ECB News: April 2011

 

Archive

 
29/04/2011
Press release ECB introduces loan-by-loan information requirements for CMBSs and SME transactions, en
 
29/04/2011
Monetary developments in the euro area, more
 
29/04/2011
CON/2011/41 Opinion on amendments to the legislation on settlement finality and financial collateral arrangements, en
 
28/04/2011
USD11017 (OT,liquidity providing):0 mn USD alloted (fixed 1.11%, 0% allotment at margin), more
 
28/04/2011
20110046 (LTRO,liquidity providing):63410.83 mn EUR alloted ( % allotment at margin), more
 
28/04/2011
Publication Recovery and beyond: lessons for trade adjustment and competitiveness , download
 
27/04/2011
Announcing 20110046 (LTRO,liquidity providing), for 91 days deadline 09:30, more
 
27/04/2011
20110045 (OT,liquidity absorbing):71403 mn EUR alloted (marginal 1.25%, weighted average 1.17%, 100% allotment at margin), more
 
27/04/2011
20110044 (MRO,liquidity providing):117882.5 mn EUR alloted (fixed 1.25%, 100% allotment at margin), more
 
27/04/2011
Press release Report on the results of the survey on the access to finance of SMEs in the euro area – September 2010 to February 2011
, en
 
27/04/2011
Press release Results of the April 2011 bank lending survey for the euro area, en
 
27/04/2011
Publication Survey on the access to finance of SMEs in the euro area - September 2010 to February 2011 , download
 
27/04/2011
CON/2011/40 Opinion on amendments to the rules on the register of financial assets, en
 
26/04/2011
Longer-term refinancing operation, more
 
26/04/2011
Interview Jean-Claude Trichet: Interview with Helsingin Sanomat and Kauppalehti, en
 
26/04/2011
CON/2011/39 Opinion on recovery and resolution measures for credit institutions , en
 
22/04/2011
Announcing 20110044 (MRO,liquidity providing), for 7 days deadline 09:30, more
 
21/04/2011
USD11016 (OT,liquidity providing):0 mn USD alloted (fixed 1.11%, 0% allotment at margin), more
 
21/04/2011
Fine-tuning operation, more
 
21/04/2011
Other decisions Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates), bg . cs . da . de . el . en . es . et . fi . fr . hu . it . lt . lv . mt . nl . pl . pt . ro . sk . sl . sv
 
20/04/2011
20110043 (OT,liquidity absorbing):76000 mn EUR alloted (marginal 1.21%, weighted average 1.12%, 91.1367% allotment at margin), more
 
20/04/2011
20110042 (MRO,liquidity providing):97371.9 mn EUR alloted (fixed 1.25%, 100% allotment at margin), more
 
20/04/2011
Press release Schedules for the meetings of the Governing Council and the General Council of the ECB in 2012 and 2013
, en
 
20/04/2011
No. 1333: Distributional dynamics under smoothly state-dependent pricing, by James Costain, Anton Nakov, description, download
(JEL: E31, E52, D81) Starting from the assumption that firms are more likely to adjust their prices when doing so is more valuable, this paper analyzes monetary policy shocks in a DSGE model with firm-level heterogeneity. The model is calibrated to retail price microdata, and inflation responses are decomposed into “intensive”, “extensive”, and “selection” margins. Money growth and Taylor rule shocks both have nontrivial real effects, because the low state dependence implied by the data rules out the strong selection effect associated with fixed menu costs. The response to firm-specific shocks is gradual, though inappropriate econometrics might make it appear immediate.
 
20/04/2011
No. 1332: Central bank communication on financial stability, by Benjamin Born, Michael Ehrmann, Marcel Fratzscher, description, download
(JEL: E44, E58, G12) Central banks regularly communicate about financial stability issues, by publishing Financial Stability Reports (FSRs) and through speeches and interviews. The paper asks how such communications affect financial markets. Building a unique dataset, it provides an empirical assessment of the reactions of stock markets to more than 1000 releases of FSRs and speeches by 37 central banks over the past 14 years. The findings suggest that FSRs have a significant and potentially long-lasting effect on stock market returns, and also tend to reduce market volatility. Speeches and interviews, in contrast, have little effect on market returns and do not generate a volatility reduction during tranquil times, but have had a substantial effect during the 2007-10 financial crisis. The findings suggest that financial stability communication by central banks are perceived by markets to contain relevant information, and they underline the importance of differentiating between communication tools, their content and the environment in which they are employed.
 
20/04/2011
No. 1331: Business cycle dynamics under rational inattention, by Bartosz Maćkowiak, Mirko Wiederholt, description, download
(JEL: D83, E31, E32, E52) We develop a dynamic stochastic general equilibrium model with rational inattention by households and firms. Consumption responds slowly to interest rate changes because households decide to pay little attention to the real interest rate. Prices respond quickly to some shocks and slowly to other shocks. The mix of fast and slow responses of prices to shocks matches the pattern found in the empirical literature. Changes in the conduct of monetary policy yield very different outcomes than in models currently used at central banks because systematic changes in policy cause reallocation of attention by decision-makers in households and firms.
 
20/04/2011
No. 1330: Financial remoteness and the net external position, by Martin Schmitz, description, download
(JEL: F21, F34, F41) This paper shows that, controlling for standard determinants of net external positions, financially-remote countries exhibit more positive net external positions. This finding is found to be stronger for less advanced countries, hinting at external funding problems for more remote countries. Being located near financially very open countries, being in currency unions with creditor countries, or being highly integrated through financial and trade linkages with a ‘core’ country facilitates net external borrowing. Consequently, evidence is found for an important role of geographic and bilateral factors for a country’s net external wealth.
 
20/04/2011
No. 1329: Securitization, bank lending and credit quality: the case of Spain, by Santiago Carbó-Valverde, David Marqués-Ibáñez, Francisco Rodríguez Fernández, description, download
(JEL: G21, G12) While the 2007-2010 financial crisis has hit a variety of countries asymmetrically, the case of Spain is particularly illustrative: this country experienced a pronounced housing bubble partly funded via spectacular developments in its securitization markets leading to looser credit standards and subsequent financial stability problems. We analyze the sequential deterioration of credit in this country considering rating changes in individual securitized deals and on balance sheet bank conditions. Using a sample of 20,286 observations on securities and rating changes from 2000Q1 to 2010Q1 we build a model in which loan growth, on balancesheet credit quality and rating changes are estimated simultaneously. Our results suggest that loan growth significantly affects on balance-sheet loan performance with a lag of at least two years. Additionally, loan performance is found to lead rating changes with a lag of four quarters. Importantly, bank characteristics (in particular, observed solvency, cash flow generation and cost efficiency) also affect ratings considerably. Additionally, these other bank characteristics seem to have a higher weight in the rating changes of securities issued by savings banks as compared to those issued by commercial banks.
 
20/04/2011
No. 1328: The effectiveness of monetary policy in steering money market rates during the recent financial crisis, by Puriya Abbassi, Tobias Linzert, description, download
(JEL: E43, E52, E58) The recent financial crisis deeply affected the money market yield curve and thus, potentially, the proper functioning of the interest rate channel of monetary policy transmission. Therefore, we analyze the effectiveness of monetary policy in steering euro area money market rates using two measures: first, the predictability of money market rates on the basis of monetary policy expectations, and second the impact of extraordinary central bank measures on money market rates. We find that market expectations about monetary policy are less relevant for money market rates up to 12 months after August 2007 compared to the pre-crisis period. At the same time, our results indicate that the ECB’s net increase in outstanding open market operations as of October 2008 accounts for at least a 100 basis point decline in Euribor rates. These findings show that central banks have effective tools at hand to conduct monetary policy in times of crises.
 
20/04/2011
CON/2011/38 Opinion on amendments to the governance structure of the Oesterreichische Nationalbank, en
 
19/04/2011
Announcing 20110042 (MRO,liquidity providing), for 7 days deadline 09:30, more
 
19/04/2011
Euro area balance of payments in February 2011 
and international investment position 
at the end of the fourth quarter of 2010, more
 
19/04/2011
Publication Letter from the ECB President to Ms Rodi Kratsa-Tsagaropoulou, Member of the European Parliament , download
 
19/04/2011
Publication Letter from the ECB President to Mr Nuno Teixeira, Member of the European Parliament , download
 
18/04/2011
Fine-tuning operation , more
 
18/04/2011
CON/2011/37 Opinion on strengthening the governance of De Nederlandsche Bank and the Authority for the Financial Markets, en
 
15/04/2011
Press release Statement by the European Commission, ECB and IMF on the first quarterly review mission to Ireland, en
 
15/04/2011
Speech Vítor Constâncio: Financial regulatory reform and the economy, en
 
15/04/2011
Euro area investment fund statistics, more
 
14/04/2011
USD11015 (OT,liquidity providing):0 mn USD alloted (fixed 1.09%, 0% allotment at margin), more
 
14/04/2011
Speech José Manuel González-Páramo: Risk, return, resilience: The future financial system, en
 
14/04/2011
Statistics Pocket Book Statistics Pocket Book, April 2011, download
 
14/04/2011
Monthly Bulletin Monthly Bulletin, April 2011, download
 
14/04/2011
Publication Article, Monthly Bulletin, April 2011, pp 79-90, The use of euro banknotes – results of two surveys among households and firms , download
 
14/04/2011
Publication Article, Monthly Bulletin, April 2011, pp 61-77, Ensuring fiscal sustainability in the euro area , download
 
14/04/2011
CON/2011/36 Opinion on amendments to the Statute of the Bank of Greece, en
 
13/04/2011
20110041 (OT,liquidity absorbing):78870.9 mn EUR alloted (marginal 0.8%, weighted average 0.79%, 100% allotment at margin), more
 
13/04/2011
20110040 (OT,liquidity absorbing):77000 mn EUR alloted (marginal 1.12%, weighted average 1.05%, 87.9955% allotment at margin), more
 
13/04/2011
20110039 (LTRO,liquidity providing):83686.59 mn EUR alloted (fixed 1.25%, 100% allotment at margin), more
 
13/04/2011
20110038 (MRO,liquidity providing):94133.8 mn EUR alloted (fixed 1.25%, 100% allotment at margin), more
 
13/04/2011
No. 1327: Systemic risk diagnostics: coincident indicators and early warning signals, by Bernd Schwaab, Siem Jan Koopman, André Lucas, description, download
(JEL: G21, C33) We propose a novel framework to assess financial system risk. Using a dynamic factor framework based on state-space methods, we construct coincident measures (‘thermometers’) and a forward looking indicator for the likelihood of simultaneous failure of a large number of financial intermediaries. The indicators are based on latent macro-financial and credit risk components for a large data set comprising the U.S., the EU-27 area, and the respective rest of the world. Credit risk conditions can significantly and persistently de-couple from macro-financial fundamentals. Such decoupling can serve as an early warning signal for macro-prudential policy.
 
13/04/2011
No. 1326: Welfare costs of inflation and the circulation of US currency abroad, by Alessandro Calza, Andrea Zaghini, description, download
(JEL: E31, E41, E52) Empirical studies of the "shoe-leather" costs of inflation are typically computed using M1 as a measure of money. Yet, official data on M1 includes all currency issued, regardless of the country of residence of the holder. Using monetary data adjusted for US dollars abroad, we show that the failure to control for currency held by non residents may lead to significantly overestimating the shoe-leather costs for the domestic economy. In particular, our estimates of shoe-leather costs are minimized for a positive but moderate value of the inflation rate, thereby justifying a deviation from the Friedman rule in favour of the Fed's current policy.
 
13/04/2011
CON/2011/34 Opinion on the legal framework for the Loan and Consignment Fund and on amendments to the enhancement scheme for the Greek economy’s liquidity following the international financial crisis, en
 
13/04/2011
CON/2011/35 Opinion on the settlement risk management procedure for net settlement systems, en
 
12/04/2011
Announcing 20110039 (LTRO,liquidity providing), for 28 days deadline 09:30, more
 
12/04/2011
Announcing 20110038 (MRO,liquidity providing), for 7 days deadline 09:30, more
 
12/04/2011
Speech Jürgen Stark: The global financial crisis and the role of central banking, en
 
12/04/2011
Euro area securities issues statistics, more
 
12/04/2011
Publication Settlement fails - report on securities settlement systems (SSS) measures to ensure timely settlement , download
 
12/04/2011
CON/2011/33 Opinion on the draft Constitution with regard to the Magyar Nemzeti Bank, en
 
11/04/2011
Fine-tuning operation, more
 
08/04/2011
Speech Gertrude Tumpel-Gugerell: Ist die europäische Wirtschafts- und Währungsunion eine Solidargemeinschaft? Soll sie es sein?, de
 
08/04/2011
No. 1325: Wage structure effects of international trade: evidence from a small open economy, by Philip Du Caju, François Rycx, Ilan Tojerow, description, download
(JEL: F16, J31) In the last decades, international trade has increased between industrialised countries and between high- and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employer-employee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in exports and imports on changes in wage differentials, ii) examine the impact of imports according to the country of origin. Looking at the export side, we find a positive effect of exports on the industry wage premium. The results also show that import penetration from low–income countries has a significant and negative impact on the inter-industry wage differentials, while imports from high-income countries seem to have a more ambiguous impact on the wage structure. The results suggest that trade with low-income and high-income countries has different effects on the inter-industry wage differentials.
 
08/04/2011
No. 1324: Nowcasting inflation using high frequency data, by Michele Modugno, description, download
(JEL: C53, E31, E37) This paper proposes a methodology to nowcast and forecast inflation using data with sampling frequency higher than monthly. The nowcasting literature has been focused on GDP, typically using monthly indicators in order to produce an accurate estimate for the current and next quarter. This paper exploits data with weekly and daily frequency in order to produce more accurate estimates of inflation for the current and followings months. In particular, this paper uses the Weekly Oil Bulletin Price Statistics for the euro area, the Weekly Retail Gasoline and Diesel Prices for the US and daily World Market Prices of Raw Materials. The data are modeled as a trading day frequency factor model with missing observations in a state space representation. For the estimation we adopt the methodology exposed in Banbura and Modugno (2010). In contrast to other existing approaches, the methodology used in this paper has the advantage of modeling all data within a unified single framework that, nevertheless, allows one to produce forecasts of all variables involved. This offers the advantage of disentangling a model-based measure of ”news” from each data release and subsequently to assess its impact on the forecast revision. The paper provides an illustrative example of this procedure. Overall, the results show that these data improve forecast accuracy over models that exploit data available only at monthly frequency for both countries.
 
08/04/2011
No. 1323: Structural reforms and macroeconomic performance in the euro area countries: a model-based assessment, by Sandra Gomes, Pascal Jacquinot, Matthias Mohr, Massimiliano Pisani, description, download
(JEL: C53, E52, F47) We quantitatively assess the macroeconomic effects of country-specific supply-side reforms in the euro area by simulating EAGLE, a multi-country dynamic general equilibrium model. We consider reforms in the labor and services markets of Germany (or, alternatively, Portugal) and the rest of the euro area. Our main results are as follows. First, there are benefits from implementing unilateral structural reforms. A reduction of markup by 15 percentage points in the German (Portuguese) labor and services market would induce an increase in the long-run German (Portuguese) output equal to 8.8 (7.8) percent. As reforms are implemented gradually over a period of five years, output would smoothly reach its new long-run level in seven years. Second, cross-country coordination of reforms would add extra benefits to each region in the euro area, by limiting the deterioration of relative prices and purchasing power that a country faces when implementing reforms unilaterally. This is true in particular for a small and open economy such as Portugal. Specifically, in the long run German output would increase by 9.2 percent, Portuguese output by 8.6 percent. Third, cross-country coordination would make the macroeconomic performance of the different regions belonging to the euro area more homogeneous, both in terms of price competitiveness and real activity. Overall, our results suggest that reforms implemented apart by each country in the euro area produce positive effects, cross-country coordination produces larger and more evenly distributed (positive) effects.
 
08/04/2011
No. 1322: Business cycle synchronisation: disentangling trade and financial linkages, by Stéphane Dées, Nico Zorell, description, download
(JEL: E32, F41, E44) Drawing on a large sample of countries, this paper explores whether closer economic ties between countries foster business cycle synchronisation and disentangles the role of the various channels, including trade and financial linkages as well as the similarity in sectoral specialisation. Overall, our results confirm that trade integration fosters business cycle synchronisation. Similar patterns of sectoral specialisation also lead to closer business cycle co-movement. By contrast, it remains difficult to find a direct relationship between bilateral financial linkages and output correlation. However, our results suggest that financial integration affects business cycle synchronisation indirectly by raising the similarity in sectoral specialisation. Through this indirect link, financial integration tends to raise business cycle comovement between countries.
 
08/04/2011
No. 1321: Macroeconomic implications of downward wage rigidities, by Mirko Abbritti, Stephan Fahr, description, download
(JEL: E31, E52, C61) Growth of wages, unemployment, employment and vacancies exhibit strong asymmetries between expansionary and contractionary phases. In this paper we analyze to what degree downward wage rigidities in the bargaining process affect other variables of the economy. We introduce asymmetric wage adjustment costs in a New-Keynesian DSGE model with search and matching frictions in the labor market. We find that the presence of downward wage rigidities strongly improves the fit of the model to the skewness of variables and the relative length of expansionary and contractionary phases even when detrending the data. Due to the asymmetry, wages increase more easily in expansions, which limits vacancy posting and employment creation, similar to the flexible wage case. During contractions nominal wages decrease slowly, shifting the main burden of adjustment to employment and hours worked. The asymmetry also explains the differing transmission of positive and negative demand shocks from wages to inflation. Downward wage rigidities help explaining the asymmetric business cycle of many OECD countries where long and smooth expansions with low growth rates are followed by sharp but short recessions with large negative growth rates.
 
08/04/2011
Occasional paper no. 125 Household sector borrowing in the euro area - a micro data perspective , by Ramon Gomez-Salvador, Adriana Lojschová and Thomas Westermann, download
 
07/04/2011
USD11014 (OT,liquidity providing):0 mn USD alloted (fixed 1.11%, 0% allotment at margin), more
 
07/04/2011
Press conference Jean-Claude Trichet: Introductory statement to the press conference, en
 
07/04/2011
Press release Monetary policy decisions, bg . cs . da . de . el . en . es . et . fi . fr . hu . it . lt . lv . mt . nl . pl . pt . ro . sk . sl . sv
 
07/04/2011
No. 1320: What lies beneath? A time-varying FAVAR model for the UK transmission mechanism, by Haroon Mumtaz, Pawel Zabczyk, Colin Ellis, description, download
(JEL: C38, E44, E52) This paper uses a time-varying Factor Augmented VAR to investigate the evolving transmission of monetary policy and demand shocks in the UK. Simultaneous estimation of time-varying impulse responses of a large set of macroeconomic variables and disaggregated prices suggest that the response of inflation, money supply and asset prices to monetary policy and demand shocks has changed over the sample period. In particular, during the post-1992 inflation targeting period, monetary policy shocks started having a bigger impact on prices, a smaller impact on activity and began contributing more to overall volatility. In contrast, demand shocks had the largest impact on these variables before the 1990s. We also document changes in the response of disaggregated prices, with the median reaction to contractionary policy shocks becoming more negative and the distribution more dispersed post-1992.
 
07/04/2011
No. 1319: Fiscal developments and financial stress: a threshold VAR analysis, by António Afonso, Jaromír Baxa, Michal Slavík, description, download
(JEL: E62, G15, H60) We use a threshold VAR analysis to study whether the effects of fiscal policy on economic activity differ depending on financial market conditions. In particular, we investigate the possibility of a non-linear propagation of fiscal developments according to different financial market stress regimes. More specifically we employ a quarterly dataset, for the U.S., the U.K., Germany and Italy, for the period 1980:4-2009:4, encompassing macro, fiscal and financial variables. The results show that (i) the use of a nonlinear framework with regime switches is corroborated by nonlinearity tests; (ii) the responses of economic growth to a fiscal shock are mostly positive in both financial stress regimes; (iii) financial stress has a negative effect on output growth and worsens the fiscal position; (iv) the nonlinearity in the response of output growth to a fiscal shock is mainly associated with different behaviour across regimes; (v) the size of the fiscal multipliers is higher than average in the last crisis.
 
07/04/2011
No. 1318: Using the global dimension to identify shocks with sign restrictions, by Alexander Chudik, Michael Fidora, description, download
(JEL: C32, E17, F37, F41, F47) Identification of structural VARs using sign restrictions has become increasingly popular in the academic literature. This paper (i) argues that identification of shocks can benefit from introducing a global dimension, and (ii) shows that summarising information by the median of the available impulse responses—as commonly done in the literature—has some undesired features that can be avoided by using an alternatively proposed summary measure based on a “scaled median” estimate of the structural impulse response. The paper implements this approach in both a small scale model as originally presented in Uhlig (2005) and a large scale model, introducing the sign restrictions approach to the global VAR (GVAR) literature, that allows to explore the global dimension by adding a large number of sign restrictions. We find that the patterns of impulse responses are qualitatively similar though point estimates tend to be quantitatively much larger in the alternatively proposed approach. In addition, our GVAR application in the context of global oil supply shocks documents that oil supply shocks have a stronger impact on emerging economies’ real output as compared to mature economies, a negative impact on real growth in oil-exporting economies as well, and tend to cause an appreciation (depreciation) of oil-exporters’ (oil-importers’) real exchange rates but also lead to an appreciation of the US dollar. One possible explanation would be the recycling of oil-exporters’ increased revenues in US financial markets.
 
07/04/2011
No. 1317: Financial imbalances and financial fragility, by Frédéric Boissay, description, download
(JEL: E21, F36, G01, G21) This paper develops a general equilibrium model to analyze the link between financial imbalances and financial crises. The model features an interbank market subject to frictions and where two equilibria may (co-)exist. The normal times equilibrium is characterized by a deep market with highly leveraged banks. The crisis times equilibrium is characterized by bank deleveraging, a market run, and a liquidity trap. Crises occur when there is too much liquidity (savings) in the economy with respect to the number of (safe) investment opportunities. In effect, the economy is shown to have a limited liquidity absorption capacity, which depends —inter alia— on the productivity of the real sector, the ultimate borrower. I extend the model in order to analyze the effects of financial integration of an emerging and a developed country. I find results in line with the recent literature on global imbalances. Financial integration permits a more efficient allocation of savings worldwide in normal times. It also implies a current account deficit for the developed country. The current account deficit makes financial crises more likely when it exceeds the liquidity absorption capacity of the developed country. Thus, under some conditions —which this paper spells out— financial integration of emerging countries may increase the fragility of the international financial system. Implications of financial integration and global imbalances in terms of output, wealth distribution, welfare, and policy interventions are also discussed.
 
07/04/2011
No. 1316: The ECB's New Multi-Country Model for the euro area: NMCM - with boundedly rational learning expectations, by Alistair Dieppe, Alberto González Pandiella, Stephen Hall, Alpo Willman, description, download
(JEL: C51, D83, D84, E17, E32) Rational expectations has been the dominant way to model expectations, but the literature has quickly moved to a more realistic assumption of boundedly rational learning where agents are assumed to use only a limited set of information to form their expectations. A standard assumption is that agents form expectations by using the correctly specified reduced form model of the economy, the minimal state variable solution (MSV), but they do not know the parameters. However, with medium-sized and large models the closed-form MSV solutions are difficult to attain given the large number of variables that could be included. Therefore, agents base expectations on a misspecified MSV solution. In contrast, we assume agents know the deep parameters of their own optimising frameworks. However, they are not assumed to know the structure nor the parameterisation of the rest of the economy, nor do they know the stochastic processes generating shocks hitting the economy. In addition, agents are assumed to know that the changes (or the growth rates) of fundament variables can be modelled as stationary ARMA (p,q) processes, the exact form of which is not, however, known by agents. This approach avoids the complexities of dealing with a potential vast multitude of alternative mis-specified MSVs. Using a new Multi-country Euro area Model with Boundedly Estimated Rationality we show this approach is compatible with the same limited information assumption that was used in deriving and estimating the behavioral equations of different optimizing agents. We find that there are strong differences in the adjustment path to the shocks to the economy when agent form expectations using our learning approach compared to expectations formed under the assumption of strong rationality. Furthermore, we find that some variation in expansionary fiscal policy in periods of downturns compared to boom periods.
 
07/04/2011
No. 1315: The ECB's New Multi-Country Model for the euro area: NMCM - simulated with rational expectations, by Alistair Dieppe, Alberto González Pandiella, Alpo Willman, description, download
(JEL: C51, C6, E5) The model presented here is a New estimated medium-scale Multi-Country Model (NMCM) which covers the five largest euro area countries and is used for forecasting and scenarios analysis at the European Central Bank. The model has a tight theoretical structure which allows for non-unitary elasticity of substitution, non-constant augmenting technical progress and heterogeneous sectors with differentiated price and income elastiticites of demand across sectors. Furthermore, it has the explicit inclusion of expectations on the basis of three optimising private sector decision making units: i.e. firms, trade unions and households, where output is in the short run demand-determined and monopolistically competing firms set prices and factor demands. Labour is indivisible and monopoly-unions set wages and households make consumption/saving decisions. We assume agents optimise under limited information where each agent knows only the parameters related to his/her optimization problem. Therefore we estimate with GMM, which implicitly assumes limited information boundedly rational expectations. In this paper we provide some simulation results under the assumption of model-consistent rational expectations, we show that there is some heterogeneity across countries and that the reactions of the economies to shocks depends strongly on whether the shocks are pre-announced, announced and credible or unannounced and uncredible.
 
07/04/2011
CON/2011/32 Opinion on a proposal for a Regulation establishing technical requirements for credit transfers and direct debits in euro , en
 
06/04/2011
20110037 (OT,liquidity absorbing):77000 mn EUR alloted (marginal 0.64%, weighted average 0.59%, 46.4128% allotment at margin), more
 
06/04/2011
20110036 (MRO,liquidity providing):84533.4 mn EUR alloted (fixed 1%, 100% allotment at margin), more
 
06/04/2011
CON/2011/30 Opinion on the financing of a central register of bank account numbers, en
 
06/04/2011
CON/2011/31 Opinion on a tax on the total value of a bank’s balance sheet , en
 
05/04/2011
Announcing 20110036 (MRO,liquidity providing), for 7 days deadline 09:30, more
 
04/04/2011
Fine-tuning operation, more
 
04/04/2011
Speech Jean-Claude Trichet: La gouvernance de la zone euro, en
 
04/04/2011
CON/2011/29 Opinion on a special tax on banks and on the setting up of an independent financial stability fund, en
 
01/04/2011
Speech Lorenzo Bini Smaghi: Basel III and the real economy (slides from the presentation), en
 
01/04/2011
No. 1314: Price and wage setting in Portugal: learning by asking, by Fernando Martins, description, download
(JEL: D21, E30, J31) This paper presents the main findings of a survey conducted on a sample of Portuguese firms. The main aim was to identify some relevant characteristics about the dynamics of prices and wages in Portugal. The most important conclusions are: i) changes to wages are more synchronized than changes to prices; ii) most wages are defined using inflation as a yardstick, even though there are no formal rules; iii) the wages of most workers are defined in terms of sector-related collective agreements; iv) a considerable proportion of workers receive wages above those been agreed under the collective agreement; v) firms make frequent use of other mechanisms to cut payroll costs as a way of overcoming the restrictions imposed by downward nominal wage rigidity.