Life Is Getting Worse in ESS Data: Is This Due to Micro or Macro Factors? Bruges European Economic Research (BEER) Papers 28/November 2013

In order to evaluate the success of a society, measuring well-being might be a fruitful avenue. For a long time, governments have trusted economic measures, Gross Domestic Product (GDP) in particular, to assess their success. However GDP is only a limited measure of economic success, which is not enough to show whether policies implemented by governments have a positive perceived impact on the people they represent. This paper belongs to the studies of the relationship between measures of well-being and economic factors. More precisely, it tries to evaluate the decrease in happiness and life satisfaction that can be observed in European countries in the 2000-2010 decade. It asks whether this deterioration is mainly due to microeconomic factors, such as income and individual characteristics, or rather to environmental (macroeconomics) factors such as unemployment, inflation or income inequality. Such aggregate factors could impact individual happiness per se because they are related to the perception of an aggregate risk of unemployment or income fall. In order to strengthen this interpretation, this paper checks whether the type of social protection regime existing in different countries mediates the impact of macroeconomic volatility on individual well-being. To go further, adopting the classification of welfare regimes proposed by Esping-Andersen (1990), it verifies whether the decreasing pattern of subjective well-being varies across these regimes. This is partly due to the aggregate social protection expenditure. Hence, this paper brings some additional evidence to the idea that macroeconomic uncertainty has a cost in terms of well-being. More protective social regimes are able to reduce this cost. It also proposes an evaluation of the welfare cost of unemployment and inflation (in terms of happiness and life satisfaction), in each of the different social protection regimes. Finally different measures of well-being, i.e. cognitive, hedonic and eudaimonic, are used to confirm the above mentioned result.

A macro-financial analysis of the euro area sovereign bond market. National Bank of Belgium Working Paper No. 259, June 2014

We estimate the 'fundamental' component of euro area sovereign bond yield spreads, i.e. the part of bond spreads that can be justified by country-specific economic factors, euro area economic fundamentals, and international influences. The yield spread decomposition is achieved using a multi-market, no-arbitrage affine term structure model with a unique pricing kernel. More specifically, we use the canonical representation proposed by Joslin, Singleton, and Zhu (2011) and introduce next to standard spanned factors a set of unspanned macro factors, as in Joslin, Priebsch, and Singleton (2013). The model is applied to yield curve data from Belgium, France, Germany, Italy, and Spain over the period 2005-2013. Overall, our results show that economic fundamentals are the dominant drivers behind sovereign bond spreads. Nevertheless, shocks unrelated to the fundamental component of the spread have played an important role in the dynamics of bond spreads since the intensification of the sovereign debt crisis in the summer of 2011

Press Releases of the Council of the European Communities. Numbers 323rd-1823rd. January 1975-December 1994.

NOTE. The Council meetings which correspond to these press releases can be found at http://aei.pitt.edu/view/eusries/GENERAL=3ACouncil_Press_Release=3A_Council_Meetings.html on this archive.

Squaring the cycle: capital flows, financial cycles, and macro-prudential policy in the euro area. Bruegel Working Paper 2015/14, November 2015

• Before the financial and economic crisis, monetary policy unification and interest rate convergence resulted in the divergence of euroarea countries’ financial cycles. This divergence is deeply rooted in the financial integration spurred by currency union and strongly correlated with intra-euro area capital flows. Macro-prudential policy will need to deal with potentially divergent financial cycles, while catering for potential cross-border spillovers from domestic policies, which domestic authorities have little incentive to internalise. • The current framework is unfit to deal effectively with these challenges. The European Central Bank should be responsible for consistent and coherent application of macro-prudential policy, with appropriate divergences catering for national differences in financial conditions. The close link between domestic financial cycles and intra-euro area capital flows raises the question of whether macro-prudential policy in the euro area can be compatible with free flows of capital. Financial cycle divergence had its counterpart in the build-up of macroeconomic imbalances, so effective implementation of the Macroeconomic Imbalance Procedure would support and strengthen macro-prudential policy.

German macro: how it's different and why that matters. EPC Discussion Paper, May 2016

Do the macroeconomics of the German political establishment really differ from standard western macroeconomics? That question was the starting point for the seminar on ‘German macro: How it’s Different and Why that Matters’, which was held at Heriot-Watt University in December 2015, with financial support from the Scottish Institute for Research in Economics (SIRE) and the Money, Macro & Finance Research Group (MMF). This ebook, edited by George Bratsiotis and David Cobham, is the result of that exercise; six of the papers were presented at the seminar in earlier versions, and the editors sought some additional papers to complete the range of perspectives offered. The authors all sought out to discover whether or not there is something unique about German macroeconomics, and in what ways it differs from standard western macroeconomics; is it true that the former neglects demand management (although it may be quite interventionist in other ways), rejects debt relief and emphasises structural reform designed to improve competitiveness as the (only) key to economic growth? How much of whatever difference exists is due to a well worked out set of ideas in the form of Ordoliberalism? In what way does it relate to Germany’s own experiences in different periods? And how far is this the result of political preferences and how much do the idiosyncrasies of these German views matter, for the development of the Eurozone and indeed the health of the German economy?