Month: March 2025

On 3 April 2025 at 10:00, you a welcome to join a seminar on the topic „America First? The Macroeconomic Implications of Punitive Tariffs”, which will be presented by Natascha Hinterlang from Deutsche Bundesbank and is a joint work with her co-authors Anne Ernst (Deutsche Bundesbank), Marius Jäger (Deutsche Bundesbank + Albert Ludwig University of Freiburg), and Nikolai Stähler (Deutsche Bundesbank).

The seminar should take around 1 hour and 30 minutes including questions and discussions. There is also the option to dial in via MS Teams.

Abstract: Since 2018, punitive tariffs have resurged as tools for protecting national economies, particularly between the US and China. This paper examines the macroeconomic and welfare impacts of various tariff scenarios using a four-region dynamic general equilibrium model with a multi-sectoral production network. The scenarios include unilateral US tariffs, coordinated US-EU tariffs, Chinese retaliation, Europe’s non-participation, and sector-specific versus broad tariffs. Our results show that tariffs initially boost domestic output by making local goods cheaper. While consumption increases permanently, the output benefits are short-lived. Increased production costs and reduced global income negate the output gains over time. China has an incentive to retaliate and when it does so, welfare losses deepen for the affected partners. Additionally, the rest of the world suffers from reduced aggregate income regardless of direct involvement in tariff conflicts. Sector-specific tariffs are found to be less effective in terms of output than broad tariffs by failing to protect non-targeted industries. Overall, tariffs appear inefficient for economic protection due to the high possibility of retaliation.

On 1 April 2025 at 13:00, KEVIN MULLIGAN (Queen’s University Belfast) will present his research “Government funding for firm-level R&D: Recent developments and future research agenda”.

A large body of academic studies and government policy reports suggest that public funding for firm-level R&D plays a key role in driving business innovation. However, several recent developments have created a new research agenda within this literature. Factors such as the R&D policy instrument mix sequencing and the region-specific R&D impacts have become increasingly important for understanding how public R&D support drives business innovation. Until recently, most studies conceptualised the R&D policy instrument mix as a static unit, whereby firms receive, for example, an R&D grant and an R&D tax credit at the same point in time. However, firms can also receive different R&D policy instruments in a sequence over time. In addition, firms located in certain regions benefit from unique advantages such as a critical mass of Universities, science labs and clusters of innovation-intensive firms. This R&D infrastructure produces unique knowledge spillovers that are unavailable to firms located in other regions. Such region-specific knowledge spillovers may supercharge the effectiveness of government R&D support provided to firms, thus widening the gap between more- and less-R&D/innovation intense regions further. Notwithstanding their importance, relatively little research focuses these key issues. This presentation examines these recent developments, using firm-level data to set out a research agenda that offers insights for both academics and policymakers alike.

Zoom link

On 25 March 2025 at 10:00, Johanna Krenz (University of Hamburg) is coming to Latvijas Banka to present her paper on “Household Inequality and the Transmission of QE in Euro Area Countries” (joint with Stylianos Tsiaras). The MS Teams link will be added later.

On 19 March 2025 at 14.00, ESZTER BARANYAI (Central Bank of Hungary) will present her research “Large Language Models and the Labour Market: Spatial Evidence from Job Ads“.

Little is known about the spatial variation of jobs’ exposure to large language models (LLMs) both within and across countries despite LLMs’ spectacular rise in popularity in recent years and the repercussions of technological leaps on regional productivity and employment trends. We webscrape detailed task descriptions from all job ads listed on the largest online job portal in Hungary and apply a mapping approach. Extrapolating to the county’s labour market, we estimate average exposure across jobs to LLMs in Hungary to be around 8% – somewhat lower than in the US. Mapping different occupational classifications, Hungary has a higher share of occupations associated with physical labour – and thus with lower LLM potential – and a lower share of LLM-exposed office occupations. Very rarely does job-level exposure exceed 30% in our Hungarian sample, highlighting complementary attributes. Of the factors studied, industry appears most closely related to LLM exposure. Exposure is higher in more urban areas with a higher population of young adults. Results draw attention to areas – spatial and industry – where productivity benefits could occur and where education and employment policies could help manage the effects of technological transition on employment.

Co-authors: Marcell Granát (Central Bank of Hungary), Mór Szepesi (Yale University, Central Bank of Hungary)

Zoom link

You are kindly invited to attend the Eesti Pankʼs research seminar in Teams on 13 March at 11:00 am, when Michael Burda (Humboldt University of Berlin) will present on “The Macroeconomics of Cryptocurrencies: Three Easy Pieces”.

In his study, Prof Burda surveys the capacity of simple macroeconomic models to account for persistent, positive valuations of privately issued digital assets based on the blockchain. Each of these ”three easy pieces” – models of transactions demand for a medium of exchange, consumption-based capital asset pricing, and search and matching – highlights important dimensions of digital assets. Until technological innovations can separate joint features that characterize cryptocurrencies, however, their mutual interference is likely to impede their widespread adoption as a form of money.

MS Teams link
Meeting ID: 355 740 492 239
Passcode: u4GE9V7X