By Jade Al Yahya (Banque de France)

Since 2018, the ACPR and the AMF have studied how financial institutions adjust their business practices to demographic ageing. Senior consumers are particularly likely to experience vulnerability. Yet, according to preliminary results, a commercial offer based solely on an age criterion, the most commonly used today, is far from satisfactory.

Chart 1. Population projection for the European Union by age category.
Chart 1. Population projection for the European Union by age category. Source: Eurostat.

Monetary policy decisions require a prior assessment of different economic scenarios, including the most extreme ones. Assessed on the basis of the Banque de France's Financial Conditions Index, financial risks that are likely to weigh on the distribution of future euro-area GDP growth appear limited.

Expected distribution of euro area quarterly GDP growth between 2001 and 2018
Chart 1: Expected distribution of euro area quarterly GDP growth between 2001 and 2018 Sources: Eurostat, Banque de France, authors' calculations.

By Guillaume Gaulier (Banque de France), Aude Sztulman (Paris-Dauphine University) and Deniz Ünal (CEPII)

The weakening of global value chain dynamics is considered as one of the causes of the slowdown in world trade since the 2008 crisis. However, measured as the share of trade in parts and components in the volume of world trade, and given the evolution of the business cycle, the development of international value chains continued after the crisis.

Chart 1: Share of Parts & Components (P&C) in manufacturing world trade in volume
Chart 1: Share of Parts & Components (P&C) in manufacturing world trade in volume Source: Authors' calculations based on CEPII WTFC data (about 5,000 products for the bilateral trade of over 200 countries) and IMF data (world output gap).

By Laurent Abraham and Jean-Baptiste Gossé (Banque de France)

On its 20th anniversary, the euro is enjoying remarkably high levels of support. However, a paradox exists in public opinion: each country appears to believe that the single currency is more beneficial for the other countries. Improving the functioning of national and European institutions could mitigate this paradox and strengthen attachment to the euro.

The benefits of the euro are more widely recognised at the European level than at the national level.
Chart 1: The benefits of the euro are more widely recognised at the European level than at the national level. Source: Flash Eurobarometer. Note: Average gap between the perceived benefits of the euro for the EU and for the individual countries, 2011-2018, excluding Latvia and Lithuania due to the period under review. The darker the green, the larger the gap.

By Grégory Levieuge (Banque de France)

A credible central bank can more easily anchor agents’ expectations, and therefore long-term interest rates. Thus credibility would reduce the need to make an intensive use of key rates. There is indeed an inverse relationship between credibility and interest rate volatility.

Inverse relationship between credibility and interest rate volatility
Chart 1: Inverse relationship between credibility and interest rate volatility Note: "Credibility" is the indicator proposed by Levieuge & Al. (2018), ranging from 0 (minimum credibility) to 1 (maximum credibility). The conditional variance of the interest rate reflects the volatility of the main monetary policy instrument.

By Sophie Guilloux-Nefussi, Sophie Haincourt, Edouard Jousselin (Banque de France), and Anne Perrot (Council of Economic Analysis - CAE)

The growing role of global digital players with innovative business models is shaking up traditional markets. Does the digital economy constitute a fundamental break with the industries of the past? In theory, the economic principles underlying competition policy still stand. But given the acceleration of network effects and the use of vast quantities of personal data, competition authorities must adapt their control tools and improve their digital skills.

Source : www.shutterstock.com (515267014)

By Marie-Anne Rouquier

Eco Notepad extends the scope of its analyses to France’s regions with contributions from the Bank’s network. Thus, occasionally, Eco Notepad will feature posts devoted to an analysis of an industry, a local economic institution or a product of a particular region. This post is the first of its kind.

Salt is a precious commodity, essential for human beings. Used throughout history as a currency of exchange and a means of payment, it was a key product of the economy until the 19th century. Thanks to its saltworks, Franche-Comté enjoyed remarkable prosperity for over a thousand years by mining the "white gold" of its subsoil. Now restored and reconverted, they have been given a new lease of life.

Arc-et-Senans site
Arc-et-Senans site Source: Michel Pierre

By Gilbert Cette, Jimmy Lopez and Jacques Mairesse

The positive effect on productivity of reducing product market regulation and employment protection legislation has been extensively documented and analysed, leading to many structural reforms in OECD countries. On the basis of new measures of rent creation and rent sharing, we show that further product market deregulation could substantially increase productivity, notably in France and Italy.

Chart 1: Expected total factor productivity gains from product market deregulation
Chart 1: Expected total factor productivity gains from product market deregulation Sources: Authors’ calculations assuming a switch to the most pro-competitive regulations

The US Tax Cuts and Jobs Act implemented in 2018 impacts both the domestic and the international activity of US corporates. Nevertheless, the corporate tax cut has only had a transitory effect on the composition of US foreign direct investment income, without having so far delivered any significant improvement in the trade balance.

Chart 1. US primary income
Chart 1. US primary income Source: US Bureau of Economic Analysis (BEA).

The banking sector assesses the credit risks associated with borrowers. What are the consequences to be expected from the production of information by a third party? Exploiting a change in the rating methodology of the Banque de France, this post shows how the disclosure of more detailed information on companies can increase the supply of credit for their benefit.

Chart: Companies with a fine-tuned rating obtain more credit
Chart: Companies with a fine-tuned rating obtain more credit

To mark International Women’s Day, the Banque de France organised a roundtable on 7 March on the economic impact of gender inequalities, with the participation of Sylvie Goulard, Deputy Governor of the Banque de France, Isabelle Hudon, Ambassador of Canada in France, and Peter Praet, member of the Executive Board of the European Central Bank. This post echoes these discussions, and concludes that there is urgency to act at all levels.

By Grâce Constant, Elisabeth Fonteny and Meghann Puloc’h

The blue economy encompasses all economic activities related to oceans, seas and coasts. Thanks to its overseas territories, France has the second largest marine zone in the world. World population growth and trade contribute to the development of the blue economy, which can be a driver of sustainable and innovative growth for Overseas France provided certain structural constraints are overcome.

Chart 1: Variations in the weight of the blue economy in Overseas France in 2015(*)
Chart 1: Variations in the weight of the blue economy in Overseas France in 2015(*) Sources: Insee, ISPF, ISEE, Acoss (**)

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