Mark Hoekstra, Jonathan Meer, Steve Puller, Jeremy West, 15 July 2015

A primary policy tool for reducing pollution from motor vehicles in the US is to directly regulate fuel efficiency. This column investigates whether drivers respond to increased fuel efficiency standards by driving more. The evidence from a stimulus programme shows that households did not increase their driving due to increased fuel efficiency regulations, but they purchased smaller, cheaper, and less powerful vehicles.

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.

Lucas Davis, Matthew Kahn, 18 August 2009

Under the US “cash for clunkers” programme, billions of dollars are being allocated to pay drivers to purchase a new vehicle and scrap their old automobile. This column says the programme will reduce international trade in used cars, which significantly benefits consumers in developing economies. Such trade also increases the average emission efficiency of automobiles in both the US and developing nations, which raises the possibility that “cash for clunkers” might raise global emissions.

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