EconPol Policy Reports

EconPol Policy Reports conduct comprehensive economic analysis on current European economic and fiscal policy issues, fostering a deeper understanding of European economic development and the implications of policy measures. The reports provide valuable insights into policy scenarios and the impact of economic policies, facilitating informed public discussions and evidence-based policy making. EconPol‘s mission is to contribute to the crafting of effective economic policy in the face of the rapidly evolving challenges faced by the European economies and their global partners and to provide well-founded advice to European policymakers.

COVID-19, Trust and Solidarity in the EU

Cevat Giray Aksoy (European Bank for Reconstruction and Development and King’s College London), Antonio Cabrales (EconPol Europe, Universidad Carlos III de Madrid), Mathias Dolls (EconPol Europe, ifo Institute), Lisa Windsteiger (Max Planck Institute for Tax Law and Public Finance)

Recent evidence suggests that individual traits such as social capital are key determinants of how well the Covid-19 pandemic can be contained. It has been widely argued that the success of governments’ policies will be determined by trust and, at the same time, the pandemic itself is likely to affect trust, attitudes towards institutions and solidarity. This experimental study by Cevat Giray Aksoy (European Bank for Reconstruction and Development and King’s College London), Antonio Cabrales (EconPol Europe, Universidad Carlos III de Madrid), Mathias Dolls (EconPol Europe, ifo Institute) and Lisa Windsteiger (Max Planck Institute for Tax Law and Public Finance) into the impact of Covid-19 looks at levels of trust among people and public institutions across Europe. The authors surveyed people in France, Germany, Greece, Hungary, Italy, the Netherlands, Poland, Spain and Sweden to examine the effects of the virus on social trust, reciprocity, solidarity and institutional trust. The results reveal an overall increased sense of solidarity among people, but lower levels of trust in government in countries hit hardest by the virus.

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World Economy: What Does the Road to Recovery from COVID-19 Look Like?

Expert Survey on Worldwide Effects of the Pandemic

Dorine Boumans, Pauliina Sandqvist and Stefan Sauer (EconPol Europe, ifo Institute)

As the economy and our daily life return to a “new-normal” in the midst of Covid-19, the possibility of a second wave leaves lots of uncertainty about future developments. To understand indications about the impact of the pandemic on economic performance in different countries across the world, we conducted a survey among 950 economic experts in 110 countries. This report gives an overview of the most important results of the survey and compares them in different world regions and countries. An extra focus is placed on the European Union’s strategy to combat the crisis and how experts from member states assess the different policy measures.

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The Covid-19 Crisis, Italy and Ms Merkel’s Turnaround: Will the EU Ever be the Same Again?

Luigi Bonatti and Andrea Fracasso (EconPol Europe, University of Trento)

The functioning of the Eurozone was irreversibly transformed by the European debt crisis and now, as a consequence of the Covid-19 pandemic, a new and even more devastating crisis has hit the EU. German Chancellor Angela Merkel has abandoned her opposition to substantial intercountry transfers and any form of debt mutualization, a turnaround motivated by the exceptional circumstances brought about by the pandemic. The risk that Italy’s fragile financial, economic and political situation, exacerbated by the current crisis, could destabilize the entire Eurozone in the absence of sizeable external assistance was probably one of the main determinants of the German government’s policy shift. In this policy report, Luigi Bonatti and Andrea Fracasso argue that this move will be insufficient to drive Italy into a sustainable and satisfactory growth path, and it will need further financial support from EU institutions and member states. Should they agree to provide financial assistance to the Eurozone's most vulnerable countries and make permanent what was supposed to be temporary, or expose the zone to a possible implosion?

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Financing the EU: New Context, New Responses

Clemens Fuest (EconPol Europe, ifo Institute), Jean Pisani-Ferry (Bruegel)

This paper discusses the introduction of new own resources to finance the EU budget. Currently roughly two thirds of the budget is financed from GNI-based own resources, which are essentially contributions made by the member states out of national tax revenues. While GNI resources are transparent, fair and in line with the principle of subsidiarity, they are criticised for leading to political debates that emphasise the cost of EU spending rather than on the benefits, and for contributing to the framing of discussions on the EU budget in terms of net balances, rather than value added through common policies and the provision of European public goods. Clemens Fuest and Jean Pisani-Ferry propose that the EU should receive a new source of funding in the form of revenue from the European emissions trading system (ETS). They recommend that revenue from the ETS be used to finance the EU fund for economic recovery (Next Generation EU), which was adopted in July.

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Has Immigration Contributed to the Rise of Rightwing Extremist Parties in Europe?

Anthony Edo (EconPol Europe, CEPII) and Yvonne Giesing (EconPol Europe, ifo Institute, CESifo and University of Munich)

Improving the economic and social integration of immigrants should be prioritized along with economic and health policies to prevent a rise in far-right parties in the wake of the Covid-19 crisis, as the economic downturn caused by the pandemic and the increased economic insecurity of large numbers of the population could lead to xenophobic reactions and rejection of immigrants. This policy report from Anthony Edo and Yvonne Giesing analyzes the impact of immigration on the rise of far-right parties and finds that, while there is a general tendency towards an increase in far-right voting caused by immigration, this is not automatic and depends on the type of migration. And, say authors, the degree of economic and social integration of immigrants plays an important factor in the formation of anti-immigrant sentiment.  

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