nep-eec New Economics Papers
on European Economics
Issue of 2019‒10‒07
twenty-two papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Exposition, climax, denouement: Life-cycle evaluation of the recent financial crisis in the EU by linking the ESRB financial crisis database to the European Commission's Macroeconomic Imbalance Procedure Scoreboard By Erhart, Szilard
  2. Financial integration in Europe through the lens of composite indicators By Hoffmann, Peter; Kremer, Manfred; Zaharia, Sonia
  3. Introducing dominant currency pricing in the ECB’s global macroeconomic model By Georgiadis, Georgios; Mösle, Saskia
  4. Quantify the quantitative easing: impact on bonds and corporate debt issuance By Todorov, Karamfil
  5. What drives bank coverage ratios: Evidence from the euro area By Alessi, Lucia; Bruno, Brunella; Carletti, Elena; Neugebauer, Katja
  6. Are flexible working hours helpful in stabilizing unemployment? By Kolasa, Marcin; Rubaszekz, Michał; Walerych, Małgorzata
  7. Uncertainty Shocks and Financial Crisis Indicators By Nikolay Hristov; Markus Roth
  8. Ratings matter: announcements in times of crisis and the dynamics of stock markets By Rosati, Nicoletta; Bellia, Mario; Matos, Pedro Verga; Oliviera, Vasco
  9. What hides behind the German labor market miracle? Unemployment insurance reforms and labor market dynamics By Moritz Kuhn; Benjamin Hartung; Philip Jung
  10. The Effects of Government Spending Over the Business Cycle: A Disaggregated Analysis for OECD and Non-OECD Countries By Panagiotis Konstantinou; Andromachi Partheniou
  11. Labour Productivity, Wages and the Functional Distribution of Income in Portugal: A Sectoral Approach By João Carlos Lopes; José Carlos Coelho; Vítor Escária
  12. Economic Polarisation in Europe: Causes and Options for Action By Claudius Gräbner; Philipp Heimberger; Jakob Kapeller
  13. Deposit Insurance and Banks’ Deposit Rates: Evidence from the 2009 EU Policy Change By Matteo, Gatti; Tommaso, Oliviero
  14. Forecasting Exports across Europe: What Are the Superior Survey Indicators? By Robert Lehmann
  15. A Real-time Density Forecast Evaluation of the ECB Survey of Professional Forecasters By Laura Coroneo; Fabrizio Iacone; Fabio Profumo
  16. Sovereign Debt and the Effects of Fiscal Austerity By Diego Anzoategui
  17. Policy Uncertainty and Information Flows: Evidence from Pension Reform Expectations By Emanuele Ciani; Adeline Delavande; Ben Etheridge; Marco Francesconi
  18. Corporate Leverage and Monetary Policy Effectiveness in the Euro Area By Simone Auer; Marco Bernardini; Martina Cecioni
  19. How Informative Are Real Time Output Gap Estimates in Europe? By Alvar Kangur; Koralai Kirabaeva; Jean-Marc Natal; Simon Voigts
  20. The Macroeconomics of the Greek Depression By Gabriel Chodorow-Reich; Loukas Karabarbounis; Rohan Kekre
  21. The changing nature of work and skills in the digital age By Ignacio Gonzalez Vazquez; Santo Milasi; Stephanie Carretero Gomez; Joanna Napierala; Nicolas Robledo Bottcher; Koen Jonkers; Xabier Goenaga Beldarrain; Eskarne Arregui Pabollet; Margherita Bacigalupo; Federico Biagi; Marcelino Cabrera Giraldez; Francesca Caena; Jonatan Castano Munoz; Isabel Clara Centeno Mediavilla; John Edwards; Enrique Fernandez Macias; Emilia Gomez Gutierrez; Estrella Gomez Herrera; Andreia Inamorato Dos Santos; Panagiotis Kampylis; David Klenert; Montserrat Lopez Cobo; Robert Marschinski; Annarosa Pesole; Yves Punie; Songul Tolan; Sergio Torrejon Perez; Cesira Urzi Brancati; Riina Vuorikari
  22. Secured and Unsecured Interbank Markets: Monetary Policy, Substitution and the Cost of Collateral By Thibaut Piquard; Dilyara Salakhova

  1. By: Erhart, Szilard
    Abstract: The paper investigates the life-cycle of the 2008-2009 financial crisis by linking the Macroeconomic Imbalance Procedure (MIP) Scoreboard of the European Commission to the crisis database of the European Systemic Risk Board (ESRB). The novelty of the analysis is that early warning capacity of MIP indicators is empirically tested in case of various crisis events case by case (i) Currency/Balance-of-Payment/Capital flow events, (ii) Sovereign crisis events, (iii) Banking crisis events and (iv) Significant asset price corrections in EU Member States. Furthermore, we contribute to the literature by studying the predicting power of the MIP Scoreboard in the identification of the overheating in the economy in advance of crises (preventive arm of the MIP). We found that the predictive power of the MIP Scoreboard may be twice as high to capture sovereign and Currency/Balance-of-Payment/Capital flow type of crisis events than its power to capture a banking crisis or serious asset price corrections. We confirm the results of earlier empirical studies that some MIP indicators perform relatively well (current account and net international position) in all specifications. A simple composite indicator based on the threshold breaches of MIP Scoreboard Indicators, performed in most cases as good as the best individual indicator, and hence could be considered as an input to a simple, rule based and accountable decision making. JEL Classification: C40, G01, E44, E61, G28
    Keywords: boom and bust, early warning system, financial crisis, macroeconomic imbalance procedure, signal approach, systemic risk
    Date: 2019–09
  2. By: Hoffmann, Peter; Kremer, Manfred; Zaharia, Sonia
    Abstract: This paper develops composite indicators of financial integration within the euro area for both price-based and quantity-based indicators covering money, bond, equity and banking markets. Prior to aggregation, individual integration indicators are harmonised by applying the probability integral transform. We find that financial integration in Europe increased steadily between 1995 and 2007. The subprime mortgage crisis marked a turning point, bringing about a marked drop in both composite indicators. This fragmentation trend reversed when the European banking union and the ECB's Outright Monetary Transactions Programme were announced in 2012, with financial integration recovering more strongly when measured by price-based indicators. In a growth regression framework, we find that higher financial integration tends to be associated with an increase in per capita real GDP growth in euro area countries. This correlation is found to be stronger the higher a country's growth opportunities. JEL Classification: F36, F43, F45, G01, G15
    Keywords: composite indicator, economic growth, European Monetary Union, financial integration, financial stress
    Date: 2019–09
  3. By: Georgiadis, Georgios; Mösle, Saskia
    Abstract: A large share of global trade being priced and invoiced primarily in US dollar rather than the exporter’s or the importer’s currency has important implications for the transmission of shocks. We introduce this “dominant currency pricing” (DCP) into ECB-Global, the ECB’s macroeconomic model for the global economy. To our knowledge, this is the first attempt to incorporate DCP into a major global macroeconomic model used at central banks or international organisations. In ECB-Global, DCP affects in particular the role of expenditure-switching and the US dollar exchange rate for spillovers: In case of a shock in a non-US economy that alters the value of its currency multilaterally, expenditure-switching occurs only through imports; in case of a US shock that alters the value of the US dollar multilaterally, expenditure-switching occurs both in non-US economies’ imports and – as these are imports of their trading partners – exports. Overall, under DCP the US dollar exchange rate is a major driver of global trade, even for transactions that do not involve the US. In order to illustrate the usefulness of ECB-Global and DCP for policy analysis, we explore the implications of the euro rivaling the US dollar as a second dominant currency in global trade. According to ECB-Global, in such a scenario the global spillovers from US shocks are smaller, while those from euro area shocks are amplified; domestic euro area monetary policy effectiveness is hardly affected by the euro becoming a second globally dominant currency in trade. JEL Classification: F42, E52, C50
    Keywords: dominant currency paradigm, global macroeconomic modelling, spillovers
    Date: 2019–10
  4. By: Todorov, Karamfil
    Abstract: This paper studies the impact of the European Central Bank’s (ECB) Corporate Sector Purchase Programme (CSPP) announcement on prices, liquidity, and debt issuance in the European corporate bond market using a data set on bond transactions from Euroclear. I find that the quantitative easing (QE) programme increased prices and liquidity of bonds eligible to be purchased substantially. Bond yields dropped on average by 30 basis points (bps) (8%) after the CSPP announcement. Tri-party repo turnover rose by 8.15 million USD (29%), and bilateral turnover went up by 7.05 million USD (72%). Bid-ask spreads also showed significant liquidity improvement in eligible bonds. QE was successful in boosting corporate debt issuance. Firms issued 2.19 billion EUR (25%) more in QE-eligible debt after the CSPP announcement, compared to other types of debt. Surprisingly, corporates used the attracted funds mostly to increase dividends. These effects were more pronounced for longer-maturity, lower-rated bonds, and for more credit-constrained, lower-rated firms.
    Keywords: Quantitative easing; Corporate Sector Purchase Programme; ECB; Bond market; Corporate debt issuance
    JEL: E52 E58 G12 G18
    Date: 2019–08–09
  5. By: Alessi, Lucia (European Commission -- JRC); Bruno, Brunella (Bocconi University); Carletti, Elena (Bocconi University); Neugebauer, Katja (European Commission -- JRC)
    Abstract: We analyse micro and macro drivers of coverage ratios in a cross–country sample of euro area banks. Among the former, we find that coverage ratios increase with the reliance on deposit funding and when asset quality is very poor. Among the latter, coverage ratios increase with GDP growth and with more stringent supervision and macro–prudential policies, as well as with deeper NPL secondary markets. Finally, we find evidence of peer imitation behaviour, as banks with below country average coverage ratios increase coverage ratios to catch up with their peers. As for the prevalent mechanism, banks tend to enhance coverage ratios primarily by increasing loan loss reserves rather than by resolving NPLs.
    Keywords: loan loss reserves; non–performing loans; loan loss coverage
    JEL: G21 G28 M41
    Date: 2019–08
  6. By: Kolasa, Marcin; Rubaszekz, Michał; Walerych, Małgorzata
    Abstract: In this paper we challenge the conventional view that increasing working time exibility limits the amplitude of unemployment fluctuations. We start by showing that hours per worker in European countries are much less procyclical than in the US, and in some economies even co-move negatively with output. This is confirmed by the results from a structural VAR model for the euro area, in which working hours increase after a contractionary monetary shock, exacerbating the upward pressure on unemployment. To understand these counterintuitive results, we develop a structural search and matching macroeconomic model with endogenous job separation. We show that this feature is key to generate countercyclical adjustments in working hours. When we augment the model with frictions in working hours adjustment and estimate it using euro area time series, we find that increasing flexibility of working time amplifies cyclical movements in unemployment.
    JEL: E24 E32 J22 J64
    Date: 2019–10–02
  7. By: Nikolay Hristov; Markus Roth
    Abstract: The current paper broadens the understanding of the role played by uncertainty in the context of macroeconomic fluctuations. It focuses on the implications of uncertainty shocks for indicators that tend to precede financial crises. In an empirical analysis we show for a set of four euro area countries that negative uncertainty shocks, while boosting economic activity, are followed by unfavorable reactions of financial crisis indicators. We conclude that standard uncertainty measures contain some useful information on the potential buildup of vulnerabilities in the financial system.
    Keywords: uncertainty, crisis indicators, structural macroeconomic shocks, sign restrictions
    JEL: D89 C32 E44 G01
    Date: 2019
  8. By: Rosati, Nicoletta (European Commission -- JRC); Bellia, Mario (European Commission -- JRC); Matos, Pedro Verga (University of Lisbon); Oliviera, Vasco (University of Lisbon)
    Abstract: In this paper we propose a novel approach in analysing the impact of changes in sovereign credit ratings on stock markets. We study the evolution of a segmented form of the stock market index for several crisis-hit countries, including both European and Asian markets. Such evolution is modelled by a homogeneous Markov chain, where the transition probabilities from one starting level of the index to a new (lower or higher) level in the next period depend on some explanatory variables, namely the country’s rating, GDP and interest rate, through a generalised ordered probit model. The credit ratings turn out to be determinant in the dynamics of the stock markets for all three European countries considered - Portugal, Spain and Greece, while not all considered Asian countries show evidence of correlation of market indices with the ratings.
    Keywords: Credit ratings; financial crisis; Europe; Markov chains; generalized ordered probit models
    JEL: C25 C58 E44 G01 G15 G24
    Date: 2019–09
  9. By: Moritz Kuhn (University of Bonn); Benjamin Hartung (University of Bonn); Philip Jung (TU Dortmund)
    Abstract: A key question in labor market research is how the unemployment insurance system affects unemployment rates and labor market dynamics. We revisit this old question studying the German Hartz reforms. On average, lower separation rates explain 76% of declining unemployment after the reform, a fact unexplained by existing research focusing on job finding rates. The reduction in separation rates is heterogeneous, with long-term employed, high-wage workers being most affected. We causally link our empirical findings to the reduction in long-term unemployment benefits using a heterogeneous-agent labor market search model. Absent the reform, unemployment rates would be 50% higher today.
    Date: 2019
  10. By: Panagiotis Konstantinou (AUEB); Andromachi Partheniou (AUEB)
    Abstract: Using a panel of OECD and non-OECD economies, we estimate the effects of three types of government expenditure (compensation of government employees, government use of goods and services and government investment) and social benefits on output, private consumption and investment. In OECD economies, we find that compensation of government employees and government investment generate significantly positive multipliers, whereas government use of goods and services does not. However, only the multipliers of compensation of government employees are found higher during recessions and only for horizons of up to two years ahead. In non-OECD economies, the multipliers of compensation of government employees and government investment are positive but smaller than those for the OECD group and they do not tend to differ in recessions and in expansions. We also provide evidence that social benefits generate increases of private consumption, for both OECD and non-OECD countries.
    Keywords: Fiscal Policy, Government Spending Multipliers, State-Dependent Multipliers, Local Projections, Non-Linear Models
    JEL: E62 E32 C33
    Date: 2019–09–19
  11. By: João Carlos Lopes; José Carlos Coelho; Vítor Escária
    Abstract: The main purpose of this paper is to studythe functional distribution of income in Portugal in the long run, considering the period between 1953 and 2017. The labour share in income or value added depends on two fundamental variables, the labour productivity and the average labour compensation.The trends of these variables are quantified, for the aggregate economy and for its main productive sectors. An interesting result emerges, namely the different dynamics across sectors, both for the (unadjusted)wage share (considering only the wages of employees) and for the adjusted labour share (considering also as labour compensation one fraction of mixed income). Moreover, a shift-share analysis is used, in order to distinguish the importanceof each sector’s wage share evolution (“within”effect) and the changes in each sector’s weight (structural changes, or “between”effect). Finally, a first attempt to incorporate the effect of wage inequalityon the functional distribution of income is made, subtracting the labour compensation of the highest paid workers (top 10%, 5% and 1%) in order to calculate the wage share of the (so-called) typical workers.
    Keywords: Functional Income Distribution;Labour Share;Sectoral Analysis; Shift-Share Analysis; Wage Inequalities; Portugal.
    JEL: D33 E25
    Date: 2019–09
  12. By: Claudius Gräbner; Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw); Jakob Kapeller
    Abstract: This study discusses the challenges that economic policy-makers in Europe have to cope with, in order to ensure an economically prosperous and institutionally stable community of Member States of the European Union (EU). At the analytical level, we not only document a process of multi-dimensional polarisation of EU countries, but also link the existing economic divergences with a central long-term problem, namely structural polarisation differences in the institutional and legal embedding (e.g. in the areas of tax and corporate law, the labour market or the financial sector) and in technological capabilities are a major driver of divergence in living standards between some Member States. This polarisation, which started even before the financial crisis but has intensified over the last ten years, is due largely to the global and the European ‘race for the best location’. Without coordinated and cooperative intervention by economic policy-makers, a further drifting-apart of economic development paths seems unavoidable. The large differences in the production structures of the EU countries and the resulting highly unequal distribution of technological capabilities are self-reinforcing in nature, and will further intensify polarisation. The present study provides proposals for a coherent European overall strategy that not only addresses existing problems and renders possible the often-promised upward convergence between EU countries, but also provides a potential basis for dealing with key future challenges (such as digitisation, ageing society, climate change or global trade) on the basis of common European objectives. The focus is on safeguarding and expanding European values and institutions, in order to deepen European integration at key points; and thus also to contribute, in the medium to long run, to a transformation of the global economic order from the European side. A central argument is that coordinated measures in various policy areas – especially in wage, monetary, fiscal and industrial policy – are of central importance in creating a long-term successful economic basis for the common European economic and monetary area. Disclaimer The study was first published by the Friedrich-Ebert-Stiftung in German language (‚Wirtschaftliche Polarisierung in Europa Ursachen und Handlungsoptionen‘ by Jakob Kapeller, Claudius Gräbner, Philipp Heimberger, ISBN 978-3-96250-376-5, Bonn, 2019). The German version of this study was financed by the FES under the project "Für ein Besseres Morgen".
    Keywords: Europe, European integration, economic openness, competitiveness
    JEL: B5
    Date: 2019–09
  13. By: Matteo, Gatti; Tommaso, Oliviero
    Abstract: Deposit insurance is one of the main pillars of banking regulation meant to safeguard financial stability. In early 2009, the EU increased the minimum deposit insurance limit from €20,000 to €100,000 per bank account with the goal of achieving greater stability in the financial markets. Italy had already set a limit of €103,291 in 1994. We evaluate the impact of the new directive on the banks’ average interest rate on customer deposits by comparing banks in the Eurozone countries to those in Italy, before and after the policy change. The comparability between the two groups of banks is improved by means of a propensity score matching. We find that the increase in the deposit insurance limit led to a significant decrease in the cost of funding per unit of customer deposit and that the effect is stronger for riskier banks, suggesting that the policy reduced the risk premium demanded by depositors.
    Keywords: Deposit Insurance, Average Deposit Interest Rate, Cost of Deposit Funding
    JEL: G21 G28
    Date: 2019–09
  14. By: Robert Lehmann
    Abstract: In this study, we systematically evaluate the potential of a bunch of survey-based indicators from different economic branches to forecasting export growth across a multitude of European countries. Our pseudo out-of-sample analyses reveal that the best-performing indicators beat a well-specified benchmark model in terms of forecast accuracy. It turns out that four indicators are superior: the Export Climate, the Production Expectations of domestic manufacturing firms, the Industrial Confidence Indicator, and the Economic Sentiment Indicator. Two robustness checks confirm these results. As exports are highly volatile and turn out to be a large demand-side component of gross domestic product, our results can be used by applied forecasters in order to choose the best-performing indicators and thus increasing the accuracy of export forecasts.
    Keywords: export forecasting, export expectations, export climate, Europe
    JEL: F01 F10 F17
    Date: 2019
  15. By: Laura Coroneo; Fabrizio Iacone; Fabio Profumo
    Abstract: We evaluate the real-time predictive ability of density forecasts from the European Central Bank’s Survey of Professional Forecasters (ECB SPF) using the Diebold and Mariano (1995) and West (1996) test. As the sample size for the ECB SPF is fairly small, we use fixed-b and fixed-m asymptotics to alleviate size distortions. We verify in an original Monte Carlo design that fixed-smoothing asymptotics delivers correctly sized tests in this framework. Empirical results indicate that ECB SPF density forecasts for unemployment and real GDP growth beat simple benchmarks at one-year horizon. ECB SPF density forecasts for inflation instead do not easily outperform simple benchmarks, as up to 2008 ECB SPF inflation expectations are close to the target. After 2008, we find that the predictive ability of the ECB SPF is more conspicuous for all variables, even though inflation expectations are still loosely anchored to the target.
    Keywords: real-time density forecast evaluation, ECB SPF, Diebold-Mariano-West test, fixed-smoothing asymptotics
    JEL: C12 C22 E17
    Date: 2019–09
  16. By: Diego Anzoategui (Rutgers University)
    Abstract: I study the impact of austerity programs implemented in the Eurozone since 2010. To do so I incorporate strategic sovereign default into a DSGE model where the government follows fiscal rules, which are estimated from data. I calibrate the model using data from Spain and estimate the size and impact of scal policy shocks associated with austerity policies. I then use the model to predict what would have happened to output, consumption, employment, sovereign debt levels and spreads if Spain had continued to follow the pre-2010 fiscal rule instead of switching to the austerity track. I find that, contrary to the expectations of policy makers at the time, austerity did not decrease sovereign spreads or debt-to-GDP ratios during 2010-2013. Furthermore it had a negative impact on employment and GDP. Nevertheless, the short run pain is related to a long run gain. The model predicts that as a consequence of austerity Spain is more likely to show lower levels of debt and spreads in the future.
    Date: 2019
  17. By: Emanuele Ciani; Adeline Delavande; Ben Etheridge; Marco Francesconi
    Abstract: Subjective expectations about future policy play an important role in individuals’ welfare. We examine how workers’ expectations about pension reform vary with proximity to reforms, information cost, and aggregate information acquisition. We construct a new pan-European dataset of reform implementations and government announcements, and combine it with individual-level representative survey data on expectations about future reforms and country-level data on online search. We find: (1) Expectations are revised upward by about 10 percentage points in the year leading up to a reform, from a median of 50%, regardless of whether the reform is announced; (2) Aggregate online search increases after announcements, when the cost of information is lower; (3) Reform announcements and online information gathering are substitutes in the formation of expectations; (4) Expectations do not converge as a result of announcements or implementations; (5) The effect of information on expectations varies substantially across workers and systematically with observed characteristics that proxy cognitive ability and information value. These findings, interpreted using a model of rational inattention, reveal substantial informational rigidities, with welfare costs that run into trillions of Euros.
    Keywords: expectations, retirement, pension reform uncertainty, reform announcement, online search, rational inattention
    JEL: C80 D84 D91 J14
    Date: 2019
  18. By: Simone Auer (Bank of Italy); Marco Bernardini (Bank of Italy); Martina Cecioni (Bank of Italy)
    Abstract: Using country-industry level data and high-frequency identified monetary policy shocks, we find evidence of a positive but non-linear relationship between corporate leverage and the effectiveness of monetary policy in the euro area. More leveraged industries tend to increase their production more strongly after an expansionary monetary policy shock, pointing to a non-negligible role of financial frictions in the transmission mechanism. However, at high leverage ratios this positive relation becomes weaker and eventually inverts. This finding is consistent with recent theoretical studies arguing about the role of credit risk in dampening the financial accelerator channel.
    Date: 2019
  19. By: Alvar Kangur; Koralai Kirabaeva; Jean-Marc Natal; Simon Voigts
    Abstract: We study the properties of the IMF-WEO estimates of real-time output gaps for countries in the euro area as well as the determinants of their revisions over 1994-2017. The analysis shows that staff typically saw economies as operating below their potential. In real time, output gaps tend to have large and negative averages that are largely revised away in later vintages. Most of the mis-measurement in real time can be explained by the difficulty in predicting recessions and by overestimation of the economy’s potential capacity. We also find, in line with earlier literature, that real-time output gaps are not useful for predicting inflation. In addition, countries where slack (and potential growth) is overestimated to a larger extent primary fiscal balances tend to be lower and public debt ratios are higher and increase faster than projected. Previous research suggests that national authorities’ real-time output gaps suffer from a similar bias. To the extent these estimates play a role in calibrating fiscal policy, over-optimism about long-term growth could contribute to excessive deficits and debt buildup.
    Date: 2019–09–20
  20. By: Gabriel Chodorow-Reich (Harvard University); Loukas Karabarbounis (University of Minnesota); Rohan Kekre (University of Chicago)
    Abstract: The Greek economy has experienced three distinct phases in the past 20 years: a boom from 1999 to 2007, a crash from 2007 to 2012, and a flattening from 2012 to 2017. We explore these dynamics using a quantitative model of a two-sector small open economy with nominal frictions, collateral constraints, and endogenous utilization. We first evaluate the roles of shocks to productivity, financial conditions, fiscal policy, external demand, and disaster risk in contributing to the cycle. We then ask whether counterfactual policies such as an unexpected devaluation or an alternative mix of fiscal adjustments could have facilitated the recovery.
    Date: 2019
  21. By: Ignacio Gonzalez Vazquez (European Commission - JRC); Santo Milasi (European Commission - JRC); Stephanie Carretero Gomez (European Commission - JRC); Joanna Napierala (European Commission - JRC); Nicolas Robledo Bottcher (European Commission - JRC); Koen Jonkers (European Commission - JRC); Xabier Goenaga Beldarrain (European Commission - JRC); Eskarne Arregui Pabollet (European Commission - JRC); Margherita Bacigalupo (European Commission - JRC); Federico Biagi (European Commission - JRC); Marcelino Cabrera Giraldez (European Commission - JRC); Francesca Caena (European Commission - JRC); Jonatan Castano Munoz (European Commission - JRC); Isabel Clara Centeno Mediavilla (European Commission - JRC); John Edwards (European Commission - JRC); Enrique Fernandez Macias (European Commission - JRC); Emilia Gomez Gutierrez (European Commission - JRC); Estrella Gomez Herrera (European Commission - JRC); Andreia Inamorato Dos Santos (European Commission - JRC); Panagiotis Kampylis (European Commission - JRC); David Klenert (European Commission - JRC); Montserrat Lopez Cobo (European Commission - JRC); Robert Marschinski (European Commission - JRC); Annarosa Pesole (European Commission - JRC); Yves Punie (European Commission - JRC); Songul Tolan (European Commission - JRC); Sergio Torrejon Perez (European Commission - JRC); Cesira Urzi Brancati (European Commission - JRC); Riina Vuorikari (European Commission - JRC)
    Abstract: This report aims to shed light on some of the key drivers which are worth taking into account when assessing the effect of new technologies on the future of work and skills. It combines a synthesis of the most recent and robust scientific evidence available with original JRC research on issues which have been often overlooked by existing studies. In particular, the report provides new insights on the interplay between automation and work organisation, the extent and nature of platform work, and the patterns of occupational changes across EU regions. The first chapter discusses the impact of technology on employment. It overviews the most recent estimates on technology-induced job creation and destruction, and provides new insights on the role of workplace organisation in shaping the effect of new technologies on labour markets. The second chapter discusses how skills needs are shifting towards digital and non-cognitive skills, showing evidence of an increasing shortage of these skills in the EU, which education systems are not fully tackling yet. The third chapter reviews the opportunities and challenges related to the recent upwards trend in new forms of employment in the EU, focusing on the results of the second wave of the COLLEEM survey on platform work in the EU. The final chapter presents results from a new JRC-Eurofound study on the patterns of occupational change in EU regions in the last 15 years which shows that low-wage jobs have increasingly concentrated in peripheral regions while higher-wage jobs are becoming more and more concentrated in capital regions, leading to increasing territorial disparities, both across and within EU Member States.
    Keywords: Automation, Technological change, Non-cognitive skills, Digital labour platforms, Future of work, Digital skills, Regional employment, Structural transformation
    Date: 2019–09
  22. By: Thibaut Piquard; Dilyara Salakhova
    Abstract: We study the substitution between secured and unsecured interbank markets. Banks are competitive and subject to reserve requirements in a corridor rate system with deposit and lending facilities. Banks face counterparty risk in the unsecured market and incur an opportunity cost to pledge collateral. The model provides insights on interest rates, trading volumes and substitution between the two markets. Using transaction data on the Euro money market, we provide new empirical findings that the model accounts for: (i) borrowing banks are active on both markets even when their collateral constraint is not binding, (ii) secured interest rates may fall below the deposit facility rate. We derive and empirically test predictions on how "conventional" and "unconventional" monetary policies impact interbank markets, depending on whether marketable collateral is purchased or not.
    Keywords: : Monetary Policy, Interbank Markets, Secured and Unsecured Funding.
    JEL: E42 E52 E58 G21
    Date: 2019

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