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‘Second-generation‘ fiscal rules: From stupid to too smart

Less than five years into the great euro experiment, the president of the European Commission at the timejudged Europe‘s limit on public deficits to be "stupid". A more intriguing question, however, is whether numerical constraints on broad indicators of fiscal performance can contain politicians‘ penchant for borrowing too much and at the wrong time. This column summarises lessons from recent research on fiscal rules, including the n

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Anatomy of a trade collapse: The UK, 1929-33

The literature has identified several stylised facts which characterise the nature and causes of the collapse in international trade during 2008 and 2009. This column uses detailed, commodity-specific information on UK imports between 1929 and 1933 to document several similarities between the trade collapses of the Great Depression and the Great Recession. The findings are in line with theories emphasising the composition of expenditure changes d

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Bitcoin, Vollgeld, and popular views of money

On 10June 2018, Switzerland will be the first countryto have a referendum on the introduction of Sovereign Money (‘Vollgeld‘).This column argues that theVollgeld project and cryptocurrencies such as Bitcoin build on popular fantasies about money that are disconnected from the actual operation of the current monetary system. Unfortunately, the latter‘s features remain underexplored even among economists.

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Fiscal rules and the role of the Commission

The proposals on fiscal frameworks and rules in the recent CEPR Policy Insight on euro area reformshowcase the multiple dimensions of the fundamental dilemmaswe are confronted with in the governance of the euro area. This column, part of the VoxEU debate on Euro Area Reform, looks atthe challenges to the central role of the Commission that have arisen as the rules-based fiscal framework has been severely compromised.

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Monopsony in online labour markets

Monopsony refers to the market power that employers wield in labour markets. This column explores monopsony power in online labour markets, using observational and experimental data from Amazon‘s Mechanical Turk platform. Both datasets suggest an employer labour supply elasticity of close to 0.1, suggesting that a 10% reduction in wages would only see a 1% drop in willing labour. This points to substantial employer market power in a suppose

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Euro area reform: No deal is better than a bad deal

The recent proposals for euro area reform from a team of French and German economists have initiated an intensive debate. This column,part ofVoxEU‘s Euro Area Reform debate, argues thatthe specific insolvency risk of euro area membership is the main risk that should be covered by joint risk sharing, and that the modest proposals for public and private risk sharing are insufficient in this regard.

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The levelling effects of good quality early childcare

In many societies and for many families, the responsibility for looking after very young children during the day has passed from parents to third-party care providers, prompting a hotly contested debate about the merits of early childcare and how it affects childhood development. This column exploits an expansion of childcare provision in Germany to show that early childcare can be a major contributor to eliminating inequality of opportunity and

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When quotas reduce discrimination

Affirmative action policies are widely used to tackle the underrepresentation of certain groups. However, the efficiency of these policies is fiercely debated. This column uses novel data from India to explore how affirmative action quotas affect everyday discrimination. Local political council quotas for marginalised castes are found to reduce caste-based discrimination by around one fifth, but the effect disappears when the quotas are removed.

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The populism backlash: An economically driven backlash

There has been some disagreement over the roots of the recent rise of populism in Europe. This column examines variations in exposure to economic shocks and in ability to react to them in different regions of Europe to show that the cultural backlash against globalisation has been driven by economic woes. In regions where globalisation was present but that have benefited economically, there has been no such backlash and the populist message has r

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Social multipliers in criminal behaviour

Does a person‘s criminal behaviour induce others to commit crime? This column exploits the fact that young fathers in Denmark are less likely to continue their criminal careers if their new-born child is a boy rather than a girl to identifyspillovers in criminal behaviour. The analysis shows that neighbourhood peers of new fathers of boys become less likely to commit crime themselves than neighbourhood peers of new fathers of girls.The find

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Shining a light on PPP measurement

Purchasing power parities have been one of the successes of economic measurement. This column asks whether these adjustments are a better measure of the underlying economy than market exchange rates, whether our successive estimates of PPP are improving, and whether we should discard past PPPs when new data become available. Using a regression of night-time lights on PPP-adjusted GDP data, it argues that the answers are yes, yes, and (for now) ye

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Monetary policy and inequality: A new channel

There is ongoing debate over the welfare implications of the unorthodox measures adopted by central banks in the wake of the Global Crisis. Using US data, this column explores the implications of monetary policy for income and wealth inequality. Unexpected monetary expansions are found to increase inequality between high- and low-skilled workers. In terms of stabilising the economy, strict inflation targeting is found to be the most successful po

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A quantitative analysis of multi-party tariff negotiations

It is widely accepted that the most-favoured nation rule a fundamental feature of WTO negotiations hasboth advantages and disadvantages. This column considers the empirical outcomes of tariff bargaining under the most-favoured nation rule versus outcomes where this rule is abandoned. It finds that the rule substantially increases welfare at the global level.

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