EconPol Europe: Evidence-Based Policy Debate

Additional EU tariffs on Chinese imports can only eliminate critical dependencies and unfair competitive pressure from China up to a point. “Depending on how they are structured, tariffs entail considerable economic costs and often also have unintended consequences. How suitable they are depends greatly on the objective they are meant to serve,” notes Lisandra Flach, Director of the ifo Center for International Economics.

German manufacturing firms would invest more in climate-friendly technologies if the carbon price were higher and, at the same time, more reliable. “For many companies, predictable carbon prices determine whether, for example, a new, climate-friendly facility is worthwhile,” notes ifo researcher Mathias Dolls. “On average, the companies surveyed only invest when the price remains consistently above EUR 90 per metric ton of CO₂. When price fluctuations are too severe, companies do not invest.”

Economic experts rate current economic uncertainty as high as 60.7 on a 0–100 scale, with geopolitical tensions and uncertainty surrounding energy and commodity supplies identified as leading drivers, according to a new EconPol Policy Brief. Structural vulnerabilities, particularly weak institutional and governmental frameworks as well as heavy dependence on commodity imports, further amplify uncertainty - which lowers expected GDP growth by an average of 0.8 percentage points.

A new ifo study presents the most comprehensive analysis to date of the EU's critical raw materials value chains. The findings show that Europe accounts for more than 5% of global mining output for only 4 of the 27 critical raw materials assessed. To reduce import dependence, the EU must strengthen strategic partnerships with resource-rich countries and develop a harmonized geological and commercial knowledge base to support domestic refining and production.

A euro of public support for young adults generates roughly three times the social benefit of a euro spent on older working-age individuals. This is the result of a new study by EconPol based on data for France. “Transfers that help young adults stay in education are especially valuable, because they are partly self-financing through higher future earnings and tax payments,” says Marion Brouard, researcher at ifo Institute. “Today, young adults are the age group most in need of additional social assistance. Policymakers are still not taking this shift into account enough.”

The ongoing conflict in the Persian Gulf has renewed attention on the Strait of Hormuz as a critical maritime chokepoint. A new EconPol Opinion piece by Lisandra Flach shows that while the route is vital for energy and raw material imports, other chokepoints - notably the Suez Canal and Bab el-Mandeb - are of equal or greater direct importance to the German and European economies. 

EconPol Forum (formerly CESifo Forum) is a quarterly English-language journal to bring economic analysis on topics of worldwide interest along with policy advice to a broad range of policymakers and the public.

EconPol Policy Briefs are short articles providing key findings of policy-related studies and policy implications from recent policy relevant economic research. Grounded in evidence-based insights, the Policy Briefs discuss current topics in economic and fiscal policy within a wide range of specific areas of expertise. 

EconPol Policy Reports conduct comprehensive economic analysis on current European economic and fiscal policy issues, fostering a deeper understanding of European economic development and the implications of policy measures. The reports provide valuable insights into policy scenarios and the impact of economic policies, facilitating informed public discussions and evidence-based policy making.