EconPol Working Paper Series

Cover EconPol Working Paper 7 2017

Dynamic Scoring of Tax Reforms in the European Union

Salvador Barrios, Mathias Dolls, Anamaria Mafei, Andreas Peichl, Sara Riscado, Janos Varga and Christian Wittneben

Dynamic scoring, or the evaluation of tax reform effects, is common practice in the US, but has never been applied to the EU’s fiscal governance framework. Adopting a novel approach, the authors analyse hypothetical reforms of the social insurance contributions system in Belgium. They find that the self-financing effect of a reduction in employers’ social insurance contributions is far greater than that of a comparable reduction in employees’ social insurance contributions.

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Cover EconPol Working Paper 6 2017

Addressing the Core-Periphery Imbalances in Europe: Resource Misallocation and Expansionary Fiscal Policies

Luigi Bonatti and Andrea Fracasso

How can the euro area tackle its perennial problems of core/periphery imbalances and anaemic long-term growth? According to network members Luigi Bonatti and Andrea Fracasso, Università di Trento, there is no quick-fix solution. Temporary fiscal stimulus does not produce permanent improvements, while the upfront costs and short-term negative impact of structural reforms can feed distributional conflicts. Permanent cross-national transfers provide local relief, but also exacerbate tensions among member states. The authors advocate a nuanced approach focused on the key role of structural differences in affecting income and growth differentials, as well as competitive imbalances across the euro area.

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Cover EconPol Working Paper 5 2017

We need more Europe in the Monetary Union. Which Europe? Hints from policy games.

Luciano Andreozzi and Roberto Tamborini

Under the pressure of the 2008 crisis serious flaws have emerged in the design of the European Economic and Monetary Union (EMU) as a supranational architecture which aims at generating and distributing  collective benefits from integration among highly interdependent countries. If we agree that more Europe is needed, we shall urgently ask "Which Europe?" Economists Luciano Andreozzi and Roberto Tamborini from EconPol network partner Università di Trento introduced an interesting policy game setup of two interdependent countries where each sovereign government seeks to optimise its own welfare function reflecting social preferences over policy options and their outcomes. Read here why the strategy of further integration by an extended system of binding rules enforced by technocratic agencies may be unsuccessful and which consequences should be drawn.

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Cover EconPol Working Paper 04 2017

The Case for Co-Financing the CAP

Friedrich Heinemann

The Common Agricultural Policy (CAP) was set up in a time when the memory about post-war food shortage was fresh, Europe was a large net importer of agricultural products, agricultural production was still highly labour-intensive, food was a major item in a typical consumer basket and significant shares of the work-force received their major income from the agricultural sector. Today, agricultural production is capital-intensive with a low share of total labour employed and food spending. Read in this paper by network member Friedrich Heinemann/ZEW why CAP in its current size is still part of the problem and which conclusions should be drawn.

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Cover EconPol Working Paper 03 2017

Firm Responses to an Interest Barrier: Empirical Evidence

Jarkko Harju, Ilpo Kauppinen and Olli Ropponen

Finnish VATT economists Jarkko Harju, Ilpo Kauppinen and Olli Ropponen have studied the interesting effects of an interest barrier that was introduced in Finland to restrict the profit-shifting opportunities of multinational enterprises (MNEs). They employed full population data of Finnish, Swedish and Danish MNEs and a difference-indifferences methodology, where Swedish and Danish MNEs serve as a control group.

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