The Behaviour of the Dollar and Exchange Rates in Europe: Empirical Evidence and Possible Explanations

The analysis of the day-by-day evolution of currency markets often emphasises the relationship between the behaviour of the US dollar and that of the exchange rates between the other major currencies, in particular the tendency of EMS currencies to appreciate vis-à-vis the DM in periods of dollar strength. In this paper we systematically analyse this relationship. In particular, we examine the extent to which it has changed in the last ten years, a span of time that included a period without realignments in the EMS, the crisis of the System, the suspension of the lira’s participation in the ERM and the withdrawal of the pound, the “widened” band for the other currencies, and the re-entry of the lira. We also suggest a possible explanation for this relationship and find supporting empirical evidence for it: we show that the reactions of each bilateral exchange rate to shocks to the value of the dollar are related to the different orientation of monetary and exchange-rate policies in the various European countries, and that these differences are consistent with the potential effects of variations in the exchange rates vis-à-vis the dollar and the DM on each country’s rate of inflation.exchange rate, Europe, fundamentals, forecast

What’s behind “inflation perceptions”? A survey-based analysis of Italian consumers

This study investigates inflation perceptions in both qualitative and quantitative terms and their relationship with factors likely to affect them. This has been done in a unified framework through a survey of a representative sample of Italian consumers carried out at the end of 2006. The results show that reported inflation is, on average, much higher than measured by official statistics. Inflation perceptions are higher for women, the unemployed and less educated individuals, as well as for consumers with some forms of financial distress. A very low knowledge of the inflation concept and related statistics and an inaccurate memory of past prices turn out to play a significant role in explaining the highest class of perceptions. In contrast, the characteristics of individual shopping activity do not result to be significant. All in all, these results suggest that when consumers express their opinions on what they report as “inflation”, they are incorporating a complex combination of forces that go well beyond the phenomena measured by official inflation statistics.inflation, consumers, perceptions, euro

Disentangling demand and supply in credit developments: a survey-based analysis for Italy

This paper combines qualitative information from the Eurosystem Bank Lending Survey with micro-data on loan prices and quantities for the participating Italian banks to assess the role of supply and demand factors in credit developments, with a focus on the sharp slowdown of 2008-09. Both demand and supply have played a relevant role, especially for lending to enterprises, in the whole sample period and during the financial crisis. A counterfactual exercise shows that the effect of supply factors on the growth of lending to firms was strongest after the Lehman collapse. On average, over the crisis period (2007q3-2009q4) the negative effect on the annualized quarter-on-quarter growth rate of the panel banksÂ’ lending to enterprises can be estimated in a range of 2.2 to 3.1 percentage points, depending on the specification. About one fourth of the total supply effect can be attributed to costs related to the banksÂ’ balance sheet position, the rest to their perception of credit risk.credit growth, supply tightening, financial crisis

Memory for prices and the euro cash changeover: An analysis for cinema prices in Italy

The question addressed by this study is whether consumers remember past prices correctly. We test Italian citizensÂ’ memory for cinema prices with questionnaires distributed to moviegoers. The analysis concentrates on the memory of pre-euro prices, but the recall for a more recent period is also investigated. The results show that only a small percentage of respondents recalled the correct price, and that the average prices recalled were much lower than the actual pre-euro prices and dated back to years before the changeover. Price recall is less accurate for the respondents who perceive higher and more persistent inflation; it is also worse for the older respondents and for the less frequent movie-goers.prices, memory, perceptions, euro

Monetary Policy Rules for the Euro Area: What Role for National Information?

Using a simple multi-country econometric model covering the three main countries of the euro area, the paper focuses on the role that can be played by information at the national level in defining the monetary policy of the Union. We find that the performance of a central bank that chooses the nominal interest rate to minimize a standard quadratic loss function of area-wide inflation and output gap improves significantly if the reaction function includes national variables - as opposed to the case in which the interest rate reacts to area-wide variables only. Our results suggest that asymmetries within the euro area are relevant to the central bank; overall, we interpret them as making a case for exploiting the available national information in the conduct of the single monetary policy.monetary policy rules, Eurosystem

LÂ’introduzione dellÂ’euro e la divergenza tra infl azione rilevata e percepita

Following the introduction of euro banknotes and coins many Italians perceived a much sharper increase in the price level than the moderate rise registered by the National Institute of Statistics. The paper shows that the apparent contradiction between the publicÂ’s perceptions and officially measured inflation stems mainly from the fact that the former often refer to phenomena not captured by the inflation rate calculated for the average basket of goods and services for the whole population. The rise in perceived inflation can be largely explained by the generally stronger influence that large, upward, and frequently observed price movements exert on consumersÂ’ perceptions, together with the actual behaviour of prices in the period following the currency changeover, which saw many price changes, with larger increases for the more frequently purchased products and exceptional rises for some items. The reciprocal influence between inflation perceptions and the mediaÂ’s unusually extensive coverage of price developments on the occasion of the changeover also appears to have been important. Lastly, the perception of a substantial loss of purchasing power, especially on the part of the least-well-off households, can be traced to economic phenomena that do not bear directly on official inflation but which it is hard for households to consider separately, such as the evolution of incomes and increases in the price of housing, not included in the official index.inflazione, euro, percezioni

Seneca, la diatriba e la ricerca di una morale austera

Within Seneca’s prose, using a long-codified terminology, it is possible to identify a substratum which can be defined as diatribe. This volume aims at making up for the lack of a modern ensemble work on the cynical-stoic diatribe in Seneca’s philosophy, analysing its features, influences and mediations. In response to a previous, almost purely compilatory, though systematic critical approach, this work offers an updated examination and contextualization of the individual stylistic elements bearing a seal of alleged 'diatribism'. This volume reconstructs the relationship, which is here deemed as 'complex’, between the diatribe and Seneca’s prose, while pursuing a research ideal which could combine moralistic contents and stylistic forms, philosophical preaching and rhetorical construction. Not least, the work aims at taking into account the extent to which the chronology of Seneca’s works can be reconstructed. Among the fundamental mediations, it is possible to identify the teaching of Seneca’s masters (the School of the Sextii and Attalus), the preaching of the Cynic philosopher Demetrius and Horace’s poetry

Seneca, Scipione e l’ombra di Cicerone: a proposito dell’epistola 86

The article proposes a reading of the epistle 86 by Seneca, which highlights a Ciceronian literary background. In particular, the narrative incipit seems to get inspiration from a passage of De Senectute, while in the figure of Scipio Africanus, the main character of the epistle, portrayed as the philosopher’s alter ego, it is possible to discover echoes from the famous Somnium Scipionis