Brueghel

Piero Cipollone: The euro at 25: what next for Economic and Monetary Union?

Retrieved on: 
Tuesday, February 13, 2024

We document how gas price fluctuations have a heterogeneous pass-through to euro area prices depending on the underlying shock driving them.

Key Points: 
  • We document how gas price fluctuations have a heterogeneous pass-through to euro area prices depending on the underlying shock driving them.
  • Supply shocks, moreover, are found to pass through to all components of euro area inflation – producer prices, wages and core inflation, which has implications for monetary policy.

Innovative Financing Instrument Offers Lasting Solution To Climate And Debt Crises

Retrieved on: 
Monday, April 3, 2023

Potential of performance-based financing mechanism in tackling debt and climate crises in vulnerable countries detailed in new paper.

Key Points: 
  • Potential of performance-based financing mechanism in tackling debt and climate crises in vulnerable countries detailed in new paper.
  • 'More for less' from the Sustainability-Linked Sovereign Debt Hub charts out seven scalable pathways through which this instrument can solve the triple challenge of delivering debt sustainability, climate and nature goals, and economic resilience.
  • Sustainability-linked sovereign debt -  a performance-based financing instrument that commits the issuing country to achieving certain sustainability targets - had its proof-of-concept year in 2022.
  • "Scaling this innovative debt instrument can advance climate and nature goals while avoiding the vicious cycle of unsustainable debt, deteriorating creditworthiness, and diminishing economic health that is currently threatening emerging markets and developing countries."

Innovative Financing Instrument Offers Lasting Solution To Climate And Debt Crises

Retrieved on: 
Monday, April 3, 2023

Potential of performance-based financing mechanism in tackling debt and climate crises in vulnerable countries detailed in new paper.

Key Points: 
  • Potential of performance-based financing mechanism in tackling debt and climate crises in vulnerable countries detailed in new paper.
  • 'More for less' from the Sustainability-Linked Sovereign Debt Hub charts out seven scalable pathways through which this instrument can solve the triple challenge of delivering debt sustainability, climate and nature goals, and economic resilience.
  • Sustainability-linked sovereign debt -  a performance-based financing instrument that commits the issuing country to achieving certain sustainability targets - had its proof-of-concept year in 2022.
  • "Scaling this innovative debt instrument can advance climate and nature goals while avoiding the vicious cycle of unsustainable debt, deteriorating creditworthiness, and diminishing economic health that is currently threatening emerging markets and developing countries."

Global value chains and the pandemic: the impact of supply bottlenecks

Retrieved on: 
Thursday, March 30, 2023

This box analyses how the pandemic affected global value chains.

Key Points: 
  • This box analyses how the pandemic affected global value chains.
  • It uses data for France, in particular between September 2020 and December 2021 when supply bottlenecks emerged.
  • [1] The pandemic resulted in a contraction of demand and supply that occurred both domestically and internationally.
  • Firms involved in global value chains (“GVC” firms), namely firms that both import and export, faced both of these challenges simultaneously.
  • [2]This box, based on highly granular trade data for the full universe of French firms, shows that participation in global value chains increased firms’ vulnerability to the economic implications of the pandemic.
  • In April 2020, exporters involved in global value chains recorded a decline in their export values of 42% compared with January 2020.
  • During the 2008 global financial crisis, however, firms involved in global value chains proved more resilient (Chart A, panel b).
  • Exporters that source their imports from geographically closer destinations were less affected by supply bottlenecks than those importing from further afield.
  • Furthermore, firms involved in global value chains importing mostly from the EU were hit later by supply bottlenecks, with the negative effects being visible only from April 2021.

Highlights - Exchange of views with Nicolas Schmit, Commissioner for Jobs and Social Rights - Committee on Employment and Social Affairs

Retrieved on: 
Wednesday, March 15, 2023

Exchange of views with Nicolas Schmit, Commissioner for Jobs and Social Rights

Key Points: 
  • Exchange of views with Nicolas Schmit, Commissioner for Jobs and Social Rights
    15-03-2023 - 10:21
    On 23 March, Commissioner Nicolas Schmit will appear before EMPL in the context of the structured dialogue between Parliament and the Commission.
  • Additionally, members will exchange views on social aspects of economic governance with participation of André Sapir (Bruegel, Emeritus Professor, ULB).
  • In the context of the ongoing economic governance review the exchange of views on social aspects of economic governance will focus on its social implications.
  • In the context of the ongoing economic governance review the exchange of views on social aspects of economic governance will focus on its social implications.

Christine Lagarde: Monetary policy in a new environment

Retrieved on: 
Saturday, November 26, 2022

And this has implications for the focus of macroeconomic policy in the years to come.

Key Points: 
  • And this has implications for the focus of macroeconomic policy in the years to come.
  • And in this context, swings in demand caused by the closing and reopening of the economy have hit a wall.
  • [3] And in this environment, it is uncertain whether a seamless expansion of supply will continue and how global demand will be affected.
  • For monetary policy, this changing environment creates considerable challenges.
  • That is why we have been raising rates at our fastest pace ever by 200 basis points in our last three policy meetings.
  • But we also need to normalise our other policy tools and so reinforce the impulse from our rate policy.
  • But now the environment has changed completely and we need to ensure that the lower cost of funding the TLTRO created for banks does not impede monetary transmission when policy normalisation is required.
  • Similarly, large-scale asset purchases were necessary to expand the policy stance when interest rates were close to the lower bound.
  • In parallel, our tools for preserving the orderly transmission of monetary policy notably flexible reinvestments under the pandemic emergency purchase programme and the new transmission protection instrument will remain in place.
  • Monetary policy will ensure a timely return of inflation to our medium-term target.
  • But the economic outlook will also depend on the alignment between monetary policy and other actors.
  • In the current environment of high inflation, fiscal policy needs to be temporary, targeted and tailored.
  • Looking further ahead, while monetary policy can steer demand, it cannot remove existing constraints on economic growth.
  • The effects of this shift are uncertain, but the duty of monetary policy is not.
  • But if we want to rebuild our supply capacity and strengthen domestic sources of growth, other policy areas need to refocus.
  • International Monetary Fund (2022), Near-term Macroeconomic Impact of Decarbonization Policies,
    World Economic Outlook, October.
  • Lagarde, C. (2022), Monetary policy in a high inflation environment: commitment and clarity, lecture organised by Eesti Pank and dedicated to Professor Ragnar Nurkse, Tallinn, 4 November.