Competitiveness of renewable energies. Comparison of major European countries

This paper aims at presenting the support schemes promoting the development of renewable energies in five major European countries, namely Germany, France, Italy, Spain and the United Kingdom. At first the reader will find brief country profiles, followed by a comparison of their competitiveness with regard to the type of public support available for project developers, the current level of feed-in tariffs, the stability of the regulatory framework, the quality of the wind or solar resource available, etc. Finally, a mapping will give a quick overview of the competitiveness of the five countries for each renewable energy reviewed in this study. The paper focuses on four technologies generating electricity from renewable sources: Onshore wind, Offshore wind, Photovoltaic solar energy and Concentrating solar power ('CSP', also known as solar thermoelectric power). --

The Inverse Domino Effect: Are Economic Reforms Contagious?

This paper examines whether a country’s economic reforms are affected by reforms adopted by other countries. A simple model of economic reforms is developed to motivate the econometric work. Unsurprisingly, the model predicts that reforms are more likely when factors of production are internationally mobile and reforms are pursued in other economies. More interesting is the finding that reforms are not driven by greater trade openness. Using the change in the Index of Economic Freedom as the measure of market-liberalising reforms, we examine two issues. First, we examine whether economic reforms are ‘habit-forming’, and secondly, we identify the most important channels through which reforms are transmitted from country to country. For a panel of 144 countries and the years 1995-2006, we find little evidence that reforms are habit- forming, if anything there is a status quo bias. However, we do find evidence of the importance of reforms in other countries. Consistent with our model, international trade is not a vehicle for the diffusion of economic reforms, rather the most important mechanism is geographical or cultural proximity.Economic reforms; economic freedom; resource flow models; spatial interdependence

Updating Inflation Expectations

This paper investigates how inflation expectations evolve. In particular, we analyze the time-varying nature of the propensity to update expectations and its potential determinants. For this purpose we set up a flexible econometric model that tracks the formation of inflation expectations of consumers at each moment in time. We show that the propensity to update inflation expectations changes substantially over time and is related to the quantity and the quality of news

Consumers' macroeconomic expectations

After the financial crisis of 2008, central banks around the world have increased their communication efforts to reach consumers, with the aim of both guiding and anchoring their inflation expectations. For the expectations channel of monetary policy to work as intended, central banks need a thorough understanding of the formation process of expectations by the general public and of the relationship between expectations and economic choices. This warrants reliable and detailed data on consumers' expectations of macroeconomic variables such as inflation or interest rates. We, thus, survey the available survey data and issues regarding the measurement of macroeconomic expectations. Furthermore, we discuss the research frontier on important aspects of the expectations channel: We evaluate the evidence on whether expectations are formed consistently with standard macroeconomic relationships, discuss the insights with respect to the anchoring of inflation expectations, explore the role of narratives and preferences and lastly, we survey the research on causal effects of central bank communication on expectations and economic choices

Are Consumer Expectations Theory-Consistent? The Role of Macroeconomic Determinants and Central Bank Communication

Using the microdata of the Michigan Survey of Consumers, we evaluate whether U.S. consumers form macroeconomic expectations consistent with different economic concepts. We observe that 50\% of consumers have expectations consistent with the Income Fisher equation, 46\% with the Taylor rule and 34\% with the Phillips curve. For the Taylor rule and the Phillips curve we observe less consistency during recessions and with high inflation. Moreover, changes in the communication policy of the Fed affect consistency. The strongest positive effect comes from the introduction of the official inflation target. Finally, consumers with theory-consistent expectations have lower absolute inflation forecast errors

Are survey expectations theory-consistent? The role of central bank communication and news

In this paper we analyze whether central bank communication can facilitate the understanding of key economic concepts. Using survey data for consumers and professionals, we calculate how many of them have expectations consistent with the Fisher Equation, the Taylor rule and the Phillips curve and test, by accounting for three different communication channels, whether central banks can influence those. A substantial share of participants has expectations consistent with the Fisher equation, followed by the Taylor rule and the Phillips curve. We show that having theory-consistent expectations is beneficial, as it improves the forecast accuracy. Furthermore, consistency is time varying. Exploring this time variation, we provide evidence that central bank communication as well as news on monetary policy can facilitate the understanding of those concepts and thereby improve the efficacy of monetary policy

The Implications of Central Bank Transparency for Uncertainty and Disagreement

Using survey data from 25 economies we provide evidence that greater transparency surrounding monetary policy reduces uncertainty of interest rates and inflation, primarily by reducing uncertainty that is common to agents rather than disagreement between agents. This suggests that studies that focus on disagreement as a proxy for uncertainty understate the benefits of monetary policy transparency. The adoption of inflation targets and forward guidance are both associated with lower uncertainty, although inflation targets have a stronger impact on reducing uncertainty than forward guidance. Moreover, there are diminishing benefits from ever higher levels of transparency. Taken as a whole, our results support the contention that clarity of communication is as important as the magnitude of transparency

Determinants of pollution: what do we really know?

The recent literature proposes many variables as significant determinants of pollution. This paper gives an overview of this literature and asks which of these factors have an empirically robust impact on water and air pollution. We apply Extreme Bound Analysis (EBA) on a panel of up to 120 countries covering the period 1960-2001. We find supportive evidence of the existence of the environmental Kuznets curve for water pollution. Furthermore, mainly variables capturing the economic structure of a country affect air and water pollutio

The euro and prices: changeover-related inflation and price convergence in the euro area

The purpose of the study is to examine the effects of the 'euro cash changeover' on consumer prices in the euro area. The report begins by describing price developments at the time of the introduction of euro notes and coins. The study also investigates the impact of price developments at the euro changeover on different households by socio-economic group. The third part of the report focuses on inflation perceptions and a fourth section explores the cross-border convergence of prices since the euro changeover. The following findings can be highlighted: (1) it appears that aggregate inflation rates were largely unaffected by the introduction of the euro; (2) overall, differences in inflation rates across different types of households are small; (3) inflation perceptions are mainly driven by lagged perceptions, inflation expectations and actual inflation while different individual inflation experiences also help to explain the 'jumps' in perception data; (4) price differentials have generally declined over time across European countries though there is no sizeable euro introduction convergence effect.The Euro and Prices: Changeover-related Inflation and Price Convergence in the Euro Area, euro changeover, inflation, perceptions, convergence, household-specific inflation, Sturm, Fritsche, Graff, Lamla, Lein, Nitsch, Liechti, Triet