News Archive

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.

This research from António Afonso and José Carlos Coelho studies the existence of a causal relationship between the general government balance and the current account balance (assessed as a percentage of GDP) for 28 European Union countries, using annual data for 1996 to 2019. They find that an increase in budget deficit of 1 pp of GDP results in a deterioration of the current account deficit of 0.318 pp of GDP, which supports the Twin Deficits Hypothesis.

Economic incentives to accelerate vaccine production would be much more productive than the empty threat of suing AstraZeneca - the additional cost for boosting vaccine supply for Europe might run into a couple of billions of euros, but this would be a lot less than the cost of prolonged disruption to the economy and society, let alone the lives lost. Clemens Fuest and Daniel Gros examine the EU's mistakes.