Economic & Fiscal Policy

Narratives about immigrants matter for both natives and immigrants because narratives shape attitudes, political outcomes, and perceptions of discrimination. A recent and growing literature has shown that media narratives influence how people think and act as well as that specific framing of immigration matters for how migrants are perceived. However, no study has examined narratives about immigrants in a systematic way.

The EU faces the challenge to combine large and sustained investments to promote the transition towards a green, digital, and competitive Europe while maintaining fiscal sustainability. Based on a comprehensive literature review on the effects of fiscal rules and investment clauses on public finances, this in-depth analysis provides some guidance how higher public investments can be achieved by a targeted golden rule without harming fiscal sustainability in the EU fiscal framework. The study also discusses the role of investments in the current proposals of the European Commission on the reform of the EU Economic Governance.

This Policy Brief examines how minimum income support (MIS) schemes contribute to the stabilization of disposable incomes in times of crisis in Europe. MIS systems act as a “safety net of last resort” in many European welfare states, but to varying degrees. The results from the simulation of stylized unemployment shocks hitting labor markets suggest that the tax-transfer system overall contributes to income stabilization in periods of crises. However, the MIS schemes’ individual contribution is relatively small, especially as set against the unemployment insurance system.

The US Inflation Reduction Act (IRA) promotes renewable energy and contributes to climate protection, but also offers generous tax credits and subsidies to incentivize production in the United States. While the planned generosity of the program has sparked an intense debate about potential negative spillover effects on the global economy, little is known about the quantity of potential adverse effects. In the new EconPol Policy Report the authors conduct a large-scale international survey among leading economic experts worldwide to quantify the effect of the US Inflation reduction act on the global economy. On a global scale, experts are little concerned about negative effects of the IRA on their domestic economy, estimating both the impact on national output and the risk of business outflows to be low. However, we uncover large heterogeneity in the potential impact of the IRA across countries and regions. In Europe, particularly in France and Germany, economic experts are highly concerned about the IRA and expect a significant effect of the IRA on the domestic economy. In terms of economic policy reactions, roughly 41% of the respondents support economic countermeasures.