Publications

The EU should be ready to offer candidate countries at least participation in the single market, partial access to the EU's budget, and observer status in EU institutions by 2030.

We use the pricing mechanism of perpetual loans by our proposed European Debt Agency to determine a dynamic yield corridor that captures idiosyncratic risk and filters liquidity risk.

There is no doubt that monetary policy reacted late to the rising inflationary pressures experienced in 2021-22. The major central banks subsequently caught up rapidly and hiked interest rates at an unprecedented pace. However, as inflation reached its peak at the end of 2022 and has been falling since then, central banks may once again be late in adjusting their policies.

On October 30, 2023, the Biden Administration issued the Safe, Secure and Trustworthy Development and Use of Artificial Intelligence Executive Order 14110, which marks a key development in the global race to regulate AI

The way the EU Commission and governments envisage launching future enlargements without strengthening the EU in parallel could have negative consequences for all Europeans, in the EU and in candidate countries.

The US and the euro area have similar headline inflation rates, but very different drivers. In the US, inflation is mainly driven by housing costs. By contrast in the euro area energy now provides an important negative element, that is offset to a large extent by still increasing food prices

Whatever comes out of this election result, Dutch politics has become more volatile and complex in the coming years. This will likely have consequences not only for the Netherlands but also for the EU

La Nota di aggiornamento del Documento di Economia e Finanza indica che la stabilizzazione del debito pubblico italiano richiede il raggiungimento di un surplus primario superiore al 3% del Pil nel giro dei prossimi 3-4 anni. Una manovra restrittiva di questo tipo non ha precedenti storici.

On November 13, the Institute for European Policymaking co-organized with IAI, the Istituto per gli Affari Internazionali, an event in Rome dedicated to discussing the implication of the US Industrial Reduction Act on European industries and, specifically, on Italian companies.

The EU negotiating delegation at the UN Dubai conference will put forward initiatives to phase out CO2-emitting fossil fuels and fossil fuel subsidies.

On November 9th, the Institute for European Policymaking organized its first in-person event in Brussels: The Impact of IRA on the EU Industrial Policy: Challenging Conventional Wisdom.

Ralph Ossa, a professor of Economics at the University of Zurich currently on leave, has been appointed as the WTO chief economist in the most challenging time for the organization.  In the first World Trade Report since his appointment, Ralph Ossa and his colleagues challenge the prevalent narrative of an inevitable decline of globalization that we have experienced in the last three decades.  

Our starting point was the stark increase in non-energy price inflation, which is the key element for the ECB since monetary policy cannot do anything about energy prices. Could the ECB have foreseen this development? Our analysis suggests that this would have been difficult based on past experience. 

A continuous political drive will be necessary, at all levels of government, to guarantee enough momentum in terms of both the necessary implementation of the approved reforms, and the timely disbursement of the sum related to already authorized public investments.

Our analysis indicates that the budgetary documents presented by the Italian government are based on excessively optimistic forecasts regarding GDP growth, the effectiveness of budgetary measures and the revenues connected to privatizations. As a result, the very small projected decline in the public debt/GDP ratio is not likely.

How can broad public support for policy reforms and gridlock be overcome? The main mechanism for achieving this in political systems across the democratic world is open competition for the main executive office: the President of the Commission, in the case of the EU.  

​​​​​​In the discussion on monetary policy in the presence of supply shocks, we focus on the Euro area to understand the recent wave of inflation.

La Nota di Aggiornamento del DEF (Nadef) e la bozza della Legge di Bilancio del Governo Meloni indicano obiettivi e programmi di politica economica sulla cui credibilità gravano varie ipoteche. Le difficili condizioni dell’economia internazionale e l’intrinseca debolezza della finanza pubblica italiana possono mettere in questione gli impegni dichiarati dal governo, con implicazioni per la stabilità finanziaria del paese.

As the path to fiscal sustainability narrows, so does Italy’s political capital to credibly advocate a radical reform of EU fiscal rules. Italy's primary balance will need to improve by 0.9% of GDP each year in both 2025 and 2026: similarly sized improvements were recorded in only 3 of the 20 years before the pandemic (2 of which were at the height of the Eurozone crisis, in 2011 and 2012).

Rebuilding trust in the EU would entail the recognition that the winners of yesterday are not the winners of today or tomorrow. In a world of endemic uncertainty and repeated shocks, to avoid zero-sum games, an insurance-based solidarity is needed where support will depend on who suffers more from the shocks.  

The EU directives on Women on Boards and on Pay Transparency have a clear objective: to reduce gender gaps in European countries. Assessing their effectiveness requires a thorough understanding of the outcomes of similar policies based on research.

To understand the feasibility of further integration, we study the extent and evolution of cultural and policy views heterogeneity in Europe leveraging international survey data. We calculate the distribution of cultural and policy views distance both across and within countries.  We find that cultural heterogeneity has increased along both dimensions in the past but has decreased in the most recent wave.

The ongoing conversation among the European Union institutions that started when the Commission released its proposal also features a variety of views on which (and how many) authorities both at EU level and at Member State should lead the governance of AI.

The reduction in trade needed to achieve our climate ambitions would be out of reach. Border Carbon Adjustment is the way to go, but leakages remain sizeable.

The reduction in trade needed to achieve our climate ambitions would be out of reach. Border Carbon Adjustment is the way to go, but leakages remain sizeable.

Federal Reserve monetary policy has been more expansionary than the one predicted by the rule until the second quarter of 2022, then this tendency was reversed.  The evidence is very different for the case of the Euro area, where the observed policy rates are consistently below those predicted by the model and fluctuate outside the range compatible with the model-related uncertainty.

Federal Reserve monetary policy has been more expansionary than the one predicted by the rule until the second quarter of 2022, then this tendency was reversed.  The evidence is very different for the case of the Euro area, where the observed policy rates are consistently below those predicted by the model and fluctuate outside the range compatible with the model-related uncertainty.

The former managing director of the ESM discusses the long-term consequences of the Euro crisis and its aftermath.

The former managing director of the ESM discusses the long-term consequences of the Euro crisis and its aftermath.

While American and European central bankers might prefer to focus on their progress in tamping down inflation, there is no use pretending that they did not play a significant role in creating the problem.

While American and European central bankers might prefer to focus on their progress in tamping down inflation, there is no use pretending that they did not play a significant role in creating the problem.

The ratification of the modified ESM treaty by the Greek parliament took place easily, and smoothly, without the usual political tensions. The text was submitted to the plenary on the 28th of June 2021 and a week later, on July 6th, it was adopted by a large majority. Only the Greek Communist Party and minor parties of the extreme left and right voted against it. It was practically a non-issue for the mainstream Greek political parties and Greek citizens. Why so?

With the establishment of the ESM, the original form of the states' own responsibility for their budgetary policy (no bailout clause), which was central to Germany, has been permanently softened.

While banks are now profiting from the new interest rate scenario, the ultimate long-term effect of heightened interest rates on bank performance remains uncertain.

L'Inflation Reduction Act (IRA), firmato dal Presidente degli Stati Uniti Joe Biden quasi un anno fa (agosto 2022), è il primo importante provvedimento per contrastare il cambiamento climatico che il parlamento degli Stati Uniti abbia mai approvato. La ragione principale di questo successo è che l’IRA non impone oneri all’industria USA ma garantisce molti sussidi.

Bite-back occurs when an innovation has unexpected and unintended effects. It is probably the case that in most cases such consequences are negative, but that is not invariably the case. Bite-back happens because a new technology is by definition an exploration into the unknown, and so it is impossible to predict precisely whether it will do more or less of just very different things from what it was meant to do.

A detailed analysis suggests that the handicap for European producers in the US market will be limited. This small negative effect is likely to be overwhelmed by the much-increased market, implying that the IRA leads to increased opportunities for exports of electric vehicles and renewable inputs to the US. Our calculations suggest that over time the US market for electric vehicles could increase by a factor of 4 and renewables installations should also increase by hundreds of percent. A commentary by Daniel Gros.

In this Working Document, we do not try to provide an overall evaluation of the IRA or its cost-effectiveness with regard to addressing climate change and US emissions. Rather, we investigate its impact on the US market and on EU export opportunities, concentrating on the material content of the IRA – not its intention.

As a possible reform of its dispute settlement procedures, the WTO membership should consider carving out trade actions taken under the national security exception (GATT Article XXI) as a case where trading partners have the right to bring non-violation claims but do not have the right to bring violation claims.

The proliferation of advanced generative AI models has unequivocally highlighted what was already foreseeable since the advent of the algorithmic era. The traditional notion of "consent" is no longer a viable proposition in the context of an algorithmic society. Given the increasing sophistication of emerging AI generative models, which legal basis could be a reasonable alternative?

American protectionism has been reinvented in the name of “national security”. Yet, the belief that a country can achieve its own “nationally security” unilaterally is debatable.

Given the common monetary policy in Europe, term premia on bonds issued by different countries are an immediate gauge of the heterogeneity in the transmission mechanism of monetary policy in Europe and of the need for intervention to protect the Euro area against it.

Given the common monetary policy in Europe, term premia on bonds issued by different countries are an immediate gauge of the heterogeneity in the transmission mechanism of monetary policy in Europe and of the need for intervention to protect the Euro area against it.

The dynamics of nominal government bond yields at different maturities play a central role in shaping the response of the real economy to monetary and fiscal policy interventions. Yields can be decomposed into two unobservable components: the sequence of expected one-period rates and the term-premia.

So much international trade happens in dollars that it would be very difficult to turn the tide against the currency any time soon.

So much international trade happens in dollars that it would be very difficult to turn the tide against the currency any time soon.

If Russia's invasion and assault on Ukraine can be unequivocally classified as aggression, then the response to this violation must also adhere to international legal standards.

A concise introduction into the workings of large language models is presented. We start with an introduction to the attention mechanism, the core of the transformer architecture, which is then followed by a discussion of the steps needed to engineer the base model, a generatively pretrained transfromers (GPT), to a working chatbot like ChatGPT.

“You can do some pretty impressive things with AI as a technological platform, but I am not necessarily an optimist because there are also some very negative paths that AI could take as a technology. We have a confluence of factors that make the negative use of this technology much more probable than positive use”, MIT economist Daron Acemoglu argues.

Il dibattito sulla riforma del Meccanismo Europeo di Stabilità (MES) - che l’Italia rimane l’unico Paese UE a non avere ratificato - è tornato al centro del dibattito politico italiano. All’interno della maggioranza di governo sembrano coesistere due linee di opposizione alla ratifica – una “ideologica” e una “strategica”. Entrambe sono fallaci.