ECB’s asset purchase programmes have been implemented at different times in different economic environments and may pursue different objectives. From the point of view of removing financial fragmentation and taming sovereign stress in the euro area, the PEPP has been successful so far. Moreover, this outcome was obtained without fully using its potential resources. To date and contingent on the available set of information, the current monetary stance has not gone too far and it retains some ammunitions. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).
{"title":"APP vs PEPP: Similar, But With Different Rationales","authors":"Christophe Blot, J. Creel, P. Hubert","doi":"10.2861/81250","DOIUrl":"https://doi.org/10.2861/81250","url":null,"abstract":"ECB’s asset purchase programmes have been implemented at different times in different economic environments and may pursue different objectives. From the point of view of removing financial fragmentation and taming sovereign stress in the euro area, the PEPP has been successful so far. Moreover, this outcome was obtained without fully using its potential resources. To date and contingent on the available set of information, the current monetary stance has not gone too far and it retains some ammunitions. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129950373","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper provides empirical evidence on how aspirations are formed and affect individual behavior, decisions, and paths in the context of education. Using unique data on aspirations, academic performance and actual track assignment to high school of French ninth graders, we show that low-SES students have lower aspirations than their equally-achieving high-SES classmates, and that track assignments to high school the next year are even more unequal due to dysfunctional dynamics: first, both low aspirations and low SES are associated with slower academic progress over the year. Second, aspirations and parental SES play a role in track assignment independent of one’s academic performance. Our results suggest that, in France, an aspirational trap at school contributes to the poverty trap, leading to the perpetuation of social inequalities.
{"title":"Biased Aspirations and Social Inequality at School: Evidence from French Teenagers","authors":"Nina Guyon, Élise Huillery","doi":"10.1093/ej/ueaa077","DOIUrl":"https://doi.org/10.1093/ej/ueaa077","url":null,"abstract":"This paper provides empirical evidence on how aspirations are formed and affect individual behavior, decisions, and paths in the context of education. Using unique data on aspirations, academic performance and actual track assignment to high school of French ninth graders, we show that low-SES students have lower aspirations than their equally-achieving high-SES classmates, and that track assignments to high school the next year are even more unequal due to dysfunctional dynamics: first, both low aspirations and low SES are associated with slower academic progress over the year. Second, aspirations and parental SES play a role in track assignment independent of one’s academic performance. Our results suggest that, in France, an aspirational trap at school contributes to the poverty trap, leading to the perpetuation of social inequalities.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"53 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115557472","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Beyond price stability, the EU Treaties assign to the ECB a range of secondary objectives. We investigate the linkages between price stability and these objectives to assess whether they are independent, complementary or substitutable, which is important to refine the definition of the mandate. Keeping the current mandate would not provide leeway for the ECB to reach other objectives. We propose to broaden the mandate to include employment and financial stability. Enhanced coordination should contribute to fulfilling the objectives. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs.
{"title":"Setting New Priorities for the ECB’s Mandate","authors":"Christophe Blot, J. Creel, E. Faure, P. Hubert","doi":"10.2861/951157","DOIUrl":"https://doi.org/10.2861/951157","url":null,"abstract":"Beyond price stability, the EU Treaties assign to the ECB a range of secondary objectives. We investigate the linkages between price stability and these objectives to assess whether they are independent, complementary or substitutable, which is important to refine the definition of the mandate. Keeping the current mandate would not provide leeway for the ECB to reach other objectives. We propose to broaden the mandate to include employment and financial stability. Enhanced coordination should contribute to fulfilling the objectives. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121813086","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The outbreak of COVID-19 and the unprecedented measures taken by many countries to slow down the spread of the coronavirus caused large economic and psychological costs. This paper uses real time survey data from two waves run at the end of March and in mid-April to provide a snapshot of the actual labour market outcomes in twelve countries. Our study reveals large cross-country differences. At the end of March, when large disparity existed in the diffusion of the pandemic and in the lockdown measures, a large share of employed individuals had stopped working in France (38%) and Italy (47%), but much less in Australia (13%) and the US (10%). Large differences remained in mid-April. Yet, some common patterns emerge. Labour market outcomes varied according to workers’ educational attainments and occupation types. College graduates and white collars worked more from home and less from the regular workplace. Instead, low educated workers and blue collars were more likely to remain in the regular work place or to stop working. Similar patterns emerge with respect to the workers’ (family) income. This evidence suggests that initial labour market effects of COVID-19 (and of the lockdown measures) may have contributed to increase pre-existing inequalities.
{"title":"Working during COVID-19","authors":"V. Galasso, M. Foucault","doi":"10.1787/34A2C306-EN","DOIUrl":"https://doi.org/10.1787/34A2C306-EN","url":null,"abstract":"The outbreak of COVID-19 and the unprecedented measures taken by many countries to slow down the spread of the coronavirus caused large economic and psychological costs. This paper uses real time survey data from two waves run at the end of March and in mid-April to provide a snapshot of the actual labour market outcomes in twelve countries. Our study reveals large cross-country differences. At the end of March, when large disparity existed in the diffusion of the pandemic and in the lockdown measures, a large share of employed individuals had stopped working in France (38%) and Italy (47%), but much less in Australia (13%) and the US (10%). Large differences remained in mid-April. Yet, some common patterns emerge. Labour market outcomes varied according to workers’ educational attainments and occupation types. College graduates and white collars worked more from home and less from the regular workplace. Instead, low educated workers and blue collars were more likely to remain in the regular work place or to stop working. Similar patterns emerge with respect to the workers’ (family) income. This evidence suggests that initial labour market effects of COVID-19 (and of the lockdown measures) may have contributed to increase pre-existing inequalities.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"71 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116090949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Dans cet article, nous reexaminons les fondements des modeles theoriques qui sous-tendent le consensus de politique monetaire prevalant avant la Grande Recession. Nous soulignons en quoi l'echec de ces modeles a prevenir la crise et a fournir un guide d’action pendant la recession etait du a l’exces de confiance dans la capacite d’autoregulation des marches et a la negligence du role joue par la finance dont ils temoignaient. Nous presentons, ensuite, les bases d'une approche alternative de la politique monetaire qui met l'accent sur les processus de marche, la coordination entre agents heterogenes et les externalites transmises via les interconnexions financieres. De nouvelles classes de modeles, d’une part, les modeles a agents multiples et, d’autre part, les modeles de reseaux financiers, s’inscrivent dans cette approche. Nous discutons, enfin, des nouveaux eclairages fournis par ces modeles s’agissant de la conduite de la politique monetaire et de ses interactions avec les politiques budgetaire et macro-prudentielle.
{"title":"Hétérogénéité des agents, interconnexions financières et politique monétaire : une approche non conventionnelle","authors":"Jean-Luc Gaffard, Mauro Napoletano","doi":"10.3917/RFE.183.0201","DOIUrl":"https://doi.org/10.3917/RFE.183.0201","url":null,"abstract":"Dans cet article, nous reexaminons les fondements des modeles theoriques qui sous-tendent le consensus de politique monetaire prevalant avant la Grande Recession. Nous soulignons en quoi l'echec de ces modeles a prevenir la crise et a fournir un guide d’action pendant la recession etait du a l’exces de confiance dans la capacite d’autoregulation des marches et a la negligence du role joue par la finance dont ils temoignaient. Nous presentons, ensuite, les bases d'une approche alternative de la politique monetaire qui met l'accent sur les processus de marche, la coordination entre agents heterogenes et les externalites transmises via les interconnexions financieres. De nouvelles classes de modeles, d’une part, les modeles a agents multiples et, d’autre part, les modeles de reseaux financiers, s’inscrivent dans cette approche. Nous discutons, enfin, des nouveaux eclairages fournis par ces modeles s’agissant de la conduite de la politique monetaire et de ses interactions avec les politiques budgetaire et macro-prudentielle.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116739547","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-02-22DOI: 10.1093/OXFORDHB/9780199844371.013.6
J. Barthélemy, M. Marx
In this chapter, we present theoretical foundations of main methods solving rational expectations models with a special focus on perturbation approaches. We restrict our attention to models with a finite number of state variables. We first give some insights on the solution methods for linear models. Second, we show how to use the perturbation approach for solving non-linear models. We then document the limits of this approach. The perturbation approach, while it is the most common solution method in the macroeconomic literature, is inappropriate in a context of large fluctuations (large shocks or regime switching) and of strong non-linearities (e.g. occasionally binding constraints). The former case is then illustrated extensively by studying regime switching models. We also illustrate the latter case by studying existing methods for solving rational expectations models under the Zero Lower Bound constraint, i.e. the condition of non negativity of the nominal interest rate. Finally, we end up with a brief presentation of global methods which are alternatives when the perturbation approach fails in solving models.
{"title":"Solving Rational Expectations Models","authors":"J. Barthélemy, M. Marx","doi":"10.1093/OXFORDHB/9780199844371.013.6","DOIUrl":"https://doi.org/10.1093/OXFORDHB/9780199844371.013.6","url":null,"abstract":"In this chapter, we present theoretical foundations of main methods solving rational expectations models with a special focus on perturbation approaches. We restrict our attention to models with a finite number of state variables. We first give some insights on the solution methods for linear models. Second, we show how to use the perturbation approach for solving non-linear models. We then document the limits of this approach. The perturbation approach, while it is the most common solution method in the macroeconomic literature, is inappropriate in a context of large fluctuations (large shocks or regime switching) and of strong non-linearities (e.g. occasionally binding constraints). The former case is then illustrated extensively by studying regime switching models. We also illustrate the latter case by studying existing methods for solving rational expectations models under the Zero Lower Bound constraint, i.e. the condition of non negativity of the nominal interest rate. Finally, we end up with a brief presentation of global methods which are alternatives when the perturbation approach fails in solving models.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"89 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114843738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Les algorithmes de prix mis en œuvre par des firmes concurrentes peuvent constituer le support de collusions. Les ressources offertes par le Big Data, les possibilites d’ajustement des prix en temps reel et l’analyse predictive peuvent permettre d’atteindre rapidement et de maintenir durablement des equilibres de collusion tacite. Le recours a l’intelligence artificielle pose un enjeu specifique en ce sens que l’algorithme peut decouvrir de lui-meme l’interet d’un accord tacite de non-agression et que l’analyse de son processus decisionnel est particulierement difficile. Ce faisant la sanction de l’entente sur la base du droit des pratiques anticoncurrentielles ne va pas de soi. L’article explore donc les voies de regulation possibles, que celles-ci passent par des audits ou par l’activation de regles de responsabilite
{"title":"Algorithmes de prix, intelligence artificielle et équilibres collusifs","authors":"F. Marty","doi":"10.3917/RIDE.312.0083","DOIUrl":"https://doi.org/10.3917/RIDE.312.0083","url":null,"abstract":"Les algorithmes de prix mis en œuvre par des firmes concurrentes peuvent constituer le support de collusions. Les ressources offertes par le Big Data, les possibilites d’ajustement des prix en temps reel et l’analyse predictive peuvent permettre d’atteindre rapidement et de maintenir durablement des equilibres de collusion tacite. Le recours a l’intelligence artificielle pose un enjeu specifique en ce sens que l’algorithme peut decouvrir de lui-meme l’interet d’un accord tacite de non-agression et que l’analyse de son processus decisionnel est particulierement difficile. Ce faisant la sanction de l’entente sur la base du droit des pratiques anticoncurrentielles ne va pas de soi. L’article explore donc les voies de regulation possibles, que celles-ci passent par des audits ou par l’activation de regles de responsabilite","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132970442","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper revisits the ability of central banks to manage private sector's expectations depending on its credibility and how this affects the use of interest rate rules and pegs to achieve monetary policy objectives. When private agents can only provide limited incentives for the central bank to follow a policy, we show that resulting limited credibility allows a central bank to prevents the inflation from diverging by defaulting on past promises if necessary. As a result, the Taylor rule, when expected, anchors inflation expectations on a unique equilibrium path as long as the Taylor principle is satisfied. Finally, we also show that limited credibility restricts the impact of long-term interest rate pegs, so as to make current conditions less dependent on future policy changes.
{"title":"Credibility and Monetary Policy","authors":"J. Barthélemy, Eric Mengus","doi":"10.2139/ssrn.2962259","DOIUrl":"https://doi.org/10.2139/ssrn.2962259","url":null,"abstract":"This paper revisits the ability of central banks to manage private sector's expectations depending on its credibility and how this affects the use of interest rate rules and pegs to achieve monetary policy objectives. When private agents can only provide limited incentives for the central bank to follow a policy, we show that resulting limited credibility allows a central bank to prevents the inflation from diverging by defaulting on past promises if necessary. As a result, the Taylor rule, when expected, anchors inflation expectations on a unique equilibrium path as long as the Taylor principle is satisfied. Finally, we also show that limited credibility restricts the impact of long-term interest rate pegs, so as to make current conditions less dependent on future policy changes.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124519447","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Economic and Monetary Union (EMU) institutions are consistent with a New Consensus that emerged in the 1980s, limiting the role for macroeconomic (particularly fiscal) policy to short term stabilizations by means of rules. I will argue that the policy inertia induced by the Consensus may have played a role in the disappointing performance of EMU economies even before the crisis. The crisis of the Consensus, and the debate on secular stagnation, proved that Keynesian (and possibly) persistent excesses of savings over investment may hamper growth. This has put fiscal policy back to the center of the scene, and given the General Theory, at eighty, a second youth. I will argue therefore that the EMU fiscal rule should be amended to allow semi-permanent negative government savings. I will finally argue that a modified Golden Rule may serve this objective, and allow EU-wide policy coordination. This seems the only reasonable reform with some chances of being adopted by the EU divided policy makers.
{"title":"When Keynes goes to Brussels : a New Fiscal Rule for the EMU ?","authors":"F. Saraceno","doi":"10.26331/1019","DOIUrl":"https://doi.org/10.26331/1019","url":null,"abstract":"The Economic and Monetary Union (EMU) institutions are consistent with a New Consensus that emerged in the 1980s, limiting the role for macroeconomic (particularly fiscal) policy to short term stabilizations by means of rules. I will argue that the policy inertia induced by the Consensus may have played a role in the disappointing performance of EMU economies even before the crisis. The crisis of the Consensus, and the debate on secular stagnation, proved that Keynesian (and possibly) persistent excesses of savings over investment may hamper growth. This has put fiscal policy back to the center of the scene, and given the General Theory, at eighty, a second youth. I will argue therefore that the EMU fiscal rule should be amended to allow semi-permanent negative government savings. I will finally argue that a modified Golden Rule may serve this objective, and allow EU-wide policy coordination. This seems the only reasonable reform with some chances of being adopted by the EU divided policy makers.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"82 3 Suppl 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132564042","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Face au marasme prolonge, alors que la politique monetaire atteint ses limites, l'Europe a besoin d'une relance massive de l'investissement public. Elle en a la dimension et les moyens, mais malheureusement pas la volonte politique.
{"title":"Pour une politique européenne de l'offre et de la demande","authors":"A. Grjébine","doi":"10.3917/leco.070.0039","DOIUrl":"https://doi.org/10.3917/leco.070.0039","url":null,"abstract":"Face au marasme prolonge, alors que la politique monetaire atteint ses limites, l'Europe a besoin d'une relance massive de l'investissement public. Elle en a la dimension et les moyens, mais malheureusement pas la volonte politique.","PeriodicalId":325508,"journal":{"name":"Sciences Po publications","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128085116","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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