News Archive

Hernán D. Seoane (EconPol Europe, Universidad Carlos III de Madrid) has reviewed the main theories of interest rate determination and studied the dynamics of the real interest rate in the US. Using cointegration techniques, he searched for equilibrium relationships between the real interest rate, monetary factors and real factors and studied how these relationships change with the policy regimes.

The Eurosystem has become one of the crucial players in the market for euro area government bonds: after first substantive purchases through the Securities Market Programme (SMP) in 2010, the Eurosystem’s involvement has reached a new breadth and magnitude with the establishment of the Public Sector Purchase Programme (PSPP) in 2015.

The confinement measures introduced in several countries to fight the Covid-19 pandemic have imposed a high toll on many economic activities. In this post, EconPol's Stefano Schiavo and co-authors exploit recent evidence on French firms recently published by the OFCE-SciencesPo to discuss the policy options facing European governments and the broader implications of firm exit for competitiveness. Using data on a large number of French firms, they simulate the impact of the lockdown on their balance sheets to estimate the share of companies facing liquidity or solvency issues.

Using the tax system to support research and development has become a very popular policy tool. Many countries are implementing incentives such as tax credits, patent boxes and direct subsidies to stimulate new R&D. But is there really a causal relationship between these policies and the R&D spending done by the businesses receiving the incentives? And if so, is this R&D productive, and does it have an impact on the wider economy?

Using realized investment data, this working paper from Carlos San Juan Mesonada and Carlos Sunyer Manteiga (EconPol Europe, Universidad Carlos III de Madrid) empirically assesses the effects of the European Structural and Investment Funds on the regional convergence of income in Spanish regions, comparing the results in terms of real regional convergence. The level of indebtedness in the region has a definite adverse effect on the effectiveness of European projects, and the authors also identify an apparent spillover effect from the funds towards other border regions.