists to contribute to the public debate in this more informal format. We also post book reviews. 

Delis, de Greiff, Ongena, 27 May 2018, 5139 reads

Neglecting the possibility that fossil fuel reserves can become ‘stranded’ could result in a ‘carbon bubble’ as fossil fuel firms become overvalued. This column studies whether banks price the climate policy risk of fossil fuel firms. Prior to 2015, banks did not appear to price climate policy risk. After 2015, however, the risk is priced to a certain extent, especially for firms holding more fossil fuel reserves.

Biasi, Moser, 26 May 2018, 14342 reads

Copyrights grant publishers exclusive rights to content for almost a century. In science, this can involve substantial social costs by limiting who can access existing research. This column uses a unique WWII-era programme in the US, which allowed US publishers to reprint exact copies of German-owned science books, to explore how copyrights affect follow-on science. This artificial removal of copyright barriers led to a 25% decline in prices, and a 67% increase in citations. These results suggest that restrictive copyright policies slow down the progress of science considerably.

Danielsson, 25 May 2018, 3812 reads

The advent of cryptocurrencies has captured the imaginations of consumers, businesses, and investors alike. Policymakers are grappling to regulate them, while economists are still working out the potential that cryptos have to disrupt financial markets. In this Vox Talks, Jon Danielsson takes a different view, explaining why cryptos "just don't make sense", and why they should be treated with some scepticism. 

Celasun, Gruss, 25 May 2018, 7042 reads

The manufacturing sector is believed to play a unique role as a catalyst for productivity growth and income convergence, and as a provider of well-paid jobs for less-skilled workers. This column argues, however, that the declining share of manufacturing employment over the past decades need not hurt the income convergence prospects of developing economies and that the loss of manufacturing jobs can only explain a small fraction of the rise in inequality in advanced economies. That said, getting the policies right is key to help countries make the most out of structural transformation. 

Qin, Strömberg, Wu, 25 May 2018, 5349 reads

The Chinese government has invested heavily in surveillance systems that exploit information on social media. This column shows that these systems are very effective, even in their simplest form. From the government’s point of view, social media, although unattractive as a potential outlet for organised social protest, is useful as a method to surveil protests, monitor local officials, and disseminate propaganda.

Boning, Guyton, Hodge, Slemrod, Troiano, 25 May 2018, 2834 reads

Tax evasion remains a pervasive problem. Fighting it efficiently is crucial, as resources spent on enforcement can’t be spent elsewhere in society. This column describes the outcomes of an enforcement experiment targeting at-risk firms in the US. Notification of risk status by letter saw an increase in remittances of 34%, while notification by in-person visit increased remittances by 276%. Remitted taxes also increased for the network neighbours of firms that received an in-person visit.

Schmelzing, 24 May 2018, 31967 reads

Growth rates have been stubbornly low since the financial crisis, and many have noted that the interest rate environment has been weakening since the 1980s. This column places recent episodes in the context of longer-term economic history, going back to the 14th century. Trends over recent decades are generally in line with a long-term ‘suprasecular’ trend of declining real rates. Negative real rates could become a more frequent phenomenon, and indeed constitute a ‘new normal’.

Claeys, 24 May 2018, 3958 reads

In their recent Policy Insight, the team of French and German authors suggest introducing sovereign bond-backed securities to play the role of safe asset in the euro area. This column, part of the VoxEU debate on euro area reform, argues that an improved euro area architecture would, in the long run, make all euro area sovereign bonds safer, and thus make the provision of safe assets through untested and potentially disruptive sovereign bond-backed securities unnecessary.

L. Cermeño, 23 May 2018, 4175 reads

Knowledge hubs are generally located in large and dynamic population clusters, but there is little empirical evidence on what has driven the location of services in the economy, particularly the knowledge-intensive ones that form these hubs. This column describes how the geography of services across the US has been influenced by the interaction between county and industry characteristics. The presence of large markets enhanced the agglomeration of services mainly through linkages with other services and manufacturing firms. 

Mattoo, Meltzer, 23 May 2018, 7192 reads

The EU’s privacy regulation threatens developing country exports of data-based services by making data transfers more difficult. Traditional trade rules and regulatory cooperation cannot resolve this conflict. The column argues that the way forward would be to design trade rules that reflect the bargain struck in the EU-US Privacy Shield. Data destination countries would promise to protect the privacy of foreign citizens in return for source countries promising not to restrict data flows.

Frieden, 23 May 2018, 5578 reads

For the euro area to be stable and move forward productively, substantial improvements in its operation are required. This column, part of the VoxEU Euro Area Reform debate, argues that the proposals in the recent CEPR Policy Insight are necessary if the euro area is to avoid another catastrophic crisis and that they would go a long way towards addressing the legitimate concerns of citizens in both the core and periphery of the euro area.

de Bromhead, Fernihough, Lampe, O'Rourke, 22 May 2018, 5673 reads

The literature has identified several stylised facts which characterise the nature and causes of the collapse in international trade during 2008 and 2009. This column uses detailed, commodity-specific information on UK imports between 1929 and 1933 to document several similarities between the trade collapses of the Great Depression and the Great Recession. The findings are in line with theories emphasising the composition of expenditure changes during major economic crises, or the relative sizes of firms operating closer to or further away from the margin between exporting or not.

Debrun, Eyraud, Hodge, Lledo, Pattillo, 22 May 2018, 4183 reads

Less than five years into the great euro experiment, the president of the European Commission at the time judged Europe’s limit on public deficits to be "stupid". A more intriguing question, however, is whether numerical constraints on broad indicators of fiscal performance can contain politicians’ penchant for borrowing too much and at the wrong time. This column summarises lessons from recent research on fiscal rules, including the new generation of ‘smart’ rules that emerged around the Global Crisis. Rules can mitigate fiscal excesses if they strike a good balance between simplicity, flexibility, and enforceability. 

Dube, Jacobs, Naidu, Suri, 21 May 2018, 8795 reads

Monopsony refers to the market power that employers wield in labour markets. This column explores monopsony power in online labour markets, using observational and experimental data from Amazon’s Mechanical Turk platform. Both datasets suggest an employer labour supply elasticity of close to 0.1, suggesting that a 10% reduction in wages would only see a 1% drop in willing labour. This points to substantial employer market power in a supposedly frictionless setting. 

Wieser, 21 May 2018, 3931 reads

The proposals on fiscal frameworks and rules in the recent CEPR Policy Insight on euro area reform showcase the multiple dimensions of the fundamental dilemmas we are confronted with in the governance of the euro area. This column, part of the VoxEU debate on Euro Area Reform, looks at the challenges to the central role of the Commission that have arisen as the rules-based fiscal framework has been severely compromised.

Weber, 21 May 2018, 5205 reads

On 10 June 2018, Switzerland will be the first country to have a referendum on the introduction of Sovereign Money ('Vollgeld'). This column argues that the Vollgeld project and cryptocurrencies such as Bitcoin build on popular fantasies about money that are disconnected from the actual operation of the current monetary system. Unfortunately, the latter’s features remain underexplored even among economists.

Felfe, Lalive, 20 May 2018, 3932 reads

In many societies and for many families, the responsibility for looking after very young children during the day has passed from parents to third-party care providers, prompting a hotly contested debate about the merits of early childcare and how it affects childhood development. This column exploits an expansion of childcare provision in Germany to show that early childcare can be a major contributor to eliminating inequality of opportunity and even lay the foundations for a more productive workforce in the future.

Girard, 19 May 2018, 4091 reads

Affirmative action policies are widely used to tackle the underrepresentation of certain groups. However, the efficiency of these policies is fiercely debated. This column uses novel data from India to explore how affirmative action quotas affect everyday discrimination. Local political council quotas for marginalised castes are found to reduce caste-based discrimination by around one fifth, but the effect disappears when the quotas are removed.

Dustmann, Landersø, 18 May 2018, 3524 reads

Does a person’s criminal behaviour induce others to commit crime? This column exploits the fact that young fathers in Denmark are less likely to continue their criminal careers if their new-born child is a boy rather than a girl to identify spillovers in criminal behaviour. The analysis shows that neighbourhood peers of new fathers of boys become less likely to commit crime themselves than neighbourhood peers of new fathers of girls. The findings suggest that the benefits of programmes that reduce crime at a younger age are far larger than suggested by the primary effects alone. 

Pinkovskiy, Sala-i-Martin, 18 May 2018, 4901 reads

Purchasing power parities have been one of the successes of economic measurement. This column asks whether these adjustments are a better measure of the underlying economy than market exchange rates, whether our successive estimates of PPP are improving, and whether we should discard past PPPs when new data become available. Using a regression of night-time lights on PPP-adjusted GDP data, it argues that the answers are yes, yes, and (for now) yes. In fact, current estimates of prices now may be better estimates of past prices than estimates of those past prices made at the time.

Guiso, Herrera, Morelli, Sonno, 18 May 2018, 10988 reads

There has been some disagreement over the roots of the recent rise of populism in Europe. This column examines variations in exposure to economic shocks and in ability to react to them in different regions of Europe to show that the cultural backlash against globalisation has been driven by economic woes. In regions where globalisation was present but that have benefited economically, there has been no such backlash and the populist message has retreated. The message is clear: if one wants to defeat populism, one must defeat first economic insecurity.

Bagwell, Staiger, Yurukoglu, 17 May 2018, 4102 reads

It is widely accepted that the most-favoured nation rule – a fundamental feature of WTO negotiations – has both advantages and disadvantages. This column considers the empirical outcomes of tariff bargaining under the most-favoured nation rule versus outcomes where this rule is abandoned. It finds that the rule substantially increases welfare at the global level.

Dolado, Motyovszki, Pappa, 17 May 2018, 6768 reads

There is ongoing debate over the welfare implications of the unorthodox measures adopted by central banks in the wake of the Global Crisis. Using US data, this column explores the implications of monetary policy for income and wealth inequality. Unexpected monetary expansions are found to increase inequality between high- and low-skilled workers. In terms of stabilising the economy, strict inflation targeting is found to be the most successful policy.

Schnabel, Véron, 16 May 2018, 4509 reads

Several euro area leaders have recently referred to the need to "complete the Banking Union". This column, part of VoxEU's Euro Area Reform debate, asks what would be required for Banking Union to be considered "complete", and makes the case for a modest approach to breaking the vicious circle between banks and sovereigns.

Duernecker, Herrendorf, Valentinyi, 16 May 2018, 7004 reads

Baumol argued that structural change may lead to a productivity slowdown due to a reallocation of production to service industries with low productivity growth. This column uses a new framework to estimate the effects of Baumol’s disease on future productivity growth in the US. The results suggest that future structural change will not reduce productivity much further thanks to substitutability within the broader service sector.

Bofinger, 15 May 2018, 5429 reads

The recent proposals for euro area reform from a team of French and German economists have initiated an intensive debate. This column, part of VoxEU's Euro Area Reform debate, argues that the specific insolvency risk of euro area membership is the main risk that should be covered by joint risk sharing, and that the modest proposals for public and private risk sharing are insufficient in this regard.

Monras, Vázquez-Grenno, Elias, 15 May 2018, 5516 reads

Studies have shown that granting work permits helps immigrants settle and integrate into host economies, but we know relatively little about how host economies are affected by the mass legalisation of immigrant workers. This column uses one of the largest and most unexpected legalisations in the world – by the Zapatero government in Spain – to show how legalisation can increase public revenues, but can also have distributive consequences for other workers in the economy.

Cassidy, Fafchamps, 15 May 2018, 3232 reads

Informal savings and borrowing institutions are a way to intermediate between savers and borrowers in the developing world. But if these associations attract mostly savers or mostly borrowers, or are concentrated in one occupation, they may not function as well as they should. This column uses survey results from Malawi to suggest that commitment savers and borrowers mix in such associations, but occupations have tended to stick together. This may make them vulnerable to shocks such as a bad harvest. 

Fuchs-Schündeln, 14 May 2018, 2844 reads

CEPR Research Fellow Nicola Fuchs-Schündeln was this year's winner of the Gottfried Wilhelm Leibniz Prize. In this edition of Vox Talks, she discusses her research on working hours, the origins of our political views, and the lessons we can draw from the German reunificatioin. 

Fatás, Weder di Mauro, 14 May 2018, 9007 reads

Central banks are alert to the challenge of cryptocurrencies, and are contemplating reactions ranging from prohibiting private issuance to embracing such currencies. This column argues that the risks of introducing a central bank digital currency are high while the efficiency gains do not seem large. A more efficient system can be achieved via innovation in current payment infrastructure.

Ambrocio, Jokivuolle, 14 May 2018, 2814 reads

The Basel III reform raised banks’ capital requirement per risk-weighted assets considerably, while risk weights were largely unchanged. This column uses a simple model to explore whether these risk weights discourage productive business investments. The model shows that when firms face collateral constraints, the optimal risk weights on corporate loans should be ‘flatter’ than they are at present. A quantitative assessment, however, suggests that welfare losses from the current system may not be large.

Lowes, Montero, 13 May 2018, 2742 reads

Delivery of health aid can be jeopardised by distrust at the local level. This column uses evidence from French military campaigns in Cameroon and former French Equatorial Africa to show that a significant reason for this distrust may be aid recipients’ historical experiences of colonial medical campaigns. Building and maintaining trust in medicine should remain a priority for modern health interventions.

Low, Meghir, Pistaferri, Voena, 13 May 2018, 3281 reads

Changing the terms and rules governing welfare can have substantial effects on employment. This column explores how the imposition of time limits for welfare receipt affected the employment, marriage, and divorce rates of women in the US. As intended by the reform, time limits decreased welfare use and the divorce rate, while increasing employment. Despite this, those women who were worst off prior to the reform are found to be even worse off after it.

Pichler, Ziebarth, 12 May 2018, 4800 reads

In the past decade, dozens of US cities and seven US states have mandated employers to offer paid sick leave. This column investigates the relationship between sick pay and influenza-like illness rates. The results suggest that the mandates reduced the spread of infectious diseases, while having no significant effect on employment or wages.

Pugsley, Sedláček, Sterk, 11 May 2018, 4690 reads

In order to design effective policies to foster high-growth startups, we must first understand what sets these ‘gazelles’ apart from other startups. This column combines data covering US employers since the late 1970s with a macroeconomic model of firm dynamics to show that much of the performance of a firm is driven by factors that are determined at or just before the time of startup. Understanding how policies affect which types of people aspire to become entrepreneurs, how they develop business models, and which ideas they ultimately pursue is therefore important.

Andrews, Gal, Witheridge, 11 May 2018, 6180 reads

Low inflation at the same time as rising global competition has led to a debate on the importance of globalisation for domestic inflation. This column suggests that greater participation in global value chains has placed downward pressure on inflation. The current higher level of global value chain integration may also dampen inflation by accentuating the impact of global economic slack on domestic inflation. There is a risk that stalling globalisation since the crisis, coupled with stronger aggregate demand and declining market contestability, could lead to inflationary pressures in the medium term.

Beetsma, Larch, 10 May 2018, 3538 reads

The key question in the policy debate on the next steps for the Economic and Monetary Union seems to be whether we can progress with integration in a context where some countries perceive themselves as consistently paying for policy mistakes of others, while others see themselves victims of a moral diktat. This column, adding to VoxEU's Euro Area Reform debate, argues that the policy dilemma around a central fiscal capacity can only be overcome if fiscal risk sharing and risk reduction advance in parallel. Therefore, reform of EU fiscal rules need to receive more attention. 

Ellison, Tischbirek, 10 May 2018, 4384 reads

The bond premium puzzle arises because the excess yield that investors require to hold a long-term bond is too small in quantitative macroeconomic models. Drawing on the beauty contest literature, this column argues that realistic term premia can be generated by differentiating between private and public information and by introducing strategic complementarities in the formation of expectations. It shows that a significant proportion of US term premia is driven by a beauty contest in forecasting, which rewards investors for being accurate andclose to the average forecast of others.

Marin, 09 May 2018, 13875 reads

Germany has transformed itself from ‘the sick man of Europe’ to an ‘economic superstar’, accounting for almost 8% of world exports. This column introduces a new VoxEU eBook that explores how Germany‘s extraordinary recovery came about. The contributors to the eBook find that changes in the labour market institutions and in firms’ business models as a result of trade liberalistion with Eastern Europe after the fall of communism explain Germany’s exceptional export performance. They also explain why Germany absorbed the 'China shock' more easily than other countries and why globalisation did not contribute to the rise in voting for the far right in Germany.

 

Alstadsæter, Johannesen, Zucman, 09 May 2018, 22857 reads

Tax records are often used to gauge the concentration of wealth and income in a society. However, if the rich dodge taxes more than the poor, tax records will underestimate inequality. This column uses Scandinavia as an example to demonstrate how tax evasion varies with wealth: the top 0.01% richest households in Scandinavia evade about 25% of the taxes they owe by concealing assets and investment income abroad. The very rich are able to do this simply because they have access to wealth concealment services. To reduce top-end evasion, what is essential is to shrink the supply of such services.

Carmassi, Evrard, Parisi, Wedow, 09 May 2018, 2931 reads

Recent months have seen many proposals for alternative designs for a European Deposit Insurance Scheme that would cater for concerns that such a scheme would lead to some banking sectors having to bear the costs of bank failures in other member states. This column, adding to VoxEU's Euro Area Reform debate, asks whether these concerns are well founded.

Faria, Verona, 09 May 2018, 5818 reads

The slope of the yield curve is of interest to policymakers and market participants alike. But despite being a good in-sample predictor of the equity risk premium, it performs rather poorly out-of-sample. This column finds that the low-frequency component of the term spread is a strong and robust out-of-sample equity risk premium predictor for several forecasting horizons. This finding adds to recent empirical evidence that the level and price of aggregate risk in equity markets are strongly linked to low-frequency economic fluctuations.

Aksoy, Guriev, Treisman, 08 May 2018, 12905 reads

Attitudes toward globalisation have emerged as a new dimension of political alignment, alongside – or even instead of – the traditional left-right cleavage. This column uses data covering nearly 450,000 individuals in 118 countries over the last ten years to show that highly skilled individuals approve of their government more when high skill-intensive exports increase, but approve of it less when high skill-intensive imports rise. More generally – and contrary to the conventional wisdom – unskilled workers do not oppose imports and blame their leaders for failing to protect markets.

Fatás, Weder di Mauro, 07 May 2018, 10798 reads

Economists have been dismissive of cryptocurrencies, but fintech entrepreneurs and enthusiasts continue to see their disruptive potential. This column considers the theoretical and practical arguments on both sides of the debate. Traditional currencies are overwhelmingly superior as forms of money, and cryptocurrencies’ advantage in terms of lax regulation is unlikely to last. There remains, however, ample potential for innovation in payment systems.

Razin, 06 May 2018, 4053 reads

The exodus of Soviet Jews to Israel in the 1990s was a unique event. This column shows that this immigration wave was distinctive for its large high-skilled cohort, and its quick integration into the domestic labour market. Immigration also changed the entire economic landscape, raising productivity and underpinning the information technological surge. Israel’s unusually robust assimilation of immigrants into the economic sphere and the electoral system has transformed the political balance and triggered significant changes in income distribution.

Grossman, Dave, Saffer, Kenkel, Dench, 05 May 2018, 4322 reads

In 2016, the US Food and Drug Administration extended its authority over tobacco products to include e-cigarettes. This column argues that advertising restrictions and taxes on e-cigarettes could discourage people from quitting traditional cigarettes. However, little is known about the long-term health consequences of the use of e-cigarettes, so it is too early to conclude that unrestricted advertising of e-cigarettes and low or no federal taxation would advance public health.

Kobayashi, 05 May 2018, 5082 reads

Future generations cannot influence current policies, while today’s policymakers and voters tend to be focused on the present. Understanding how to reconcile this disconnect is important for resolving intergenerational issues such as sustainability and swelling government debt. This column introduces the interdisciplinary field of ‘future design’ and discusses insights from a recent workshop held at the Research Institute for Humanity and Nature in Japan. It also proposes several directions for future design research.

Buti, Borg, 04 May 2018, 7977 reads

It is ten years since the crisis started and Europe is at the cusp of new and different challenges. This column presents the European Commission's spring forecast and the challenges ahead that policymakers should address. The baseline scenario for the European economy over the next two years is one of continued expansion. However, the assessment of risks to the forecast has changed, and the nuances have become more critical. Domestic upside risks have broadly diminished and downside risks to the global outlook have increased significantly in both the short and the medium term.

Henkel, Seidel, Südekum, 04 May 2018, 4888 reads

Germany shifts a massive amount of fiscal transfers across jurisdictions every year. This column argues that this limits the degree of economic disparities across regions, but comes at the cost of lower national productivity and output. Still, in terms of welfare, Germany would not be better off if all fiscal transfers were abolished.

Wolff, 04 May 2018, 5179 reads

When thinking about what will determine the prosperity and well-being of citizens living in the euro area, five issues are central. This column, part of VoxEU's Euro Area Reform debate, argues that the important CEPR Policy Insight by a team of French and German economists makes an important contribution to two of them, but leaves aside some of the most crucial ones: European public goods, a proper fiscal stance and major national reforms. It also argues that its compromise on sovereign debt appears unbalanced.

Evenett, Fritz, 03 May 2018, 5107 reads

A new front on protectionism has opened up in policymaking circles, with Chinese manufacturing being used as a pretext to raise trade barriers. This column presents the new Global Trade Alert report which challenges the empirical and conceptual basis for doing so. 

Cao, Dinger, 03 May 2018, 4806 reads

The effectiveness of monetary policy in dictating banking activities is one of the keys to understanding how efficient monetary policy is in tuning the real economy. This column uses data on Norwegian banks to show that efficiency may be eroded by international financial flows in a small open economy. This raises several challenges for central banks and financial regulatory agencies in such economies.

Pomfret, 02 May 2018, 5681 reads

China’s Belt and Road Initiative has the potential to extend the Eurasian Landbridge to include both the current China-Poland mainline to western Europe and a China-Istanbul mainline with spurs to the Middle East and North Africa. This column, the second in a two-part series, outlines the history of the initiative and argues that future construction on the network could be a major step towards Eurasian integration and greatly improve rail's competitiveness relative to air for time-sensitive shipments.

Bacchetta, 02 May 2018, 8852 reads

The proposed Swiss sovereign money initiative, which will be put to a popular vote in June 2018, would be a drastic reform to the monetary system. If implemented, all sight deposits in Swiss francs would come off commercial bank balance sheets and be deposited at the Swiss National Bank. This column argues that the initiative ignores most of what we know about macroeconomics or monetary economics. It would generate an aggregate loss, reduce stability, interfere with fiscal and monetary policy, and undermine the independence of the central bank. 

Duernecker, Herrendorf, 01 May 2018, 2835 reads

Recent research has shown that, in contrast to the prediction of basic theory, income tax increases in OECD countries have led people to spend less time working and more time on leisure activities, with little change in hours of household work. This column uses new estimates of household productivity to resolve the discrepancy between the evidence and basic theory. The OECD countries in which governments increased income taxes also tended to experience increases in the productivity of household production.

Pomfret, 01 May 2018, 7397 reads

A dramatic development in the 2010s has been establishment of overland rail freight services between the EU and East Asia. This column, the first in a two-part series, look at the catalyst for the Eurasian Landbridge rail services and it's impact on trade costs. While traffic on the Landbridge is still small compared to China-EU maritime trade, there is potential for further service improvement with implications for global value chains across Eurasia.

Marimon, Cooley, 01 May 2018, 5314 reads

The Horizon 2020 ADEMU project has aimed to reassess the fiscal and monetary framework of the Economic and Monetary Union in the wake of the euro crisis. This column introduces a new VoxEU ebook which presents the main findings from the project, including the lessons we can extract from the crisis and the policy response. It also outlines the two main proposals arising from the project relating to the European Stability Fund and a European Unemployment Insurance System.

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