Current publications

Cover of EconPol Working Paper 49

Environmental Policy with Green Consumerism

Stefan Ambec and Philippe De Donder

Is green consumerism beneficial to the environment and the economy? To shed light on this question, Stefan Ambec and Philippe De Donder study the political economy of environmental regulations in a model with neutral and green consumers where the latter derive some warm glow from buying a good of higher environmental quality produced by a profit-maximizing monopoly, while the good bought by neutral consumers is provided by a competitive fringe.

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Cover of EconPol opinion

Plugging Carbon Leaks

Stefan Ambec and Claude Crampes (EconPol Europe and Toulouse School of Economics)

The border adjustment mechanism proposed by the European Commission is designed to reduce imported CO2 emissions. An attractive initiative on paper but whose implementation is a real headache as it conflicts with the trade negotiations conducted by the same Commission. Stefan Ambec and Claude Crampes (EconPol Europe and Toulouse School of Economics) examine the plans and consider the solutions.

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Cover of EconPol Policy Report 28

The Insurance Properties of Common Debt Issuance

Daniel Gros (EconPol Europe, CEPS)

The cost of public debt increases more than proportionally with the debt/GDP ratio. This convexity has one immediate implication in the presence of uncertainty about growth: the average social cost of public debt is higher than the contractual debt service cost embedded in the interest rate. In this EconPol policy report, Daniel Gros explains how Common European debt, which is financed by a pro-rata levy on the output of member states, provides an insurance function because countries which grow less have to contribute less (and vice versa). This insurance function becomes more important the longer the horizon and thus the uncertainty about (relative) economic performance.

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Cover of EconPol Policy Report 27

COVID-19, Trust and Solidarity in the EU

Cevat Giray Aksoy (European Bank for Reconstruction and Development and King’s College London), Antonio Cabrales (EconPol Europe, Universidad Carlos III de Madrid), Mathias Dolls (EconPol Europe, ifo Institute), Lisa Windsteiger (Max Planck Institute for Tax Law and Public Finance)

Recent evidence suggests that individual traits such as social capital are key determinants of how well the Covid-19 pandemic can be contained. It has been widely argued that the success of governments’ policies will be determined by trust and, at the same time, the pandemic itself is likely to affect trust, attitudes towards institutions and solidarity. This experimental study by Cevat Giray Aksoy (European Bank for Reconstruction and Development and King’s College London), Antonio Cabrales (EconPol Europe, Universidad Carlos III de Madrid), Mathias Dolls (EconPol Europe, ifo Institute) and Lisa Windsteiger (Max Planck Institute for Tax Law and Public Finance) into the impact of Covid-19 looks at levels of trust among people and public institutions across Europe. The authors surveyed people in France, Germany, Greece, Hungary, Italy, the Netherlands, Poland, Spain and Sweden to examine the effects of the virus on social trust, reciprocity, solidarity and institutional trust. The results reveal an overall increased sense of solidarity among people, but lower levels of trust in government in countries hit hardest by the virus.

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Cover of EconPol opinion

Explained: the Insurance Properties of Common Debt Issuance in the European Union

Daniel Gros

The Covid-19 crisis has led to a common European fiscal response in the form of the €750 billion Next Generation EU (NGEU) package agreed by EU leaders in July 2020. One important novelty of this package is that it will involve, for the first time, the issuance of substantial common European debt - Daniel Gros explains what this means for the EU and its Member States.

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Cover of EconPol opinion

The Priorities of Public Buyers

Sebastian Blesse

Public procurement officials make substantial decisions for public good provision, and their decisions have widespread welfare implications. Yet despite the importance of these decisions, there can be a lot of discretion applied by the individuals awarding public sector contracts. EconPol network member Sebastian Blesse (ZEW) and co-authors Janne Tukiainen, Albrecht Bohne, Leonardo Giuffrida, Jan Jääskeläinen, Ari Luukinen and Antti Sieppi investigated the decisions made by public procurement officials in contracting bureaus in government offices of various types across states, regions and municipalities in Finland, Germany and Italy to examine the level of discretion they were able to apply.

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Cover of EconPol Opinon

How Financial Regulation Can Help Save the Planet

Antonio Cabrales

Global authorities have longstanding worries about the impact of financial contagion on the economy: the domino effect of a failing bank can have severe repercussions, as the 2008 financial crash illustrated. To deal with these potential shocks, regulators and financial institutions have implemented risk management systems and processes designed to minimize the likelihood that such an event will be able to destroy the economy again. However, while these new frameworks and increased capital reserves go a long way to protecting financial institutions, according to economist Antonio Cabrales there is one area that is being overlooked: the link between financial systems and climate change.

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Cover of EconPol opinion

Online Public Procurement System Reduces Collusion in Ukraine

Vitezslav Titl

An  e-procurement system launched by the central government in Ukraine in 2016 reduces collusion and leads to better market outcomes, according to research carried out by Bruno Baranek, Leon Musolff and Vitezslav Titl. The system allows members of the public to leave reviews on public procurement processes – and there’s little evidence of it being used to sabotage rival businesses. This research exploits a unique setting in Ukraine and illustrates that online public monitoring of procurement markets can eliminate collusion and improve market outcomes. The 2016 reform allows citizens to observe complete information about procurement contracts and comment, review, monitor, and submit abuse reports.

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Cover of EconPol opinion

Auctioning Renewable Energy: How to Put a Price On It?

Natalia Fabra

The European Commission has set one of its key climate and energy targets as achieving a share of at least 32% for renewable energy over total energy consumed by 2030. But despite such a large share up for grabs, the methods by which renewable energy is bought and sold are far from clear. Renewable energy auctions have been implemented globally; they’re currently taking place in most countries in Europe and beyond 100 countries around the world. But, says Natalia Fabra of EconPol Europe and Universidad Carlos III de Madrid, there’s no uniformity about the way the auctions are being run, with each country using their own system.

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Cover of EconPol opinion

No-Deal Brexit has Drastic Implications for UK Firms Reliant on EU27 Supply Chains

Lisandra Flach (EconPol Europe, LMU Munich and ifo Institute), Feodora Teti (EconPol Europe, LMU Munich and ifo Institute)

The decision of the UK to leave the EU imposes a key challenge for trade relations; regardless of the outcome of trade talks, trade costs are set to increase with the resulting shocks more severe for goods that are highly dependent on few suppliers. In the worst case scenario, say Lisandra Flach (EconPol Europe, LMU Munich and ifo Institute) and Feodora Teti (EconPol Europe, LMU Munich and ifo Institute), these shocks will cause significant supply chain disruptions that will have a much harsher impact on the UK than any EU member state.These product dependencies, they say, emphasize the need for a trade agreement that minimizes the costs of Brexit for both sides and reduces the uncertainty in international relations.

 

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