John O'Hagan, 04 May 2021

The presence of prize-winning young economists among faculty can be seen as a marker of a university’s status in the field of economics, particularly when awards are given on the basis of researchers being published in ‘top’ journals. This column examines where recent young economist prize winners studied for their doctorates and identifies a clear pattern of dominance, with the US – particularly Boston – the clear frontrunner.

Assaf Razin, 23 April 2021

Concerns associated with the Covid-19 pandemic have led to new rationales of protectionism, with renewed emphasis on domestic production and sourcing. This column compares the current economic crisis brought on by the pandemic to previous major economic crises and examines what this could mean for the future of various aspects of globalisation.

Jonathan Muringani, Rune Fitjar, Andrés Rodríguez-Pose, 20 April 2021

Social capital matters for economic growth and development, but different types of social capital matter in very different ways. This column examines how differences in social capital across Europe shape regional economic growth. While ‘bridging’ social capital is linked to higher regional economic growth, ‘bonding’ social capital leads to lower growth. This is particularly the case in less-developed regions and in regions with a lower endowment of human capital. As the level of education increases, the need for bridging social capital declines, implying that bridging social capital and human capital are, to a certain extent, substitutes.

Asger Lau Andersen, Niels Johannesen, Mia Jørgensen, José-Luis Peydró, 19 April 2021

Who gains – and by how much ­– when central banks soften their monetary policy regime is a key policy question. This column discusses new evidence on the distributional effects of monetary policy based on detailed administrative household-level data. The authors show that the gains from lower policy rates exhibit a steep income gradient, with the increases in income, wealth, and consumption modest at the bottom of the income distribution and highest at the top. 

Giorgio Barba Navaretti, Alberto Pozzolo, 12 March 2021

It has been two years since Wirecard suddenly collapsed. Giorgio Barba Navaretti and Alberto Pozzolo explain to Tim Phillips why it is so hard to supervise global fintechs, and how regulators can do a better job next time.

Shusen Qi, Ralph De Haas, Steven Ongena, Stefan Straetmans, 03 March 2021

Digitalisation, FinTech, and the expansion of mobile banking have changed the way in which many banks operate on a day-to-day basis, including where they choose to have physical branches. This column explores the effect of digitalisation on the geography of banks, testing the effects of digital information-sharing on branch locations in Europe. findings suggest that information sharing has a strong positive effect on branch clustering, with banks more likely to open new branches in areas where they do not yet operate but where other banks are already present.

Vincent Aussilloux, Adam Baïz, Matthieu Garrigue, Philippe Martin, Dimitris Mavridis, 19 February 2021

The Covid-19 crisis has presented policymakers across the euro area with an unprecedented challenge, not least of all because the shock has come to both the supply side and the demand side of the economy. This column presents a preliminary analysis of different nations’ responses so far, focusing on which measures have been deployed to address each side of the economic shock and where a ‘mixed approach’ has been taken to work in tandem. At a time where coordinated action may be needed, there is a concerning level of inconsistency in strategy. 

Branko Milanovic, 29 January 2021

In classical capitalism, the rich earn their money from capital while the poor sell the value of their labour. In which countries is that still true, and how does it affect the gap between rich and poor? Branko Milanovic tells Tim Phillips about a new way in which we can think about inequality.

Arnoud Boot, Elena Carletti, Hans‐Helmut Kotz, Jan Pieter Krahnen, Loriana Pelizzon, Marti Subrahmanyam, 25 January 2021

Covid-19 has placed renewed pressure on the European banking sector as firms and households struggle to meet the costs imposed by the pandemic. This column provides a comparative assessment of the various policy responses to strengthen banks in light of the crisis. While the authors do not make a specific final recommendation, they review the different options suggested within current research and provide a criteria-based framework for policymakers to guide them in their decision making.

Francesco Fasani, Jacopo Mazza, 25 January 2021

The spread of COVID-19 has had dire consequences for the earnings and employment of workers in Europe. As in most recessions, immigrants are among the most vulnerable workers. This column proposes a measure of employment risk based on workers’ job attributes which sidesteps the lack of an up-to-date European labour force survey, and estimates that the pandemic-induced recession puts 9 million immigrant workers at high risk of unemployment in Europe.

Christine Binzel, Andreas Link, Rajesh Ramachandran, 24 December 2020

The use of a language in written and formal contexts that is distinct from the languages used in everyday communication – such as Latin in early modern Europe and Standard Arabic in the Arabic-speaking world, both past and present – comes with benefits, but also with costs. Drawing on publishing data from early modern Europe, this column shows that the Protestant Reformation led to a sudden and sharp rise in vernacular printing, such that by the end of the 16th century, the majority of works were printed in spoken tongues rather than in Latin. This transformation allowed broader segments of society to access knowledge. It also diversified the composition of authors and book content and had long-term consequences for economic development.

Andrés Rodríguez-Pose, Roberto Ganau, Kristina Maslauskaite, Monica Brezzi, 15 December 2020

Does institutional quality mitigate the negative returns of credit rationing on labour productivity? Using data on a large sample of manufacturing firms in 11 European countries, this column demonstrates that this is indeed the case, especially for micro, small, and medium-sized firms. The negative effects of credit constraints on productivity are mitigated in those areas of Europe with high-quality governance. ‘Good’ regional institutions not only drive firm-level productivity but also, and in a more indirect way, reduce the negative productivity returns of credit constraints.

Marco Ranaldi, Branko Milanovic, 03 December 2020

Similar levels of income inequality may coexist with completely different distributions of capital and labor incomes. This column introduces a new measure of compositional inequality, allowing the authors to distinguish between different capitalist societies. The analysis suggests that Latin America and India are rigid ‘class-based’ societies, whereas in most of Western European and North American economies (as well as in Japan and China), the split between capitalists and workers is less sharp and inequality is moderate or low. Nordic countries are ‘class-based’ yet fairly equal. Taiwan and Slovakia are closest to classless and low inequality societies. 

Sascha O. Becker, Yuan Hsiao, Steven Pfaff, Jared Rubin, 27 November 2020

The Protestant Reformation, led by Martin Luther, was one of the most transformative periods of European (if not world) history in the second millennium. How did this movement succeed? This column offers a theory that combines relational diffusion (via Luther’s network ties) with spatial diffusion (via trade routes in the Holy Roman Empire), and substantiates this theory using data on Luther’s letters, travels, and students. Luther’s network alone does not explain the success of the Reformation, but his network in combination with the pre-existing ties created by trade routes explains much of its success.

Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Pozzolo, 22 November 2020

The default of Wirecard highlights several problems in the regulation and supervision of Fintech companies, with regulatory holes in investor protection, customer protection, and financial stability. This column argues that since Fintech companies can be very complex, their oversight requires understanding their business model and combining regulation and supervision based on both entities and activities. The global reach of Fintechs also calls for better coordination at the European level and beyond, but the authors do not see the need for new regulatory body to oversee Fintechs in Europe.

Gunes Aşik, Ulaş Karakoç, Sevket Pamuk, 17 October 2020

Unlike for developed countries, only a limited number of studies exist on the long-term evolution of regional inequalities in today’s developing countries. With the help of a novel dataset, this column examines the evolution of regional income inequality within present-day borders of Turkey. It finds an inverse U-shaped pattern for regional disparities since 1880, with a peak at around 1950 (although the East lagged further behind until the end of the 20th century). A combination of causes led by geography, including proximity to Europe, structural change, industrialisation and agglomeration economies, as well as ethnic conflict and demographic movements, appear to be behind this pattern.

Janine Aron, John Muellbauer, 29 September 2020

The US has 4% of the world’s population but 21% of the global COVID-19-attributed infections and deaths. This column shows that when comparing excess mortality rates, a more robust way of reporting on pandemic deaths, Europe’s cumulative excess mortality rate from March to July is 28% lower than the US rate, contradicting the Trump administration’s claim that Europe’s rate is 33% higher. The US Northeast – the region most comparable with individual European countries – has experienced substantially worse excess mortality than Europe’s worst-affected countries. Had the US kept its excess mortality rate down to the level in Europe, around 57,800 American lives would have been saved. 

Pietro Santoleri, Andrea Mina, 19 July 2020

Direct public support for business R&D is common practice in many countries, but evidence on its causal effects has been mixed. This column exploits discontinuity in the assignment mechanism of the first large-scale European R&D grant programme to assess the impact of the policy. The results indicate that direct grants have positive and sizable effects on a wide range of firm-level outcomes suggesting that R&D grants are an effective policy tool. 

Henk Jan Reinders, Dirk Schoenmaker, Mathijs van Dijk, 13 July 2020

The severe economic impact of the COVID-19 pandemic could threaten financial stability. Since accounting-based methods report loan losses with a delay, this column adopts a real-time, market-based assessment of the impact on corporate loan portfolios. Using European stock market data, it estimates that the market-implied losses for euro area banks could reach over €1 trillion, or, depending on the scenario, 7-43% of available bank capital.

Nicolas Gonne, Olivier Hubert, 08 July 2020

The shutdown of passenger air travel at the height of the COVID-19 pandemic slowed the spread of the disease but caused major economic losses for the sector. This column presents a cost-benefit analysis of the global freeze of passenger air traffic. While any conclusion is highly dependent on a handful of factors, including the controversial and difficult-to-calculate ‘value of a statistical life’, the simulations provide useful anchoring points at a time when governments are contemplating reopening air routes, as well as in the face of a potential second wave of infections.

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