Post n°213
Published on 04/28/2021

By Rafael Cezar and Fabio Grieco

While the principle of a European Carbon Border Adjustment Mechanism (CBAM) has been agreed on, discussions as to its calibration are still underway. This post presents three scenarios in which the calculation of the tax base and the scope of the mechanism vary. These choices have significant consequences: the gains in terms of CO2 reduction can vary by a factor of three, depending on the scenario chosen.

Chart 1: Short-term impact of the CBAM on EU imports and import-related emissions
Chart 1: Short-term impact of the CBAM on EU imports and import-related emissions Source: authors' calculations, OECD, CEPII, Cezar & Polge (2020).
Post n°212
Published on 04/23/2021

by Sylvérie Herbert, Maria Sole Pagliari and Adrian Penalver

For several decades, advanced economies have seen their borrowing costs decrease, including amid the coronavirus pandemic. This is especially true at the long end of the yield curve. Even long-term bonds issued by some private corporations in the euro area trade at negative interest rates. This decrease in borrowing costs primarily reflects a decline in the natural real rate of interest due to population ageing and slower productivity growth, as well as the more recent compression of the long end of the yield curve resulting from central banks’ bond purchases.

Chart 1: 10-year sovereign yields and asset purchases
Chart 1: 10-year sovereign yields and asset purchases Sources: Bloomberg, ECB
Post n°211
Published on 04/22/2021

By Benjamin Bureau, Anne Duquerroy, Mathias Lé and Frédéric Vinas (Banque de France), Julien Giorgi and Suzanne Scott (INSEE)

Since the start of the public health crisis, the Banque de France and INSEE have compiled a monthly estimate of the loss of activity in each sector, notably via their monthly economic surveys and their monitoring of high-frequency data. The monthly surveys have proved to be a reliable and almost real-time indicator of the impact of the restrictions, and have on the whole been confirmed by the national quarterly accounts. In parallel, the Banque de France and INSEE have launched a joint project which differs from these surveys but complements them in terms of methodology: using real turnover data for individual firms (measured using VAT returns), they compare ex-post the “activity shock” with a counterfactual of what turnover would have been without the. This makes it possible to carry out an analysis at a more granular level, within individual sectors. This blog post presents the first results of this project, which are consistent with our monthly surveys. They will be supplemented with an ex-post analysis of firms’ cash and financial positions.

Chart 1 – Evolution of the aggregate shock to activity over 2020
Chart 1 – Evolution of the aggregate shock to activity over 2020 Source: VAT data (DGFiP) and authors’ calculations.
Post n°210
Published on 04/14/2021

By Oustry Antoine, Erkan Bünyamin, Svartzman Romain and Weber Pierre-François

The securities accepted as a guarantee under the Eurosystem collateral framework are not, in aggregate, “aligned” with the climate targets of the Paris Agreement. They can therefore be considered to be exposed to so-called “transition” risks related to climate change. Technically, it would be possible to ensure that the collateral pools pledged by each counterparty are more aligned, but this raises methodological questions.

Chart 1: Coverage rate and climate alignment of the pools of collateral pledged by Eurosystem counterparties, based on the methodology developed by Carbon4Finance
Chart 1: Coverage rate and climate alignment of the pools of collateral pledged by Eurosystem counterparties, based on the methodology developed by Carbon4Finance Sources: Carbon4Finance, Eurosystem and authors’ calculations.
Post n°209
Published on 03/25/2021

By Emmanuel Cerclé, Hervé Le Bihan and Michaël Monot

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)
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.
Post n°208
Published on 03/12/2021

By Samuel Bieber

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)
Chart 1: Excess reserves exempted and non-exempted from negative remuneration (EUR billion) Source: Banque de France, European Central Bank
Post n°207
Published on 03/08/2021

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
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.
Post n°206
Published on 03/03/2021

By Stefan Gebauer, Jean-François Ouvrard and Camille Thubin

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)
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.
Post n°205
Published on 02/23/2021

By Olivier de Bandt, Jean-Charles Bricongne and Lionel Fontagné

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)
Chart 1: Uncertainty and openness of the euro area current account (1999-2019)
Post n°204
Published on 02/17/2021

By Raphaël Cancé, Jean-François Ouvrard and Camille Thubin

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
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)
Post n°203
Published on 02/10/2021

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
Chart 1: Breakdown by sector of the impact on real value added in France and in the rest of the EU Source: Authors' calculations.
Post n°202
Published on 02/03/2021

By Jérémi Montornès and Marie-Baïanne Khder

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)
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

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