Economic Challenges for Europe After the Pandemic: Proceedings of the XXXII Villa Mondragone International Economic Seminar, Rome, Italy, 2021

Contents
Contributors
Creating an Epistemic Community: The Experience of the Villa Mondragone International Economic Seminar
	1 The Themes of VIDMA as an Epistemic Community
	2 Some Conclusions
	References
European Growth Prospects After Covid-19
	1 Introduction
	2 Slow European Economic Recovery and Growth After the 2009 Recession
	3 The U.S. Has Grown Faster Than the EU and the Euro Area During the Past Two Decades
	4 The Fundamental Reason Europe Grew Slower Than U.S. During Past Two Decades
	5 Growth Prospects for Europe After the Pandemic
	6 Programs to Stimulate European Growth and Deal with Climate Change
	7 Concluding Remarks
	References
Covid-19 and the Golden Rule of Social Distancing
	1 Introduction
	2 Literature
	3 Model
		3.1 Demographics
		3.2 Output
	4 The Social Optimum
	5 Comparative Statics
	6 A Look at the Data
	7 Concluding Remarks
	A.1 Appendices
		A.1.1 Appendix 1
		A.1.2 Appendix 2
		A.1.3 Appendix 3
		A.1.4 Appendix 4
	References
The New European Industrial Policy and the Case of the `Pharmaceuticals and Biotechnology' Industry
	1 Introduction
	2 The New European Industrial Policy: An Overview
		2.1 The Theoretical Background
		2.2 The European Perspective
		2.3 The Next Generation EU (and Not Only): Toward a Change of Attitude
	3 The Pharmaceutical Industry: Pillar of Global and European R&D
		3.1 The EU's R&D Scoreboard
		3.2 The Race for a Vaccine and the US–EU Gap
	4 A Fourfold Policy Agenda
	5 Conclusion
	References
Assessing Next Generation EU
	1 Introduction
	2 Policy Responses to Date
	3 An Alternative Approach
	4 A Numerical Comparison
		4.1 Actual Policy
		4.2 The Alternative Approach
	5 Conclusions
	A.1 Annex: A Stylised Model
		A.1.1 A.1 The Real Economy
		A.1.2 A.2 The Financial Sector
		A.1.3 A.3 The Government Sector
		A.1.4 A.4 Shocks and Changes in Policy Variables
	References
Globalization in Europe: Consequences for the Business Environment and Future Patterns in Light of Covid-19
	1 Introduction
	2 Literature Review
	3 The Empirical Analysis
		3.1 Identification Strategy
		3.2 Results
		3.3 Robustness Checks and Limits of the Analysis
		3.4 The Future of Globalization
	4 Concluding Remarks
	Appendix
		Data Sources
		Additional Tables and Figures
	References
The Value of Nature to Our Health and Economic Well-Being: A Framework with Application to Elephants and Whales
	1 Introduction
	2 A Valuation Framework for Natural Resources
	3 Applying the Framework to the Valuation of Forest Elephants in Africa
		3.1 Step 1: Identify the Services Produced by the Resource
		3.2 Step 2: Project the Market Value of Services Provided into the Future
			3.2.1 Carbon Capture and Sequestration Through Elephant Biomass
			3.2.2 Carbon Capture and Sequestration Through Stimulating Forest AGB Increase
		3.3 Step 3: Assign a Discount Rate Appropriate to the Natural Resource and the Service(s) Produced
		3.4 Step 4: Using the Values Projected in Step 2, Calculate the Value of the Resource Using the Definition of Vt
		3.5 Discussion
	4 Applying the Framework to the Valuation of Great Whales Frequenting the Brazilian and Chilean Coasts
		4.1 Step 1: Identify the Services Produced by the Resource
		4.2 Step 2: Project the Market Value of Services Provided into the Future
			4.2.1 Ecotourism (Whale Watching)
			4.2.2 Carbon Capture and Sequestration Through Whale Biomass
			4.2.3 Carbon Capture and Sequestration Through Enhancement of Primary Production (Phytoplankton Fertilization)
			4.2.4 Fisheries Enhancement
		4.3 Step 3: Assign a Discount Rate Appropriate to the Natural Resource and the Service(s) Produced
		4.4 Step 4: Using the Values Projected in Step 2, Calculate the Value of the Resource Using the Definition of Vt
		4.5 Discussion
	5 Conclusion
	Appendices
		Appendix 1: Population Model
		Appendix 2: Valuation of Elephants in Central Africa Forest
			Carbon Capture in Elephant Bodies
			Carbon Capture Enhancement Through Interaction with Tropical Forest
			The Cost of Poaching
		Appendix 3: Estimation of Whale Populations Off Brazil's Coast
		Appendix 4: Valuation of Whales
			Carbon Capture in Whale Bodies
			Phytoplankton Capture Enhancement
			Fisheries Enhancement
			Ecotourism Revenues
	References
Public Policies and Long-Run Growth in a Model with Environmental Degradation
	1 Introduction
	2 The Basic Model
		2.1 Production
		2.2 Total Factor Productivity
		2.3 Emissions
		2.4 Firms' Profits
		2.5 Firms' Investment
		2.6 Firms' Profit Maximization
		2.7 Dynastic Families
		2.8 Households' Utility
		2.9 Households' Production Functions
		2.10 Households' Intertemporal Problem
		2.11 Government
		2.12 Market Equilibrium
	3 The Economy's Balanced Growth Path When ps: [/EMC pdfmark [/Subtype /Span /ActualText (bold italic x left parenthesis bold upper C Subscript bold t Baseline comma bold upper S Subscript bold t Baseline right parenthesis equals StartFraction bold upper C Subscript bold t Baseline Over bold upper S Subscript bold t Baseline EndFraction) /StPNE pdfmark [/StBMC pdfmark x(Ct,St)=CtSt ps: [/EMC pdfmark [/StPop pdfmark [/StBMC pdfmark
		3.1 The Laissez-Faire Path
		3.2 The Socially Optimal Path
		3.3 The “Green-Policy” Path
		3.4 Numerical Example 1
	4 The Economy's Balanced Growth Path When ps: [/EMC pdfmark [/Subtype /Span /ActualText (bold italic x left parenthesis bold upper C Subscript bold t Baseline comma bold upper S Subscript bold t Baseline right parenthesis equals bold upper C Subscript bold t Baseline left parenthesis StartFraction bold upper M Over bold upper S Subscript bold t Baseline EndFraction minus 1 right parenthesis) /StPNE pdfmark [/StBMC pdfmark x(Ct,St)=Ct(MSt-1) ps: [/EMC pdfmark [/StPop pdfmark [/StBMC pdfmark
		4.1 The Laissez-Faire Path
		4.2 The Socially Optimal Path
		4.3 The “Green-Policy” Path
		4.4 Numerical Example 2
		4.5 Numerical Example 3
	5 Conclusion
	References
Distributional Effects of Monetary Policy
	1 Introduction
	2 Stylized Facts
	3 Channels for Distributional Effects of Monetary Policy
		3.1 A Stylized Framework
			3.1.1 Income Channels
			3.1.2 Wealth Channels
		3.2 Exposures to Monetary Policy Shocks
	4 Distributional Impact of Monetary Policy Shocks
		4.1 Savings-Redistribution Channel: Microsimulations
		4.2 Asset Price Channel: Microsimulations
		4.3 A DSGE Model for the United States
		4.4 Labor Earnings Channel: Empirical Assessment
		4.5 Results from Other Studies in the Literature
	5 Policy Implications
		5.1 Central Bank Mandate
		5.2 Central Bank Communication
	6 Conclusions
	Appendices
		Appendix 1: Definiti on of Variables in Household Surveys
		Appendix 2: Benchmarking “Unhedged Interest Rate Exposures”
		Appendix 3: Benchmarking Distributional Implications of Asset Price Increases
		Appendix 4: The Heterogeneous Agent New Keynesian Model of KMV
		Appendix 5: Empirical Strategy and Specification for the Results on Earnings
	References
Covid-19 Shock and Fiscal-Monetary Policy Mix in a Monetary Union
	1 Introduction
	2 Model
		2.1 Overview
		2.2 Households
			2.2.1 Ricardian Household
			2.2.2 Restricted Household
			2.2.3 HTM Household
		2.3 Capital Goods Producers
		2.4 Intermediate Sector
		2.5 Monetary Policy Rule
		2.6 Fiscal Sector
		2.7 Calibration
	3 Simulated Scenarios
	4 Results
		4.1 Recessionary Shock and the ELB
		4.2 Recessionary Shock, ELB, Lump-Sum Transfers to HTM Households, and Public Consumption
		4.3 Long-Term Sovereign Bond Purchases by the Central Bank
		4.4 Increase in Home Sovereign Spread
		4.5 Public Debt Issued by a Supranational Fiscal Authority
		4.6 Sensitivity: Higher Share of HTM Households
	5 Conclusions
	References
Policy Mix During a Pandemic Crisis: A Review of the Debate on Monetary and Fiscal Responses and the Legacy for the Future
	1 Introduction and Main Policy Messages
	2 Macroeconomic Effects of the COVID-19 Global Health Crisis: Its Sectoral Propagation and Hysteresis Effects
		2.1 Cross-Sector Propagation of the COVID-19-Induced Recession
		2.2 Lower Knowledge and Capital Accumulation
		2.3 Main Takeaways
	3 Policy Responses to the COVID-19 Shock: The Monetary and Fiscal Policy Mix in the Short-term
		3.1 The Monetary Policy Responses
			3.1.1 Expansionary Monetary Policy Measures
			3.1.2 Liquidity Provision Measures
			3.1.3 The Global Dimension of Monetary Policy Measures
		3.2 The Fiscal Policy Responses in Advanced Economies
			3.2.1 COVID-19, the Design of Automatic Stabilizers, and Public Safety Nets
	4 Looking Forward: The Legacy of the COVID-19 on Monetary and Fiscal Policy and the Road to the Global Recovery
		4.1 High Public Debt and Contingent Liabilities
		4.2 High Debt and the Conduct of Monetary Policy
		4.3 Monetary Accommodation and Financial Stability
		4.4 Towards a Knowledge-Based, “Green”, and Digital Global Recovery: The Role of Public Investment
	5 Conclusions
	References
Next Generation EU, Green Deal and Sustainable Growth
	References