Recent VoxEU Content

The hidden costs of China’s industrial policy

Daniel Garcia-Macia, Siddharth Kothari, Yifan Tao — 2025-11-10T00:00:00+0000

China uses a wide array of industrial policies, such as subsidies and regulations, to promote strategic economic sectors. This column estimates that the equivalent fiscal cost of industrial policy is about 4% of GDP per year, with support directed largely at the manufacturing sector. Different policy instruments have varying effects: subsidies tend to lead to inefficiently high production, while trade and regulatory barriers limit production to suboptimal levels. Overall, factor misallocation from industrial policies reduces domestic aggregate total factor productivity by about 1.2%. Scaling back industrial policy would lower fiscal costs and raise productivity.

Navigating the 2022 inflation surge: Lessons for monetary policy frameworks

Patrick Imam, Tigran Poghosyan — 2025-11-10T00:00:00+0000

The 2022 global inflation surge tested inflation-targeting frameworks under severe supply shocks. This column shows that, despite earlier and sharper tightening, inflation targeting central banks did not achieve systematically better outcomes than their non-targeting peers. Instead, credibility and timely action mattered more than institutional labels. As supply shocks driven by geopolitics, climate change, and the energy transition become more frequent, inflation targeting frameworks will need to adapt and evolve to remain effective in this new environment.

Supply chains and free trade agreements

Atsuyuki Kato, Hiroyuki Nishiyama — 2025-11-09T00:00:00+0000

Studies examining the effects of free trade agreements on the activities of multinational enterprises have tended to focus on trade between home countries and their FTA partner countries. This column examines the effects of free trade agreements on local sales and exports to third countries by overseas affiliates of Japanese manufacturing multinationals. While the effects on local sales are ambiguous, regional trade agreements have positive effects on exports to other countries, suggesting that that Japanese multinationals have optimised their cross-border supply chain networks by utilising various forms of free trade agreements.

Lessons from Denmark’s eight-hour workday reform

Marius Fredagsvik Gunnesmo, Casper Worm Hansen — 2025-11-08T00:00:00+0000

In recent years, calls for shorter working weeks have re-emerged in Europe and elsewhere. This column examines how Denmark’s 1919 shift to the eight-hour workday affected labour market outcomes such as hourly wages, weekly earnings, and employment. Weekly earnings fell in provincial towns but less so in Copenhagen, where union membership was higher and hourly wages rose partly to offset shorter hours. Employment increased everywhere, especially among unskilled and female workers. Decentralised wage bargaining appears to have allowed for partial wage compensation and employment expansion.

Takatoshi Ito, scholarship on Japan’s economy transformed

2025-11-07T00:00:00+0000

Takatoshi Ito, who passed away in September 2025, was a leading scholar of macroeconomics and international finance. This column, written by a group of friends and colleagues, outlines his many contributions in a lifetime of research, teaching, and policymaking in Japan, the US, and around the world. His work is particularly notable for challenging the widespread perception that standard economic analysis is somehow ill-suited for understanding the Japanese economy. Indeed, using the discipline’s rigorous tools, he illuminated challenges that Japan faced earlier and more acutely than other countries – including population decline and ageing, ballooning government debt, the zero lower bound and unconventional monetary policies, real estate bubbles and their collapse, and the banking sector’s problem of non-performing loans.

Tariffs, global imbalances, and the dollar

Oleg Itskhoki, Dmitry Mukhin — 2025-11-07T00:00:00+0000

While the Trump administration has offered multiple justifications for imposing tariffs, none has been as prominently cited as the goal of reducing trade deficits. This column contributes to the ongoing debate on the implications of global imbalances for trade policy, arguing that tariffs can close a persistent trade deficit if and only if they change the value of, or the returns on, the country’s international financial position. The authors also discuss whether it is optimal to increase tariffs when trade is imbalanced, and whether tariffs can account for the large depreciation of the dollar in the first half of 2025.

How to make carbon removal work

2025-11-07T00:00:00+0000

We are familiar with climate policy to reduce emissions. We know about the policies to adapt to climate change. But can we successfully reduce the amount of CO2 in the atmosphere, and how do we create policies and incentives to invest in, and take advantage of, those technologies?

Ottmar Edenhofer, Director of the Potsdam Institute for Climate Impact Research and chair of the European Scientific Advisory Board on Climate Change, talks to Tim Phillips about an aspect of climate policy that is becoming increasingly important.

China’s Belt and Road Initiative and the shifting landscape of trade and investment

Yasuyuki Todo, Shuhei Nishitateno, Sean Brown — 2025-11-06T00:00:00+0000

China’s Belt and Road Initiative has reshaped international economic and political ties among countries and reorganised global value chains. This column reveals that the initiative has triggered strategic and divergent responses among major investor countries, depending on their economic and political relationships with China. The US increased its investment in countries after they signed BRI agreements with China, largely driven by strategic competition, while the UK reduced investment, reflecting concerns over political and supply chain risks linked to China. Japan’s investment in BRI countries appears to be largely unaffected by its strategic stance toward China.

Spending smarter: A powerful growth strategy

Era Dabla-Norris, Davide Furceri, Zsuzsa Munkacsi, Galen Sher — 2025-11-06T00:00:00+0000

With high public debt and weak medium-term growth, finance ministries seek to do more with less. This column argues that efficiency gaps in public spending stand at about 30-40% globally and are pronounced in infrastructure investment and R&D spending. Using empirical and model-based analysis, it shows that reallocating spending to infrastructure, education, health, and R&D and closing efficiency gaps can raise GDP by 11% in emerging market and developing economies and 4% in advanced economies, over the long term, and crucially without increases in total spending.

The economics of biodiversity

2025-11-05T00:00:00+0000

"The Economics of Biodiversity” was published by the UK Treasury in 2021. It sets out how economic systems value biodiversity and natural capital, and which policies would preserve and restore nature.

The project leader was Professor Sir Partha Dasgupta of the University of Cambridge. In the latest of our special episodes recorded at the first Hoffmann Centre / CEPR / ReCIPE Conference continue, he tells Tim Phillips what he learned from hanging out with ecologists, why we need indicators of economic performance that value nature, and why we should worry about the decline of natural capital.

How AI can help detect warning signs of financial market stress

Matteo Aquilina, Gaston Gelos, Andreas Schrimpf, Sonya Zhu — 2025-11-05T00:00:00+0000

Predicting financial market stress is a significant challenge, as traditional models often fail to capture complex and nonlinear dynamics. This column highlights two recent advances in the use of AI tools to anticipate financial market stress. The first is a novel framework using machine learning to predict financial market stress and explain the main factors driving predictions. The second integrates numerical data with textual information using large language models to forecast market stress and identify its underlying drivers. Policymakers can use these tools to monitor emerging risks in real time, combining quantitative forecasts with qualitative insights from financial news and commentary.

From the China Shock to the global relocation of production: Inequality consequences

Francisco Alcalá, Andres Romeu — 2025-11-05T00:00:00+0000

Globalisation has raised living standards worldwide but has also fuelled concerns that international competition is eroding middle-class incomes and widening inequality within countries. The column shows that the international relocation of production – the shift of export capacity from higher- to lower-income economies – systematically increases within-country income inequality in the countries that originally specialised in relocated products by compressing the income shares of the middle deciles and raising the top share.

Dutch households spend less of their income on fixed and necessary expenditures

Mark van der Plaat, Anna Huizinga — 2025-11-04T00:00:00+0000

Households with high fixed and necessary expenditures relative to income are more vulnerable to income shocks. This column examines fixed and necessary expenditures for middle-income Dutch households between 2019 and 2023 and finds that, despite a sudden rise in energy prices in 2023, disposable incomes increased faster, slightly lowering average expenditure-to-income ratios. Tenants, especially private renters, remain more exposed to financial shocks than homeowners. Detailed information on household expenditures can help policymakers identify vulnerable households, assess policy effectiveness, and better understand household heterogeneity.

China’s shrinking oil footprint: How electric vehicle adoption is shaping China’s oil consumption

Lorenzo Bencivelli, Alessandro D'Orazio, Simone Emiliozzi, Andrea Gazzani — 2025-11-04T00:00:00+0000

Between 2005 and 2024, China more than doubled its oil consumption, accounting for over half of the global increase in oil demand during that period. But in 2024 Chinese annual oil demand declined for the first time in twenty years. This column develops a dynamic model which suggests that the rapid adoption of electric vehicles in China has been a major driver of this trend. In 2024 alone, EV diffusion displaced about 0.43 million barrels per day of gasoline, and this figure could quadruple by 2040 with an accelerated transition.

The lasting economic scars of war

Efraim Benmelech, Joao Monteiro — 2025-11-03T00:00:00+0000

Wars leave deep and lasting scars on economies. Using data for 115 conflicts across 145 countries over the past 75 years, this column documents large and persistent declines in output, investment, and trade following the onset of war, with no evidence of recovery even a decade later. Government revenues collapse while spending remains stable, forcing reliance on inflationary finance and short-term debt. The findings show that the true cost of war extends far beyond the battlefield, reshaping fiscal and monetary stability for years to come.

When debt perceptions shape fiscal futures

Francesco Bianchi, Era Dabla-Norris, Salma Khalid — 2025-11-02T00:00:00+0000

Voters fear debt, but they do not understand it. Using data across 13 countries, this column shows that most people dramatically misjudge debt levels and lose trust in their governments with every budget cut. A smaller group of wealthier and more experienced voters demonstrates a stronger grasp of fiscal realities. Yet all groups share a common concern: that debt stabilisation efforts will disproportionately penalise them. These findings reveal how misinformation and memory shape the politics of debt – and why fixing fiscal policy may first require fixing public perception.

The hidden cycle: How informality shapes fiscal policy and sovereign default

Francesco Pappadà, Yanos Zylberberg — 2025-11-01T00:00:00+0000

The informal sector tends to expand during economic downturns and contract in recoveries, and is also highly sensitive to fiscal policy. This column explores the impact of these informality dynamics on optimal fiscal policy and the risk of sovereign default. The interaction of tax distortions and limited commitment to reimburse sovereign debt strongly constrains the dynamics of optimal fiscal policy and leads to more frequent default episodes and costly consumption fluctuations. Toning down the impact of fiscal policy on future returns to taxation or tempering the threat of default would both lead to welfare gains and more muted consumption fluctuations.

Data, power and emissions: How AI’s growth may slow down the green transition

Alessandra Bonfiglioli, Rosario Crinò, Mattia Filomena, Gino Gancia — 2025-10-31T00:00:00+0000

AI and other data-intensive technologies may help optimise energy use, but the technologies themselves are power hungry. This column explores how the diffusion of AI affected emissions in the US between 2002 and 2022 and finds that local AI growth raises emissions by boosting economic activity and energy use. It also leads to power generation becoming more carbon-intensive as plants shift from renewable to non-renewable sources. The ‘green’ promise of AI will remain elusive as long as the electricity sector itself does not rapidly decarbonise.

Overcoming climate agenda fatigue

2025-10-31T00:00:00+0000

Can COP 30 get the green transition back on track? It’s not a great time for international cooperation right now and, with hindsight, was the period from 2017 to 2022 a “golden moment” the climate transition, and was it an opportunity missed?

That’s the argument presented by Livio Stracca, Deputy Director General Financial Stability at the European Central Bank, also the chair of NGFS work on climate scenarios. He talks to Tim Phillips about what we can learn from this golden moment, and what can be done this time around to avoid the dangers of what Livio calls “climate agenda fatigue” among both the public and governments.

The macroeconomic implications of extreme weather events: Insights from advanced economies

Hélia Costa, John Hooley — 2025-10-31T00:00:00+0000

Extreme weather events are increasing in frequency and intensity, yet their macroeconomic impacts remain poorly understood. This column argues that the highly localised nature of climate-related natural disasters means impacts should be assessed at the subnational level, with explicit accounting for cross-region spillovers. Such an approach uncovers significant adverse effects of about 0.3% of GDP per year in OECD economies, roughly half occurring outside the disaster zone via negative spillovers.

Insuring labour income shocks: The role of the dynasty

Andreas Fagereng, Luigi Guiso, Luigi Pistaferri, Marius Ring — 2025-10-30T00:00:00+0000

Beyond government and market-based insurance, the family remains a key institution for coping with economic risk. This column uses detailed Norwegian data to study how parents adjust their wealth when their children experience income losses. When the shock to children’s income is temporary, parents decumulate assets and transfer resources. However, when the shocks are persistent, parents increase savings, preparing to help again in the future. These transfers are systematic, sizeable, and one-sided – parents do not adjust when children’s incomes rise. For policymakers, households should be viewed as part of financial dynasties connected by transfers across generations.

Africa’s domestic debt boom: New evidence from the African Debt Database

Mark Manger, Ugo Panizza, Niccolò Rescia, Christoph Trebesch, Ka Lok Wong — 2025-10-29T00:00:00+0000

Africa’s total public debt has risen more than fourfold since the early 2000s, but just as important as the increase in debt volumes is the shift in structure. This column uses a new open-access dataset covering more than 50,000 loans and securities issued by 54 African countries to reveal that African governments now raise more than half of their financing at home, reversing decades of dependence on external lenders. While the rise of domestic debt markets may deepen financial systems, foster local investor bases, and enhance monetary autonomy, the authors warn that the line between financial deepening and financial repression can be thin.

Political polarisation drives talent away: Evidence from Spain’s health sector

David Martinez-Miera, Carlos Sunyer — 2025-10-29T00:00:00+0000

Given the growing prevalence of political and social polarisation, understanding its effects on society is of paramount importance. This column discusses the effects of an increase in political polarisation on a region’s capacity to attract human capital. The evidence shows how an increase in polarisation results in lower attraction of human capital, especially for individuals with higher human capital scores.

Coalitions of the willing

2025-10-29T00:00:00+0000

In this special video VoxTalks Economics filmed at the Hoffmann Centre/ CEPR / ReCIPE Flagship Conference on Global Sustainability, we explore the prospects for major multilateral climate agreements at COP30 — and, if such agreements prove elusive, what a credible Plan B might look like.

CEPR's President Beatrice Weder di Mauro speaks with Tim Phillips about the potential for “coalitions of the willing” — climate or finance clubs that can design and implement their own sustainability policies when global consensus falls short.

What incentives could encourage countries to join these coalitions?
And who might take the lead in driving them forward?

Coalitions of the willing

2025-10-29T00:00:00+0000

In the first of our special episodes from the first Hoffmann Centre / CEPR / ReCIPE Conference, we’re discussing what chances there are of significant multilateral agreements being signed at COP 30 and, given that the chances are low, what plan B might be.

Beatrice Weder di Mauro of CEPR, Hoffmann Centre and the Geneva Graduate Institute tells Tim Phillips that, if everyone can’t agree, then coalitions of the willing – climate or finance clubs that offer incentives for the countries that want to join – can agree their own sustainability policies. But what are those incentives? And who will lead?

How tariffs hurt the ones you love

Janice Huijun Yan, Randall Morck — 2025-10-28T00:00:00+0000

US stock markets fell in response to the announcement of President Trump’s “Liberation Day” tariffs until the tariffs were paused a few days later. This column shows that the stocks of firms headquartered in counties that tend to vote Republican, and stock indexes for industries with more firms headquartered in ‘redder’ counties, fell more than the stocks of firms in ‘bluer’ counties and industries. The findings appear to reflect some mix of investors’ lower expectations and heightened fears about the future prospects of firms headquartered in 'redder' counties.

The flawed rationale behind America’s “reciprocal tariﬀs”

Gene M. Grossman, Alan O. Sykes — 2025-10-27T00:00:00+0000

On 2 April 2025, the Trump administration declared a “national emergency” caused by “large and persistent US goods trade deficits” and announced the imposition of new “reciprocal tariﬀs” using powers granted to the president under the International Emergency Economic Powers Act. This column argues that the tariffs do not meet two core requirements for the exercise of emergency powers under the Act – that measures are needed to respond to an “unusual and extraordinary threat” originating abroad, and that the measures undertaken must “deal with” that threat. Moreover, the text of the Act does not contain a clear delegation of sweeping tariﬀ authority to the president.

Multi-issuer stablecoins: A threat to financial stability

Richard Portes — 2025-10-27T00:00:00+0000

Stablecoins – digital tokens pegged to fiat currencies – have emerged as a major innovation in crypto finance, with broad implications for payments and international finance. The IMF, the Financial Stability Board, and the European Systemic Risk Board are focusing on the regulatory issues, while the US has just passed the GENIUS Act, a comprehensive framework for stablecoins. A particular innovation is the multi-issuer stablecoin, a cross-border construct. This column explores the risks such stablecoins pose to financial stability and measures that could contain these risks.

Public R&D and Brazil’s agricultural revolution

Ariel Akerman, Jacob Moscona, Heitor Pellegrina, Karthik Sastry — 2025-10-26T00:00:00+0100

It is often argued that returns to R&D are low in developing countries, making imported technologies a better path to growth. Yet technologies designed for frontier nations may not fit local conditions, limiting their productivity gains. This column studies Brazil’s Embrapa, a large public R&D effort to create agricultural innovation suited to Brazil’s ecology. Embrapa shifted research toward local needs and raised agricultural productivity by 110%, far outweighing its costs. Sustained, locally targeted R&D can be a key part of development policy.

Leading firms are falling behind in developing East Asia

Francesca de Nicola, Aaditya Mattoo, Jonathan Timmis — 2025-10-26T00:00:00+0100

For decades, East Asia has been a paragon of economic dynamism. But today, in an era of rapid global technological advances, productivity growth in the region is slowing. This column uses harmonised firm-level data from five countries – China, Indonesia, Malaysia, the Philippines, and Viet Nam – to reveal a key piece of the puzzle: the most productive firms in the region are no longer leading the charge. In fact, they are falling behind their global counterparts, especially in digital-intensive sectors.

Knowledge, technology, and growth: Joel Mokyr, Nobel laureate

Ran Abramitzky, Mauricio Drelichman — 2025-10-25T00:00:00+0100

Joel Mokyr of Northwestern University has been awarded the 2025 Nobel Prize in Economic Sciences with Philippe Aghion and Peter Howitt “for having explained innovation-driven economic growth”. Mokyr was cited by the Nobel committee “for having identified the prerequisites for sustained growth through technological progress”. This column, written by two of his students and now fellow scholars, outlines how his work has reshaped our understanding of virtually every fact and theory associated with industrialisation – from the mechanics of machine design and production processes to the intellectual and political forces that changed entire societies. One core message of this extensive body of research is particularly timely: economic progress is critically dependent on open intellectual inquiry, on the free exchange of ideas, and on a vigorous defence of scientific principles.

The impact of interest: How loan rates shape firm investment

Lea Best, Benjamin Born, Manuel Menkhoff — 2025-10-24T00:00:00+0100

Monetary policy moves aggregate investment, but the underlying drivers remain unclear. This column opens the black box with a German firm survey. A one percentage point fall in loan rates raises investment by about 7%. Yet many firms do not adjust, often because they have ample cash or are off the margin. Firms’ narratives and their responses to actual monetary policy shocks indicate that the borrowing-cost channel is first-order for policy.

The visual politics of Brexit

2025-10-24T00:00:00+0100

A decade ago, the UK voted in a referendum to leave the European Union. It was the culmination of years of partisan arguments over membership. During that time, most newspapers in the UK took strong “leave” or “remain” positions in the stories they wrote. But were they less obviously partisan in their choice of pictures too? Wanyu Chung of University of Birmingham and CEPR was one of a team of researchers that used artificial intelligence to estimate the emotional impact of news images of politicians before and after the Brexit vote.

Households’ inaction in the deposit market

Fernando Cirelli, Arna Olafsson — 2025-10-24T00:00:00+0100

The sharp rise in interest rates since 2021 has not been matched by equal increases in household savings rates in advanced economies. This column uses transaction-level data from Iceland to study how changes in interest rates affect household deposit holdings. It shows that for the average household, low-yield deposits barely respond to interest rate differentials, even when there are equally safe alternatives available. This inaction means households forgo significant income by not moving balances into higher-yielding accounts. The findings imply that monetary policy transmission through deposits is weaker and more uneven than standard models imply.

Confusopoly unveiled: How firms use complexity to raise prices

Ambre Nicolle, Christos Genakos, Tobias Kretschmer — 2025-10-23T00:00:00+0100

Can entire markets strategically confuse consumers to raise prices? This column tracks the prices of nearly all mobile phone tariffs and handsets in the UK from 2010 to 2012, and finds that quality-adjusted prices rise in the early part of the sample period and decline later. Obfuscation strategies by firms appear to be the primary driver, with the rise in prices strongly correlated with the introduction of dominated tariffs – contracts for which cheaper alternatives exist from the same operator. These strategies reduce product transparency, elevating prices not only for dominated tariffs but also for efficient ones, distinguishing the effect from behavioural price discrimination.

Speaking of debt: Framing, guilt, and economic choices

2025-10-23T00:00:00+0100

In many Germanic languages, the word for ‘debt’ also means ‘guilt’. This column explores whether the linguistic overlap leads to greater debt aversion in Germany, the Netherlands, Sweden, and Switzerland. Using a guilt-laden term reduces willingness to borrow, lowers approval for government debt, and influences firms’ financing plans and politicians’ framing of fiscal policy. While support for public debt goes down with use of the laden term, the effect disappears when the purpose of the debt is clear. Linguistic framing may help guide borrowing toward socially optimal levels.

Sustained growth through creative destruction: Nobel laureates Philippe Aghion and Peter Howitt

Peter J. Klenow — 2025-10-22T00:00:00+0100

Philippe Aghion and Peter Howitt have been jointly awarded the 2025 Nobel Prize in Economic Sciences with Joel Mokyr ‘for having explained innovation-driven economic growth’. Aghion and Howitt were cited by the Nobel committee ‘for the theory of sustained growth through creative destruction’. As this column explains, their work transformed creative destruction from an evocative metaphor into a rigorous analytical framework. The Nobel recognition honours research that has fundamentally reshaped how economists understand the engines of prosperity and technological progress.

Details matter: How loan pricing affects monetary policy transmission in the euro area

2025-10-22T00:00:00+0100

Classifying loans as fixed-rate or floating-rate fails to fully capture their distinct sensitivity to changes in ECB policy rates. This column analyses the maturity of the relevant risk-free rates used to price new loans to see if it affects their short-term interest rate sensitivity. In countries where new loans were priced using shorter-term risk-free rates, interest rates increased more sharply during the ECB’s monetary tightening, regardless of the loan’s own maturity. Banks partly offset this rise by lowering the premia they charged. This highlights how variations in lending practices drive cross-country differences in monetary policy pass-through.

The impact of fintech on lending

Xavier Vives — 2025-10-21T00:00:00+0100

Fintech has improved efficiency and inclusion in banking, especially lending, but has also raised concerns about financial stability, privacy, discrimination, and overall wellbeing. This column introduces a framework that outlines the differences between fintech firms and traditional banks and how fintech affects frictions in lending. New technologies influence the differentiation between banks and fintechs and the efficiency gap between them, which in turn shape market performance and overall welfare. The framework can inform policies on price discrimination and data sharing, as well as the desirability of levelling the playing field between incumbents and entrants.

Trump’s tariffs as fiscal folly

Kimberly Clausing, Maurice Obstfeld — 2025-10-20T00:00:00+0100

In 2025, the US government underwent a large fiscal switch, with Congress enacting large income tax cuts and the second Trump administration putting new tariffs on goods at levels not seen in the US since the Great Depression. This column evaluates tariffs as a broad tool of fiscal policy, reviewing both tax policy and macroeconomic considerations, and concludes that this fiscal switch will leave most Americans worse off.

Geopolitical tensions and international financial fragmentation: The 28th Geneva Report on the World Economy

2025-10-20T00:00:00+0100

Rising geopolitical tensions now threaten the rules-based world order that has governed the functioning of the international monetary system since WWII with risks of geoeconomic fragmentation. The latest Geneva Report on the World Economy examines how these risks, which include a reversal in decades of financial integration, reduced international allocative efficiency, and an erosion of coordinated global crisis response mechanisms, are transforming the structure and stability of global finance.

Why export controls accelerate innovation: Evidence from the 2007 US ‘China Rule’

Xueyue Liu, Yu Liu, Alexey Makarin, Jaya Wen — 2025-10-19T00:00:00+0100

A key debate surrounding export controls is whether they accelerate innovation in targeted rivals. This column studies this question using a set of US export controls, the 2007 ‘China Rule’, by comparing sanctioned goods with goods just excluded from the policy. It finds that the policy reduced Chinese imports of restricted goods. It also finds strong evidence of a domestic innovation response: Chinese firms cut off from US inputs substantially increased R&D spending and patenting, and upstream Chinese suppliers of similar products to exposed firms increased patenting in related technologies.

What money will become: Seven key questions

Livio Stracca — 2025-10-18T00:00:00+0100

The digital age has ushered in an era of transformation for money, triggering debates about the role of cryptocurrencies, central bank digital currencies, stablecoins, and the possible encroachment of Big Tech into the monetary system. In the midst of this upheaval, central bankers, economists, and the private sector are grappling with fundamental questions about the future of money. This column presents seven insights on redefining the monetary standard in the digital age, offering a perspective that bridges traditional central banking and the disruptive potential of digital innovation.

Geopolitical shifts, uncertainty, and investment: Evidence from the EIB Investment Survey 2025

2025-10-17T00:00:00+0100

Geopolitical risks impact firms on both sides of the Atlantic. While the short-term outlook is better than expected, there remains huge uncertainty related to the nature and extent of more permanent geopolitical shifts and breaks. This column reports findings from the EIB Investment Survey 2025, which show that EU and US firms continue to invest, albeit with a somewhat weaker appetite. US firms have been adjusting their supply chains, looking into import substitution, enhanced diversification, and expanding production capacity. EU firms are taking a measured approach, balancing measures to improve efficiency and resilience, and investing in digitalisation, energy efficiency, and mitigation as drivers for future competitiveness. As geopolitical risks unfold, the competitiveness of EU firms will increasingly depend on the EU’s capacity to deliver on the Draghi and Letta agendas.

The missing link: Why economic policy needs organisational economics

Alfonso Gambardella, Florian Englmaier, Maria Guadalupe — 2025-10-17T00:00:00+0100

Europe faces slowing growth, ageing populations, and structural shifts. This column discusses how organisational economics can illuminate the impact of structural forces on Europe and assist in the design of policies to promote productivity and growth. Demographic change is among the most consequential challenges for European governments, and its impact hinges on organisational choices regarding hiring, training, and retention. Furthermore, AI has the potential to fuel growth, but it also requires a strategy for implementation, both at the institutional level and within organisations. Further work is needed to understand how organisational structures and managerial choices shape policy outcomes.

A hundred lessons from history

2025-10-17T00:00:00+0100

The International Macroeconomic History Online Seminar Series, hosted by CEPR, is turning 100 this month — not years, but episodes. What began as a lockdown experiment has become a global fixture for anyone who believes economics never forgets. In a special edition of VoxTalks Economics, Tim Phillips talks with organisers Nathan Sussmann and Rui Esteves of the Geneva Graduate Institute about the moments that shaped the series and what a hundred lessons from history can teach us today. Why does history matter so much to economists? And how can the series help us understand current events?

Decoupling without deglobalisation: The new geography of trade blocs

2025-10-16T00:00:00+0100

As geopolitical tensions rise, fears of deglobalisation have taken centre stage. However, world trade has remained surprisingly resilient, at least through 2023. This column uses bilateral trade data from 187 countries between 2015 and 2023 to identify decoupling patterns and their economic impacts. Trade reorientation mirrors political alliances more than comparative advantage, with a quarter of countries aligning with the US, another quarter with China, and half remaining unaligned. The redirection of trade has so far produced little loss in global welfare, as global trade volumes remain stable.

Of AI bubbles and crashes

Jon Danielsson, Robert Macrae — 2025-10-16T00:00:00+0100

Warnings of an AI stock market bubble abound. Should investors and policymakers be concerned? This column argues that innovation-driven bubbles can yield real benefits when financed by equity rather than debt. Even if investors face large losses, policymakers have little reason for concern, unless it drives risk appetite elsewhere in the system and AI investment relies on bank credit.

Bank specialisation and the transmission of euro area monetary policy

Konrad Kuhmann — 2025-10-15T00:00:00+0100

Bank lending is a key channel through which monetary policy affects the real economy. This column explores how the effects of monetary policy on credit are shaped by bank specialisation in borrower industries and size categories. Analysing granular loan data reveals that such specialisation is widespread among euro area banks. Moreover, higher specialisation is typically associated with more favourable lending conditions. Most importantly, specialised banks tend to partially insulate their preferred borrower groups from the consequences of monetary policy. These findings suggest that bank specialisation plays a meaningful role for the aggregate and distributional consequences of monetary policy.

The new curse of critical minerals

Rabah Arezki, Frederick van der Ploeg — 2025-10-15T00:00:00+0100

A race is raging among global powers to secure access to critical minerals to power the simultaneous energy and digital transitions the world is experiencing. The extraordinary growth in demand for critical minerals is putting upward pressure on prices and stimulating new critical mineral discoveries all around the world. However, in developing countries, this new bonanza presents opportunities but also important risks. This column argues that absent governance system shifts, the rush for critical minerals risks creating a ‘new curse of critical minerals’.