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Magnus Forsells
- 10 November 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 7, 2022Details
- Abstract
- Carry-over effects describe how much the average growth rate in a given period is affected by developments in the preceding period. The most common application is to quantify how much annual average GDP growth is affected by quarterly developments in the previous year. This box applies this concept to quarterly changes in GDP by interpolating quarterly GDP into monthly observations using monthly indicators. In selecting the appropriate indicator variables, a production perspective is adopted by using industrial production, construction production and an indicator for services production. This sectoral approach is particularly useful in the current environment, given the differences in how sectors are being affected by the sharp and sudden fluctuations in economic conditions.
- JEL Code
- E00 : Macroeconomics and Monetary Economics→General→General
O10 : Economic Development, Technological Change, and Growth→Economic Development→General
- 4 November 2019
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 7, 2019Details
- Abstract
- Euro area growth has weakened, and economic indicators point to slow growth in coming quarters. This mainly reflects the ongoing weakness in international trade – in an environment of elevated global uncertainties – and its impact on the manufacturing sector. Activity levels in the services sector, by contrast, have remained relatively resilient. However, this raises questions about the extent to which there could be spillovers from the manufacturing sector to the services sector in the future. An analysis of the relationship between manufacturing and various sub-groups of the services sector shows that non-market services exhibit a weak co-movement with the cyclical developments in manufacturing. In contrast, market services and business services tend to move with manufacturing, but as yet there is limited evidence that the recent slowdown in manufacturing has been transmitted to these parts of the economy. This is likely to stem from the resilient developments in domestic demand, supported by the very accommodative monetary policy stance, which continues to support labour markets and create favourable financing conditions.
- JEL Code
- A10 : General Economics and Teaching→General Economics→General
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 17 June 2019
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2019Details
- Abstract
- This box looks at periods of slowdowns during a number of euro area expansionary phases – so-called soft patches – and assesses whether these contain any information with regard to forthcoming business cycle peaks and possible subsequent recessions.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E66 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General Outlook and Conditions
- 8 August 2018
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 5, 2018Details
- Abstract
- This article documents the key role that private consumption has played in recent output growth (2013-18), and asks how long the current growth in consumption can continue and whether it is self-sustaining. To that end, this article tries to identify the relative importance of different factors driving consumption, such as the recovery in the labour market, accommodative monetary policy, the 2014-15 drop in oil prices, the increase in asset prices, the easing of credit conditions and deleveraging. As the fall in consumption from 2008 to 2013 was very heterogeneous across countries, this article also sheds light on the extent to which the current expansion has actually led to a net increase in consumption over the past decade. This is relevant because private consumption is also a prime indicator of the economic well-being of households. While the growth of consumption has been low compared with previous expansions, since 2013 it has exceeded initial expectations. It has been driven mainly by the recovery in the labour market, even though unemployment in some countries and for some groups of workers remains higher than before 2008. Looking forward, as labour markets continue to improve, private consumption should expand further in all countries and for all groups of workers. Through its impact on the labour market, the ECB’s accommodative monetary policy is not only contributing to the expansion of private consumption, but also to a decrease in inequality. At the same time, there is little evidence that low interest rates have led to generalised increases in household indebtedness, supporting the sustainability of the overall economic expansion.
- JEL Code
- D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
- 28 June 2018
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2018Details
- Abstract
- Following very strong growth rates in 2017, quarterly real GDP growth in the euro area moderated to 0.4% in the first quarter of 2018. The slowdown in growth at the start of the year, which appears to reflect temporary factors as well as more lasting cyclical factors, was in line with developments in economic indicators, notably survey data. Both the composite output Purchasing Managers' Index (PMI) and the European Commission's Economic Sentiment Indicator (ESI) declined throughout the first quarter of 2018. However, it is important to note that, like output growth, these indicators fell back from exceptionally high levels.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E66 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General Outlook and Conditions
- 22 March 2018
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2018Details
- Abstract
- Timely and reliable statistics are essential for economic analysis. This box reviews and assesses the reliability of Eurostat’s preliminary flash estimate of quarterly GDP growth for the euro area, which was introduced at the beginning of 2016. It was a welcome development in terms of the continuous efforts to improve Europe’s statistical landscape given that the euro area’s single monetary policy is dependent on timely, reliable and comparable indicators that accurately reflect economic developments. To further support a more thorough analysis of macroeconomic developments at euro area level few challenges remain and some improvements are desirable such as the development of relevant euro area and country-level statistics soon after the end of the reference quarter. It is also important to enhance the quality of the source data that are used as inputs for preliminary flash estimates (e.g. short-term statistics on services). These improvements will ultimately increase the reliability of preliminary flash estimates and make them more useful, thereby facilitating more detailed economic analysis.
- JEL Code
- E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
E20 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→General
- 21 December 2017
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2017
- 9 January 2009
- OCCASIONAL PAPER SERIES - No. 100Details
- Abstract
- The first part of this paper provides a brief survey of the recent literature that employs survey data on household finance and consumption. Given the breadth of the topic, it focuses on issues that are particularly relevant for policy, namely: i) wealth effects on consumption, ii) housing prices and household indebtedness, iii) retirement income, consumption and pension reforms, iv) access to credit and credit constraints, v) financial innovation, consumption smoothing and portfolio selection and vi) wealth inequality. The second part uses concrete examples to summarise how results from such surveys feed into policy-making within the central banks that already conduct such surveys.
- JEL Code
- C42 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Survey Methods
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance - Network
- Eurosystem Monetary Transmission Network
- 1 August 2002
- WORKING PAPER SERIES - No. 163Details
- Abstract
- This paper uses survey data to assess consumers' inflation expectations in the euro area. The probability approach is used to derive quantitative estimates of inflation expectations from the European Commission's Consumer Survey. The paper subsequently analyses the empirical properties of the estimated inflation expectations by considering the extent to which they fulfil some of the necessary conditions for rationality. The results suggest an intermediate form of rationality. In particular, the surveyed expectations are an unbiased predictor of future price developments and they incorporate - though not always completely - a broad set of macroeconomic information. In addition, although persistent deviations between consumers' expectations and the rational outcome have occurred, consumers are shown to rationally adjust their expectations in order to eventually 'weed out' any systematic expectational errors. Interestingly, perhaps reflecting changes in the monetary regime, there is also evidence of 'growing' rationality over the 1990s compared with the 1980s.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation