Current publications

Cover of EconPol Policy Report 30

Covid-19 Pandemic: Challenges and a Way Forward

Panu Poutvaara, Madhinee Valeyatheepillay (EconPol Europe, ifo Institute, LMU Munich)

Sacrificing lives does not save the economy, according to this latest policy report from Panu Poutvaara and Madhinee Valeyatheepillay: countries that fail to suppress the pandemic risk a disastrous overburdening of their health care system and patients who could have been otherwise saved die. Short of an effective vaccine, no single measure is enough to stop the pandemic. Instead, societies need a combination of effective social distancing measures, careful hygiene, use of masks in indoor public spaces and contact tracing.

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Cover of EconPol Working Paper 52

Offshore Tax Evasion and Wealth Inequality: Evidence from a Tax Amnesty in the Netherlands

Wouter Leenders (University of California), Arjan Lejour, Simon Rabaté, Maarten van’t Riet (EconPol Europe; CPB Netherlands Bureau for Economic Policy Analysis)

While tax administrations have made considerable progress in fighting tax evasion, it remains a seemingly inextricable part of our world. Exploiting unique datasets covering over 28,000 tax evaders in the Netherlands, Wouter Leenders, Arjan Lejour, Simon Rabaté and Maarten van’t Riet investigate the distribution of tax evasion and its implications for the measurement of wealth inequality. They show that the distributional pattern of tax evasion depends on the type of tax evasion, e.g. it depends on the offshore country of choice. They explore a number of explanations to account for the differences in results and caution against projecting distributional patterns of detected tax evasion onto still undetected evasion. 
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Cover of EconPol Working Paper 51

Structural Tax Reforms and Public Spending Efficiency

António Afonso (EconPol Europe; ISEG; REM/UECE), João Tovar Jalles (EconPol Europe; ISEG; REM/UECE; Economics for Policy and Centre for Globalization and Governance; IPAG Business School), Ana Venâncio (ISEG; ADVANCE/CSG)

This working paper, from António Afonso, João Tovar Jalles and Ana Venâncio, evaluates the effects of structural tax reforms on government spending efficiency in a sample of OECD economies over the period 2007-2016. Increases in tax rates result in falling public efficiency, with the negative effect found to be more significant for increases in personal income tax and value added tax. In times of economic expansion, increasing the corporate income tax base and reducing personal income tax rates were found to have a positive impact on public sector efficiency. In recessions, efficiency improves when the personal income tax and value added tax bases increase and the corporate income tax rate increases. 

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Cover of EconPol Policy Report 29

The Sovereign-Bank Nexus: the Role of Debt and Monetary Policy

Hernán D. Seoane (EconPol Europe, Universidad Carlos III de Madrid)

In this policy report, Hernán D. Seoane (EconPol Europe, Universidad Carlos III de Madrid) analyzes one aspect of the sovereign-bank nexus: the feedback effects between banks and sovereigns derived from the holdings of sovereign debt in domestic banks. He examines how this relationship evolved during the European debt crisis and how it responded to the implementation of ECB monetary policy based on Open Market Operations and Marginal Lending Facilities. He finds evidence of carry trade behavior by banks, with some evidence that this channel may have been boosted by the liquidity provision policies.

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Cover of EconPol Working Paper 50

Government Spending Efficiency, Measurement and Applications: a Cross-Country Efficiency Dataset

António Afonso (EconPol Europe; ISEG; REM/UECE), João Tovar Jalles (EconPol Europe; ISEG; REM/UECE; Economics for Policy and Centre for Globalization and Governance; IPAG Business School), Ana Venâncio (ISEG; ADVANCE/CSG)

António Afonso, João Tovar Jalles, Ana Venâncio have conducted a review of the literature dealing with overall public sector performance and efficiency, defining a methodology to assess public sector efficiency and create a novel and large cross-sectional panel dataset of government indicators and public sector efficiency scores. The focus is on a balanced sample covering all 36 OECD countries over the time period between 2006 and 2017. The authors have defined a set of economic and sociodemographic metrics necessary to construct performance composite indicators and calculated and reported a full set of (input and output oriented) efficiency scores based on the performance indicators previously computed.

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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 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 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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