The existing literature exhibits high uncertainty over the theoretical and empirical determinants of private world saving. This paper reports new evidence on the drivers of private saving by applying Bayesian techniques, using data from the world’s 35 largest economies in the period 1980-2012. After reviewing the main theories of consumption and saving decisions, and discussing the potential effects of different determinants, we specify a general model that incorporates the most commonly used factors in the literature, considering the potential endogeneity of some of the regressors. The Bayesian Model Averaging (BMA) approach summarises the information embedded in all combinations of the explanatory variables considered by averaging each specification according to its likelihood. We find that in the medium term private credit to GDP ratio, the government surplus to GDP ratio, the terms of trade, life expectancy and the old-age dependency ratio are key determinants of cross-country private saving behaviour. Lastly, we assess the long-term effect of expected demographic changes in private saving globally.

In the years 2008-09, following the Global Financial Crisis (hereafter the GFC), the global economy experienced its worst economic recession since the Great Depression. Some ten years later, this book examines the macroeconomic dynamics of the global economy in the aftermath of the GFC. The book is split into four sections. First, we look at the supply side of the economy and how potential growth is likely to have been affected by the GFC, against a backdrop of a long-run decline in productivity and rising inequalities. Second, we examine the impact of the GFC on demand, focusing on trends in global trade, household consumption and business investment. Third, we discuss how monetary policy reactions after the GFC were rapid and large enough to sustain the global economy and the international monetary system, but also take a closer look at the challenges ahead for central bankers, notably low inflation regimes, heightened uncertainties and low natural interest rates. The final section points out some stylized facts on the external sector variables of countries such as capital flows, exchange rates and cross-border monetary policy spillovers.

There is ample evidence that real interest rates have progressively declined and converged since the 1980s in most advanced and emerging economies, to stand currently at very low levels. The persistence of this trend and its intensification during the global financial crisis have raised a series of highly relevant issues in different areas. We follow a conceptual framework where global real interest rates are determined by the supply of (saving) and the demand for (investment) loanable funds at the global level. Against this background, this chapter analyses the determinants of this trend from a global perspective highlighting how globalisation and increasing financial integration, contributed to increase the influence of the emerging market economies since the beginning of this century. In the wake of the global financial crisis other factors in place were the subsequent reduction in the propensity to invest, the increase in precautionary saving, the introduction of non-standard monetary policies or the increase in income inequality. Looking forward, this chapter argues that the normalisation of monetary policies, the change in the growth model of certain emerging countries and the socio-demographic and productivity trends would point to a gradual recovery in real interest rates over a medium-term horizon, albeit with a high degree of uncertainty. Over the longer term, this trend may tail off against a background of limited technological progress or a sharper-than-expected decline in investment in the emerging economies.

La literatura economica muestra una gran incertidumbre sobre los determinantes teoricos y mpiricos del ahorro privado. Este trabajo aporta nueva evidencia sobre los principales determinantes del ahorro privado mediante la aplicacion de tecnicas bayesianas, utilizando datos de las 35 principales economias mundiales en el periodo 1980-2012. Despues de revisar las principales teorias que explican las decisiones de consumo y ahorro, y de discutir los efectos potenciales de los diferentes determinantes, se especifica un modelo general que incorpora las principales variables explicativas consideradas en la literatura, teniendo en cuenta su posible endogenidad. El enfoque Bayesian Model Averaging (BMA) resume la informacion subyacente en los modelos resultantes de las diferentes combinaciones de las variables explicativas promediando cada especificacion segun su verosimilitud. Este trabajo encuentra que, a medio plazo, el credito privado sobre el PIB, el saldo publico sobre el PIB, los terminos de intercambio, la esperanza de vida y el envejecimiento de la poblacion son determinantes clave del comportamiento del ahorro privado. Por ultimo, se evalua el efecto a largo plazo de los cambios demograficos esperados en el ahorro privado a escala mundial.

Este estudio ofrece un analisis empirico de la manera como la politica monetaria no convencional en Estados Unidos ha afectado a los paises latinoamericanos. Primero, estimamos los efectos de los anuncios de politica monetaria en Estados Unidos sobre la tasa de interes de los bonos soberanos, el tipo de cambio y los indices bursatiles de un grupo de paises emergentes, incluidas cinco economias latinoamericanas. Encontramos que los anuncios de expansion cuantitativa (QE) en 2008-2009 y la tapering talk en 2013 ocasionaron fluctuaciones considerables en el rendimiento de titulos soberanos y en los tipos de cambio. Tambien encontramos, en pocos casos, alguna sobrerreaccion del precio de los activos en los paises latinoamericanos. En la segunda parte del estudio, estimamos un modelo simple que mide la influencia de los fundamentos macroeconomicos especificos de cada pais sobre la transmision de las perturbaciones financieras en Estados Unidos. El modelo estimado que incluye la tasa de inflacion, el diferencial de CDS, el coeficiente de reservas oficiales y la capitalizacion del mercado explica parte de la heterogeneidad entre paises, de los efectos generados por los anuncios de politica monetaria en Estados Unidos. Con este modelo, cabe esperar un mayor efecto de la normalizacion de la politica monetaria estadounidense sobre America Latina que sobre otras economias emergentes.

We present a comparable set of results on the monetary transmission channels on firm investment for the four largest euro-area countries (Germany, France, Italy and Spain). With particularly rich micro datasets for each country containing over 215,000 observations from 1985 to 1999, we ex-plore what can be learned about the interest channel and the broad credit channel. For each of those countries, we estimate neo-classical investment relationships, explaining investment by its user cost, sales and cash flow. We find investment to be sensitive to user cost changes in all those four countries. This implies an operative interest channel in these euro-area countries. We also find in-vestment in all countries to be quite sensitive to cash flow movements. However, only in Italy do smaller firms react more to cash flow movements than large firms, implying that a broad credit channel might not be equally pervasive in all countries.

Este articulo ofrece una revision de la importancia de Estados Unidos en la economia y el sistema financiero globales, y repasa los principales retos internos y externos que afronta para mantener su posicion de liderazgo mundial. En el plano interno se destacan la conduccion de las finanzas publicas hacia una senda sostenible, la configuracion de un sistema financiero mas estable, el aumento del crecimiento potencial y la reduccion de la desigualdad. En el externo se subrayan la posicion de Estados Unidos en la gobernanza de las principales instituciones multilaterales y el pleno desarrollo de los acuerdos comerciales internacionales.

The global financial crisis triggered in 2007-2008 has been the most serious shock to the world economy since the Second World War. As a result of the crisis, the GDP of the main developed economies fell by between 3% and 6% from its previous high, despite the rapid and coordinated response of the economic authorities. The measures aimed at stimulating aggregate demand, supporting the financial sector and restoring agents’ confidence succeeded in breaking the negative feedback loop between the weakness of financial systems and the deterioration in the real economy, and contributed to the start of a moderate recovery. Gradually, the role of macroeconomic policy in support of the recovery has become more focused on monetary policy, given the deterioration in the public finances of many advanced economies. Despite the support of monetary policy, recovery in the major economies is proving slow, fragile and uneven. Some of these economies, such as the United States, have returned to growth rates close to pre-crisis levels; others, including some in the euro area, continue to post growth rates far below those achieved in the previous upswing, and have even suffered fresh setbacks. As a result, GDP levels are well below their pre-crisis trends (see Charts 1 and 2). In this context, there is heated debate about the causes of the persistent low growth in advanced economies, which has significant implications both for their prospects and for economic policy responses. The numerous factors that have been highlighted in this debate include the imbalances accumulated in the past (both before and during the crisis), certain longer-term trends, that were already apparent before the global financial crisis was triggered and might be behind the persistent weakness of aggregate demand (such as the increasingly unequal income distribution or the higher demand for safe assets), and various phenomena that might point to a reduction in potential growth (such as population ageing or a slowdown in technical progress). This article offers a broad overview of the studies that have been emerging on the impact of the crisis on advanced economies, with a view to determining and assessing the main factors responsible for the weakness of the recovery in these economies, and reflecting on the appropriate economic policies to overcome this prolonged period of slow growth. The next section outlines the usual patterns of exit from financial crises, and compares them to the current path of recovery. The third section analyses the main imbalances resulting from the crisis, assessing the extent to which they are being corrected. In the fourth, the outlook for potential growth is discussed, while in the fifth the role of economic policies in the current situation is reviewed. The article concludes with some brief final reflections.

La crisis financiera global desencadenada en 2007-2008 ha sido la perturbacion mas grave experimentada por la economia mundial desde la Segunda Guerra Mundial. Como resultado de la crisis, el PIB de las principales economias desarrolladas se redujo entre un 3 % y un 6 % desde el maximo previo, a pesar de la respuesta rapida y coordinada de las autoridades economicas. Las medidas dirigidas a estimular la demanda agregada, dar apoyo al sector financiero y restaurar la confianza de los agentes permitieron quebrar la realimentacion de efectos negativos entre la debilidad de los sistemas financieros y el deterioro de la economia real, y contribuyeron al inicio de una suave recuperacion. Paulatinamente, el protagonismo de la politica macroeconomica como soporte de la recuperacion ha ido recayendo en mayor medida en la politica monetaria, dado el deterioro experimentado por las finanzas publicas en muchas economias avanzadas. A pesar del apoyo de la politica monetaria, la recuperacion en las principales economias esta siendo lenta, fragil y desigual. Algunas de ellas, como la de Estados Unidos, han retornado a tasas de crecimiento proximas a las anteriores a la crisis; otras, entre las que se encuentran algunas del area del euro, siguen registrando ritmos de avance muy inferiores a los alcanzados en la fase de expansion previa, y han experimentado incluso nuevos retrocesos. Como resultado de todo ello, los niveles del PIB se situan muy por debajo de los que marcarian las tendencias previas a la crisis. En este contexto, existe un intenso debate sobre las causas del bajo crecimiento persistente en las economias avanzadas, que tiene implicaciones importantes tanto para sus perspectivas como para las respuestas de politica economica. Entre los multiples factores que se han apuntado en este debate estan los desequilibrios acumulados en el pasado —tanto en la fase previa a la crisis como durante esta—, algunas tendencias de mas largo plazo, que ya se venian manifestando antes de que se desencadenase la crisis financiera global y que estarian detras de la persistente debilidad de la demanda agregada —como el aumento de la desigualdad en la distribucion de la renta o la mayor demanda de activos seguros—, y diversos fenomenos que apuntarian a una reduccion del crecimiento potencial —como el envejecimiento de la poblacion o la disminucion del ritmo de progreso tecnologico—. Este articulo realiza un amplio repaso de los trabajos que han ido apareciendo sobre el impacto de la crisis en las economias avanzadas, con objeto de determinar y evaluar los principales factores que estan incidiendo en la debilidad de la recuperacion de estas economias, y de reflexionar sobre las politicas economicas adecuadas para superar este periodo prolongado de crecimiento lento. En la siguiente seccion se caracterizan los patrones habituales de salida de las crisis financieras y se comparan con la senda de recuperacion actual. En la tercera seccion se analizan los principales desequilibrios resultantes de la crisis, valorando en que medida se estan corrigiendo. En la cuarta se discuten las perspectivas de crecimiento potencial, mientras que en la quinta se repasa el papel de las politicas economicas en la situacion actual. El articulo concluye con unas breves reflexiones finales.

The lack of theoretical models explicitly addressing the issue of the long-run effects of inflation has not prevented many researchers from trying to estimate inflation costs. The evidence so far is not conclusive. A series of recent papers have tried to assess the long-run impact of current inflation within the framework of the so called convergence equations. These equations can be derived from a theoretical model of economic growth, although the reasons for including the inflation rate among the determinants of growth remain somewhat unclear. This paper adheres to this approach to estimating the impact of inflation upon the long-run performance of the OECD countries. The approach has several advantages as compared with more standard ones. First, and foremost, an explicit model prevents the omission of relevant variables. Second, convergence equations allow for a variety of effects of inflation including those which reduce accumulation rates and those which undermine the efficiency with which productive factors operate. Finally, in this framework a clear distinction can be made between level and rate of growth effects of inflation; this difference matters as regards the size and the timing of the costs of inflation. The methodology also has some shortcomings. First, growth models focus on long-run issues, disregarding the short-run costs associated with disinflation (the sacrifice ratio). Second, the use of multi-country data sets imposes too many restrictions on the parameters to prevent a shortage of degrees of freedom. Also, the direction o f causality among the variables included in convergence equations is not unambiguous. This paper tries, in several ways, to overcome these limitations to check the robustness of the inflation-growth empirical link.

The existence of a credit channel in the process of transmission of monetary impulses is a recurrent topic in the literature on the effects of monetary policy. Nevertheless, macroeconomic models have frequently tended to ignore this channel of transmission and empirical tests of its existence have usually been unsatisfactory. Over the past decade, a large number of papers, mainly about the US economy, have helped to correct the traditional assumption that credit is relatively unimportant in the monetary transmission mechanism. They have also provided new empirical approaches to test the existence of this credit channel.

Spanish Abstract: Tras casi seis años con los tipos de intervención situados en niveles cercanos a cero y con numerosos estímulos no convencionales todavía en vigor, en 2014 ya se percibe la proximidad de la normalización monetaria en las economías en las que, como en Estados Unidos y el Reino Unido, el proceso de recuperación parece más afianzado. Sin embargo, el Banco de Japón continúa con su ambicioso programa de expansión monetaria y en el área del euro se han adoptado medidas adicionales de carácter expansivo. Este documento, en primer lugar, hace una valoración de los distintos programas extraordinarios de política monetaria realizados por los principales bancos centrales de las economías avanzadas en respuesta a la crisis financiera global; en segundo lugar, expone los riesgos asociados a la prolongación de las actuales medidas y los interrogantes sobre la gradualidad en la retirada de dichos estímulos; y, por último, avanza algunas lecciones sobre la conducción de la política monetaria en el futuro.

Using information from the balance sheets of Spanish banks between 1995 and 2009 matched to credit information at the bank-industry and bank-firm level, we estimate the average impact of current and anticipated changes in banks’ capital on lending to firms. We isolate the role of credit supply factors using the variation in capital growth associated with the bank-specific historical exposure to real estate development and its interaction with the change in house prices in the provinces where the banks operate. We control for the quality of borrowers by using region and industry fixed effects. A 1 % increase in capital growth increases business lending to non-real estate firms by between 0.7 and 0.8 %—a limited magnitude when set against the literature. The relatively small magnitude of credit supply factors may be explained by the weakness of loan demand in a context of deep recession.

In the Spanish labour market, characterised by high labour market inflows and outflows, aggregate wage behaviour may be significantly affected by changes in the composition of employment. This effect may have been particularly important in the period dating from 2008, in which the marked job destruction has been concentrated in lower skilled and in less experienced workers whose average wage is below the Spanish average. It is therefore important to isolate the mechanical changes which this phenomenon may have caused in wages, in order to determine accurately how wages have responded to economic developments.

espanolCasi cuatro anos despues de la quiebra de Lehman Brothers, el tono de la politica monetaria en gran parte de las economias avanzadas continua siendo extraordinariamente laxo, con tipos de intervencion proximos a cero y con numerosos estimulos no convencionales todavia en vigor. Este protagonismo de la politica monetaria ha respondido tanto a la necesidad de restablecer el funcionamiento normal del mecanismo de transmision de la politica monetaria —contribuyendo a la recuperacion de la estabilidad en distintos segmentos de los mercados financieros— como al objetivo de estimular las decisiones de gasto de los agentes economicos. En este contexto, el presente trabajo, tras resumir las medidas de politica monetaria adoptadas en las principales economias avanzadas hasta configurar la situacion actual de tipos cercanos a cero y vigencia de importantes estimulos extraordinarios, ofrece una reflexion sobre el papel de los distintos instrumentos de politica economica a la luz de los resultados de la literatura academica y de las recientes tomas de posicion sobre esta materia por parte de instituciones internacionales y autoridades nacionales. El trabajo concluye resumiendo las principales lecciones para la gestion de las politicas economicas que pueden extraerse de la crisis actual e identifica algunas cuestiones sobre las que todavia existe una cierta controversia. EnglishAlmost four years after the collapse of Lehman Brothers, the monetary policy stance in most advanced economies remains extraordinarily loose, with policy rates close to zero and a number of non-conventional stimuli still in place. The resulting prominence of monetary policy responds, first, to the need to restore the functioning of the monetary transmission mechanism by contributing to the stabilisation of various financial market segments; and further, to the objective of stimulating economic agents´ spending decisions. This paper summarises the monetary policy measures adopted in the main advanced economies and reflects on the role played by different economic policy instruments, drawing both on the results of academic literature and on the recent positions taken by international institutions and national authorities. The paper concludes by summarising the main economic policymaking lessons to be learnt from the current crisis and it identifies issues still eliciting controversy.

We analyze the takeover premiums paid for a sample of European bank mergers between 1997 and 2007. We find that acquiring banks value profitable, high-growth and low risk targets. We also find that the strength of bank regulation and supervision as well as deposit insurance regimes in Europe have measurable effects on takeover pricing. Stricter bank regulatory regimes and stronger deposit insurance schemes lower the takeover premiums paid by acquiring banks. This result, presumably in anticipation of higher compliance costs, is mainly driven by domestic deals. Also, we find no conclusive evidence that bidders seek to extract benefits from regulators either by paying a premium for deals in less regulated regimes or by becoming ‘too big to fail’.

This paper summarizes the microevidence on the setting of producer prices in the euro area. The main findings are: (i) 21% of producer prices are adjusted each month, (ii) producer prices are changed more frequently and by smaller amounts than consumer prices (even after controlling for product characteristics), (iii) price decreases are relatively frequent, (iv) inflation correlates positively with the difference between the frequency of price increases and decreases, and (v) there is substantial variation in price flexibility across sectors, which can be explained in part by differences in the cost structure, the degree of competition, and the level of sectoral inflation.