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Agostino Consolo

16 June 2010
OCCASIONAL PAPER SERIES - No. 113
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Abstract
This report aims to analyse euro area energy markets and the impact of energy price changes on the macroeconomy from a monetary policy perspective. The core task of the report is to analyse the impact of energy price developments on output and consumer prices. Nevertheless, understanding the link between energy price fluctuations, inflationary pressures and the role of monetary policy in reacting to such pressure requires a deeper look at the structure of the economy. Energy prices have presented a challenge for the Eurosystem, as the volatility of the energy component of consumer prices has been high since the creation of EMU. At the same time, a look back into the past may not necessarily be very informative for gauging the likely impact of energy price changes on overall inflation in the future. For instance, the reaction of HICP inflation to energy price fluctuations seems to have been more muted during the past decade than in earlier periods such as the 1970s.
JEL Code
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
Network
Eurosystem Monetary Transmission Network
29 October 2018
WORKING PAPER SERIES - No. 2189
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Abstract
This paper presents new evidence on the importance of insolvency frameworks for private sector debt deleveraging and for the resolution of non-performing loans (NPL). We construct an aggregate insolvency framework index (IFI), which is used as explanatory variable in the empirical analysis. By means of panel estimates over 2003-2016, we show that OECD countries with better IFI deleverage faster and adjust their NPL levels more rapidly than countries with worse IFI. We also show that there is a strong correlation between the level of NPL and IFI, which appears to be state-dependent, i.e. in a situation of high unemployment relative to its historical average the NPL ratio is generally lower for a higher IFI. Finally, our results indicate that better insolvency frameworks lead to faster NPL reductions and to lower NPL increases during economic bad times.
JEL Code
C23 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Panel Data Models, Spatio-temporal Models
E02 : Macroeconomics and Monetary Economics→General→Institutions and the Macroeconomy
E05 : Macroeconomics and Monetary Economics→General
O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
13 June 2019
OCCASIONAL PAPER SERIES - No. 224
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Abstract
Well-functioning economic structures are key for resilient and prospering euro area economies. The global financial and sovereign debt crises exposed the limited resilience of the euro area’s economic structures. Economic growth was masking underlying weaknesses in several euro area countries. With the inception of the crises, significant efforts have been undertaken by Member States individually and collectively to strengthen resilience of economic structures and the smooth functioning of the euro area. National fiscal policies were consolidated to keep the increase in government debt contained and structural reform momentum increased notably in the second decade, particularly in those countries most hit by the crisis. The strengthened national economic structures were supported by a reformed EU crisis and economic governance framework. However, overall economic structures in euro area countries are still not fully commensurate with the requirements of a monetary union. Moreover, remaining challenges, such as population ageing, low productivity and the implications of digitalisation, will need to be addressed to increase economic resilience and long-term growth.
JEL Code
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E60 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
F10 : International Economics→Trade→General
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
O43 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Institutions and Growth
19 June 2019
ECONOMIC BULLETIN - ARTICLE
Economic Bulletin Issue 4, 2019
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Abstract
In this article we look at the euro area labour market using the framework underlying the Beveridge curve, which captures the negative relationship between the unemployment rate and the job vacancy rate. The Beveridge curve shows that, at a given moment in time, there are jobs vacant and people unemployed, while the shape and the position of the curve provide important information about the functioning of the labour market. There are two key concepts associated with the Beveridge curve: labour market tightness and matching efficiency. Labour market tightness is the number of vacant posts per each unemployed person and matching efficiency reflects the market’s ability to match individuals to jobs. We analyse the importance of these two concepts for wage developments using a simple version of the search and matching model, where unemployment, wages and vacancies are jointly determined and the Beveridge curve features prominently. First, we derive two aggregate measures that encapsulate the changes in the vacancy -unemployment space: labour market tightness and matching efficiency. Second, we look at the information content behind market tightness and job matching efficiency to analyse the euro area labour market and its cyclical conditions. Third, aggregate measures of labour market tightness and efficiency are used in a standard wage Phillips curve equation to measure their marginal impact. The results support the view that labour market tightness and labour market efficiency both play a role in explaining wage developments. However, the quantitative implications for wages differ only marginally from those of the standard Phillips curve approach. Overall, labour market efficiency provides an important qualitative margin of labour market functioning that is not captured in standard wage Phillips curve specifications.
JEL Code
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J63 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→Turnover, Vacancies, Layoffs
J64 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→Unemployment: Models, Duration, Incidence, and Job Search
29 July 2020
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 5, 2020
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Abstract
This box examines high-frequency data to quantify the impact of the coronavirus (COVID-19) pandemic on both job postings and hiring patterns in the euro area. Prior to the COVID-19 crisis, both of these indicators had increased steadily year on year, reflecting a rise in the number of job findings in the euro area. However, both the Indeed job postings and the LinkedIn hiring rate have declined significantly since the onset of the COVID-19 crisis and the lockdowns, with the hiring rate bottoming out in May 2020. While the decline in the hiring rate was broad-based across sectors, the intensity of the COVID-19 shock is asymmetric, with sectors such as recreation, travel and manufacturing being more affected by the crisis than others, such as healthcare, software and IT services sectors. Based on the high-frequency information derived from the hiring rate, the implied unemployment rate is expected to peak during the second quarter of 2020 and to be around 2.3 percentage points higher than in February. Overall, the methodology and the high-frequency data used in this box allow for a timely assessment of developments in the euro area labour market. The use of job flows in and out of unemployment helps to enhance our understanding of the labour market adjustment during the current COVID-19 crisis.
JEL Code
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E27 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Forecasting and Simulation: Models and Applications
29 July 2020
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 5, 2020
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Abstract
This box analyses labour market developments in the euro area since the onset of the coronavirus (COVID-19) pandemic, contrasting the developments in business and consumer survey data with the main headline labour market indicators for the euro area. On the one hand, business and consumer survey data point to a strong deterioration in the euro area labour market since the introduction of the containment measures to limit the spread of the virus. On the other hand, the extensive margin of the labour market has shown a muted response, with both employment and unemployment adjusting moderately to the COVID-19 shock. The adjustment of the euro area labour market is occurring instead via a strong decline in the average number of hours worked per employed person, shaped by the widespread use of short-time work schemes in the euro area. These schemes have been successful in containing dismissals, supporting incomes and helping firms to effectively reduce their payroll costs and liquidity needs, while maintaining the worker-job relationship. However, the continued success of the widespread use of short-term work schemes in supporting the euro area labour market depends critically on the dynamics and duration of the crisis.
JEL Code
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E65 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Studies of Particular Policy Episodes
6 January 2021
ECONOMIC BULLETIN - ARTICLE
Economic Bulletin Issue 8, 2020
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Abstract
This article analyses labour market developments in the euro area since the onset of the coronavirus (COVID-19) pandemic. Total hours worked declined sharply in the first half of 2020. However, employment and unemployment reacted only weakly to the marked fall in GDP, as many workers remained employed under job retention schemes. These contributed to a fall in compensation per employee and an increase in compensation per hour worked. Participation in the labour force also dropped substantially, more than offsetting the increase observed since mid-2013. An analysis of the decomposition of labour market shocks via a sign-restricted structural vector-autoregressive model shows that both supply and demand shocks contributed to the decline in total hours worked. High-frequency indicators on hiring rates and job postings have declined sharply since April and continue to indicate a depressed level of labour demand. However, employment and hours worked recovered somewhat in the third quarter. Nonetheless, the COVID-19 pandemic is having a heterogeneous impact on employment across euro area countries and there is the risk of a further increase in geographic divergence in euro area labour markets. Temporary employees, the young and workers with low levels of education were the most affected, while teleworking may have played a role in supporting employment and hours worked for some workers in certain sectors. Activity sectors such as trade and transport and recreation activities have been disproportionately affected, with the largest decreases in hours worked. However, it is too early to assess the extent to which the pandemic will affect the need for labour reallocation across sectors, tasks and occupations.
JEL Code
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E65 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Studies of Particular Policy Episodes