Question A: The likely need for increased European public investment in defense should come with substantial reallocations of public budgets at the national and EU levels.

Question B: Greater use of joint EU-level procurement of military equipment and defense research/innovation would promote substantially enhanced capacity in Europe's defense industry.

Question C: Increased defense spending would deliver a measurable boost to economic growth in Europe over the next five years.

On the basis of current climate policy commitments and potential technology and market responses, my current best estimate for global warming is that average global temperatures by 2100 will rise to no more than 2.5 degrees Celsius above pre-industrial levels.

Question A: A period of high inflation is substantially more electorally damaging to incumbent governments in advanced countries than a period of high unemployment.

Question B: Voters are more likely to punish incumbents for what they perceive as poor national economic performance than they are to reward incumbents for a good economy.

Question A: The institutions of society - such as constitutions, laws, judiciaries, and property rights - substantially shape economic decisions, policies, and outcomes.

Question B: On average and over the long term, democracies deliver substantially better economic growth than other forms of government.

Question C: Countries where democracy and the rule of law are weakened are likely to experience measurable damage to their economic performance.

Question A: Current enforcement of competition policy in Europe is not working to promote innovation and growth.

Question B: European Union bureaucracy and regulations are a substantial constraint on innovation in Europe.

Question C: The conduct of the dominant US tech companies in European markets (including lobbying and acquisition of start-ups and competitors) is a substantial constraint on innovation in Europe.

Question A: In pursuing social and environmental initiatives, the average public company generates more benefits than costs in terms of profits.

Question B: In pursuing social and environmental initiatives, public companies would benefit from a measurably lower cost of capital.

Question C: There are substantial social benefits when managers of public companies make choices that account for the impact of their decisions on customers, employees, and community members beyond the effects on shareholders.

Question A: US antitrust investigations of the dominant firms in artificial intelligence are warranted by the need to foster competition and innovation in the technologies.

Question B: Seeking to slow the pace of artificial intelligence use and implementation would be a more effective means of assessing potential harms from the technologies than market deployment and ex post assessment.

Question A: The proposed US tariffs on Chinese EVs would lead to measurably higher employment in the US automotive industry over the next five years.

Question B: The proposed US tariffs on Chinese EVs would measurably slow the adoption of green technology by consumers.

Question C: Unless the EU matches the proposed US tariffs on Chinese EVs, there would be measurably lower employment in Europe's automotive industry over the next five years.

Question A: Greater integration of national markets for financial services, energy and telecommunications would give a measurable boost to Europe’s GDP over the next ten years.

Question B: The potential benefits for GDP from loosening European merger rules to allow greater consolidation within the single market would outweigh the potential harm to consumers from weaker competition.

Question A:

Creation of a more unified capital market in Europe - with a common pool of capital, a single rule book and a strengthened European Securities and Markets Authority, comparable to the US Securities and Exchange Commission – would lead to a substantial shift in the balance of companies listing their shares in the EU vis-a-vis the US.

Question B: Creation of a more unified capital market in Europe - with a common pool of capital, a single rule book and a strengthened European Securities and Markets Authority, comparable to the US Securities and Exchange Commission – would substantially increase the availability of funding for start-ups and growing companies across the EU.

Question A: The European Union's AI Act was approved by the European Parliament in March 2024: https://artificialintelligenceact.eu/the-act/

The EU's legislation to regulate artificial intelligence is likely to put European technology firms at a substantial disadvantage to their competitors elsewhere in the world.

Question B: By providing a clear set of rules, the EU's legislation on artificial intelligence is likely to enhance research and innovation by firms building the new technology.

Question A: Europe’s economic growth performance over the last 25 years has been measurably better than it would have been in the absence of the single currency.

Question B: With euro area member states having given up their ability to carry out independent monetary policy, it is substantially more difficult for them to respond effectively to country-specific macroeconomic disturbances.

A legalized and carefully regulated market for cannabis would lead to measurably higher social welfare than a system of prohibition.

Question A: The economic and financial sanctions against Russia are substantially limiting its ability to wage war on Ukraine.

Question B: In the absence of continuing flows of Western economic aid, Ukraine's wartime economy will be substantially compromised.

Question A: A constitutional rule that limits the size of budget deficits that governments can run as a share of GDP is an effective way to impose discipline on a country’s public finances.

Question B: Germany’s debt brake is a substantial constraint on vital public investment in physical/digital infrastructure and the green transition.

Question A:

The fundamental cause of Argentina’s high inflation is unfunded fiscal commitments that are being financed by the central bank.

Question B: Even if Argentina could marshal the resources to make a full switch to using US dollars for domestic transactions, it would substantially increase the volatility of Argentine GDP.

Question A: It is best for society if the management of publicly traded corporations only considers the impact of their decisions on customers, employees, and community members to the extent that these effects feedback to affect shareholder wealth.

Question B: The typical chief executive officer of a publicly traded corporation is paid more than his or her marginal contribution to the firm's value.

Question A: By enabling women’s life choices about education, work and family, the contraceptive pill made a substantial contribution to closing gender gaps in the labor market for professionals.

Question B: Gender gaps in today’s labor market arise less from differences in educational and occupational choices than from the differential career impact of parenthood and social norms around men's and women’s roles in childrearing.

Question C: The gender gap in pay would be substantially reduced if firms had fewer incentives to offer disproportionate rewards to individuals who work long and/or inflexible hours.

Question A: The EU's taxonomy for sustainable activities - a classification system that defines criteria for economic activities that are aligned with a net zero trajectory by 2050 and the broader environmental goals other than climate - is an effective way to steer greener investment and the energy transition by firms and financial institutions.


Details on the taxonomy are here:
https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en

Question B: Use of the EU taxonomy for sustainable activities is likely to stifle important innovations, including in green technology.

Question C: On balance, use of the taxonomy in EU directives and regulation is likely to be net beneficial to European citizens.

Question A: Fiscal rules on budget deficits and public debt levels are an essential part of a sound fiscal framework.

Question B: Since the inception of the Stability and Growth Pact, budget deficits in Europe have been measurably lower, on average, than would have been the case without common budget rules.

Question C: Since the inception of the Stability and Growth Pact, the path of GDP growth in Europe has been measurably more stable than would have been the case without common budget rules.

Question A: Non-bank financial intermediaries pose a substantial threat to financial stability.

Question B: Regulating the leverage and liquidity of non-bank financial intermediaries would substantially improve financial stability.

Question C: Given current regulations, non-bank financial intermediaries should not have access to central bank support.

Question A: A significant factor behind today’s inflation in Europe is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins.

Question B: A significant factor behind today’s inflation in some sectors of the European economy is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins.

Question C: A significant factor behind today’s inflation in some sectors of the European economy (both competitive and concentrated) is distortions in the aggregate economy where supply does not meet demand.

Question A: If countries could impose a ban on the use of ChatGPT and similar generative AI chatbot services that is technologically effective, they would experience a measurably negative impact on national innovation.

Question B: Regardless of whether advances in AI spur productivity growth, they are likely to create deep challenges for society – in areas from labor markets to politics, and including disinformation, privacy, crime, and warfare – that will be difficult to anticipate, plan for, and contain.

Question A: Use of artificial intelligence over the next ten years will lead to a substantial increase in the growth rates of real per capita income in the US and Western Europe over the subsequent two decades.

Question B: Use of artificial intelligence over the next ten years will have a substantially bigger impact on the growth rates of real per capita income in the US and Western Europe over the subsequent two decades than the internet has had over the past two decades.

Question A: Preserving the financial viability of France's state pension system is better achieved by raising the effective retirement age than by raising contributions while working.

Question B: Preserving the financial viability of France's state pension system is better achieved by raising the effective retirement age than by reducing benefits once retired.

Question A:

At this point, there is little that the European Central Bank can do to increase or maintain output in the Eurozone.

Question B: When the economy is operating below its potential, larger fiscal deficits are likely to increase demand and output.

Question C: When the economy is operating below its potential and monetary policy is at the effective lower bound, fiscal policy should prioritize increasing output over decreasing public debt.

Question A:

Selecting candidates for membership of the ECB Executive Board based primarily on nationality ahead of competence is likely to have a negative effect on the quality of monetary policy in the Eurozone.

Question B: Although the central bank can never be an entirely technocratic institution, the selection process for the ECB President and members of the Executive Board is significantly worsened by intergovernmental trade-offs involving appointments to other European institutions.

On bids for infrastructure projects, the average European would be better off if Europe’s governments favored European firms over Chinese firms (or firms from any other country with non-profit-related geopolitical strategies) — even if it means sometimes choosing a higher-cost bidder.

Question A: Breaking the “doom loop” — a negative spiral that can result when banks hold sovereign bonds and governments bail out banks — would increase the stability of European economies in the event of another financial crisis.

Question B: Regulators should try to break the doom loop by assigning positive risk weights — in calculating banks’ capital requirements — to banks’ holdings of domestic and other Eurozone sovereign bonds.

Question C: Breaking the doom loop would impose substantial costs on powerful political constituencies.

Residents of big European cities would be better off, on balance, if governments did more to counter gentrification, for example by using rent and other housing subsidies, public housing investments, zoning regulations, or similar policies.

Question A: A common European deposit insurance scheme, once fully implemented, would increase the stability of European economies in the event of another financial crisis.

Question B: A common European deposit insurance scheme, once fully implemented, would increase the likelihood of another financial crisis in Europe.

Question A: Overall, public spending on the arts in Europe creates benefits that exceed the deadweight loss caused by taxation to fund it.

Question B: Additional public spending on the arts in Europe would create incremental benefits that exceed the deadweight loss caused by taxation to fund it.

Question A: The average European is better off if Europe’s competition authorities let firms merge into European champions in their sectors, even it weakens competition.

Question B: If China and other countries use policies that create giant international firms, then the average European is better off if Europe's competition authorities let firms merge into European champions in their sectors, even it weakens competition.

Question A: Letting publicly traded European firms report earnings annually rather than quarterly would lead their executives to place more weight on long-term issues in their investments and other decisions.

Question B: A switch from quarterly to annual earnings reports would, on net, benefit shareholders of European firms.

Question A: To the extent that public corporations pursue social and environmental initiatives, they tend to achieve higher risk-adjusted (private) returns than otherwise similar corporations that pursue such initiatives less.

Question B: To the extent that Norway’s global government pension fund makes investments for social and environmental objectives — apart from investments that would bring the highest expected risk-adjusted returns — it improves the welfare of Norwegians.

Question A: The fiscal rules of the European Union should give more flexibility to member countries.

Question B: The Italian budget for 2019 that the European Commission rejected in October would have increased Italy’s risk of fiscal insolvency substantially.

Question C: If France runs a 2019 budget deficit of around 3.4% of GDP, as announced by President Macron’s government, France’s risk of fiscal insolvency will increase substantially.

Question A: Capping the number of ride-sharing drivers as is being discussed in New York City, Chicago and London will make the average resident in that city worse off.

Question B:

To achieve a given level of congestion, it would be better to use taxes for driving that vary based on the level of congestion, rather than limiting the number of ride-sharing vehicles.

People who migrated to Europe between 2015 and 2018 are likely — over the next two decades — to contribute more in taxes paid than they receive in benefits and public services.

Ideas are nonrival, so increasing returns to scale is an essential feature of technological change in a market economy.

Voters overestimate the effect that current governments have on their economies’ concurrent economic performance.

Over the next decade, autonomous cars will raise average welfare in the EU by at least as much as smartphones have over the past decade.

Britain’s Labour party recently proposed giving the Bank of England a target of 3% annual labor productivity growth. Consider the following statement:

Central banks cannot significantly increase productivity growth over a ten year horizon, except perhaps by promoting macroeconomic stability.

Question A: The European Commission has proposed new rules to ensure that “digital business activities are taxed in a fair and growth-friendly way in the EU”. Consider two statements regarding this proposal:

An EU-wide 3% tax on revenue from digital activities would, on balance, be a good idea.

Question B:

If the EU decides to tax digital service providers, it would be better — given the difficulties of measuring and verifying digital activity — to tax them on the revenue, rather than the profits, that they generate locally.

The European Union often uses its antitrust powers to protect EU-based firms from international competition, rather than to promote greater competition in European markets.

Question A: Trade with China makes most Europeans better off because, among other advantages, they can buy goods that are made or assembled more cheaply in China.

Question B: Some Europeans who work in the production of competing goods, such as clothing and furniture, are made worse off by trade with China.

Question C: If the EU followed the new US steel tariffs by imposing similar EU tariffs on steel from China, it would improve Europeans’ welfare.

Question A: Assuming it exits its third bailout program this summer without an immediate restructuring or other debt relief, Greece is unlikely to default on its sovereign debt in the coming decade.

Question B: Greece would be better off if it had decided to exit the euro between 2011 and 2015.

Question C: If Greece had defaulted on (or restructured) its private debt in 2010, while also staying within the euro, that combination would have been better for Greece than either exiting the euro or proceeding as it has actually done.

Question A: Bitcoins are more similar to gold than they are to currency.

Question B: Bitcoins are more similar to gold than they are to Dutch tulips in the 1630s.

The US spends roughly 17% of GDP on healthcare, according to the OECD; most European countries spend less than 12% of GDP.

Higher quality-adjusted US healthcare prices contribute relatively more to the extra US spending than does the combination of higher quantity and quality of US care (interpreting quantity and quality to reflect both greater American healthcare needs due to underlying population health and the delivery of more or better healthcare services to Americans).

Over the past two years, all else equal, the appeal of the US as a destination for immigrants has changed in ways that will likely decrease innovation in the US economy.

Question A:

Holding other policies fixed, the average European would be better off if every European country taxed corporate profits at a rate of 20% (based as closely as possible on a common definition of profits).

Question B: If other policies were held fixed and every European country taxed corporate profits at a common rate of 20%, then reducing that common rate substantially below 20% would make the average European better off.

Question A: All else equal, if corporations throughout Europe set quotas for a minimum number of women board members, the shareholder value of European companies would increase.

Question B: Taking into account the likely effects on investments in human capital by men and women, setting quotas throughout Europe for a minimum number of women board members would generate substantial net benefits for Europeans.

Question A: Subsidizing renewable energy sources is better than taxing fossil fuels, assuming the subsidy or tax would be set at levels that would reduce carbon emissions by an equivalent amount.

Question B: Germany’s solar-energy subsidies to date have produced net social benefits for Germany.

Question C: Solar-energy subsidies to date in Germany and other countries have produced net social benefits for the world.

Insights from psychology about individual behavior – examples of which include limited rationality, low self-control, or a taste for fairness – predict several important types of observed market outcomes that fully-rational economic models do not.

The influx of refugees into Germany beginning in the summer of 2015 will generate net economic benefits for German citizens over the succeeding decade.

Question A: Holding labor market institutions and job training fixed, rising use of robots and artificial intelligence is likely to increase substantially the number of workers in advanced countries who are unemployed for long periods.

Question B: Rising use of robots and artificial intelligence in advanced countries is likely to create benefits large enough that they could be used to compensate those workers who are substantially negatively affected for their lost wages.

Question A: Consumers will be better off, on balance, if European cities treat firms that provide ride-sharing platforms (such as Uber) as substantively different from taxi firms, and thus not necessarily warranting the same regulation.

Question B: Assuming that taxi and ride-sharing companies were treated as substantively similar — including requirements that they operate on an equal footing regarding safety, insurance and taxation — letting ride-sharing services compete without restrictions on prices or routes would raise consumer welfare.

Question C: Regardless of how ride-sharing services are treated, existing regulations for traditional taxi firms in many European cities harm consumers by limiting competition.

Question A: Revising France’s labor market policies — by reducing employment protection, decentralizing labor negotiations to the firm level, and making training programs more accessible and responsive to labor demands — would, all else equal, increase productivity in France’s economy.

Question B: Reducing employment protection would reduce the equilibrium unemployment rate in France.

Question A: The ECB's asset purchases over the past two years have reduced the threat of deflation in the euro area as a whole.

Question B: If the economic outlook in the euro area becomes less favorable, then increasing the ECB's asset purchase program (in size or duration) would substantially increase the euro area's economic growth over the following five years.

In general, absent any inside information, an equity investor can expect to do better by holding a well-diversified, low-fee, passive index fund than by holding a few stocks.

Question A: Without changes in policy, a rising share of people who are over age 65 will exert a substantial downward influence on per capita real GDP in western European countries.

Question B: In European countries where the share of those over 65 is rising, there are net social benefits to adjusting retirement ages for state-financed (including pay-as-you-go) pension systems upwards, so that revised retirement ages better reflect longer life expectancies.

Question A: All else equal, there are substantial advantages to having much of Europe’s human capital and infrastructure for international financial activity clustered in a single city, as they are at present in London.

Question B: All else equal, Britain’s rules on hiring, firing and working hours are significantly more conducive to financial activity than those in other large European countries.

Question A: Setting the EU rules aside, and assuming it would take 2.5% of Italy’s GDP to recapitalize its banks, the Italian government would improve financial stability in Europe if it injected this amount of public funds into its banks.

Question B: If Italy were to inject public funds into its banks without imposing losses on at least some claimants, an important cost would be the effect on future incentives (economic or political) in Europe.

Question A: Because of the Brexit vote's outcome, the UK's real per-capita income level is likely to be lower a decade from now than it would have been otherwise.

Question B: Because of the Brexit vote's outcome, the rest of the EU's real per-capita income level is likely to be lower a decade from now than it would have been otherwise.

In general, using more congestion charges in crowded transportation networks — such as higher tolls during peak travel times in cities, and peak fees for airplane takeoff and landing slots — and using the proceeds to lower other taxes would make citizens on average better off.

On the whole, the shift from state to private ownership of many industrial assets in central and eastern European countries after communism has increased productivity in those countries.

Question A: Freer movement of goods and services across borders within Europe has made the average western European citizen better off since the 1980s.

Question B: Freer movement of goods and services across borders within Europe has made many low-skilled western European citizens worse off since the 1980s.

Question A: Giving tax incentives to specific firms to locate operations in a country typically generates domestic benefits that outweigh the costs to the country providing the incentives.

Question B: Europe as a whole benefits when European cities or countries compete with each other by giving tax incentives to firms to locate operations in their jurisdictions.

Question A: Freer movement of people to live and work across borders within Europe has made the average western European citizen better off since the 1980s.

Question B: Freer movement of people to live and work across borders within Europe has made many low-skilled western European citizens worse off since the 1980s.