Economy & Markets

Edited by Donato Masciandaro and Gianmarco Ottaviano

iStock_BlackSalmon
2023-12-14 Gianmarco Ottaviano

Ecological Transition, Carbon Taxation, and the Competitiveness of Businesses: the European Gamble

Climate change is a global problem that requires global solutions. One significant cause of the phenomenon is greenhouse gas emissions associated with high-carbon-intensity production. Left to their own devices, businesses generally do not consider the negative impact of their emissions on the climate when making production decisions. Hence the idea of using a tax on greenhouse gas emissions (also known as a "carbon tax"), which imposes a "fair price" on such emissions for companies, forcing them to internalize the damage caused to the climate by high-carbon-intensity production. Unfortunately, ...

iStock_traffic_analyzer
2023-11-30 Donato Masciandaro

The "Militarization" of Finance between Economics and Politics

Between February 26 and 28 of last year in Brussels, the G7 countries and the European Commission jointly introduced financial sanctions against Russia. Geopolitics suddenly and traumatically entered the realm of monetary and financial policy. What assessment can we make more than a year and a half after that decision, considering the statements by President Putin and state oligarchs aimed at denying that the sanctions have had any effect? The analysis of the facts shows us that at the very least, there are roosters crowing when it is still dark. The starting point is to frame those choices, which ...

iStock_simon2579
2023-10-24 Gianmarco Ottaviano

New Scenarios of Globalization from Beijing to New Delhi

The summer that just ended was a very active one for the diplomacies of emerging countries, marked by two major summits, the BRICS summit in Johannesburg and the G20 summit in New Delhi. What has changed for the global economy? It seems like quite a lot, but what is particularly surprising is the transformation that occurred in the two weeks between the two summits, during which Beijing quickly withdrew from the stage. Indeed, while President Xi Jinping of China was a protagonist in Johannesburg, he was not seen in New Delhi. For some, this was considered a strategic withdrawal to express dissatisfaction ...

iStock_Eoneren
2023-09-13 Donato Masciandaro

Digital Euro: Moving Forward with Caution and 'Education'

Do we need a digital euro? The answer is affirmative if the ECB keeps its promise to create a complementary public currency that will be useful for European citizens, and also enhance effectiveness from both a monetary policy and banking supervision perspective. We must move forward, but with caution. A middle ground must be found between the skeptical positions of those who, out of ignorance or convenience, do not see the need for this innovation and, on the other extreme, the superficial enthusiasm of those who see the digital euro as the sole currency of the future, replacing both physical ...

iStock_ipopba
2023-07-21 Donato Masciandaro

Dangerous Liaisons: Digital Bank, Social Networks, and Financial Instability

Being constantly connected is harmful to the mind, common sense tells us. However, it can also be very harmful to the wallet, as suggested by what happened with the four recent bank failures: Silicon Valley Bank (SVB), Signature Bank, First Republic Bank, and Credit Suisse. Three cases in America and one in Europe share a common lesson: regulation and oversight must be proactive. It is necessary to eliminate the possibility of conducting unlimited digital banking operations in terms of time or amount and to be very cautious about the rules for introducing the digital Euro. A couple of months after ...

iStock_Pekic
2023-05-31

The War of Talents and the Challenge of Skilled Immigration in Europe

Despite not capturing media attention, the increasingly urgent need for skilled immigration in Italy and Europe has been the focus of numerous analyses carried out over the years by both national and international institutions. The Organization for Economic Cooperation and Development (OECD) has been particularly active on this front, publishing several reports as part of the series entitled “Recruiting immigrant workers.” The OECD is an international organization for economic studies consisting of member countries (including Italy) that share the common characteristics of being developed ...

iStock_QwazzMe Photo
2023-04-18 Donato Masciandaro

Swedish Lessons for the ECB

A good central bank is one that is understood; if it is also credible, it becomes excellent. A bad central bank is one that must be interpreted; if it also creates macroeconomic damage, it becomes terrible. From this point of view, in February the ECB took a step forward, unfortunately taking two steps back in March. Let's start with February. How to judge what the ECB did and said, also through the words of President Lagarde? Economic analysis allows us to make the question more precise: what have we understood about the reaction function of the ECB? The concept of a reaction function is what ...

iStock_marqs
2023-03-17 Gianmarco Ottaviano

The Role of the State in the New Phase of Globalization

In the period after the Second World War, the design of global markets was executed based on a strong trust in the ability for self-regulation under the auspices of multilateral international organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization. The idea was that globalization could produce benefits in terms of economic development and wellbeing for all of the countries in the world. This did happen in large part, in the sense that a series of indicators of poverty and exclusion, especially in developing countries, showed improvement in part thanks ...

iStock-1393160219
2023-02-15 Donato Masciandaro

The Fed Floats between Wall Street and the White House

The beginning of 2023 has seen the Federal Reserve continue to pursue rate rises, but at a slower pace. The Fed perseveres in its policy of “getting by”: decisions are made meeting by meeting, and the only goal seems to be to avoid mistakes, floating between the desires of the financial markets, that believe inflation “has fallen,” and those of the Biden administration, that claims it is “still high.” Chair Jerome Powell and his colleagues are pursuing the same policy inaugurated last year, that does not entail any transparency on the future path of interest rates, thus not allowing ...

iStock-1332002332
2023-01-23 Gianmarco Ottaviano

Reglobalization: From the Supremacy of Economics to that of Politics?

Starting from the time of the Second World War, precisely to counter some of the causes of the conflict – as well as to stem some of its consequences – an international, diplomatic, and political movement arose aimed at achieving integration of the markets in various countries; integration that was global and multilateral, meaning that it would leave nobody out. This, for two reasons: first of all, with the aim of stability, i.e. to avoid the creation of opposing blocs; and secondly, for reasons of inclusiveness, to prevent a situation in which large industrialized countries would reach agreements ...