News Archive

The cost of public debt increases more than proportionally with the debt/GDP ratio. This convexity has one immediate implication in the presence of uncertainty about growth: the average social cost of public debt is higher than the contractual debt service cost embedded in the interest rate. In this EconPol policy report, Daniel Gros explains how Common European debt, which is financed by a pro-rata levy on the output of member states, provides an insurance function because countries which grow less have to contribute less (and vice versa).

The Covid-19 crisis has led to a common European fiscal response in the form of the €750 billion Next Generation EU (NGEU) package agreed by EU leaders in July 2020. One important novelty of this package is that it will involve, for the first time, the issuance of substantial common European debt - Daniel Gros explains what this means for the EU and its Member States.

Public procurement officials make substantial decisions for public good provision, and their decisions have widespread welfare implications.

Recent evidence suggests that individual traits such as social capital are key determinants of how well the Covid-19 pandemic can be contained. It has been widely argued that the success of governments’ policies will be determined by trust and, at the same time, the pandemic itself is likely to affect trust, attitudes towards institutions and solidarity.

Global authorities have longstanding worries about the impact of financial contagion on the economy: the domino effect of a failing bank can have severe repercussions, as the 2008 financial crash illustrated. To deal with these potential shocks, regulators and financial institutions have implemented risk management systems and processes designed to minimize the likelihood that such an event will be able to destroy the economy again.