Europe lags behind in innovation. This column describes how its industry seems stuck in a middle-technology trap in which it does not pay to leave the beaten path. The authors argue that EU innovation policy should support disruptive innovation to break this path dependency, but this needs profound reforms, both in terms of its structure […]
Amid a global surge in populism, political pressures on central banks to lower interest rates have escalated, driven by populist politicians’ preferences for low rates to fuel short-term, growth-oriented policies. This column explores the impact of this heightened political pressure on financial market and central bank behaviour. It finds that political pressure for low interest […]
Amid recent global shocks and increasing geopolitical tensions, the debate surrounding the future of global value chains and economic integration has intensified. This column introduces a new open-access dataset of ready-to-use positioning indicators, calculated for a wide array of countries, including most developing nations, and sectors, covering an extensive period. These indicators are derived from […]
Public policies can have direct effects on firms, but also propagate through production networks. This column studies the spillover effects through supply chains of a bonus depreciation tax policy in Japan. Beyond the direct effects, it finds strong positive effects on upstream firms, but not on downstream firms. Furthermore, it shows that large suppliers are […]
The past few decades have seen a remarkable surge in populism across Western democracies. This column evaluates how mainstream parties might counter populism by estimating the short- and long-term effects of an anti-populist campaign in Italy. The findings suggest that while countering populism using its own tactics can yield immediate benefits to mainstream politicians, such […]
Interest in wealth taxation has grown in recent years as a way to combat inequality and raise revenue, but evidence on the responses to wealth taxes has so far been sparse. This column exploits changes in Colombia’s wealth taxation regime to examine behavioural responses. Taxpayers promptly reduced their reported wealth to fall below higher tax […]
Household debt dynamics are widely recognised as an important driver of boom-bust cycles, but corporate debt has received less attention. This column studies the role of firm debt in macroeconomic fluctuations using a large historical cross-country dataset. The authors show that corporate debt plays a crucial role in boom-bust cycles, financial crises, and sluggish macroeconomic […]
Societies around the world are become increasingly diverse as international migrant flows increase. Public education is one of the primary institutions that can foster intergroup cooperation and trust, improving social cohesion in these countries. This column uses trust-based experiments to study the opposing forces of fractionalisation and polarisation operating within diverse classrooms in German schools. […]
The decision to enrol in higher education and what field of study to follow are among the most consequential choices an individual makes. These choices have large impacts on later-life earnings (Kirkeboen et al. 2016, Ketel et al. 2016, Dahl et al. 2020, Andrews et al. 2022), and other socioeconomic outcomes such as marriage, fertility, […]
Most studies on central bank digital currencies focus on the effects after they become well established. This column analyses the macroeconomic effects in the transition to the new equilibrium. Using a two-country model with financial frictions, it shows that, under plausible assumptions for demand for central bank digital currency, the transition is characterised by volatility […]
