Methodology or pricing: how can the greater volatility of consumer gas and electricity prices in Belgium be explained?

Over the past three years, it has gradually become clear that consumer gas and electricity prices in Belgium are much more volatile than elsewhere in the euro area or in the three main neighbouring countries. The article first of all examines whether recent methodological changes to the registration method in the consumer price index are an explanatory factor for the differing movements in gas and electricity prices. The analysis shows that this is not the case, implying that the deviations in price movements from those in the reference zones may be attributed to the pricing itself. It also indicates an increase in volatility during the period 2007-2009 in response to a number of changes in pricesetting since the full-scale liberalisation of the gas and electricity market for residential consumption (changes that cannot necessarily be related directly to the liberalisation, however). Moreover, an international comparison of gas and electricity prices excluding taxation reveals that, contrary to what was previously the case, prices in Belgium began to move considerably ahead of those in the euro area in the course of 2008. As far as gas is concerned, this handicap was to disappear again in the third quarter of 2009, whereas the available indicators show that the gap remains substantial in the case of electricity, despite some narrowing. It may also be noted that gas and electricity prices may have then bottomed out and that the transmission (more substantial in Belgium) of the new upward momentum in prices for energy raw materials could lead to a deterioration in the relative position in the near future. It is then open to question which economic factor explains why price fluctuations for energy raw materials in Belgium are having a greater impact on consumer gas and electricity prices than elsewhere. In addition, the higher volatility of gas and electricity prices is also a factor that has to be taken into account when containing broader price and cost movements, especially in a situation where energy prices present a structural upward trend.consumer price index, Belgium, gas prices, electricity prices

A new national index of consumer prices and 10 years of the HICP

To mark the introduction, in January 2006, of a new national index of consumer prices (NICP) in Belgium and almost 10 years of application of the harmonised index of consumer prices (HICP) at the European level, the article highlights recent methodological developments regarding the two inflation measures. By reviewing the basket and the weighting scheme of the NICP, the 2006 reform eliminates the loss of representativeness, which was particularly pronounced in 2004 and 2005. As a result, there will be smaller discrepancies between NICP inflation and HICP inflation from 2007 onwards, while the method used for the introduction of the new NICP will temporarily reduce NICP-measured inflation in 2006. Despite the improvements introduced for the NICP, and in particular the adoption of bi-annual mini reforms, the HICP continues to be a more precise measure because its greater flexibility enhances its representativeness and because it is more accurate in terms of adjustments for quality changes. Future challenges include the treatment of owner-occupied housing, and the generalisation and harmonisation, at the European level, of the adjustments for quality changes.consumer price index, HICP

The distributive trade sector and its impact on euro area prices

At a time of a consolidation and an increasing internationalisation of the distributive trade sector, three major phenomena have been simultaneously altering the structure of euro area trade for several years now : the success of hard discounters, the emergence of private-label products, and the growth in online shopping. All three tend to exert downward pressure on price levels. Whereas the first two factors are particularly pronounced in Belgium, online shopping is less of a factor. There have been no significant competition anomalies uncovered in the sector in Belgium. Retailers are not particularly concentrated at either the local or national level. And yet, despite improvements in recent years, Belgian regulation of the sector remains very invasive and could discourage the opening of new points of sale. Given the impact of the distributive trade sector’s structural characteristics on price-setting behaviour, and the differences in price levels within each country and between euro area countries, structural reforms are needed to enhance competition and take better advantage of the common market. However, even though harmonising regulations and eliminating implicit barriers should help lessen differences within the euro area, some differences are unavoidable due to consumer preferences and cultural differences from one country to the next, and even regionally.retail, regulation, competition, market structure, pricing

Sectoral interdependences and cost structure in the Belgian economy : an application for input-output tables

Input-output tables (IOT) offer a comprehensive view of an economy, describing supply and demand flows according to activity branches, including flows between these branches, i.e. intermediate consumption. Based on the latest published IOT, i.e. over the year 2000, this article develops the so-called cumulative approach, which delivers a global view of the effects of the economic activity of a given branch on others and on the economy as a whole. More specifically, the nature of relationships between branches, the peculiarities regarding the degree of openness and the production process of the Belgian economy, and the cost structure are illustrated in turn. Indirect effects vary significantly among branches, as they are a function of the importance of domestic intermediate consumption in the production process. Generally speaking, business sector services are an important beneficiary of indirect effects from all branches, especially, and increasingly, from industry as a result of outsourcing. Industrial activity presents fewer spill over effects in Belgium than in other European countries, as a result of higher leak effects through imports. As opposed to this, indirect effects of business sector services activity are stronger than elsewhere, due to important business activities outsourcing in these branches also. From 1995 to 2000, the cumulative intermediate import content of Belgian output has raised to the expense of value added, which, aside from a price effect, also indicates an increasing reliance on imports. Intermediate import dependency, which is larger in Belgium, mainly takes the form of industrial products, but is also more important than elsewhere for business sector services. While import dependency looms heavy for exports, it is also large for households’ consumption. In terms of cost structure, wages represent globally more than a third of total production. However, the share of wages amounts to about a quarter of the total costs related to households consumption recorded in the HICP, while the share of indirect taxes is 17 p.c.input-output tables, sectoral interdependences, cost structure

The euro, five years later : what has happened to prices ?

While both the creation of the Economic and Monetary Union in 1999 and the introduction of the euro banknotes and coins in January 2002 actually went remarkably smooth, the introduction of the euro gave rise to a very lively debate regarding its impact on inflation. Indeed, the vast majority of consumers, both in the euro area as a whole and in Belgium, were, and still are, under the impression that the new currency has led to pronounced price increases. This article analyses both the movement of actual prices over the five years following the changeover to the euro and the trend in inflation perceptions as indicated by the European Commission’s consumer survey. It also considers a number of factors which may have contributed to the breaking of the link between actual and perceived inflation. There is clear evidence that the euro cash changeover led to a severing of the link between actual and perceived inflation. However, the direct impact on inflation was small in 2002. But, as it was concentrated in certain less competitive sectors where isolated goods and services are purchased, it was fairly visible. Since then, inflation has remained relatively low, but there has been greater dispersion in the movement of relative prices. At the microeconomic level, the process of price adjustment, which seems relatively slow, gave rise to a new attractive price structure and an increase in the number of prices used in the economy. Such structural changes probably imply that consumers experience difficulties in getting used to the euro. At the same time, these observations also illustrate indirectly that the process of adjusting prices to the euro is correctly reflected in the data used to measure inflation, so that the HICP is an accurate measure of inflation, even if consumers may see things differently. While the changeover’s role in the development of a persistent perception gap cannot be denied, it is very difficult to identify possible explanatory factors more precisely. The statement that consumers tend to form their perceptions on the basis of the movement in prices of frequently purchased items is not sufficient to explain a persistent perception gap. The socioeconomic characteristics of consumers did not play a dominant role either, while the impact of more psychological factors is difficult to assess. The specific characteristics of the HICP inflation measurement do not appear to have played a significant role in the emergence of the perception gap in the euro area. A similar gap arises when the national CPIs are used as benchmarks instead of the HICP ; the non-inclusion of the costs of owner occupied housing was not a key factor either. The fact that the accuracy and credibility of the HICP per se are not at stake is reassuring from the point of view of monetary policy.euro cash changeover, inflation, perceived inflation

Regulation and competition in the distribution sector in Belgium

While being a key sector in all developed economies, retail trade does actually appear to be one of the reasons for Europe’s lagging behind in potential output growth. One of the reasons for this lag could be regulation. By determining conditions for market access and for carrying out a commercial activity, the regulatory framework may exert some influence on both economic performance and market structure and, ultimately, on the degree of competition. The article assesses the retail trade situation in Belgium along these lines. As far as possible, Belgium’s performance is compared with that of neighbouring countries and the findings are assessed by cross-matching the various sources of information available. First, evidence from international indicators (such as those regularly published by the OECD), as well as from a review of the main legislation governing retail trade in Belgium, tend to suggest that regulation in Belgium is relatively abundant and restrictive for this sector. Operating conditions in particular appear to be more regulated than in neighbouring countries. As regards the retail trade sector’s economic performance, it should be noted that, like most other economic sectors, the retailing business in Belgium still has a higher productivity rate than in the majority of other European countries and even the United States too. However, unlike trends noted in other branches of activity, this favourable position has been gradually eroded over the last ten years. It does actually seem that Belgium’s main problem lies in its inability to improve the efficiency of the production factors being used. However, looking more closely at the food retailing sub-sector, no striking anomalies are noted in the market structure and the degree of competition in Belgium. Even though the overall indicators point to some concentration at national level, local competition – assessed with an original approach applied to detailed data – appears to be quite strong; only a few sales outlets have a dominant position. Moreover, the non-specialised food retail sector has a growing number of big shops, as well as an increasing number of hard discounters and a larger share of generic brand products in traditional retail outlets. Using detailed consumption price data from CityData and Eurostat, this analysis throws up evidence that prices charged by the retail sector are higher in Belgium than in the three neighbouring countries and the euro area as a whole. There have also been signs of a recent deterioration in the differential between prices in Belgian supermarkets and prices charged by German and Dutch supermarkets in particular. Adverse developments in labour costs in Belgium and higher retail business margins can go some way to explaining the trend in price differentials compared to Germany, where hard discounters are more common. Then again, the sharp deterioration in the price differentials between Belgium and the Netherlands recorded in supermarkets can largely be explained by the price war that raged between the major Dutch retail groups from October 2003 to December 2006. Overall, it therefore appears that the actual influence of specific regulatory requirements for the retail trade on the efficiency of the sector, on the degree of competition and, ultimately, on consumer prices needs to be looked at very carefully. On the one hand, simplifying regulations in force in Belgium would no doubt break down the barriers to entry without necessarily impeding other policy objectives. On the other hand, the performance of the retail distribution sector must be examined taking account of the specific features of the economy, such as population density and cultural preferences.retail, regulation, market structure, pricing, productivity

A toy model of the five-dimensional universe with the cosmological constant

A value of the cosmological constant in a toy model of the five-dimensional universe is calculated in such a manner that it remains in agreement with both astronomical observations and the quantum field theory concerning the zero-point fluctuations of the vacuum. The (negative) cosmological constant is equal to the inverse of the Planck length squared, which means that in the toy model the vanishing of the observed value of the cosmological constant is a consequence of the existence of an energy cutoff exactly at the level of the Planck scale. In turn, a model for both a virtual and a real particle-antiparticle pair is proposed which describes properly some energetic properties of both the vacuum fluctuations and created particles, as well as it allows one to calculate the discrete "bare" values of an elementary-particle mass, electric charge and intrinsic angular momentum (spin) at the energy cutoff. The relationships between the discussed model and some phenomena such as the Zitterbewegung and the Unruh-Davies effect are briefly analyzed, too. The proposed model also allows one to derive the Lorentz transformation and the Maxwell equations while considering the properties of the vacuum filled with the sea of virtual particles and their antiparticles. Finally, the existence of a finite value of the vacuum-energy density resulting from the toy model leads us to the formulation of dimensionless Einstein field equations which can be derived from the Lagrangian with a dimensionless (naively renormalized) coupling constant.Comment: 52 pages, 1 figure; a post-final, rewritten version with a number of new remarks and conclusion

Genomic basis of the differences between cider and dessert apple varieties

Unravelling the genomic processes at play during variety diversification is of fundamental interest for understanding evolution, but also of applied interest in crop science. It can indeed provide knowledge on the genetic bases of traits for crop improvement and germplasm diversity management. Apple is one of the most important fruit crops in temperate regions, having both great economic and cultural values. Sweet dessert apples are used for direct consumption while bitter cider apples are used to produce cider. Several important traits are known to differentiate the two variety types, in particular fruit size, biennial versus annual fruit bearing and bitterness, caused by a higher content in polyphenols. Here, we used an Illumina 8K SNP chip on two core collections, of 48 dessert and 48 cider apples, respectively, for identifying genomic regions responsible for the differences between cider and dessert apples. The genome-wide level of genetic differentiation between cider and dessert apples was low, although 17 candidate regions showed signatures of divergent selection, displaying either outlier FST values or significant association with phenotypic traits (bitter versus sweet fruits). These candidate regions encompassed 420 genes involved in a variety of functions and metabolic pathways, including several colocalizations with QTLs for polyphenol compounds

Genetic analysis of a major international collection of cultivated apple varieties reveals previously unknown historic heteroploid and inbred relationships

Domesticated apple (Malus x domestica Borkh.) is a major global crop and the genetic diversity held within the pool of cultivated varieties is important for the development of future cultivars. The aim of this study was to investigate the diversity held within the domesticated form, through the analysis of a major international germplasm collection of cultivated varieties, the UK National Fruit Collection, consisting of over 2,000 selections of named cultivars and seedling varieties. We utilised Diversity Array Technology (DArT) markers to assess the genetic diversity within the collection. Clustering attempts, using the software STRUCTURE revealed that the accessions formed a complex and historically admixed group for which clear clustering was challenging. Comparison of accessions using the Jaccard similarity coefficient allowed us to identify clonal and duplicate material as well as revealing pairs and groups that appeared more closely related than a standard parent-offspring or full-sibling relations. From further investigation, we were able to propose a number of new pedigrees, which revealed that some historically important cultivars were more closely related than previously documented and that some of them were partially inbred. We were also able to elucidate a number of parent-offspring relationships that had resulted in a number of important polyploid cultivars. This included reuniting polyploid cultivars that in some cases dated as far back as the 18th century, with diploid parents that potentially date back as far as the 13th century