EU Institutions & Policy-Making

Excess profit taxes (EPTs) emerge as an option to contribute to the extra needed revenues, avoiding a general increase in corporate tax rates, while having the prospect to serve as a gateway to converge toward a permanent efficient rent tax instaed of the corporate income tax. General unilateral (temporary or permanent) EPTs would face the same international pressures from profit shifting and tax competition as the existing corporate income tax, calling for international coordination. A coordinated EPT on multinational enterprises can take the form of a formulary apportionment approach that allocates the EPT base using sales by destination.

On 1 January 2023, Croatia became the newest member of the Schengen Agreement of the European Union (EU) and also joined the Eurozone. This will not only mean a new currency and the elimination of border controls. It will also mean reductions in barriers to trade between Croatia and other EU member states. The Schengen Agreement and the Eurozone are part of the engine of European integration, namely the reduction of trading costs between the member countries in various dimensions as well as in trade with third countries. This includes the European Customs Union, the European Single Market, the Eurozone, the removal of customs barriers in the Schengen area and the EU’s free trade agreements with third countries.

Our paper quantifies ECB communication on the Governing Council meeting days. The key questions we address are as follows: What are the main communication patterns in the ECB press conference? Do shifts in communication patterns affect stock market volatility on the Governing Council meeting days?

The financial sector may play a central role in climate change. This is because, ideally, climate policy measures create important incentives for investors throughout the globalized world to redirect their capital in favor of a cleaner production and thus lower emissions. That is why climate policy must consider the link between the real sector and the financial sector. This transition will not happen by itself. It requires targeted financing measures. To make it effective, policymakers need information about what economic activity, and thus what investment, can be considered green or sustainable. The task is to identify and compile relevant data and provide it to investors in a suitable classification, e.g., via an ESG rating or a taxonomy. Our authors in the “Policy Debate of the Hour” discuss to which extent green finance can make the economy greener. They also examine the role the financial sector can play in this transition. Among other things, they shed light on how “green” can be measured and look at the role of climate policy and incentive effects. They also provide recommendations for both economic and climate policy. In our “Economic Policy and its Impact” section, the authors shed light on the question of how teaching evolutionary theory changes students' knowledge and important choices in their life. In “Institutions Across the World” we discuss how policymakers can create incentives for households to follow tax rules when they use household-related services. The section “Big Data-Based Economic Insights” uses a textual analysis to look at remarks made in ECB press conferences.