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on European Economics |
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Issue of 2026–03–23
nine papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Hegemann, Hendrik |
| Abstract: | The Euro Area experienced historically high inflation in 2022, with energy prices playing a central role. This paper examines the joint impact of various energy price shocks on inflation in the Euro Area, with a focus on the period encompassing the COVID-19 pandemic and the Russia-Ukraine war. Using a structural VAR model, the analysis identifies shocks to gasoline, diesel, jet fuel, natural gas, and electricity prices and evaluates their effects on headline and core inflation. Historically, before the pandemic, gasoline price shocks had the most substantial impact on the Euro Area HICP, while the effects of other energy price shocks were relatively minor. Spillover effects to non-energy goods were very limited, implying negligible effects on core inflation. Extending the sample to May 2023 reveals a notable change in these relationships. In particular, natural gas price shocks become substantially more important and exhibit significantly more persistent effects on inflation. In contrast to previous findings for the United States, the results suggest that energy prices, especially natural gas price shocks, played a major role in the surge in the HICP and core HICP during 2021 and 2022 within the Euro Area. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:imfswp:338106 |
| By: | Rodrigo Cuenca De Armas (Department of Economics, Universitat Jaume I, Castellón, Spain); Maria Teresa Balaguer-Coll (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | This study explores the risk of financial development traps in European regions by analysing the performance of the financial sector in terms of productivity and its relationship with GDP per capita. Using data for 226 NUTS2 regions over the period 2000–2021, we construct two original indicators adapted from Diemer et al. (2022) to a sectoral framework, capturing respectively the cyclical and structural dimensions of decoupling between financial sector dynamics and regional economic performance. The analysis reveals that a non-negligible share of European regions show signs of entrapment, with considerable heterogeneity both between and within Eastern and Western Europe. Results also point to a reduction in the share of trapped regions between the crisis period (2008–2015) and the subsequent recovery phase (2016–2021), alongside a notable inversion in the relative exposure of Eastern and Western European regions. Our findings highlight the importance of assessing the functional orientation of the financial sector (rather than its mere size or depth) and suggest that institutional and sectoral factors play a critical role in shaping regional financial resilience beyond geographic location. |
| Keywords: | financial development, development traps, regional inequalities, productivity, employment, convergence |
| JEL: | R11 R58 O16 O18 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:jau:wpaper:2026/06 |
| By: | Costanza Bosone; Leonardo Gambacorta; Paolo Giudici; Enisse Kharroubi; Ulf Lewrick |
| Abstract: | We study how robot adoption and investment in information and communication technologies (ICT) jointly shape sectoral employment across 20 European Union (EU) countries over the period 1995-2020. Using a cross-sectional regression design that interacts changes in robot adoption with ICT investment, we find that increases in robot adoption are associated with higher employment in sectors that either entered the period without robots or invested little in ICT. By contrast, robot adoption is associated with lower employment in sectors that initially had some robots and high ICT investment. These findings highlight the importance of both initial conditions and complementary technology investment in shaping labour-market outcomes, suggesting that the employment effects of technology are highly context-dependent. |
| Keywords: | ICT capital, employment, labour market, technology adoption, European Union |
| JEL: | E23 O33 J24 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1334 |
| By: | Berg, Tobias; Lindner, Vincent; Rößler, Denise |
| Abstract: | After years of investigation, the digital euro project has entered the legislative stage. Geoeconomic developments, especially the full-scale invasion of Ukraine in 2022 and the following regime of sanctions against Russia, as well as the economist-nationalist policies of the second Trump administration, have reinforced arguments for EU monetary and infrastructure sovereignty. At the same time, however, the digital euro project is under pressure from private solutions, stablecoins and the European Wero initiative that claim to provide similar benefits as the digital euro. While these may develop into useful tools for payments, they fail to provide the same features, such as universal acceptance and legal certainty, competitive neutrality, and - crucially - EU sovereign control over settlement infrastructure. This Policy Letter calls upon EU policymakers to reject the false dichotomy between private solutions and a public infrastructure and to make swift progress on the legislation and implementation of the digital euro. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safepl:338129 |
| By: | Andrea Gasparroni (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (UNIVPM)) |
| Abstract: | This paper investigates how different sources of income inequality shape individual preferences for redistribution across European regions. Using EU-SILC microdata and the intergenerational transmission of disadvantages modules (2005, 2011, and 2019), we construct regional measures of income inequality of opportunity across 132 European regions. These indicators are combined with individual-level data from the European Social Survey to examine how regional opportunity structures and individual exposure to disadvantaged circumstances affect redistributive preferences. Our results show that inequality of opportunity is a strong and robust predictor of support for redistribution, while overall income inequality and inequality of effort display weak or insignificant effects. Individuals living in regions with higher inequality of opportunity are significantly more likely to support redistributive policies. In addition, we construct an individual-level opportunity disadvantage index capturing the probability of having experienced limited opportunities during income formation. This measure is also strongly associated with redistributive preferences, suggesting that both contextual and personal exposure to unfair inequality shape attitudes toward redistribution. |
| Keywords: | Inequality, Preferences for Redistribution, Inequality of Opportunity, Intergenerational Mobility. |
| JEL: | D63 D31 D10 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:anc:wpaper:506 |
| By: | Phoebe Koundouri; Maria Chourdaki; Konstantinos Dellis; Kit England |
| Abstract: | Europe, as the fastest warming continent, faces elevated climate risks coupled with a climate adaptation finance gap, defined as the difference between the costs of achieving an adaptation target and the amount of finance available for adaptation (UNEP, 2024). The EU needs to invest almost EUR 70 billion per year in climate adaptation up to 2050 (Monteleone et al., 2026). However, current funding relies heavily on public sources, highlighting the urgent need for private sector involvement (CPI, 2023). Regions and cities in the EU face barriers in their effort to muster financial resources to translate adaptation strategies into tangible projects to promote climate and socioeconomic resilience. The Adaptation Investment Cycle (AIC), developed in the HEU Pathways2Resilience project, is a six-step process designed to help regions overcome barriers to financing climate adaptation by offering a step-by-step approach that builds local capacity and bridges gaps between planning and implementation. This paper maps the steps of the AIC to common adaptation finance barriers -economic, financial, awareness, behavioral, and institutional-, highlights their impact on raising and leveraging capital to strengthen regional resilience and assesses innovative financial sources and instruments tailored to regional needs. Finally, we emphasize concise frameworks for sub-national adaptation finance and contribute to the literature on regional resilience. |
| Keywords: | climate finance, climate adaptation, adaptation finance barriers, Adaptation Investment Cycle (AIC), public sector, investors |
| Date: | 2026–03–10 |
| URL: | https://d.repec.org/n?u=RePEc:aue:wpaper:2608 |
| By: | Juan Mejino-Lopez; Guntram Wolff |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/392156 |
| By: | Guntram Wolff; Armin Steinbach; Jeromin Zettelmeyer |
| Abstract: | Gaps in European military equipment are substantial compared to Russia s military build-up. The European defence market is fragmented and weakened by home bias in procurement, low order numbers and technological gaps. With the US now retreating from its role as Europe s guardian, greater European cooperation will be essential to close technological gaps and reduce rearmament costs. Procurement will need to be pooled to reduce market fragmentation and avoid that additional demand for defence goods will mainly drive up prices. Better-integrated defence markets would both increase competition and facilitate entry of new defence technology firms. The combination of integrated markets and scaled-up procurement could halve unit costs. This article discusses how this could be achieved either by scaling instruments in the current institutional framework or by creating a new intergovernmental institution, the European Defence Mechanism. |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/393996 |
| By: | König, Jörg; Meyer, Tim |
| Abstract: | Die Pläne zur Einführung eines digitalen Euros werden immer konkreter. Im Mai 2026 soll das Europäische Parlament über das Vorhaben abstimmen. Bis Ende des Jahres soll der europäische Gesetzgebungsprozess abgeschlossen sein. Der digitale Euro dürfte jedoch vor allem ein Prestigeprojekt europäischer Institutionen sein, dessen Nutzen nur schwer ersichtlich ist. Die Einführung des digitalen Euros hätte mit hoher Wahrscheinlichkeit Wettbewerbsverzerrungen und Risiken für das Finanzsystem zur Folge. Zudem könnte sie zu einer sukzessiven Verdrängung des Bargelds führen, die diskret von den unterschiedlichen interessierten Seiten vorangetrieben wird. Entgegen der Hoffnung seiner Befürworter dürfte der digitale Euro zudem kaum dazu in der Lage sein, technologischen Fortschritt zu befördern oder die Rolle des Euros als globale Reservewährung zu stärken. Deshalb bedarf es eines ergebnisoffenen Prozesses ohne Zeitdruck, an dessen Ende auch die Entscheidung stehen kann, den digitalen Euro nicht einzuführen. Vielmehr sollten andere Optionen in den Entscheidungsprozess einbezogen werden: Neben der Möglichkeit, der EZB die Bereitstellung der digitalen Infrastruktur anzuvertrauen, sollten private Initiativen Vorrang bei der Entwicklung digitaler Zahlungsdienstleistungen erhalten. Denn eines scheint offensichtlich: Europas Rückstände und Abhängigkeiten bei digitalen Zahlungssystemen lassen sich nicht durch eine mehr oder weniger staatliche Digitalwährung beheben, sondern erfordern Vertrauen in marktwirtschaftliche Prozesse und Offenheit gegenüber privaten Innovationen. |
| Keywords: | Bargeld, Digitalisierung, Europa, Finanzmärkte |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:smwpos:338087 |