Publications

A substantial and growing amount of press attention has been devoted to the subject of Central Bank Digital Currencies (CBDCs) since last year’s announcement of Libra which spooked regulators at central banks who are petrified of losing control of the mint. Central banks have a mixed track record in understanding and predicting trends in alternative payment technologies, and prior to Libra were relaxed that bitcoin was unlikely to attain mass adoption. Jerome Powell, head of the Federal Reserve gave congressional testimony shortly after the Libra announcement denigrating it on several counts. Nonetheless, Libra doubtless turbocharged central banks’ research.

The recent decision of the German Bundestag against the introduction of an opt out solution for organ donation has surprised many people. After all, the two leading health politicians of the coalition, CDU Health Minister Jens Spahn and SPD Health politician Karl Lauterbach, had publicly supported the opt out solution. In the vote on organ donation, however, the usual party discipline did not apply.

According to Article 38 of the German Constitution, the members of parliament “… are not bound to orders and instructions and are only subject to their conscience.” In practice, however, before a decision is made in the Bundestag, votes are taken in the respective parliamentary groups, and MPs usually follow this result. Parliamentary group discipline is also laid down in coalition agreements.

What influences the voting behaviour of members of parliament? Do they follow their own preferences, the party’s line, the whispers of interest groups or do they listen to their voters? In the latest IREF Working Paper, David Stadelmann of the University of Bayreuth and Gustavo Torrens of Indiana University examine the question of how strong the influence of different groups on political decisions is, exploiting unique data from Switzerland

Recently, a new “specter” has been haunting Europe: populist parties (left or right, here we have the full menu) appear to gain more and more approval at the polls. In some cases, they also manage to win the elections and enter the cabinet. From Hungary to Poland, Spain, Italy (and, according to some observers, the UK as well) we are spoiled for choice. Yet, observers sometimes fail to notice that the very existence of ideologically radical governments, as often cabinets involving populist parties are (such parties are usually rather extreme from an ideological point of view), can also have a significant impact on citizens’ happiness.

Climate scientists warn against the possible consequences of anthropogenic climate change. Rising average temperatures make extreme weather, including draughts and floods, more likely; rising sea levels threaten populations in coastal regions. An international political agreement was to limit global warming to an average of 2°C until 2100; this was tightened to 1.5°C at the Climate Change Conference in Paris. It is questionable, however, whether the climate targets will be met. Considering today’s prospects, it is about time to not only cut emissions but to also discuss ways of dealing with the consequences of climate change.

Beyond emissions trading systems, markets play an important role in this regard: they can make it significantly easier to adapt to climate change. Price signals hint at necessary adjustments, international trade opportunities make changes in production structures less painful, developed financial markets help handling risk. Moreover, market economies promote prosperity, which facilitates the use of resources and technology in an effort to cope with the effects of climate change.

In the ten years since the first iteration of the European Stability Mechanism (ESM) emerged, its status has changed markedly. Initially, it was just a clever example of financial engineering deployed by the ECB to enable certain EU member states to be bailed out without imposing the costs directly on the better off countries of Europe.

A new type of virus is holding the world in suspense by evoking images of the worst Hollywoodian nightmares. It is known that it spread out of Wuhan, the capital of Hubei province, China, and then quickly propagated throughout mainland China, at least for the moment. The mortality rate of this new type of coronavirus is reported to be at about 2%. This esteem might be however highly imprecise. First, because the real number of people infected is not known. Some independent institutions presume that it could be much higher than the statistics reported by the official authorities. Second, because it needs time for the mortality rate to approach its steady state value, as most people are still ill, and it is not possible to know exactly how many of them will recover.

Some time ago, the story of Martin Shkreli, an entrepreneur who made the news as a candidate for “the most hated man in America” (thus the BBC), caused a stir: he bought the intellectual property rights needed to produce a life-saving anti-AIDS drug, and immediately afterwards raised the price by 5,000%.
Beyond the merits of the affair, what caused the most stir was the unapologetic attitude of this businessman, who did not care about the criticism of moralists and defended his right to maximize profits for himself and the investors of his hedge fund in a contemptuous manner.

As shown in Peter Higgins’ book “Immigration Justice”, two distinct positions dominate the immigration debate. The nationalist position assumes that states should favor the interests of their own citizens over those of foreigners. By contrast, the cosmopolitan position claims that residents are entitled to no privileges.

A few weeks ago, the bodies of 39 people were found in a lorry trailer in Essex. They were Vietnamese migrants, including eight women, three boys and twenty-eight men. The eldest victim was 44, the youngest 15. This was just one in a series of dreadful events that have occurred in Europe over the last few years. A long chain of desperation and hope that has produced nearly 10 thousand deaths in the Mediterranean Sea over the period 2016-2018.

WP 2020-01.