Post n°260
Published on 03/11/2022

By Bruno Cabrillac and Vincent Fleuriet

The Covid-19 crisis, combining supply and demand shocks with associated inflationary pressures, provides an opportunity to reassess the advantages of fixed exchange rate regimes over flexible or intermediate exchange rate regimes, in particular in Sub-Saharan Africa (SSA). Indeed, in this context, the anchoring of the currency via the fixed exchange rate gives more monetary policy space…

Inflation in Sub-Saharan Africa
Inflation in Sub-Saharan Africa Source: IMF (World Economic Outlook, Oct. 2021, dotted line = forecast) and Banque de France calculations.
Post n°259
Published on 03/08/2022

In several sectors, including academic economics, considerable efforts have been made over at least the past two decades to combat gender discrimination. One of the most frequently debated policies over recent years has been positive discrimination. Hiring or promoting an equally qualified woman over a man is argued to have a positive impact on all individuals in the profession as it will reduce prejudice and provide role models for younger women. Despite these efforts, women still appear to be vastly underrepresented amongst researchers in economic and earn far less credit than men for their academic work.

Figure 1: Proportion of female economists according to RePEc
Chart 1: Proportion of female economists according to RePEc Source: RePEc, Female representation in Economics and academic Rankings by country and for the world, as of February 2022.
Post n°258
Published on 03/03/2022

By Cristina Jude, Antoine Lalliard and Pierre Sicsic.

The employment rate in France has exceeded the level reached at end-2019. This is a French particularity. It nevertheless remains low compared to other countries, in particular for young workers and men over 60. Its growth over the past twenty years had been slower than in the other major countries until recently.

Chart 1: Employment rate deviations from Q4 2019
Chart 1: Employment rate deviations from Q4 2019 Source: Eurostat & BLS
Post n°257
Published on 02/25/2022

As part of the first climate pilot exercise, the Banque de France and the ACPR developed a series of models to quantify the financial risks associated with different climate transition scenarios. We present some of the results in this post. In some scenarios, the oil industry's probability of default is expected to increase by 400 bps, its credit spread by 30 bps and its stock market valuation is expected to decrease by 40-50% in 2050.

Chart 1: Changes in probabilities of default for the most affected sectors (PDs in bps in deviation from the orderly scenario)
Chart 1: Changes in probabilities of default for the most affected sectors (PDs in bps in deviation from the orderly scenario) Source: authors’ calculations.
Post n°256
Published on 02/11/2022

The increase in the money holdings by the non-financial sector in the euro area and the United States during the pandemic is explained by the strong increase in financial savings linked to public transfers and the sustained growth of loans, and in particular (in the euro area), government-guaranteed loans. Portfolio shifts strengthened the monetary dynamics in the United States, while they dampened them in the euro area.

Chart 1. Sources of change in money holdings by households in the euro area (Change in annual flows as a % of GDP)
Chart 1. Sources of change in money holdings by households in the euro area (Change in annual flows as a % of GDP) Source: Euro area sector accounts, ECB.
Post n°255
Published on 02/08/2022

By Annabelle de Gaye and Noëmie Lisack

In order to evaluate the financial risks linked to climate change, the Banque de France and ACPR have developed a suite of models that quantify adverse low-carbon transition scenarios for France. While the short-term macroeconomic effect is limited, the key impacts are located at the sector level and are strongly heterogeneous. A second blog post will examine the issue of financial stability.

Chart 1: Impact of disorderly transitions on total and sectoral activity in France in 2050 (compared with an orderly transition)
Chart 1: Impact of disorderly transitions on total and sectoral activity in France in 2050 (compared with an orderly transition) Source: Authors’ calculations
Post n°254
Published on 02/02/2022

By Antonin Bergeaud, Jean-Benoît Eymeoud, Thomas Garcia and Dorian Henricot

Corporate real estate market participants are starting to adjust to the take-off of teleworking in France. We show that teleworking already has an impact on the office real estate market. In French départements more exposed to teleworking, the Covid-19 crisis has led to higher vacancy rates, less construction, and lower prices. Forward-looking indicators suggest that market participants are expecting a lasting shift towards teleworking.

Chart 1a: Teleworking index by département
Chart 1a: Teleworking index by département Source: Bergeaud et al., 2021
Post n°253
Published on 01/31/2022

By Julien André, Yannick Kalantzis , Antoine Lalliard and Paul Vertier

The harmonised measure of inflation currently published in the euro area does not take into account costs related to owner-occupied housing. There are several ways of capturing these costs, including the “imputed rent” and “net acquisition” approaches. Incorporating these costs into the measure of inflation produces different results depending on the method used, and the size and sign of the impact vary over time.

Chart 1: HICP and HICP augmented with imputed rents and with the acquisition price of housing in the euro area (% change year-on-year)
Chart 1: HICP and HICP augmented with imputed rents and with the acquisition price of housing in the euro area (% change year-on-year) Source: Eurostat for the HICP, Banque de France calculations for the augmented HICP. By convention, a weighting of 15% is applied to the price of owner-occupied housing in the euro area.
Post n°252
Published on 01/21/2022

Relative to demand factors, supply-side disruptions during the Covid-19 pandemic explain about 60% of longer delivery times and significantly dampened manufacturing output since 2020 in France. According to historical regularities, bottlenecks are expected to unwind in the course of 2022, while forecasts are surrounded by a high degree of uncertainty given the unusual origins of disruptions.

Chart 1: Shock decomposition – Suppliers’ delivery time and output PMI France
Chart 1: Shock decomposition – Suppliers’ delivery time and output PMI France Source: Markit, own calculations. Note: Demeaned index value and ppt. contributions, index increase = faster deliveries. Most recent observation: 2021M12.
Post n°251
Published on 01/18/2022

Both monetary and fiscal expansions have been needed during the past recent period in the euro area to sustain demand and inflation, mitigate the costs of the pandemic crisis and ensure a robust recovery. Conflicts of objectives between the two policies could, however, arise again in the future, in particular as a result of the ongoing accumulation of public debts and the large expansion of the Eurosystem’s balance sheet. Building on the work done during the recent ECB strategy review, this blog recalls the recent monetary and fiscal actions and presents some of the trade-offs for the post-pandemic period.

Chart 1. Public debt to GDP ratio in the euro area and for its largest countries (left hand side axis) and evolution of the Eurosystem balance sheet over GDP (right hand size axis)
Chart 1. Public debt to GDP ratio in the euro area and for its largest countries (left hand side axis) and evolution of the Eurosystem balance sheet over GDP (right hand size axis) Source: Eurostat, National accounts, Eurosystem data. Authors’ calculation.
Post n°250
Published on 01/14/2022

The Fed’s monetary policy influences firms’ debt composition. Conventional monetary policy (CMP) easing increases firms’ bank loans and reduces their bond issuance, while unconventional monetary policy (UMP) easing stimulates corporate bond issuance. UMP affects the US corporate debt structure through a portfolio-rebalancing channel, rather than a bank lending one.

Chart 1: Evolution of loans and debt securities of US non-financial corporations
Chart 1: Evolution of loans and debt securities of US non-financial corporations Source: Financial Accounts of the United States, L.103.
Post n°249
Published on 01/07/2022

By Gábor Fukker, Thibaud Piquard, Aurore Schilte and Matthias Sydow

The growth of non-bank financial intermediation calls for a more holistic risk assessment encompassing the entire financial system and the interactions between financial intermediaries. The incorporation of investment funds into a stress test for banks further increases the impact of a shock in terms of depletion of bank capital by 1%.

Chart 1: Representation of securities holdings networks for euro area banks and funds.
Chart 1: Representation of securities holdings networks for euro area banks and funds. Source: Sydow et al. (2021). Note: Each dot is an entity of all possible sectors. Each line shows that a bank (blue dot) or a fund (purple dot) holds a security issued by another entity.

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