We review the fiscal position of France, Germany, Italy and Spain, discuss the need for consolidation and how it could be implemented with minimal harm to output.By Klaus Adam and Dirk Schumacher

Provided wage growth moderates and inflation develops as expected, the ECB will start cutting interest rates in June. We discuss the uncertainties around this outlook and recent headwinds on the inflation front.By Klaus Adam and Dirk Schumacher

We discuss with Prof. Harald Fadinger (University of Mannheim) how the EU taxes the carbon content of imported goods via its Carbon Border Adjustment Mechanism (CBAM). We critically review the effectivenes of CBAM to prevent "carbon leakage", i.e., the international reallocation of production to locations with low carbon prices, and its effect on t…

We discuss with Veronika Grimm (German Council of Economic Experts) about lifting Germany's long-run growth potential. We focus on measures that increase labor supply, human capital formation and the role of long-run electricity prices.By Klaus Adam and Dirk Schumacher

The @ecb is getting close to cutting interest rates: it signaled following it March 7 Governing Council Meeting its readiness to start cutting rates in June, if everything goes according to plan.By Klaus Adam and Dirk Schumacher

We talk about recent trends and future challenges for productivity growth in the French economy. Our guest, Alain Durré, is Head of the Macroeconomics and Europe Division at the Bureau of the French Prime Minister and Rapporteur Général of the French National Productivity Board.By Klaus Adam and Dirk Schumacher

Euro Area inflation fell like a rock: from the peak of 10.6%, reached in October 2022, it dropped to levels below 3% a year later. We analyze how much of this decline can be attributed to policy tightening by the ECB. We find that the direct effect of ECB policy is likely small. ECB policy may have had important indirect effecta via anchoring infla…

We present the main academic insights about how government debt should evolve over time, if the government seeks to maximize social welfare. We discuss (i) how to deal with positive/negative expenditure surprises, (ii) how refinancing risk, due to interest rate risk, impacts optimal government debt dynamics, and (iii) the optimal long-run level of …

We talk with Bernard Dadah (Head of Commodity Research, Natixis) about critical minerals. What are these? How big of market do they have? Who mines and refines them? What can the EU's Critical Raw Materials Act (CRMA) achieve?By Klaus Adam and Dirk Schumacher

We discuss with the ECB's Director General for Economics Oscar Arce about the Euro Area's macroeconomic outlook, the ECB's past forecast errors, the way forecasts are produced at the ECB and the difficulties associated with producing macroeconomic projections. A true tour de force through the topic!By Klaus Adam and Dirk Schumacher

We review the ECB's assessement of the economic situation & the outlook for policy rates going forward.By Klaus Adam and Dirk Schumacher

We take stock of Germany's recent underperformance relative to its European peers and analyze its sources. We identify (real) household income dynamics as one of the main drivers.By Klaus Adam and Dirk Schumacher

We review and critically discuss the decisions taken by the ECB after the suprisingly benign November inflation numbers.By Klaus Adam and Dirk Schumacher

We discuss how various forms of uncertainty affect the conduct of optimal monetary policy. We provide a summary of key insights from the academic literature, some of which are quite surprising. We explain how to make sense of them. We make reference to the following academic papers: Indicator variables for optimal policy, LEO Svensson, M Woodford -…

We discuss with Professor Lars Feld (Advisor to the German Finance Minister) about what led to the Constitutional Court Ruling on the Debt Brake, what it implies for German federal budget and the Green Transition going forward.By Klaus Adam and Dirk Schumacher

Euro Area labour markets show astonishing resilience: unemployment rates are hovering around record lows despite serious adverse shocks having hit the Euro Area economy. We explore different explanation for this pheonmon and discuss whether it can last.By Klaus Adam and Dirk Schumacher

In October 2023, the European Council agreed on a reform of the European electricity market. We shed light on what went wrong in electricity markets in the past & critically review the main elements of the reform, together with Professor Andreas Loeschel, Chair of Resource Economics and Sustainability at the Ruhr University, Bochum, and Chairman of…

We discuss with Prof. Jean-Marie Meier (Wharton School) about technology transfer to China: (i) what coercive methods does China deploy to force a transfer?, (ii) how do Western CEOs' incentives contribute to technology transfer? Based on Jean-Marie's latest research finding, we provide surprising insights, in particular on the latter mechanism. Je…

We discuss the decisions taken by the ECB Governing Council and provide perspective on them.By Klaus Adam and Dirk Schumacher

We discuss with Guntram Wolff, CEO of the German Council on Foreign Relations (DGAP), about the prospects for a European Geopolitical Strategy. What would a Geopolitical Strategy consist of? What could be its guiding principles? How could it be implemented?By Klaus Adam and Dirk Schumacher

We discuss with Tobias Linzert about central bank frameworks for liquidity provision, in particular, how they changed following the financial crisis and how they might evolve going forward. Tobias is Adviser and Analytical Coordinator at the ECB’s Directorate General Market Operations.By Klaus Adam and Dirk Schumacher

We discuss the possible factors driving the recent strong increase in long-term government bond yields in the Euro Area. We disucss how monetary factors, fiscal developments and gobal factors have influenced bond yields dynamics.By Klaus Adam and Dirk Schumacher

Economists have a long tradition of opposing industrial policies measures, but advanced economies often use industrial policies to influence economic outcomes. We discuss with Professor Nathan Lane from Oxford University about what is known about the effects of industrial policies, when they work and when not.…

Artificial Intelligence has made new inroads into areas of work that were reserved exclusively for humans: conversational interaction, pattern recognition & prediction, and writing & teaching. We discuss with Carl Benedikt Frey about the implications of AI technologies for labor market outcomes going forward. Carl Benedikt is the Dieter Schwarz Ass…

We review the main decisions taken by the European Central Bank at its policy meeting on Sept. 14, 2023 & provide perspective on them.By Klaus Adam and Dirk Schumacher

We kick off the fall 2023 season in our "Week in Europe" series by discussing the cyclical and longer-term outlook for the Euro Area growth. We present positive and negative factors affecting growth dynamics and discuss mechanisms through which recent negative supply shocks might give rise to long-term scarring implications for Euro Area GDP. The p…

In the heart of Europe, as national governments engage in intense negotiations over the reform of fiscal rules, the future of the continent's economic stability will be determined. Olivier Blanchard, a Senior Research Fellow at the Peterson Institute, former Chief Economist of the International Monetary Fund and Professor of Economics at MIT, joins…

Various economic commentators have called for the ECB to raise its inflation objective, but central bankers in the Euro Area are reluctant to engange in a discussion about the target. We discuss both views and add insights from recent academic research about what constitutes an optimal inflation target for the Euro Area.…

We discuss how trade integration affects labor market outcomes: who are the winners & losers from international trade? Where did the gains from trade end up? And how long-lasting are the effects of trade-induced labor market displacements? Our guest in this episode is Prof. David Dorn from the University of Zurich, see here for his latest research:…

The ECB has revised inflation forecasts strongly upwards, particularly for core inflation. We review the new ECB forecasts and the main decision taken by the ECB Governing Council. We also discuss the outlook for interest rates going forward.By Klaus Adam & Dirk Schumacher

We discuss about the new insights generated by so-called Heterogeneous Agent New Keynesian (HANK) models. HANK models allow taking into account household heterogeneity when analyzing monetary policy. Ben Moll is one of the founding fathers of this model classs and Professor of Economics at the London School of Economics. For readers wishing to read…

We discuss the contributions of Nobel Prize winning Economist Robert E. Lucas Jr. to economics, together with Juan Pablo Nicolini, his former student, coauthor and friend. We review the main aspects of his work but also hear interesting anecdotes from Juan Pablo about his life and personality. Robert Lucas died May 15, 2023 in Chicago.…

Euro area manufacturing activity was surprisingly weak over recent months: we put the pullback in historical perspectiv and discuss possible factors behind it, in particular whether recent weakness is a harbinger of more structural issues in the manufacturing sector.By Klaus Adam & Dirk Schumacher

We discusss the main channels through which Euro Area monetary policy generates income inequality in the cross-section of households and their quantitative importance. We also discuss why the ECB should care about inequality implications of its policies and whether the current rate increases generate effects that are symmetric to the effects genera…

We review the main decisions taken at the ECB's May 2023 Governing Council meeting & discuss the outlook for policy rates going forward.By Klaus Adam & Dirk Schumacher

We discuss what one can learn from the ongoing contraction in Euro Area money growth for output growth and inflation going forward. We discuss the various interpretations of the quantity theory of money and then analyze to what extent the resulting implications are born out by the data.By Klaus Adam & Dirk Schumacher

We discuss with the Global Head of Short-Term Liquidity Management of Groupe BPCE, the second-largest cooperative banking group in France, about liquidity managment & regulation, recent banking sector stress and the ECB's approach to liquidity provision.By Klaus Adam & Dirk Schumacher

We discuss whether recent stress in the banking sector will adversely affect Euro Area economic growth. We look at the latest indicators, their pandemic dislocations and academic research on the importance of financial shocks for business cycles (Jermann & Quadrini, Macroeconomic Effects of Financial Shocks, American Economic Review, https://www.ae…

We discuss with Ignazio Angeloni about the state of banking supervision in the Euro Area. What kind of information do supervisors have access to and how do they use it? Ignazio Angeloni is a former member of the ECB's Supervisory Board. He coordinated the establishment of the so-called Single Supervisory Mechanism (SSM) at the ECB.…

We review the main ECB decisions and the challenges that lie ahead in terms of inflation and financial stability.By adam@uni-mannheim.de (Klaus Adam & Dirk Schumacher)

The international trade order established by the World Trade Organization seems to be falling apart. We discuss with Harald Fadinger from the University of Mannheim about the reasons behind this development and how Europe should react to it.By Klaus Adam & Dirk Schumacher

We critically review the fiscal situation in Europe and the key elements of the fiscal reform proposal put forward by the European Commission.By adam@uni-mannheim.de (Klaus Adam & Dirk Schumacher)

We discuss how the Euro Area construction sector will perform given the record speed at which interest rates have been increasing. Can it derail the Euro Area economic recovery?By adam@uni-mannheim.de (Klaus Adam & Dirk Schumacher)

We discuss about the current state of the Italian economy, structural reforms in Italy, and about Italy's position on the reform of the ESM reform & Stability and Growth Pact. Francesco Giavazzi is Professor of Economics at Bocconi University and was widely seen to be the most important economic advisor to former Prime Mario Draghi.…

Europe needs to boost its growth potential - but how? We discuss with Professor Ludger Wößmann (University of Munich & ifo Institute), one of the most eminent researchers in education economics worldwide, about the role of human skills and schools in economic growth.By Klaus Adam & Dirk Schumacher

We discuss the main announcements and possible reasons for why the market wasn't buying them.By Klaus Adam & Dirk Schumacher

Policy rates have increased by 2,5% already since the summer of 2022, but how much more is needed to get Euro Area inflation back to 2%? We discuss: the inflationary situation in Europe, the main aspects of historical inflation surges, and simple calculations that provide a perspective on the required amount of tightening.…

The Euro Area has faced one its most dramatic energy price shocks, is operating in an increasingly hostile international trade environment, and experienced a negative confidence shock following the Russian invasion in Ukraine. Yet, a recession has been avoided. We shed some light on why this is the case and what this means going forward.…

The Inflation Reduction Act (IRA) has recently been signed into law by U.S. President Biden. We discuss its economic consequences for European industry and how the EU might have to respond to the IRA.By Klaus Adam & Dirk Schumacher

We review and discuss the important decisions taken by the ECB in its December 2022 monetary policy meeting.By Klaus Adam & Dirk Schumacher