Current publications

Cover of EconPol Opinion

Covid-19 Throws Us Into an Unprecedented Debt Crisis, But It’s One We Can Rise From

Stefano Schiavo (EconPol Europe, Università di Trento)

The road to recovery is long and winding, says Stefano Schiavo (EconPol Europe, Università di Trento) but it's one we have to take: exceptional measures are needed to exit the economic crisis triggered by the coronavirus, which will see national governments at the forefront of business support and demand stimulation plans.This will lead to a sharp increase in public debt of dimensions never seen in the post-war period, but it's crucial to direct public spending towards initiatives that generate growth and contribute to solving future problems.

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Cover of EconPol Policy Brief 29

If the Objective is Herd Immunity, on Whom Should it be Built?

Christian Gollier, (EconPol Europe, Toulouse School of Economics, University of Toulouse-Capitole)

In the absence of a treatment or vaccine, there are two options available for managing Covid-19: long confinement of a large proportion of the population and the associated economic costs (Plan A), or to progressively build herd immunity by exposing the population to the virus (Plan B). But attaining herd immunity requires governments to expose a fraction of the population to the virus, and to recognize that some people in this targeted population will die. Christian Gollier (EconPol Europe, Toulouse School of Economics, University of Toulouse-Capitole) uses standardized guidelines to identify ‘optimal’ herd immunity policies but warns that the moral concerns related to such a policy would go against several decades of policy evaluation practice.

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Crises, Immigration and the Labor Market: Learning from Past Mistakes

Anthony Edo and Camilo Umana (EconPol Europe, CEPII)

Periods of crisis increase xenophobic outbursts and anti-immigrant sentiments, which can lead policy makers to target migrant workers in the hope of quickly restoring labor demand for natives - particularly when health crises are the root cause. But curbing the rise of unemployment by restricting access to the labor market and encouraging the departure of foreign workers is ineffective. In times of crisis, macroeconomic policies to stabilize economic activity and stimulate recovery are crucial to stop the rise in unemployment.

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Cover of EconPol Policy Brief 28

Covid-19: Has the Time Come for Mainstream Macroeconomics to Rehabilitate Money Printing?

Axelle Arquié (EconPol Europe, CEPII), Jérôme Héricourt (EconPol Europe, Université de Lille & CEPII) and Fabien Tripier (EconPol Europe, Université Paris-Saclay (Evry) & CEPII)

The expenditure necessary to avoid the Covid-19 health crisis turning into a long-lasting deep recession is enormous and raises the issue of how it should be financed: through new debt, or monetization? Monetization - defined as the financing of public expenditure through money creation by the central bank without being reimbursed by the government - has long been rejected by mainstream macroeconomics. This policy brief analyzes in detail some recent theoretical arguments of mainstream macroeconomics to rehabilitate monetization. The authors suggest policy makers consider monetization to finance Covid-19 related spending in the current macroeconomics context, combining secular stagnation features and a very high stock of public debt. In the specific context of the Euro area, monetization raises important political issues.

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Cover of EconPol Working Paper 45

Labor Productivity in State-Owned Enterprises

António Afonso (EconPol Europe, Universidade de Lisboa; REM/UECE), Maria João Guedes(Universidade de Lisboa; Advance/CSG), Pankaj C. Patel (Villanova University, Villanova School of Business)

Between 2013 and 2015, in the aftermath of the global financial crisis, the Portuguese government revoked four holidays for public and private employees - but the revocation seems to have served little economic purpose and been no more than a ceremonial gesture. In this paper, authors António Afonso (EconPol Europe, Universidade de Lisboa; REM/UECE), Maria João Guedes (Universidade de Lisboa; Advance/CSG), Pankaj C. Patel (Villanova University, Villanova School of Business) show that revocation of the holidays did not impact labor productivity for either central or local and regional government managed state owned enterprises.


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Cover of EconPol Policy Brief 27

COVID-19: The World Economy Needs a Lifeline – But Which One?

Dorine Boumans, Sebastian Link and Stefan Sauer (EconPol Europe, ifo Institute)

This paper from Dorine Boumans, Sebastian Link and Stefan Sauer (EconPol Europe, ifo Institute) presents the results of a survey of 1000 economic experts in 110 countries on the economic effects of the COVID-19 pandemic and the effectiveness of different policy measures to combat the crisis for different countries. The results indicate that economies all around the globe are severely hit by the COVID-19 crisis. The experts perceive the reductions in investment to have the strongest impact on their domestic economies. In consequence, the experts expect a severe recession in almost all countries in 2020, followed by a long period of economic recovery. The experts rate emergency liquidity assistance to firms as well as temporary tax deferrals for businesses as the most effective policy measures, but do not regard other responses such as helicopter money or lenient bank supervision as being well suited to combat the crisis. 

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Cover of EconPol Policy Brief 26

The Search for the Right European Financing Instruments in the Corona Pandemic: ESM Liquidity Assistance Versus Corona Bonds

Friedrich Heinemann (EconPol Europe, ZEW)

The purported advantages of corona bonds over the ESM are meagre to non-existent, says Friedrich Heinemann (EconPol Europe, ZEW). The challenge we face is to contain the spread of COVID-19 while stabilising the economy and ensuring eurozone states have sufficient liquidity and the ESM is a suitable tool for pursuing these ends. However, we should wait until the acute phase of the crisis has passed before engaging in discussion of how to handle high debt levels and possible cases of insolvencies among eurozone nations, and the difficult question of who finally bears the burden of unsustainable debts.

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EU Solidarity in Exceptional Times: Corona Transfers Instead of Coronabonds

Daniel Gros (EconPol Europe, CEPS)

Does the coronavirus crisis call for solidarity within the EU, or within the euro area? Daniel Gros (EconPol Europe, CEPS) argues that being hit by an unforeseen epidemic has nothing to do with euro area membership and the present situation is a case which requires solidarity at EU level. And, he says, there's a plausible and simple way to organise a real expression of EU solidarity without engaging in any large-scale financial transactions.

This article first appeared on

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Cover of EconPol Policy Brief 25

The Economic Costs of the Coronavirus Shutdown for Selected European Countries: A Scenario Calculation

Florian Dorn, Clemens Fuest, Marcell Göttert, Carla Krolage, Stefan Lautenbacher, Robert Lehmann, Sebastian Link, Sascha Möhrle, Andreas Peichl, Magnus Reif, Stefan Sauer, Marc Stöckli, Klaus Wohlrabe, Timo Wollmershäuser

This paper presents scenarios of the shutdown costs in terms of lost value added for Austria, France, Italy, Germany, Spain, Switzerland and UK. The shutdown phase will lead to considerable production losses and large declines in GDP this year. Lasting longer than a month, the losses within the EU quickly reach dimensions well beyond the growth slump of previous recessions or natural disasters. Shutdown costs justify almost every conceivable investment in health policy measures which allow to combine a resumption of production with further fight against the epidemic.

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Cover of EconPol Policy Brief 24

Group Testing Against Covid-19

Christian Gollier (EconPol Europe, Toulouse School of Economics University of Toulouse- Capitole), Olivier Gossner (CNRS – CREST, Ecole Polytechnique, London School of Economics)

Testing for Covid-19 is a bottleneck that we face in front of the pandemic. Test production is currently much below what is necessary for mass testing strategies which are required in order to control the pandemic while letting people go back to work. In this paper, Christian Gollier (EconPol Europe, Toulouse School of Economics University of Toulouse- Capitole) and Olivier Gossner (CNRS – CREST, Ecole Polytechnique, London School of Economics) show how group testing can be optimized in three applications to multiply the efficiency of tests against Covid-19: Estimating virus prevalence to measure the evolution of the pandemic; bringing negative groups back to work to exit the current lockdown; and testing for individual infectious status to treat sick people. 

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