Global imbalances matter again, but how should policymakers respond in a world of heightened uncertainty and diminished cooperation? The 4th Paris Report from CEPR & @bruegel.bsky.social explains. @wederdim.bsky.social @jzettelmeyer.bsky.social https://ow.ly/JZN950YI8b3 #EconSky

Global imbalances matter again, but how should policymakers respond in a world of heightened uncertainty and diminished cooperation? The 4th Paris Report from CEPR & @bruegel.bsky.social explains.
@wederdim.bsky.social @jzettelmeyer.bsky.social

ow.ly/JZN950YI8b3
#EconSky

New VoxTalks Economics: Global Imbalances Redux Since the 1970s, global imbalances surged three times. Maurice Obstfeld joins @talknormal.co.uk to discuss their return, with the US current account deficit at 3.9% of GDP in 2025. Listen now: https://ow.ly/biyU50YIL9S

New VoxTalks Economics: Global Imbalances Redux

Since the 1970s, global imbalances surged three times. Maurice Obstfeld joins @talknormal.co.uk to discuss global imbalances return, with the US current account deficit standing at 3.9% of GDP in 2025.

Listen now: ow.ly/biyU50YIL9S

The upper panel shows the share of survey respondents who use generative AI for work. The lower panel reports the share of last week’s working hours spent using generative AI. For daily usage, respondents could indicate (i) no usage, (ii) less than 15 minutes, (iii) 15–60 minutes, (iv) 1–4 hours, or (v) more than 4 hours. To obtain the total minutes spent using generative AI, the authors assume daily usage of 0, 7.5 minutes, 37.5 minutes, 2.5 hours, and 4 hours for each option, respectively. Weekly usage is calculated by combining daily usage with the reported number of days used. If respondents report using generative AI on ‘some days’ (rather than one or all days), the authors assume they used it on half of their working days. For non-users, the share of work hours using generative AI is mechanically 0. The economic impact of generative AI will depend on the speed and breadth of adoption by workers and firms. Drawing on a survey of workers in the US and six European countries and a firm survey covering 32 European countries, this column explores the speed of AI adoption across countries and whether an ‘AI gap’ will exacerbate existing productivity differences between the US and Europe. There are large differences in AI adoption across countries, much of which are accounted for by management practices. Higher AI adoption rates are associated with faster productivity growth but not with changes in employment.

A Bick, A Blandin, D Deming, N Fuchs-Schündeln, & J Jessen find large differences in AI adoption across countries, much of which are accounted for by management practices. Higher adoption rates are associated w/ + productivity growth but not w/ employment changes.
cepr.org/voxeu/column...
#EconSky

Figure shows how across the 16 countries in the sample, estimated elasticities range from 0.075 to 1.9, with an average of roughly 0.79. This implies that a 10% increase in the net-of-tax rate raises reported taxable income by around 8% on average. Debates on corporate taxation hinge crucially on how firms respond to changing tax incentives. This column uses administrative tax data from 16 countries and a unified empirical framework to estimate corporate taxable income elasticities. It shows that the responsiveness of corporate taxable income varies widely across economies, and there are large differences in efficiency costs of corporate taxation as well. The differences are linked to tax system design, firm characteristics, and economic fundamentals. The results imply that identical tax reforms can produce very different revenue and efficiency outcomes.

@katarzynabilicka.bsky.social, E Patel & N Seegert show the responsiveness of corporate taxable income varies widely across economies, w/ large differences in efficiency costs of corporate taxation. Identical reforms can produce very different revenue/efficiency outcomes.
ow.ly/gThO50YFtkr
#EconSky

The chart reports marginal fixed effects estimates associated with parental education, that is, the percentage point difference in probabilities to achieve tertiary education between individual’s grown-up in high/low-educated families relative to those grown up in middle-educated families. Regressions control for sex, migration background, age and region of residence. All estimates are statistically significant (at least at the 10% level). Understanding levels and patters of intergenerational social mobility can help in designing policy mixes that enhance both drivers of economic growth and equality of opportunity. This column provides new cross-country estimates of intergenerational social mobility for 29 OECD countries. Parental background exerts a significant influence on offsprings’ socioeconomic outcomes, though with a different extent across countries. Education is a key channel of intergenerational mobility.

Data across 29 OECD countries show that parental background exerts a significant influence on offsprings’ socioeconomic outcomes, though with a different extent across countries. Education is a key channel of intergenerational mobility.
T Tanaka, M Nguyen, O Causa
ow.ly/HX1c50YFtkf
#EconSky

Figure shows event-study estimates of the effect of platform entry on annual crime rates across French police jurisdictions, for individuals aged 15–54. The vertical dashed line marks the year of platform entry. Post-entry percentage changes shown below each panel. Food delivery platforms lower barriers to legal work for disadvantaged groups. Using the staggered rollout of Deliveroo and Uber Eats across France, this column shows how expanding access to legal income for such groups can reduce crime even when the jobs are temporary, flexible, and low-paid. The policy goal should be to pair accessible entry-level work with pathways to skill development and stable employment.

Using the staggered rollout of Deliveroo & Uber Eats in France, H Allouard, G Cecere, J De Sousa, @econom.bsky.social, & I Picard show how expanding access to legal income for disadvantaged groups can reduce crime even when jobs are temporary, flexible, & low-paid.
cepr.org/voxeu/column...
#EconSky

The panels show from top clockwise kernel-weighted local polynomial regressions of product complexity scores (PCI), the logarithm of the number of products, the logarithm of unit prices (a measure of product quality), and markups on the share of knowledge jobs employment at the firm-level. 95% confidence intervals around the estimates are shown. Firms can shape demand by designing attractive products, managing quality, adapting to regulations, and deploying effective marketing strategies. This column argues that a set of jobs – knowledge jobs – are critical for firms to influence demand on top of helping firms to be cost efficient. These jobs are positioned high in the firm and horizontally aside upper-tier managers but are not managerial in nature. While they include R&D jobs, an important share consists of different tasks such as legal services, IT, marketing, or economic modelling.

Knowledge jobs, incl. R&D, legal services, IT, marketing, & economic modelling, are critical for firms to influence demand. These jobs specialise in processing information and transforming it into usable knowledge.
@ericmengus.bsky.social @tomkmichalski.bsky.social
cepr.org/voxeu/column...
#EconSky

The figure shows the timeline for CBAM phase-in and ETS free allocation phase-out. The EU’s Carbon Border Adjustment Mechanism seeks to address carbon leakage and ensure fair competition between EU and non-EU producers as EU climate policy tightens. This column uses input-output tables and sector-level carbon intensity data to estimate the carbon fees implied by the mechanism for member states and trading partners. While the direct impact of the current design is modest, its effects are concentrated in key sectors – such as iron, steel, and aluminium – and among a small group of suppliers, underscoring its political significance. Future expansions in sectoral coverage and higher carbon prices could amplify the Carbon Border Adjustment Mechanism’s influence on trade costs and global climate policy.

Though the direct impact of the current design of the EU's Carbon Border Adjustment Mechanism is modest, its effects are concentrated in key sectors and among a small group of suppliers, underscoring its political significance.
Geoffroy Dolphin & Gianluigi Ferrucci
cepr.org/voxeu/column...
#EconSky

This figure plots the evolution of total government bond issuance (in billion US dollars) over the period 2000-2023. The orange bars show Chinese central government bond issuance and the blue bars show central government bond issuance by the other 19 countries in our dataset. Emerging market debt has surged since the pandemic, renewing concerns about rollover risk and fiscal vulnerability. This column uses a new auction-level dataset covering sovereign bond issuance events across 20 emerging markets to study the evolution, currency composition, and maturity of emerging market bond issuance. The majority of issuance is in local currency and has a maturity of five years or less. Furthermore, local-currency borrowing is mainly driven by rollover needs, while foreign-currency issuance is timed around global financial conditions. These findings underscore the importance of developing deep domestic bond markets as core infrastructure for macroeconomic resilience.

Ka Lok Wong, @markya.bsky.social‬ & @upanizza.bsky.social study sovereign bond issuance events across 20 EMDEs. The majority of issuance is in local currency and has a maturity of 5 years or less. Deep domestic bond markets are key for macroeconomic resilience.
cepr.org/voxeu/column...
#EconSky

Figure shows rephrasing leads to substantially smaller distortions than removal, and the gap widens at lower toxicity thresholds, precisely where there is more substantive content to salvage alongside the inflammatory language. Online platforms face a fundamental tension between removing toxic content and preserving the plurality of online discourse. This column discusses a new methodology for measuring the distortions that content moderation introduces to the semantic composition of social media content. Based on a representative sample of 5 million US political tweets, the authors show that removing toxic content significantly alters the information landscape, equivalent to eliminating 4 out of 67 topics from the debate. Rephrasing toxic content with large language models, rather than deleting it, can reduce toxicity while mitigating these distortions.

M Habibi & C Schwarz provide a quantitative tool to measure the trade-off between reducing toxicity & preserving the diversity of discourse. They find that rephrasing toxic content with LLMs, rather than deleting it, can reduce toxicity while mitigating distortions.
cepr.org/voxeu/column...
#EconSky

🌍Where is the international trading system headed? What is domino regionalism and how will it play into the emergent order?
Richard Baldwin introduces his new CEPR book on VoxEU: cepr.org/voxeu/column...
#EconSky #ebook #trade #China #UnitedStates #EU

📢 #CallForPapers - Joint Workshop on Incentives, Management and Organization (IMO) & Entrepreneurship, Strategy and Firm Dynamics (ESF) 2026
📆17-18 Sept |📍IESE Business School, Barcelona, Spain
⌛Deadline: 5 April
Organisers: Ricard Gil & Maria Guadalupe
ow.ly/WYVP50Yv8mQ
#EconSky #EconConf

Figure plots the decomposition across commodity categories (energy, industrial metals, precious metals, grains, soft, and livestock) of the Geopolitical Risk Theme for the period between 2001 and 2023. As geopolitical tensions from Ukraine to the Middle East disrupt global supply chains, understanding how diverse commodity shocks affect the broader economy has become increasingly important. This column argues that although oil has dominated policy discussions, recent events show that other commodities also play a critical role in shaping macroeconomic outcomes. The authors find the stagflationary impact of commodity supply disturbances originating outside the oil market to be at least as important for both output and inflation.

Alvin Lumbanraja, Sarah Mouabbi, @evgeniapassari.bsky.social & Adrien Rousset Planat find that the stagflationary impact of commodity supply disturbances originating outside the oil market to be at least as important for both output and inflation.
cepr.org/voxeu/column...
#EconSky

Figure: firms are ranked by information precision (highest to lowest on the x-axis) and average consumer risks (lowest to highest on the y-axis). The red solid line represents a linear fit between the two rankings. Firm IDs are displayed next to each dot. Efforts to reduce information asymmetries across firms are increasingly at the centre of Europe’s digital regulatory agenda. This column examines how differences in risk-rating precision, cost structures, and product differentiation among Italian auto insurers affect pricing and targeting strategies. It estimates large consumer surplus gains from greater information sharing, driven by reductions in premiums. The gains are concentrated among less informed firms, while losses are largest for those at the top of the information hierarchy. Policy interventions such as the creation of a centralised risk bureau can generate substantial welfare gains but need to preserve incentives for innovation.

Data from the Italian auto insurance industry show that there are large consumer surplus gains from greater information sharing, driven by reductions in premiums. Gains are concentrated among less informed firms.
Marco Cosconati, Yi Xin, Fan Wu
cepr.org/voxeu/column...
#EconSky

We’ve launched a new weekly digest ✉️

All VoxEU content, one email, once per week. New economics research from leading voices straight to your inbox.

You can sign up here: ow.ly/GA0950Y4kwt
#EconSky

Figure shows annual clinical trials in China, the US, and Europe, 2010–2024. Left panel shows all trials; right panel shows high-novelty trials (above-median novelty score) using the novelty index in Dranove et al. (2022). China has become a serious contender at the frontier of pharmaceutical innovation. A key policy change was the 2016 National Reimbursement Drug List, whereby the government negotiated steep price cuts in exchange for guaranteed coverage and near-universal patient access. This column shows that the reform generated both static gains from expanding patient access to existing innovative drugs, and dynamic gains from stimulating the development of the next generation of therapies. The reform policy offers rare evidence that a well-designed insurance policy can help reconcile the tension between affordability and innovation incentives.

China's 2016 National Reimbursement Drug List generated both static gains from expanding patient access to existing innovative drugs and dynamic gains from stimulating the development of the next generation of therapies.
Panle Barwick, Hongyuan Xia, Tianli Xia
cepr.org/voxeu/column...
#EconSky

As overt discrimination has receded and human capital gaps have narrowed, economists have increasingly turned to gender norms to explain why women continue to earn less than men, shoulder the bulk of unpaid care work, and suffer earnings penalties following childbirth. This column discusses how gender norms – both those people internalise and those enforced by peers – act as powerful constraints on women’s labour market outcomes. Understanding how these norms form, persist, and can change has major implications for the design of effective labour market policy. The challenge is not merely to alter private preferences, but to shift shared expectations.

As overt discrimination recedes & human capital gaps narrow, P Cortes, J Hwang, J Pan, & U Schönberg turn to gender norms - internal and external - to explain why women continue to earn less, shoulder more unpaid work, & suffer earnings penalties after childbirth.
cepr.org/voxeu/column...
#EconSky

Figure shows how increasing labour migration to reach a net migration rate of 0.61% by 2030 would almost perfectly compensate for the effect of increasing fertility up to instant replacement in countries such as France and Italy. After the early-2040s, the dividends of this strategy would also be sufficiently large to outperform the GDP per capita trajectory of the baseline scenario. Policymakers often promote higher fertility as a way to offset the impact of population ageing without increasing immigration. This column uses OECD and United Nations projections to argue, however, that higher fertility would depress GDP per capita growth for roughly 50 years. Mobilising women and older workers could avert this slowdown, but more births would likely lower force participation among these groups. Conversely, increased labour immigration can coexist with higher fertility. Simple simulations show that expanding migration can readily offset, and even neutralise, the negative growth effects of a fertility boost in countries with low net migration rates.

A Bassanini argues higher fertility would depress GDP per capita growth for 50 years as women & older workers leave the labour force. Complementing higher fertility w/ increased labour immigration would help offset the negative growth effects of a fertility boost.
cepr.org/voxeu/column...
#EconSky

The figure shows the identified Chinese domestic shocks using a structural vector autoregression (SVAR) framework. Domestic negative demand shocks are identified as those associated with declines in both activity and prices, while domestic negative supply shocks correspond to falling activity paired with rising prices. China’s economy is deeply embedded in global supply chains and fluctuations in its growth can have worldwide repercussions. Combining novel Chinese demand and supply shocks with both country- and firm-level data, this column shows that: (i) global GDP responds more to Chinese supply shocks than to Chinese demand shocks; (ii) both supply and demand slowdowns in China reduce partner-country GDP and firm revenue, especially where trade links to China are stronger; and (iii) supply shocks have larger impacts on countries and firms that are more reliant on Chinese inputs, while demand shocks have larger impacts on those more reliant on selling to Chinese firms and consumers.

Alexander Copestake, Melih Firat, Davide Furceri, & Chris Redl show that Chinese spillovers into the global economy are far-reaching, with effects depending on the type of shock and the degree to which countries are linked to China.
cepr.org/voxeu/column...
#EconSky

The figure shows that the short-term macroeconomic costs of austerity can be mitigated through careful design and timing. Many governments have to mitigate concerns about fiscal sustainability, without triggering near-term output losses or reversing progress on containing poverty or inequality. This column assesses how the design of fiscal consolidation packages shapes their impact on aggregate and distributional outcomes. It finds that the careful design of fiscal consolidation (making use of available monetary space or choosing tax-based instruments) can lower the output and unemployment costs of austerity and mitigate the adverse impacts on poverty and inequality. The results stress the importance of monetary-fiscal coordination for maintaining fiscal buffers, while limiting setbacks to development goals.

K Bhasin & P Loungani show that the careful design of fiscal consolidation (making use of available monetary space or choosing tax-based instruments) can lower the output and unemployment costs of austerity and mitigate the adverse impacts on poverty and inequality.
cepr.org/voxeu/column...
#EconSky

Figure shows how the global distribution of scientific production has changed dramatically over the past four decades. Scientific activity has historically been concentrated in a small number of advanced economies, but the global landscape of research is undergoing rapid transformation. Using data on 44 million publications from 1980 to 2022, this column examines how the geography of science has evolved along three dimensions: where research is produced, what topics it studies, and where it is consumed through citations. It documents a substantial shift in scientific production from traditional Western leaders to emerging economies. Yet scientific attention and knowledge diffusion remain uneven, revealing a tension between the global expansion of scientific capacity and the continued fragmentation of the knowledge system.

A Nagaraj & R Yao document how the geography of science has evolved since 1980 & find a substantial shift in scientific production from traditional Western leaders to emerging economies. There is also strong cross-country specialisation by field of research.
cepr.org/voxeu/column...
#EconSky

The map shows the share of electricity demand from data centres in European countries. The global data centre market has expanded massively over the past 15 years, with the US firmly in the lead in terms of both number of facilities and computational capacity. While data centre electricity consumption remains relatively limited at the global level, it is growing rapidly, with notable implications in some areas for local electricity demand. This column presents evidence of how the geographic concentration of data centres can create localised pressures on electricity prices and network congestion. These dynamics are already generating political tensions and have spurred a vivid debate on key policy issues, including grid access, cost allocation, and strategic autonomy.

Data centre electricity consumption remains limited at the global level, but it is growing rapidly. Fabrizio Ferriani & Andrea Gazzani analyse how the geographic concentration of data centres can create localised pressures on electricity prices & network congestion.
cepr.org/voxeu/column...
#EconSky

Figure shows military records from the Commonwealth War Graves Commission and other archival sources that identify the place of origin of soldiers who died (left map) and a dataset of patents filed in Britain between 1895 and 1979, geolocated to the communities where inventors lived (right map). Large wars destroy not only lives and infrastructure but also the human capital that fuels long-term economic progress. This column presents new evidence from Britain that shows that communities that lost many young men in World War I experienced persistent declines in subsequent innovation. The losses were particularly detrimental for frontier technologies and breakthrough inventions, highlighting how war can leave long-lasting scars on a country’s capacity to generate new ideas.

@lrepetto.bsky.social, Davide Cipullo, Edward Pinchbeck, & @jbietenbeck.bsky.social show that communities that lost many young men in WWI experienced persistent declines in subsequent innovation, especially in frontier technologies.
cepr.org/voxeu/column...
#EconSky

Chris Sims, who passed away in March 2026, reshaped modern macroeconomics by insisting that theory and data speak together. A pioneer of vector autoregressions, Bayesian methods, and policy relevant modelling, he transformed how scholars and practitioners analyse economic dynamics and inform central bank decisions. His influence spanned econometrics and macroeconomics, from DSGE models to rational inattention. Beyond his intellectual legacy, Sims was a demanding yet deeply supportive mentor whose sharp insights pushed generations of students to produce stronger work. This personal reflection highlights both his groundbreaking contributions and the lasting imprint he left on the field and on those he taught.

Chris Sims, who passed away in March 2026, reshaped modern macroeconomics by insisting that theory and data speak together. F Bianchi, M Del Negro, G Primiceri, & F Schorfheide reflect on his contributions to the profession and the impact he had on those he taught.
cepr.org/voxeu/column...
#EconSky

Figure shows industrial policy, manufacturing employment, and TFP growth. Each bubble represents a country. The x-axis shows the average industrial policy intensity over the 2002-2019 period. The y-axis shows the change in manufacturing employment share (left panel) and the log change in TFP (right panel), on average, over the same period. Industrial policies are a key feature of many countries running persistent trade surpluses. This column develops a framework to examine how industrial policies shape global imbalances and asks whether countries should worry about trade deficits, in the context of the ‘Second China Shock’ affecting mostly innovation-intensive high-tech sectors. The findings suggest that countries negatively affected by global imbalances should include industrial and innovation policies as part of their policy toolkit.

A Cesa-Bianchi, @apferrero.bsky.social @lucafornaro.bsky.social & M Wolf examine how industrial policies shape global imbalances. Countries negatively affected by those imbalances should include industrial and innovation policies as part of their policy toolkit.
cepr.org/voxeu/column...
#EconSky

Figure: GDP gap in Sweden and in the euro area, 1970–2024 (per cent of potential GDP). EA10 is Austria, Belgium, Finland, France, Germany, Ireland, the Netherlands, Italy, Portugal, and Spain. Sweden chose to stay outside the monetary union in 1999 and rejected the euro in a 2003 referendum. This column summarises a recent report which reassesses the pros and cons of Swedish euro membership. The effects on economic efficiency, political influence, and European integration argue for euro membership, whereas the effects on business cycle stabilisation and other economic considerations point against it. The author judges that the arguments concerning political integration have gained much more importance in an increasingly geopolitically unstable world at the same time as the differences in economic consequences between membership and non-membership appear limited. He therefore recommends that Sweden should adopt the euro.

Lars Calmfors surveys the pros and cons of Sweden joining the euro. Political integration concerns have gained more importance in an increasingly unstable world at the same as differences in economic consequences between membership & non-membership appear limited.
cepr.org/voxeu/column...
#EconSky

Figure shows labour shortages and real wage growth in the EU, 2013 Q1 - 2025 Q2. Labour shortages are included as the share of firms in industry, services, and construction, indicating that labour is a ‘factor limiting production’. Real wages are calculated based on the compensation per employee deflated using the GDP deflator. Labour shortages across the EU are back down to pre-pandemic levels and declining, but this easing of the labour market has not translated into higher unemployment. So far, leading indicators such as youth unemployment and long-term unemployment have remained stable. This column argues, however, that the declining hiring rate for those with weak labour market attachment may suggest that a turning point is within reach. The evolution of the labour market will depend on how new shocks will affect labour demand going forward.

Despite the easing of the labour market, unemployment has not risen in the EU. Kristine Van Herck, Áron Kiss, & Alessandro Turrini argue that the declining hiring rate for discouraged workers may suggest that a turning point is within reach.
cepr.org/voxeu/column...
#EconSky

The figure displays the cash-on-hand impulse response to a one-percentage-point rate increase at refinancing. Cash-on-hand consists of the change in monthly payment (the passive component) and the change in total borrowing (the active component). A one-percentage-point rate rise causes cash-on-hand to fall by about £2,000 on average after one year. The right panel shows that household-level spending declines by £1500 (about 5% of consumption) over the same twelve-month period. Central banks adjust interest rates to affect consumption and manage aggregate demand. This column uses 6.8 million natural experiments created by differences in the timing of UK mortgage refinancing to study the impact of monetary policy on household spending behaviour. It finds that rate increases lead to lower cash-on-hand and lower household spending, whereas spending rises following rate cuts. These spending effects are driven by an asset price channel, whereby households borrow against higher house prices following rate cuts. Lower debt service costs matter less for explaining spending responses to interest rate changes.

Angus Foulis‬, Jonathon Hazell, @atifrmian.bsky.social, & Belinda Tracey ‪study the impact that UK mortgage refinancing had on household spending behaviour. Rate increases led to lower cash-on-hand and lower household spending, with spending rising following a cut.
cepr.org/voxeu/column...
#EconSky

The G20 is approaching a turning point. The shift toward coalition-based governance, the need to manage systemic interdependence, and the move beyond market-centric frameworks all point to a new alignment in global economic governance. This column argues that the UK Presidency in 2027 has an opportunity to advance this transformation, positioning the G20 as a platform for managing the complexities of the twenty-first century.

The alignment of global economic governance is shifting. Dennis Snower argues that the 2027 UK Presidency of the G20 has the opportunity to advance a transformation of the institution, positioning it as a platform for managing the complexities of the 21st century.
cepr.org/voxeu/column...
#EconSky

The figure reports mean lifetime fertility (realised + planned) by work-from-home (WFH) status. The sample is restricted to respondents aged 20 to 45 who live with a partner. ‘No one WFH’ means neither the respondent nor the partner works from home; ‘Only self WFH’ means only the respondent works from home at least one day per week; and ‘Both WFH’ means both partners work from home at least one day per week. Fertility has fallen to very low levels in many advanced economies, and many pro-natalist policies appear to deliver modest gains at high cost. Using survey data covering 38 countries, this column shows that both planned and realised fertility are higher among adults who work from home at least one day a week. For couples, fertility is higher still when both partners work from home, indicating that hybrid work may be an overlooked margin for easing the trade-off between family and paid work.

Steven Davis, Cevat Giray Aksoy, Jose Maria Barrero, @nickbloom.bsky.social, Katelyn Cranney, @mathiasdolls.bsky.social, & Pablo Zarate find that both planned and realised fertility are higher among adults who work from home at least one day a week.
cepr.org/voxeu/column...
#EconSky