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John Hutchinson

30 July 2020
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 5, 2020
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Abstract
This box examines the impact of the ECB’s monetary policy measures taken in response to the coronavirus (COVID-19) crisis, focusing on asset purchases and the targeted longer-term refinancing operations (TLTRO III). It outlines how the ECB’s response centred on addressing three key issues: (i) market stabilisation, (ii) providing central bank liquidity to maintain credit provision to the real economy, and (iii) ensuring that the overall monetary policy stance is sufficiently accommodative. The box sets out in detail how the ECB’s measures have indeed proved an effective and efficient response to the COVID-19 crisis, in turn providing crucial support to the real economy and to price stability across two dimensions, namely underpinning the medium-term growth and inflation outlook and removing tail risks around the baseline outlook. These measures are a proportionate response under current conditions given that the ECB’s price stability objective would have been subject to further downside risks in the absence of such measures.
JEL Code
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
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
13 April 2021
WORKING PAPER SERIES - No. 2537
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Abstract
Increased investment in clean electricity generation or the introduction of a carbon tax will most likely lead to higher electricity prices. We examine the effect from changing electricity prices on manufacturing employment. Analyzing firm-level data, we find that rising electricity prices lead to a negative impact on labor demand and investment in sectors most reliant on electricity as an input factor. Since these sectors are unevenly spread across countries and regions, the labor impact will also be unevenly spread with the highest impact in Southern Germany and Northern Italy. We also identify an additional channel that leads to heterogeneous responses. When electricity prices rise, financially constrained firms reduce employment more than less constrained firms. This implies a potentially mitigating role for monetary policy.
JEL Code
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
H23 : Public Economics→Taxation, Subsidies, and Revenue→Externalities, Redistributive Effects, Environmental Taxes and Subsidies
J23 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Demand
Q48 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Government Policy