Recent VoxEU Content en Terrorism and voting: The rise of right-wing populism in Germany Scholars looking to explain the rise of authoritarian populism in liberal democracies over the last half century frequently invoke economic insecurity and cultural conflict, but the role of actual violence is largely overlooked. This column questions whether acts of terror can shift a country’s political landscape. Assessing both successful and failed terror attacks across German municipalities, the authors find that successful attacks lead to significant increases in the right-wing populist party’s vote share in state elections, despite the fact that most attacks were committed by right-wing nationalists against migrant communities. 2023-05-31T00:00:00+0000 83df7de9-c85f-4245-8680-669c063c3dd8 VoxEU Column The gender wellbeing gap Evidence is emerging of a sizeable and persistent gender wellbeing gap. This column uses data from eleven surveys from 167 countries across the world to demonstrate the exisitence of this gap as well as an apparent ‘female happiness paradox’, with women reporting worse mental health than men, lower momentary wellbeing, and less satisfiaction with most domains in their life, yet at the same time expressing higher life satisfaction and higher happiness. 2023-05-31T00:00:00+0000 David Blanchflower, Alex Bryson ed4fee3b-aa1d-4740-98ac-01656dd475b9 VoxEU Column Fiscal consequences of corporate tax avoidance Multinational corporations routinely shift their profits to tax havens globally in order to benefit from low-tax environments. This column uses German municipal data on trade and property tax rates to study the consequences of such corporate tax avoidance on government tax revenues and tax revenue structures. It shows that increases in trade tax rates lead to lower levels of trade tax revenue in places exposed to multinationals with at least one tax haven. Furthermore, municipalities exposed to profit shifting do not compensate for lost revenue with higher property tax revenues or rates, which leaves them with lower tax revenue overall. 2023-05-30T00:00:00+0000 Katarzyna Bilicka, Evgeniya Dubinina, Petr Janský 208deb0c-8e80-4c77-8c99-6a9f4cefdef0 VoxEU Column Another systemic debt crisis in low-income countries can be prevented – if we act now There are growing concerns that low-income countries may be in or close to a systemic debt crisis. This column argues that while debt distress indicators in these countries have been steadily rising over the last decade, they remain substantially below their levels in the mid-1990s and do not yet indicate a systemic crisis of the type that would require a wholesale, coordinated Heavily Indebted Poor Countries-style initiative. However, the window to prevent the next big crisis may close fast, if we don’t act now. 2023-05-30T00:00:00+0000 Chuku Chuku, Guillaume Chabert, Marcos Chamon, Dalia Hakura, Jeromin Zettelmeyer 5e398074-a4a0-48dd-97b6-d29c9d72655b VoxEU Column How declining population growth might portend a future of increasing resource scarcity In the coming century, the global economy will experience an unprecedented convergence of two trends, as the world’s population reaches its peak while simultaneously approaching near-zero levels of growth – a combination that will invert both the population pyramid and dependency rates. This column examines this transformation within the context of changes to the global economy’s fundamental methods of production. High levels of dependency and the relative scarcity of labour may induce a shift in the methods of production from labour-based R&D back to a reliance on natural resources. 2023-05-29T00:00:00+0000 Pedro Naso, Timothy Swanson f4a1c6ce-3549-4d6a-8fef-7c2c8fb687de VoxEU Column The impact of EU sanctions on Russian imports The EU imposed extensive sanctions on Russia following the invasion of Ukraine in February 2022. This column analyses the impact of trade bans on Russian imports by using a unique dataset of EU trade restrictions, Russian customs data, and mirror trade statistics. It finds that flows from sanctioning countries are close to zero for restricted goods and the increase in imports from non-sanctioning countries has substituted no more than one-fourth of the missing shipments. However, there are signs of a rerouting of EU sanctioned goods through specific third countries and the evidence on sanctions’ efficacy in a key strategic class of products, microchips, is mixed. 2023-05-29T00:00:00+0000 Alessandro Borin, Gabriele Cappadona, Francesco Paolo Conteduca, Benjamin Hilgenstock, Oleg Itskhoki, Michele Mancini, Maxim Mironov, Elina Ribakova 8fb7f7eb-b90f-4c7d-a9e3-fe9219899b48 VoxEU Column The short- and long-run effects of the refugee crisis in Europe Europe has experienced a sudden and unprecedented increase in labour supply with the arrival of Ukrainian refugees from the Russia invasion. This column models the welfare and economic effects across EU countries. Real GDP increases in most countries, but especially in countries that are able to build more capital structures to accommodate the increased labour supply. Some countries that are not able to accumulate capital fast enough experience a decline in output. The impact varies across parts of the workforce – low-skilled labour, high-skilled labour, and owners of capital – and over time. 2023-05-28T00:00:00+0000 Lorenzo Caliendo, Luca David Opromolla, Fernando Parro, Alessandro Sforza b812dc0e-2043-4a47-b520-3ef50d78d844 VoxEU Column The glass ceiling in the ivory tower: A century of gender gaps in academia across the globe In academia, women remain under-represented across most disciplines and countries. This column traces how gender gaps in academia evolved over the 20th century and across the globe, using the largest database of university academics ever assembled. By the end of the century, women remain significantly under-represented in prestigious universities. However, by 2000 the gender gap in citations had nearly disappeared and the gap in promotions in the sciences had closed. 2023-05-27T00:00:00+0000 Alessandro Iaria, Carlo Schwarz, Fabian Waldinger aa179246-ebba-48bd-a098-abd5d98b0b55 VoxEU Column The price of leverage: Learning from the effect of loan-to-value constraints on job search and wages Macroprudential policies restricting household leverage may affect job search and subsequently wages via opposing channels through a debt-overhang and a liquidity-constraints channel. This column describes how the introduction of a loan-to-value ratio restriction in Norway can be used to assess which channel dominates empirically. It finds that job-seeking workers, when forced to have lower leverage, obtain higher wages in their new jobs. A reduction in leverage enables workers to have longer and broader job search and to find different occupations and jobs in firms with higher wage premia. These unintended effects on labour markets are important in an overall assessment of the welfare implications of macroprudential policies. 2023-05-27T00:00:00+0000 Gazi Kabas, Kasper Roszbach 6562b72e-ad44-4d8a-924b-05cd9e89d981 VoxEU Column Lessons from missing the signals of failing banks The collapse of Silicon Valley Bank revealed shortcomings in both prudential supervision and resolution of banks in the US. This column argues that while the report by Federal Reserve Vice Chair Michael Barr is a valuable acknowledgment and dissection of the supervisory failures, it glosses over one of the most important: the failure to realise six months ago that the bank was likely to fail and needed to be dealt with by the Federal Deposit Insurance Corporation as resolution authority. 2023-05-26T00:00:00+0000 Patrick Honohan 4e1e98db-e86c-456e-8512-b36dd484ece7 VoxEU Column Socioeconomic diversity in the workplace and education: Smart, underprivileged, and overlooked means missed opportunities for all Persistent barriers facing those from less privileged backgrounds block access to elite universities, many occupations, and high-level positions. This column starts from the premise that overlooking the talents of less privileged members of a society hurts the society as a whole by stifling productivity and economic growth. After synthesising findings from various studies on the lack of socioeconomic diversity in education and the workplace, the author looks at diversity initiatives in place at some firms, schools, and universities across Europe and suggests ways to build on their momentum 2023-05-26T00:00:00+0000 Robert Anderton 28c8afc4-2d97-442b-a6d9-1038c8e73ed0 VoxEU Column The distinction between Keynesians and Monetarists is obsolete Last week Robert Lucas passed away. His work changed macroeconomics forever. The idea of rational expectations has permeated macroeconomic models of all walks, at the University of Chicago as well as MIT – the cradles of Monetarism and New Keynesianism, respectively. This column argues that the distinction between Keynesianism and Monetarism is obsolete for understanding the current macro debate since both schools rely on Walrasian economics. A more useful distinction is between Neoclassicals (embracing both Keynesians and Monetarists) and Neo-Austrians. This distinction allows for an alternative view of the role of public debt in the economy. 2023-05-26T00:00:00+0000 Coen N. Teulings d936d703-e006-4b38-b0b0-14e56506535f VoxEU Column Implementing central bank policy in China How do China’s government-owned commercial banks respond to informal guidance from The People’s Bank of China? Their reaction to recent guidance designed to cool off mortgage lending offers a fascinating insight into how the banking sector works in China. Michel Habib of the University of Zurich talks to Tim Phillips. 2023-05-25T23:00:00+0000 c24d08ae-fbc0-43fb-a0fb-72306ba24ca7 VoxEU Talk Accounting for imported and domestically generated inflation: Supply chains, monetary policy, and the UK’s cost of living crisis Inflation has increased sharply since the start of 2021 as the global economy grapples with the aftermath of the COVID-19 pandemic and Russia’s invasion of Ukraine. This column draws on a long tradition of research on input-output linkages to trace the proximate contributions of energy and import costs to the cost-of-living crisis in the UK. As of 2022 Q4, over 70% of the annual rate of inflation was due to these external pressures. Overlooking the role of energy and imports in the domestic supply chain overestimates the extent of domestically generated inflation. 2023-05-25T00:00:00+0000 Swati Dhingra, Jack Page 2184742f-21ee-4845-a4f5-04ae5006b43c VoxEU Column The deposit glut: Lessons from the failure of Silicon Valley Bank Recent years have been described as marked by a ‘saving glut’ and a recurring hypothesis is that the saving glut also spurs financial instability. This column tests this hypothesis in the context of the recent failure of Silicon Valley Bank in March 2023. It finds that banks with higher exposure to local wealth inequality and higher exposure to intangible-intensive firms – both seen as root causes of the ‘saving glut’ – faced significantly larger stock price drops around the date the bank failed. The interaction between savings and financial instability has important implications for deposit insurance systems and large uninsured deposits. 2023-05-25T00:00:00+0000 Guillaume Vuillemey 1a462612-29fe-441b-9ab6-776179559c55 VoxEU Column Economists growing old The arc of creative activity may rise quickly and then decline with age. This column asks whether this is true for economists and, if so, why. An analysis of all articles published in the ‘Top Five’ economics journals between 1969 and 2018 reveals that economists who had published less in the previous decade of their careers publish less in the current decade. Scholars were less likely to publish after retirement, but those who had published more top-level research in their third decade were less likely to be retired. Perhaps senior economists continue to produce and publish top-level research because it is fun and just might benefit society. 2023-05-24T00:00:00+0000 Daniel Hamermesh, Lea-Rachel Kosnik 87465da9-9342-4174-8139-f26aa51a65d4 VoxEU Column Subjective well-being during Spain’s decline: Evidence from Crusade Bulls The relationship between a country’s economic conditions and the subjective well-being of its citizens has attracted increasing interest from economists in recent decades, but the question is rarely pursued in a historical context. This column looks back to early modern Spain, which experienced an economic decline from the 1570s to 1650, to assess how that decline affected individual perceptions of well-being and inequality. A previously unexplored source – the sale of papal Crusade Bulls – suggests that improvements in subjective well-being were accompanied by a decline in subjective inequality. 2023-05-24T00:00:00+0000 Carlos Álvarez-Nogal, Leandro Prados de la Escosura fbfea857-03d5-4c59-bf64-2d583bf93da4 VoxEU Column Open banking’s far-fetched promise of a financial revolution Open banking involves giving third parties access to information that is otherwise captive in a bilateral relationship between a provider of financial services and its client. Yet, there are considerable limits to the diffusion of financial information and to the use of such information to enhance competition. This column argues that the scope and the aims of open banking, although potentially ground-breaking, may thus be overstated. A new regulatory framework should be devised to deal with the potential shortcomings of open banking along the lines of the EU’s Digital Markets Act and Digital Services Act. 2023-05-23T00:00:00+0000 Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Pozzolo 312a49d9-80f1-4d82-ad12-fcb945bf4fb7 VoxEU Column The EU’s strategic dependencies unveiled The EU benefits greatly from its wide participation in international value chains. However, that integration is not exempt from strategic dependencies on products and inputs that are critical for Europe. This column examines the EU’s dependencies in traded goods using data from 5,400 products imported between 2017 and 2020. Foreign-dependent products span various sectors, including energy-intensive industries, health, renewables, and digital. China emerges as the primary source for these dependent products, followed by the US and Vietnam. Policymakers can use these insights to enhance supply chain resilience and mitigate vulnerabilities. 2023-05-23T00:00:00+0000 Román Arjona, William Connell Garcia, Cristina Herghelegiu 51bdf063-5d18-4ed3-a731-6e6214b7f18f VoxEU Column Winter resilience lifts outlook for EU growth amid persistent challenges A better-than-expected performance at the beginning of the year has lifted the forecast for EU growth marginally upwards. The European Commission’s Spring 2023 Economic Forecast outlines how falling energy commodity prices are driving a sharp fall in energy bills, but core inflation has been firming. As a result, the inflation forecast has also been revised upward and markets have raised expectations about future policy rate hikes. Expansionary budgets would add to inflationary pressures and complicate the task of EU central banks. Governments should not be distracted by the temporary benefits of high inflation and seize the opportunity of falling energy prices to strengthen fiscal sustainability through gradual fiscal consolidation. 2023-05-22T00:00:00+0000 Maarten Verwey, Allen Monks, Kristian Orsini b4052dd5-42cb-48b4-bfba-8c22cdc74f1f VoxEU Column The far side of the EU’s expenditure benchmark The ongoing debate on the future of the EU’s fiscal framework puts a lot of trust in the expenditure benchmark as single operational rule. The benchmark is meant to eliminate the overspecification of the current system, mitigate the noise implied by unobserved variables, and act as a dependable compass on the way towards more prudent levels of government debt. This column argues that there is a blind spot in the dominant narrative, which can be easily fixed but can also weaken a reformed system if ignored. 2023-05-22T00:00:00+0000 Martin Larch, Janis Malzubris d147dce4-b08f-4f12-8802-3597157b5d3a VoxEU Column Measuring the independent contractor workforce Policymaking to regulate contract work in the US would benefit from reliable evidence about the size and composition of the independent contractor workforce, but good data on independent contractors are elusive. This column shows that traditional survey questions fail to identify as many as half of independent contractors and that those who have been missed are disproportionately workers in disadvantaged groups. The phrasing of typical survey questions leads household surveys to miscode many contractors as employees. Questions that probe for clarification on a worker’s employment arrangements are critical for accurately measuring independent contractor work. 2023-05-21T00:00:00+0000 Katharine G. Abraham, Brad J. Hershbein, Susan Houseman, Beth C. Truesdale 2149ebc1-fcdb-4303-88c4-fdf6e16ef874 VoxEU Column The effectiveness of green collateral policy as an instrument of climate policy The debate surrounding climate change mitigation measures has recently extended to central bank instruments. One of the points under discussion is the preferential treatment of green bonds in central bank monetary policy operations. This would improve the financing conditions of firms with low emissions and thus create an incentive for green investment. Using a novel model, this column analyses the climate policy and macroeconomic implications of a green-tilted collateral policy and finds only minor effects on green investment. 2023-05-20T00:00:00+0000 Francesco Giovanardi, Matthias Kaldorf, Lucas Radke, Florian Wicknig 0d160988-cd97-4cd2-bbd6-e41cc0361689 VoxEU Column Central bank digital currency policies in open economies Central banks worldwide are actively considering issuing digital currencies. This column studies the macroeconomic and financial stability implications of their issuance, and of alternative arrangements for their management. It finds that a CBDC interest rate rule that responds to credit delivers the most effective stabilisation of real and financial activity, including reductions of around one third in the volatilities of capital flows and exchange rates. CBDC issuance of 30% of GDP in one country raises long-run output by almost 6%. 2023-05-19T00:00:00+0000 Michael Kumhof, Marco Pinchetti, Phurichai Rungcharoenkitkul, Andrej Sokol 0ea9b968-075a-471f-a5d3-c3883bad6e95 VoxEU Column British voting intentions and the far reach of 9/11 terror in New York Terrorism can impact voting behaviour not only in the country under attack but also in other countries. This column studies the impact of the 9/11 terror attacks in the US on voting preferences in the UK. Daily survey data on the intentions of British voters in the days before and after 9/11 reveal a 31% increase in the intention to vote for the Conservative Party and a decline of 17% in prospective Labour votes at future elections. The effects were short-lived and varied by gender, education, and employment status. 2023-05-19T00:00:00+0000 Elena Stancanelli c2d7d030-4e02-4096-b831-f0939c9d5695 VoxEU Column How much inflation did Covid fiscal support cause? In 2020 finance ministers threw their fiscal policy plans into the bin and did everything they could to protect and stimulate Covid-hit economies. How much of the spike in inflation did the Covid rescue cause? Galina Hale talks to Tim Phillips 2023-05-18T23:00:00+0000 8b863ef7-4693-40d5-96fc-db65b93f0022 VoxEU Talk Real value-added in national accounts and in theory: A disconnect Statistical agencies construct sectoral real GDP using double deflation and base period prices, a method that could lead to biased measurement. When firms apply a markup, real GDP becomes mechanically linked to intermediate inputs fluctuations, even when labour, capital, and technology are unchanged, because inputs generate profits that are incorporated into real value added. This column constructs new measures of ‘physical value-added’ at the sectoral level which take into account fluctuations in net operating surplus. Comparing these measures with existing sectoral real GDP data suggests that national accounts underestimate value-added growth in manufacturing and overestimate it in finance. 2023-05-18T00:00:00+0000 Francois de Soyres, Alexandre Gaillard, Henry Young b38eb959-242f-419d-9d05-52c2dffb841e VoxEU Column When will they ever learn? The US banking crisis of 2023 While Silicon Valley Bank was in some ways a special case, the ultimate cause of the run on the bank was a solvency problem which was, and is, not unique to SVB. This column argues that US authorities should acknowledge the evident banking crisis and suggests reforms to address the underlying solvency problems. 2023-05-18T00:00:00+0000 Anat Admati, Martin Hellwig, Richard Portes 7b190510-1512-4b8c-9a6c-39ac557f4b1f VoxEU Column How the US film industry mitigates financial risk Film production is a high-risk venture that requires large up-front investment. This column uses data from loan registers, copyright registration, and interviews with industry experts to explore the private-sector solutions to financial risk mitigation and the most common types of financial deals in the US film industry. Intellectual property rights are widely used as a collateral in lending deals, in a multi-billion dollar industry where tangible assets are particularly scarce. Co-production, loan syndication, risk indemnification, and insurance can help transfer and mitigate risk among stakeholders in US film finance. 2023-05-17T00:00:00+0000 Alexander Cuntz, Alessio Muscarnera, Prince C. Oguguo, Matthias Sahli 9fbb2e5d-7f4c-4dac-934d-bab319317074 VoxEU Column Reducing policy uncertainty attracts foreign direct investment in services: The role of regional trade agreements There is no consensus in the literature on how policy uncertainty affects international trade and foreign direct investment in services. This column examines the impact on trade margins of five regional trade agreements between Japan and its partner countries that entered into force between 1995–2018s. Results show that policy uncertainty regarding national treatment reduces the intensive margin of FDI in services, while policy uncertainty relating to most-favoured nation status reduces the extensive margin of FDI in services. 2023-05-17T00:00:00+0000 Mitsuo Inada, Naoto Jinji 54f084a7-dcec-41f8-9189-a3a3f9354418 VoxEU Column Missing girls in Liberal Italy, 1861–1921 Though Italy has one of the lowest female labour-force participation rates in the OECD, there is little evidence on regional disparities or the evolution of women’s status over time. This column examines population censuses and finds an excess of male children – especially in Southern Italy – from 1861 to 1921. The results place Italy among the European countries with the highest fraction of ‘missing’ girls on the eve of the 20th century, findings that reveal veiled patterns of gender discrimination and suggest ways of linking gender inequality and Italian economic development. 2023-05-16T00:00:00+0000 Francisco Beltrán Tapia, Gabriele Cappelli 4cd0b2e9-5756-4220-9ef9-bf96dd8612bd VoxEU Column Test-optional admissions, diversity, and social pressure Proponents of test-optional admissions claim that by not seeing standardised scores, a college can select a more diverse student body. But how can seeing less information help a college with its decisions? This column argues that test-optional policies may be driven by social pressure on college admissions. The authors model outcomes for a college and society where the college imputes (assigns) a test score to students who do not submit scores. A ban on affirmative action may result in more colleges going ‘test optional’ or ‘test blind’. 2023-05-16T00:00:00+0000 Wouter Dessein, Alexander Frankel, Navin Kartik 2752a238-8453-447c-bfb9-098295d8fa2a VoxEU Column The giant missing piece in the EU’s capital market puzzle In this blog, Carmine di Noia argues that in seeking to develop the EU’s capital markets, two points should feed into and guide technical discussions: capital seeks growth opportunities, and it moves globally 2023-05-15T00:00:00+0000 Carmine Di Noia cc4e38b3-6970-48a4-bf9a-456e86888d70 VoxEU Blog/Review The extraordinary generosity of central banks towards banks: Some reflections on its origin Since central banks started their fight against inflation, they have transferred massive amounts of their profits to banks. The authors of this column have suggested that minimum reserve requirements are a valid alternative, but they have met fierce resistance because they are seen as introducing distortions and departures from efficiency. However, the authors argue that successive financial crises have shown there is a trade-off between efficiency and stability. The emphasis of central bankers on using policy tools that do not interfere with market forces comes at the price of less stability and more financial crises. 2023-05-15T00:00:00+0000 Paul De Grauwe, Yuemei Ji 87717969-767b-4c78-97fd-57e6796899fe VoxEU Column Advertiser block lists as a threat to media integrity Advertisers are sometimes reluctant to feature their products alongside serious news items, fearing the products will acquire negative associations. This column describes an experiment in which participants read a range of articles with ads placed beside them. Using non-intrusive eye-tracking technology, the authors measured the attention readers paid to each article and advertisement. Articles that captured a reader’s attention increased their attention to ads on the same page, enhancing brand recall and purchase probability. But the type of content – ‘hard’ versus ‘soft’ news – had no impact on an ad’s effectiveness. 2023-05-14T00:00:00+0000 Andrey Simonov, Tommaso Valletti, Andre Veiga 85fb775b-569c-4ef3-be3f-c46e59939521 VoxEU Column Rebuilding education for a smarter and stronger Ukraine Human capital is Ukraine's most valuable asset, and will remain so in the future. The education system plays a critical role in creating, nurturing, and sustaining this asset. This column argues that that education should be a principal pillar of Ukraine’s reconstruction efforts and that it should be leveraged to ensure that all Ukrainian citizens are included in these efforts. It will also play a crucial role in supporting state-building and the provision of essential state services, as well as safeguarding democracy and human rights. 2023-05-13T00:00:00+0000 Martin Kahanec, Snizhana Leu-Severynenko, Anna Novosad, Yegor Stadnyi 82fd6d2b-ce74-43cf-b7f7-983d62703349 VoxEU Column The Commission’s Crisis Management and Deposit Insurance proposal has the potential to significantly improve banking resolution in the EU The collapse of several US regional institutions and of Crédit Suisse in the last two months has increased the urgency for crisis management reform in the EU. This column argues that the Crisis Management and Deposit Insurance proposal by the European Commission has the potential to improve bank resolution in the EU while protecting depositors and financial stability. The authors suggest it should be accompanied by further efforts to increase loss-absorbency and liquidity requirements, supervision, and managerial accountability in order to reduce moral hazard, while taxpayer interests could be better served if additional flexibility were granted to resolution authorities to temporary nationalise troubled banks under state aid control. 2023-05-13T00:00:00+0000 Mathias Dewatripont, Peter Praet, André Sapir 4870e782-4039-4ffc-a020-24ec39dd2d0d VoxEU Column Reducing barriers to support services in domestic violence cases leads to more effective use of police services In the aftermath of a police-reported incident of domestic violence, victims may receive help through police or non-police support services. This column discusses what happens to the uptake of police services when access to non-police services is facilitated through a caseworker. Victims assigned a caseworker were less likely to provide a witness statement to police, but perpetrator convictions were not affected and statement retractions fell to almost zero. This suggests improving access to non-police services could lead to a more efficient use of police services without compromising the wellbeing of victims. 2023-05-12T00:00:00+0000 Jesse Matheson, Martin Koppensteiner, Reka Plugor 0920ddec-2021-4b94-b221-5e518074b2d3 VoxEU Column Is de-dollarisation happening? There has been much discussion recently on the prospect of the US dollar losing its global dominance. This column argues that while there is evidence of a decline in the dollar’s share of allocated foreign exchange reserves, reports of its demise as the dominant global currency have been greatly exaggerated. Among the factors behind the decline are the need for central banks to intervene in foreign exchange markets and changes in interest rates, but there is little evidence of an effect of sanctions. The majority of the shift away from the dollar has been towards nontraditional reserve currencies. 2023-05-12T00:00:00+0000 Barry Eichengreen 7b3187b7-8f90-4151-addc-ea1c7a49d584 VoxEU Column American precious metals and the rise of the West Between the 16th and 18th centuries, at least 180,000 tons of silver and around 4,000 tons of gold were extracted from the Americas and transported to Europe. How much of western Europe’s economic transformation can be attributed to this windfall? Yao Chen tells Tim Phillips about new research that upends the conventional wisdom. 2023-05-11T23:00:00+0000 5d961f8a-5c8a-49ce-a35e-3641632ed82c VoxEU Talk What happens when AI comes to healthcare While artificial intelligence technologies are entering the mainstream, adoption in healthcare has lagged. This column explores potential cost savings of AI use in healthcare and reasons for the slow adoption. Widespread AI adoption in the next five years using currently available technology could result in savings of 5–10% of healthcare spending, or $200 to $360 billion annually. The dispersion of healthcare data and privacy concerns present some barriers to adoption, but if surmounted, AI could improve labour productivity, flatten healthcare spending, and improve the quality of care. 2023-05-11T00:00:00+0000 Nikhil Sahni, George Stein, Rodney Zemmel, David Cutler f22c6023-2f5e-4cdb-aead-3a0039b9ca1d VoxEU Column Climate regulation and financial risk: The challenge of policy uncertainty Climate risk has become a major concern for financial institutions and financial markets. Yet, climate policy is still in its infancy and contributes to increased uncertainty. For example, the lack of a sufficiently high carbon price and the variety of definitions for green activities lower the value of existing and new capital, and complicate risk management. This column argues that it would be welfare-enhancing if policy changes were to follow a predictable longer-term path. Accordingly, the authors suggest a role for financial regulation in the transition. 2023-05-10T00:00:00+0000 Tobias Berg, Elena Carletti, Stijn Claessens, Jan-Pieter Krahnen, Irene Monasterolo, Marco Pagano 81e7a79c-69be-492a-9cab-42818c69aa5e VoxEU Column Carbon costs hardly harm firms Firms seem to have responded to rising carbon costs by adapting rather than relocating their business operations. This column uses a comprehensive measure of carbon costs and data on over 3 million firms from 32 countries from 2000 to 2019 to show that carbon costs hardly depressed the performance of an average industrial firm. While limited employment reductions are observed, a large number of firms ramped up their investments in response to higher carbon costs, and losses and exit probabilities have not noticeably increased. 2023-05-09T00:00:00+0000 Arjan Trinks, Erik Hille 81b71a74-ce88-47ee-8eee-59d2199a6e89 VoxEU Column Trade fragmentation matters for bank credit supply: New evidence from the International Banking Research Network Recent geopolitical events have raised concerns that markets for goods and services could become more fragmented. Clearly, trade uncertainty has increased. The consequences for financial intermediation of fragmentation and uncertainty are not well understood though. If banks affected by adverse trade events contract lending, the effects of the initial shock for the real economy could be amplified. Studies conducted in the International Banking Research Network show that fragmentation shocks reallocate and sometimes reduce overall credit supply through banks. This reallocation can reinforce fragmentation and change the consequences from trade disruptions. 2023-05-08T00:00:00+0000 Claudia Buch, Linda Goldberg, Björn Imbierowicz 8fffe074-7121-4705-bec9-161042c10c1d VoxEU Column Credit Suisse: Too big to manage, too big to resolve, or simply too big? The runs on Silicon Valley Bank and Credit Suisse in March 2023 revived attention on banking regulation, resolution, and government intervention. This column analyses the details of the run on Credit Suisse and its eventual takeover by UBS. It highlights multiple discrepancies between official statements and implemented measures, both by Credit Suisse and Swiss authorities. Furthermore, it argues that the reforms adopted after the 2007-2009 crisis are still insufficient for resolving systemic institutions. Going forward, authorities must be able to act promptly and implement correction actions before risks of failure become too severe. 2023-05-08T00:00:00+0000 Anat Admati, Martin Hellwig, Richard Portes 8cb800d5-0779-4193-9996-874f852963cb VoxEU Column Floods and firms in Europe: Destruction and reallocation Climate change is increasing the frequency and severity of flooding, but there is still little evidence on its short- and medium-term microeconomic impact. This column explores the effects of flood events on European firms. Water damages have a significant and persistent adverse effect on firm performance and may even lead to firm exit. However, frequent floods do not significantly worsen firm performance, suggesting that firms adapt in flood-prone areas. In such regions, economic activity may be reallocated from firms exposed to water damage to unaffected firms. 2023-05-07T00:00:00+0000 Serena Fatica, Gabor Katay, Michela Rancan c2c43396-3137-409c-b907-1ecf8690df1d VoxEU Column Global monetary and financial spillovers: Evidence from a new measure of Bundesbank policy shocks There is a lively debate about the international transmission of monetary policy, the role of the exchange rate regime, and the role of different central banks for the global cycle. This column sheds new light on these issues, focusing on the European Monetary System between 1979 to 1998. It shows that Bundesbank policy spillovers were much stronger in major economies in the European Monetary System with Deutschmark pegs than in economies outside the system with floating exchange rates. Furthermore, compared to monetary spillovers from the US, German spillovers were comparable or even larger in magnitude for both pegs and floats. 2023-05-06T00:00:00+0000 James Cloyne, Patrick Hürtgen, Alan M. Taylor d5b76223-6b75-4f6c-8ce4-44ba529067f4 VoxEU Column Learning from Silicon Valley Bank’s uninsured deposit run The public bailout for cash-rich companies holding large deposits in the failed Silicon Valley Bank has made clear that society is still at the mercy of uninsured demandable claims. This column proposes that a combination of gating (i.e. temporary or partial suspension of redemptions) and swing pricing when outflows become large be applied to any uninsured demandable claim. Businesses would thus be ensured access to liquidity as required without creating escalation and avoiding a guarantee of their absolute safety. 2023-05-05T00:00:00+0000 Enrico Perotti c4501b6a-ef6a-4181-8487-68e405ea15cf VoxEU Column Does politics sell newspapers? When the political debate hots up in the world’s largest democracy, is this good for newspaper circulation? Guilhem Cassan talks to Tim Phillips about how to make a causal link from Indian politics to how many newspapers are sold, and what sort of papers they are. 2023-05-04T23:00:00+0000 3d86078c-0446-4941-8782-2d2f750df833 VoxEU Talk The aggregate cost of cartels Antitrust policy is under intense scrutiny on both sides of the Atlantic. Yet estimates of the aggregate cost of cartels and potential gains from more robust antitrust policies have proven elusive. This column argues that properly accounting for collusion in a macroeconomic model can lead to sizeable productivity and aggregate welfare losses. The findings suggest that antitrust enforcement and competition laws that aim to break down cartels can yield large gains. 2023-05-04T00:00:00+0000 Flavien Moreau, Ludovic Panon 796966aa-2608-4f89-9641-a8c5130eff51 VoxEU Column