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VoxEU @ CEPR
@voxeu.org
5.9K followers 1.3K following 550 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
@ckhead.bsky.social & @thierry-mayer.bsky.social‬ argue that the recent estimate of an equivalent 45% tariff in intra-EU costs is likely too high & vastly overstates the barriers which could be lowered due to Commission policy decisions.
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Graph of the evolution of EU15 integration in four datasets. All 4 datasets agree that the impact of borders has gone down over time. A recent paper which has gathered significant attention estimates a 45% tariff equivalent of intra-EU border costs. This column argues that this estimate is likely too high and depends on the particular dataset used and specific estimation choices. Therefore, it also vastly overstates the barriers that are akin to tariffs and could be lowered as a result of European Commission policy decisions. Instead, it argues that there are more urgent reforms with larger potential benefits, such as boosting EU innovation capacity and R&D spending.
November 13, 2025 at 9:31 AM
voxeu.org
In the second column of a 2-part series, Dirk Niepelt discusses recent developments in stablecoins, tokenisation, and decentralised finance, and details multiple ideas to address emerging risks while preserving the benefits offered by the rapidly evolving landscape.
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The digitisation of payment, trading, and settlement systems is reshaping the financial architecture. This column, the second in a two-part series, discusses recent developments in stablecoins, tokenisation, and decentralised finance. These innovations have the potential to boost competition, improve access to credit, and reduce information frictions. However, multiple risks exist, ranging from regulatory gaps, low financial literacy, and challenges to the key principle of monetary ‘singleness’. It discusses multiple ideas to address emerging risks, while preserving the key benefits offered by the rapidly evolving landscape.
November 13, 2025 at 9:28 AM
voxeu.org
In the latest VoxTalks Economics Rick van der Ploeg (@oxfordecondept.bsky.social ) joins @talknormal.co.uk to argue that gradual climate policies won’t deliver real change — what’s needed is a big push for transformation in economies and societies.

🌍 Listen here: cepr.org/multimedia/b...
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Graphic promoting a VoxTalks interview titled "A big push for climate policy" with Rick van der Ploeg, showing a figure pushing a large boulder uphill in a dark, mountainous landscape.
November 12, 2025 at 3:31 PM
voxeu.org
Maria Giulia Cassinis, Massimo Ferrari Minesso, & Ine Van Robays introduce a new financial markets-based model to identify the types of shocks driving changes in inflation expectations in near real-time.
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The figure reports the median historical decomposition for the period between January 2020 and March 2024. The black line reports the cumulated percentage changes of each variable, standardised to zero at the first observation. The model is a Bayesian mixed-frequency vector autoregression (VAR) (Eraker et al. 2014, Ghysels 2016, and Schorfheide and Song 2015) designed to identify the structural shocks driving US inflation expectations at a weekly frequency. Weekly financial variables (yields, stock and commodity prices, ILS rates) are combined with lower-frequency macroeconomic indicators within a unified framework. Specifically, two monthly variables are used: US industrial production and the New York Fed’s Global Supply Chain Pressure Index (Benigno et al. 2022). The model is identified combining sign and magnitude restrictions, leveraging on the Supply Chain Index’s exogeneity from demand and energy factors. Determining the drivers of inflation in real time is a central challenge for central banks. This column introduces a new financial markets-based model to identify the types of shocks driving changes in inflation expectations in near real-time. After the initial fall in demand in 2020, supply and policy factors became key drivers of inflation expectations. As the economy reopened in 2021, supply bottlenecks kept inflation elevated, until stronger demand became the main driver from mid-2022 onward. Furthermore, it shows that pass-through to inflation varies by shock type: global value chain disruptions are especially persistent, widespread, and inflationary.
November 12, 2025 at 9:13 AM
voxeu.org
Italian household survey data show that while awareness of genAI is high, usage is concentrated among younger, more educated and socially engaged individuals, potentially exacerbating inequalities.
Leonardo Gambacorta, Tullio Jappelli, Tommaso Oliviero
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Generative AI is being adopted more rapidly than previous digital technologies and has the potential to deliver meaningful productivity gains in professional tasks, raising concerns over whether the benefits are equitably distributed across society. This column analyses Italian household survey data to show that while awareness of generative AI is high, usage is concentrated among younger, more educated and socially engaged individuals, potentially exacerbating inequalities. Targeted interventions such as digital literacy programmes, community-based training, and inclusive design could help bridge gaps, and peer networks and informal learning can also play an important role.
November 12, 2025 at 9:09 AM
voxeu.org
@leosven.bsky.social argues that the debt-to-income ratio is a poor predictor of future crises, and that one should look at aggregate and individual data on household solvency and liquidity instead.
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Graph of Swedish household debt-to-income ratio as a percent with the high-risk thresholds of the European Commission and ESRB noted. The Swedish authorities and international organisations often claim that household debt poses a threat to financial and macroeconomic stability, with reference to a high debt-to-income ratio. This column argues that the debt-to-income ratio is a poor predictor of future crises, and that one should look at aggregate and individual data on household solvency (debt relative to assets) and liquidity (debt-service relative to debt-service capacity) instead. Because solvency and liquidity levels are good, Swedish household debt is not a threat to financial and macroeconomic stability.
November 12, 2025 at 8:54 AM
voxeu.org
Daniel Garcia-Macia, Siddharth Kothari, & Yifan Tao argue that factor misallocation from industrial policies in #China reduces domestic aggregate total factor productivity by about 1.2%. Scaling back industrial policy would lower fiscal costs and raise productivity.
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Figure showing industrial policy support by instrument over time as a percent of GDP. The instruments are: taxes, subsidies, credit, and land. Adding up the four instruments, industrial policy support is estimated to be about 4% of GDP as of 2023. Results for listed firms are extrapolated to all firms, correcting for the disproportionate share of tax revenue contributed by listed firms. China uses a wide array of industrial policies, such as subsidies and regulations, to promote strategic economic sectors. This column estimates that the equivalent fiscal cost of industrial policy is about 4% of GDP per year, with support directed largely at the manufacturing sector. Different policy instruments have varying effects: subsidies tend to lead to inefficiently high production, while trade and regulatory barriers limit production to suboptimal levels. Overall, factor misallocation from industrial policies reduces domestic aggregate total factor productivity by about 1.2%. Scaling back industrial policy would lower fiscal costs and raise productivity.
November 10, 2025 at 9:18 AM
voxeu.org
Patrick Imam and Tigran Poghosyan show that despite earlier and sharper tightening, inflation targeting central banks did not achieve systematically better outcomes than their non-targeting peers during the 2022 global inflation surge.
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The figure illustrates how inflation expectations shifted after the 2022 inflation surge, together with their 90-95% confidence intervals. In both inflation targeting and non-inflation-targeting countries, expectations for the year ahead increased by roughly one percentage point, while longer-term expectations remained stable, indicating that credibility held up across regimes. See Imam and Poghosyan (2025) for details of the empirical analysis. The 2022 global inflation surge tested inflation-targeting frameworks under severe supply shocks. This column shows that, despite earlier and sharper tightening, inflation targeting central banks did not achieve systematically better outcomes than their non-targeting peers. Instead, credibility and timely action mattered more than institutional labels. As supply shocks driven by geopolitics, climate change, and the energy transition become more frequent, inflation targeting frameworks will need to adapt and evolve to remain effective in this new environment.
November 10, 2025 at 9:16 AM
voxeu.org
A Kato & H Nishiyama find regional trade agreements have positive effects on exports to other countries from overseas Japanese manufacturing multinationals, suggesting that they have optimised their cross-border supply chain networks through free trade agreements.
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Chart showing activities of overseas Japanese affiliates by region. Data source: METI, the Basic Survey on Oversea Business Activities Studies examining the effects of free trade agreements on the activities of multinational enterprises have tended to focus on trade between home countries and their FTA partner countries. This column examines the effects of free trade agreements on local sales and exports to third countries by overseas affiliates of Japanese manufacturing multinationals. While the effects on local sales are ambiguous, regional trade agreements have positive effects on exports to other countries, suggesting that that Japanese multinationals have optimised their cross-border supply chain networks by utilising various forms of free trade agreements.
November 10, 2025 at 9:15 AM
voxeu.org
8-hour workday led to + employment in Denmark, especially among unskilled & female workers. Earnings fell in provincial towns but less in Copenhagen, where union membership was higher & wages rose to offset shorter hours.
M Fredagsvik Gunnesmo, C Worm Hansen
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Average hours worked in Denmark from 1872 to 1925. The dashed line represents the collective bargaining reform. We observe country-level average working hours between 1872 and 1911, but with gaps. We calculate the 1914–1925 values from occupation-level data. Hours are interpolated where data is missing: several intervals between 1872 and 1911, and between 1914 and 1919. In recent years, calls for shorter working weeks have re-emerged in Europe and elsewhere. This column examines how Denmark’s 1919 shift to the eight-hour workday affected labour market outcomes such as hourly wages, weekly earnings, and employment. Weekly earnings fell in provincial towns but less so in Copenhagen, where union membership was higher and hourly wages rose partly to offset shorter hours. Employment increased everywhere, especially among unskilled and female workers. Decentralised wage bargaining appears to have allowed for partial wage compensation and employment expansion.
November 10, 2025 at 9:13 AM
voxeu.org
Ottmar Edenhofer @pik-potsdam.bsky.social talks with @talknormal.co.uk about how to make carbon removal work and what policies are needed to turn it from theory into practice.

cepr.org/multimedia/h...

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Graphic promoting a VoxTalks podcast with Ottmar Edenhofer titled 'How to make carbon removal work', featuring an illustration of a hand capping an industrial smokestack emitting blue smoke on a red background.
November 7, 2025 at 4:27 PM
voxeu.org
K Aoki, A Auerbach, C Yuji Horioka, A Kashyap, T Watanabe, & D Weinstein discuss the legacy of Takatoshi Ito. His work is notable for challenging the perception that standard economic analysis is somehow ill-suited for understanding the Japanese economy.
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Takatoshi Ito, who passed away in September 2025, was a leading scholar of macroeconomics and international finance. This column, written by a group of friends and colleagues, outlines his many contributions in a lifetime of research, teaching, and policymaking in Japan, the US, and around the world. His work is particularly notable for challenging the widespread perception that standard economic analysis is somehow ill-suited for understanding the Japanese economy. Indeed, using the discipline’s rigorous tools, he illuminated challenges that Japan faced earlier and more acutely than other countries – including population decline and ageing, ballooning government debt, the zero lower bound and unconventional monetary policies, real estate bubbles and their collapse, and the banking sector’s problem of non-performing loans.
November 7, 2025 at 9:05 AM
voxeu.org
O Itskhoki & D Mukhin add to the ongoing debate on the implications of global imbalances for trade policy & argue tariffs can close a persistent trade deficit if & only if they change the value of, or the returns on, the country's international finance position.
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While the Trump administration has offered multiple justifications for imposing tariffs, none has been as prominently cited as the goal of reducing trade deficits. This column contributes to the ongoing debate on the implications of global imbalances for trade policy, arguing that tariffs can close a persistent trade deficit if and only if they change the value of, or the returns on, the country’s international financial position. The authors also discuss whether it is optimal to increase tariffs when trade is imbalanced, and whether tariffs can account for the large depreciation of the dollar in the first half of 2025.
November 7, 2025 at 9:04 AM
voxeu.org
China's Belt & Road Initiative triggered strategic & divergent responses among major investment countries. The US increased investment in signatory countries, largely driven by strategic competition, while the UK reduced investment.
Y Todo, S Nishitateno, S Brown
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Graph showing the impact that an FDI target country signing an MOU MOU between China and that country has on US FDI. China’s Belt and Road Initiative has reshaped international economic and political ties among countries and reorganised global value chains. This column reveals that the initiative has triggered strategic and divergent responses among major investor countries, depending on their economic and political relationships with China. The US increased its investment in countries after they signed BRI agreements with China, largely driven by strategic competition, while the UK reduced investment, reflecting concerns over political and supply chain risks linked to China. Japan’s investment in BRI countries appears to be largely unaffected by its strategic stance toward China.
November 6, 2025 at 9:26 AM
voxeu.org
E Dabla-Norris, D Furceri, Z Munkacsi, & G Sher show reallocating spending to infrastructure, education, health, & R&D and closing efficiency gaps can raise GDP by 11% in EMDEs and 4% in advanced economies, without increases in total spending.
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Graph of long-term output gains from reallocating spending (percent). The bars show long-term output gains due to a permanent increase, in the expenditure categories listed in the legend, of 1% of GDP in 2025, funded by a cut in public consumption. With high public debt and weak medium-term growth, finance ministries seek to do more with less. This column argues that efficiency gaps in public spending stand at about 30-40% globally and are pronounced in infrastructure investment and R&D spending. Using empirical and model-based analysis, it shows that reallocating spending to infrastructure, education, health, and R&D and closing efficiency gaps can raise GDP by 11% in emerging market and developing economies and 4% in advanced economies, over the long term, and crucially without increases in total spending.
November 6, 2025 at 9:23 AM
voxeu.org
M Aquilina, G Gelos, A Schrimpf, & S Zhu highlight two recent advances in the use of #AI tools to anticipate financial market stress. The tools can help policymakers monitor emerging risks in real time, combining quantitative forecast & qualitative insights.
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Graph showing the predictive accuracy of market dysfunction episodes. True data: 20-day average of the daily euro-yen triangular arbitrage parity difference with the US dollar as the vehicle currency, calculated on a minute-by-minute basis. The vertical red dashed line represents the end of the training period, end-2020; everything to the right of this line is considered pseudo out-of-sample. Predicting financial market stress is a significant challenge, as traditional models often fail to capture complex and nonlinear dynamics. This column highlights two recent advances in the use of AI tools to anticipate financial market stress. The first is a novel framework using machine learning to predict financial market stress and explain the main factors driving predictions. The second integrates numerical data with textual information using large language models to forecast market stress and identify its underlying drivers. Policymakers can use these tools to monitor emerging risks in real time, combining quantitative forecasts with qualitative insights from financial news and commentary.
November 5, 2025 at 9:03 AM
voxeu.org
International relocation of production systematically increases within-country income inequality in the countries that originally specialised in relocated products by compressing the income shares of the middle deciles.
Francisco Alcalá, Andres Romeu
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Graph showing the estimated effect of the relocation shock on the Gini index over the 1996-2017 period (percentage points). Economies with average GDP greater than $400 billion (2017 PPP). Globalisation has raised living standards worldwide but has also fuelled concerns that international competition is eroding middle-class incomes and widening inequality within countries. The column shows that the international relocation of production – the shift of export capacity from higher- to lower-income economies – systematically increases within-country income inequality in the countries that originally specialised in relocated products by compressing the income shares of the middle deciles and raising the top share.
November 5, 2025 at 9:00 AM
voxeu.org
In 2024, Chinese annual oil demand declined for the first time in 20 years. L Bencivelli, A D'Orazio, S Emiliozzi, & A Gazzani show the rapid adoption of EVs is a major driver of this trend. In 2024 alone, EVs displaced 0.43 million barrels per day of gasoline.
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Source: CEIC; Our World in Data and IEA. Note: In the left panel, “Other” includes Diesel, Natural Gas, LPG and other alternative fuels. For the right figure the green bars show each country's share of electric vehicles (EVs) on its total vehicle fleet in 2024 while the orange bars indicate the growth in the number of circulating EVs from 2014 to 2024. In the right panel the blue bars show each country's share of the global EV fleet in 2024. Between 2005 and 2024, China more than doubled its oil consumption, accounting for over half of the global increase in oil demand during that period. But in 2024 Chinese annual oil demand declined for the first time in twenty years. This column develops a dynamic model which suggests that the rapid adoption of electric vehicles in China has been a major driver of this trend. In 2024 alone, EV diffusion displaced about 0.43 million barrels per day of gasoline, and this figure could quadruple by 2040 with an accelerated transition.
November 4, 2025 at 9:15 AM
voxeu.org
Despite a rise in energy prices in 2023, Dutch households experienced slightly lower average expenditure-to-income ratios as disposable incomes increased faster. Tenants are more vulnerable but most households have become more resilient.
M van der Plaat, A Huizinga
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Graphs showing that fixed and necessary expenditures grew in the Netherlands, but the household expenditure ratio decreased between 2019 and 2023. Microdata from Statistics Netherlands, Nibud, and authors’ calculations. Households with high fixed and necessary expenditures relative to income are more vulnerable to income shocks. This column examines fixed and necessary expenditures for middle-income Dutch households between 2019 and 2023 and finds that, despite a sudden rise in energy prices in 2023, disposable incomes increased faster, slightly lowering average expenditure-to-income ratios. Tenants, especially private renters, remain more exposed to financial shocks than homeowners. Detailed information on household expenditures can help policymakers identify vulnerable households, assess policy effectiveness, and better understand household heterogeneity.
November 4, 2025 at 9:13 AM
voxeu.org
Efraim Benmelech & Joao Monteiro use data for 115 conflicts over the past 75 years and document large and persistent declines in output, investment, and trade following the onset of war, with no evidence of recovery even a decade later.
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Graph showing the effect of conflict on GDP Wars leave deep and lasting scars on economies. Using data for 115 conflicts across 145 countries over the past 75 years, this column documents large and persistent declines in output, investment, and trade following the onset of war, with no evidence of recovery even a decade later. Government revenues collapse while spending remains stable, forcing reliance on inflationary finance and short-term debt. The findings show that the true cost of war extends far beyond the battlefield, reshaping fiscal and monetary stability for years to come.
November 3, 2025 at 10:36 AM
voxeu.org
Francesco Bianchi, Era Dabla-Norris, & Salma Khalid show that most people dramatically misjudge debt levels and lose trust in their governments with every budget cut. They also believe that debt stabilisation efforts will disproportionately penalise them.
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This figure shows the median and interquartile range for the response of people in each country to the question "What do you think the current level of government debt is in percent of your country's Gross Domestic Product (GDP)?" Voters fear debt, but they do not understand it. Using data across 13 countries, this column shows that most people dramatically misjudge debt levels and lose trust in their governments with every budget cut. A smaller group of wealthier and more experienced voters demonstrates a stronger grasp of fiscal realities. Yet all groups share a common concern: that debt stabilisation efforts will disproportionately penalise them. These findings reveal how misinformation and memory shape the politics of debt – and why fixing fiscal policy may first require fixing public perception.
November 3, 2025 at 10:30 AM
voxeu.org
The informal sector expands during economic downturns and is highly sensitive to fiscal policy. Francesco Pappadà & Yanos Zylberberg show that limited commitment to repay sovereign debt and imperfect tax enforcement strongly influence fiscal policy during crises.
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This figure displays the estimated impulse response function to an increase of one percent of output in government expenditures (as in Born et al. 2020). Panels (a) and (b) display the estimated response (dashed line) and the 10-90% confidence interval for debt as a percentage of output and the default spread. The estimation procedure allows for regime switching between two regimes: low and high tax compliance in the previous period. The informal sector tends to expand during economic downturns and contract in recoveries, and is also highly sensitive to fiscal policy. This column explores the impact of these informality dynamics on optimal fiscal policy and the risk of sovereign default. The interaction of tax distortions and limited commitment to reimburse sovereign debt strongly constrains the dynamics of optimal fiscal policy and leads to more frequent default episodes and costly consumption fluctuations. Toning down the impact of fiscal policy on future returns to taxation or tempering the threat of default would both lead to welfare gains and more muted consumption fluctuations.
November 3, 2025 at 10:22 AM
voxeu.org
A Bonfiglioli, R Crinò, M Filomena, & G Gancia find that local #AI growth raises emissions by boosting economic activity and energy use. It also leads to power generation becoming more carbon-intensive as plants shifts from renewable to non-renewable sources.
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Panel (a) displays the employment share of data-intensive occupations in each commuting zone in 2022. Panel (b) shows the total CO2 emissions in each commuting zone for the same year. Darker colours represent higher levels of adoption of data-intensive occupations or emissions over the sample period. Red triangles indicate the presence of a data centre site. AI and other data-intensive technologies may help optimise energy use, but the technologies themselves are power hungry. This column explores how the diffusion of AI affected emissions in the US between 2002 and 2022 and finds that local AI growth raises emissions by boosting economic activity and energy use. It also leads to power generation becoming more carbon-intensive as plants shift from renewable to non-renewable sources. The ‘green’ promise of AI will remain elusive as long as the electricity sector itself does not rapidly decarbonise.
October 31, 2025 at 10:21 AM
voxeu.org
Hélia Costa and John Hooley argue that the highly localised nature of climate-related natural disasters means impacts should be assessed at the subnational level. Such an approach reveals significant adverse effects of about 0.3% of GDP per year in OECD economies.
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Graph showing the change in the level of real GDP following severe disasters (percent). Lines show local projection estimates at each horizon after the disaster for all, moderate, and severe disasters; shaded bands are 90% confidence intervals. Extreme weather events are increasing in frequency and intensity, yet their macroeconomic impacts remain poorly understood. This column argues that the highly localised nature of climate-related natural disasters means impacts should be assessed at the subnational level, with explicit accounting for cross-region spillovers. Such an approach uncovers significant adverse effects of about 0.3% of GDP per year in OECD economies, roughly half occurring outside the disaster zone via negative spillovers.
October 31, 2025 at 9:12 AM
voxeu.org
Norwegian data show that when children experience income losses, parents adjust their wealth to, either, transfer resources (when the shock is temporary) or increase savings (when the shocks are persistent).
A Fagereng, L Guiso, L Pistaferri, @mariusring.bsky.social
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Notes: The figure shows the reduced-form relationship between changes in parents’ financial wealth and the child's employer’s value-added shocks. The steep slope on the left-hand side indicates that parents accumulate more wealth when the child experiences larger negative income shocks through their employer. The flat slope on the right-hand side suggests that parental saving is unaffected by positive shocks. Beyond government and market-based insurance, the family remains a key institution for coping with economic risk. This column uses detailed Norwegian data to study how parents adjust their wealth when their children experience income losses. When the shock to children’s income is temporary, parents decumulate assets and transfer resources. However, when the shocks are persistent, parents increase savings, preparing to help again in the future. These transfers are systematic, sizeable, and one-sided – parents do not adjust when children’s incomes rise. For policymakers, households should be viewed as part of financial dynasties connected by transfers across generations.
October 30, 2025 at 8:57 AM