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Euro area annual inflation down to 1.4%

Eurostat/Euro area annual inflation down to 1.4% /31 May 2017 Euro area annual inflation is expected to be 1.4% in May 2017, down from 1.9% in April 2017, according to a flash estimate from Eurostat, the statistical office of the European Union. Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in May (4.6%, compared with 7.6% in April), followed by …Read More

Flexible labour markets, real wages, and economic recoveries: Views of economists

Den Haan, Wouter, Ellison, Martin, Ilzetzki, Ethan,McMahon, Michael, Reis, Ricardo, (2017), “Flexible labour markets, real wages, and economic recoveries: Views of economists”, VoxEU, 30 May Real hourly wage growth has behaved quite differently across countries over the past ten years. This column describes how the majority view of the latest Centre for Macroeconomics and CEPR expert survey is that low growth of real wages has had a positive impact on European …Read More

Solving Non-Performing Loans in Europe to speed up the recovery

Beynet, Pierre, (2017), “Solving Non-Performing Loans in Europe to speed up the recovery”, OECD ECOSCOPE, 23 May Almost 10 years after the outset of the financial crisis in summer 2008, European growth remains modest, constantly underperforming the OECD average. Several factors explain this disappointing performance. The pace of fiscal consolidation was rapid in the countries most affected by the crisis while structural reforms were not sufficiently pursued in other countries. …Read More

Reforms for more and better quality jobs in Spain

Jin, Yosuke, Caldera Sánchez, Aida, Garcia Perea, Pilar, (2017), “Reforms for more and better quality jobs in Spain “, OECD Economics Department Working Papers, No 1386, 30  May The Spanish economy is growing strongly, but there is a risk that many people are being left behind. Unemployment, especially among young people and the low-skilled, remains very high. About half of all the unemployed have been unemployed for over a year …Read More

Is the recent increase in long-term interest rates a threat to euro-area recovery?

Clayes, Gregory, Efstathiou, Konstantinos, (2017), “Is the recent increase in long-term interest rates a threat to euro-area recovery?”, Bruegel, 29 May After reaching historically low levels in the first half of 2016, European long-term sovereign yields experienced a notable increase in the second half of 2016 and at the beginning of 2017, before stabilising in the last few months. The nominal long-term interest rate can be decomposed into the following components: …Read More

Business models of the banks in the euro area

Farne, Matteo, Vouldis, Angelos, “Business models of the banks in the euro area”, ECB, May 2017 The paper identifies the business models followed by banks in the euro area, utilising a proprietary dataset collected in the context of the supervisory reporting of the Single Supervisory Mechanism. The concept of a ‘business model’ has been neglected by economic theory and is defined here with respect to the set of activities performed by banks. …Read More

Bank bail-in: The effects on credit supply and real economy

Beck, Thorsten, Samuel Da-Rocha-Lopes, Samuel, Silva, Andre, (2017), “Bank bail-in: The effects on credit supply and real economy”, VoxEU, 26 May The new resolution and bail-in regime in Europe hypothetically lets banks fail without resorting to public funding. This column examines the effects of the bail-in of the Portuguese Banco Espírito Santo. Existing borrowers from the banks exposed to the bail-in experienced a negative impact on their credit supply from these …Read More

Bank resolution: The importance of a public backstop

Cecchetti, Stephen, Schoenholtz, Kim, (2017), “Bank resolution: The importance of a public backstop”, Vox Eu, 28 May 2017 The failure of Lehman on 15 September 2008, signalled the most intense phase of the Global Crisis of 2007-2009, fuelling a run on a broad array of intermediaries. Following Congress’ approval of the Troubled Asset Relief Program (TARP) funding that was used mostly to recapitalise US financial firms, the mantra of US regulators became …Read More

European Business: Overcoming Uncertainty, Strengthening Recovery

Bughin, Jacques, Labaye, Eric, Mattern, Frank, Smit, Sven, Windhagen, Eckart, Mischke, Jan, Bragg, Kate, (2017), “European Business: Overcoming Uncertainty, Strengthening Recovery”, Mckinsey Global Institute, May 2017 Since its founding in 1990, the McKinsey Global Institute (MGI) has sought to develop a deeper understanding of the evolving global economy. As the business and economics research arm of McKinsey & Company, MGI aims to provide leaders in the commercial, public, and social sectors …Read More

Financial Stability Review

ECB, (2017), “Financial Stability Review”, ECB, May The Financial Stability Review (FSR) assesses developments relevant for financial stability, including identifying and prioritising the main sources of systemic risk and vulnerabilities for the euro area financial system – comprising intermediaries, markets and market infrastructures. It does so to promote awareness of these systemic risks among policymakers, the financial industry and the public at large, with the ultimate goal of promoting financial stability. …Read More