Karl Aiginger, 20 April 2019

Populism represents a challenge to liberal democracy, pluralism, human rights, and the exchange of ideas. This column examines the features and drivers of populism, as well as the potential strategic response by the EU and its member states. This includes a vision for Europe to become the role model for high-income societies providing well-being, lower unemployment, and less inequality, and a leader in decarbonisation and public sector management.

Mónica Correa-López, Beatriz de Blas, 23 April 2019

Since the end of WWII, advanced economies have experienced long-lasting swings in economic activity. This column takes a look at the historical data and finds that, over the medium term, output and investment fluctuations among European countries have been even more volatile and persistent than in the US. It also reveals that, by diffusing embodied technology through trade inintermediates, large US firms appear to drive Europe's output over the medium term. 

Alberto Alesina, Elie Murard, Hillel Rapoport, 08 April 2019

A large literature shows that generosity, both public and private, is more freely extended within the same group rather than across groups. This column examines how immigration affects natives’ attitudes towards redistribution and the implications for welfare states in Europe. The main finding is that in regions which have received a larger share of immigrants, natives are in general less favourable towards redistribution. Some European countries face the dilemma of natives favouring generous welfare policies for themselves but opposing them for immigrants.

Guido Friebel, Miriam Manchin, Mariapia Mendola, Giovanni Prarolo, 02 February 2019

There is a general understanding that illegal migration only exists because of the smuggling industry. However, there is no reliable information on how migrants’ intent to leave their home country and come to Europe, for example, depends on the availability of smuggling services. This column uses data on migrant flows arriving at European borders after the effective opening to Libyan refugees of the central Mediterranean migration route, following the 2011 fall of the Gaddafi regime, to estimate the supply elasticity of the lucrative smuggling industry. Findings indicate that when the smuggling distance between country-pairs gets shorter, there is an increase in individual intentions to migrate.

Jacques Bughin, Christopher Pissarides, 02 January 2019

Europe’s social contracts to protect their citizens from socioeconomic risks are based on an inclusive growth model characterised by a more egalitarian view of revenue generation and distribution. But this model is under strain, with various global trends placing upward pressure on inequality that could intensify. This column suggests that keeping the essence of Europe’s current inclusive growth model does not preclude it from adapting its current social contracts to protect its citizens, whatever the disruptions that lie ahead.

Pierluigi Bologna, Arianna Miglietta, Anatoli Segura, 29 October 2018

Proponents of contingent convertible bonds, or CoCos, argue that they are effective instruments for bank recapitalisation. Sceptics argue that they introduce too much complexity, with potentially destabilising consequences. This column addresses this dispute empirically, using the dynamics of the CoCo market in 2016. The CoCo market at the time exhibited adverse dynamics that can’t be explained by banks’ fundamentals. Though some of this instability may have been transitory, the findings imply that the market should be monitored as it develops.

Joan Rosés, Nikolaus Wolf, 20 July 2018

Inequality between Europe's regions has risen in the last few decades. Joan Rosés and Nikolaus Wolf discuss their research on inequality at both the personal and regional levels across Europe in the last century. Rising regional inequality is one factor behind the growing populism in Europe.

Nauro Campos, 22 June 2018

The issue of how to reform the EU is well discussed in research and policy. But through which institutions and in which order these reforms should take place is less well debated. Nauro Campos discusses the role of Europe’s institutions in its successes and failures. Based on the findings of the recent CEPR eBook, “Bretton Woods, Brussels, and Beyond: Redesigning the Institutions of Europe”, he suggests that the risks of not reforming these institutions are at least another recession across Europe, but also threats to the European project itself.

Nikolaus Wolf, 11 June 2018

Ashoka Mody, 01 April 2018

Luigi Guiso, Helios Herrera, Massimo Morelli, Tommaso Sonno, 18 May 2018

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.

Philipp-Bastian Brutscher, Jonas Heipertz, Christopher Hols, 23 April 2018

Despite an extensive literature examining the optimal financing mix, little work exists on firms’ preferences over specific debt financing characteristics. This column uses experimental data from Europe to analyse the link between different external financing characteristics and investment decisions. The findings suggest that modest improvements in financing terms can more than double the probability of investment. Investment decisions are particularly sensitive to interest rates and collateral requirements.

Barry Eichengreen, 06 April 2018

Problems that have recently been faced by Europe's financial system - from highly variable exchange rates to disrupted trade flows - also plagued advanced economies a century ago. Barry Eichengreen compares the problems of the Gold Standard to the European Monetary System, and the euro area. 

Joan Rosés, Nikolaus Wolf, 14 March 2018

A recent literature has explored growing personal wealth inequality in countries around the world. This column explores the widening wealth gap between regions and across states in Europe. Using data going back to 1900, it shows that regional convergence ended around 1980 and the gap has been growing since then, with capital regions and declining industrial regions at the two extremes. This rise in regional inequality, combined with rising personal inequality, has played a significant role in the recent populist backlash.

Marco Onado, 01 March 2018

The Global Crisis continues to cast a show over Europe in the form of the persistent weakness of its financial systems. In this video, Marco Onado discusses the role of non-performing loans (NPLs) in causing these weaknesses, and suggests how they could be resolved using a form of securitisation that imposes limited costs on both the banks and public finance. This video was recorded at the RELTIF book launch held in London in January 2018.

Rain Newton-Smith, 02 February 2018

Low productivity continues to plague the UK economy. Rain Newton-Smith, Chief Economist at the CBI, discusses how greater and better-targeted investment, along with improved taxation, lie at the heart of resolving this. This video was recorded at the RELTIF book launch held in London in January 2018.

Michel Serafinelli, Guido Tabellini, 06 January 2018

Innovation is often concentrated in certain geographic areas, or ‘creative clusters’. This column uses novel data on famous births to explore the dynamics of creativity in European cities between the 11th and 19th centuries. The results show that creativity tends to precede economic prosperity, and that city institutions that protect personal and economic freedoms are conducive to radical innovation in a variety of domains.

Alberto Alesina, Stefanie Stantcheva, Edoardo Teso, 21 June 2017

Americans are generally thought to view the economic system as fair and see wealth as a reward for ability and effort, while Europeans tend to believe that the economic system is unfair, and that wealth is the result of circumstances. This column tests this using new evidence on beliefs about intergenerational mobility in four European countries and the US, and confirms that Europeans do indeed tend to be overly pessimistic about moving up the social ladder compared to reality, while Americans are overly optimistic. These perceptions have important implications for how redistribution and equal opportunity policies will be received.

Timothy Hatton, 20 June 2017

While immigration preferences have been studied extensively, less attention has been paid to the public’s assessment of the importance of immigration as a policy issue. Using survey data from 17 European countries, this column shows that the drivers of immigration preference and salience are very different. Both immigration preference and salience should be taken into account when assessing the effect of immigration attitudes on policy. 

Enrico Rubolino, Daniel Waldenström, 29 April 2017

The responsiveness of high-income earners to taxation is a central aspect of tax system design. This column presents patterns in the tax elasticity of top earners for up to 30 countries over a period of 115 years. Tax elasticities vary tremendously over time, space, and income, with a J-shaped pattern emerging over the past century. Tax avoidance behaviour strongly influences the elasticity of the very top earners, while there is less support for the role of labour supply responses across earners.

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