Carbon pricing has become a central tool in Europe’s strategy to mitigate climate change. This column presents new evidence on the impact of carbon pricing across European regions. The authors find that an increase in carbon prices is associated with a significant decline in output and a rise in unemployment. Carbon pricing also has important […]
The transition to clean energy will require a significant reallocation of technological investments away from fossil energy sources towards cleaner alternatives. This column investigates whether leveraging the technological capabilities in the fossil energy supply chain can help incentivise this reallocation with the required speed. Using data from Norway, the authors highlight an underexplored channel for […]
How do monetary policy shocks affect workers’ wages and employment? This column looks at the role that firms play in determining the wage and employment responses to such shocks. The authors show that, when it comes to employment, young firms are especially sensitive to monetary policy shocks, and that the wages of workers at large […]
The fight against inflation has largely been won in the euro area, after a sharp but short-lived inflation episode over 2021-2023. This column argues that energy prices can explain the dynamics of inflation over the recent period better than the interest rate policy of the ECB. At the same time, higher interest rates led to […]
Floods are the costliest type of natural disaster in Europe, but little is known about whether adaptation investments such as flood defences can shield the economy. This column studies how floods affect output and prices at the sectoral level in England and the effect of adaptation investments. Floods affect sectors differently, acting as both supply […]
Kimberly Hilliard, co-founder of a five-year-old travel agency in Maryland, says at this time of year she usually fields up to 10 inquiries a week from clients eager to book vacations, but for much of the past month her phones have gone quiet. The unusual lull in Hilliard’s business followed a plunge in U.S. share […]
It is down more than 4% on both the euro and the yen through April, though bounced at the end of last week on an apparent conciliatory shift in the tone of U.S.-China relations. The dollar held steady on Monday as investors waited warily on news of U.S. trade policy and braced for a week […]
Faced with major security challenges, Europe is preparing to boost its defence capacity. To defend itself against Russia without the United States, Europe needs to rapidly increase spending from the current level of about 2 percent of GDP to an estimated 3.5 percent of GDP – an increase of about €250 billion annually (Burilkov and […]
In recent years, banks’ credit line exposure to non-bank financial institutions has grown significantly. This column analyses the implications by focusing on a specific type of such institutions – real estate investment trusts. These trusts are significant investors in commercial real estate and therefore exposed to rising interest rates and economic slowdowns. They have higher […]
Until the late 19th century, states raised most of their government revenues from import tariffs. This column asks whether the practice could work today. A side effect of taxes is that they discourage the economic activity that they are assessed on. Tariffs are taxes on imports and no different: they shrink trade. The authors allow […]
