Adjusting to the euro

In this paper we argue that, for a group of converging economies of the European Union, participation in the euro area has been associated with easier access to financing by domestic economic agents. Easier access to financing was a significant impulse leading to a sharp increase in households' expenditures and a corresponding fall in the savings ratio. Increased expenditure was associated with current account deficits, a sharp fall in the net foreign asset position and an increase in the households' indebtedness. At the same time there was a sizeable increase in the real exchange rate. In this paper, we show that it is possible to obtain all these qualitative features of adjustment using a simple analytical model of intertemporal equilibrium. Specifically, we consider a simple endowment economy with traded and non-traded goods populated by Blanchard-Yaari households. We also argue that the consideration of external habit formation improves the model's ability to mimic short to medium term adjustment dynamics while, at the same time, improving the plausibility of steady state effects. JEL Classification: F36, E21, F32euro area, interest rate convergence, overlapping generations model

Adjusting to the Euro

In this paper we argue that, for a group of converging economies of the European Union, participation in the euro area has been associated with easier access to financing by domestic economic agents. Easier access to financing was a significant impulse leading to a sharp increase in households' expenditures and a corresponding fall in the savings ratio. Increased expenditure was associated with current account deficits, a sharp fall in the net foreign asset position and an increase in the households' indebtedness. At the same time there was a sizeable increase in the real exchange rate. In this paper, we show that it is possible to obtain all these qualitative features of adjustment using a simple analytical model of intertemporal equilibrium. Specifically, we consider a simple endowment economy with traded and non-traded goods populated by Blanchard-Yaari households. We also argue that the consideration of external habit formation improves the model's ability to mimic short to medium term adjustment dynamics while, at the same time, improving the plausibility of steady state effects.

Money Demand in EU Countries: A Survey

Money demand is probably one of the most extensively studied economic relationship in applied economics. While useful surveys of existing literature are available, much of the attention has focused on the US. However, a considerable number of papers have recently been produced dealing with the situation in the EU, both at a country and at an area- wide level, with much of this research being carried out at EU central banks. Therefore, it appears useful to also examine this recent work, both in order to assess the current situation, and to guide future research. The first part of the paper covers a range of general issues arising such as the theoretical models, the specifications, the variables employed, and estimation techniques that have been used. It is emphasised that the basis of all these papers appears to be a benchmark model, in which money is a function of a scale variable, of interest rates and, when necessary, of variables accounting for financial innovation. The second part of the paper focuses on the estimated equations for the individual countries, paying particular attention to the case of Germany. A reasonable summary of the results obtained in general is that money demand equations perform fairly well in EU countries. Estimated parameters have the signs, if not always the magnitudes, predicted by economic theory. In most cases, the evidence points to the existence of the long-run equilibrium relation between money and a few determinant variables (real income, prices and interest rates) although the size of the adjustment coefficients indicate that deviations from the steady state may be of long duration. The next section provides a review of empirical evidence of aggregate money demand in grouping of EU countries taken together, an area in which interest is increasing as EMU approaches. In this strand of the literature, there seems to be a consensus that EU-wide equations yield satisfactory results, with area-wide equations often performing better than comparable national equations. Some reasons underlying this result are also examined.Money demand, Cross-country comparisons, European union

Analyses of three‐dimensional species associations reveal departures from neutrality in a tropical forest

The study of community spatial structure is central to understanding diversity patterns over space and species co-occurrence at local scales. Although most analytical approaches consider horizontal and vertical dimensions separately, in this study we introduce a three-dimensional spatial analysis that simultaneously includes horizontal and vertical species associations. Using tree census data (2000–2016) and allometries from the Luquillo forest plot in Puerto Rico, we show that spatial organization becomes less random over time as the forest recovered from land-use legacy effects and hurricane disturbance. Tree species vertical segregation is predominant in the forest with almost all species that co-occur in the horizontal plane avoiding each other in the vertical dimension. Horizontal segregation is less common than vertical, whereas three-dimensional aggregation (a proxy for direct tree competition) is the least frequent type of spatial association. Furthermore, dominant species are involved in more non-random spatial associations, implying that species co-occurrence is facilitated by species segregation in space. This novel three-dimensional analysis allowed us to identify and quantify tree species spatial distributions, how interspecific competition was reduced through forest structure, and how it changed over time after disturbance, in ways not detectable from two-dimensional analyses alone

Hydrologic controls on basin-scale distribution of benthic invertebrates

Streamflow variability is a major determinant of basin-scale distributions of benthic invertebrates. Here we present a novel procedure based on a probabilistic approach aiming at a spatially explicit quantitative assessment of benthic invertebrate abundance as derived from near-bed flow variability. Although the proposed approach neglects ecological determinants other than hydraulic ones, it is nevertheless relevant in view of its implications on the predictability of basin-scale patterns of organisms. In the present context, aquatic invertebrates are considered, given that they are widely employed as sensitive indicators of fluvial ecosystem health and human-induced perturbations. Moving from the analytical characterization of site-specific probability distribution functions of streamflow and bottom shear stress, we achieve a spatial extension to an entire stream network. Bottom shear stress distributions, coupled with habitat suitability curves derived from field studies, are used to produce maps of invertebrate suitability to shear stress conditions. Therefore, the proposed framework allows one to inspect the possible impacts on river ecology of human-induced perturbations of streamflow variability. We apply this framework to an Austrian river network for which rainfall and streamflow time series, river network hydraulic properties, and local information on invertebrate abundance for a limited number of sites are available. A comparison between observed species density versus modeled suitability to shear stress is also presented. Although the proposed strategy focuses on a single controlling factor and thus represents an ecological minimal model, it allows derivation of important implications for water resource management and fluvial ecosystem protection. Key Points Hydrologic variability is a major control of invertebrate habitat suitability New analytical basin-scale approach for pdfs of ecohydrological key features Austrian river basin used for ecohydrological data-model compariso