Monthly Report No. 06/2022

Chart of the Month The role of capital regions in CESEE by Ambre Maucorps Opinion Corner Economic policy in Europe must not turn overly restrictive in response to inflation by Philipp Heimberger There are limits to what the ECB can do in response to the supply-side shock to energy and food prices. What is needed is a holistic anti-inflationary strategy, including fiscal and regulation policies. EU economic policy Is Ukraine going to put a spoke in it? by Bernhard Moshammer With the ongoing war in Ukraine, there is a wide range of new challenges for EU policy makers support for refugees, reconstruction of Ukraine, reducing energy dependence on Russia, and the need for greater defence spending. However, given the high inflation, there is a risk of repeating the mistakes of the economic and financial crisis of 2008/2009 and engaging in excessive austerity. The EU Recovery and Resilience Facility will certainly help stabilise the economy, but will it be – can it be – enough? Digital endowments and comparative advantage by Dario Guarascio and Roman Stöllinger Countries’ endowments with digital tasks and ICT capital will shape the digital transformation and determine comparative advantage in the digital era. By calculating endowment-based comparative advantage for 25 EU countries, we find that the underlying theory of comparative advantage (the Heckscher-Ohlin-Vanek theorem) holds. However, the EU’s leaders in terms of innovation are not necessarily those countries with an abundance of digital tasks and ICT capital; this may be due to the lack of digital leadership across the EU. Monthly and quarterly statistics for Central, East and Southeast Europe