European Daily: ECB—Takeaways from Sintra

Research evidence excerpt

European Daily: ECB—Takeaways from Sintra

Goldman Sachs European Daily

place within, rather than across sectors (Exhibit 2). He argues that Europe’s productivity

issue does not lie in the generation of ideas, but rather in their commercialisation,

dissemination, and absorption in the broader economy. The author links these

challenges to Europe’s limited risk capital financing, fragmented product and services

markets, and complex regulatory framework.

The author also notes that monetary policy can have non-neutral effects on productivity

and innovation. On the one hand, monetary tightening can lead to disproportional

increases in the cost of capital for firms at the innovation frontier. On the other hand,

monetary accommodation can sustain low-productivity “zombie” firms and deter

investments because of more volatile inflation. The author concludes that the link

between monetary policy and productivity might weaken in the future with the rise of

intangible investment, given its limited use as credit collateral.

Exhibit 2: The First Study Estimates That 80% of the US-Euro Area Productivity Gap Takes

Place Within, Rather Than Across Sectors

Source: Reproduced from Van Ark (2026)

Second, Stockholm School of Economics Professor Mariassunta Giannetti and

co-authors use a large language model to study the effects of the stringency and

complexity of bank regulations on systemic risk and bank valuations. They measure

systemic risk as the sum of the banks’ expected capital shortfall during a severe market

downturn. The dominant episode in their sample is the transposition of Basel III

following the Great Financial Crisis, which their model screens as a highly stringent and

complex set of bank regulations.