Climate change and central banks: what role for monetary policy?
In: Climate policy, Band 22, Heft 6, S. 770-787
ISSN: 1752-7457
In: Climate policy, Band 22, Heft 6, S. 770-787
ISSN: 1752-7457
We investigate which variables have supported growth in the euro area over the last 30 years. This is a challenging task due to dimensionality problems: a large set of potential determinants, limited data, and the prospect that some variables could be non-stationary. We assemble a set of 35 real, financial, monetary, and institutional variables for nine of the original euro area countries covering the period between 1990Q1 and 2016Q4. Using the Weighted-Average Least Squares method, we gather clues about which variables to select. We quantify the impact of various determinants of growth in the short and long runs. Our main finding is the positive and robust role of EU institutional integration on long-term growth for all countries in the sample. An improvement in competitiveness matters for growth in the overall euro area in the long run, as well as a decline in sovereign and systemic stress. Debt over GDP negatively influences growth for the periphery, but only in the short run. Property and equity prices have a significant impact only in the short run, whereas the loans to non-financial corporations positively affect the core euro area. An increase in global GDP also supports growth in the euro area.
BASE
In: Journal of European integration, Band 37, Heft 7, S. 769-786
ISSN: 0703-6337
World Affairs Online
In: Journal of European integration: Revue d'intégration européenne, Band 37, Heft 7, S. 769-786
ISSN: 1477-2280
This paper presents a European Index of Regional Institutional Integration (EURII), which maps developments in European integration from 1958 to 2014 on the basis of a monthly dataset. EURII captures what we call: (i) the "Common Market Era", which lasted from 1958 until 1993; and (ii) the first twenty years of the "Union Era" that started in 1994, but gained new impetus in response to the euro area crisis. The paper complements the economic narratives of the crisis with an institutional approach highlighting the remedies to the flaws in the initial design of Economic and Monetary Union (EMU). In fact, since 2010, EMU's institutional framework has been substantially reformed. While work on EMU's new governance is still in progress, the broad contours of a "genuine union" have been outlined in the Four Presidents' Report of December 2012. The report envisages a more effective economic union, a fiscal union, a financial union, and a commensurate political union. The aim of the EURII index is threefold: (i) to provide a tool to synthesise and monitor the process of European institutional integration since 1958 and, in particular, track institutional reforms since 2010; (ii) to expand a previous integration index by showing that monetary unification – which was initially understood as "the cherry on the Internal Market pie" – implied a major discontinuity in the process and nature of European integration, that is, a new "pie on the cherry"; and (iii) to offer a tool for further research, policy analysis and communication.
BASE
In: Occasional paper series 144
In: Journal of common market studies: JCMS, Band 50, Heft 6, S. 881-898
ISSN: 1468-5965
AbstractThe world has been struck by a mutating systemic financial crisis that is unprecedented in terms of financial losses and fiscal costs, geographic reach, and speed and synchronization. The crisis from August 2007 to date can be divided into three main phases: the financial turmoil from August 2007 to the collapse of Lehman Brothers; the global financial crisis from September 2008 until spring 2010; and the eurozone sovereign debt crisis from spring 2010 to the current period. While each phase has brought significant challenges, the current sovereign debt crisis has been the most critical stage for the eurozone. It has brought unprecedented challenges for the monetary union and triggered extraordinary adjustments in both monetary policy and institutional arrangements at the eurozone level. The purpose of this article is to outline the features of each crisis phase, to describe the actions taken by the European Central Bank (ECB) during each phase and to explain the rationale for such measures. It also discusses the need to strengthen further the economic union in order to guarantee the sustainability of the monetary union of the eurozone. In this respect, it is argued that the recent institutional adjustments made at the European Union level would have been necessary independently of the financial crisis.
In: Journal of common market studies: JCMS, Band 50, Heft 6, S. 881-898
ISSN: 0021-9886
World Affairs Online
The world has been struck by a mutating systemic financial crisis that is unprecedented in terms of financial losses and fiscal costs, geographic reach, and speed and synchronisation. The crisis from August 2007 to date can be divided into three main phases: the financial turmoil from August 2007 to the collapse of Lehman Brothers; the global financial crisis from September 2008 until spring 2010; and the euro area sovereign debt crisis from spring 2010 to the current period. While each phase has brought significant challenges, the current sovereign debt crisis has been the most critical stage for the euro area. It has brought unprecedented challenges for the monetary union and triggered extraordinary adjustments in both monetary policy and institutional arrangements at the euro area level. The purpose of this article is to outline the features of each crisis phase, to describe the actions taken by the European Central Bank (ECB) during each phase and to explain the rationale for such measures. It also discusses the need to strengthen further the economic union in order to guarantee the sustainability of the monetary union of the euro area. In this respect, it is argued that the recent institutional adjustments made at the EU level would have been necessary independently of the financial crisis.
BASE
In: Journal of common market studies: JCMS, Band 48, Heft 2, S. 319-345
ISSN: 1468-5965
AbstractThe monetary policy framework of the Eurosystem has received considerable attention in recent years: there is a well‐established and rich literature on the price stability objective, as well as the two‐pillar strategy of the ECB. This is less the case for the regular monetary policy preparations and the decision‐making process. This article provides an insider's roadmap to the procedures to prepare monetary policy decisions by the Governing Council of the ECB. The architecture of the Eurosystem permits the processing and analysis of a vast amount of national and aggregate economic, financial and monetary data and assists the Governing Council in taking monetary policy decisions – and this each month. Our aim is to describe the role of a variety of committees and sub‐committees that prepare and support the monetary policy decision‐making process. A federal organization is at the heart of this process. At the top of the pyramid of information there is a two‐tiered committee structure with the Executive Board taking the lead in bringing together most of the economic, financial and monetary analyses, and the Governing Council utilizing that information, for its monthly economic and monetary analyses.
In: Journal of common market studies: JCMS, Band 48, Heft 2, S. 319-345
ISSN: 0021-9886
World Affairs Online
In: Economic papers 302
The ECB's monetary policy has received considerable attention in recent years. This is less the case, however, for its regular monetary policy preparation and decision-making process. This paper reviews how the factors usually considered as critical for the success of a central banking system and the federal nature of the Eurosystem are intertwined with its overall design and the functioning of its committee architecture. In particular, it examines the procedures for preparing monetary policy decisions and the role of the decision-making bodies and the committees therein. We suggest that technical committees, involving all national central banks (NCBs), usefully contribute to the regular processing of a vast amount of economic, financial and monetary data, as well as to the consensus building at the level of the Governing Council. A federal organisational structure, including a two-tier committee structure with the Executive Board taking the lead in preparing the monetary policy decisions and the Governing Council in charge of the decisions with collective responsibility for them, as well as committee work at the various hierarchical levels, contributes to the efficiency of the ECB's monetary policy decision-making, and thereby facilitates the maintenance of price stability in the euro area. A fully-fledged committee structure has also contributed to the smooth integration of non-euro area Member States into the Eurosystem's monetary policy decision-making process.
BASE
In: Occassional paper series no 79 (January 2008)
The ECB's monetary policy has received considerable attention in recent years. This is less the case, however, for its regular monetary policy preparation and decision-making process. This paper reviews how the factors usually considered as critical for the success of a central banking system and the federal nature of the Eurosystem are intertwined with its overall design and the functioning of its committee architecture. In particular, it examines the procedures for preparing monetary policy decisions and the role of the decision-making bodies and the committees therein. We suggest that technical committees, involving all national central banks (NCBs), usefully contribute to the regular processing of a vast amount of economic, financial and monetary data, as well as to the consensus building at the level of the Governing Council. A federal organisational structure, including a two-tier committee structure with the Executive Board taking the lead in preparing the monetary policy decisions and the Governing Council in charge of the decisions with collective responsibility for them, as well as committee work at the various hierarchical levels, contributes to the efficiency of the ECB's monetary policy decision-making, and thereby facilitates the maintenance of price stability in the euro area. A fully-fledged committee structure has also contributed to the smooth integration of non-euro area Member States into the Eurosystem's monetary policy decision-making process.
In: Working paper series 742