Modelling internal devaluation experiences in Europe: Rational or learning agents?

Angelini, Elena; Dieppe, Alistair; Pierluigi, Beatrice

doi:10.1016/j.jmacro.2014.08.008

Cited by 7 publications

(3 citation statements)

References 28 publications

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“…The literature on internal devaluation usually considers differences in ULCs and finds that countries with lower labour costs exhibit an higher degree of competitiveness. In particular, Myant et al (2016) observe that during the double-dip recession internal devaluation has been used in order to reduce current account imbalances; Angelini et al (2015) compare the experiences of internal devaluation in Germany and Spain and find that lower wage and price mark-ups led to an increase in competitiveness; Stockhammer and Sotiropoulos (2014) estimate the effect of domestic demand and ULC on current account, in order to assess the costs of internal devaluation.…”

Section: The European Monetary Union As a Natural Experimentsmentioning

confidence: 99%

Energy Costs and Competitiveness in Europe

Faiella

Mistretta

2020

SSRN Journal

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The worldwide upswing in energy prices recorded in the last decade has placed decarbonization strategies, and their potentially negative consequences for firms' costs and competitiveness, at the centre of the European policy debate. We evaluate the relevance of energy policies for competitiveness by augmenting the standard analysis, largely based on labour costs, with a Unit Energy Cost (UEC) indicator. We analyse how the UEC evolved in different countries and industries and we assess its main drivers (prices, energy intensity, sector composition). Modelling the relationship between foreign sales and the UEC in a gravity model setup, we find that an increase in UECs reduces bilateral exports; the largest negative effects are obtained when limiting the analysis to euro-area countries. Our results strengthen the case for pursuing further integration of European energy markets (as provided for in the Energy Union and Winter packages) to ensure that the ambitious long-term European decarbonization targets do not have a negative impact on the euro-area industry's ability to compete worldwide.

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Section: The European Monetary Union As a Natural Experimentsmentioning

confidence: 99%

Energy Costs and Competitiveness in Europe

Faiella

Mistretta

2020

SSRN Journal

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“…Flexibilita menových kurzov, resp. depreciácia menového kurzu spôsobená spomalením ekonomického rastu, môže slúžiť aj ako vhodný nástroj na oživenie prostredníc-tvom zvyšovania konkurencieschopnosti domácej produkcie na domácom a zahraničnom trhu (za predpokladu fungovania cenových úprav) (Angelini, Dieppe a Pierluigi, 2015). Preto depreciácia flexibilného menového kurzu sa ukazuje v čase recesie ako nástroj, ktorý poskytuje širokú škálu podnetov stimulujúcich celkový dopyt a tým aj hospodársky rast (Chen, Milesi-Ferretti a Tressel, 2013).…”

Section: Priepustnosť Menového Kurzu V Rôznych Kurzových Režimochunclassified

Exchange Rate Pass-Through to Domestic Prices in New EU Member Countries

Mirdala¹,

Ďurčová²

2016

Politicka ekonomie

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Exchange Rate Pass-Through to Domestic Prices in New EU Member CountriesEuropean Union member countries are currently exposed to the large complex of the economic crisis implications. Poor macroeconomic performance together with an increased uncertainty on the financial markets causes is accompanied with increased exchange rate volatility. As the result exchange rates determine macroeconomic development of the countries during the crisis period the way that seems to differ in comparison with the pre-crisis period. Considering the wide variety of effects that exchange rates transmit to the domestic economy from abroad in the paper we focus on the external price impulses and their impact on the domestic price indexes in the new EU member states. VAR methodology is implemented to investigate responsiveness of exchange rate to the exogenous price shock to examine the dynamics (volatility) in the exchange rate leading path followed by the unexpected oil price shock and effect of the unexpected exchange rate shift to domestic price indexes to examine its distribution along the internal pricing chain. Our results revealed differences in absorption capabilities of exchange rates in countries with rigid and flexible exchange rate arrangements. Implications are even stronger considering distortionary effects of the crisis period.Keywords: exchange rate, pass-through effect, inflation, VAR, impulse-response function JEL Classification: C32, E31, F41 ÚvodSchopnosť menového kurzu prenášať pôsobenie vonkajších šokov do domácej ekonomiky predstavuje v odborných kruhoch často diskutovanú tému a to nielen v súvislosti s prebiehajúcim procesom menovej integrácie v podmienkach krajín EÚ, ale aj negatív-nymi dôsledkami hospodárskej krízy (Berka, Devereux a Engel, 2012). Nové členské krajiny EÚ, ktoré prijali záväzok participovať na projekte spoločnej meny, prirodzene zvažujú pozitívne a negatívne aspekty jednotnej meny. Termín prijatia eura sa v mnohých krajinách posúva najmä v kontexte pripravenosti, výrazne poznamenanej dôsledkami hospodárskej krízy (udržateľnosť plnenia maastrichtských konvergenčných kritérií sa *1 Rajmund Mirdala (rajmund.mirdala@tuke.sk), Júlia Ďurčová (julia.durcova@tuke.sk), Ekonomická fakulta, Technická univerzita, Košice. Príspevok je súčasťou riešenej výskumnej úlohy 1/0994/15.

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“…Although a German‐led demand shock may support an internal devaluation process, the latter might also arise through the design of different economic policies. Angelini et al () and ECB () have analysed the role of different policy prescriptions to address external divergence in the euro area using the NMCM and other models. The main conclusion of these papers is that current account deficits could be alleviated through: (i) the improvement of wage competitiveness; (ii) fiscal devaluations (namely a shift from direct to indirect taxes); and (iii) policies aimed at enhancing non‐price competitiveness and productivity.…”

Section: Re‐balancing Scenarios Aheadmentioning

confidence: 99%

External and Macroeconomic Adjustment in the Larger Euro‐Area Countries

Angelini

Zorzi²,

Aerssen³

2016

International Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, and of other organisations associated with the Network. Terms of use: Documents in EconStor may AcknowledgementsWe are grateful for the insightful comments by L. Dedola, A. Dieppe, G. Kenny, G. Lombardo, M. Rubaszek, F. Smets as well as participants of ECB and ESCB seminars. The views expressed are those of the authors and do not necessarily reflect those of the ECB. Elena AngeliniEuropean Central Bank; e-mail: elena.angelini@ecb.europa.euMichele Ca' Zorzi European Central Bank; e-mail: michele.cazorzi@ecb.europa.eu Katrin ForsterEuropean Central Bank; e-mail: katrin.forster@ecb.europa.eu AbstractA balanced current account in the euro area has disguised sizeable net lending imbalances at the country level, exposing the common currency area to severe pressures during the …nancial crisis.The key contribution of this paper is to evaluate the adjustment process through the lenses of the New Multi Country Model at the country and sectoral level. We …nd that shocks to the external, …scal and monetary environment help explain, to a large degree, the sizable current account adjustment and rise in unemployment in Spain. The model also suggests that a recovery in wage competitiveness helps to reduce external de…cits at the cost of higher net borrowing by households. The stimulus e¤ects on aggregate demand, via the interest rate response of the common monetary authority and the competitiveness channel, are present but not overly large, as the rebound in economic activity depends mainly on global demand, supportive monetary policy, business and consumer con…dence.Key words: net lending, euro area countries, current account, modeling JEL Classi…cation: C5, F32, F41, O52. NON-TECHNICAL SUMMARYThe current account in the euro area has historically been close to balance. The presence of de…cits and surpluses across the di¤erent participating members was not generally perceived as a major policy issue, as e.g. the Spanish de…cit was o¤set by the German surplus (Williamson, 2007).The sizable net borrowing by the euro area public sector was instead o¤set by the net savings of the euro area private sector. Following the …nancial crisis the academic literature has moved from a largely beni...

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Modelling internal devaluation experiences in Europe: Rational or learning agents?

Cited by 7 publications

References 28 publications

Energy Costs and Competitiveness in Europe

Energy Costs and Competitiveness in Europe

Exchange Rate Pass-Through to Domestic Prices in New EU Member Countries

External and Macroeconomic Adjustment in the Larger Euro‐Area Countries

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