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The macroeconomic impact of the ECB’s expanded asset purchase programme (APP)

Gambetti, Luca, Musso, Alberto, (2017), “The macroeconomic impact of the ECB’s expanded asset purchase programme (APP)”, ECB Working Paper Series No 2075, Ιούνιος This paper provides empirical evidence on the macroeconomic impact of the expanded asset purchase programme (APP) announced by the European Central Bank (ECB) in January 2015. The shock associated to the APP is identified with a combination of sign, timing and magnitude restrictions in the context of …Read More

Jobs gap closes but recovery remains uneven

OECD, (2017), “Jobs gap closes but recovery remains uneven”, 13 June The job market continues to improve in the OECD area, with the employment rate finally returning to pre-crisis levels. But people on low and middle incomes have seen their wages stagnate and the share of middle-skilled jobs has fallen, contributing to rising inequality and concerns that top earners are getting a disproportionate share of the gains from economic growth, …Read More

House prices and monetary policy in the euro area: evidence from structural VARs

Nocera, Andrea, Roma, Moreno, (2017), “House prices and monetary policy in the euro area: evidence from structural VARs”, ECB, June We use a structural Bayesian vector autoregression model for seven euro-area countries (Belgium, France, Germany, Ireland, Italy, the Netherlands, and Spain) for the period 1980:Q1- 2014:Q4 to provide a systematic structural analysis of the impacts of housing demand shocks on economic activity and the role of house prices in the monetary …Read More

Capital Requirements For Banks Are Needed But Costly—Only Limited Increases Are Called For

William R., Cline, (2017), “Capital Requirements For Banks Are Needed But Costly—Only Limited Increases Are Called For”, PIIE, 12 June Cline’s study, one of several analyses of financial stability published by PIIE since the crisis of 2008–09, reviews the extensive literature on banking crises, regulations, and their impact on capital formation and economic growth. It looks indepth at the multilateral voluntary framework on bank capital adequacy known as Basel III, established …Read More

Why keeping the balance sheet of the Federal Reserve constant is equivalent to a gradual exit

Gros, Daniel, (2017), “Why keeping the balance sheet of the Federal Reserve constant is equivalent to a gradual exit”, Vox Eu, 12 June When interest rates are at the zero lower bound, the stance of monetary policy is judged by the size of the balance sheet of the central bank. However, this is not quite correct since one part of the balance sheet is determined by the demand for cash, which …Read More

Monetary-fiscal interactions and the euro area’s malaise

Jarociński, Marek, Maćkowiak, Bartosz, (2017), “Monetary-fiscal interactions and the euro area’s malaise”, ECB, June 2017 When monetary and fiscal policy are conducted as in the euro area, output, inflation, and government bond default premia are indeterminate according to a standard general equilibrium model with sticky prices extended to include defaultable public debt. With sunspots, the model mimics the recent euro area data. We specify an alternative configuration of monetary and fiscal …Read More

The Study Europe’s Rate-Setters Should Read

Giugliano, Ferdinando, (2017), “The Study Europe’s Rate-Setters Should Read”, Bloomberg View, 8 June A key argument for hurrying up with a monetary tightening is that negative rates have hurt bank profitability, restricting lenders’ ability to give credit to families and firms. But is it really the case? How low can interest rates go before they become a drag on the economy? A new way of thinking about this problem comes from …Read More

Charting the next steps for the EU financial supervisory architecture

Véron, Nicolas, (2017), “Charting the next steps for the EU financial supervisory architecture”, Bruegel, June The combination of banking union and Brexit justifies a reform of the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) in the near term, in line with the subsidiarity principle. The other EU-level financial authorities, namely the European Insurance and Occupational Pensions Authority (EIOPA), European Systemic Risk Board (ESRB), Single Resolution Board …Read More

Europe (Finally) Shows How to Deal With a Failing Bank

Bloomberg View, (2017), “Europe (Finally) Shows How to Deal With a Failing Bank”, 8 June Credit where credit’s due: The sale for 1 euro of Banco Popular Espanol SA, a failing Spanish bank, to rival lender Banco Santander SA shows how the euro zone should handle such cases. The regulators acted swiftly and fairly. Global markets barely noticed. This is a model for future interventions. Banco Popular’s troubles date back to …Read More

A Pilot for the Governance of the Euro Is Required Immediately

Perrut, Dominique, (2017), “A Pilot for the Governance of the Euro Is Required Immediately” , EconoMonitor, 8 June After the Brexit, European leaders are faced with the strict obligation to make Europe credible, particularly by consolidating the weak pillar of the Euro, namely, economic governance. This must henceforth be piloted by a Finance Minister. This step, which is necessary for the survival of the Euro, must be taken by the European …Read More