1498

result(s)

Word(s)
Publication type
Policy area
Author
Keyword
Date

Economic Dialogue with the President of the Eurogroup - ECON on 21 February 2018

19-02-2018

Mário Centeno, President of the Eurogroup since 13 January 2018, has been invited to a regular Economic Dialogue, notably in accordance with Article 2ab of Regulation 1466/97 as amended. This briefing provides an overview of the ongoing work of the Eurogroup as regards public finances, macro-economic imbalances, financial adjustment programmes and the banking union. As the President of the Eurogroup, Mr Centeno has also been appointed as Chairman of the Board of Governors of the European Stability ...

Mário Centeno, President of the Eurogroup since 13 January 2018, has been invited to a regular Economic Dialogue, notably in accordance with Article 2ab of Regulation 1466/97 as amended. This briefing provides an overview of the ongoing work of the Eurogroup as regards public finances, macro-economic imbalances, financial adjustment programmes and the banking union. As the President of the Eurogroup, Mr Centeno has also been appointed as Chairman of the Board of Governors of the European Stability Mechanism.

Recommendations on the economic policy of the euro area under the European Semester

16-02-2018

This briefing provides an overview of the Council recommendations addressed to the euro area as a whole under the European Semester, and presents information on the related Eurogroup’s policy actions. The briefing is regularly updated.

This briefing provides an overview of the Council recommendations addressed to the euro area as a whole under the European Semester, and presents information on the related Eurogroup’s policy actions. The briefing is regularly updated.

An economic recovery with little sign of inflation acceleration: A transitory phenomenon or evidence of a structural change?

15-02-2018

This paper investigates the possibility that there has been a structural shift in inflation (upward) in the euro area since the recovery in 2014 or 2015. From the perspective of policy, it is important to be sure that any such shifts are significant statistically, sustained or likely to be sustained (durable) over the near future, and are evenly distributed over the member economies so that no one of them is damaged by anti-inflation measures taken to help the others. We approach the problem in two ...

This paper investigates the possibility that there has been a structural shift in inflation (upward) in the euro area since the recovery in 2014 or 2015. From the perspective of policy, it is important to be sure that any such shifts are significant statistically, sustained or likely to be sustained (durable) over the near future, and are evenly distributed over the member economies so that no one of them is damaged by anti-inflation measures taken to help the others. We approach the problem in two steps: we first examine the circumstantial and informal evidence, and then conduct formal statistical tests for structural changes in euro area inflation in 2015 or 2016. We find no evidence of a structural change under the four criteria mentioned. The even distribution of inflation criterion is the closest to being satisfied, but the other three are far from satisfied in any formal sense. There was a brief acceleration in inflation in mid-2016 towards 2%, but it flattened out in 2017 and has been constant at 1.5% ever since. Core inflation was constant at 0.9% throughout. The question is why has there been no inflation in the recovery and how long is that likely to last? In a third step, we explain how low growth in real wages and self-reinforcing low productivity growth produces slow output growth and low inflation. This model fits the data pretty well, down to the lack of labour and total factor productivity and to substituting cheaper labour for excess capital stock. It implies a fall in investment spending (also seen in the data) which in turn extends the period for which low productivity-low inflation outcomes apply.

External author

Andrew HUGHES HALLETT

Why does the recovery show so little inflation?

15-02-2018

We investigate the determinants of inflation in the euro area since 2000 and show that the most important determinants are inflation expectations and wage growth. Both indicators have contributed negatively to inflation since 2014 but inflation expectations less so since 2015 whereas the contribution of wage growth has remained negative. We suggest that structural reforms may have put a drag on the ability of the ECB to reach its inflation target rapidly.

We investigate the determinants of inflation in the euro area since 2000 and show that the most important determinants are inflation expectations and wage growth. Both indicators have contributed negatively to inflation since 2014 but inflation expectations less so since 2015 whereas the contribution of wage growth has remained negative. We suggest that structural reforms may have put a drag on the ability of the ECB to reach its inflation target rapidly.

External author

Christophe BLOT, Jérôme CREEL, Paul HUBERT, OFCE (Sciences Po)

Economic recovery and inflation

15-02-2018

In the last decade, advanced economies, including the euro area, experienced deflationary pressures caused by the global financial crisis of 2007-2009 and the anti-crisis policies that followed—in particular, the new financial regulations (which led to a deep decline in the money multiplier). However, there are numerous signs in both the real and financial spheres that these pressures are disappearing. The largest advanced economies are growing up to their potential, unemployment is systematically ...

In the last decade, advanced economies, including the euro area, experienced deflationary pressures caused by the global financial crisis of 2007-2009 and the anti-crisis policies that followed—in particular, the new financial regulations (which led to a deep decline in the money multiplier). However, there are numerous signs in both the real and financial spheres that these pressures are disappearing. The largest advanced economies are growing up to their potential, unemployment is systematically decreasing, the financial sector is more eager to lend, and its clients—to borrow. Rapidly growing asset prices signal the possibility of similar developments in other segments of the economy. In this new macroeconomic environment, central banks should cease unconventional monetary policies and prepare themselves to head off potential inflationary pressures.

External author

Marek Dabrowski, CASE

Persistent low inflation in the euro area: Mismeasurement rather than a cause for concern?

15-02-2018

The huge literature on the causes of the persistent weakness in inflation in the euro area has not identified one single key factor. Moreover, inflation has also been lower than expected in many advanced countries. Low inflation expectations seem to have played an important role in reducing wage demand, both in the US and the euro area; but a residual output gap also contributes. The concerns about low inflation seem overblown. The HICP (Harmonized Index of Consumer Prices) used to measure inflation ...

The huge literature on the causes of the persistent weakness in inflation in the euro area has not identified one single key factor. Moreover, inflation has also been lower than expected in many advanced countries. Low inflation expectations seem to have played an important role in reducing wage demand, both in the US and the euro area; but a residual output gap also contributes. The concerns about low inflation seem overblown. The HICP (Harmonized Index of Consumer Prices) used to measure inflation in the euro area differs from the indices used in most advanced countries in that it does not account for the cost of owner occupied housing. This omission has a considerable impact on measured inflation and can explain most of the difference between inflation in the US and in the euro area. If the HICP were to incorporate the available estimates of inflation in owner occupied housing, measured inflation would be close to 2 %.

External author

Daniel GROS, CEPS

Brexit, financial stability and the supervision of clearing systems

15-02-2018

This paper examines the evolution of the supervisory framework of third-country CCPs in the EU making special reference to risks associated with the imminent withdrawal of the United Kingdom from the European Union (Brexit). Its key finding is that the proposed reform is in principle in the right direction but there are still challenges ahead and a more comprehensive package of measures will be required to address them.

This paper examines the evolution of the supervisory framework of third-country CCPs in the EU making special reference to risks associated with the imminent withdrawal of the United Kingdom from the European Union (Brexit). Its key finding is that the proposed reform is in principle in the right direction but there are still challenges ahead and a more comprehensive package of measures will be required to address them.

External author

Andromachi GEORGOSOULI, Centre for Commercial Law Studies, Queen Mary University of London

An economic recovery with little signs of inflation acceleration: Transitory phenomenon or evidence of a structural change?

15-02-2018

Inflation has been persistently below the inflation target of the ECB despite the ongoing economic recovery in the euro area. In this paper, we analyse whether the relationship between inflation and economic activity in the euro area has changed based on a review of the literature and discuss implications for monetary policy.

Inflation has been persistently below the inflation target of the ECB despite the ongoing economic recovery in the euro area. In this paper, we analyse whether the relationship between inflation and economic activity in the euro area has changed based on a review of the literature and discuss implications for monetary policy.

External author

Salomon FIEDLER, Nils JANNSEN, Ulrich STOLZENBURG, Kiel Institute for the World Economy

Note on the interactions between payment systems and monetary policy

15-02-2018

This paper analyses the interactions between, on one hand, monetary policy and financial stability responsibilities of the ECB and, on the other hand, Post-Trading-Financial Market Infrastructures. Its basic conclusion is that Payment Systems are critical for monetary policy while Central Counter Parties (CCPs) are critical for financial stability. However, in stressed conditions CCPs can be the source of risks also for monetary policy.

This paper analyses the interactions between, on one hand, monetary policy and financial stability responsibilities of the ECB and, on the other hand, Post-Trading-Financial Market Infrastructures. Its basic conclusion is that Payment Systems are critical for monetary policy while Central Counter Parties (CCPs) are critical for financial stability. However, in stressed conditions CCPs can be the source of risks also for monetary policy.

External author

Francesco PAPADIA, Bruegel

The euro-area denominated payment systems and the conduct of monetary policy: Some considerations ahead of Brexit

15-02-2018

The framework for euro-denominated payment systems has undergone significant changes in recent years leading to a concentration of payments performed by Central Counterparty Clearing Houses. As it stands, a large part of euro-denominated transactions, derivatives in particular, are cleared through CCPs located in the UK; which poses challenges to the current supervisory framework because of the UK leaving the EU. Against this background, this note discusses the extent to which the current set-up ...

The framework for euro-denominated payment systems has undergone significant changes in recent years leading to a concentration of payments performed by Central Counterparty Clearing Houses. As it stands, a large part of euro-denominated transactions, derivatives in particular, are cleared through CCPs located in the UK; which poses challenges to the current supervisory framework because of the UK leaving the EU. Against this background, this note discusses the extent to which the current set-up bears risks, including for the conduct of the ECB monetary policy.

External author

Corrado MACCHIARELLI, Mara MONTI, London School of Economics

Upcoming events

27-02-2018
Public Hearing on the Review of the European System of Financial Supervision
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27-02-2018
The UN Global Compacts on refugees and migrants and the role of Parliaments
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27-02-2018
Better law-making: A lawyer's perspective
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EPRS

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