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VoxEU @ CEPR
@voxeu.org
6K followers 1.3K following 580 posts
VoxEU – CEPR’s policy portal - promotes "research-based policy analysis and commentary by leading economists". VoxEU columns cover all fields of economics broadly defined and are widely read.
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voxeu.org
Stefano Corradin, Alessandro Fontana, @chriskubitza.bsky.social, & Angela Maddaloni find that over the past decade, the balance sheets of euro area insurers have become less liquid and more sensitive to market conditions.
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Graph showing home bias in government and corporate bond portfolios of traditional life insurers. Home bias is computed as the share of holdings of an insurance sector’s domestic bonds relative to total government bond holdings. The countries are sorted by their average total exposure to government bonds. ‘Other euro area countries’ represents a weighted average, by asset size, of the home bias shares of all other euro area countries not shown separately. Over the past decade, euro area insurers have been challenged by the prolonged period of low interest rates until 2022 and climate-related risks, particularly for property and casualty insurers. This column shows that the balance sheets of euro area insurers have become less liquid and more sensitive to market conditions. However, insurers still rely heavily on holdings of sovereign bonds – particularly domestic ones – and tend to sell these assets to fund large claims after natural disasters. The capital markets union would promote diversified bond portfolios and likely mitigate these effects.
November 28, 2025 at 9:48 AM
voxeu.org
E Jakucionyte & S Singh show how housing market thickness (how many buyers & sellers are active) affects renovation incentives of Soviet-era apartments in Lithuania. In thick markets, homeowners are more likely to move before gaining the full benefits of renovating.
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#EconSky
Map of Vilnius neighbourhoods and the share of Soviet-era apartment buildings. Improving the energy efficiency of buildings is central to Europe’s climate agenda. In Lithuania, most Soviet-era apartment blocks remain unrenovated despite decades of preferential loans and generous subsidies. This column shows how housing market thickness – how many buyers and sellers are simultaneously active – affects renovation incentives. In thick markets, homeowners are more likely to move before capturing the full benefits of renovating. Current subsidy rates are uniform across regions, falsely assuming renovation barriers are identical everywhere. Alternative policy instruments may be more cost-effective for thick markets.
November 28, 2025 at 9:42 AM
voxeu.org
Alexander Dück & Fabio Verona @suomenpankki.fi show that model uncertainty is the dominant constraint on systematic monetary policy design. Rules optimised across a wide range of models converge toward cautious and stable policy responses.
cepr.org/voxeu/column...
#EconSky
How should monetary policy be designed when no single model can be trusted and policymakers may care more about stabilising some frequencies of inflation and real activity than others? This column shows that rules optimised across a wide range of models converge toward cautious and stable policy responses. Differences in frequency-specific objectives play only a limited role, while model uncertainty overwhelmingly drives the design of systematic rules. Robustness across models therefore provides the central organising principle for monetary policy.
November 28, 2025 at 9:31 AM
voxeu.org
Hans Gersbach, Paul Maxence Maunoir, & Kieran James Walsh introduce the 'trade benefit ratio', which captures the total economic loss a country's withdrawal from global trade would cause others relative to the self-inflicted loss.
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Graphs of the trade benefit ratio for all sectors, only manufacturing and services, and only manufacturing. ‘ROE’ means Rest-of-EU, ‘LAA’ is a subset of Latin American economies, ‘EAA’ is a subset of East Asian economies, ‘AFR’ is a subset of African economies, and ‘ROW’ means Rest-of-World. ‘Only Manufacturing and Services’ excludes ISIC codes A and B (agriculture, forestry, fishing, and mining) from trade barriers, and ‘Only Manufacturing’ includes the C codes only. See Gersbach et al. (2025) for a full description of the countries, regions, and sectors.
November 27, 2025 at 9:10 AM
voxeu.org
S Alvarez-Blaser, @raphauer.bsky.social, @leinsarah.bsky.social, & A Levchenko present evidence that inflation in advanced economies is highly influenced by the prices set by a small number of firms. These forces were a key driver of the 2021-22 inflation shock.
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This figure displays the share of the variance of aggregate year-on-year inflation accounted for by each component. The four components are: Macro component, Firm Granular Beyond Top 10, Category Granular, and Firm Granular Top 10. Textbook monetary economics views inflation as fundamentally driven by aggregate shocks, such as money supply or policy rates. This column presents empirical evidence that inflation is highly granular – it is significantly influenced by the prices set by a small number of large firms. Based on an analysis of 2.9 billion barcode-level transactions spanning 16 economies, it shows that firm-level idiosyncratic shocks account for a substantial share of inflation variability in advanced economies. Granular forces were also a key driver of the 2021–22 inflation shock and are shown to slow down the transmission of monetary policy.
November 26, 2025 at 9:07 AM
Reposted by VoxEU @ CEPR
helene-rey.bsky.social
www.lemonde.fr/idees/articl...

Une architecture européenne pour la défense du futur un cadre à la fois technologique, industriel et financier afin d’atteindre une autonomie stratégique et de favoriser l’intégration des marchés financiers européens. @voxeu.org @cepr.org @sylviekauffmann.bsky.social
Défense de l’Europe : « A terme, c’est la survie même du projet européen et de ses valeurs fondamentales qui sera menacée »
TRIBUNE. Les économistes Hélène Rey et Moritz Schularick et le vice-président du fonds d’investissement BlackRock Philipp Hildebrand proposent, dans une tribune au « Monde », la création d’une nouvell...
www.lemonde.fr
November 26, 2025 at 8:14 AM
voxeu.org
Maarten Bosker, Else-Marie van den Herik, Paul Pelzl, & Steven Poelhekke study Indonesia's 2014 ban on nickel and bauxite exports and show that export bans must be accompanied by a swift increase in domestic processing capacity to be effective.
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#EconSky
Graph of active Indonesian export restrictions on industrial raw materials by reason from 2009 to 2023. ‘Promote downstream industry’ denotes an active export-restricted industrial raw material that lists as a reason at least one of ‘Promote further processing / value added’ and ‘Protect local downstream industry’. Besides ‘Other’, reasons could include ‘Control of illegal mining activity’, ‘Product is strategic for the economy’, ‘Generate revenue’, and ‘Control of foreign exchange’. Export restrictions on industrial raw materials are increasingly used by developing economies to climb value chains. This column explores whether Indonesia’s 2014 ban on nickel and bauxite exports, which aimed to spur domestic processing and job creation, succeeded in promoting local economic development. Nickel districts saw a sustained rise in employment, especially in manufacturing and service, while bauxite districts faced employment losses. Export bans must be accompanied by a swift increase in domestic processing capacity, and policymakers must carefully consider commodity-specific factors.
November 25, 2025 at 8:45 AM
voxeu.org
Jon Danielsson (LSE) argues that while AI enhances the financial system's efficiency, it also poses new, poorly understood risks. Supervisory authorities must develop their own AI capabilities to keep pace.
cepr.org/voxeu/column...
#EconSky
Artificial intelligence is transforming finance faster than the authorities can adapt. This column argues that while AI enhances the financial system’s efficiency, it also poses new, poorly understood risks. To stay relevant, the supervisory authorities must develop their own AI capabilities, use federated learning for cross-jurisdiction models, and design intervention facilities that can respond at machine speed. If they cannot keep pace, the consequences will be ineffective supervision and a higher risk of financial crisis.
November 25, 2025 at 8:43 AM
voxeu.org
Maarten Verwey, Christos Axioglou, & Gábor Márk Pellényi (@ec.europa.eu) review the EU Commission's Autumn 2025 Forecast and argue that while trade policy uncertainty has decreased, the war in Ukraine and persistent geopolitical tensions cloud the outlook.
cepr.org/voxeu/column...
#EconSky
Graph of real GDP growth in member states between 2019-2024. Countries are ordered by proximity to the war, based on their average distance to Kyiv and Moscow. The EU economy grew stronger than expected in recent quarters and all member states are set to return to growth in 2025. Modest but steady economic growth is expected to continue in 2026 and 2027, supported by a robust labour market, decreasing inflation and improving financing conditions. Although the conclusion of the EU-US trade deal in the summer reduced trade policy uncertainty, weaker global growth and persistent geopolitical tensions cloud the outlook. As this column argues, the proximity to Russia’s protracted war of aggression against Ukraine has been weighing on the economic performance of the EU, especially in member states closest to the conflict, while necessitating a unified strengthening of EU defence capabilities and financial support to Ukraine.
November 24, 2025 at 2:52 PM
voxeu.org
Alan Auerbach & William Gale argue that after incorporating the One Big Beautiful Bill Act, debt-to-GDP is projected to rise to 183% by 2054, under conservative assumptions. Without a return to fiscal responsibility, adjustment will likely involve an external shock.
cepr.org/voxeu/column...
#EconSky
Graph of US publicly held debt as a percent of GDP. There is now widespread concern that the US faces an unsustainable fiscal future under current policies. The rise in the debt-to-GDP ratio since 2001 can be explained by responses to the Global Crisis and Covid-19 pandemic, as well as tax cuts and discretionary spending increases. This column argues that after incorporating the One Big Beautiful Bill Act, debt-to-GDP is projected to rise to 183% by 2054, under conservative assumptions. Without a return to an earlier period of fiscal responsibility, adjustment in US fiscal policy will likely involve some external shock that forces changes in policy.
November 24, 2025 at 10:27 AM
voxeu.org
Financial fragmentation can undermine European bond market stability by amplifying the sensitivity of both sovereign and corporate credit markets to global risk shocks.
Benjamin Mosk & Nander de Vette
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Source: Bloomberg L.P., authors’ calculations. Note: weekly data, Aug. 2007-Aug. 2024, reflecting Bloomberg’s illiquidity indices. As European governments scale up investment, bond market stability is more critical than ever. This column shows that financial fragmentation can undermine that stability by amplifying the sensitivity of both sovereign and corporate credit markets to global risk shocks. Crucially, this vulnerability affects jurisdictions across the euro area.
November 24, 2025 at 10:23 AM
voxeu.org
AI fundamentally alters the balance between formal credentials and verified experience in labour markets. @eduardoyeyati.bsky.social‬ reviews employment record systems from 8 countries to establish design principles and draw lessons from implementation failures.
cepr.org/voxeu/column...
#EconSky
The rise of AI fundamentally alters the balance between formal credentials and verified experience in labour markets, but without verified employment records, experience remains invisible. This column reviews employment record systems across eight advanced and emerging economies, as well as EU-level initiatives, to establish design principles and draw lessons from implementation failures. The analysis reveals that technical infrastructure alone does not guarantee success. Effective systems require aligned incentives, continuous stakeholder engagement, and careful sequencing.
November 24, 2025 at 10:16 AM
voxeu.org
Households can face serious financial consequences from a spouse's illness or death even in a comprehensive welfare state like Sweden. Renters and low-wealth households are hit the hardest.
@kmajlesi.bsky.social @elinmolin.bsky.social @pauroth.bsky.social
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#EconSky
This figure presents estimates of the effect of a fatal health shock on adult children, by the homeownership status and income loss of the surviving parent. Panels A–D correspond to children of renters or homeowners, further distinguished by whether the deceased parent was the primary earner (smaller income loss) or the secondary earner (larger income loss). Effects on debt collection, social benefits, and labour income are estimated with 95% confidence intervals using the Callaway–Sant’Anna (2021) difference-in-differences method, controlling for 10-year age bins of the children. The reported coefficients are expressed as percentage impacts relative to the mean outcome one year prior to the event. Standard errors are clustered at the parent level. While many advanced economies shield their citizens from the most severe direct medical costs of illness, less is known about how households cope with income losses from a serious health event. This column shows that the financial consequences of a spouse’s illness or death can be severe, even in a comprehensive welfare state like Sweden. Defaults on unpaid debts, bills, and other financial commitments rise sharply after such shocks, with renters and low-wealth households hit the hardest. Both income and wealth access need to be considered to strengthen households’ financial resilience.
November 24, 2025 at 10:10 AM
voxeu.org
Adam Wolfe discusses how higher and broader US #tariffs on Chinese imports resulted in increased tariff avoidance and an underestimation of US imports from #China, which played a significant role in narrowing the US-China trade data gap.
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#EconSky
US imports and Chinese exports by US Section 301 tariff regime Until 2018, the US-China trade data gap was in line with the discrepancies found in the bilateral trade data of China and its other partners, but in 2018 the gap began to narrow. This column argues that higher and broader US tariffs on Chinese imports resulted in increased tariff avoidance and an underestimation of US imports from China, which played a significant role in narrowing the US-China trade data gap. Changes in China’s VAT regime may have also played a role.
November 21, 2025 at 9:13 AM
voxeu.org
Paul Twomey, Vicente Arias González, & Dennis Snower argue that while the European Commission's Digital Omnibus package responds to the increasingly complex regulatory landscape, it treats the symptoms rather than the structural cause of market failure.
cepr.org/voxeu/column...
#EconSky
Over the last decade, the EU has pioneered a world-leading framework for digital governance, but the result has been an increasingly complex regulatory landscape and a digital governance system that undermines the workings of economic markets. This column argues that while the European Commission’s Digital Omnibus package responds to this complexity, it treats the symptoms rather than the structural cause of market failure. The authors propose an ‘Innovation in the Digital Economy Architecture’ (IDEA) framework that meets the simplification aims of the Digital Omnibus proposal, while giving digital consumers more control over their personal data, strengthening digital rights, creating transparent data markets that reward trust, and promoting competition and innovation.
November 21, 2025 at 9:08 AM
voxeu.org
D Blanchet & G Cette argue a change in the average retirement age has an impact both on pension funding and resources available for other public spending. This implies penalties for earlier retirement that are higher than those designed to balance the system alone.
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The design of pension rules must take into account, through an actuarial neutrality approach, the adjustments to pension levels that are necessary in the case of flexible retirement ages. This column argues that a change in the average retirement age has an impact not only on pension funding, but also on resources available for other public spending. All else equal, incorporating this externality would imply penalties for earlier retirement and bonuses for later retirement that are much higher than those designed to balance the pension system alone.
November 21, 2025 at 9:04 AM
Reposted by VoxEU @ CEPR
voxdev.bsky.social
🆕 Africa’s domestic debt boom: New evidence from the African Debt Database

Today on VoxDev via VoxEU @ CEPR w/ Mark Manger (UofT), Ugo Panizza (Geneva Graduate Institute), Niccolò Rescia (Global Sovereign Advisory), Christoph Trebesch (Kiel) & Ka Lok Wong (Steve) (UN): https://ow.ly/gsIr50XuzLM
Africa’s domestic debt boom: New evidence from the African Debt Database
Africa’s total public debt has risen more than fourfold since the early 2000s, but just as important as the increase in debt volumes is the shift in structure. This column uses a new open-access dataset covering more than 50,000 loans and securities issued by 54 African countries to reveal that African governments now raise more than half of their financing at home, reversing decades of dependence on external lenders. While the rise of domestic debt markets may deepen financial systems, foster local investor bases, and enhance monetary autonomy, the authors warn that the line between...
ow.ly
November 20, 2025 at 10:58 AM
voxeu.org
In a context of shifting US commitments, external threats, and global competition, Philipp Hildebrand, Hélène Rey, & @schularick.bsky.social outline key principles for establishing a European Future of Defence Architecture and a framework for its financing.
cepr.org/voxeu/column...
#EconSky
In a context of shifting US commitments, external threats, and global competition over trade, technology, critical minerals, talent, and intellectual property, Europe’s lack of defence capabilities leaves it vulnerable to economic and foreign policy pressure. This column outlines key principles for establishing a European Future of Defence Architecture and a framework for its financing.
November 20, 2025 at 9:37 AM
voxeu.org
R&D intensity has been a key determinant of increased equity valuations for European defence contractors rally, particularly for companies with higher dual-use revenues. Markets have rewarded military R&D with civilian applications.
M Albori, F Ferriani, L Ristuccia
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#EconSky
The figure shows EU and US defence stocks as market ratios. Top panel: price to book ratio; Bottom panel: 12-month forward price-earnings ratios. The vertical lines denote the Russian invasion of Ukraine, the election of Donald Trump, the London summit (LS), and the NATO meeting (NM). The sharp rise in European defence spending – driven by Russia’s full-scale invasion of Ukraine, President Trump’s re-election and the weakening of US security guarantees, and ultimately by revised NATO targets – has increased equity valuations for European defence contractors. This column shows that R&D intensity has been a key determinant of this rally, particularly for companies with higher dual-use revenues. Far from being an endorsement of military spending as a driver of economic growth, the results suggest that financial markets have rewarded military R&D with civilian applications, viewing dual-use innovation as a strategic opportunity to benefit from the cycle in military spending and geopolitical uncertainty.
November 20, 2025 at 9:35 AM
voxeu.org
@paulinecarry.bsky.social & @schoefer.bsky.social show that France's 2008 introduction of separation by mutual agreement failed to improve employer-employee relations during separations and added costs to the unemployment insurance scheme.
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#EconSky
Share of SMAs among all open-ended contract terminations between 2007 and 2022. Open-ended contract terminations include quits, economic, or personal dismissals, and SMAs. Source: Carry and Schoefer (2024). Dismissals are costly and are often subject to stringent employment protection regulations. This column explores how France’s 2008 introduction of separation by mutual agreement affected separation patterns. Despite fast and wide adoption of such agreements, they only replace a small share of dismissals and substitute more for quits rather than dismissals. Highly conflictual dismissals remain unchanged. The reform failed to improve employer–employee relations during separations and added costs to the unemployment insurance scheme.
November 20, 2025 at 9:24 AM
voxeu.org
New VoxTalks Economics episode out now: Sergei Guriev and Catherine de Vries discuss with @talknormal.co.uk why populism keeps rising — and what this means for the difficult climate and sustainability decisions governments can no longer avoid.
🎧 Listen here: cepr.org/multimedia/p...

#EconSky
Graphic promoting a VoxTalks interview with Sergei Guriev and Catherine de Vries titled ‘The planet has a problem with populism’, showing a globe wrapped in barbed wire.
November 19, 2025 at 2:10 PM
voxeu.org
A yield discount on green sovereign bonds - a 'greenium' - exists but is very small, ~ 2 basis points in adv. economies & 13 bp in emerging markets. The greenium rises when climate risks are salient.
@upanizza.bsky.social, S Shi, @wederdim.bsky.social, M Gulati
cepr.org/voxeu/column...
#EconSky
The two panels show the evolution of the greenium (a more negative value indicates a larger greenium). Each point shows the estimated greenium (with 95% confidence interval) for the previous 120 days obtained from a model that controls the bid-to-ask spread, the log of the bond face value, remaining time to maturity (in days), pair-date fixed effects. Standard errors are clustered at the bond level. The left panel uses all bonds, the right only bonds issued by emerging markets (EM). Since 2016, many governments have issued ‘green’ debt instruments to support the transition to a low-carbon economy. This column shows that a yield discount on green sovereign bonds, or ‘greenium’, exists but is very small, around two basis points in advanced economies and 13 basis points in emerging markets. Still, the greenium rises when climate transition risks are salient and for issuers more vulnerable to climate change. Going forward, governments and international institutions should strengthen the credibility of green-bond frameworks, integrate climate priorities into the budget process, while also recognising that sovereign green bonds are not a fiscal panacea.
November 19, 2025 at 9:14 AM
voxeu.org
AI offers opportunities to improve financial efficiency & inclusion. However, adoption remains limited in emerging market & developing economies. Many still lack capacity to monitor AI risks and face skill gaps and weak data and IT infrastructure.
Gian Boeddu et al.
cepr.org/voxeu/column...
#EconSky
N= 27. Question asked: “For which supervisory activities is your authority currently using or planning to use AI in the next 12 months? Select all that apply” and “For which type of supervisory activities will AI most likely be used in your authority in the medium to longer term (e.g. the next 5 years)? Select all that apply.” Source: World Bank Survey on AI in Supervision, 2025. AI offers opportunities to improve efficiency, inclusion, and oversight in the financial sector. This column shows, however, that AI adoption remains limited in most emerging market and developing economies. While central banks are adapting to safely realise its potential, few countries have board-level AI strategies and policies. Many still lack the capacity to monitor AI risks and face skills gaps and weak data and IT infrastructure, which make it harder to address challenges such as cybersecurity, data privacy and sovereignty, reliance on third-party service providers, and model governance.
November 18, 2025 at 9:03 AM
voxeu.org
Andrea Gazzani, Joseba Martinez, Filippo Natoli, & Paolo Surico use US patent data to show that publicly funded but privately owned patents - just 2% of all US patents - account for around 20% of medium-term fluctuations in productivity and growth.
cepr.org/voxeu/column...
#EconSky
The figure shows that government-funded patents account for a large share of the ‘most basic’ ones, according to measures of basicness based on patents’ similarity to subsequent ones (‘importance’) and on the number of citations to scientific papers (‘reliance on science’). The US has long been the world’s innovation powerhouse, based on a system that combines public funding with private initiative. Yet this model is under strain. Using newly digitised US patent data since 1950, this column shows that publicly funded but privately owned patents – just 2% of all US patents – account for around 20% of medium-term fluctuations in productivity and GDP growth. As funding cuts threaten the most productive funders of public R&D, the authors argue that America’s innovation edge rests on the visible hand of public support for basic research.
November 18, 2025 at 8:55 AM
voxeu.org
Siddharth Eapen George et al. study a 2006 Indian reform to show expanded credit access fosters #innovation for firms that face few non-financial barriers. But for the average firm, other barriers hinder their ability to translate credit into innovation.
cepr.org/voxeu/column...
#EconSky
The 2006 reform significantly improved newly eligible firms’ ability to access credit. Long-term loan balances increased by 12% for newly eligible firms relative to firms with no shift in eligibility. Short-term and total borrowing also expanded by more than 20%. Yet the increased access to bank credit had little impact on product innovation. Access to finance is an important driver of innovation in developed countries. This studies a 2006 reform in India that expanded credit access for many small Indian manufacturing firms, and finds a nuanced relationship between credit and innovation. Among firms that face few non-financial barriers, credit access fosters innovation, as in advanced economies. But for the average firm, additional barriers hinder their ability to translate credit into new and better products, diluting the effect of credit on innovation. Instead, these firms use credit to scale their existing operations and fully utilise current capacity.
November 17, 2025 at 9:48 AM