GDP

Isabel Schnabel: From laggard to leader? Closing the euro area’s technology gap

Retrieved on: 
Saturday, February 17, 2024
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This paper, by means of a DSGE model including heterogeneous firms and banks, financial frictions and prudential regulation, first shows the need of climate-related capital requirements in the existing prudential framework.

Key Points: 
  • This paper, by means of a DSGE model including heterogeneous firms and banks, financial frictions and prudential regulation, first shows the need of climate-related capital requirements in the existing prudential framework.
  • We further show that relying on microprudential regulation alone would not be enough to account for the systemic dimension of transition risk.

Atlas of Impunity's second edition tracks abuse of power worldwide and includes historical data set

Retrieved on: 
Friday, February 16, 2024

MUNICH, Feb. 16, 2024 /PRNewswire-PRWeb/ -- Eurasia Group and the Chicago Council on Global Affairs released the second edition of the Atlas of Impunity today at the Munich Security Conference. The Atlas is the first-ever comprehensive index tracking the abuse of power across five key dimensions: unaccountable governance, abuse of human rights, conflict, economic exploitation, and environmental degradation.

Key Points: 
  • The Atlas is the first-ever comprehensive index tracking the abuse of power across five key dimensions: unaccountable governance, abuse of human rights, conflict, economic exploitation, and environmental degradation.
  • The Atlas defines impunity as the exercise of power without accountability, built on 66 statistical indicators drawn from 26 validated sources.
  • The data underpinning the Atlas is curated from universal, independent, and credible sources with annually updated statistics.
  • In this second edition, the Atlas adds a decade of historical data, allowing for comparisons within countries and regions across years that illuminate where the battle between impunity and accountability is being won or lost.

EverWind's Leading Canadian Green Hydrogen and Ammonia Project Will Generate Substantial Economic & Structural Benefits, Major Study Finds

Retrieved on: 
Thursday, February 15, 2024

HALIFAX, NS, Feb. 15, 2024 /CNW/ - EverWind Fuels ("EverWind"), a pioneering developer of an Atlantic Canadian green fuels hub based across Nova Scotia & Newfoundland & Labrador, today announced the release of EverWind's Economic Impact Assessment on its Nova Scotia based green hydrogen and ammonia project ("Nova Scotia Project").

Key Points: 
  • HALIFAX, NS, Feb. 15, 2024 /CNW/ - EverWind Fuels ("EverWind"), a pioneering developer of an Atlantic Canadian green fuels hub based across Nova Scotia & Newfoundland & Labrador, today announced the release of EverWind's Economic Impact Assessment on its Nova Scotia based green hydrogen and ammonia project ("Nova Scotia Project").
  • The Economic Impact Assessment, which was supported by Deloitte Canada, found significant economic and environmental benefits from EverWind's Nova Scotia Project, including the full green energy production cycle from renewable power generation (wind & solar) to green hydrogen-to-ammonia production.
  • Capacity Development and Innovation – The Nova Scotia Project will enhance Canada's green energy innovation, while supporting Nova Scotia's labour market.
  • Future phases of the project, which include additional onshore and offshore wind development, are set up to generate further economic benefits to Canada and Nova Scotia.

Ghana’s new vehicle tax aims to tackle pollution – expert unpacks how it’ll work and suggests reforms

Retrieved on: 
Thursday, February 15, 2024

It’s only the third African country to introduce an explicit carbon tax, after South Africa and Mauritius.

Key Points: 
  • It’s only the third African country to introduce an explicit carbon tax, after South Africa and Mauritius.
  • The tax is intended to address harm associated with vehicle emissions.

Why is the government taxing emissions?

  • The proposed vehicle emissions tax under the Emissions Levy Act, 2023 is one of several environmental fiscal reform measures being introduced by the government.
  • Environmental tax reform aims to shift the burden of taxation to environmentally damaging activities, such as pollution.
  • Ghana’s government believes the vehicle emissions tax is a more cost-effective and equitable way to make sure the polluter pays, prevent harm and protect the public.

What has been done so far to reduce air pollution?

  • In 2021, the government introduced a sanitation and pollution levy on petrol and diesel under the Energy Sector Levies Act to raise revenue to improve air quality, among other goals.
  • The levy accrued GHS452 million (US$55 million) in 2022.
  • These measures weren’t well designed from a tax policy point of view as they were not tied to actual vehicular emissions.

How should an emissions tax work and how does the new tax work?

  • Ideally, the tax should be based on the actual carbon dioxide and other pollutant emissions from a vehicle, measured in grams of carbon dioxide per kilometre.
  • Each car owner would pay an annual tax for the amount of CO₂ their car emits above that threshold.
  • The tailpipe emissions test would be done during the annual roadworthiness check by Ghana’s Driver Vehicle and Licensing Authority.

What are the objections to the tax and can they be accommodated?

  • There is also no clear plan for what the tax will be used for after it is collected.
  • Several critics, especially in the manufacturing and transport sector, say there are already too many taxes.
  • But the government is under pressure to raise domestic revenue as part of its International Monetary Fund conditionalities.

How does Ghana’s tax compare with others in Africa?

  • For example South Africa introduced a carbon emissions tax on vehicles in 2010.
  • A 2018 study indicated that South Africa’s CO₂ emissions tax had failed to influence which new cars consumers were buying.
  • Ghana’s proposed emissions tax for vehicles up to 3 litre engine capacity is not unreasonable when benchmarked to South Africa’s.

Can the tax be implemented and will it meet its objectives?

  • The existing sanitation and pollution levy must first be scrapped and replaced with the vehicle emissions tax.
  • The tax bands should conform to emission standards set by the Ghana Standards Authority and the vehicle licensing authority.
  • Having both the sanitation and pollution levy and vehicle emissions tax operating at the same time amounts to double taxation.

What is the tax collection picture in Ghana?

  • Ghana tax collection is currently around 14% of GDP.
  • Its aim is to get to 18% by 2028, comparable with its peers such as Senegal, Namibia, Togo and Rwanda.


Theophilus Acheampong is affiliated with the IMANI Centre for Policy and Education in Accra, Ghana. He has also consulted for the Government of Ghana on environmental fiscal reform in a private capacity.

Pyxis Tankers Announces Closing of Modern Dry Bulk Vessel Acquisition & Commercial Update

Retrieved on: 
Thursday, February 15, 2024

The five year amortizing bank loan is priced at Term SOFR +2.35% and is secured by, among other things, the vessel.

Key Points: 
  • The five year amortizing bank loan is priced at Term SOFR +2.35% and is secured by, among other things, the vessel.
  • The vessel has been named the “Konkar Asteri” and is expected to commence commercial operations shortly.
  • The acquisition of the “Konkar Asteri” provides the opportunity to expand our commercial footprint with a fleet of eco-efficient, scrubber-fitted mid-sized dry bulk carriers.
  • We expect to employ our dry bulk vessels under a mix of T/C’s and spot voyages.”

Kyriba’s Quarterly Currency Impact Report: Currency Impact Reported by North American and European Companies Totaled $30 Billion

Retrieved on: 
Thursday, February 15, 2024

Kyriba’s latest Currency Impact Report (CIR) found that the currency impact on earnings reported by both North American and European companies totaled $30 billion in Q3 2023 ($16.01 billion headwinds and $13.92 billion tailwinds).

Key Points: 
  • Kyriba’s latest Currency Impact Report (CIR) found that the currency impact on earnings reported by both North American and European companies totaled $30 billion in Q3 2023 ($16.01 billion headwinds and $13.92 billion tailwinds).
  • Highlights from the Q3 2023 Kyriba Currency Impact Report include:
    Publicly traded North American companies reported $16.01 billion in headwinds.
  • Publicly traded North American companies reported $13.92 billion in tailwinds.
  • The average earnings per share (EPS) impact reported by North American companies in Q3 2023 was $0.05, five times greater than the industry standard MBO of less than $0.01 EPS impact.

Bluevine Survey finds more than 60% of American Small Businesses Expect to Hire in 2024

Retrieved on: 
Thursday, February 15, 2024

As a result, the overwhelming majority (93%) of small businesses (SMBs) surveyed posted some level of profitability in 2023.

Key Points: 
  • As a result, the overwhelming majority (93%) of small businesses (SMBs) surveyed posted some level of profitability in 2023.
  • As a key indicator of growth, SMBs are poised to see an uptick in overall headcount growth in 2024, with 67% of US small businesses surveyed planning on making new hires.
  • “As many small business owners can attest, it’s the execution of your business plan that determines whether a small business thrives or fails.
  • It’s about being efficient with the business while maintaining that entrepreneurial spirit.”
    Bluevine surveyed over 1,100 small business owners nationwide between December 11th, 2023, and January 25th, 2024.

Ahead of a major global election year, populism remains strong

Retrieved on: 
Thursday, February 15, 2024

Ahead of a major global election year, populism remains strong

Key Points: 
  • Ahead of a major global election year, populism remains strong
    Paris, February 15th, 2024 - Ipsos , one of the world's leading market research companies, releases a study across 28 countries highlighting the strength of populism in these countries.
  • In a significant election year, 63% of people on average across 28 countries1 believe their country needs “a strong leader to take the country back from the rich and powerful”.
  • Similarly, Ipsos’ Global Trends study finds that 74% fear their government will not provide enough support in the future.
  • The sample in India consists of approximately 2,200 individuals, of whom approximately 1,800 were interviewed face-to-face and 400 were interviewed online.

Measuring market-based core inflation expectations

Retrieved on: 
Thursday, February 15, 2024

Abstract

Key Points: 
    • Abstract
      We build a novel term structure model for pricing synthetic euro area core inflation-linked
      swaps, a hypothetical swap contract indexed to core inflation.
    • The model provides estimates of market-based expectations for core inflation, as
      well as core inflation risk premia, at daily frequency, whereas core inflation expectations from
      surveys or macroeconomic projections are typically only available monthly or quarterly.
    • We
      find that core inflation-linked swap rates are generally less volatile than headline inflationlinked swap rates and that market participants expected core inflation to be substantially
      more persistent than headline inflation following the 2022 energy price spike.
    • In this paper, we aim to infer market-based core inflation expectations, which are otherwise
      not directly observable because no financial asset directly tied to core inflation exists.
    • We deem this second assumption reasonable because HICP inflation itself is a linear combination
      of core as well as energy and food inflation.
    • The level of 2 percent and relatively low volatility of
      long-term inflation expectations suggests that inflation expectations are firmly anchored at the
      ECB?s 2 percent inflation target.
    • This assumption appears reasonably uncontroversial,
      as core inflation is a sub-component of headline inflation, which the observable headline ILS
      rates are tied to.
    • Our estimates of core ILS rates reflect both market participants? genuine core
      inflation expectations and a core inflation risk premium, but our model explicitly allows for
      this decomposition.
    • The model-implied estimates of core ILS rates appear reasonable along several dimensions:
      (i) like realized core inflation is less volatile than headline inflation, the core ILS rates are less
      volatile than headline ILS rates, (ii) core ILS rates comove less with oil prices than headline
      ILS rates, (iii) the core inflation expectations, as reflected in core ILS rates, typically evolve
      similarly as the core inflation projections by Eurosystem staff, and (iv) consistent with market
      commentary at the time, core ILS rates suggest that market participants expected core inflation
      to be substantially more persistent than headline inflation following the 2022 energy price spike.
    • To the best of our knowledge, we are the first to price core ILS rates and decompose them into
      market-based expectations for and risks around the core inflation outlook.
    • Our approach to inferring core ILS
      rates from headline ILS rates, realized headline and core inflation as well as survey expectations
      for headline and core inflation is also related to Ang et al.
    • Relative
      to their study, we separately measure core inflation expectations and risk premia, we provide
      core inflation expectations at a higher-frequency, and we provide evidence on the causal effects

      ECB Working Paper Series No 2908

      6

      of monetary policy shocks on core inflation expectations and risk premia.

    • Specifically, we decompose the synthetic core ILS rates
      into average expected core inflation over the lifetime of the swap contract and a core inflation
      risk premium that compensates investors for core inflation risk.
    • In
      our model below, this term is constant over time and relatively small, so we will simply refer
      to the core inflation risk premium as the difference between the core ILS rate and the average
      expected core inflation over the lifetime of the swap contract.
    • 3.2

      Core ILS rates

      To have a joint model for headline and core ILS rates, we need one further assumption on the
      dynamics of realized core inflation.

    • The assumption that core inflation is driven by the same set of factors as headline inflation
      should be relatively uncontroversial: since headline inflation is a weighted average of core and
      food and energy inflation, it should reflect any factors driving core inflation.
    • If there are factors
      driving food and energy inflation, which do not show up in core inflation, then those factors
      should still show up in headline inflation.
    • In step two, to be able to infer the factor
      loadings of core inflation, we would regress realized core inflation onto the estimated latent
      factors to identify the additional parameters in equation (12).
    • Before the fourth
      quarter of 2016, the SPF did not ask respondents for their core inflation expectations, so we
      are not able to use survey-based information about core inflation before then.
    • Before
      2016, the fitted core inflation series is somewhat above the realized one, potentially reflecting
      that the model has limited information about core inflation over this early period due to the
      lack of information about core inflation from surveys.
    • This could have been the
      case if one of the factors moved core inflation and energy and food inflation in exactly offsetting
      direction, so the overall impact on headline inflation was exactly zero.
    • During 2021, for example, there were

      ECB Working Paper Series No 2908

      25

      Figure 7: Decomposition of synthetic core ILS rates
      2y core ILS

      5y core ILS

      5
      4

      5
      ILS

      premia

      exp

      4

      ILS

      premia

      exp

      3

      3

      2

      2

      1

      1

      0

      0

      -1

      -1

      -2
      2017 2018 2019 2020 2021 2022 2023

      -2
      2017 2018 2019 2020 2021 2022 2023

      10y core ILS

      5y5y core ILS

      5
      4

      5
      ILS

      premia

      exp

      4

      ILS

      premia

      exp

      3

      3

      2

      2

      1

      1

      0

      0

      -1

      -1

      -2
      2017 2018 2019 2020 2021 2022 2023

      -2
      2017 2018 2019 2020 2021 2022 2023

      Note: Synthetic core ILS rates decomposed into genuine core inflation expectations and core inflation risk
      premia.

    • ECB Working Paper Series No 2908

      26

      Figure 8: Decomposition of ILS rates
      2y ILS

      5y ILS

      5
      4

      5
      ILS

      premia

      exp

      4

      3

      3

      2

      2

      1

      1

      0

      0

      -1

      -1

      -2
      2006

      2010

      2014

      2018

      2022

      -2
      2006

      ILS

      2010

      10y ILS

      2018

      2022

      5
      ILS

      premia

      exp

      4

      3

      3

      2

      2

      1

      1

      0

      0

      -1

      -1

      -2
      2006

      2014

      exp

      5y5y ILS

      5
      4

      premia

      2010

      2014

      2018

      2022

      -2
      2006

      ILS

      2010

      premia

      2014

      2018

      exp

      2022

      Note: ILS rates decomposed into genuine core inflation expectations and core inflation risk premia.

    • We find that the headline inflation risk premium
      indeed does responds more strongly than the core inflation risk premium.
    • The key
      assumption underlying our approach is that traded headline ILS rates span core inflation, which

      ECB Working Paper Series No 2908

      35

      should be reasonably uncontroversial as core inflation is a sub-component of headline inflation.

    • We fit the model to euro area headline ILS rates, realized headline and core inflation, and
      both headline and core inflation expectations reported in the SPF.
    • Decomposing our core ILS rates into genuine core inflation expectations and core
      inflation risk premia shows that shorter maturities mainly reflect core inflation expectations,
      while the core inflation risk premium matters relatively more for longer maturities.
    • Our results suggest that a monetary policy tightening surprise significantly lowers
      near-term core inflation expectations, although less so than it lowers headline inflation expectations.