Download or read book Medium term Growth at risk in the Euro Area written by Jan Hannes Lang and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial stability indicators can be grouped into financial stress indicators that reflect heightened spreads and market volatility, and financial vulnerability indicators that reflect credit and asset price imbalances. Based on a panel of euro area countries, we show that both types of indicators contain information about downside risks to real GDP growth (growth-at-risk) in the short-term (1-year ahead). However, only vulnerability indicators contain information about growth-at-risk in the medium-term (3-years ahead and beyond). Among various vulnerability indicators suggested in the literature, the Systemic Risk Indicator (SRI) proposed by Lang et al. (2019) outperforms in terms of in-sample explanatory power and out-of-sample predictive ability for medium-term growth-at-risk in euro area countries. Shocks to the SRI induce a rich "term structure" for growth-at-risk: downside risks to real GDP growth are reduced in the short-term, but over the medium-term the effect reverses and downside risks to real GDP growth go up considerably. We also show that using cross-country information from the panel of euro area countries can improve the out-of-sample forecasting performance of growth-at-risk for the euro area aggregate.
Download or read book Euro Area Policies written by International Monetary Fund. European Dept. and published by International Monetary Fund. This book was released on 2015-07-27 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Selected Issues paper discusses the risks of low growth and inflation over the medium term for the euro area. It examines the consequences of longer term trends that predate the crisis and the progress made in addressing the crisis legacies of high unemployment and debt. The paper illustrates, in a downside scenario, how low potential growth and crisis legacies leave the euro area vulnerable to the risks of stagnation. The weak medium-term prospect and limited policy space leave the euro area vulnerable to shocks that could lead to a prolonged period of low growth and inflation. Model simulations suggest that a modest shock to investor confidence could push up risk premia and real interest rates, as policy space is constrained at the zero lower bound and fiscal policy space to provide stimulus is limited. Moreover, the lingering crisis legacies of high debt and unemployment could amplify the original shocks, creating a bad feedback loop and keeping the economy stuck in equilibrium of stagnation.
Download or read book Risks of Stagnation in the Euro Area written by Huidan Lin and published by International Monetary Fund. This book was released on 2016-01-22 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the risks of stagnation over the medium term in the euro area. It examines the consequences of longer-term growth trends that predate the crisis and the progress made in addressing the crisis legacies of high unemployment and debt. The paper illustrates in a downside scenario, how low potential growth and crisis legacies leave the euro area vulnerable to a negative shock that tips the economy into a prolonged slowdown.
Download or read book Euro Area Policies written by International Monetary Fund. European Dept. and published by International Monetary Fund. This book was released on 2016-07-08 with total page 95 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Selected Issues paper discusses the impact of workforce aging on productivity in the euro area. The euro area population has aged considerably over the past few decades, and the process is expected to accelerate in the years ahead. At the same time, labor productivity growth in the euro area has been sluggish, posing risks to long-term growth prospects. It is estimated that workforce aging could significantly retard total factor productivity (TFP) growth over the medium to long term. Given current demographic projections from the Organisation for Economic Co-operation and Development, the aging of the workforce in the euro area could lower TFP growth by about 0.2 percentage points each year between 2014 and 2035. Appropriate policies can, however, mitigate the adverse effects of aging.
Download or read book EMU at Risk written by Daniel Gros and published by CEPS. This book was released on 2005 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This is the seventh annual report issued by the CEPS Macroeconomic Policy Group since it was reconstituted at the start of economic and monetary union in 1999. This distinguished group of economists argues that a combination of slow growth, inadequate policy responses and newly emerging intra-area divergences are putting EMU at risk. Against this background, the MPG recommends that the ECB should downgrade its short-term concern about cyclical economic developments and pursue a monetary policy aimed at preserving the value of the euro in the long-term. Moreover, it urges the core countries to urgently return to fiscal discipline, both in their own interest and to set an example that would allow them to exert pressure on potential soft currency countries to do the same."--CEPS website.
Download or read book Adjustment in Euro Area Deficit Countries written by Mr.Thierry Tressel and published by International Monetary Fund. This book was released on 2014-07-14 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Imbalances within the euro area have been a defining feature of the crisis. This paper provides a critical analysis of the ongoing rebalancing of euro area “deficit economies” (Greece, Ireland, Portugal, and Spain) that accumulated large current account deficits and external liability positions in the run-up to the crisis. It shows that relative price adjustments have been proceeding gradually. Real effective exchange rates have depreciated by 10-25 percent, driven largely by reductions in unit labor costs due to labor shedding. While exports have typically rebounded, subdued demand accounts for much of the reduction in current account deficits. Hence, the current account balance of the euro area as a whole has shifted into surplus. Internal rebalancing has come with subdued activity—notably very high unemployment in the deficit economies—and made continued adjustment more difficult. To advance rebalancing further, the paper emphasizes the need for: (1) macroeconomic policies that support demand and bring inflation in line with the ECB’s medium-term price stability objective; (2) continued EMU reforms (banking union) to ensure proper financial intermediation; and (3) structural reforms in product and labor markets to improve productivity and support the reallocation of resources to tradable sectors.
Download or read book Report on Financial Structures written by European Central Bank and published by . This book was released on 2002 with total page 376 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book International Monetary Fund Annual Report 2017 written by International Monetary Fund and published by International Monetary Fund. This book was released on 2017-10-05 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the past financial year, the IMF’s 189 member countries faced a number of pressing challenges. IMF work on these challenges - slower trade, declining productivity, gender inequality, inclusive growth, and debt management - is a central focus of this 2017 Annual Report.
Download or read book Evaluating Medium Term Forecasting Methods and Their Implications for EU Output Gap Calculations written by and published by . This book was released on 2017 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper sheds light on two specific, but interlinked, questions - firstly, how do the EU's, medium term actual GDP growth rate forecasts compare, in terms of accuracy and biasedness, with those of the EU's Member States, in their annual Stability and Convergence Programme (SCP) updates; and secondly, should medium term forecasts be allowed to influence the short run output gap and structural balance calculations used in the EU's fiscal surveillance procedures. Regarding the first question, the paper concludes that the EU's medium term forecasts are equally as good, and arguably better, than those of the SCP's both with respect to accuracy and biasedness. Regarding the second question, due to the relatively rapid loss in forecast accuracy as the time horizon lengthens; the paper suggests that using more forecast information should be avoided in the output gap and structural balance calculations. Extending the forecast horizon to be used in the output gap calculations could exacerbate an existing optimistic bias with respect to the supply side health of the EU's economy, thereby enlarging the risk of procyclicality problems, especially in the upswing phase of cycles, where most of the large fiscal policy errors tend to occur.
Download or read book Economic Convergence in the Euro Area Coming Together or Drifting Apart written by Mr.Jeffrey R. Franks and published by International Monetary Fund. This book was released on 2018-01-23 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine economic convergence among euro area countries on multiple dimensions. While there was nominal convergence of inflation and interest rates, real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency. Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis. New euro area members, in contrast, have seen real income convergence. Business cycles became more synchronized, but the amplitude of those cycles diverged. Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes. Income convergence requires reforms boosting productivity growth in lagging countries, while cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies, together with steps to deepen the single market.
Download or read book Europe and Global Imbalances written by Philip R. Lane and published by International Monetary Fund. This book was released on 2007-06 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.
Download or read book Economic Policy Coordination in the Euro Area written by and published by . This book was released on 2015 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European Semester is a well-intentioned attempt to foster macroeconomic policy coordination between Member states. However, the concept of euro area fiscal stance lacks operational instruments, the concept of macroeconomic imbalances is loosely defined, the Macroeconomic Imbalance Procedure (MIP) is weakened by its complexity, and its blurred frontier with respect to the Europe 2020 process further obscures the Semester. The euro area is still not well equipped to design a consistent macroeconomic policy and reduce the risk of long-lasting stagnation. We propose to use the future European Fiscal Board to promote an integrated view of fiscal policy, to make the MIP symmetric to the Stability and Growth Pact (SGP), with a flagship indicator (the current account) complemented with a limited number of indicators related to medium-term imbalances. Growth-enhancing policies would all fall under the Europe 2020 process ("integrated guidelines"), with alternating building blocks.
Download or read book A Banking Union for the Euro Area written by Rishi Goyal and published by International Monetary Fund. This book was released on 2013-02-12 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: The SDN elaborates the case for, and the design of, a banking union for the euro area. It discusses the benefits and costs of a banking union, presents a steady state view of the banking union, elaborates difficult transition issues, and briefly discusses broader EU issues. As such, it assesses current plans and provides advice. It is accompanied by three background technical notes that analyze in depth the various elements of the banking union: a single supervisory framework; a single resolution and common safety net; and urgent issues related to repair of weak banks in Europe.
Download or read book Annual Report on the Euro Area 2007 written by and published by . This book was released on 2007 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European Commission calls on euro-area members to reduce public deficits and debts, taking advantage of the current robust economic growth. In 2006, the euro-area economy saw its fastest growth rate since 2000. Employment also grew, pushing the overall number of new jobs created since 1999 to 10 million more than generated in the US in the same period.
Download or read book Annual Report on the Euro Area 2006 written by European Commission. Directorate-General for Economic and Financial Affairs and published by . This book was released on 2007 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first annual report on the euro area provides an economic analysis of issues raised in the annual statement on the euro area. Chapter 1 focuses on macroeconomic developments, highlighting the factors driving the economic recovery and summarising the upside and downside risks to the economic outlook. Chapter 2 explores the positive contribution of macroeconomic policies to the euro-area's economic recovery and the need for an adjustment in the macroeconomic-policy setting in view of the improved outlook. Chapter 3 discusses the importance of well-functioning product, labour and capital markets for a dynamic and smooth functioning EMU and their contribution to dealing with unwarranted cross-country growth and inflation differences. Chapter 4 describes the emergence of the euro as a global currency, the euro-area's developing role in international financial institutions and fora and the challenges posed to the world economy by unsustainable current-account imbalances. Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank. COM(2006)392 final.The first Annual Statement on the Euro Area calls for a prudent macroeconomic policy mix delivering price stability and reduced fiscal imbalances in view of the more positive economic outlook for the euro area, coupled with structural reforms to improve the functioning of product, labour and capital markets and measures to deepen the Internal Market. On external issues, the need for the euro area to project a strong voice on the world economic stage is emphasised in view of the growing importance of the euro as a global currency and the challenges posed by, inter alia, global imbalances.
Download or read book The Term Structure of Growth at Risk written by Tobias Adrian and published by International Monetary Fund. This book was released on 2018-08-02 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using panel quantile regressions for 11 advanced and 10 emerging market economies, we show that the conditional distribution of GDP growth depends on financial conditions, with growth-at-risk (GaR)—defined as growth at the lower 5th percentile—more responsive than the median or upper percentiles. In addition, the term structure of GaR features an intertemporal tradeoff: GaR is higher in the short run; but lower in the medium run when initial financial conditions are loose relative to typical levels, and the tradeoff is amplified by a credit boom. This shift in the growth distribution generally is not incorporated when solving dynamic stochastic general equilibrium models with macrofinancial linkages, which suggests downside risks to GDP growth are systematically underestimated.
Download or read book Breaking the Bank A Probabilistic Assessment of Euro Area Bank Profitability written by Selim Elekdag and published by International Monetary Fund. This book was released on 2019-11-22 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the determinants of profitability across large euro area banks using a novel approach based on conditional profitability distributions. Real GDP growth and the NPL ratio are shown to be the most reliable determinants of bank profitability. However, the estimated conditional distributions reveal that, while higher growth would raise profits on average, a large swath of banks would most likely continue to struggle even amid a strong economic recovery. Therefore, for some banks, a determined reduction in NPLs combined with cost efficiency improvements and customized changes to their business models appears to be the most promising strategy for durably raising profitability.
