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on European Economics |
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Issue of 2025–03–31
eleven papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Bosetti, Isabella; Incardona, Rocco; Caloca, Antonio Rodríguez |
| Abstract: | This paper presents the estimation method used to break down the euro area portfolio investment liabilities in the international investment position (i.i.p.) and their corresponding income debits in the balance of payments (b.o.p.), by main geographical counterpart. Identifying non-resident investors in euro area portfolio investment liabilities (i.e. equity and debt securities issued by euro area residents) is a complex task, as securities are regularly traded in secondary markets and held via custodians and other financial intermediaries. Consequently, identifying the actual holders of euro area securities may be hampered by so-called “first-known counterparty” and/or “custodial” biases if statisticians cannot look through the chain of intermediaries. Owing to these difficulties, the geographical counterpart allocation of euro area portfolio investment liabilities cannot generally be directly collected from reporting agents (i.e. the issuers of euro area securities) but instead needs to be estimated. The estimation method presented in this document relies on a comprehensive set of so-called “mirror” datasets (i.e. information on the holders of euro area securities) supported by temporal disaggregation and econometric techniques. The results provide robust estimates of portfolio investment liabilities and income debits by geographical counterpart. JEL Classification: C22, C82 |
| Keywords: | balance of payments, data integration, portfolio investment, security-by-security data, temporal disaggregation, time series |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbsps:202550 |
| By: | Haavio, Markus; Heikkinen, Joni; Jalasjoki, Pirkka; Kilponen, Juha; Paloviita, Maritta |
| Abstract: | We study the evolution of the European Central Bank's (ECB) monetary policy since July 2021, following the adoption of a new strategy and amid a period of volatile inflation. Utilizing text analysis, we assess changes in the general sentiment of the ECB's communication. Additionally, we employ topic modeling to develop an inflation focused tone index. By integrating these tone indices with real-time data from monetary policy meetings, we directly estimate the ECB's loss function. Our findings indicate a recent shift towards a more inflation-centered communication approach by the ECB. Preliminary results also suggest that the ECB's policy preferences have become more symmetric since July 2021. |
| Keywords: | asymmetric loss function, central bank communication, textual analysis, topic model, optimal monetary policy |
| JEL: | E31 E52 E58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofrdp:313643 |
| By: | Schmidt, Tobias |
| Abstract: | This paper examines the pivotal role of journalists in shaping economic narratives, focusing on inflation coverage in Germany in 2022. While the media's influence on disseminating economic narratives is widely acknowledged, little research has focused on journalists, the agents responsible for content production. Using a mixed-method approach combining survey data with media content analysis, this study investigates how economic journalists explain inflation causes and persistence compared to professional economists. The results from surveys conducted during peak inflation (10.4%) show that journalists hold less optimistic views on inflation persistence than experts and that they are more likely to attribute inflation to specific protagonists, particularly the European Central Bank (ECB) and corporate profit-seeking. The ECB's role emerges as an especially contentious issue among journalists, revealing significant disagreement within the profession. Analysis of media coverage reveals notable alignment between journalists' perceptions and actual content, especially regarding the emphasis placed on the ECB's role-despite experts considering monetary policy a relatively minor factor. While this might suggest that journalists' personal narratives influence media coverage, the study's design precludes causal claims. The findings underscore the need for further research into how journalists' personal narratives impact public discourse on economic matters. |
| Keywords: | media, narratives, journalism, inflation |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:docmaw:313658 |
| By: | Frane Banić (Croatian National Bank, Croatia); Milan Deskar-Škrbić (Croatian National Bank, Croatia); Maroje Lang (Croatian National Bank, Croatia) |
| Abstract: | The aim of this paper is to explain the main features of the latest reform of the EU fiscal framework and to illustrate the differences between the new and old EU fiscal rules, using Croatia's experience during the Excessive Deficit Procedure (EDP) activated in 2014. Our results suggest that the new rules provide greater flexibility, allow for a longer fiscal adjustment, and mitigate the potential pro-cyclical nature of fiscal consolidation. The main limitation of our analysis are the difficulties related to the construction of a hypothetical scenario that would fully capture the political, economic, and institutional context surrounding the activation of the EDP in Croatia, or assumptions regarding the behaviour of fiscal policymakers in such a scenario. The paper nevertheless contributes to the ongoing debate on the implications of the reform of EU fiscal rules at both academic and policy levels. |
| Keywords: | fiscal policy, fiscal rules, fiscal governance, debt sustainability analysis, Croatia, EDP |
| JEL: | E62 F42 H60 H61 H62 H63 |
| Date: | 2025–03–18 |
| URL: | https://d.repec.org/n?u=RePEc:hnb:survey:42 |
| By: | World Bank |
| Keywords: | Environment-Environmental Disasters & Degradation Water Resources-Drought Management Environment-Natural Disasters Urban Development-Hazard Risk Management Finance and Financial Sector Development-Financial Intermediation |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:41592 |
| By: | Eichenauer, Vera; Köppl, Stefan; Köppl-Turyna, Monika |
| Abstract: | In this paper we analyze the effects of investment screening on cross-border venture capital investments in Europe between 2007 and 2022. The data we work with is originally based on PRISM data which has been extended by Eichenauer and Wang and which we combine with deal data from Preqin to assess investment activity. Our results point to unintended negative effects: while the number of actually blocked deals has remained very low, the associated uncertainty and an increase in transaction costs have led to a significant decline in cross-border deals. The effects are stronger in the case of financial (i.e. "non-strategic") investors, for late-stage venture capital deals, and for deals with investors from non-OECD countries. Moreover, we observe changes in the size of deals and their structure. This has profound policy implications for the financing of innovation in Europe. |
| Keywords: | cross-border venture capital, investment screening, Europe, transaction costs |
| JEL: | F55 F21 G24 L14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:313651 |
| By: | Filippo Biondi (Düsseldorf Institute for Competition Economics); Sergio Inferrera (Queen Mary University of London, School of Economics and Finance); Matthias Mertens (Massachusetts Institute of Technology); Javier Miranda (Halle Institute for Economic Research (IWH), Friedrich-Schiller University, and CompNet) |
| Abstract: | We study changes in job reallocation in Europe after 2000 using novel micro-aggregated data that we collected for 19 European countries. In all countries, we document broad-based declines in job reallocation rates that concern most economic sectors and size classes. These declines are mainly driven by dynamics within sectors, size, and age classes rather than by compositional changes. Simultaneously, employment shares of young firms decline. Consistent with US evidence, firms’ employment has become less responsive to productivity shocks. However, the dispersion of firms’ productivity shocks has decreased too. To enhance our understanding of these patterns, we derive and apply a firm-level framework that relates changes in firms’ market power, labor market imperfections, and production technology to firms’ responsiveness and job reallocation. Using German firm-level data, we find that changes in markups and labor output elasticities, rather than adjustment costs, are key in rationalizing declining responsiveness. |
| Keywords: | Business dynamism, job reallocation, productivity, responsiveness of labor demand, market power, technology, European cross-country data |
| JEL: | D24 D43 J21 J23 J42 L11 L25 |
| Date: | 2025–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2025-0004 |
| By: | Berlemann, Michael; Hinze, Jörg |
| Abstract: | Die deutsche Wirtschaft entwickelte sich im Winterhalbjahr 2024/25 weiterhin schwach, da sich im unsicheren Vorfeld der Neuwahlen im Februar 2025 die privaten Verbraucher und Unternehmen weiter zurückhielten, zudem gingen die Exporte weiter zurück. Bei der Neuwahl erhielt die Union die Mehrheit; sie hat umfassende Wirtschaftsreformen - wie Steuerentlastungen, niedrigere Energiekosten, Bürokratieabbau, Infrastrukturinvestitionen und effizienterer Staat - angekündigt. Allerdings dürften in der wahrscheinlichen Koalition mit der SPD vorgenannte Maßnahmen angesichts teils sehr unterschiedlicher wirtschaftspolitischer Vorstellungen nicht vollumfänglich durchgesetzt werden können. Erst nach Vorliegen der Koalitionsvereinbarungen dürfte die Zurückhaltung bei privaten Verbrauchern und insbesondere Investoren schwinden. Zu den geopolitischen Unsicherheiten kommt die restriktivere Handelspolitik der neuen US-Administration hinzu; auch auf deutsche Exporte in die USA drohen Zölle. Das alles dämpft die für den weiteren Verlauf dieses Jahres erwartete Wiederbelebung der Wirtschaft. Das HWWI rechnet deshalb für 2025 im Jahresdurchschnitt, auch wegen des negativen Überhangs aus dem Jahr 2024, nur noch mit einer Zunahme des realen Bruttoinlandsprodukts von 1/4 % (zuvor 1/2 %). Unter der Annahme, dass sich die künftige Koalition auf wichtige wirtschaftliche Reformen einigen kann und unter Berücksichtigung zu erwartender Nachholeffekte sowie einer weiteren Lockerung der Geldpolitik wird für 2026 weiterhin mit einem Wirtschaftswachstum von 1 1/2 % gerechnet. Die Inflationsrate für die Verbraucherpreise hat sich mittlerweile nahe der Stabilitätsmarke von 2 % eingependelt. Die deutlich gestiegenen Arbeitskosten halten die sogenannte Kernrate jedoch noch höher, zuletzt 2, 6 %. Im Laufe dieses Jahres dürfte aber mit moderateren Lohnabschlüssen der Inflationsdruck weiter nachlassen. Dann dürfte sich die Inflationsrate bei 2 % stabilisieren. Nicht nur wegen der geopolitischen Unsicherheiten - jüngst durch die Spannungen zwischen USA, Ukraine und Europa verschärft - bleiben die Risiken für diese Prognose hoch. Die Koalitionsverhandlungen stehen noch an und je weniger durchgreifende Maßnahmen zur Verbesserung der Standortbedingungen sie beinhalten, desto beschränkter sind die Wachstumschancen. Die Vorabklärung der Finanzierungsfragen für Verteidigung und Infrastruktur in den Sondierungsgesprächen muss noch mit 2/3-Mehrheit durch den Bundestag; dann kann dies wie ein Konjunkturprogramm wirken. |
| Abstract: | The German economy continued to develop weakly in the winter half of 2024/25, as private consumers and companies continued to hold back in the uncertain run-up to the new elections in February 2025, and exports continued to decline. In the new election, the Union received the majority; it has announced comprehensive economic reforms - such as tax relief, lower energy costs, reduction of bureaucracy, infrastructure investments and a more efficient state. However, in the likely coalition with the SPD, the aforementioned measures are unlikely to be fully implemented in view of the sometimes very different economic policy ideas. Only after the coalition agreements are available is the reluctance of private consumers and especially investors likely to dwindle. In addition to the geopolitical uncertainties, there is the more restrictive trade policy of the new US administration; German exports to the USA are also threatened with tariffs. All this dampens the economic revival expected for the rest of this year. The Hamburg Institute of International Economics (HWWI) therefore expects an annual average increase in real gross domestic product of only 1/4% (previously 1/2%) for 2025, partly because of the negative overhang from 2024. Assuming that the future coalition can agree on important economic reforms and taking into account expected catch-up effects and a further easing of monetary policy, economic growth of 1 1/2% is still expected for 2026. The inflation rate for consumer prices has now settled close to the stability mark of 2%. However, the significant increase in labor costs keeps the so-called core rate even higher, most recently 2.6%. In the course of this year, however, inflationary pressures are likely to ease further with more moderate wage agreements. Then the inflation rate should stabilize at 2%. It is not only because of the geopolitical uncertainties - recently exacerbated by the tensions between the USA, Ukraine and Europe - that the risks to this forecast remain high. The coalition negotiations are still pending, and the fewer drastic measures to improve the location conditions they contain, the more limited the growth opportunities. The preliminary clarification of the financing issues for defense and infrastructure in the exploratory talks still has to be passed by the Bundestag with a 2/3 majority; then this can act like an economic stimulus program. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:hwwifo:313017 |
| By: | Marta Marzi; Alessandra Marini; Ludovica Cherchi; Francesco Cenedese |
| Keywords: | Gender-Gender and Social Development Governance-E-Government Social Protections and Labor-Labor Management and Relations Social Protections and Labor-Labor Markets Macroeconomics and Economic Growth-Income Social Development-Social Inclusion & Institutions |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:42088 |
| By: | Cuong, Nguyen Manh; Mutai, Noah C.; Ibeh, Lawrence |
| Abstract: | The Ukraine conflict has profoundly affected global trade and international relations, particularly for Germany, a major player in Europe and the European Union. This study utilizes a Gravity Model analysis to explore Germany’s trade network and assess the impact of the conflict on its trade partnerships. |
| Date: | 2023–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:p672w_v1 |
| By: | Kaitila, Ville |
| Abstract: | Abstract We analyse the development of labour productivity in five service industries in Europe, the United States, and Japan. Vis-à-vis a group of peer countries, labour productivity in service industries is relatively low in Finland. We further find that the respective gap in capital intensity (capital stock to hours worked) is even greater. Using the growth accounting framework and panel estimations, we find that in 1995–2023 overall capital intensity was positively associated with the level of labour productivity in European countries. This is also the case if the capital stock is disaggregated into four parts with ICT, R&D, software and database, and all other capital analysed separately. Furthermore, the annual change in overall capital intensity, or capital deepening, is positively associated with the change in labour productivity in service industries. The association is weaker when capital is disaggregated into parts, with the strongest association found for the traditional capital stock, while the results for ICT and IPP capital deepening depend on the service industry analysed. |
| Keywords: | Service industries, Productivity, Capital intensity, ICT, R&D, Software and databases |
| JEL: | C23 O14 O30 O47 |
| Date: | 2025–03–27 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:127 |