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Begin New Search Political Geography Global Focus Content Type Special Report Publishing Institution Center for Social and Economic Research - CASE Publication Year within 5 Years

1. Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Long-Term

Author:
Marek Dabrowski
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance. This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Topic:
Monetary Policy, Economic Growth, Trade, Pandemic, and COVID-19
Political Geography:
Europe and Global Focus

2. Does Low Inflation Pose a Risk to Economic Growth and Central Banks Reputation?

Author:
Marek Dabrowski
Publication Date:
03-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they should revise the inflation target downwards and publicly explain the rationale for such a move. Risks to the independence of central banks come from their additional mandates (beyond price stability) and populist politics.
Topic:
Economic Growth, Inflation, and Central Bank
Political Geography:
Global Focus

3. Is the economy doomed to a long recession?

Author:
Andrzej Halesiak and Andrzej Rzońca
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic. A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
Topic:
Financial Crisis, Economy, Economic Growth, Crisis Management, Fiscal Policy, and Trade
Political Geography:
Global Focus

4. Study and Reports on the VAT Gap in the EU-28 Member States: 2020 Final Report

Author:
Adam Śmietanka, Grzegorz Poniatowski, and Mikhail Bonch-Osmolovsky
Publication Date:
10-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported. In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019. Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion). The Policy Gap and its components remained stable. For the EU overall, the average Policy Gap level was 44.24 percent. Of this, in 2018, 10.07 percentage points were due to the application of various reduced and super-reduced rates (the Rate Gap) and 34.17 were due to the application of exemptions without the right to deduct. The results of the econometric analysis show that the VAT Gap is influenced by a group of factors relating to the current economic conditions, institutional environment, and economic structure as well as to the measures and actions of tax administrations. Out of a broad set of tested variables, GDP growth and general government balance appeared to explain a substantial set of VAT Gap variation across time and countries. Within the control of tax administrations, share of IT expenditure proved to have the highest statistical significance in explaining the size of the VAT Gap. In addition, the VAT Gap appeared to be inter-related with the values of risky imports of goods, indicating the role of fraud in driving the overall share of the VAT Gap. Since the COVID-19 recession will likely have a dire impact on the EU economies, the VAT Gap in 2020 is forecasted to increase. If the EU economy contracts by 7.4 percent in 2020 and the general government deficit jumps as forecasted in the Spring Forecast of the European Commission, the Gap could increase by 4.1 percentage points year-over year up to 13.7 percent and EUR 164 billion in 2020. The hike in 2020 could be more pronounced than the gradual decrease of the Gap observed over the three preceding years. Moreover, a return to the VAT Gap levels observed in 2018 and 2019 will take time and require significant action from tax administrations. This Report has been written for the European Commission, DG TAXUD, for the project TAXUD/2019/AO-14, “Study and Reports on the VAT Gap in the EU-28 Member States”, and is a follow-up to the seven reports published between 2013 and 2019.
Topic:
European Union, Fiscal Policy, VAT, and COVID-19
Political Geography:
Europe and Global Focus

5. Climate Calling: Inside EU Cities’ and Regions’ Green Race

Author:
Karolina Zubel
Publication Date:
11-2019
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
: In this issue of showCASE our economist discusses the role of cities and regions in climate negotiations, which since COP21 in 2015 has indeed been growing. Will the incoming COP25 in Madrid (2–13 December) further strengthen cities and regions in fight against climate change? As the author argues, for the upcoming COP presidency, lying a strong foundation for climate action and subnational parties’ engagement in post2020 reality could become the biggest success.
Topic:
Environment
Political Geography:
Global Focus