Pauline Affeldt, Tomaso Duso, Klaus Gugler, Joanna Piechucka, 10 January 2022

The majority of large horizontal mergers are unconditionally cleared by antitrust authorities. Since most horizontal mergers generate incentives to increase prices and/or reduce output, the presumption seems to be that the resulting efficiencies must be sizeable to make them good for consumers. This column uses a novel database covering over 1,000 mergers scrutinised by the European Commission and shows that, under certain assumptions, compensating efficiencies appear too large to be achievable for a large part of the mergers in the sample. The Commission's view on required efficiencies might have been too optimistic and it appears to have been too lax in enforcing its merger policy.

Christian Gayer, Andreas Reuter, Fiona Morice, 29 November 2021

Uncertainty can have an important impact on economic activity, but it is not directly observable. This column presents the features of the European Commission’s new index for uncertainty in the economy, based on its EU-wide Programme of Business and Consumer Surveys, and its evolution in response to the COVID-19 pandemic and the stringency of the related restrictions. It also compares the indicator to survey-based indicators of economic confidence, as well as to other existing uncertainty gauges, and offers a glimpse of the rich set of geographical, sectoral, and sub-sectoral breakdowns of the new data.

Marco Buti, 18 November 2021

The global financial crisis was a particularly testing episode for the EU. Even more testing has been the impact of the Covid-19 pandemic that erupted in March 2020. In a new book, the Chief of Staff of the Commissioner for the economy and former Director General for Economic and Financial Affairs at the European Commission retraces the analytical underpinnings of the economic policy responses to the two crises. In this column, taken from the introduction to the book, he draws general lessons for the future of EU policymaking based on his personal involvement in crisis management and response.

Roberta Cardani, Olga Croitorov, Fabio Di Dio, Lorenzo Frattarolo, Massimo Giovannini, Stefan Hohberger, Philipp Pfeiffer, Marco Ratto, Lukas Vogel, 08 September 2021

The COVID-19 recession differs strongly from past crises in recent history. This column summarises the integration of key economic features of the pandemic into the European Commission’s estimated DSGE model. Shock decompositions highlight the dominant role of ‘lockdown shocks’ (‘forced savings’, labour hoarding) for explaining the quarterly pattern of real GDP growth in 2020, complemented by negative contributions from foreign and investment demand notably in 2020q2 and a negative impact of persistently higher (precautionary) savings. The inflation response has been modest given the severity of the recession.

Géraldine Mahieu, Philipp Pfeiffer, Janos Varga, Jan in 't Veld, 04 August 2021

Next Generation EU is an unprecedented tool that provides significant financial support for reforms and investment, resulting in a coordinated fiscal expansion across the EU. This column quantifies the effects of the additional investment expenditure for each member state by extending a standard macro model with a rich trade structure. The model suggests Next Generation EU investment can boost GDP by up to 1.5%, and that the effects are around one-third larger when explicitly accounting for the spillover effects from individual-country measures. A simple aggregation of the national effects of individual investment plans would thus substantially underestimate the growth effects of Next Generation EU.

László Andor, Robin Huguenot-Noël, 05 May 2021

In the midst of a third wave of the Covid-19 pandemic affecting the European continent, the European Commission released the Social Pillar Action Plan, setting concrete targets on employment, skills, and poverty reduction to be reached by 2030. This new ‘social rulebook’ represents a welcome initiative from the EU to set itself long-term development goals. Yet setting new ambitions without the necessary means may risk backfiring. This column argues that to act as a game-changer, the Action Plan should place a greater emphasis on tapping Europe’s job growth potential where it lies, moving beyond a supply-side approach on employment promotion, and committing to greater ambitions in poverty reduction. 

Pierre Régibeau, 13 March 2021

On 15 December 2020, the European Commission approved the acquisition of Fitbit by Alphabet, subject to a number of commitments. The case caused considerable concern that Google will gain unfair advantages in the online advertising market and ensure its dominance in digital health, with dire consequences for privacy. Critics also feared the acquisition would reduce Google’s incentives to keep its Android ecosystem open to rival wearable products. This column argues that the decision is appropriate, addressing the four main concerns. The suggested theories of harm have remedies or they are not supported by evidence to the requisite legal standard. 

Maarten Verwey, Milan Vyskrabka, Philipp Pfeiffer, 15 February 2021

The breakthroughs in vaccine development in the autumn of 2020 and the start of mass vaccination campaigns in 2021 brightened the near-term outlook for the EU economy. However, hopes of a quick recovery have, to some extent, been overshadowed by the recent resurgence of the pandemic. In order to highlight the extent of prevailing uncertainty and the importance of vaccinations for EU’s economic trajectory, this column describes the optimistic and pessimistic model-based scenarios for the EU economy forecast by the European Commission. It finds that effective vaccines and their quick roll-out could add about three percentage points to annual growth of EU this year. 

Elena Flores, Lucia Granelli, 14 December 2020

In April 2020, G20 Finance Ministers and Central Bank Governors endorsed the ‘G20 Action Plan Supporting the Global Economy Through the COVID-19 Pandemic’, setting out the key principles guiding the global response to the crisis and commitments to specific actions for driving forward international economic cooperation. The G20 agenda in 2021 – under the Italian Presidency – will be closely linked to the Action Plan. This column develops a few principles to support the G20’s work in 2021.

Marc Bourreau, Cristina Caffarra, Zhijun Chen, Chongwoo Choe, Gregory Crawford, Tomaso Duso, Christos Genakos, Paul Heidhues, Martin Peitz, Thomas Rønde, Monika Schnitzer, Nicolas Schutz, Michelle Sovinsky, Giancarlo Spagnolo, Otto Toivanen, Tommaso Valletti, Thibaud Vergé, 30 September 2020

The European Commission is conducting an in-depth investigation of the Google/Fitbit deal. A static, conventional view would suggest limited issues from a merger of complements. Yet, as this column outlines, unprecedented concerns arise when one sees that allowing for Fitbit’s data gathering capabilities to be put in Google’s hands creates major risks of “platform envelopment,” extension of monopoly power and consumer exploitation. The combination of Fitbit’s health data with Google’s other data creates unique opportunities for discrimination and exploitation of consumers in healthcare, health insurance and other sensitive areas, with major implications for privacy too. We also need to worry about incentives to pre-empt competition that could threaten Google’s data collection dominance. As the consensus is now firmly that preventing bad mergers is a key tool for competition policy vis-a-vis acquisitive digital platforms, the European Commission and other authorities should be very sceptical of this deal, and realistic about their limited ability to design, impose and monitor appropriate remedies.

Christian Peukert, Stefan Bechtold, Michail Batikas, Tobias Kretschmer, 30 September 2020

The EU’s General Data Protection Regulation came into effect in 2018 to tackle issues of privacy and personal data. Looking at over 110,700 websites before and after the introduction of the regulation, this column examines its effect on non-EU-based websites and on other policy domains, such as competition or trade policy. Both EU-based and non-EU-based websites switched to more privacy-sensitive technologies following GDPR, but only in the short term. The market for web tracking technologies became more concentrated, with Google gaining the most market share among large providers. Privacy regulations can function as nonpecuniary barriers to trade, especially if enacted by a large economic area.

László Andor, 10 September 2020

Maarten Verwey, Sven Langedijk, Robert Kuenzel, 09 June 2020

As Member States start to ease restrictions linked to the COVID-19 pandemic on citizens and businesses, EU leaders and institutions have turned their attention towards the medium-term recovery of their economies. In late May, the Commission presented its proposals for a recovery plan. This column provides a brief overview of the economic rationale for collective action and an assessment of the expected impact of the recovery plan proposed by the Commission.

Cristina Caffarra, Federico Etro, Oliver Latham, Fiona Scott Morton, 04 June 2020

There is a developed public discourse on the need for more enforcement, regulation and legislation of digital platforms. Regulating ‘gatekeeper platforms’ has emerged as a major plank of the new European Commission mandate, with a consultation process underway this week for a plan to introduce both ex-ante regulation and a new market investigation tool with quasi-regulatory powers. This column asks how economists can contribute to rationally progressing the debate, so that it is not based on subjective priors, but uses applied theory to make testable predictions, and data to discriminate between theories.

Cristina Caffarra, Tommaso Valletti, 04 March 2020

Karl Aiginger, 20 January 2020

The new president of the European Commission, Ursula von der Leyen, has announced a ‘European Green Deal’ and the Commission has asserted Europe’s need to develop a new growth model to achieve climate neutrality. However, the Commission’s limited view of ‘productivity’ ignores the fact that raising labour productivity can raise emissions and accelerate climate change. Instead, this column argues that a welfare-oriented Green Deal needs to focus on resource and energy productivity, not raising labour productivity.

Marco Buti, 12 January 2020

In December 2019, Marco Buti left the position of Director General for Economic and Financial Affairs at the European Commission at the end of a rough journey through the crisis and its aftermath. In this column, he draws the main lessons out of five key moments in the crisis for the completion of EMU and the appropriate policy mix in the euro area.

Thorsten Kaeseberg, 12 December 2019

The agendas and roadmaps for the future of digital policy in Europe have been debated extensively. This column proposes a menu of different policy instruments for the new European Commission in order to achieve this transformation. These include reforming the framework of the e-commerce Directive, regulating super-dominant digital platforms, facilitating data intermediaries as counter-balancing actors, facilitating the rise of European platforms, and pushing blockchain. 

Marco Buti, Philipp Jaeger, Karl Pichelmann, 03 December 2019

A full understanding of the political economy roots of the major economic, social, and political divides that have emerged in our societies is essential to devise the right policy responses and to properly calibrate them in an environment of possibly protracted economic weakness. This column summarises the proceedings of DG ECFIN’s Annual Research Conference 2019, which zoomed in on some of the most pertinent challenges economic policymakers face today: (i) bringing productivity to people and places; (ii) making markets work for all, not just the few; (iii) future-proofing fiscal policies when going green and digital; and (iv) safeguarding Europe’s role in the global economy.

Riccardo Crescenzi, Mara Giua, 26 November 2019

Despite the European Commission’s claims that its Cohesion Policy has had a positive impact on beneficiary regions, some member states argue that it is not fit for purpose and have called for a renationalisation of the policy. This column suggests that while there have been some positive effects on regional growth and jobs across the EU as a whole, these have been concentrated in the beneficiary regions of Germany and the UK, and structural problems in the South of Europe remain largely untouched. This uneven distribution of regional impacts along national lines suggests that individual member states have significant responsibilities for the local success (or failure) of the policy.

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