EU Institutions & Policy-Making

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.

The current energy crisis in Europe is bringing about profound changes that can accelerate the transition to a more sustainable and secure energy system. Yet, it is a supply shock of unprecedented scale and complexity, most noticeable in the markets for natural gas, coal, and electricity. Winter promises to be tough - especially for low-income households that use gas for heating and for small and medium-sized industrial companies. Short-term policy measures aim to shield consumers from the effects of the crisis: these include gas and electricity price brakes and energy subsidies for households. At the same time, many governments in the EU are now trying to increase or diversify oil and gas supplies and also accelerate structural change. The articles in the “Policy Debate of the Hour” section of this issue of EconPol Forum examine the causes of the crisis, analyze its effects, critically assess the policies already in place, and propose new short- to medium-term energy policies to better manage it and strengthen the EU’s systemic resilience to energy market volatility.

In this issue of the EconPol Forum, our authors discuss how Europe can more effectively address all these challenges and solve the associated labor market problems caused by rapid structural change. The authors also provide helpful policy recommendations for national governments and EU companies.