Bookmarks (288)

What has Brexit meant for the UK economy? Six years on from the referendum, and over a year since the implementation of the UK–EU Trade and Cooperation Agreement, this column introduces a new eBook which brings together leading academic researchers on trade, immigration, and the political economy of Brexit to present new research and evidence on different aspects of this question.

Pressing social and environmental concerns are leading many to question the usefulness of economic growth. This column argues that there is nothing intrinsic in the concept of growth that makes it incompatible with environmental protection. Growth and technological progress are two sides of the same coin. The green transition can contribute to the creation of ‘good jobs’ that are less prone to geographical concentration, dehumanising...

Standard macro models with rational expectations struggle to explain the 2008 global crisis. This column provides a theoretical foundation for recurrent booms and busts within a dynamic rational expectations model with capital and land. The interaction between capital and land prices generates endogenous ‘phase transitions’, which lead to macroeconomic fluctuations. Furthermore, it shows that appropriately designed government policy, for example by guaranteeing a certain...

War lowers income by reducing the size of the population and reducing total factor productivity through the destruction of physical and human capital. This column describes the demographic trends in Ukraine and the impact of the 2022 war. Covid-19 worsened the downward long-term demographic trend in Ukraine, and Russia’s invasion of Ukraine has added to this through substantial outward migration, especially of women. A...

The last inventory of digital economy policies was published in 2018. Since then, officials have gone into overdrive, acting unilaterally to regulate and to promote digital activities. Drawing upon an up-to-date inventory of over 15,000 state acts, a new report assesses whether unilaterally determined policy is fragmenting the digital economy along national and regional lines.

The war in Ukraine has clouded the near-term economic outlook. However, the European Fiscal Board concludes that current policy plans for 2023 amount to a broadly appropriate fiscal stance for the euro area as a whole. A moderate fiscal contraction appears adequate despite the war. Indeed, the terms-of-trade shock magnified by the war amounts to an overall income loss that cannot be buffered by additional public...

Political economy is an important source of distortions in financial markets. For example, state ownership may either lower capital costs due to implicit or explicit bailout guarantees or raise them due to the politicisation of business decisions. This column uses cross-country data on 4 million firms to show that state ownership is negatively correlated with leverage on average, and this effect is stronger in...

The crash in crypto currency valuations may trigger a radical reassessment. But, just as excessive hype fuelled speculation, a collapse in valuations may lead to an indiscriminate condemnation of digital money and an underestimation of its potential benefits. This column takes stock of developments over the last five years in an attempt to separate fact from exaggeration and fiction.

Our behaviours are highly influenced by social pressure. This column takes as a natural experiment the 2020 season of the Japanese professional football league, which held matches without spectators due to the COVID-19 pandemic, to examine whether the presence of spectators puts pressure on referees’ decisions. The authors find that the home team advantage is real: the number of fouls decided against the home...

Bitcoin is often sold as protection against adverse macroeconomic outcomes. This column argues that this depiction as a macro hedge does not stand up to scrutiny. Recent events – from Covid and inflation to war – provide a window into what sort of asset bitcoin actually is. It if were a true macro hedge, bitcoin would be positively correlated with macroeconomic uncertainty. Instead, it...

Recorded live at CEPR Paris Symposium 2022: What are the consequences of an extended period of above-target inflation for the euro area? Agnès Bénassy-Quéré and Giancarlo Corsetti discuss policy options with Tim Phillips.

Unprecedented events, including the Covid-19 pandemic and the Russian invasion of Ukraine, have boosted the demand for real-time measures of consumer price inflation. This column demonstrates the usefulness of high-frequency retail scanner data to document the dynamics of both prices and quantities of German food products in the aftermath of the invasion of Ukraine. Immediate price and quantity responses can be detected and quantified...

Australia’s news media bargaining code has been successful in achieving the single objective set for it: to address the imbalance in bargaining power between the country’s news media businesses and the digital platforms of Big Tech. The code is largely being copied in Canada, and its key components are in essence replicated in draft legislation under discussion in the UK and the US. Yet it...

Dale Jorgenson, who passed away in June 2022, was a central contributor to a wide range of economic and policy issues over a long and productive career. This column, written by three of his friends and colleagues, outlines some of his most notable intellectual contributions, including changing how economists think about investment, implementing better ways to measure productivity, and pushing national accountants to update...

Little is known about the effects of being a temporary contract holder on young workers’ subsequent labour market and family outcomes. This column provides insight into this question by studying a unique set of natural experiments in the Japanese airline industry, which changed the nature of the contract for flight attendants in the mid-1990s and then again in the mid-2010s. The authors find that workers...

Similar to many other government policies around the world, Germany's fiscal response to the Covid-19 pandemic included direct fiscal transfers to households. This column evaluates the spending effects of three payments to families with children and their effectiveness. It finds a significant but small spending effect of the first transfer which is higher for low-income and liquidity-constrained households, and in areas with lower infection...

The latest CEPR ebook investigates the impact of Brexit so far on the economies of the UK and EU. Tim Phillips talks to three of the authors: Jonathan Portes, Thomas Sampson and Sarah Hall. Download the eBook: The Economics of Brexit: What Have We Learned?

This eBook, produced by VoxEU/CEPR and UK in a Changing Europe, brings together leading academic researchers on trade, immigration and political economy to assess what we have learned, 18 months on from its implementation, about the impacts of Brexit on the UK economy

Recorded live at CEPR Paris Symposium 2022. What are the long-term consequences of the conflict in Ukraine for the EU? Lucrezia Reichlin and Philippe Martin discuss the impact of the war on trade, energy security, fiscal policy, and green transition with Tim Phillips.

Housing inflation in the US before 1983 was measured in a way that made the Consumer Price Index (CPI) mechanically responsive to Fed policy, leading to artificially high peaks and fast declines in CPI inflation. To better contextualise the current run-up in inflation to a 40-year high, this column presents new historical series for CPI headline and core inflation that are more consistent with current practices...

The war in Ukraine has severely limited the ability to gather statistical information and assess the impact on the country’s economy. This column uses high-frequency data from night lights, online search behaviour, and social media activity to estimate the economic impact on Ukrainian regions. It suggests that economic activity decreased by 45% at the beginning of the war, but recovered to around 85% of...

Interest rate risks on banks’ balance sheets represent a relevant financial stability concern with a view to the normalisation of monetary policy. This column explores how a parallel shift in the euro area yield curve, or its steepening, might impact banking sector profitability and solvency. Leveraging on two distinct ECB stress-testing frameworks, it finds that banks are overall well equipped to face the interest rate...

How does people’s ability influence their taxpaying behavior? This column links administrative tax and military enlistment registers in Sweden to measure how cognitive ability matters for income tax responsiveness. The authors find that individuals in the top decile of the ability distribution react twice as strong to a large and salient kink point in the tax code than the average individual, and three times...

Studies show that investing in a government’s capacity to collect tax revenues is beneficial for economic development of low-income countries. This column uses new census data from local governments in Ghana to provide descriptive and experimental evidence on the role of technology in improving government tax capacity. The pre-existing infrastructure for tax collection in the country is poor, and the technology increases the number...

Central banks are increasingly being called upon to engage in climate change issues, not only in their financial stability capacity but also with monetary policy measures. This second column in a two-part series reviews some measures that central banks could consider to internalise climate change objectives into their monetary policy frameworks. These range from protective actions to more proactive measures aimed at mitigating climate...

While the implications of climate change for financial stability and prudential supervision are widely recognised, those for monetary policy have received less attention until recently. This column, the first in a two-part series, reviews the key mechanisms through which climate change influences monetary policy. Climate change impacts the objective, conduct, and transmission of monetary policy and could bear implications for the design of the...

Responsible investing has become an increasingly popular practice, with the blanket exclusion of ‘brown’ industries – such as tobacco, gambling, and fossil fuels – widely regarded as its purest form. This column suggests that in some cases, ‘tilting’ (leaning away from a brown sector but keeping an industry leader) is a more effective strategy than shunning the industry outright. Though exclusion may work best for such industries as controversial weapons,...

Import tariffs on Russian exports are an important tool available to the international coalition of sanctioning countries (the ‘Allies’). This column analyses the optimal sanctions in terms of the scope of sectors targeted, the magnitude of import tariff increases, and the disbursement of tariff revenues. Rather than an all-out import ban, the Allies would fare better by limiting import sanctions to the eight most-imported Russian sectors...

Recorded live at CEPR Paris Symposium 2022: Thomas Piketty’s short new book promises A brief history of equality. He tells Tim Phillips about why institutions are precarious, why policymakers should consider the consequences for inequality before they intervene – but also why we should be optimistic about the long-term trends in equality.

Given the scale of climate risks, achieving carbon neutrality by 2050 represents an urgent priority. This column examines the link between female managers in a firm and corporate carbon emissions. It finds that after the Paris Agreement in December 2015, firms with more women involved in the decision-making process reduced carbon dioxide emissions more than firms with a predominance of male managers. The finding suggests...

Patents seek to trade off the benefits to the inventor of exclusivity with the social benefits of disclosure to the public. Most studies of the patent system focus on the benefits of exclusivity. This column analyses the broader impacts of patents on innovation, leveraging a change in patent disclosure requirements in the US in 1999. Accelerating patent publication by two years increases future patent...

Academia has seen remarkable progress in gender equality over the last 50 years, but has yet to achieve parity – particularly in economics and STEM disciplines. This column documents the participation of women in European academia from the first universities to the eve of the Industrial Revolution, with unexpected results. Of the 108 women who taught at universities or belonged to academies, most were...

The rise of common ownership of publicly traded companies has important implications for competition in product markets. This column argues that it is important to distinguish inter-industry from intra-industry effects of common ownership. Using data from the airline industry, it shows that intra-industry common ownership is positively associated with prices, while inter-industry common ownership is negatively associated with prices. Antitrust regulation should take into...

Economic studies of drought episodes typically use rainfall as a proxy for water scarcity, yet this is likely to lead to an endogeneity problem due to the correlation of variables that affect water scarcity (such as temperature and soil moisture) with relevant economic choices (such as which crops to grow or where to settle). This column presents an index that overcomes endogeneity by combining precipitation...

A large literature documents the positive effects of experiments aiming to alleviate the informational and behavioural challenges jobseekers face. In contrast, this column evaluates the impact of an online platform for jobseekers in France and finds no impact on time spent looking for a job, search scope, or self-reported wellbeing. The results also show no effect on any employment outcome in the short or...

The path to an EU embargo on Russian energy has now been agreed, but with an opt-out for Hungary. This column argues that Russia exporting one seventh of its national income to the rest of the world is weakening, not strengthening, its war effort. Rather than ‘paying for Putin’s war’, Russia’s exports are paying for the accumulation of idle balances of foreign currency. Sanctions are working,...

In economic analysis, preferences are usually assumed to be fixed. This column analyses the impacts of climate mitigation policies when preferences can change. It argues that carbon taxes can change climate preferences by affecting social norms and influencing preferences in social networks. Changes in preferences can increase the effectiveness of a carbon tax by 38%. Ultimately, the implementation of instruments complementary to pricing that...

There is a well-documented correlation between foster care and crime, but little evidence on the long-term consequences of placing a child into foster care or leaving them with their family. Using data from the state of Michigan, this column estimates the causal effect of foster care placement on adult crime. Foster care placement reduced later-in-life crime, especially for male children and younger children. Foster...

Previous studies report the propagation of shocks via supply chains from downstream, but little is known about the propagation from customers to suppliers driven by demand shocks. This column uses Japanese firm-level input-output data to fill this gap. The authors find that negative demand shocks only propagated from large exporters to larger suppliers during the global financial crisis, but were transmitted from small customers...

As fertility rates have declined in high-income countries, the cross-country relationship between women’s labour supply and fertility has reversed. Today, in countries where more women are working, more babies are born. This column suggests that classic models of fertility no longer explain ultra-low fertility rates in high-income countries, where the compatibility of women’s career and family goals are now a key driver of fertility decisions. The authors highlight four factors that facilitate combining a...

Learning-by-doing is believed to be a major source of economic growth, human capital, and comparative advantage, but documenting learning curves has proven difficult since workers are usually not randomly assigned to tasks. This column explores learning-by-doing among Swedish cardiologists, who were quasi-randomly assigned to heart attack patients during night-time shifts. The results provide rare evidence on the existence of prolonged learning curves in a...

We know women are under-represented in economics. But if male economists are more comfortable expressing a strong opinion, does this increase the perceived imbalance? Sarah Smith tells Tim Phillips about new research into the difference between male and female voices in economics. Learn more about the research behind this Vox Talk and download the free DP:Sievertsen, H and Smith, S. 2022. 'Male and female...

Russia has imposed a naval blockade on Ukraine, suffocating the country’s agricultural exports. The last time that Ukraine experienced an export crisis of similar proportions was during the collapse of the Soviet Union. This column estimates that losses of agricultural producers reached $200 million a day in March through May 2022, with the next harvest at even higher risk due to lack of storage...

New technologies may replace human labour, but can simultaneously create jobs if workers are needed to use these technologies or if new economic activities emerge. At the same time, technology-driven productivity growth may increase disposable income, stimulating a demand-induced employment expansion. Based on a systematic review of the empirical literature on technological change and its impact on employment published in the past four decades,...

Market imperfections strongly influence the volume of greenhouse gas emissions, which is a key driver of climate change. While governments should lead climate policies in the first place, a broad coalition of actors across society, including central banks, needs to contribute to transition to a carbon-neutral economy in a timely and orderly fashion. The ECB’s mandate states that it must pursue its primary and...

Active labour market programmes typically target hard skills, yet soft skills are also important determinants of labour market outcomes. This column examines the impact on employment and earnings of an Israeli randomised control trial that focused exclusively on soft skills training. The programme increased employment rates by 24% and lessened participants’ income support dependency by 26% for the group receiving the training, relative to...

The Russian invasion of Ukraine and the subsequent sanctions imposed on Russia are adding strains to already disrupted global supply chains. This column introduces a new indicator to show that the war is already rattling global supply chains. It also argues that despite the modest share of Russia and Ukraine in global trade, the ramifications for global activity can be sizeable as both countries...

The May 2022 CfM survey asked the members of its UK panel to forecast the prospects for UK economic growth and propose policies that might improve the UK’s economic performance in the upcoming decade. The panellists are nearly unanimous that UK income growth will be low in the upcoming decade. The majority believe that this will be due to structural factors. According to the...

Central banks have begun integrating climate-related risks into their financial stability assessments, but estimating risks to the financial system more broadly remains a work in progress. This column summarises recent scenario-based analyses of the risks thatdecarbonisation poses to UK banks, insurers, and pension funds. Though no imminent threats to financial stability are observed, the authors believe an abrupt switch to an ambitious decarbonisation scenario could result in non-negligible losses,...

The war in Ukraine is having immediate and stark humanitarian and economic impacts, yet its long-term consequences are challenging to predict. This column revisits the evidence on the long-term impact of conflict and presents preliminary evidence for the continued invasion of Ukraine by Russia. The after-effects of bombing campaigns and those of violence against civilians can be substantial and are typically, although not exclusively, damaging....