This study investigates the impact of inaccurate assumptions on economic forecast precision. We construct a new dataset comprising an unbalanced panel of annual German GDP forecasts from various institutions, taking into account their underlying assumptions. We explicitly control for different forecast horizons to reflect the information available at the time of release. Our analysis reveals that approximately 75% of the variation in squared forecast errors can be attributed to the variation in squared errors of the initial assumptions. This finding emphasizes the importance of accurate assumptions in economic forecasting and suggests that forecasters should transparently disclose their assumptions to enhance the usefulness of their forecasts in shaping effective policy recommendations.

Climate policies do not operate in isolation but propagate through global production networks, affecting industries beyond national borders. This paper combines international input-output data with a granular instrumental variable approach to capture how foreign regulations transmit through upstream and downstream linkages. Distinguishing between market-based policies, non-market regulations, and technology support, the analysis shows that foreign climate policies can enhance domestic productivity, with effects shaped by industry characteristics and operating through technological adjustment along supply chains. The results underscore the importance of accounting for international spillovers when evaluating the economic impact of environmental regulation.

This study provides new evidence on the impact of the EU Cohesion Policy on income growth in less developed regions. Our panel includes data from all European regions for the years 1989-2020. Using a fuzzy Regression Discontinuity Design, we model treatment dynamics by applying a random effects estimator. Based on digitized historical data, we precisely replicate the policy rule and correctly classify the regions’ eligibility status. Results show that the policy has a moderate positive effect on GDP per capita growth in the targeted regions.

The European Commission’s growth forecasts play a crucial role in shaping policies and provide a benchmark for many (national) forecasters. The annual forecasts are built on quarterly estimates, which do not receive much attention and are hardly known. Therefore, this paper provides a comprehensive analysis of multi-period ahead quarterly GDP growth forecasts for the European Union (EU), euro area, and several EU member states with respect to first-release and current-release data. Forecast revisions and forecast errors are analyzed, and the results show that the forecasts are not systematically biased. However, GDP forecasts for several member states tend to be overestimated at short-time horizons. Furthermore, the final forecast revision in the current quarter is generally downward biased for almost all countries. Overall, the differences in mean forecast errors are minor when using real-time data or pseudo-real-time data and these differences do not significantly impact the overall assessment of the forecasts’ quality. Additionally, the forecast performance varies across countries, with smaller countries and Central and Eastern European countries (CEECs) experiencing larger forecast errors. The paper provides evidence that there is still potential for improvement in forecasting techniques both for nowcasts but also forecasts up to eight quarters ahead. In the latter case, the performance of the mean forecast tends to be superior for many countries.

We study the aggregate, distributional, and welfare effects of fiscal policy responses to Germany’s energy crisis arising in 2022 using a novel ten-agent new Keynesian (TENK) model. The crisis, compounded by the COVID-19 pandemic, led to sharp price increases and significant consumption disparities. Our model, calibrated to Germany’s income and consumption distribution, evaluates key policy interventions. We find that untargeted transfers had the largest short-term aggregate impact, while targeted transfers for lower-income households were most cost-effective. Other instruments yielded comparably limited welfare gains. The results highlight how targeted fiscal measures can address distributional effects and stabilize consumption during crises.