Financial institutions

Longer-term challenges for fiscal policy in the euro area

This article discusses the challenges for public finances arising from (i) demographic ageing, (ii) increases in defence expenditure, (iii) digitalisation and (iv) climate change. While these changes are likely to occur, the associated fiscal costs are difficult to estimate with precision. Nonetheless, as far as possible prudent fiscal policy should already be taking these into account.

The post-pandemic recovery – why is the euro area growing more slowly than the United States?

Growth has been notably weaker in the euro area than in the United States for decades. This box considers several factors that have contributed to the difference observed since the start of the pandemic, reflecting the fact that the euro area has seen less of a stimulus from private consumption, coupled with weaker labour productivity growth. The euro area has also felt a greater impact from the pandemic and Russia’s war against Ukraine.

The wage-price pass-through across sectors: evidence from the euro area

This paper studies the pass-through from wages to producer prices using sectoral disaggregated data for the euro area. We find a positive and statistically significant wage-price pass-through that reaches 50% after three years, which differs across sectors. The wage-price pass-through in private servicesis significantly higher than in industry and takes longer before reaching its peak.

Productivity-enhancing reallocation during the Covid-19 pandemic

This paper studies how the Covid-19 pandemic and the extensive job retention support that accompanied it affected productivity in Europe. The focus is on the reallocation channel and productivity-enhancing reallocation of jobs, following Foster et al., 2016. An extensive micro-distributed analysis of firm-level data for 11 euro area countries is used. The unique firm-level datasets are constructed by merging balance-sheet and income-statement data with policy support data.

The wage-price pass-through across sectors: evidence from the euro area

This paper studies the pass-through from wages to producer prices using sectoral disaggregated data for the euro area. We find a positive and statistically significant wage-price pass-through that reaches 50% after three years, which differs across sectors. The wage-price pass-through in private servicesis significantly higher than in industry and takes longer before reaching its peak.

Productivity-enhancing reallocation during the Covid-19 pandemic

This paper studies how the Covid-19 pandemic and the extensive job retention support that accompanied it affected productivity in Europe. The focus is on the reallocation channel and productivity-enhancing reallocation of jobs, following Foster et al., 2016. An extensive micro-distributed analysis of firm-level data for 11 euro area countries is used. The unique firm-level datasets are constructed by merging balance-sheet and income-statement data with policy support data.

Will the euro area car sector recover?

Since the start of 2018 automotive production and exports in the euro area have both contracted by about 20%, while they have fared better in China, Japan, Korea and the United States. The current weakness is mostly a result of declining demand for combustion engines in the context of net zero emission targets and hesitancy to purchase hybrid and electric vehicles. Other factors, such as supply chain disruptions, adverse energy supply shocks and monetary tightening have also negatively contributed to the drop in automotive production.

The impact of environmental regulation on clean innovation: are there crowding out effects?

We examine the extent to which environmental regulation affects innovation and which policy types provide the strongest incentives to innovate. Using a local projection framework, we estimate the regulatory impact on patenting activity over a five-year horizon. As a proxy for environmental policy exposure, we estimate firm-level greenhouse gas emissions using a machine learning algorithm. At the country-level, policy tightening is largely associated with no statistically significant change in environmental technology innovation.

The impact of environmental regulation on clean innovation: are there crowding out effects?

We examine the extent to which environmental regulation affects innovation and which policy types provide the strongest incentives to innovate. Using a local projection framework, we estimate the regulatory impact on patenting activity over a five-year horizon. As a proxy for environmental policy exposure, we estimate firm-level greenhouse gas emissions using a machine learning algorithm. At the country-level, policy tightening is largely associated with no statistically significant change in environmental technology innovation.

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