News Archive

Corruption has a negative effect on the economy - specifically on the level and growth of GDP - and large governments register less benefit from reducing corruption than small governments. This working paper from António Afonso and Eduardo de Sá Fortes Leitão Rodrigues finds that developing economies, regardless of government size, benefit less from reducing corruption and government size is not sufficient to explain the influence of corruption on economic activity - although the level of effectiveness of public services is crucial.

Delays in the availability of vaccines are very costly for society but existing fixed price contracts provide no incentives for producers to speed up delivery: a dose delivered tomorrow receives the same price as a dose delivered in the next quarter. The benefits for early delivery are huge for society, but non-existent for suppliers. A better contract would have the price fully  variable over time. In this policy brief, the authors show that it is straightforward to design an optimal contract, which aligns the time paths of the price with that of the social value of a vaccination.

The budget dispute between Italy and the European Commission in 2018 gave new impetus for the debate about the reliability of output gap estimation methods and their use for calculating structural budget balances. In this paper, Marcell Göttert and Timo Wollmershäuser review the main properties of the mainstream approaches. They show that the structural budget balances resulting from the production function approach and the time series approach are imprecise, subject to large revisions and often biased.

An analysis of data from the International Federation of Robotics (IFR), currently the most widely used data on the economic effects of robotization, has found that robotization has significantly lower productivity effects than previously assumed and may cause falling wages.

The coronavirus crisis has led to the sharpest economic downturn in modern times and poses unparalleled challenges to policy both on a national and an EU level, as well as globally. The European Union has launched the ground-breaking Next Generation EU (NGEU) program, which involves common burden-sharing and explicitly aims to strengthen social cohesion within the European Union. If it succeeds, it will strengthen both the role of the European Union and cohesion within the European Union.