Overview publications

A strong middle class is important for political stability in democracies and can be an anchor against political extremism. With their consumption and labor input, middle class households make a significant contribution to economic growth and a prosperous society. With their taxes and other levies, the middle-income groups also contribute significantly to revenues and thus to the government budgets and the financing of EU welfare states. At the same time, the middle class has come under pressure in many countries in recent years. In many European countries, it is therefore questionable whether and to what extent the middle class will be able to bear further fiscal and financial burdens during the current crises and to meet the state’s additional financing needs to cope with major challenges such as climate change, the energy transition, the security policy shift, or demographic change.

Innovations form the backbone of sustained economic growth and, as such, they play a key role in safeguarding prosperity. Governments, aware of this, invest heavily in public research at universities and research institutes, and strive to create ideal conditions for private sector research and development (R&D), usually through specific R&D tax credit schemes or direct funding.

Narratives about immigrants matter for both natives and immigrants because narratives shape attitudes, political outcomes, and perceptions of discrimination. A recent and growing literature has shown that media narratives influence how people think and act as well as that specific framing of immigration matters for how migrants are perceived. However, no study has examined narratives about immigrants in a systematic way.

How prevalent is remote work on a global scale? What are the prevailing modes of working arrangements at present? What are the foremost advantages of working from home and on employer's business premises? Is there a need for policy intervention? Our new Global Survey of Working Arrangements provides new insights to answer these questions.

More than twenty years after the beginning of negotiations, a new window of opportunity seems to have opened for the ratification of a trade agreement between the European Union and Mercosur. For Mercosur, this comes at a crucial juncture in its integration process: the future of the South American trade bloc appears to be more uncertain than ever, with member states holding diverging views on Mercosur’s objectives. Thirty years after its foundation, the original goals of Mercosur’s integration process have been only partially achieved. While there has been some success in terms of trade liberalization within Mercosur, the goals of forming a customs union and pursuing deeper integration steps remain unfulfilled. High Most Favored Nation (MFN) tariffs and non-tariff trade barriers within the region, coupled with the lack of trade agreements, hinder the integration of Mercosur countries into the global economy.

The EU faces the challenge to combine large and sustained investments to promote the transition towards a green, digital, and competitive Europe while maintaining fiscal sustainability. Based on a comprehensive literature review on the effects of fiscal rules and investment clauses on public finances, this in-depth analysis provides some guidance how higher public investments can be achieved by a targeted golden rule without harming fiscal sustainability in the EU fiscal framework. The study also discusses the role of investments in the current proposals of the European Commission on the reform of the EU Economic Governance.

This Policy Brief examines how minimum income support (MIS) schemes contribute to the stabilization of disposable incomes in times of crisis in Europe. MIS systems act as a “safety net of last resort” in many European welfare states, but to varying degrees. The results from the simulation of stylized unemployment shocks hitting labor markets suggest that the tax-transfer system overall contributes to income stabilization in periods of crises. However, the MIS schemes’ individual contribution is relatively small, especially as set against the unemployment insurance system.

The US Inflation Reduction Act (IRA) promotes renewable energy and contributes to climate protection, but also offers generous tax credits and subsidies to incentivize production in the United States. While the planned generosity of the program has sparked an intense debate about potential negative spillover effects on the global economy, little is known about the quantity of potential adverse effects. In the new EconPol Policy Report the authors conduct a large-scale international survey among leading economic experts worldwide to quantify the effect of the US Inflation reduction act on the global economy. On a global scale, experts are little concerned about negative effects of the IRA on their domestic economy, estimating both the impact on national output and the risk of business outflows to be low. However, we uncover large heterogeneity in the potential impact of the IRA across countries and regions. In Europe, particularly in France and Germany, economic experts are highly concerned about the IRA and expect a significant effect of the IRA on the domestic economy. In terms of economic policy reactions, roughly 41% of the respondents support economic countermeasures.

In the light of geopolitical conflicts and instability, sanctions play an important role in the international economic policy debate - especially against countries such as Russia, Iran and China. Economic sanctions are often intended to achieve foreign and security policy goals: fighting terrorism, protecting democracy and human rights, or resolving conflicts. In this issue of EconPol Forum, our authors examine, using the evidence-based studies, the extent to which various sanctions have achieved their goals. How do they affect economic growth, trade, and prosperity? In addition, we want to understand their impact on sectoral development of agriculture, energy and mining, as well as on human rights, military spending or life expectancy. In this context, international trade, financial transactions, technology transfer and other economic activities, among others, are systematically studied. And researchers look at different types of sanctions, such as unilateral, multilateral, and extraterritorial.

The Covid-19 pandemic has had a profound impact on the global economy, leaving us with a significant stock of additional debt. A widespread view is that the burden of servicing this debt should be distributed fairly, suggesting that tax systems should become more progressive. How should the optimal degree of income tax progression change if governments need to raise more revenues? In this article, the authors use the workhorse model of optimal income taxation to analyze the change in the degree of tax progressivity in response to the fiscal pressure caused by the Covid-19 pandemic.