Tariffs and foreign direct investment – a nuanced relationship

Tariffs have re-emerged as a key policy tool amid rising protectionism, renewed industrial policy activism and growing geopolitical fragmentation. This article analyses the conditions under which tariffs can encourage new greenfield foreign direct investment (FDI) projects, with a focus on the manufacturing sector. The results indicate that tariffs can encourage “tariff-jumping” greenfield FDI projects aimed at serving local markets.

What’s new in the HICP? The 2026 classification update and its implications for inflation analysis

The European Central Bank (ECB) defines its price stability target in terms of the HICP, the official measure of consumer price inflation in the euro area. Several changes have been implemented in the compilation of the HICP as of the January 2026 data release. Most importantly, the European Classification of Individual Consumption according to Purpose (ECOICOP) version 2 has been introduced for consumer goods and services. This box describes the main features of the new classification and outlines its impact on the HICP.

Assessing cross-border integration of equity markets in the euro area: evidence from a gravity model

Euro area financial markets hold significant untapped potential: deeper cross-border integration would improve the allocation of savings, lower the cost of capital and strengthen capacity to finance investment and innovation. To assess how the integration of euro area equity markets has evolved over time, this box applies a structural gravity model, the workhorse of international trade analysis, to bilateral euro area equity holdings.

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