Students, the fourth Eco Notepad competition will close on the 30th of June. You can still be part of the debate and take part in the Eco Notepad competition in order to imagine “The future market Job”. The two best posts will be published on this site and will receive a prize of 3,000 and 1,500 euros.
Post n°275
Published on 06/23/2022

By Paul Bouche, Julien Demuynck, Erwan Gautier, Frédérique Savignac

For the first time, the Banque de France is publishing the results of a survey on business leaders’ inflation expectations, collected since the end of 2021. One-year inflation expectations have increased since the beginning of the year and their median stands at 5% in the second quarter of 2022. Longer-term expectations (3-5 years) are also rising, but more slowly, with a median of 3%. This survey was conducted prior to the ECB's monetary policy normalisation announced on 9 June, which is expected to contribute to the gradual "re-anchoring" of inflation expectations.

Chart 1: Changes in inflation expectations since end-2021 in France   (median in %)
Chart 1: Changes in inflation expectations since end-2021 in France (median in %) Note: median weighted by the number of employees in the company and the value added in the company's sector, 1% of the highest responses are not taken into account in the calculations. Source: IE-Banque de France survey.
Post n°274
Published on 06/17/2022

By Stéphane Dees, Jean-François Ouvrard and Pierre-François Weber

Modelling is a key element in the Eurosystem's climate change action plan. Macroeconomic analysis and the preparation of monetary policy decisions are based on quantitative work in which models play a central role.

Chart 1: Economic impacts of climate change
Chart 1: Economic impacts of climate change Source : Authors’ analysis
Post n°273
Published on 06/10/2022

By Céline Grislain-Letrémy  and Bertrand Villeneuve (Université Paris-Dauphine)

The rising costs of natural disasters over the last decades are largely explained by urbanisation in exposed areas. Land-use and insurance policies can limit this urbanisation. Simple frequently-observed policies, with prohibited red zones and zones without insurance tariff differentiation, are relatively efficient. It is critical that red zones be redefined to reflect changes in climate risks or population developments.

Chart 1: New Orleans
Chart 1: New Orleans Source: pixabay.com
Post n°272
Published on 06/03/2022

In order to assess the quality of its research output, the Banque de France has constructed its own ranking of academic journals in economics and finance. The objective is to encourage the production of research on issues relevant to the Banque de France. This post explains the ten principles underlying the construction of this ranking.

Chart 1: Evolution of the number of authors of academic papers affiliated with one of the Eurosystem central banks on the REPEC website
Chart 1: Evolution of the number of authors of academic papers affiliated with one of the Eurosystem central banks on the REPEC website Source: Authors' calculations based on central bank ranking data from the REPEC website
Post n°271
Published on 05/25/2022

Eric Monnet, Angelo Riva and Stefano Ungaro

During the Great Depression, bank runs in France were characterised by a flight from banks to savings institutions, which were perceived as safer. Here, we identify and quantify the effects of these bank runs and analyse the conditions that led them to deepen the economic crisis.

Chart 1: Total deposits in banks and savings institutions, 1920-36
Chart 1: Total deposits in banks and savings institutions, 1920-36 Source : Baubeau, Monnet, Riva et Ungaro (2021)
Post n°270
Published on 05/16/2022

By Tristan Jourde

The Russian invasion of Ukraine led to a change in the structure of interconnections between financial markets. While the contagion effects have remained limited overall, the war has brought about new negative correlations between certain commodity indices (aluminium, oil, gold, silver, wheat) on the one hand, and equity markets, particularly in Europe, on the other.

Chart 1: Interconnections prior to the war in Ukraine Source: Refinitiv Datastream; author’s calculations. ISO codes : Australia (AUS), Canada (CAN), France (FRA), Germany (DEU), Italy (ITA), Japan (JPN), Netherlands (NLD), United Kingdom (GBR), United States (USA).
Post n°269
Published on 05/13/2022

So far in 2022, industry-level wage bargaining has generally resulted in wage increases of around 3% compared with rises of close to 1% in recent years. Inflation, which has been higher since the end of 2021, and the recent hike in the national minimum wage (NMW) are contributing to this stronger growth in negotiated wages.

Chart 1: Change in negotiated wages, the NMW and inflation (year-on-year % change)
Chart 1: Change in negotiated wages, the NMW and inflation (year-on-year % change) Source : INSEE (consumer price index – all households, and NMW), Banque de France (300 national, regional and departmental industries – private sector – wage floors).
Post n°268
Published on 05/11/2022

By Sebastian Stumpner

This blog post examines to what extent the recent surge in international transport costs has fuelled US import price inflation. While we find a moderate effect at the aggregate level, there are significant differences across products that are largely driven by the degree of containerisation.

Chart 1: The share of transport costs has increased only for containerised goods
Chart 1: The share of transport costs has increased only for containerised goods Source: Author’s calculations based on data from TradeDataMonitor.
Post n°267
Published on 04/28/2022

Rich households consume digital goods more intensively than poor households. As digitalisation makes some goods and services cheaper, higher-income households benefit more. Using US household data, this blog argues that the relative price effect of digitalisation is sizeable and amplifies the effects that digitalisation has on income inequality.

Chart 1: ICT intensity of consumption basket along the income distribution in the US
Chart 1: ICT intensity of consumption basket along the income distribution in the US Source: Arvai and Mann (2021) Note: The graph shows the share of information and communication technology (ICT) in the consumption basket by income percentile for different sub-periods.
Post n°266
Published on 04/20/2022

By Hyacinthe Buisson, Henri Fraisse and Matthias Laporte

The increasing use of artificial intelligence (AI) or machine learning (ML) techniques could allow banks to develop new credit risk models. These techniques could lead to substantial reductions in capital requirements. However, the opaque nature of these algorithms and the governance challenges they raise might make their adoption less attractive.

Chart 1: Neural network models could lead to substantial  reductions in capital requirements
Chart 1: Neural network models could lead to substantial reductions in capital requirements Source: Fraisse and Laporte (2022) forthcoming in the Journal of Banking and Finance.
Post n°265
Published on 04/01/2022

By Stéphane Dees, Jean-François Ouvrard and Pierre-François Weber

Macroeconomic and financial market disruptions linked to climate change and transition policies could affect the conduct of monetary policy. Climate risks could impair the monetary policy transmission channel, limit the monetary policy space for conventional tools and complicate the assessment of the monetary policy stance.

Chart 1: Inflation-output growth trade-off under a disorderly transition scenario
Chart 1: Inflation-output growth trade-off under a disorderly transition scenario Source: European Central Bank (ECB) calculations
Post n°264
Published on 03/28/2022

By Léa Le Quéau, Agathe Madeline and Paul Sabalot

The European Union is going to issue close to EUR 800 billion of debt to finance the NextGenerationEU recovery plan, making it one of the largest public debt issuers in the euro area. European debt has some key advantages that would make it ideal as a benchmark asset. However, it still needs to reach the critical mass required to ensure a sufficiently liquid secondary market.

Chart 1: NGEU debt yields are comparable to those of the highest rated euro area issuers Source: Authors’ calculations using Bloomberg data and median of Moody’s, S&P and Fitch ratings (data as at 18/03/2022).

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