| Opinion
Italy’s new Minister for EU affairs Paolo Savona is the main author of an eight-point plan for Italy’s exit from the euro. In this opinion piece EconPol expert Daniel Gros sheds some light on the Italian government’s strategy. In his view, the Plan seems designed to confirm Germany’s worst fears: exit would be accompanied by a massive default on public debt, including foreign official debt like Target2 balances. But the Plan would also enable rich Italians who have considerable assets abroad to hold onto their euros tax-free. ...Details
| EconPol Policy Brief
This EconPol Policy Brief reassesses the relationship between inequality and growth. In their empirical analysis network members Clemens Fuest, Florian Neumeier and Daniel Stöhlker show that there is no robust negative correlation between inequality and growth. For OECD countries, they find that higher inequality coincides with higher, not lower economic growth. The authors also caution against giving the observed correlation between inequality and economic growth a causal interpretation. Both inequality and economic growth are influenced by many policy variables, including education and redistributive taxation. In their view, portraying one of these outcomes as being ‘caused’ by the other is unconvincing. ...Details
| EconPol Opinion
What are the implications of Trump’s trade follies with tariffs for the rest of the world? EconPol network member Daniel Gros examines the nature of today’s trade wars by focusing on the high tech sector. He explains why differences in profit opportunities tend to escalate trade conflicts in a ‘winner takes all’ economy. Today, the US government is essentially lining up its diplomatic guns behind its internet giants, while Europe and China are baying for their monopoly profits. This is a zero-sum game, warns Gros, which can only turn negative sum through the collateral damage that it causes to the global trading system. ...Details