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on European Economics |
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Issue of 2024‒05‒27
25 papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Cappelletti, Giuseppe; Dimitrov, Ivan; Naruševičius, Laurynas; Le Grand, Catherine; Nunes, André; Podlogar, Jure; Röhm, Nicola; Ter Steege, Lucas |
| Abstract: | This paper presents the updated macroprudential stress test for the euro area banking system, comprising around 100 of the largest euro area credit institutions across 19 countries. The approach involves modelling banks’ reactions to changing economic conditions. It also examines the effects of adverse scenarios as defined for the European Banking Authority’s 2023 stress test on economies and the financial system as a whole by acknowledging a broad set of interactions and interdependencies between banks, other market participants and the real economy. Our results highlight the resilience of the euro area banking system and the important role banks’ adjustments play in the propagation of shocks to the financial sector and real economy. JEL Classification: C30, C53, C54, E52 |
| Keywords: | economic models, forecasting, macroeconometrics, monetary policy |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2024347&r=eec |
| By: | Lucke, Bernd |
| Abstract: | After more than 20 years of European Monetary Union (EMU), surprisingly few scientific studies exist which study the growth effects of introducing a common currency in large parts of the European Union. I do so using a large panel (NUTS3 data) of regional data for the EU-15. Some 800 (treated) regions were subject to a policy intervention when their country joined the Euro, while some 200 control regions were not. In a synthetic control approach as explored e. g. by Abadie, Diamond and Hainmueller (ADH, 2010), I estimate the causal effects of EMU both with the standard ADH-methodology and with a novel approach which estimates counterfactuals from the control group in post-treatment time. The results from both approaches are very similar: EMU has benefited regions with export-oriented and highly competitive companies e. g. in Germany, while it has had sizable detrimental growth effects on most French and Mediterranean Eurozone regions. Over eighteen years, these losses in growth cumulate to losses in per-capita income of between 15% and 30% vis-à-vis the non-EMU counterfactual. |
| Keywords: | European Monetary Union, synthetic control methods |
| JEL: | C12 C13 C21 C23 E65 F33 N14 |
| Date: | 2022–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120662&r=eec |
| By: | António Rua; Nuno Lourenço; João Quelhas |
| Abstract: | We propose a novel tool to gauge price pressures resorting to circular statistics, the so-called inflation compass. We show that it provides a reliable indication on inflationary pressures in the euro area by focusing on key episodes of high and low inflation since the monetary union inception. Unlike most alternative measures of underlying inflation, the inflation compass does not exclude any subitems of inflation, ensuring that all disaggregated information is taken on board. Moreover, it is not subject to revisions, providing policymakers with real-time signals about the course of underlying inflation, while being easily understood and visually appealing. We also provide evidence of the usefulness of the inflation compass to forecast overall inflation up to 36 months ahead, even during periods of increased turbulence, such as those marked by the COVID-19 pandemic or the recent inflation surge. Our findings indicate that the inflation compass surpasses other widely used measures of underlying inflation for the euro area, leading to statistically significant improvements in forecast accuracy. Lastly, we show that our approach can handle large-dimensional data by leveraging on finer product-level and country-level data. In such environment, the inflation compass still exhibits higher accuracy, underscoring its robustness and reliability. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202317&r=eec |
| By: | António Afonso; José Alves; Sofia Monteiro |
| Abstract: | In this article, we study the effects of geopolitical risks and world uncertainty on time-varying fiscal and external sustainability coefficients. We use Schlicht’s (2021) methodology to estimate time-varying fiscal and external sustainability coefficients for the EU for 27 economies between 2001Q4 and 2022Q3. While fiscal sustainability coefficients derive from the government revenues and expenditures relationship, external sustainability coefficients were computed from the exports’ responses to changes in imports. Our results show that geopolitical risks are always associated with lower fiscal and external sustainability, although with a stronger effect when took into consideration the home geopolitical risk. Moreover, the effects of geopolitical tensions are much stronger on external accounts’ sustainability than on fiscal sustainability. The magnitude of GPR detrimental effects on external sustainability can be 3 to 6 times higher, approximately, when compared to public finances’ sustainability. Lastly, geopolitical tensions in border countries have a negative spillover effect on the sustainability of domestic external accounts. |
| Keywords: | economic integration, geopolitical risks, fiscal sustainability, external sustainability, time-varying coefficients |
| JEL: | E62 F15 F42 H62 H87 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11067&r=eec |
| By: | Sónia Cabral; Cláudia Duarte; José R. Maria |
| Abstract: | High-quality economic analysis requires high-quality data. We construct quarterly industrylevel databases for Portugal and the euro area with a rich and homogeneous breakdown since 1995. The data facilitate international comparisons based on value added, wages, producer prices, hours worked and capital, disaggregated by industries, viz. construction, wholesale and retail trade or human health and social work activities. As an illustration we compare Portugal and the euro area in manufacturing and accommodation and food service activities over 1995Q1-2022Q4. We show that Portuguese value added and real producer wages, per hour, are consistently below those of the euro area in both industries. Capital per hour in manufacturing is systematically lower in Portugal, but not in accommodation and food service activities since the late 2000s. In both economies, manufacturing witnessed an upward trend in value added, real wages and capital stock, all per hour. In contrast, accommodation and food service activities recorded a downward trend in value added per hour and real hourly wages. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:o202302&r=eec |
| By: | Joris Wauters (Economics and Research Department, National Bank of Belgium); Zivile Zekaite (Irish Economic Analysis Division, Central Bank of Ireland); Garo Garabedian (Monetary Policy Division, Central Bank of Ireland) |
| Abstract: | The ECB concluded its strategy review in 2021 with a plan to include owner-occupied housing (OOH) costs in its inflation measure in the future. This paper uses the Bundesbank’s online household panel to study how household expectations would react to this change. We conducted a survey experiment with different information treatments and compared long-run expectations for euro area overall inflation, interest rates, and OOH inflation. Long-run expectations are typically higher for OOH inflation than overall inflation, and both are unanchored from the ECB’s target at the time of the survey. We find significantly higher inflation expectations under the treatment where OOH costs are assumed to be fully included in the inflation measure. This information effect is heterogeneous as, among others, homeowners and respondents with low trust in the ECB react more strongly. However, inflation expectations remain stable when information about past OOH inflation is also given. Careful communication design could thus prevent expectations from becoming more de-anchored. |
| Keywords: | Owner-occupied housing costs, survey experiment, inflation measurement, inflation expectations, ECB |
| JEL: | D83 D84 E31 E50 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202405-449&r=eec |
| By: | Gubitz, Andrea; Toedter, Karl-Heinz; Ziebarth, Gerhard |
| Abstract: | Despite the "interest rate turnaround" initiated by the ECB in the second half of 2022 as a late reaction to the clearly underestimated persistence of high inflation rates in the euro area, real interest rates are by no means to be regarded as restrictive, neither in the ex post nor in the ex ante view. However, banks have been quite quick to adopt stricter lending guidelines, and demand in housing construction and mortgage lending has plummeted. Against this background, the paper discusses the importance of cash flow effects in annuity loans and in particular analyses the so-called front-loading effect. Accordingly, even if inflation rates are fully anticipated and real market and lending interest rates remain unchanged, higher nominal rates lead to strong additional financial burdens in the first phases of the typically mortgages with long maturities. Such liquidity effects can severely reduce the ability or willingness to pay of private investors in the household sector. This is particularly true for long-run loans in the form of a percentage annuity, as an additional maturity shortening effect occurs here. These types of fixed term loans are quite popular in Germany. Looking ahead, there is also a real risk to the stock of housing loans if there is a refinancing of the large stock of cheap housing loans, a risk that also has implications for macroeconomic and financial stability. |
| Abstract: | Trotz der von der EZB eingeleiteten "Zinswende" in der zweiten Jahreshälfte 2022 als späte Reaktion auf die deutlich unterschätzte Persistenz hoher Inflationsraten im Euroraum sind die Realzinsen sowohl in der ex post Betrachtung als auch in der ex ante Betrachtung keineswegs als restriktiv einzuschätzen. Die Banken haben allerdings recht rasch strengere Vergaberichtlinien beschlossen, und die Nachfrage im Wohnungsbau und bei den Hypothekarkrediten ist stark eingebrochen. Der Beitrag thematisiert vor diesem Hintergrund die Bedeutung von Zahlungsstromeffekten bei Annuitätenkrediten und analysiert hier vor allem den sog. front-loading Effekt. Danach führen höhere Nominalzinsen selbst bei vollständig antizipierten Inflationsraten und unveränderten Realzinsen zu starken finanziellen Zusatzbelastungen in den ersten Phasen der typischerweise langen Kreditlaufzeit. Derartige Liquiditätseffekte können die Zahlungsfähigkeit bzw. die Zahlungsbereitschaft der privaten Investoren empfindlich verringern. Dies gilt vor allem bei Darlehen in Form der Prozentannuität, da hier zusätzlich ein Laufzeitenverkürzungseffekt auftritt. Solche Darlehen sind in Deutschland recht populär. Mit Blick auf die Zukunft besteht auch eine reale Gefahr für den Bestand an Wohnungsbaukrediten, wenn es zu einer Refinanzierung des großen Bestands an günstigen Wohnungsbaukrediten kommt, ein Risiko, das auch Auswirkungen auf die makroökonomische und finanzielle Stabilität hat. |
| Keywords: | ECB, monetary policy, liquidity effects of interest rate policy, front loading effects, housing finance, mortgage |
| JEL: | G21 G51 E59 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hawdps:294836&r=eec |
| By: | Victor Vasnetsov (Caribbean Environmental Development Institute); Catherine Vasnetsov (Caribbean Environmental Development Institute) |
| Abstract: | This paper investigates trends in cross-border Mergers and Acquisitions (M&A) in the European Union (EU), both pre-COVID and during the COVID epidemic, in its correlations with several major macroeconomic and financial factors. We established that EU cross-border M&A transaction volume during the 2000-2023 period was positively correlated to European stock market performance, exchange rate (Euro/US dollar), and EU economic uncertainty, and inversely correlated to stock market valuations and cost of debt capital. All these correlations were found to be highly statistically significant. COVID?s overall impact could be split into two different phases: first, the initial massive ?shock? (March ? June 2020) with its highly disruptive effect to all types of economic activities (including cross-border M&A). In the later, longer phase (July 2020 ? April 2022), COVID itself had no statistically significant impact on a strong rebound in the economy and M&A activity despite two larger waves of COVID epidemic (winters of 2020-21 and 2021-22). The latter could be explained by the rapid adjustment of economies and societies to effective remote work and by the massive monetary and fiscal interventions by EU governments. This unprecedented government stimulus had a rapid, positive, and sustainable effect on the economies and the stock market more than just offsetting the initial negative impact of COVID, and temporarily distorted historical relationships of M&A activity with macroeconomic factors. |
| Keywords: | EU mergers and acquisitions (M&A), Cross-border M&A, COVID-19 |
| JEL: | G34 I15 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14115993&r=eec |
| By: | Heider, Florian; Krahnen, Jan Pieter; Langenbucher, Katja; Lindner, Vincent; Schlegel, Jonas; Tröger, Tobias |
| Abstract: | Almost ten years after the European Commission action plan on building a capital markets union (CMU) and despite incremental progress, e.g. in the form of the EU Listing Act, the picture looks dire. Stock exchanges, securities markets, and supervisory authorities remain largely national, and, in many cases, European companies have decided to exclusively list overseas. Notwithstanding the economic and financial benefits of market integration, CMU has become a geopolitical necessity. A unified capital market can bolster resilience, strategic autonomy, and economic sovereignty, reduce dependence on external funding, and may foster economic cooperation between member states. The reason for the persistent stand-still in Europe's CMU development is not so much the conflict between market- and state-based integration, but rather the hesitancy of national regulatory and supervisory bodies to relinquish powers. If EU member states wanted to get real about CMU (as they say, and as they should), they need to openly accept the loss of sovereignty that follows from a true unified capital market. Building on economic as well as historical evidence, the paper offers viable proposals on how to design competent institutions within the current European framework. This note outlines the case for speedy capital market integration and for the adoption of a common regulatory framework and single supervisory authority from a political economy perspective. We also show the alternative case for harmonization and centralization via regulatory competition, elaborating how competition between EU jurisdictions by way of full mutual recognition may lead to a (cost-)efficient and standardized legal framework for capital markets. Lastly, the note addresses the political economy conflict that underpins the implementation of both models for integrating capital markets. We point out that, in both cases, national authorities experience a loss of legislative and jurisdictional competence at the national level. We predict that any plan to foster a stronger capital market union, following an institution based or a market-based strategy, will face opposition from powerful national stakeholders. |
| Keywords: | Capital Markets Union, Capital Markets, Regulatory Arbitrage, European Integration, Institution-building, Geopolitics |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewh:294828&r=eec |
| By: | Daan Freeman; Leon Bettendorf; Gerrit Hugo van Heuvelen; Gerdien Meijerink |
| Abstract: | This study examines the decline in firm dynamism within the Netherlands, potentially linked to the deceleration of productivity growth. We utilise a rich microdata set covering the period 2006-2016, encompassing nearly all Dutch corporations. This dataset facilitates an evaluation of start-ups’ and exiting firms’ contributions to Total Factor Productivity (TFP) growth across various industries, employing the Melitz and Polanec (2015) decomposition approach. Our findings reveal that in service sectors, the creative destruction hypothesis is substantiated, as start-ups and exiting firms positively impact overall TFP growth. In contrast, TFP growth in manufacturing is primarily driven by incumbent firms. Entry and exit dynamics in this context exert minimal or even negative influence on TFP growth. Although entrants in manufacturing initially display lower productivity than incumbents, their productivity growth outpaces that of incumbents. In services, entrants commence operations with higher initial productivity, a trait that gradually diminishes over time. Generally, entrants with relatively low productivity are predisposed to exit within five years, aligning with the ’up-or-out’ pattern. |
| Keywords: | productivity slowdown, firm dynamics, TFP, Netherlands |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11071&r=eec |
| By: | Tiago Pinheiro |
| Abstract: | We analyze the effects of the Portuguese COVID-19 sovereign loan guarantee scheme on financial stability using a DSGE model. Sovereign loan guarantees decrease the default rate of banks, increase credit, and speed up economic recovery. On the other hand, guarantees increase the leverage and default rate of firms. These effects are larger the lower the sensitivity of the capital of banks to capital requirements. Behind these results are the reduction in regulatory risk-weights and the transfer of loan losses from banks to the sovereign brought by sovereign loan guarantees. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202313&r=eec |
| By: | Sophie Cottet |
| Abstract: | This paper uses administrative employer-employee data to uncover the effects of a large payroll tax reduction for minimum-wage workers in France. Exploiting the change in labor costs both at the job level and at the firm level, I find that the policy spurred an additional 13 percentage points increase in the number of minimum-wage jobs, and that these extra jobs stem exclusively from firms which had previously very few or no minimum-wage workers. On the other hand, firms which already employed workers at minimum-wage levels, and therefore benefit ex ante from a cash windfall, increase employment irrespective of wage levels. These firms grow by an additional 4 percent in the first two years following the reform. This effect is stronger in liquidity-constrained and credit-constrained firms. Overall, these results show that not all firms react to changes in relative labor costs and highlight the importance of alleviating liquidity constraints for firm growth. |
| Keywords: | payroll taxes, firm behaviour, rent sharing, minimum wage |
| JEL: | H22 H25 H32 J21 J23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11076&r=eec |
| By: | Márcio Mateus |
| Abstract: | In this paper we investigate the determinants of the loss given default (LGD) of mortgage loans in Portugal. Exploring loan-level data from the Portuguese Central Credit Register, we show that the original LTV (oLTV) ratio is by far the most important determinant of the LGD of mortgage loans, but the relation between these two variables is not linear. A higher oLTV ratio is associated with a higher LGD of mortgage loans, but only above a certain threshold. We provide evidence that the critical area in the relationship between these two variables lies in a range between 80% and 100%. Our results also highlight the importance of the house price cycle history in explaining the LGD, with distinct short and long-term effects. In the short-term we find a negative correlation between house prices and LGD, meaning that a house price increase just before loan origination seems to contribute to the decrease of the LGD in the future. In the long-term the correlation is positive, which suggests that the higher the house price has increased in the past, the higher the future LGD is expected to be. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202318&r=eec |
| By: | Stefan Raychev (University of Plovdiv Paisii Hilendarski); Yuliyan Mollov (University of Plovdiv Paisii Hilendarski) |
| Abstract: | This article presents the cohesion policy in the EU and analyzes the role of decentralization for the sustainable development of the European regions at the NUTS 2 level. It examines the regional policy in the EU member states and its relationship with the decentralization and social progress of the regions. The study also covers sustainable urban development in Europe. Trends and effects of decentralization on economic growth and regional inequalities are discussed. A methodology based on statistical analysis is used to compare the social progress of European regions. A comprehensive approach is applied to reveal relationships and dependencies between indicators of a socio-economic nature within EU NUTS 2 level regions. In this sense, the methodology uses statistical software tools to reveal trends in the structural aspect of regional development and thus draw conclusions and recommendations for policies and measures aimed at increasing the effectiveness of fiscal regionalization. Incorporating principles of green economics into regional policy and decentralization efforts can drive the adoption of sustainable practices, such as renewable energy deployment, eco-friendly infrastructure development, and the promotion of green industries. The integration of green economic strategies within regional governance structures empowers regions to pursue environmentally conscious initiatives, contributing to the overall transition towards a low-carbon and resource-efficient economy. |
| Keywords: | Green transition, Region development, Social-progress index of regions, Decentralization, Cohesion, Sustainable development |
| JEL: | R11 Q01 R58 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:14115972&r=eec |
| By: | Luis Férnandez Lafuerza (Banco de España); Jorge E. Galán (Banco de España) |
| Abstract: | We provide compelling evidence of the association between credit standards at loan origination in the corporate sector and default risk, a topic that has received little attention in the literature in comparison to the study of this relationship in the mortgage market. Using data from the Spanish credit register merged with corporate balance sheet information spanning the last financial cycle, we demonstrate that leverage and debt burden ratios at loan origination are key predictors of future corporate loan defaults. We also show that the deterioration in lending standards is strongly correlated to the build-up of cyclical systemic risk during periods of financial expansions. Specifically, limits on the debt-to-assets ratio and the interest coverage ratio could serve as effective tools to mitigate credit risk during economic expansions. We identify that the strength of these associations varies significantly across different sectors and is dependent on firms’ size, age and the existence of prior relationships with the bank. Real estate firms and small and medium-sized enterprises exhibit the strongest relationship between credit standards and future default. Overall, our findings provide strong support for the effectiveness of macroprudential measures targeting the corporate sector and contribute to providing guidance for the implementation of borrower-based measures in key segments of corporate credit. |
| Keywords: | bank credit, defaults, lending standards, macroprudential policy, non-financial corporations |
| JEL: | C32 E32 E58 G01 G28 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:2413&r=eec |
| By: | Francesca Guadagno (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The energy-renewables ecosystem (ERES) plays a particularly important role in the green transition. This paper analyses its relevance in EU member states and the competitiveness for the EU27 as a whole vis-à-vis other global players and identifies structural dependencies and vulnerabilities. It does so by drawing on the Joint Research Centre’s FIGARO dataset and detailed trade data, and by developing a novel approach that adapts input-output indicators to the analysis of industrial ecosystems. A number of key findings emerge from our analysis. First, the ERES is particularly relevant in new member states, Austria and Germany. At the global level, the EU27 is the second most important exporter after China. Second, in 2020 the EU ecosystem was dependent on imports of coal and lignite from Russia, as well as on a variety of other products from China (including medium- and high-tech electronic products). Third, analysis on the basis of detailed trade data indicates that a few products in the ERES supply chain are delivered by only a handful of countries, which could indicate some vulnerability. Most of the partner countries supply some products that may be characterised as ‘risky’, but China is a main source of such products. |
| Keywords: | green transition; energy-renewables ecosystem; linkages; dependencies; open strategic autonomy |
| JEL: | F10 F14 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:473&r=eec |
| By: | Gero Dasbach (University of Lille, France) |
| Abstract: | Gains from trade liberalization are accompanied by environmental externalities of increased greenhouse gas emissions. The EU is currently active on both trade and climate policy frontiers. By means of a new quantitative trade model, this study uncovers counterfactual changes in trade, CO2 emissions, and welfare of an EU-India FTA, first as a standalone policy, and then, in conjunction with the Carbon Border Adjustment Mechanism (CBAM). Trade data from the OECD Inter-Country Input-Output (ICIO) tables and CO2 emission data from the OECD Trade in Embodied CO2 (TECO2) database are used. While the CBAM decreases trade volumes and CO2 emissions, a hypothetical EU-India FTA results in significant increases in both trade and CO2 emissions. When considering the Armington assumption of national product differentiation and no intermediate goods, the welfare effects of the EU-India FTA alone are found to be negative for India. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:bai:egeiwp:egei_wp-3_2024&r=eec |
| By: | Carla Guerriero (Università di Napoli Federico II and CSEF); Antonia Pacelli (University of Naples Federico II, Naples School of Economics.) |
| Abstract: | This paper uses Italian data on industrial plant emissions over a 12 years period to assess the differential impact of negative shocks in the allocation of free allowances across various industrial sectors in the context of the EU Emission Trading Scheme (ETS). Specifically, it examines the consequences of reduced free allowances for certain sectors in contrast to those that maintain their existing allocation. By using a novel indicator of emission intensity based on quantity this study shows that the absence of free allowances does not directly impact the incentive to abate emissions but foster the entry of cleaner producers. The results offer evidence of regional heterogeneity by analysing the variations in policy effects between the South and the North of Italy. |
| Keywords: | Carbon pricing, free allowances, carbon leakage, emission intensity. |
| JEL: | D22 H23 Q54 Q58 |
| Date: | 2023–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:699&r=eec |
| By: | Inaki Veruete Villegas (Charles University, Institute of Economic Studies at Faculty of Social Sciences & The Environment Center, Czech Republic & BETA, CNRS, University of Strasbourg); Milan Scasny (Charles University, Institute of Economic Studies at Faculty of Social Sciences and The Environment Center, Czech Republic.) |
| Abstract: | The current geopolitical landscape, exemplified by the Russian invasion of Ukraine, has heightened concerns about energy security. This study delves into the nexus of energy security and natural gas utilization in the Czech Republic, offering a thorough analysis amid these turbulent times. Despite the fact that the environment/energy-extended input-output models have been significantly improved, they still fail to fully capture a sector’s role in an economic system characterized as a network of sectors as they primarily analyze sectors as both ends of the supply chain, ignoring a significant role of transmission sectors. We overcome this gap by applying a multidimensional approach to scrutinize the energy supply chain in order to assess the repercussions of heightened natural gas prices post-Russian invasion. Specifically, we combine domestic energy input-output demand and price models to assess the economic impacts under constrained alternative energy scenarios, particularly relevant given the challenges of replacing Russian gas. Additionally, leveraging network analysis techniques —node and edge betweenness centrality—and the hypothetical extraction method are used to identify critically important structural elements within the country’s natural gas consumption chain. While the former pinpoints vital transmission sectors based on gas flow, the latter gauges sectoral significance by simulating complete disconnections, without being influenced by the number of times the sector appears in the supply chain path. Last, we develop a complete map of the embodied energy flows. Structural Path Analysis traces intermediate product flows, enabling the quantification of embodied energy across the supply chain and its representation as a tree-like structure. Our findings reveal significant implications of natural gas price fluctuations on key manufacturing industries, notably those engaged in international trade which are vulnerable to energy supply and price disruptions. We emphasize the critical role of sectors providing essential household goods and services, like energy, food, and transportation. Strategic interventions may be necessary to safeguard domestic demand and the competitive edge of vital sectors like automotive. As energy security remains a dynamic and evolving challenge, our research contributes significantly to the ongoing discourse on energy resilience, particularly for countries dependent on energy imports. Despite the fact our study is applied to the energy field, this framework is useful to analyze the footprint of any inputs, including usage of critical materials, environmental inputs, or emissions, which face similar complexities. |
| Keywords: | Energy-Extended Input-Output Aanalysis; Energy Supply Chain; Natural Gas Footprint; Embodied Energy; Betwenness Centrality; Hypothetical Extraction; Structural Path Analysis; Input-Output Price Model |
| JEL: | C67 Q43 H56 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_19&r=eec |
| By: | Asimakopoulos, Ioannis G.; Tröger, Tobias |
| Abstract: | The lack of a European Deposit Insurance Scheme (EDIS) - often referred to as the "third pillar" of Banking Union - has been criticized since the inception of the EU Banking Union. The Crisis Management and Deposit Insurance (CMDI) framework needs to rely heavily on banks' internal loss absorbing capacity and provides little flexibility in terms of industry resolution funding. This design has, among others, led to the rare application of the CMDI, particularly in the case of small and medium sized retail banks. This reluctance of resolution authorities weakens any positive impact the CMDI may have on market discipline and ultimately financial stability. After several national governments pushed back against the establishment of an EDIS, the Commission recently took a different approach and tried to reform the CMDI comprehensively, without seeking to erect a "third pillar". The overarching rationale of the CMDI Proposal is to make resolution funding more flexible. To this end, the proposal seeks to facilitate contributions from (national) deposit guarantee schemes (DGS). At the same time, the CMDI Proposal tries to broaden the scope of resolution to include smaller and medium sized banks. This paper provides an assessment of the CMDI Proposal. It argues that the CMDI Proposal is a step in the right direction but cannot overcome fundamental deficiencies in the design of the Banking Union. |
| Keywords: | bank resolution, CMDI, EDIS, bail-in, transfer strategies, MREL, Banking Union |
| JEL: | G01 G18 G21 G28 K22 K23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:294847&r=eec |
| By: | Rodríguez-Pose, Andrés; Dijkstra, Lewis; Poelman, Hugo |
| Abstract: | While in recent times many regions have flourished, many others are stuck—or are at risk of becoming stuck—in a development trap. Such regions experience decline in economic growth, employment, and productivity relative to their neighbors and to their own past trajectories. Prolonged periods in development traps are leading to political dissatisfaction and unrest. Such discontent is often translated into support for antisystem parties at the ballot box. In this article we study the link between the risk, intensity, and duration of regional development traps and the rise of discontent in the European Union (EU)—proxied by the support for Eurosceptic parties in national elections between 2013 and 2022—using an econometric analysis at a regional level. The results highlight the strong connection between being stuck in a development trap, often in middle- or high-income regions, and support for Eurosceptic parties. They also suggest that the longer the period of stagnation, the stronger the support for parties opposed to European integration. This relationship remains robust whether considering only the most extreme Eurosceptic parties or including parties with more moderate levels of Euroscepticism. |
| Keywords: | discontent; euroscepticism; development trap; economic growth; employment; productivity; regions; EU; Taylor & Francis deal |
| JEL: | D72 R58 R11 |
| Date: | 2024–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122411&r=eec |
| By: | Menzie D. Chinn; Jeffrey A. Frankel; Hiro Ito |
| Abstract: | We begin by examining determinants of aggregate foreign exchange reserve holdings by central banks (size of issuing country’s economy and financial markets, ability of the currency to hold value, and inertia). But understanding the determination of reserve holdings probably requires going beyond the aggregate numbers, instead observing individual central bank behavior, including characteristics of the holding country (bilateral trade with the issuing country, bilateral currency peg, and proxies for bilateral exposure to sanctions), in addition to the characteristics of the reserve currency issuer. On a currency-by-currency basis, US dollar holdings are somewhat well explained by several issuer characteristics; but the other currencies are less successfully explained. It may be that the results from currency-by-currency estimation are impaired by insufficient sample size. This consideration offers a motivation for pooling the data across the major currencies and imposing the constraints that reserve holdings are determined in the same way for each currency. In this setting, most economic determinants enter with significance: economic size as measured by GDP, size of financial markets as measured by foreign exchange turnover, bilateral currency peg, and bilateral trade share. However, geopolitical variables (bilateral alliance, bilateral sanctions) usually do not enter with significance. |
| JEL: | F33 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32387&r=eec |
| By: | Arranz, Ana Muñoz |
| Abstract: | Introduction: It has been stated that housing plays a major role in the process of integration of migrants and refugees into a society, as housing location, accessibility, affordability and habitability among other factors, have direct impact on the ability of inhabitants to seek employment and access education and healthcare. However, there seems to be little literature about the integration outcomes and the improvement of wellbeing after different housing policies and housing solutions have been implemented. This research aims at reviewing the existing literature regarding housing interventions of any kind for migrants in European Mediterranean countries, with a focus on inclusion related outcomes. Methods: A scoping review was performed including different sources of information. Results: The review analysed 26 records -comprising 103 housing projects- with various study designs. The housing interventions were categorised into eight main types: collective accommodation, camps, squats, flatsharing, full apartments in only-migrants buildings, full apartments in mixed population buildings, financial support for housing, and other non-material interventions. Each type of intervention showed different integration outcomes and good practices associated with it, which have been categorised into 13 domains. Conclusions: Measuring integration is complex due to various factors, including the absence of a consensus definition and its multifaceted nature. This review reveals heterogeneous and scant outcome measures and employing Ager and Strang's integration framework facilitates categorisation and understanding. The reviewed good practices often lack supporting evidence, but frequently noted integration facilitators include stable housing and support in employment, education and social relations. Overall, while widely recognised as vital, robust evidence on housing interventions' impact on migrant integration is lacking, calling for further research. |
| Date: | 2024–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:beh4s&r=eec |
| By: | Sebastian Dullien (Macroeconomic Policy Institute (IMK)); Alexander Herzog-Stein (Macroeconomic Policy Institute (IMK)); Peter Hohlfeld (Macroeconomic Policy Institute (IMK)); Katja Rietzler (Macroeconomic Policy Institute (IMK)); Sabine Stephan (Macroeconomic Policy Institute (IMK)); Thomas Theobald (Macroeconomic Policy Institute (IMK)); Silke Tober (Macroeconomic Policy Institute (IMK)); Sebastian Watzka (Macroeconomic Policy Institute (IMK)) |
| Abstract: | Die Wachstumsaussichten für die Weltwirtschaft sind verhalten. Die Weltkonjunktur expandiert 2024 nur moderat. Das Welt-BIP steigt im Jahresdurchschnitt um 2, 7 %. Die wirtschaftliche Entwicklung im Euroraum wird im Prognosezeitraum von den anhaltenden Kaufkraftverlusten der privaten Haushalte, den steigenden Finanzierungskosten der Unternehmen infolge der kontraktiven Geldpolitik der EZB und der verhaltenen weltwirtschaftlichen Dynamik geprägt sein. Die deutsche Wirtschaft befindet sich seit nunmehr einem Jahr in der Stagnation. Die stark restriktive Geldpolitik, die Folgen der Energie- und Nahrungsmittelpreisschocks sowie die verhaltene Weltkonjunktur beeinträchtigten die Wirtschaftsaktivität stark. Auch für 2024 ist mit einer kraftlosen deutschen Konjunktur zu rechnen. Nach einem sehr schwachen Jahresauftakt wird die Wirtschaftsleistung im Jahresverlauf stagnieren. Die Jahresverlaufsrate beträgt im Jahr 2024 -0, 1 % nach -0, 1 % in diesem Jahr. Im Jahresdurchschnitt dürfte das BIP um 0, 3 % sinken. Die Inflationsrate in Deutschland wird sich im Jahresverlauf 2024 wieder der Zielrate der EZB annähern; im Jahresdurchschnitt steigt sie um 2, 5 % nach 5, 9 % in diesem Jahr. Die anhaltende Stagnation belastet den Arbeitsmarkt. Im Jahr 2024 nimmt die Zahl der Erwerbstätigen um 0, 1 % ab. Die Arbeitslosenzahl wird im Jahresdurchschnitt 2024 um rund 240.000 Personen zunehmen. Die Arbeitslosenquote beträgt dann 6, 2 % (2023: 5, 7 %); das sind rund 2, 9 Millionen Personen. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:imk:report:186-2023&r=eec |
| By: | Christophe Blot (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Céline Antonin (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Amel Falah (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Sabine Le Bayon (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Catherine Mathieu (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Hervé Péléraux (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Christine Rifflart (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Elliot Aurissergues (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Bruno Coquet (DARES - Direction de l'animation de la recherche, des études et des statistiques - Ministère du Travail, de l'Emploi et de la Santé, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Magali Dauvin (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Ombeline Jullien de Pommerol (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Pierre Madec (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Raul Sampognaro (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Benoît Williatte (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Mathieu Plane (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po) |
| Abstract: | Alors que les États-Unis échappent toujours au ralentissement, la situation conjoncturelle reste dégradée dans les pays européens accentuant la divergence qui est apparue dès le début de la crise sanitaire. Au-delà des écarts de croissance potentielle entre pays, ces différences sont liées à l'impact de la crise énergétique, plus fort dans les pays européens qu'outre-Atlantique mais aussi s'expliquent par l'orientation de la politique budgétaire depuis 2020. Ces écarts ne devraient pas se réduire à court terme. Le ralentissement de l'activité observé fin 2023 pèsera sur la croissance annuelle de 2024. De plus, les enquêtes et les premières données conjoncturelles disponibles au début de l'année dessinent un paysage contrasté entre les grands pays industriels et nous conduisent à prévoir la poursuite de la contraction du PIB de l'Allemagne pour le premier trimestre (-0, 2 %). La croissance serait légèrement positive au Royaume-Uni et resterait bien orientée à court terme en Espagne et aux États-Unis. En Chine, la croissance devrait résister malgré la crise du secteur immobilier. Les indicateurs conjoncturels signalent une certaine accélération de la production et nous prévoyons une croissance annuelle de 4, 7 % en 2024. L'activité ralentirait en Inde par rapport à 2023 pour progresser autour de 6, 5 %. Dans les pays d'Asie émergents (hors Chine), elle continuerait au même rythme qu'en 2023 et ralentirait en Amérique latine. Dans les pays industrialisés et particulièrement en Europe, le rebond se manifesterait pour 2025 avec une croissance de 1, 7 % tandis que celle des pays émergents resterait stable en 2024 et 2025. L'activité serait soutenue par l'assouplissement de la politique monétaire. La convergence de l'inflation vers la cible de 2 % conduirait effectivement les banques centrales à amorcer une baisse des taux à partir de mi-2024. Inversement, le niveau des déficits budgétaires et de la dette publique conduira de nombreux gouvernements à prendre des mesures de consolidation. La croissance mondiale atteindrait alors de 2, 8 % en 2025, 0, 2 point au-dessus de son niveau de 2024. |
| Keywords: | inflation, croissance, perspectives, économie mondiale |
| Date: | 2024–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04540937&r=eec |