Yearly Archives: 2024

Recent contributions from Enrico Letta, Mario Draghi, and Emmanuel Macron are exposing however deep concerns that the European project is floundering. Cristina Caffarra writes that Letta, Draghi and Macron are collectively making an urgent call to tackle the reality of a “divided bloc” that has lost ground, rethink industrial policy, public good investments and reformulate traditional trade-offs. Explicitly acknowledging the end of the neoliberal vision that still occupies many European institutions (from antitrust to trade to industrial policy) will be important to “join the dots” and make the trade-offs clearer.

Municipal and state governments provide input to the organization that creates their accounting standards. Such input by stakeholders can be helpful, but their influence has produced some accounting rules that diverge from both economic reality and private sector rules. These deviations allow governments to understate budget liabilities, including pensions plans, and put at risk the financial health of states and cities across the United States.

Kevin Murphy reflects on his seminal work with the late Michael Jensen, reassessing their influential findings on CEO compensation in light of the dramatic changes in executive pay practices and market conditions since the 1990s. In this piece, Murphy shares the journey of their research collaboration, the challenges they faced, and the evolution of their thoughts on executive compensation.

Knut Bergmann and Matthias Diermeier discuss the economic origins and developments of Germany’s right-wing Alternative for Germany party and how the party’s rise reflects, in part, voters’ concerns that mainstream parties are failing to protect the future of Germany’s vibrant manufacturing sector.

Luis Braido builds on Eric Posner and Carl Shapiro’s debate about the role of economics in merger review by further exploring the tension between efficiency and consumer welfare. He argues that efficiency merits endorsement as it boosts productivity, wealth, and social welfare. Nevertheless, he acknowledges that the law favors competition and consumer welfare over efficiency. From his perspective, enlarging the range of remedies available in merger review is central for protecting productivity gains while preserving competition and compensating consumers for adverse impacts.

Academics have argued that changes in product markup trends show that the European markets, abetted by the adoption of the Single Market and stronger antitrust enforcement, have become more competitive over the last half-century, whereas American markets have become more concentrated. In their research, Tommaso Crescioli and Angelo Martelli argue that a study of labor market power in Europe muddles this picture of higher competition in Europe.

Single-name credit default swaps help investors manage risk, but the 2023 financial crisis showed how these opaque derivatives can suddenly throw financial markets into turmoil. Randy Priem argues that mandatory central clearing, which some authorities have suggested as a solution to managing this risk, is not the holy grail solution they believe it to be.

Local governments in the United States spend trillions of dollars each year delivering essential services and infrastructure, with enormous implications for our economy and quality of life. Chris Berry and Justin Marlowe examine the links between municipal governance structures and fiscal outcomes, revealing the state of municipal finances today.

Fiona Scott Morton and David Dinielli show how landmark antitrust cases historically have cleared the path for innovation in the next “frontier technology.” But with closing arguments in the search monopoly case just days away, Google threatens to evade this round of rigorous new competition. It reportedly is in talks to place its own artificial intelligence tool on Apple devices as it did in the case of search. Such a maneuver would entrench Google’s search monopoly and place Google in the driver’s seat to steer the development of consumer-facing AI. The authors offer up a menu of steps the government might take now to thwart Google’s new anticompetitive strategy and preserve competition in AI before it’s too late.

Louise Tillin explores the sources of populism in India, its recent developments, and what this means for the country’s 2024 general election, which begins April 19 and ends June 1.