News Archive

In the current context of difficult times across Europe and in the World, there are relevant issues on which many people might agree, regardless of their political, ideological or theoretical views - António Afonso examines the options available and asks for compromise.

EconPol Europe's Ulrich Hege (Toulouse School of Economics, ECGI) and co-authors Bo Becker (Stockholm School of Economics, CEPR & ECGI) and Pierre Mella-Barral (Toulouse Business School) discuss the economic risks of COVID-19 and the increasingly plausible steep protraction, examine the mitigating support programs governments are putting into place for households and firms, and explain why planning for debt structuring should start now.

This EconPol policy brief, using figures from the ifo Institute, calculates potential costs of coronavirus to the German economy of up to 729 billion, with up to 1.8 million jobs cut and six million workers affected by lower hours - however it stresses that the aim of any action must be to shorten the partial shutdown of the economy without compromising the fight against the epidemic, with strategies that combine a resumption of production with further containment of the epidemic.

A recession is now inevitable, says Daniel Gros (CEPS, EconPol Europe), but it can be followed by a vigorous recovery. The memory of the financial crisis of 2008/9 is fresh enough to ensure the combined efforts of central bankers and governments can keep financial markets working and prevent mass bankruptcies. Policymakers at every level are using every lever at their disposal to avoid a repeat of the freezing of financial markets, which was so damaging ten years ago.

Existing literature suggests that firm R&D support policies stimulate private R&D within a country and that in most cases, the positive impact of government support is stronger on smaller firms. Recent evidence also indicates that some of the policy instruments, such as patent box policies, are tools that multinationals use to lower their total tax bill through profit shifting.