EconPol Forum

EconPol Forum (formerly CESifo Forum) is a bi-monthly English-language journal to bring economic analysis on topics of worldwide interest along with policy advice to a broad range of policymakers and the public.

In September 2022 the CESifo Forum was restructured into four sections under the new EconPol brand. The first, Policy Debate of the Hour, recognizes the constantly evolving nature of policy challenges, focusing on the most pressing issues of the times. Leading researchers are invited to share their insights and policy conclusions. The Economic Policy and its Impact section assesses economic policies and develops robust evidence for their optimal design and implementation. In the Institutions Across the World section, contributors focus on the key role that institutional design plays in shaping socio-economic outcomes, often by comparing institutions across economic and political systems. Finally, Big Data-Based Economic Insights presents articles that glean economic policy advice from the exploitation of large, complex datasets.

It’s in the Data – Improved Market Power Mitigation in Electricity Markets

BIG-DATA-BASED ECONOMIC INSIGHTS

Jacqueline Adelowo, Moritz Bohland

In electricity markets, market power is typically measured by the difference between observed offers and underlying marginal (variable) cost of power production. Therefore, marginal cost estimates should be as accurate as possible to ensure unbiased measurement of market power and welfare-improving mitigation thereof. However, cost components and power plant characteristics are private information and firms have an incentive to overstate costs. Instead, system operators thus proxy marginal cost of power plants from past offers of the respective plant, which leaves room for strategic manipulation by firms. This article tests the accuracy of this best-practice benchmark approach against multiple suggested alternative methods. The results of our empirical analysis reveal a low estimation accuracy of the currently applied benchmark approach. All suggested alternative approaches deliver more precise estimates.

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The Role of Fiscal Policy Measures in Mitigating the Effects of the Covid-19 Crisis in Germany

ECONOMIC POLICY AND ITS IMPACT

Michael Christl, Silvia De Poli, Tine Hufkens, Andreas Peichl, Mattia Ricci

The Covid-19 pandemic hit Germany hard in 2020. Driven by the need to limit close contact and the resulting strict lockdown measures, economic activity fell sharply. To counter the effects of the Covid-19 pandemic, the German government introduced several policy measures. While the macroeconomic impact of the Covid-19 pandemic is well documented, evidence on the distributional impact on household income at the micro level is more limited. Our analysis shows that German households experienced a loss of over 3 percent of market income in 2020 due to the Covid-19 pandemic.

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Emigration and Elections: The Role of Emigrants' Missing Votes

INSTITUTIONS ACROSS THE WORLD

Yvonne Giesing, Felicitas Schikora, Geisi Shima

The number of migrants is continuously increasing worldwide. One in 30 people is a migrant, which amounts to 3.6 percent of the world’s population. This article presents the case of Poland, a country with 12.5 percent of its population living abroad. Many of them still have Polish citizenship and thus the right to vote in Poland. It finds that, the large-scale emigration of young and educated voters causes a negative shift in left-wing voting while there is a substantial increase in right-wing voting with higher emigration. More generally, this effect will depend on the selection of migrants and their voting preferences. Based on this, countries might also want to apply different policies to steer the wheel in either direction.

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Reform of the EU Economic Governance – Why and How?

POLICY DEBATE OF THE HOUR

Clemens Fuest, George Economides and Apostolis Philippopoulos, Iain Begg, George Kopits, Paul Dermine and Martin Larch, Wolfram F. Richter, Vesa Kanniainen, Vivien A. Schmidt, Torben M. Andersen, Sebastian Blesse, Florian Dorn and Max Lay, Anne-Laure Delatte

Europe is facing a whole new set of challenges: The cost of living is rising, war is on our doorstep, and an environmental turnaround is needed. How should the EU framework for economic governance change to make Europe stronger, more sustainable and more resilient? The European Commission has recently developed guidelines for a reformed economic governance framework. In March 2023, the European Council endorsed these guidelines. They aim at strengthening national ownership and facilitating the enforcement of projects. At the same time, they are intended to enable strategic investments and set a framework to reduce the high level of public debt. However, such economic policy coordination efforts at the EU level and the individual governance reform proposals open new debates. To what extent do they correspond to the real needs and interests of the EU? And do they take into account country-specific economic, structural and social problems of the member states?

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Immigrant Narratives in German Newspapers

BIG-DATA-BASED ECONOMIC INSIGHTS

Kai Gehring, Joop Adema, Panu Poutvaara

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.

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