EconPol Working Paper Series

Cover of EconPol Working Paper 38

Monetary Policy, Rational Confidence and Neo-Fisherian Depressions

Lucio Gobbi (EconPol Europe, University of Trento), Ronny Mazzocchi (European Parliament), Roberto Tamborini (EconPol Europe, University of Trento)

The "Neo-Fisherian" claim has been questioned on the ground that the Fisher equation cannot be used mechanically to peg the long-run inflation expectations. In this working paper, authors Lucio Gobbi (EconPol Europe, University of Trento), Ronny Mazzocchi (European Parliament) and Roberto Tamborini (EconPol Europe, University of Trento) study a New Keynesian economy where agents' inflation expectations are based on their correct understanding of the data generations process, and on their probabilistic confidence in the central bank's ability to keep inflation on target. They find that the Neo-Fisherian claim is a theoretical possibility depending on the interplay of a set of parameters and very low levels of agents' confidence. 

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Cover of Working Paper 37

Euro Area Reform Preferences of Central and Eastern European Economic Experts

Sebastian Blesse (EconPol Europe, ZEW Mannheim), Annika Havlik (EconPol Europe, ZEW Mannheim and University of Mannheim), Friedrich Heinemann (EconPol Europe, ZEW Mannheim and University of Heidelberg)

A variety of reforms have been implemented to improve the institutional set-up of the euro area over the last decade. Nevertheless, the political and academic reform debate remains intense and the future of the euro area is unclear. One striking feature of the ongoing debate is that it is characterized prominently by contributions from larger euro countries from Western Europe. This study was conducted to balance the dominance of Western European politicians and academics in the euro area reform debate. It explored the positions of 1800 economic experts from Central and Eastern European member states on a range of European Monetary Union reform topics, which were compared to benchmarks of surveyed experts in France, Germany and Italy. The results provide the first database to map expert communities in all CEE EU member states relative to the three reference countries.

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Cover of EconPol Working Paper 36

Ring-fencing Digital Corporations: Investor Reaction to the European Commission’s Digital Tax Proposals

Daniel Klein (University of Mannheim), Christopher A. Ludwig (EconPol Europe, ZEW Mannheim, University of Mannheim), Christoph Spengel (EconPol Europe, University of Mannheim, ZEW Mannheim)

In this working paper, Daniel Klein (University of Mannheim), Christopher A. Ludwig (EconPol Europe, ZEW Mannheim, University of Mannheim) and Christoph Spengel (EconPol Europe, University of Mannheim, ZEW Mannheim) study the effect of digital tax measures on firm value and find that expectations about ring-fencing digital tax measures impact firm values. An analysis of investor reaction to the European Commission’s proposals on the taxation of digital corporations reveals a significant abnormal capital market reaction of -0.692 percentage points. The investor reaction is more pronounced for firms that engage more actively in tax avoidance, have a higher profit shifting potential, and for those with higher exposure to the EU. The market value of digital and innovative corporations decreased by at least 52 billion euro in excess of the regular market movement during the event window. 

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Cover of EconPol Working Paper 35

The Political Economy of Multilateral Lending to European Regions

Zareh Asatryan (EconPol Europe, ZEW Mannheim), Annika Havlik (EconPol Europe, ZEW Mannheim, University of Mannheim)

European regions which have representatives on the board of directors at the European Investment Bank (EIB), the world’s largest multilateral lending and borrowing institution, are more likely to receive loans than those regions in Europe which aren’t represented. Researchers Zareh Asatryan (EconPol Europe, ZEW Mannheim) and Annika Havlik (EconPol Europe, ZEW Mannheim, University of Mannheim) collected information on the regions of origin of around 500 national representatives at the EIB’s Board of Directors (the decisive body for loan approvals) since its foundation in 1959. They found that a representative's appointment increases the probability of their sub-national region receiving a loan by 17 percentage points. This “home-bias" effect is particularly present in large loans financing infrastructure projects.

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Cover of EconPol Working Paper 34

The Social Costs of Side Trading

Andrea Attar, Thomas Mariotti, François Salanié (EconPol Europe; Toulouse School of Economics)

This working paper examines resource allocation under private information when the planner cannot prevent bilateral side trading between consumers and firms. Adverse selection and side trading severely restrict feasible trades: each marginal quantity must be fairly priced given the consumer types who purchase it. Authors Andrea Attar, Thomas Mariotti and François Salanié (EconPol Europe and Toulouse School of Economics) discuss the relevance of the results for insurance and financial markets.

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