|
on European Economics |
|
Issue of 2024‒09‒23
twenty-six papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Luca Dedola; Erwan Gautier; Chiara Osbat; Sergio Santoro |
| Abstract: | This chapter reviews the empirical evidence on price stickiness in the euro area. We provide an overview of the different sources of granular consumer and producer price data now available in the euro area. We document new stylized facts on price adjustment in the euro area over the last 20 years. We first present results on the frequency and size of price adjustment in the cross-section dimension. Then we describe some results on the evolution of price stickiness over time. We also derive some implications for the micro-foundations of macro models, discussing the consistency of available evidence with predictions of state- and time-dependent models. |
| Keywords: | Nominal Rigidities, Inflation, Micro Data, Euro Area |
| JEL: | D40 E31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:958 |
| By: | Domenico Giannone; Giorgio Primiceri |
| Abstract: | Post-covid inflation was predominantly driven by unexpectedly strong demand forces, not only in the United States, but also in the Euro Area. In comparison, the inflationary impact of adverse supply shocks was less pronounced, even though these shocks significantly constrained economic activity. With output already weakened by these unfavourable supply conditions, any attempt by the European Central Bank to further mitigate the demand-driven inflationary pressures---to maintain inflation near its 2-percent target---would have severely hampered an already anaemic recovery. |
| JEL: | E30 E31 E32 E37 E52 E58 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32859 |
| By: | Marco Moreno (Central Bank of Ireland and Department of Economics, Trinity College Dublin); Simone Cima (Central Bank of Ireland and Department of Economics, Trinity College Dublin) |
| Abstract: | We use new data on the distribution of wealth in the euro area and employ panel local projections to estimate the different impact of ECB monetary policy shocks on households across the wealth distribution. We look at how policy affects the composition of their balance sheets, their investment decisions, and overall wealth inequality. We find that in response to a contractionary shock, poorer households display a substantial decline in their assets and a reduction in their debt. Conversely, the balance sheet of the very wealthiest shows the opposite evolution, ultimately leading to an increase in overall wealth inequality. Evidence also suggests that the investment behaviour of poorer and wealthier households differs in response to the shock. Our results further indicate that contractionary shocks lead to a shift in balance sheet composition towards housing assets across the whole wealth distribution, at the expense of financial assets. |
| Keywords: | Wealth Inequality; Monetary Policy; Distributional Wealth Accounts; Local Projections |
| JEL: | D31 E44 E52 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep0524 |
| By: | Jochem, Axel; Lecomte, Ernest |
| Abstract: | Commercial banks in some euro area member states hold large amounts of sovereign debt that offer a risk premium and hence higher yields than AAA-rated bonds issued by the most creditworthy countries. In particular, banks in vulnerable countries exhibit a bias towards domestically issued government bonds as de jure safe assets. We show that scarcity of the domestically available stock of de facto safe assets cannot by itself account for this home bias. Instead, we provide indications that differences in bank funding costs help explain the varying appetite of banks for relatively high-yielding (and hence riskier) government bonds at the expense of bonds issued by core countries governments or EU supranational entities, as banks match the return on their euro government bond portfolio with their own funding costs. In addition, prospects for a preferential treatment of domestic creditors in case of a public default and government pressure on banks to increase their holdings of government debt give incentives to hold domestic securities. |
| Keywords: | sovereign-bank nexus, safe assets, funding costs |
| JEL: | F02 G15 G21 H63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:302187 |
| By: | Justus Inhoffen (Vrije Universiteit Amsterdam); Iman van Lelyveld (Vrije Universiteit Amsterdam) |
| Abstract: | We construct the first measure of collateral re-use at the bank and bond level for the European repo market using a regulatory transaction dataset. We show that banks materially increase the rate of re-use in response to tightened asset scarcity induced by the Eurosystem's asset purchase program. We find that dealers accommodate clients' demand for safe assets rather than liquidity and profit from the repo rate spread. Yet, dealers also re-use collateral to source liquidity which exposes them to collateral runs. Our results contribute to the policy debate on trade-offs between shock absorption and financial stability risks of collateral re-use. |
| Keywords: | collateral reuse, rehypothecation, safe assets, scarcity, repo market |
| JEL: | E4 E5 G1 G2 |
| Date: | 2024–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240018 |
| By: | Kumar Verma, Akhilesh; McQuinn, Kieran |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:esr:wpaper:wp783 |
| By: | Tibor Lalinsky (National Bank of Slovakia); Jaanika Merikull (Bank of Estonia); Paloma Lopez-Garcia (European Central Bank) |
| Abstract: | This paper studies how the Covid-19 pandemic and the extensive job retention support that accompanied it affected productivity in Europe. The focus is on the reallocation channel and productivity-enhancing reallocation of jobs, following Foster et al., 2016. An extensive micro-distributed analysis of firm-level data for 11 euro area countries is used. The unique firm-level datasets are constructed by merging balance-sheet and income-statement data with policy support data. The paper exploits variation in employment responsiveness to productivity over time, particularly examining the relationship between changes in employment responsiveness and the job retention support in 2020 and studying how well the support was targeted by firm productivity. Acknowledging limitations of a small set of countries covered and occasionally large confidence bounds around estimates, the findings suggest that (1) productivity-enhancing reallocation was weaker in the pandemic than in the Great Recession; (2) The countries that were more generous with job retention support and countries where more support was allocated to lowproductivity firms showed weaker productivity-enhancing reallocation in 2020. |
| JEL: | D22 H25 J38 L29 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1105 |
| By: | Bjarni G. Einarsson |
| Abstract: | This paper presents a framework for testing the optimality of monetary policy decisions made by a central bank in a monetary union. Applying the framework to test the European Central Bank’s monetary policy decisions we find several instances of optimization failures in its use of the Forward Guidance and Quantitative Easing instruments. We cannot reject optimality in its use of the Target Rate instrument. We find signs of heterogeneity in the optimal prescriptions for the individual member countries with respect to the union level prescription. Additionally, we find many instances of optimization failure at the country level for all instruments. Assuming each country has a country specific version of the union loss function we provide a measure of the cost of abandoning independent monetary policy by joining a union. The results indicate that the price of Euro membership is higher for the peripheral economies. |
| JEL: | C32 E31 E32 E52 E58 E61 E65 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ice:wpaper:wp96 |
| By: | Hudepohl, Tom; Malderez, Suzanne |
| Abstract: | The Eurosystem implements its monetary policy through a set of monetary policy instruments (MPIs). The period covered by this report (2022-23) was dominated by high inflation, which led to a change from an easing to a tightening monetary policy environment in line with the mandate of the European Central Bank (ECB) to pursue price stability. This report focuses on the accompanying shift in the use of MPIs. Key ECB interest rates were hiked to an unprecedented extent and at exceptional speed, leading to an exit from negative interest rates. This was accompanied by a gradual phasing-out of reinvestments under the asset purchase programmes, revisions to the conditions of targeted longer-term refinancing operations (TLTROs) and their subsequent substantial early repayments, and a phasing-out of pandemic collateral easing measures. This report discusses these developments and provides a full overview of the Eurosystem’s monetary policy implementation from 2022-23. JEL Classification: D02, E43, E58, E65, G01 |
| Keywords: | asset purchase programmes, central bank collateral framework, central bank counterparty framework, central bank liquidity management, monetary policy implementation, non-standard monetary policy measures, refinancing operations |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbops:2024355 |
| By: | Mathilde Salin; Katie Kedward; Nepomuk Dunz |
| Abstract: | This chapter reviews the empirical evidence on price stickiness in the euro area. We provide an overview of the different sources of granular consumer and producer price data now available in the euro area. We document new stylized facts on price adjustment in the euro area over the last 20 years. We first present results on the frequency and size of price adjustment in the cross-section dimension. Then we describe some results on the evolution of price stickiness over time. We also derive some implications for the micro-foundations of macro models, discussing the consistency of available evidence with predictions of state- and time-dependent modelPolicymakers are increasingly calling for the development of scenarios to explore the economic consequences of nature loss and transition policies, particularly at a global scale and macroeconomic level. In this paper, we review global integrated-assessment models (IAMs) linking nature and the macroeconomy and assess their suitability to help build such scenarios. We perform an in-depth analysis of both ‘stylised’ and ‘applied’ IAMs, and critically assess how they represent dependencies of the macroeconomy on nature, as well as policies to reverse nature loss. We find that applied IAMs are generally skewed to capturing the dependency of the economy to selected provisioning ecosystem services, with regulating and maintenance services less represented. As these models tend to focus on the land-use and climate drivers of biodiversity loss, the transition policies they capture only aim to mitigate those drivers and overlook other drivers of nature loss such as pollution or invasive alien species. We also find that some theoretical assumptions in the core macroeconomic part of applied models may tend to mitigate the potential macroeconomic consequences of nature loss and nature transition policies. This contrasts with the results of the ‘stylised’ models we review, which tend to represent the loss of natural capital and biodiversity as having significant impacts on the macroeconomy. However, stylised models make it hard to represent the impact of the loss of specific ecosystem services or specific policies to protect nature. Building on this analysis, we explore the challenges and identify future avenues for the use of IAMs in scenarios that account for the importance of nature and biodiversity for economic activity. |
| Keywords: | Integrated Assessment Modelling; Biodiversity; Natural Capital; Nature Scenarios; Macroeconomic Impacts; Sustainable Development |
| JEL: | C6 Q56 Q57 Q01 O11 O44 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:959 |
| By: | Monastiriotis, Vassilis; Randjelovic, Sasa |
| Abstract: | The aim of this paper to evaluate the relationship between public and private capital formation in 16 economies from Central Eastern and South Eastern Europe by applying panel-cointegration methods to 2000–2017 data. We find a positive public-private capital formation nexus both in the short and the long-run, with pro-cyclicality of private capital formation and negative relevance of the user costs of capital. The results imply that expansionary public investment policy may be effective in boosting private investment both in the short and the long-run, if fit into a financially sustainable framework that limits negative impact of the user cost of capital. |
| Keywords: | crowding-in hypothesis; emerging Europe; private investment; public investment |
| JEL: | E22 H54 O16 O52 P33 |
| Date: | 2023–02–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:118277 |
| By: | Heller, Anna Lena; Brunzema, Iska; Schlomann, Barbara |
| Abstract: | Energy poverty, characterized by a lack of access to reliable and affordable energy services, persists to be a critical global challenge with far-reaching socio-economic implications. As this also remains to be an urgent issue in the EU, measures alleviating energy poverty are critical to ensure a just energy transition. Instead of being a co-benefit of packages such as the Energy Efficiency first principle and only tackling the issue via social policies, the recast of the Energy Efficiency Directive (EED) and the Energy Performance of Buildings Directive (EPBD) mandate are treating energy poverty via energy efficiency measures. Thus, this paper focuses on energy efficiency policies that address energy poverty, based on the MURE database which contains energy efficiency measures of the EU Member States, Switzerland, and Energy Union partners. Recognizing the diverse nature of energy poverty across the EU, the European Commission guides Member States to adopt individualized approaches to combat this issue. To illustrate the different contexts and strategies, the paper includes case studies from Greece, Finland, Ireland, Latvia, and India. In the upcoming years, further policy measures alleviating energy poverty are to be expected due to the new requirements for the Member States in the EED and EPBD recast. This paper is intended to show examples of measures alleviating energy poverty that could be used to implement the future EU requirements in the Member States. |
| Keywords: | Energy poverty, energy efficiency policy, EU policy, case studies, reporting requirements |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fisisi:302185 |
| By: | Hackenesch, Christine (Ed.); Keijzer, Niels (Ed.); Koch, Svea (Ed.) |
| Abstract: | This collective IDOS Discussion Paper seeks to inform the incoming EU leadership and member state capitals about the EU's role in a changing world, main internal and external influences, as well as the prospects and expected challenges in the new legislative period. The primary focus of this publication is on key challenges for the new EU leadership in the field of development policy. In addition, it analyses the interrelations between development policy and other external and internal EU policies and their influences on global sustainable development. The publication consists of 17 sections, which in addition have been published as long-reads on the IDOS website. The views expressed in the sections of this paper are the authors'. |
| Keywords: | European Union, European development policy, European Parliament |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:diedps:302191 |
| By: | Cylus, Jonathan; Thomson, Sarah; Tayara, Lynn Al; Cerezo, José Cerezo; Martínez, Marcos Gallardo; García-Ramírez, Jorge Alejandro; Karanikolos, Marina; Gregori, María Serrano; Evetovits, Tamás |
| Abstract: | Progress towards universal health coverage is monitored by the incidence of catastrophic spending. Two catastrophic spending indicators are commonly used in Europe: Sustainable Development Goal (SDG) indicator 3.8.2 and the WHO Regional Office for Europe (WHO/Europe) indicator. The use of different indicators can cause confusion, especially if they produce contradictory results and policy implications. We use harmonised household budget survey data from 27 European Union countries covering 505, 217 households and estimate the risk of catastrophic spending, conditional on household characteristics and the design of medicines co-payments. We calculate the predicted probability of catastrophic spending for particular households, which we call LISAs, under combinations of medicines co-payment policies and compare predictions across the two indicators. Using the WHO/Europe indicator, any combination of two or more protective policies (i.e. low fixed co-payments instead of percentage co-payments, exemptions for low-income households and income-related caps on co-payments) is associated with a statistically significant lower risk of catastrophic spending. Using the SDG indicator, confidence intervals for every combination of protective policies overlap with those for no protective policies. Although out-of-pocket medicines spending is a strong predictor of catastrophic spending using both indicators, the WHO/Europe indicator is more sensitive to medicines co-payment policies than the SDG indicator, making it a better indicator to monitor health system equity and progress towards UHC in Europe. |
| Keywords: | universal health coverage; financial protection; health financing; catastrophic spending; co-payments; SDGs; coverage policy; Elsevier deal |
| JEL: | F3 G3 |
| Date: | 2024–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124416 |
| By: | Gerards Iglesias, Simon; Krpata, Marie; Kuss, Ana Helena Palermo |
| Abstract: | Dieses Policy Paper untersucht die geopolitische und wirtschaftliche Bedeutung des EU-Mercosur-Abkommens für die Europäische Union (EU) im Rahmen der neuen Wirtschaftssicherheitsstrategie der EU (European Economic Security Strategy). Angesichts geopolitischer Veränderungen und wachsender protektionistischer Tendenzen großer Volkswirtschaften wie China und den USA wird eine engere Zusammenarbeit mit dem Globalen Süden, einschließlich der Mercosur-Staaten, als notwendig erachtet. Deutschland und Frankreich haben ihre Wirtschaftspolitik neu ausgerichtet, insbesondere durch einen aktiven Einsatz für das Zustandekommen einer europäischen Industriestrategie und einer "Derisking-Strategie" zur Reduktion wirtschaftlicher Verwundbarkeiten. Diese sollen die Resilienz der europäischen Volkswirtschaften stärken, eine Verringerung der Risiken durch Diversifizierung der Wirtschaftsbeziehungen gewährleisten, und setzen dabei u.a. auf ausgewogene Partnerschaften (Bundesregierung, 2023). Diese Entwicklungen könnten eine Chance darstellen, traditionell unterschiedliche Auffassungen von Handelspolitik in Deutschland und Frankreich zusammenzubringen. |
| Abstract: | This policy paper analyses the geopolitical and economic significance of the EU-Mercosur agreement for the European Union (EU) in the context of the EU's new European Economic Security Strategy. In view of geopolitical changes and growing protectionist tendencies of large economies such as China and the USA, closer co-operation with the Global South, including the Mercosur countries, is considered necessary. Germany and France have adapted their economic policies accordingly, in particular by actively promoting a European industrial strategy and a derisking strategy to reduce economic vulnerabilities. These strategies should enable a strengthening of the EU's economic resilience, reduce risks through the diversification of trade partners and promote partnerships with third countries at eye-level. These developments could further the convergence of two traditionally different views of trade policy between France and Germany. [...] |
| Keywords: | Freihandelsabkommen, Geopolitik, Wirkungsanalyse, EU-Staaten, Mercosur-Staaten |
| JEL: | F02 F13 F53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkpps:302190 |
| By: | Jean-Charles Bricongne; Mathilde Dufouleur |
| Abstract: | This paper examines the impact of insolvency framework reforms on non-performing loans (NPLs), extending prior research by considering both creditor and debtor factors. Using a new metric derived from the European Banking Authority's Transparency Exercises, we focus on the insolvency regime of the debtor's country in cross-border insolvencies. Furthermore, we contribute to the creditor vs. debtor-friendly insolvency regime debate by analysing reforms according to their orientation. Our findings suggest that debtor-oriented reforms are more effective in reducing NPLs, particularly benefiting non-SMEs and large banks in high NPL contexts. Moreover, such reforms have a larger effect in non-debtor and creditor-friendly insolvency regime countries. Finally, we also find that creditor-oriented reforms are associated with higher NPL ratios. |
| Keywords: | Non-Performing Loans, Insolvency Regime, Transparency Exercise, Reform, Banking Sector |
| JEL: | Q02 Q5 Q42 L72 G3 Q3 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:953 |
| By: | Marina Tkalec (The Institute of Economics, zagreb) |
| Abstract: | Consumer expenditure went through major shifts during the COVID-19 pandemic, but these were not reflected in household basket weights used for measuring inflation. Using real-time credit and debit transactions for the US, we update consumer expenditure for 27 EU member states on a month-by-month basis from January 2020 to December 2023. We thereby consider expenditure changes and calculate an alternative measure of inflation?inflation with the Covid consumption basket. We find that the Covid inflation rate in May 2020 is higher than the official CPI in 25 out of 27 countries. Our fixed-effects econometric exercise suggests that government intervention to fight the pandemic tended to decrease the Covid inflation rate, by as much as 0.05 percentage points in the whole sample, and by 0.18 percentage points in the year 2022 alone. Government response, containment and health, and stringency measures were statistically significant in reducing inflation, while economic support measures proved not to be correlated with Covid inflation in the whole sample. |
| Keywords: | consumption basket; COVID-19; inflation; pandemic |
| JEL: | E01 E21 E31 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:14216251 |
| By: | Aleksandra Jandric (Institute of Economic Studies, Charles University, Prague, Czech Republic & Faculty of Economics, University of Banja Luka); Adam Gersl (Institute of Economic Studies, Charles University, Prague, Czech Republic) |
| Abstract: | This paper examines the determinants of private equity activity across Europe. We analyze a total of 43 explanatory variables, categorized into six groups: Economy; Finance and capital markets; Quality of institutions; Life quality; Economic freedom and Globalization. We assess their impact on three target variables representing overall private equity activity: Investments, Divestments and Fundraising. The study covers 26 European countries over the period from 2007 to 2022. First, we use Bayesian Model Averaging (BMA) to identify which variables are essential for further analysis. We then conduct a multicollinearity test and remove variables highly correlated with those deemed significant by BMA. The final step involves panel data analysis to identify the key variables that countries should prioritize in order to enhance their private equity activity and make the necessary policy adjustments to improve their attractiveness in the private equity sector. Our findings highlight the significance of certain variables that have not been previously analyzed, alongside some traditionally acknowledged factors. Notably, trade openness, bank credit to the private sector, public spending on education, inflation and labor force emerge as significant determinants across Investments, Divestments, and Fundraising. |
| Keywords: | Private equity, Venture capital, Fundraising, Investments, Divestments, Bayesian Model Averaging, Panel data analysis |
| JEL: | C58 E44 G11 G24 G28 M13 O21 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_30 |
| By: | Hong Xu |
| Abstract: | The global momentum towards establishing sustainable energy systems has become increasingly prominent. Hydrogen, as a remarkable carbon-free and renewable energy carrier, has been endorsed by 39 countries at COP28 in the UAE, recognizing its essential role in global energy transition and industry decarbonization. Both the European Union (EU) and China are at the forefront of this shift, developing hydrogen strategies to enhance regional energy security and racing for carbon neutrality commitments by 2050 for the EU and 2060 for China. The wide applications of hydrogen across hard-to-abate sectors and the flexibility of decentralized production and storage offer customized solutions utilizing local resources in a self-paced manner. To unveil the trajectory of hydrogen development in China and the EU, this paper proposes a comparative analysis framework employing key factors to investigate hydrogen developments in both economic powerhouses. Beyond country-wise statistics, it dives into representative hydrogen economic areas in China (Inner Mongolia, Capital Economic Circle, Yangtze River Delta) and Europe (Delta Rhine Corridor) for understanding supply and demand, industrial synergy, and policy incentives for local hydrogen industries. The derived implications offer stakeholders an evolving hydrogen landscape across the Eurasian continent and insights for future policy developments facilitating the global green transition. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.08874 |
| By: | Jan Klacso (National Bank of Slovakia) |
| Abstract: | The debt service-to-income ratio represents a critical indicator of retail credit risk. While the calculation of this ratio is straightforward for individual retail clients, obtaining it at the country level presents a more significant challenge. Nevertheless, such a measure can provide early warning signals and can help explaining household consumption throughout the credit cycle. Furthermore, the macro DSTI enables a comparison of debt burden across countries. In this paper we estimate the annual and quarterly ratio of debt service-to-income, or Macro DSTI, for selected EU countries. We make several adjustments to currently available comparable indices, like the Debt Service Ratio calculated by the BIS. The estimation of the index solely for indebted households, with the inclusion of their net income, enables a more accurate reflection of the actual debt service burden at the country level. While the majority of countries observed a decline or stagnation in macro DSTI following the Great Financial Crisis, Slovakia exhibited a notable increase, with a decline starting in 2018 resulting from a reduction in consumer loans. |
| JEL: | C8 E44 E50 G21 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1106 |
| By: | Pierfederico Asdrubali; Soyoung Kim; Haerang Park |
| Abstract: | International risk sharing in OECD countries weakens during domestic recessions, when its role is most needed. Instead, no significant changes emerge during boom periods or in relation to the global business cycle. The asymmetry in the risk sharing response to cyclical fluctuations is driven mainly by dissmoothing effects in the capital market channel and the credit market channel. Specifically, interest payments to abroad and credit constraints of households increase during domestic recessions, limiting the smoothing role of risk sharing channels. However, countries with more internationally integrated financial markets and corporate disclosure can mitigate the dis-smoothing effects of these two channels and thus the asymmetry in international risk sharing. These findings contribute to rationalise heterogeneous results in the literature on the impact of globalisation and of financial frictions on international risk sharing. From an analytical viewpoint, they caution against assessments of international risk sharing over time which do not take the business cycle into account. From a policy perspective, they establish that, contrary to part of the literature on financial frictions, financial integration and corporate disclosure do affect international risk sharing during recessions. Since our results carry over to EU countries, they support the pursuit of the Capital Markets Union and further elimination of financial barriers to the completion of the Single Market. They also call for a more active role of counter-cyclical fiscal policy: during a recession, when a negative (positive) output shock hits, net government savings should fall (rise) along with net private savings, in order to preserve consumption stability. |
| JEL: | E00 E21 F15 G15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:205 |
| By: | Ramji, Aditya; Fulton, Lew; Sperling, Daniel |
| Abstract: | Strong policies are needed to accelerate the zero-emission vehicle (ZEV) transition so that it occurs at a pace in line with international climate goals. The purchase price of new vehicles tends to be the variable that most affects consumer decisions. With urgency for a ZEV transition, fiscal pressure for governments can be high as rebates for consumers and incentives supporting manufacturers in the switch to ZEV technologies will be needed for a mass-market transition. Fees on high-polluting vehicles—and rebates on clean ones—have become an effective and increasingly common strategy in European countries. The feebate mechanism can raise the necessary capital for financing a ZEV transition in combination with other regulatory mechanisms. This paper reviews and assesses feebate design types, issues, and implementation strategies in France, Germany, Italy, Sweden, and the United Kingdom. These examples show that feebates can be designed in a variety of ways to meet unique policy objectives and that periodic adjustments are helpful in achieving goals. Among twelve design considerations for an effective feebate, the authors find that: (1) focusing on a single fee parameter, such as CO2 emissions, can be a simple yet effective mechanism; (2) a continuous functional form for the fee and a stepwise rebate are likely to be most effective in driving EV adoption; and (3) pure feebates, where fee revenue funds EV incentives by program design, provide certainty for manufacturers, regulators, and consumers. View the NCST Project Webpage |
| Keywords: | Social and Behavioral Sciences, electrification, light duty, feebates, taxation, Europe |
| Date: | 2024–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt73z6j5v1 |
| By: | Saioa Armendariz; Ezequiel Cabezon; Mr. Larry Q Cui; Silvia Domit; Alina Iancu; Giacomo Magistretti; Rohan Srinivas; Yu Ching Wong |
| Abstract: | Public debt ratios in Europe increased significantly in response to the pandemic and energy shocks and have remained higher than before the pandemic in most countries. Going forward, the projected public debt trajectories are broadly flat overall in advanced Europe but have a rising profile in emerging Europe. Government financing needs are still elevated, and the unwinding of quantitative easing by major central banks adds to financing pressures. Moreover, there are important medium- to long-term spending pressures from defense, climate transition, and aging, which are not fully reflected in the projected baseline trajectories. Against this backdrop, the risk that debts will not stabilize in the medium term has increased. Debt stabilization will hinge critically on achieving ambitious fiscal consolidation and sustained growth. Facing these elevated risks, policymakers need to implement carefully-calibrated fiscal adjustments that ensure debt sustainability while supporting growth. They could target debt stabilization over a longer, 10-year, horizon—while adhering to credible fiscal rules such as the reformed EU Economic Governance Framework—but with a high probability to reassure markets that debts will indeed be tamed. |
| Keywords: | Public debt; Government financing; Debt stabilization; Optimal fiscal path |
| Date: | 2024–08–23 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/181 |
| By: | Kornher, Lukas; Balezentis, Tomas; Santeramo, Fabio Gaetano |
| Abstract: | Since the Covid-19 pandemic and the Russia-Ukraine War, global food markets have been in turmoil. Agricultural input and energy prices doubled between 2020 and 2022, with immediate consequences on food accessibility. We examine the drivers of the EU food inflation patterns, and how trade integration shapes these dynamics. We find that food price inflation has been mainly driven by surges in agricultural production costs and, to a lesser extent, by global food price increases. Trade openness has not exacerbated the inflating dynamics during this period. |
| Keywords: | Europe, food price inflation, Russia–Ukraine War, trade policy uncertainty, geopolitical risk |
| JEL: | E31 Q11 Q18 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121673 |
| By: | Lucia Vergano |
| Abstract: | Social acceptance is growing about the need for moving from a linear to a more circular use of resources. This allows for lowering raw material consumption and waste generation, while reducing the EU resource and energy dependence from abroad, which has become economically and geo-strategically important. The EU circular economy could further expand by fostering waste prevention and preparing for re-use. Despite recent improvements in waste management capacity, the EU circularity could also benefit from enlarging secondary markets by feeding back more secondary raw materials into the economy. However, materials’ specific features and/or economic and technological constraints might limit recycling capacities. Therefore, understanding the economic drivers of recycling is key for defining effective and efficient policy measures. These range from regulation (e.g. specific technological or performance standards including waste collection/sorting methods and eco-design) to market-based instruments, whether price-(e.g. taxes and charges, subsidies and public facilities) or quantity-based (e.g. cap-and-trade), or both. The optimal policy mix design may nevertheless vary according to a range of economic, social, cultural, political and institutional factors. Specific policy interventions promoting recycling encompass a possible review of the EU waste hierarchy, a broader eco-design and a harmonised waste legislation, data definition and collection. |
| JEL: | Q30 Q53 Q58 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:209 |
| By: | McGuinness, Seamus; Bergin, Adele; Devlin, Anne |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:esr:wpaper:wp781 |