Debora Revoltella, Julie Delanote, Tessa Bending, 03 December 2021

The European economic policy response to the COVID-19 pandemic has ensured business continuity and shielded investment, but digital and green transitions are now ever more urgent. This column uses data on 12,000 European firms from the European Investment Bank Investment Survey to show that the pandemic spurred many firms to start accelerating transformation efforts. Policy should seek to support this momentum amid post-pandemic economic recovery.

Timothy Hatton, 19 November 2021

Less than half of all applicants for political asylum in Europe gain some form of recognition that allows them to stay. Since the early 2000s, the EU has developed a common asylum policy with the aims of protecting the rights of refugees and mitigating the ‘asylum lottery’.  This column shows that the implementation of EU Directives contributed modestly to an overall increase in average recognition rates but has not reduced the variation in rates across countries.

Rigissa Megalokonomou, Marian Vidal-Fernandez, Duygu Yengin, 11 November 2021

Women are now more likely to pursue a university degree than men, but the proportion of women graduating in economics has decreased or remained stagnant over the past two decades. This column examines the representation of women in undergraduate economics degrees in 25 European countries during 2014–2018. The ratio of women to men in economics, controlling for gender differences in enrolment, has been around 0.6 on average and is stable or decreasing. Increased representation of women economists is important for more balanced policy recommendations, and the authors discuss how this might be achieved. 

Fabio Canova, Evi Pappa, 09 November 2021

In light of last year’s launch of the Next Generation EU funds, understanding the effectiveness of the EU’s use of structural funding has become even more important. This column examines the role of the European Regional Development Fund and the European Social Fund over time. While both have contributed to job creation and economic recovery, the former had a more short-term direct effect and the latter a more medium- to long-term indirect impact. There is significant regional heterogeneity in these impacts, driven by location, level of development, EU tenure, and euro area membership.

Nauro Campos, Fabrizio Coricelli, Emanuele Franceschi, 07 November 2021

Economic integration has certainly deepened and, more recently, changed enormously. Until the late 1990s integration was mostly trade-centred, while it now can be better described as institutions-centred. This column introduces the notion of ‘institutional integration’, identifies its main features, and provides estimates of its net benefits. With one of the first applications of the synthetic difference-in-differences estimator and using data from the 1995 enlargement of the EU, the authors find that the failure to embrace institutional integration by Norway (compared to ‘only’ embracing deep integration) generates yearly productivity losses of about 0.6 percentage points.

John Duca, John Muellbauer, Anthony Murphy, 13 September 2021

Research on house price cycles and their interactions with the economy has burgeoned since the Global Financial Crisis. This column draws five lessons from a recent comprehensive survey. It argues that conventional theories of house price dynamics are misleading. Shifts in credit conditions, together with differences in housing supply response across cities, regions and countries, account for much of the heterogeneity of house price outcomes. Finally, increased demand for space and unprecedented policy interventions together explain the very different house price experience in the pandemic compared with the Global Financial Crisis.

Randolph Bruno, Nauro Campos, Saul Estrin, 17 July 2021

Do different economic integration arrangements vary in terms of their capacity to attract foreign direct investment? This column uses a structural gravity framework on annual bilateral FDI data for 142 countries between 1985 and 2018 to revisit this question. It finds that deep integration in the form of EU membership increases FDI by about 60% from outside the EU and by about 50% from within the EU. The effect of EU membership on FDI appears to be significantly larger than that from the less deep integration arrangements (EFTA, NAFTA, or MERCOSUR), with the Single Market the cornerstone of this differential impact. 

Paul Hiebert, 13 July 2021

Climate change will impact those parts of the financial system most exposed to its disruptive effects. This column analyses a new financial stability risk mapping for the EU financial system, linking financial exposures of thousands of banks, insurance companies, and investment funds to millions of firms subject to climate risk. It highlights a high level of risk concentration, both in European regions subject to climate hazards as well as economic sectors with diverse carbon emission intensities. Long-term scenario analyses suggest that the risks will be best addressed through proactive policies that directly contain global temperature rises. 

Bernard Hoekman, Xinquan Tu, 12 July 2021

Rising geopolitical and geoeconomic tensions among major trade powers are undermining the rules-based multilateral trade order. A new VoxEU eBook brings together teams of mostly Chinese and European experts who focus on key challenges confronting the multilateral trading system. Pursuit of issue-specific negotiations on an open plurilateral basis offers prospects for revitalizing the WTO but does not remove the need for balance in the choice of issues put forward for negotiation and for systemic WTO reform. Joint leadership by China and the EU to establish a balanced work programme that spans both old and new issues of interest to all WTO members is a necessary condition to reboot the rules-based trade order.

Sebastian Siegloch, Nils Wehrhöfer, Tobias Etzel, 04 June 2021

Increasing regional inequality has become a major concern for policymakers both in the US and Europe. This column investigates the effects of a large place-based investment subsidy targeted at manufacturing firms in East Germany. It shows that a decrease in the subsidy rate leads to a decrease in manufacturing employment, highlighting spillovers to untreated sectors in treated counties and untreated counties connected via trade and local taxes. It also finds that the place-based policy is at least as efficient as cash transfers for the unemployed but is more effective in curbing regional inequality overall.

Päivi Leino-Sandberg, Vesa Vihriälä, 31 May 2021

The EU’s response to the COVID-19-induced economic crisis has been aggressive, but not without criticism. This column, part of the Vox debate on euro area reform, summarises some of the shortcomings of the way in which the EU’s Next Generation programme may play out, and suggests short- and longer-term considerations that need to be made in order to ensure that the programme strengthens the Union in the long run.

Ian Goldin, Pantelis Koutroumpis, François Lafond, Julian Winkler, 31 May 2021

Labour productivity is a key determinant in improving living standards. But in recent years, productivity has stagnated, if not declined, in many countries around the world. This column re-evaluates the various reasons as to why this might be, applying three criteria to the existing explanations for the slowdown. It finds that the slowdown in productivity can be attributed to numerous factors, ranging from mismeasurement to changes in trade patterns.

Gabriel Felbermayr, Aleksandra Kirilakha, Constantinos Syropoulos, Erdal Yalcin, Yoto Yotov, 18 May 2021

While the world experienced a golden age of international economic integration in the 1990s and the 2000s, in the more recent past there has been an emergence of interstate political conflicts, political polarisation, and extensive use of coercive sanctions intended to limit the international movement of goods, assets, and people. This column presents findings from the newly updated Global Sanctions Data Base, which now includes the years of the Trump presidency and provides a more comprehensive coverage of 1,101 sanction cases in the years from 1950 to 2019.

Catalina Amuedo-Dorantes, Agnese Romiti, 15 May 2021

Attracting international students is critical for public universities in the UK increasingly facing funding cuts and a diminishing domestic youth population. This column discusses how Brexit may have affected students’ willingness to study in the UK and the factors likely driving the students’ choices. Brexit significantly lowered applications from EU students, especially for science, technology, engineering and mathematics subjects and for more selective institutions. International student enrolments also dropped, substantiating concerns regarding the ability to attract international talent.

Jan I. Haaland, Ian Wooton, 14 May 2021

The changes in the UK’s trading relationship with the EU are likely to have widespread effects, many of which are yet to be understood in full. This column introduces the issue of compliance with rules of origin requirements within free trade agreements. The authors argue that complying with these rules can present firms with additional production costs that would not have been present had the UK remained a part of the EU.

Olivier Blanchard, Álvaro Leandro, Jeromin Zettelmeyer, 22 April 2021

The EU’s fiscal rules are currently suspended. If reinstated, they will need to be modified to account for the higher levels of debt. This column, part of the Vox debate on euro area reform, argues that simple fiscal rules provide a crude and unsatisfactory assessment of debt sustainability and proposes that they be replaced with fiscal standards. In particular, it calls for qualitative prescriptions that leave room for judgement together with a process to decide whether the standards are met. This proposal envisages a larger surveillance role for independent fiscal councils and/or the European Commission, as well as a judicial body for adjudication over disputes. 

Stefano Filauro, Georg Fischer, 17 April 2021

Inequality in the EU has traditionally been analysed either at the individual country level or in terms of the average of country trends, but attention is now shifting to the analysis of inequality between all citizens across individual member states. Using income survey data, this column shows that that inequality among EU citizens is significantly lower than among US citizens, but slightly higher than in countries with established welfare models such as Australia and Japan. This and other findings may be useful in identifying the most effective policy path to address inequality at the EU level.

Matthias Breuer, Christian Leuz, Steven Vanhaverbeke, 08 April 2021

Firms often argue that disclosure and reporting regulations such as the EU Accounting Directive require them to reveal proprietary information, which discourages innovation. This column explores the effects of disclosure requirements on corporate innovation in the EU, and finds that forcing firms to publicly disclose their financial statements does indeed discourage innovative activities. At the industry level, positive information spillovers to competitors, suppliers, and customers appear insufficient to compensate for the negative direct effect on innovation. Indeed, the spillovers seem to concentrate innovation within a few large firms in a given industry.

Gerald Carlino, Thorsten Drautzburg, Robert Inman, Nicholas Zarra, 07 April 2021

The allocation of COVID-19 assistance under the American Rescue Plan has proven to be a point of significant partisan conflict between the Democratic administration and Republican governors. Motivated by partisan conflicts in the passage and implementation of the American Recovery and Reinvestment Act, this column suggests that the resolution of these disagreements will have significant consequences for the overall impact of the American Rescue Plan on the aggregate economy.

Alessio Terzi, 02 April 2021

Inspired by conspicuous historical parallels, some scholars and journalists have argued that GDP growth and productivity might boom in the aftermath of the Covid-19 pandemic. This column reviews the evidence for and against the ‘Roaring Twenties’ hypothesis, concluding that some countries might well experience a forceful economic expansion. But policymakers should avoid complacency and make the most of the Recovery and Resilience Facility funds, combining them with wide-reaching structural reforms to improve economic prospects for the decade to come.

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