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on European Economics |
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Issue of 2025–07–21
24 papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Franzetti Enrico; Marques Santos Anabela (European Commission - JRC); Arlia Daniela (European Commission - JRC) |
| Abstract: | This study uses Eurofoundâs European Restructuring Monitor (ERM) data to examine the spatial and sectoral distribution of large-scale restructuring events â such as company closures, bankruptcies, mergers and acquisition, business relocation and expansions â across EU regions between 2003 and 2023. A large-scale restructuring is defined as job losses or gains involving at least 100 jobs or more than 10% of the workforce at company sites with over 250 employees. The analysis focuses on the frequency and direct employment impact of these events at regional level and classifies them according to the 14 Industrial Ecosystems identified by the European Commission. During the period 2003-2023, job losses â approximately 4.8 million â significantly outnumber job gains, which total around 2.3 million, resulting in a net loss of over 2.4 million jobs. Among these, the âMobility-Transport-Automotiveâ sector and the âEnergy-Intensive Industryâ account for the largest share of announced job losses, with the former also recording the highest share of job gains, resulting in a limited net reduction in employment. The findings reveal substantial variation in restructuring patterns across EU regions: Central European countries, notably France and Germany, report the highest number of announced job losses, while Eastern European countries, along with Portugal and Ireland, record most job gains â leading to a positive overall net employment effect in these countries. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202506 |
| By: | Aydin Yakut, Dilan (Central Bank of Ireland) |
| Abstract: | This study investigates the dynamics of trend inflation for both the euro area (EA) countries and the aggregate rates of the EA. To this aim, trend inflation rates are estimated using various forms of a flexible unobserved components model, allowing for outliers and stochastic volatility. Using granular sector-level data for country-level applications provides a finer comparison between the member countries. Both models exploiting the sector and country levels are considered for the euro area to understand the underlying dynamics more thoroughly. In addition, alternative estimates for the euro area are obtained by combining country-level results. The results show that the use of multivariate models improves precision and outperforms the univariate models at longer horizons. A horse race between these estimates and the other popular measures from the literature, such as PCCI, supercore, etc., shows that no single metric outperforms the others. Therefore, it remains crucial to have various measures in the toolbox of policymakers as they complement each other. |
| Keywords: | Trend inflation, persistence, unobserved components, the euro area. |
| JEL: | E52 C32 C11 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:3/rt/25 |
| By: | Kanelis, Dimitrios; Siklos, Pierre L. |
| Abstract: | We combine modern methods from Speech Emotion Recognition and Natural Language Processing with high-frequency financial data to precisely analyze how the vocal emo- tions and language of ECB President Mario Draghi affect the yields and yield spreads of major euro area economies. This novel approach to central bank communication reveals that vocal and verbal emotions significantly impact the yield curve, with effects varying in magnitude and direction. Our results reveal an important asymmetry in yield changes with positive signals raising German, French, and Spanish yields, while negative cues increase Italian yields. Our analysis of bond spreads and equity mar- kets indicates that positive communication influences the risk-free yield component, whereas negative communication affects the risk premium. Additionally, our study contributes by constructing a synchronized dataset for voice and language analysis. |
| Keywords: | Artificial Intelligence, Asset Prices, Communication, ECB, High-Frequency Data, Speech Emotion Recognition |
| JEL: | E50 E58 G12 G14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:320429 |
| By: | Robert C. M. Beyer; Mr. Luis Brandão-Marques |
| Abstract: | Updated estimates of real equilibrium interest rates in the euro area, derived from eight prominent methodologies proposed in the academic literature, deliver a wide range of estimates, partly because they vary in time horizon and economic complexity. By the end of 2024, shorter-term equilibrium rates mostly exceeded longer-term rates, with foreign spillovers contributing positively to euro area equilibrium rates. Given the wide range of estimates and their high uncertainty, a judgment-based assessment should be based on three criteria and consider their conceptual fit, robustness, and alignment with other economic indicators. Even then, the uncertainty surrounding the estimates represents a specific form of model uncertainty that necessitates the formulation of robust conclusions and policy recommendations. Our results show that ECB policy rates are broadly aligned with short-run efficient rates and suggest that monetary policy remained restrictive at the end of 2024. |
| Keywords: | Equilibrium Interest Rates; Euro Area; Monetary Stance; Foreign Spillovers |
| Date: | 2025–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/123 |
| By: | Hermes, Felix; Schmeling, Maik; Schrimpf, Andreas |
| Abstract: | We analyze the international dimension of repo markets using novel euro area regulatory microdata. Our findings highlight the deep integration of funding markets across the Atlantic and the US dollar’s outsized role. Our paper documents five key facts: (1) US dollar repos by euro area entities account for approximately 40% of total volumes and are comparable in size to euro repos; (2) term repos (with maturities beyond one day) are quantitatively more relevant than commonly thought, especially non-centrally cleared ones; (3) repo markets have become more collateral-driven, involving diverse nonbank financial players and trading motives; (4) banks’ intragroup transactions form a large share of non-centrally cleared volumes; and (5) haircuts, even for riskier collateral, are often zero or negative, especially in euro trades. We show in two empirical applications that US monetary policy shocks spill over to euro repo rates and that negative haircuts arise from market power and collateral demand dynamics. JEL Classification: G12, G14 |
| Keywords: | bank intermediation, haircuts, repo market, US dollar funding |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253065 |
| By: | Schepens, Glenn; Core, Fabrizio; De Marco, Filippo; Eisert, Tim |
| Abstract: | We provide novel evidence on the supply-side transmission of monetary policy through a floating-rate channel. After a rate hike, firms with floating-rate loans keep prices elevated to offset higher borrowing costs, thereby reducing the effectiveness of monetary policy. Using monthly data on product-level prices, industry-level inflation rates and the euro-area credit register from 2021 to 2023, we find that the short-run impact of monetary tightening on inflation is 50% smaller when firms rely on floating-rate loans. This effect is stronger for firms that rely more on working capital to finance production and when they can easily pass on higher prices to their sticky customerbase (customer capital). Since firms with floating-rate loans face an increase in their financial burden, their loan terms are more frequently renegotiated, often resulting in reduced spreads and a shift from floating to fixed rates. Overall, if firms across the euro area had a lower reliance on floating-rate loans, inflation would have been 0.8 percentage points lower in 2022-2023. JEL Classification: E31, E52, G21 |
| Keywords: | floating-rate loans, inflation, market power, monetary policy transmission, product prices |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253064 |
| By: | Francesca Caselli; Allan Dizioli |
| Abstract: | This paper sheds new light on an overlooked channel of monetary transmission: the relationship between central bank interest rate policy and the economy’s trade position. It examines the impact of monetary policy on import dynamics through its effect on domestic demand composition. In 2023, the euro area faced a significant contraction in imports, despite resilient GDP growth, challenging traditional import elasticity models. While an import intensity-adjusted demand framework explains the Great Financial Crisis (GFC) trade-GDP disconnect, it fails to account for the euro area’s 2023 import shortfall, indicating that additional factors are at play. Incorporating lending rates into the regression significantly improves the model’s explanatory power for this recent period, underscoring the role of monetary policy in the recent decline in imports. Using local projection methods with high-frequency monetary policy shocks, we confirm that monetary tightening negatively impacts imports by suppressing demand components with higher import intensity. Furthermore, this effect is amplified when accounting for the cross-border synchronization of monetary policy. |
| Keywords: | Monetary policy; Demand Composition; Monetary policy synchronization; International trade; Euro Area |
| Date: | 2025–07–04 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/140 |
| By: | Kostarakos Ilias (European Commission - JRC); Marques Santos Anabela (European Commission - JRC) |
| Abstract: | This report focuses on the assessment of the economic performance of selected industrial ecosystems. IN particular, it offers an in-depth discussion of the developments across those ecosystems that exhibited the largest shares of total Gross Value Added in 2019, the year prior to the eruption of the pandemic-induced shock. The analysis is conducted across three levels of aggregation, namely EU-wide, country-level and the NUTS2 regional level. Moreover, an analysis of the recent trends in labour productivity for the ecosystems is offered. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202507 |
| By: | Hoffmann, Mathias; Mönch, Emanuel; Pavlova, Lora; Schultefrankenfeld, Guido |
| Abstract: | During the post-pandemic inflation surge, many central banks actively used communication about the inflation outlook as a policy tool to limit spillovers from realized to expected inflation. We present novel survey evidence showing that the ECB's guidance about the projected inflation path substantially lowers households' inflation expectations in times of unusually high inflation. A reassuring, positively framed non-quantitative communication style has the largest treatment effects on short-term expected inflation. Providing simple visualizations of the ECB's projected inflation path also significantly lowered inflation ex- pectations across horizons. We document substantial heterogeneity of these effects along key socio-demographic characteristics. Our findings suggest that, regarding their communication, central banks should 'keep it sophisticatedly simple (KISS)'. |
| Keywords: | Inflation projections, Central Bank Communication, Inflation Expectations, Randomized Control Trial, Survey Data |
| JEL: | E31 E52 E32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:319626 |
| By: | Carolina Ulloa-Suárez; Oscar M. Valencia; Jorge Guerra; Gustavo Sánchez |
| Abstract: | This paper investigates whether compliance with fiscal rules promotes public debt sustainability. Building on an extended theoretical framework of fiscal reaction functions to incorporate the impact of compliance, and leveraging newly available crosscountry compliance data, we assess whether governments that adhere to rules adjust their primary balances more strongly in response to rising debt and benefit from lower growth-adjusted interest rates. Focusing on two regions with contrasting institutional contexts, we find five key results. First, annual compliance strengthens fiscal adjustment in the European Union (EU) but not in Latin America and the Caribbean (LAC). Second, only sustained compliance improves debt responsiveness in both regions, especially in LAC. Third, the effect varies by rule type: all categories matter in the EU, while only expenditure rules are robust in LAC. Fourth, those effects remain even with high debt levels. Finally, sustained compliance reduces growth-adjusted interest rates in both regions, easing fiscal constraints. These findings suggest that compliance alone is not sufficient—its effectiveness depends on credibility, institutional setting, and persistence over time. |
| Keywords: | Public Finances, Sustainability, Fiscal rules, Compliance. |
| JEL: | E62 H61 H68 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2025-23 |
| By: | Boitier, Alvaro; Stracca, Livio |
| Abstract: | This paper investigates the impact of foreign exchange (FX) shocks on income inequality across 31 European countries from 2003 to 2021. Leveraging a unique database of household-level longitudinal data from the European Union Statistics on Income and Living Conditions (EU-SILC) and exchange rate data from the Bank of International Settlements, we investigate how currency devaluations and appreciations influence income distribution. Our findings indicate that a 1% currency devaluation decreases income inequality by 15 basis points within one year, while appreciations have the reverse effect. Contrary to previous studies focused on Latin America, which credit reductions in inequality to both labor mobility and union influence, our analysis identifies labor mobility as the primary factor in Europe. Furthermore, we discover that income changes are predominantly driven by variations in income per hour rather than hours worked. JEL Classification: F31, F41, F44 |
| Keywords: | EU-SILC, foreign exchange, income inequality, labor mobility |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253067 |
| By: | Schulz-Gebhard, Jan; Ipsen, Leonhard |
| Abstract: | We argue that most of the existing literature on inflation inequality misses an essential source of disparity by focusing on differences in expenditures while ignoring the effect of a price change on the purchasing power of households' incomes. As a remedy, we propose weighting price changes by income rather than by expenditure, as is commonly done. We theoretically derive why, under incomeweighting, lower-income households are disproportionately affected by any change in prices. This proposition is validated empirically for 21 EU countries using current sector-level input-output data. Our approach allows to reconcile the conflicting evidence in the literature on inflation inequality regarding structurally higher inflation perceptions and expectations of lower-income households. Ultimately, these findings call for a broad reassessment of current approaches to measuring inflation and income inequality. |
| Keywords: | Inflation, Inequality, Input-output Analysis, Europe |
| JEL: | E31 D31 C15 C67 D90 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bamber:319883 |
| By: | Simion Costea (GGI - GLOBAL GOVERNANCE INSTITUTE BRUSSELS, UMFST - George Emil Palade University of Medicine, Pharmacy, Science and Technology of Targu Mures) |
| Abstract: | L'EUROPE UNIE /UNITED EUROPE PARIS, EU Enlargement and Resilience: Legal and Economic Reforms on Georgia's Path to Integration, L'Europe unie/United Europe - special volume - no 22/2025 Paris-Cluj Napoca / coord.: Mihaela Daciana Natea, Simion Costea. - Cluj-Napoca: Napoca Star, 2025 ISBN 978-630-354-001-6, Print ISSN: 0248-2851, On line ISSN: 2743-4052 Linking ISSN (ISSN-L): 2743-4052 |
| Keywords: | EU POLICIES |
| Date: | 2025–03–22 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05010965 |
| By: | Sun, Yiqiao; de Bondt, Gabe |
| Abstract: | This study involves tasking ChatGPT with classifying an “activity sentiment score” based on PMI news releases. It explores the predictive power of this score for euro area GDP nowcasting. We find that the PMI text scores enhance GDP nowcasts beyond what is embedded in ECB/Eurosystem Staff projections and Eurostat’s first GDP estimate. The ChatGPT-derived activity score retains its significance in regressions that also include the composite output PMI diffusion index. GDP nowcasts are significantly enhanced with PMI text scores even when accounting for methodological variations, excluding extraordinary economic events like the pandemic, and for different GDP growth quantiles. However, the forecast gains from the enhancement of GDP nowcasts with ChatGPT scores are time dependent, varying by calendar years. Sizeable forecast gains of on average about 20% were obtained apart from the two most recent years due to exceptionally low forecast errors of the two benchmarks, especially the first GDP estimate. JEL Classification: C8, E32, C22 |
| Keywords: | chat generative pre-training transformer, nowcasting GDP, purchasing managers’ index (PMI), text analysis, zero-shot sentiment analysis |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253063 |
| By: | Shi, Mengjie; Zhang, Yupu; Meinerding, Christoph |
| Abstract: | The introduction of the EU Carbon Border Adjustment Mechanism (CBAM) has triggered statistically significant negative stock market responses for firms within the EU. Comparing EU customers that have non-EU suppliers in CBAM-affected industries with their non- treated peers in the control group, we find an extra cumulative abnormal return of up to -1.3 percentage points over our main five-day event window around December 13, 2022. Fur- thermore, we document substantial anticipatory market responses reflecting updated beliefs about broader climate policy developments going forward. This paper is the first to provide empirical evidence of carbon border tax impacts on firm valuations through international supply chains. Our findings contribute to the understanding of climate policy transmission through international trade networks and inform the debate on stranded assets resulting from environmental regulations. |
| Keywords: | Carbon border adjustment mechanism, carbon pricing, supply chain, event study, cumulative abnormal returns, trade |
| JEL: | G12 G14 G15 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:319628 |
| By: | Hinnerk Gnutzmann (Leibniz Universität Hannover); Arevik Gnutzmann-Mkrtchyan (Leibniz Universität Hannover & CESifo); Tobias Korn (Leibniz Universität Hannover & Heidelberg University) |
| Abstract: | Abstract Empirical models of trade agreements implicitly assume that withdrawal from a trade agreement has an equal and opposite trade effect as accession, i.e., symmetry. With increasing opposition to international economic cooperation, it becomes urgent to test this assumption. We analyze a quasi- natural experiment to explicitly test the symmetry assumption in the context of FTA termination using the gravity model. In 2004, Estonia joined the European Union, which mandated that it withdraws from its FTA with Ukraine. Carefully controlling for possible confounding effects of EU enlargement using a variety of methods, we isolate the FTA withdrawal effect and find strong support in favour of symmetry. Moreover, while import tariffs are part of the impact, the bulk of the effect comes from non-tariff effects of an FTA. General equilibrium estimates suggest that the FTA withdrawal led to a noticeable loss in members’ welfare. |
| Keywords: | Free trade agreement, withdrawal, gravity, welfare analysis, European Union, Estonia, Ukraine |
| JEL: | F13 F14 J13 F15 F17 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ost:wpaper:407 |
| By: | Margarita Lopez Forero (Banque de France, Université Paris-Saclay - Univ Evry, EPEE); Benjamin Michallet (Paris School of Economics) |
| Abstract: | This paper provides causal evidence on how multinational enterprises’ (MNEs) presence in tax havens translates into job cuts in France following the 2006 European Court of Justice (ECJ) judgement on the Cadbury-Schweppes case, which weakened member States’ controlled foreign company rules (CFC). Using French firm-level data over 2001 and 2014 we show that this weakening in European Anti-tax avoidance rules generates a sharp decline in employment in France in European MNEs having a pre-judgement presence in a European tax haven. We show that treated MNEs lose about 6% of their local employment after the ECJ decision. The effects are mainly concentrated in highly qualified workers and white collars (5% decline for each category). An event-study design shows that no effects are found for MNEs without a pre-judgement presence in a European tax haven, suggesting that it is the weakening in the CFC rules that fosters job cuts at home. Two plausible explanations for these findings are linked to: i) a decline in the cost of opacity allowing firms to restructure and carry out otherwise expensive mass layoffs in France and ii) more stringent rules specifically affecting †wholly artificial arrangements†(i.e. pure letter boxes), which increase the need to comply with substance rules and justify a presence in a European tax haven. |
| Keywords: | Tax Havens, Freedom of Establishment, Employment, Mass layoffs, Economic Substance |
| JEL: | D33 F23 H26 H87 O47 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:021 |
| By: | Geoffroy Dolphin; Gianluigi Ferrucci |
| Abstract: | The EU Carbon Border Adjustment Mechanism (CBAM) came into force on October 1, 2023, introducing reporting requirements for importers of covered products and, from 2026, an obligation to pay a fee on the carbon content of imported goods. This paper uses indices of ad valorem tariffs to assess the incidence of the EU CBAM on both EU member states and the EU’s trading partners. Overall, the direct impact on EU countries’ trade is estimated to be small, adding 0.1 percent to the value of EU imports when averaged across all imports, and 0.04 percent to the average cost of non-EU countries’ exports to the EU—with a maximum of 1.2 percent. However, effects could be sizeable for specific products such as iron, steel and aluminium, which can help explain CBAM’s political salience. Moreover, an expanded CBAM featuring full coverage of ETS sectors and a significantly higher carbon price could entail larger costs in the more distant future. |
| Keywords: | Carbon Leakage; Emissions Trading; Carbon Taxation; Trade Policy |
| Date: | 2025–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/125 |
| By: | von Ondarza, Nicolai |
| Abstract: | Europe must take more responsibility for its defence, if necessary without the United States, given Washington's volatility. In March 2025, the European Union (EU) launched a series of initiatives to strengthen defence industry and defence policy cooperation. With these new instruments also come the outlines of a new partnership strategy. Previous Brussels formats for defence industrial cooperation were only open to members of the EU and the European Economic Area (EEA). The Security Action For Europe (SAFE) Regulation - adopted by the EU in May 2025 - on the other hand, provides for a level of integration of Ukraine in this sector that comes close to that of an EU member. With the United Kingdom, the EU has created new opportunities for participation for the first time since Brexit via a security partnership agreement. The EU also wants to offer countries such as Canada, Turkey, Japan, South Korea, Australia and even India points of contact via partnership agreements. In order for this strategy to be successful, the EU needs to make itself a more attractive partner. |
| Keywords: | European Union, defence industry, security and defence policy, security partnerships, security partnership agreements, alliance strategy, partnership and alliance strategy, armaments policy, White Paper "Readiness 2030", Security Action For Europe, SAFE |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:320462 |
| By: | Camba-Méndez, Gonzalo; Darecki, Jan Jerzy; Manzanares, Andrés; Metra, Matteo; Vergnano, Riccardo |
| Abstract: | One of the main goals of launching the EU’s second Markets in Financial Instruments Directive (MiFID II) and the respective Markets in Financial Instruments Regulation (MiFIR) was to increase the transparency of transactions in financial markets. Prior to MiFID II, transparency requirements in financial markets were limited mostly to equities traded in regulated markets. Following MiFID II, transactions now need to be publicly reported for a broader range of financial assets. Furthermore, disclosures on financial transactions are not restricted to those transactions executed in regulated markets but apply also to those executed over the counter. Importantly, this information should be made available free of charge, ensuring non-discriminatory access, within the 15 minutes following the transaction. The published information should also be machine-readable. The purpose of this paper is to show how a relatively simple IT tool may be devised that gathers data on market prices and transacted volumes published in compliance with MiFID II. We steer our simple IT tool towards retrieving data on those financial assets that are eligible for use as collateral in Eurosystem credit operations. This includes those assets eligible for outright purchase under the various monetary policy programmes launched by the Eurosystem. In view of the importance of UK financial markets when it comes to trading in Eurosystem eligible marketable assets, our tool also covers transactions and quotes reported by UK trading venues and investment firms in compliance with UK MiFIR. Apart from the merits and potential of our IT tool, this paper documents some of the tool’s shortcomings related to processing the posted MiFID II and UK MiFIR raw data. It also covers some of the deficiencies associated with the data. Increased market transparency contributes to deeper and more integrated financial markets, potentially supporting economic growth. […] JEL Classification: C81, D40, G10 |
| Keywords: | ECB eligible assets, financial market prices, MiFID II |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbsps:202551 |
| By: | Lehmici Hicheme (Swiss UMEF University of Applied Sciences) |
| Abstract: | This article examines the erosion of European sovereignty due to growing U.S. influence, particularly in military, economic, and strategic spheres. It traces American involvement in shaping the European project from its inception, focusing on NATO's role as a tool for U.S. power projection and the weakening of European defense autonomy through military dependence on American technology. The article also explores how sanctions on Russia, the energy crisis, and Europe's alignment with U.S. policies limit its strategic autonomy in the context of rising global powers like the BRICS. The analysis is supported by historical and contemporary data, highlighting the challenges Europe faces in regaining sovereignty in an increasingly multipolar world. |
| Keywords: | European sovereignty, American domination, Transatlantic relations, Hegemony, Strategic autonomy, NATO, European Union, Geopolitics of sovereignty, Decline of Europe, Multipolar world order, Economy |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05074136 |
| By: | Danyal Arnold; Shania Bhalotia; Swati Dhingra |
| Abstract: | Deglobalisation policies promote the vision that pulling back from economic integration can help correct international imbalances and reposition national economies for renewed prosperity. A core vision of Brexit was to transform the UK to a new Global Britain - a sovereign trading nation free from EU constraints, and capable of reinvigourating its historical comparative advantage in the world economy. Central to this was the idea of "taking back control" of regulations, particularly in high-value-added services where EU rules were seen as limiting the UK's longstanding global competitiveness. We develop granular and comprehensive measures of UK's departure from regulatory alignment with the EU, and find that they have introduced significant new bilateral trading frictions that have not been offset by increased competitiveness in markets beyond the EU. UK exports to the EU in services that have got these new Brexit barriers have declined by 16 percent relative to other bilateral trade flows. Overall, UK services exports are estimated to be 4 to 5 percent lower, indicating that five years on, Brexit has fallen short of delivering its vision of Global Britain. |
| Keywords: | deglobalisation, services, non-tariff barriers, Brexit |
| Date: | 2025–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2110 |
| By: | Winter, Richard (University of Mannheim); Doerrenberg, Philipp (University of Mannheim); Eble, Fabian (University of Mannheim); Rostam-Afschar, Davud (University of Mannheim); Voget, Johannes (University of Mannheim) |
| Abstract: | We provide novel evidence on the incidence of business taxes using comprehensive survey and experimental data from German firms. Leveraging randomized variation in hypothetical tax changes, we find that the incidence of profit taxes is highly asymmetric. Tax decreases are more likely to benefit workers and stimulate investment, whereas tax increases tend to be passed on to consumers through higher prices and absorbed by firm owners through reduced profit distributions. Moreover, by varying the magnitude of the tax changes, we demonstrate that worker incidence increases with the absolute size of the tax change, partially offsetting the burden on firm owners. |
| Keywords: | investment, firm behavior, tax incidence, corporate tax, payout, wages |
| JEL: | D22 H00 H22 H25 J23 J30 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17983 |
| By: | Schenuit, Felix |
| Abstract: | In the discussions being held at EU level about the 2040 mitigation target, the role of international credits has recently taken centre stage. The new momentum in those discussions is due in part to the German government having announced its support for a mitigation target of a net 90 per cent greenhouse gas emissions reduction is conditional on up to 3 per cent of the target being achieved through international credits. How the target is to be drawn up and what it means for EU climate policy instruments will inevitably give rise to conflicts during the forthcoming legislative processes. Despite open questions about the quality, additionality and availability of the credits, it makes sense to hold a timely debate about their possible functions so that, if necessary, policy instruments can be further developed and corrections made later. It would be expedient to ensure that the use of international credits is focused on durable carbon dioxide removal technologies that are scalable only to a limited extent within the EU itself. Not only could international removal credits make a contribution to overcoming the challenges on the path to greenhouse gas neutrality by counterbalancing residual emissions; the creation of institutionalised demand for high-quality removal methods would also lay the foundation for achieving net-negative emissions. |
| Keywords: | EU mitigation target for 2040, carbon dioxide removal technologies, greenhouse gas neutrality, climate policy, Net-zero emissions, Carbon Management, CCS, CCU, CDR, UNFCCC |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:320461 |