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on Transition Economics |
| By: | Gabriel Di Bella; Mr. Mark J Flanagan; Mr. Frederik G Toscani; Alex Pienkowski; Karim Foda; Martin Stuermer; Svitlana Maslova |
| Abstract: | This paper analyzes the implications of disruptions in Russian gas for Europe’s balances and economic output. Alternative sources could replace up to 70 percent of Russian gas, allowing Europe to avoid shortages during a temporary disruption of around 6 months. However, a longer full shut-off of Russian gas to the whole of Europe would likely interact with infrastructure bottlenecks to produce very high prices and significant shortages in some countries, with parts of Central and Eastern Europe most vulnerable. With natural gas an important input in production, the capacity of the economy would shrink. Our findings suggest that in the short term, the most vulnerable countries in Central and Eastern Europe — Hungary, Slovak Republic and Czechia — face a risk of shortages of as much as 40 percent of gas consumption and of gross domestic product shrinking by up to 6 percent. The effects on Austria, Germany and Italy would also be significant, but would depend on the exact nature of remaining bottlenecks at the time of the shutoff and consequently the ability of the market to adjust. Many other countries are unlikely to face such constraints and the impact on GDP would be moderate—possibly under 1 percent. Immediate policy priorities center on actions to mitigate impacts, including to eliminate constraints to a more integrated gas market via easing infrastructure bottlenecks, to accelerate efforts in defining and agreeing solidarity contributions, and to promote stronger pricing pass through and other measures to generate greater energy savings. National responses and RePowerEU contains many important measures to help address these challenges, but immediate coordinated action is called for, with specific opportunities in each of these areas. |
| Keywords: | Energy supply; natural gas; production output |
| Date: | 2022–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2022/145&r= |
| By: | Alessandro Borin (Bank of Italy); Francesco Paolo Conteduca (Bank of Italy); Enrica Di Stefano (Bank of Italy); Vanessa Gunnella (European Central Bank); Michele Mancini (European Central Bank); Ludovic Panon (Bank of Italy) |
| Abstract: | We provide a quantification of the impact through international trade of the restrictive measures and related trade disruptions following the Russian invasion of Ukraine. We first exploit the multi-sector, multi-country, general equilibrium trade model by Antr’and Chor (2018). In this framework, Russia would suffer greatly from trade disruptions. Adding restrictive measures on energy exports would further amplify this loss. For sanctioning countries, the welfare impact is modest. This result arises mainly because the used model allows for a high degree of substitutability across inputs and countries, a feature arguably unrealistic especially in the short-run. When we relax this assumption by relying on the framework proposed by Bachmann et al. (2022) extended to a multi-country setting, we show that the impact on sanctioning countries might increase markedly in the short run and would be very sensitive to small changes in countries’ possibility to diversify away from Russian energy. |
| Keywords: | war, trade disruptions, energy shock, international trade, global value chains |
| JEL: | F51 F15 F17 Q43 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_700_22&r= |
| By: | Blockmans, Steven |
| Abstract: | Without any formal notification, China recently declined customs clearances for shipments from Lithuanian firms in the pharmaceutical, electronics, and food sectors, and warned multinationals of secondary sanctions if they did not sever their ties with Lithuania. These covert actions were taken in response to Lithuania’s invitation to Taiwan, which the People’s Republic of China (PRC) claims as its own territory, to open a ‘representative office’ in Vilnius. No other country has ever found itself at the receiving end of such intense and politically motivated Chinese economic pressure. These actions on the part of the PRC are politically explosive because it raises serious questions about the international conduct of the Chinese Communist Party (CCP). If it can simply wipe a country off its trade book, a state belonging to the EU’s customs territory no less, then what does it mean to be a member of the WTO, or a signatory to any other number of international agreements? And, given the lamentable state the WTO is in: could the European Commission’s newly proposed anti-coercion instrument bring any solace to Lithuania and the EU? |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:34908&r= |
| By: | Janda, Karel; Sajdikova, Lucia |
| Abstract: | This paper provides a descriptive analysis of financing the European Green Deal. It is focused on the description of financial resources used for financing the Green Deal. The first part identifies public financing supporting the green economy, including incentive schemes, subsidies and taxes related supports. The second part identifies commercial funding available for climate transition, including green bonds and other climate and sustainability bonds and related loan schemes. While the first two chapters are covered on the level of the whole European Union, the last chapter is focused on the Czech Republic. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:261279&r= |
| By: | Tunio, Mohsin Waheed |
| Abstract: | This paper first looks for Sudden Stops in capital inflows to nineteen emerging economies of Asia, Europe, Latin America, and Africa as Calvo, Izquierdo and Mejia (2008) based on the country-specific data availability from January 1990 to May 2022. The paper then introduces the notion of Systemic Sudden Stop as the one triggered by exogenous factors and measured in terms of a rise in Emerging Market Bond Index (EMBI) spreads. The author finds out that four countries i.e. Indonesia, Thailand, Poland, and Egypt have already entered into the Systemic Sudden Stop phase while other emerging economies could also be at a greater risk of the similar situation. The major risks to emerging markets come from the commodity prices and rising inflation due to the Russia-Ukraine conflict; tightening financial conditions; mounting uncertainty; and recessionary fears. Nevertheless, on the positive note, net ratings of emerging market sovereign bonds have improved in comparison with the year 2020, and EMBI spreads have not increased much due to greater risk being already priced-in, especially in high yield. |
| Keywords: | sudden stops, capital inflows, capital outflows, emerging markets, exchange rate, current account, EMBI spreads |
| JEL: | F31 F32 F39 F41 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113693&r= |
| By: | Mariusz Kapuściński (National Bank of Poland) |
| Abstract: | In this study I analyse the effects of a bank levy, as introduced in Poland, on areas which appear to be relevant from the perspective of a central bank. I apply the difference-in-differences method, using bank level panel data. I find that the introduction of the bank levy has affected the use of some monetary policy instruments, money market rates and volumes, and deposit and loan rates. However, I find little evidence of its impact on loan volumes, bank profitability, capital and risk-taking. This means that the bank levy has had important implications for monetary policy implementation, interest rate benchmark reform and monetary conditions, but (as yet) less so for financial stability. As an extension of the study, I document its effects on assets and Treasury bond holdings (including their changes at the end of the month), and estimate the impact of bank balance sheet adjustments on government revenues. |
| Keywords: | bank levy, difference-in-differences, panel data, monetary policy instruments, money market, financial stability |
| JEL: | C23 E43 E51 E52 G18 H26 H39 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:346&r= |
| By: | OECD |
| Abstract: | The impacts of the war in Ukraine will be felt severely within OECD economies, especially in border regions on the front-line of the humanitarian refugee crisis. The economic impacts, in particular those driven by rising energy prices, will also be spatially differentiated, affecting some regions more than others. Italy is no exception, with gas-intensive industries concentrated in northern regions, and wheat-based food and farming prevailing in southern regions and islands. While, overall, Russia accounted for a minor share of Italian exports, some regions and industries are more vulnerable than others to falls in bilateral trade, including destinations popular with high per-capita expenditure Russian tourists. |
| Keywords: | commodities, employment, spatial analysis, tourism, trade |
| JEL: | F16 F51 J43 O13 R11 R12 |
| Date: | 2022–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:cfeaaa:2022/08-en&r= |
| By: | Katarzyna Hertel (National Bank of Poland); Marcin Humanicki (National Bank of Poland); Marcin Kitala (National Bank of Poland); Tomasz Kleszcz (National Bank of Poland); Kamila Kuziemska-Pawlak (National Bank of Poland); Jakub Mućk (National Bank of Poland); Bartosz Rybaczyk (National Bank of Poland); Maciej Stefański (National Bank of Poland) |
| Abstract: | The paper presents estimates of the macroeconomic effects of the Structural Open Market Operations (SOMO) programme implemented by NBP in 2020 in response to the COVID-19 pandemic shock. In order to assess the ex-ante impact of bond purchases by the central bank on the real economy and prices in Poland, (i) the impact of unconventional monetary policy on financing conditions, identified indirectly using the shadow policy rate concept, and (ii) the impact of the SOMO on the exchange rate of the Polish zloty against the euro were estimated. The results of the NECMOD model simulations indicate that the unconventional monetary policy conducted by NBP reduced the extent of the decline in GDP growth and inflation by 0.1 and 0.2 percentage points in 2020 and 0.5 percentage points each in 2021. At the same time, the macroeconomic impact of the SOMO was similar to the effect of the interest rate cuts in the first half of 2020. |
| Keywords: | monetary policy, open market operations, COVID-19 |
| JEL: | E31 E52 E5 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:343&r= |