Policy Briefs & Testimonies

The price cap on Russian oil implemented today by the G7 countries plus Australia represents a novel approach to sanctions. The policy is designed to reduce Russian fossil fuel revenues while keeping Russian oil on the market. In this brief, Catherine Wolfram, Simon Johnson, and Łukasz Rachel explain the basic economic principles at work and discuss some of the critiques of the price cap. 

The European Union (EU) is highly competitive in clean technologies manufacturing and thus well-positioned to benefit from the emergence of global hydrogen markets. But a narrow focus on short-term cost considerations could drive member states to implement national roadmaps with little or no coordination among themselves and hence little or no chance of competing globally.

In this policy brief, we consider the existing mechanism of tax credits. We see how they can encourage private sector risk-taking to enable research and development (R&D) outcomes. However, our goal is to go beyond economic growth benefits, and to include the less tangible considerations of public good and public purpose in the research and development domain. We then suggest an expansion of tax credits focused on supporting the researchers involved in the R&D and encouraging innovation in both large organizations and in startups and small businesses. This approach builds upon the existing framework of agency-led, mission-defined support of the private sector used by the U.S. government, as occurs in other programs such as America’s Seed Fund (sometimes known by its acronyms, SBIR and STTR). The integration of specific agency- and mission-focused elements to the credit system ensures that these additive credits support research and researchers whose R&D outcomes will improve the health, prosperity, and opportunity for the U.S. as a whole.

Whereas the Trump administration worked effectively with Europe in some areas, including energy security and law enforcement, the U.S-EU relationship disintegrated in many other areas, above all in trade following U.S. tariffs on imports of aluminum and steel and threats to restrict car imports. While some members of the United Kingdom’s Conservative Party have appreciated President Trump’s endorsement of Brexit, the core interests of the United Kingdom (including free trade, the fight against climate change and defense of multilateral institutions) diverge from those of the Trump administration.

The next U.S. administration will face the challenge of re-engaging with Europe on matters of joint concern, not only on climate and Iran but also on concluding a trade agreement, resolving outstanding economic disputes and leading efforts to reform the World Trade Organization (WTO).

Both sides of the Atlantic are converging in their assessment of the challenges China poses to transatlantic prosperity and democracy. The U.S. and Europe must now build on this convergence to advance a common strategy toward China. Only together can the U.S. and Europe, alongside other democratic nations, maintain the necessary leverage in trade, technology and multilateral engagement to hold China accountable to a set of standards that protects democratic societies and contributes to global stability.

To develop a stronger transatlantic approach toward China, the Biden administration must work to rebuild trust in the transatlantic relationship and recommit to multilateral alliances and institutions abandoned by President Trump. Europe for its part must unite and take action where it sees China exploiting its critical industries and infringing on its values. A common position on China at the EU–level and across several influential EU member states is critical to making transatlantic cooperation on China feasible.

China announced it would launch a national carbon market in 2017, yet this policy is taking years to come into effect. What will it take for a carbon market to work in command-and-control China? This policy brief explores an understudied challenge—emissions accounting—and identifies potential opportunities that have arisen in the first phase of China’s national carbon market.

Corporations, organizations, and even governments are purchasing offsets to reduce their carbon footprint. This policy brief provides an overview of the offset process – who buys them, who produces them, and who certifies them; describes the emerging challenges facing this market; and makes recommendations for the future.

In this brief, we outline the common motivations driving central bank work on CBDCs. We then explore CBDCs’ potential impacts on financial inclusion, a primary motivation in developing and emerging markets that has also gained significant traction in developed economies during the COVID-19 related global recession. We conclude that for CBDCs to achieve its financial inclusion goals, more technical advancement in offline adaptability and policy deliberations around issues of identity and traceability are needed. 
 

This policy brief describes the persistent challenge of poor electricity reliability in India and how it interacts with key regulatory policies, analyzes Delhi’s experience with outage compensation since 2017, and highlights areas for additional economic and policy research on this topic.

The recent ruling of the German Constitutional Court on the ECB was an economic and political bombshell. The deep controversy that resulted – within Germany and on a European scale – illustrates that the ambiguity surrounding the euro area’s legal order and architecture may have reached its limit.