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Niccolò Battistini
Economics
- Division
Business Cycle Analysis
- Current Position
-
Lead Economist
- Fields of interest
-
Macroeconomics and Monetary Economics,Economic Growth
- Education
- 2013-2017
PhD in Economics, Rutgers University, New Brunswick, United States
- 2010-2013
MA in Economics, Rutgers University, New Brunswick, United States
- 2006-2010
BA in Economics, Bocconi University, Milan, Italy
- 2002-2006
BA in Philosophy, University of Florence, Florence, Italy
- Professional experience
- 2024-
Lead Economist - Business Cycle Analysis Division, Directorate General Economics, European Central Bank
- 2024
Principal Economist - Business Cycle Analysis Division, Directorate General Economics, European Central Bank
- 2020-2023
Senior Economist - Business Cycle Analysis Division, Directorate General Economics, European Central Bank
- 2018-2019
Economist - Business Cycle Analysis Division, Directorate General Economics, European Central Bank
- 2017-2018
Economist - Fiscal Policy Division, Directorate General Economics, European Central Bank
- 2015-2017
Graduate Programme Participant, Fiscal Policy Division - Directorate General Economics, European Central Bank
- 2014-2015
Graduate Programme Participant - Oversight Division, Directorate General Market Infrastructure and Payments, European Central Bank
- Awards
- 2014
Alfred S. Eichner Prize in Economics in recognition of an out-standing student working on the most path-breaking and innovative dissertation, Department of Economics, Rutgers University
- Teaching experience
- 2011-2014
Macroeconomic Theory - Department of Economics, Rutgers University, New Brunswick, United States
- 17 June 2024
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 4, 2024Details
- Abstract
- This article examines recent sectoral developments in the euro area and their near-term implications for the business cycle. After a brief review of the existing literature, it presents new evidence for the euro area. It first uses a simple aggregate measure of cross-sectoral shifts in activity to assess the short-term impact of these shifts on the business cycle. It then explores the leading-indicator properties of sectoral developments as regards aggregate activity and explains the correlation between these properties and the position of sectors within the production structure of the economy. Overall, the results of this article point to moderate momentum in economic activity in the euro area in the near term.
- JEL Code
- E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
E27 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Forecasting and Simulation: Models and Applications
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 22 April 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2024Details
- Abstract
- This box examines the current level of housing investment in the euro area as a whole, and in the four largest euro area economies, in relation to the evolution of the user cost of housing. To this end, the box proposes a novel quarterly measure of the user cost of housing by combining quarterly data on mortgage rates, long-term risk-free interest rates and expected house price growth with information on tax rates and structural characteristics of residential construction and housing finance. Furthermore, we use an empirical model to relate the level of housing investment to the user cost of housing. The model estimates suggest that euro area housing investment at the end of 2023 was still above the level implied by the user cost of housing despite a significant decline and with marked differences across countries. This highlights the possibility of further weakness in euro area housing investment, which could persist for some time if there is no significant decline in the user cost of housing.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
R21 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Housing Demand
- 9 January 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2023Details
- Abstract
- Manufacturing activity has been weak since the end of 2021, while market services activity has started to slow down more recently. This box uses a lead-lag analysis to examine how developments in manufacturing are correlated with services activity. It then assesses the implications of the recent monetary policy tightening for the near-term outlook across sectors through the lens of an empirical model. The lead-lag analysis shows that current dynamics in manufacturing contain information for near-term dynamics in services activity. The model-based assessment shows that monetary policy shocks have a larger and faster impact on manufacturing than on services and are consistent with a broadening of the impact of monetary policy tightening across sectors during 2023.
- JEL Code
- C11 : Mathematical and Quantitative Methods→Econometric and Statistical Methods and Methodology: General→Bayesian Analysis: General
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 9 November 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 7, 2023Details
- Abstract
- This box first analyses a bottom-up composite index of business activity expectations across sectors derived from the European Commission’s business survey. It then assesses the role of demand-side and supply-side drivers of the index, using disaggregated data on expectations and limits to production from the same survey. The bottom-up composite index of business activity expectations appears to be a good leading indicator of real GDP. According to the index, business activity expectations have deteriorated since mid-2022, with the decline occurring earlier than the weakening of economic growth in the euro area. An empirical model is then used to assess the impact of drivers on business activity expectations. The model captures historical business cycle patterns. It shows that recent trends in business activity expectations were driven by deteriorating demand, partly offset by improved supply. A granular model-based decomposition suggests that tightening financial conditions and flagging product demand were the main drag on business activity expectations across sectors in the third quarter of 2023.
- JEL Code
- C11 : Mathematical and Quantitative Methods→Econometric and Statistical Methods and Methodology: General→Bayesian Analysis: General
E10 : Macroeconomics and Monetary Economics→General Aggregative Models→General
E60 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General
- 2 November 2023
- THE ECB BLOGDetails
- JEL Code
- D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
H31 : Public Economics→Fiscal Policies and Behavior of Economic Agents→Household
- 28 September 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2023Details
- Abstract
- This box analyses the recent dispersion of economic activity across countries and sectors and assesses the role that reopening effects have played following the lifting of COVID-19 restrictions last year. The box shows that the dispersion of growth across euro area countries was still relatively high at the beginning of 2023, while the dispersion of growth across sectors was in line with pre-pandemic levels. The greater dispersion of growth across countries appears to be related to the continued higher dispersion of growth in contact-intensive services, which declined from the peak seen during the pandemic but remained at a historically high level, as contact-intensive services output continued to grow at a stronger pace in countries where contact-intensive services account for a larger share of the economy. According to an econometric model for the euro area as a whole, reopening effects remained a significant driver of the growth differential between manufacturing and contact-intensive services in the first quarter of 2023 but weakened overall compared with 2022. Over the course of 2023 the effects of the reopening of the economy should continue to fade and other forces, such as tighter financing conditions, should become more prominent.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 8 August 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2023Details
- Abstract
- This box analyses the factors determining household perceptions of the attractiveness of housing as an investment. It finds that these perceptions differ depending on the demographic and economic characteristics of households. Using a linear probability regression model, the box also shows that higher perceptions of housing as a good investment are associated with higher expectations for economic growth, personal income growth and house price growth, as well as lower expectations for inflation and mortgage rates. Combining the model estimates with the average expectations of households surveyed in the CES at each point in time, the box derives an expectations-based indicator of households’ perceptions of housing as a good investment. This indicator has declined significantly since June 2021, mainly driven by expectations of higher mortgage interest rates, reflecting the impact of tighter monetary policy and financial conditions in general.
- JEL Code
- R2 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis
R3 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location
- 29 June 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2023Details
- Abstract
- Since the outbreak of the pandemic, households in the euro area and the United States have accumulated a remarkable stock of savings, which exceeds the pre-pandemic trend and provides a boost to private consumption. This box documents how, in the euro area, the stock of excess savings is mainly held in illiquid assets, which are not readily available for consumption. It also shows that, despite some differences in the euro area and the United States, excess savings are concentrated among wealthy individuals, who generally have a lower marginal propensity to consume. Using a calibrated general equilibrium model with heterogeneous agents, the box shows that the consumption impulse from the immediate use of such excess savings is dampened by the anticipation of a future expansion in demand, as households smooth their consumption patterns over time. Overall, the results suggest that the consumption impulse from excess savings accumulated during the pandemic has declined in both economies since the second half of 2021 and has been lower in the euro area compared with the United States.
- JEL Code
- E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 17 May 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2023Details
- Abstract
- This box analyses the dynamics of housing investment in the euro area and the United States and discusses the impact of the recent monetary policy tightening on future housing investment in the euro area. Building on the literature, the box argues that deeper mortgage markets, as reflected in higher levels of household mortgage indebtedness, securitisation and leverage, strengthen the transmission of monetary policy shocks to housing investment. In the euro area, where the mortgage markets are less deep, housing investment is found to react relatively less to monetary policy shocks than in the United States. As a result, housing investment in the euro area has been recently more sheltered from monetary policy tightening than housing investment in the United States. Despite this relative resilience of housing investment in the euro area, the box argues that most of the impact of tighter monetary policy in the euro area is still to materialise, thus clouding the outlook for housing investment.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 27 March 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2023Details
- Abstract
- This box assesses the uneven economic effects of the recent surge in energy prices across households and firms in the euro area. The box first uses disaggregated data to disentangle the effects of the deterioration in the energy terms of trade on final expenditures and aggregate income, allocating the implied purchasing power losses across the household income distribution. The box then uses structural economic models to identify the energy price shock underlying the recent terms-of-trade deterioration and to gauge its direct, indirect and second-round effects on the overall economy. As regards the results, the different exposures of households to higher energy costs and lower income indicate a relatively larger impact of the energy terms-of-trade deterioration on lower-income households. The direct and indirect effects of the energy price shock mainly impacted private consumption on the expenditure side and non-energy sectors on the income side. The second-round effects spread the impact more evenly across private consumption and investment, with the government partially shielding private sector disposable income.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
- 17 November 2022
- WORKING PAPER SERIES - No. 2752Details
- Abstract
- This paper assesses the role of the housing market in the transmission of conventional and unconventional monetary policy across euro area regions. By exploiting a novel regional dataset on housing-related variables, a structural panel VAR analysis shows that monetary policy propagates effectively to economic activity and house prices, albeit in a heterogeneous fashion across regions. Although the housing channel plays a minor role in the transmission of monetary policy to the economy on average, its importance increases in the case of unconventional monetary policy. We also explore the determinants of the diverse transmission of monetary policy to economic activity across regions, finding a larger impact in areas with lower labour income and more widespread homeownership. An expansionary monetary policy can thus be effective in mitigating regional inequality via its stimulus to the economy.
- JEL Code
- D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
- 10 October 2022
- MACROPRUDENTIAL BULLETIN - FOCUS - No. 19Details
- Abstract
- This focus proposes a novel framework, a combined price quantity model, which features demand and supply long-run relationships in the housing market, to assess the status of house prices and housing investment relative to equilibrium levels. It shows that in the first quarter of 2022 euro area house prices are estimated to be more than 10% above their equilibrium level, while housing investment is close to its equilibrium.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
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
R30 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→General
- 19 September 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2022Details
- Abstract
- Against a background of rising mortgage rates, this box investigates the impact of changes in mortgage rates on euro area house prices and housing investment through linear and non-linear local projections. The model evidence suggests that housing market dynamics are very sensitive to mortgage rates, especially in a low interest rate environment. At the current juncture, this points to a significant risk of a marked slowdown of the euro area housing market. Yet, pandemic-induced shifts in housing preferences, which are not captured by the models, could counteract higher mortgage rates and could potentially increase uncertainty surrounding the housing outlook.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
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
- 3 August 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2022Details
- Abstract
- This box reviews wage share dynamics and potential second-round effects on inflation at times of energy price increases. Compared to a well-known episode with some similar features – the OPEC oil embargo in October 1973 – recent energy price increases have so far had limited implications for labour income and the GDP deflator. This contained impact reflects the relatively mild terms-of-trade loss and subdued real wage dynamics today compared to the 1970s. However, the experience in the United States in both episodes shows that significant increases in the GDP deflator may arise even in the presence of weak real wage growth. A model-based analysis finds that the transmission of energy price increases to inflation, and in particular the emergence of second-round effects, has been more limited or even absent since the start of monetary union. Nevertheless, high and persistent inflation increases the risk of second-round effects materialising via higher wages and profit margins.
- 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
E25 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Aggregate Factor Income Distribution
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
- 22 June 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2022Details
- Abstract
- This box assesses the extent to which current private sector forecasts point to expectations of stagflation in the euro area reminiscent of the stagflation episode in the 1970s. Stagflation refers to a protracted period of flat or negative growth combined with high or increasing inflation, as witnessed in the main advanced economies in the 1970s. Private forecasters do not currently envisage a period of stagflation for the euro area.
- JEL Code
- E20 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→General
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
N14 : Economic History→Macroeconomics and Monetary Economics, Industrial Structure, Growth, Fluctuations→Europe: 1913?
- 28 April 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2022Details
- Abstract
- This box reviews the dynamics of household savings as derived from deposit flows across the wealth distribution from the onset of the COVID-19 pandemic in the first quarter of 2020 to the surge in inflation that started in the second quarter of 2021. An empirical model disentangles the underlying drivers of household deposit flows across the wealth distribution. Pandemic-related restrictions initially led to an increase in deposit flows, while increases in inflation arising mostly from cost-push shocks subsequently weighed on deposit flows, raising savings inequality in both cases. It is likely that developments in deposit dynamics and savings inequality will continue to be shaped by pandemic-related restrictions and cost-push inflation, as well as uncertainty caused by the war in Ukraine.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
R20 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→General
Q11 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Agriculture→Aggregate Supply and Demand Analysis, Prices
- 25 April 2022
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 3, 2022Details
- Abstract
- The recent increase in energy prices raises the question of the extent to which households will reduce their consumption in response. This article reviews the drivers of the macroeconomic transmission of higher energy prices. It finds that in the first half of 2021 households regarded most of the rise in energy prices as being driven by stronger aggregate demand, leading to a recovery in consumption. However, since the summer of 2021 price rises caused, among other things, by disruptions in the supply of energy have increasingly weighed on household spending. This article also analyses the distributional impact of higher energy prices. Because poorer households spend a relatively large percentage of their income on energy, their purchasing power is particularly affected when energy prices surge. While monetary policy may have a limited role to play in counteracting the fallout from supply-driven changes in energy prices, targeted fiscal policies seem well suited to addressing the impact on the most affected households.
- JEL Code
- C23 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Panel Data Models, Spatio-temporal Models
C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
D39 : Microeconomics→Distribution→Other
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
- 9 November 2021
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 7, 2021Details
- Abstract
- This article reviews the developments in the euro area housing market during the various phases of the coronavirus (COVID-19) pandemic and compares them with previous crises. During the first wave of the COVID-19 pandemic, the introduction of mandatory and voluntary restrictions on economic agents’ mobility had a strong impact on housing market activity. However, in contrast to the global financial crisis and the sovereign debt crisis, the upward trend in house prices and housing loans continued unabated, which was also thanks to resilient demand for housing by households. During the second and third waves, the forceful support of monetary, fiscal and macroprudential policy measures amid more targeted containment measures ensured favourable financing conditions and helped increase the attractiveness of housing for investment purposes, while supply-side bottlenecks may have exerted some upward pressure on house prices. The outlook for the euro area housing market remains dependent on uncertainties related to pandemic developments, policy support and structural changes.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
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
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
- 8 November 2021
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 7, 2021Details
- Abstract
- This box assesses the recent dynamics and outlook for economic activity in more contact-intensive services in the euro area, which were particularly adversely affected by the pandemic. Following the marked deterioration during the initial phase of the COVID-19 pandemic, value added in those services rebounded strongly in the second and third quarters of 2021, while remaining well below its pre-pandemic level. The ample slack in these subsectors is also confirmed by the significant role of demand as a factor limiting activity, which in turn appears to be affected by pandemic restrictions. The gradual resolution of the public health crisis and the ensuing reopening of the economy are expected to support a continued recovery in more contact-intensive services. In the medium term, structural factors, such as changes in households’ preferences and working arrangements, will also play a role in shaping the recovery path of consumer services.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 25 March 2021
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2021Details
- Abstract
- This box shows how the economic impact of containment measures adopted in response to the pandemic differed across sectors and countries, and over time. The impact is assessed with a cross-sector vector autoregression (VAR) model. The results confirm that containment measures had a relatively large impact on sectors with non-teleworkable, contact-intensive occupations, such as recreational services. They also show that the impact of the measures varied across countries largely due to the different economic structures and containment policies. There is evidence that economic agents learned how to cope with the restrictions over time. This suggests that more targeted measures, coupled with behavioural responses by households and firms, helped limit the economic costs of containment policies during the renewed wave. Looking ahead, the large divergence in the economic impact of restrictions across sectors is likely to persist at least in the short term.
- JEL Code
- E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
E27 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Forecasting and Simulation: Models and Applications
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 5 January 2021
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2020Details
- Abstract
- The exceptional contraction in economic activity induced by the outbreak of the coronavirus (COVID-19) has warranted an update of the standard toolkit used to forecast euro area real GDP in real time. This box describes the adjustments and the additions to the standard toolkit developed by ECB staff to account for the dramatic change in statistical and economic relationships due to COVID-19. The use of each individual tool is subject to a considerable degree of judgment as to the type of adjustment needed to best capture the sharp movements in economic activity. These tools have provided helpful insights into forecasting euro area real GDP in real time, even if they imply some shortcomings.
- JEL Code
- C18 : Mathematical and Quantitative Methods→Econometric and Statistical Methods and Methodology: General→Methodological Issues: General
E27 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Forecasting and Simulation: Models and Applications
- 1 May 2020
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2020Details
- Abstract
- This box presents illustrative ECB staff scenarios for the impact of the COVID-19 pandemic on economic activity in the euro area. The unprecedented uncertainty surrounding the developments and economic impact of the COVID-19 pandemic warrants an analysis based on alternative scenarios. These illustrative ECB staff scenarios point to a drop in euro area GDP of between 5% and 12% in 2020. At its trough, quarterly real GDP growth could be as low as around -15% in the second quarter of 2020 under a severe scenario.
- JEL Code
- E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E33 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
- 28 February 2020
- RESEARCH BULLETIN - No. 67Details
- Abstract
- With monetary policy constrained by the effective lower bound (ELB), the debt sustainability implications of a fiscal expansion are a pressing concern. In a general equilibrium model of fiscal limits, we find that the adverse impact of a fiscal expansion on sustainability is muted at the ELB compared with normal times. Getting the timing of public spending increases right, however, is essential for containing sustainability risks.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of Fiscal and Monetary Policy, Stabilization, Treasury Policy
- 17 April 2019
- WORKING PAPER SERIES - No. 2268Details
- Abstract
- This paper analyzes the impact of monetary policy on public debt sustainability through the lens of a general equilibrium model with fiscal limits. We find that the mere possibility of a binding ZLB may have detrimental effects on debt sustainability, as a kink in the Laffer curve induces a dead-weight loss in the present discounted value of future primary surpluses. Moreover, debt sustainability improves with monetary policy activeness, that is, with the elasticity of the interest rate to changes in inflation and the output gap. On this basis, we assess the trade-off between economic stabilization and debt sustainability depending on the monetary policy environment. In normal times, large public spending shocks may engender perverse debt dynamics and cause economic contractions. At the ZLB, a muted trade-off between stabilization and sustainability instead expands the fiscal margin, especially if coupled with a commitment to a more active monetary policy during normal times.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E61 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Policy Objectives, Policy Designs and Consistency, Policy Coordination
E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of Fiscal and Monetary Policy, Stabilization, Treasury Policy
- 6 November 2018
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 7, 2018Details
- Abstract
- The housing market has important macroeconomic and macroprudential implications for the euro area economy. In view of the duration of the ongoing upturn in euro area house prices and residential investment, which started at the end of 2013, analysing the state of the housing market is particularly informative. This article discusses the ongoing housing market upturn, from a chronological and fundamental perspective. It also explores a selected set of indicators that can potentially inform on the state of the housing market, elaborating on the demand and supply factors underpinning the current upturn, as well as their relative importance.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
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
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
- 24 May 2016
- FINANCIAL STABILITY REVIEW - ARTICLEFinancial Stability Review Issue 1, 2016Details
- Abstract
- Financial institutions can build up leverage via the use of derivatives and securities financing transactions (SFTs). In order to limit the build-up of excessive leverage and the associated liquidity risks, as well as the pro-cyclical effects of margin and haircut setting practices, the macro-prudential toolkit needs to be extended. This special feature presents the general case for setting macro-prudential margins and haircuts using theoretical and empirical evidence on the effectiveness of various design options. Furthermore, it addresses implementation and governance issues that warrant attention when developing a macro-prudential framework for margins and haircuts. It concludes by recommending a way forward that is intended to inform the ongoing policy discussions at the European and international levels.
- JEL Code
- G00 : Financial Economics→General→General
- 2024
- European Economic Review
- 2023
- SUERF Policy Brief
- 2020
- VoxEU
- 2014
- Economic Policy