The literature on the economic origins of political radicalism revolves largely around the ‘China shock’. Yet, trade not only causes shifts in the labour market but can also affect living standards via the expenditure channel. This column shows that the relative consumption loss of the European middle classes, who benefit less than low-income consumers from […]
The unprecedented surge in prices since 2021 led the ECB to embark on the fastest tightening cycle in the euro area’s history. This column analyses the lags and strength of monetary policy transmission to output and inflation over the two decades in the euro area. It shows that the peak effects on real GDP and […]
Artificial intelligence is transforming academic research, raising both opportunities and concerns. This column shows how large language models can generate entire research papers, integrating empirical findings with plausible theories. While this boosts efficiency, it also threatens academic integrity, making it harder to distinguish rigourous scholarship from AI-generated content. Existing safeguards may not scale, requiring updated […]
Some consumers are over-optimistic about their future income and underestimate the probability of experiencing negative income shocks, while others have more accurate (‘rational’) beliefs. This column introduces a framework that considers behavioural and rational borrowers to assess the effects of potential regulatory interventions. Over-optimists benefit from being partially pooled with (‘cross-subsidised’ by) rational borrowers. Small-scale […]
Europe’s labour productivity gap with the US has widened since the mid-1990s and again since the Covid pandemic. This column uses comprehensive cross-country firm-level and sector-level data to trace the roots of Europe’s productivity problem. It shows that productivity growth of Europe’s large leading firms has been trailing that of US counterparts. Young firms in […]
As governments worldwide grapple with labour shortages and systemic budget shortfalls, the question arises of how unemployment insurance policies potentially contribute to this imbalance by increasing and extending nonemployment. This column argues that recent debates around unemployment insurance reform, which often focus on the effect among job seekers, overlook potential unintended consequences among the employed. […]
Though ‘buy now, pay later’ loans are increasingly popular, critics argue that they encourage high costs and unsound borrowing. This column examines how such services influence conventional bank credit markets. Using loan-application data from a Nordic bank that also provides both traditional consumer loans and ‘buy now, pay later’ – allowing applicants’ creditworthiness to be […]
Germany’s manufacturing sector has struggled since 2021 due to rising energy costs, weak global demand, and a declining automotive industry. This column describes how higher gas consumption in energy-intensive industries, trade fragmentation, and competition from China have hit Germany harder than other euro area economies, and shows that shocks in German industry significantly impact neighbouring […]
The discussion of the monetary policy response to climate change has typically focused on whether central banks should take action and what types of adjustments they could make, with comparably less focus on the practical challenges in making such adjustments. This final column in a three-part series reviews some prominent examples of central banks having […]
As artificial intelligence is becoming a top priority for businesses and policymakers worldwide, understanding what makes a country competitive in AI-driven industries is crucial for ensuring success in the global economy. This column uses US import data over the period 1999–2019 to study the determinants of comparative advantage in AI-intensive industries. It shows that more […]
