Sebastian Gechert

Sebastian Gechert is head of the unit on the macroeconomics of income distribution at the Macroeconomic Policy Institute (IMK) in Düsseldorf.

Sebastian Gechert

Corporate tax cuts do not boost growth

Sebastian Gechert 15th July 2021

Implicit in the global ‘race to the bottom’ on corporation tax in recent decades has been that this favours growth. Yet does it?

Recovery from Covid-19: the changing structure of employment in the EU

Eurofound’s new publication Recovery from COVID-19: The Changing Structure of Employment in the EU shows that European labour markets recovered strongly from the pandemic, before the onset of the disruptions from Russia's invasion of the Ukraine and related cost-of-living increases. The report summarises labour-market developments in 2020 and 2021 using quarterly data from the EU Labour Force Survey, presenting information from a structural perspective, with a focus on sector-level and occupation-level data, and key demographic variables: gender and age.

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FEPS Primers series

Discover the new FEPS Primers series. Designed with an educational purpose, they represent a prominent tool in the new FEPS training strategy. The EU and Gender Equality, by Agnès Hubert, explores the progress and hurdles in the fight for equality between women and men at the EU level. The Progressive Potential of the EU, by Richard Corbett, takes a comprehensive look at the history of the EU, its decision-making structures and the areas worthy of reform. The subsequent primers, by Arancha González Laya, on trade, and Stephen Minas, on climate, will be ready very soon. Stay tuned!

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The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.

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Minimum income across all ages: a focus on elderly people

The risk of poverty is a key issue for European countries. Irrespective of the uneven evolution of that risk—a sharp increase in the aftermath of the Great Recession of 2008 followed by an overall decrease in the past few years—people at risk of poverty represent a key target of social-protection and social-assistance schemes across the European Union member states and a persistent challenge for policy-makers. This paper explores some of the many dimensions of old-age poverty and considers the possibility of addressing at least some of them by means of a guaranteed minimum income for retired persons, including one that could be introduced or co-ordinated at EU level.

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Corporate tax cuts do not boost growth

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