That climate policies are costly is evident and therefore often creates major fears. But the alternative (no action) also has a cost. Mitigation costs and damages incurred depend on what the climate policies are; moreover, they are substitutes. This brings climate policies naturally in the realm...

This paper presents a new approach to estimating the existence and magnitude of tax-motivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous...

Can attitudes towards minorities, an important cultural trait, be changed? We show that the presence of African American soldiers in the U.K. during World War II reduced anti-minority prejudice, a result of the positive interactions which took place between soldiers and the local population. The...

This paper painstakingly restores a vintage empirical model of unemployment determination by interacting shocks and institutions, and runs it on recent data featuring dramatic shocks and controversial institutional change. Theoretical insights and empirical results suggest that reforms and...

Distance related variables typically vary in a cross-section dimension but less so in a time dimension across cities, regions, or countries. The enlargement of the EU or the introduction of the euro, however, can be looked upon as integration shocks that are informative of the consequences of...

This paper presents a review of the most significant fiscal rules policymakers can choose from. The insights from this review are then applied to the current budgetary situation of the European Union. In the European Union, the supranational Stability and Growth Pact (SGP) should provide the...

This study investigates the pricing behaviour of firms in the euro area on the basis of surveys conducted by nine Eurosystem national central banks, covering more than 11,000 firms. The results, robust across countries, show that firms operate in monopolistically competitive markets, where...

This paper offers a comprehensive comparison of the structure of banking and financial markets in the euro area. Based on this, several hypotheses about the role of banks in monetary policy transmission are developed. Many of the predictions that have been proposed for the U.S. are deemed...

In order to provide medium run forecasts of headline and core HICP inflation for the euro area, we assess the usefulness of dynamic factor models. We use Stock and Watson's (1999) out-of-sample methodology for models estimated over the 1988:1-2002:3 period, with balanced and unbalanced panels....

The paper implements a consistent empirical strategy in order to investigate the behaviour of the markup over the cycle and its contribution to inflation movements.We model the price series as I(2) components and use polynomial cointegration in order to recover a long-run price schedule. We do...