Eco Notepad features educational articles that present the research, studies and economic expertise of the Banque de France. The blog is aimed at students, professionals, journalists and academics. Some articles will be devoted to analyses carried out by the Bank's branch network, on specific topics. The opinions expressed are those of the authors and do not necessarily reflect the position of the Banque de France, the Eurosystem, or the institutions employing these authors.
Eco Notepad editors asks authors submitting a post to the blog to confirm that they have no conflicts of interest. If one of the authors of a blog benefits of an external financing, he should state the sources of financial support for the particular research it describes.
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Central banks' balance sheets have grown significantly, as a result of the "non-standard" monetary policies conducted in response to the 2008 crisis and the Covid-19 crisis. Reflecting the net asset purchase programmes in place, they are still expanding. However, over the longer term, their size could stabilise and then gradually decline once inflation has consistently returned to close to its target. Adjusting the size of their balance sheets should nevertheless remain in central banks' toolbox.
Chart1: Balance sheets of the Eurosystem, the FED and the BoJ (in amounts and as a % of GDP) Source: ECB, FED, BoJ, Eurostat Note: Top panel: amount in billions of euros (G€), dollars (G$), and yen (G¥). Bottom panel: as a % of GDP.
The two-tier system, which has been in place for over a year in the euro area, exempts part of banks' excess reserve holdings with the central bank from negative remuneration. This system aims to support the bank-based transmission of monetary policy. It has not unduly influenced money market rates.
Chart 1: Excess reserves exempted and non-exempted from negative remuneration (EUR billion) Source: Banque de France, European Central Bank
The Covid-19 crisis has had a profound impact on the organisation of labour. Women have been on the front line both in tackling the virus and in looking after their family and relatives in these difficult times. Their participation in the labour market has not been significantly affected, thanks both to public aid policies and to their efforts in balancing their professional and private responsibilities.
Chart 1: Change in the employment rate by gender, comparison between the Great Recession and the Covid crisis – Q4 2008 and 2019 = 100 Source: INSEE. Key: The female employment rate fell by 0.3 percentage point between Q4 2019 and Q1 2020.
We study the role of precautionary savings in the recent rise in French household savings. Using different approaches, we show that elevated uncertainty contributed to the surge in savings in 2020, notably in the first lockdown. For the whole year, however, uncertainty effects were small compared to the contribution of administrative spending constraints.
Figure 1: Household savings ratio in France (in % of disposable income) Source: INSEE (most recent observation: 2020Q4). Note: Household savings in per cent of gross disposable income. Most recent observation: 2020Q4.
The environment that economic policy makers face today is characterised by both a large amount of uncertainty and a high level of globalisation. This blog post highlights a perception of increasing uncertainty by economic agents when external shocks become more frequent, and a faster transmission of these shocks when the economy is more open, or when traded goods are produced within more sophisticated "value chains". Globalisation has thus heightened the macroeconomic impact of uncertainty on the real economy, amplifying the consequences of international uncertainty shocks.
Chart 1: Uncertainty and openness of the euro area current account (1999-2019)
The health crisis has caused an unprecedented economic shock. In this post, we describe its different channels using the FR-BDF forecasting model. In 2020, shocks to private domestic demand and to trade performance dominate. In 2021 and 2022, public support is expected to speed up economic recovery, but supply shocks should slow down the rebound.
Chart 1: Deviation of projected activity in December 2020 from the pre-crisis path Source: Banque de France (FR-BDF model, December 2020 macroeconomic projections)
How would the impact of a European carbon tax on the French economy differ from that in the rest of the EU? The medium-run impact on value added would be 20% lower in France than in the rest of the EU. This divergence would stem more from differences in the sectoral structure of the economy (the weight of those sectors most affected, inter-sectoral flows) than from differences in carbon intensity between homologous sectors.
Chart 1: Breakdown by sector of the impact on real value added in France and in the rest of the EU Source: Authors' calculations.
The authors belonged to the Economic Studies and National Accounts Directorate at Insee when they wrote the article from which this blog post is derived. The authors would like to thank D. Blanchet for his helpful comments when writing the article. They remain solely responsible for any errors and omissions.
Irish GDP growth over the recent period has been strongly influenced by transfers from US multinationals. These transactions have increased since 2015. Changes in Irish GDP and its components now reflect multinationals’ choice of location in addition to cyclical fluctuations.
Chart 1: Quarterly changes in GDP and GNI in volume (in %, adjusted for seasonal and working day variations) Source: Central Statistics Office (CSO), national accounts
By Dominique Durant, Kevin Parra Ramirez, Geneviève Toubol
The descriptive data associated with large enterprise identifiers (LEIs) provide up-to-date information on groups’ ownership structure, as well as on the legal form and location of their operations, including those in off-shore financial centres (OFCs). Extending the obligation to have an LEI would thus help to make global financial transactions more transparent.
Chart 1: Distribution of locations of foreign subsidiaries, by parent company nationality
Interest rate benchmarks, which are used to price money-market instruments as well as numerous financial contracts (bank overdrafts, real estate loans, bond debt, etc.), are only relevant if they are reliable and representative of the actual financing conditions experienced by economic agents. At the global level, they underpin some USD 350 trillion worth of financial instruments and contracts.
Chart 1: Evolution of interest rate benchmarks in the euro area Sources: EMMI and ECB.
The health restrictions put in place in France and the rest of Europe have obliged firms and workers to resort to teleworking on a massive scale. By breaking down some of the existing barriers to home-working, this shock will probably mark a turning point in the use of teleworking. This in turn has major implications for workers, businesses and the economy.
Chart 1: Cross-department heterogeneity in potential for teleworking Source: DADS, Dingel and Neiman (2020) and DARES (2019)
Eco Notepad celebrated its fourth birthday in December 2020: we’ve published nearly 200 posts in English and French and our readership keeps on growing! 2020 was a reminder of just how important it is to have rapidly available, relevant information in order to make sense of economic events as they happen.