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Managing the transition to a post-vaccine world

Vaccines against COVID-19 are on the horizon; now is the time to manage the transition rationally On 13 November 2020, standing in the Rose Garden of the White House under intense worldwide attention, President Trump announced the much-anticipated results of Operation Warp Speed, the US government’s signature effort to promote the development of an effective vaccine against COVID-19. With evident pride, Mr Trump hailed the recent announcement by the pharmaceutical...

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Teacher allocation and school performance in Italy

Italy’s education system has faced funding constraints for many years. Official data from ISTAT (the Italian national statistical office) shows that public spending in the sector fell from 5.4% of GDP in 1992 to 4.4% in 2000 and has continued to fall, reaching 3.8% in 2017.  Since the largest expenditure in education is teachers’ salaries, it is no surprise to find that the fall in school expenditure has been accompanied by a reduction in the total number of teachers. According to...

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Work, care, and gender across UK lockdowns

The start of a second lockdown in the UK is raising many questions about its impact on the economy and on society more broadly, and what the implications for gender equality in the workplace and at home might be (Fabrizio et al. 2020).  To counter negative effects on employment, the government has announced that it will reinstate the original furlough scheme for the duration of the lockdown, where employees will be paid 80% of their wages if the new restrictions prevent them from...

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Making the European Green Deal really work

With its increasing ambition, the conceptual deficiencies of the European climate policy are becoming even more transparent – especially its neglect of the systemic nature of the energy system. This column highlights three key elements of a more promising approach to European climate policy: (i) establishing a uniform carbon price as its central policy element, (ii) ending the confusion of objectives and instruments, and (iii) dropping its naiveté about the repercussions of its...

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Relabelling, retirement, and regret

Fiscal sustainability challenges have prompted governments to restructure public pension systems, including the focal retirement ages. This column shows that relabelling ‘early’ and ‘normal’ retirement ages in a 2005 reform in Finland changed people’s retirement rate. Such relabelling allows policymakers to shape retirement behaviour with little fiscal cost. However, there is a marginal increase in regret among those who responded to the change in retirement ages, suggesting a...

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Regulating Fintech in Europe: Lessons from Wirecard

In its 2018 Annual Report, Wirecard, a German Fintech organisation, claimed to be “a global technology group that supports its customers and partners in accepting electronic payments from all sales channels [and in] the issuing of payment instruments”. The report also stated that “[t]he uniform platform approach and seamlessly integrated value added services such as data analytics, customers loyalty programmes and digital banking services support customers and partners of Wirecard...

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On the development of fiscal capacity: Insights from Africa

Policymakers in developing countries know the importance of fiscal capacity well. Without the state possessing an adequate capacity to collect revenues, the provision of public goods, including schools, infrastructure, or security will be limited. Without these public goods, crucial preconditions for economic development are called into question (Besley and Persson 2014). It is not surprising therefore that development economists have focused on devising techniques to make the...

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Inequality in choice quality

Inequality in choice quality: Evidence from health insurance choices in the Netherlands Ben Handel, Jonathan Kolstad, Thomas Minten, Johannes Spinnewijn 21 November 2020 Typically, markets provide a variety of high-quality products at low cost to consumers. This is a key motivation for using regulated exchanges to supply important products that might otherwise be publicly provided. Governments sanction markets to provide health insurance,...

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Gravity with granularity

Much of world trade is dominated by a small number of large firms. Market power becomes problematic for the estimation of gravity equations because many policy interventions also influence market shares and hence prices and the value of trade flows. This column proposes a method to correct the resulting inaccuracies in gravity equation estimation by adjusting trade flows for market power effects by subtracting a correction term that depends on the market share a firm or country...

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A long-run perspective on the productivity slowdown: Spain since 1850

Leandro de la Escosura, Joan R. Rosés 21 November 2020 The current productivity slowdown in advanced economies has triggered a lively debate about its causes and remedies (Gordon 2016, Gordon 2018, Fernald 2018, Mokyr 2018). The long phase of post-WWII robust growth, which led to unprecedented progress in living standards, recently gave way to a new phase of deceleration in output per hour worked and sluggish total factor productivity (TFP) growth. In a...

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