Why is euro inflation so low?

Jean-Pierre Landau 02 December 2014

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Inflation in the Eurozone stood at 0.4% (year on year) in November. It has been persistently declining for almost a year, and constantly undershooting forecasts. The Eurozone is now clearly diverging from many advanced economies, where inflation is either on the rise – albeit at moderate levels – as in the US, or, when falling, still remaining close to target, as the UK.

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Topics:  Macroeconomic policy Monetary policy

Tags:  inflation, eurozone, safe assets, safety trap, risk aversion, disinflation, exchange rates, interest rates, liquidity trap, zero lower bound, monetary policy, public debt, Eurozone crisis, Central Banks, ECB, quantitative easing, long-term refinancing operations, unconventional monetary policy, liquidity, asset-backed securities, securitisation, debt sustainability, fiscal space, fiscal capacity, balance sheets

Policy uncertainty spillovers to emerging markets: Evidence from capital flows

Dennis Reinhardt, Cameron McLoughlin, Ludovic Gauvin 05 November 2014

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In the wake of the global financial crisis of 2007–2008, advanced economies experienced heightened levels of uncertainty in macroeconomic policymaking. Against this backdrop, policymakers debated the domestic and global spillover implications of advanced-country policy uncertainty (e.g. IMF 2013). At the same time, the potential for monetary policy settings in advanced countries to spill over to emerging market economies (EMEs) via capital flows was hotly contested in both academic and policymaker circles (e.g. Fratzscher et al. 2013).

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Topics:  International finance Macroeconomic policy Monetary policy

Tags:  capital flows, Capital inflows, emerging markets, policy uncertainty, spillovers, global crisis, monetary policy, macroeconomic policy, risk aversion, home bias

Are you risk taking or risk averse? It may depend on how you measure it!

Graham Loomes, Ganna Pogrebna 02 August 2014

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There are three common ways of measuring individual risk attitudes: the choice list procedure, the ranking procedure, and the allocation procedure. If individual risk attitudes can be used to help explain and predict other economic decisions (such as the choice of investments, insurance policies, pension schemes, etc.) we should expect that different procedures should at least on average lead to the same results. For example, the same individual should be classified as risk averse, risk neutral, or risk taking irrespective of the procedure used.

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Topics:  Frontiers of economic research

Tags:  preferences, risk aversion, measurement, risk attitudes

The ‘fear factor’: Personal experience and risk aversion in times of crisis

Peter Koudijs, Hans-Joachim Voth 12 April 2014

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To paraphrase Larry Summers, some people are scared – just look around. The crisis of 2007–08 took a toll on a lot of people, investors included. What seemed to be a new age of steady, moderately high growth and stable equity returns suddenly turned into the biggest economic crisis since the 1930s:

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Topics:  Economic history Financial markets

Tags:  financial markets, crisis, behaviour, risk aversion, lending

Foreign investors and crises: There is no safe haven for all seasons

Maurizio Michael Habib, Livio Stracca 28 February 2014

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The resilience of the international status of the US dollar remains surprising (Frankel 2013). At the peak of the global financial crisis which started in the US, in particular in the last quarter of 2008, US treasury yields fell and the US dollar appreciated. This has created the impression of a stronger demand for US securities in general. The evidence suggests, however, that non-US residents were instead relatively ‘picky’, fleeing into short-term US Treasury bills but reducing purchases of longer-dated Treasury bonds and shedding other US bonds.

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Topics:  Financial markets Global crisis

Tags:  US, reserve currency, financial crisis, asset pricing, global crisis, risk aversion, home bias, safe haven, portfolio flows

Shaping risk preferences across time

Alison Booth, Patrick Nolen, Lina Cardona Sosa 20 February 2012

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The majority of experimental studies investigating gender differences in risky choices find that women are less willing to take risks than men. This research is summarised in Eckel and Grossman (2008) and Croson and Gneezy (2009). However, these experimental studies investigating gender differences in risky choices typically do so only at a single point in time.

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Topics:  Frontiers of economic research Gender Labour markets

Tags:  competition, risk aversion, sexism

Gender differences in risk aversion: Do single-sex environments affect their development?

Alison Booth, Lina Cardona Sosa,

Date Published

Mon, 02/06/2012

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Are married women less risk-averse? If so, why?

Graziella Bertocchi, Costanza Torricelli, Marianna Brunetti 13 March 2010

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A growing literature has explored gender differences in making financial decisions. At the same time, there is a parallel literature on the implications of marital status. This research generally reveals a higher degree of risk aversion among women and single people. Studies such as Sundén and Surette (1998), Jianakoplos and Bernasek (1998), and Barber and Odean (2001) consider marital status and gender jointly and conclude that single women exhibit the most cautious attitude.

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Topics:  Financial markets Labour markets

Tags:  gender, marriage, risk aversion

Gender, risk, and competition

Alison Booth 14 September 2009

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It is well known that women are under-represented in high-paying jobs and top-level management positions. Recent work in experimental economics, largely examining college-age men and women attending coeducational universities, has examined to what degree this underrepresentation may be due to innate differences between men and women. Experimental studies have shown that women are less willing than men to take risks or to enter a competitive environment such as a tournament (see for example Niederle and Vesterlund, 2007).

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Topics:  Frontiers of economic research

Tags:  gender, Culture, risk aversion

Can we understand the recent moves of the euro-dollar exchange rate?

Anton Brender, Emile Gagna, Florence Pisani 21 July 2009

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Trying to forecast foreign exchange rates is challenging. Understanding their past behaviour is not much easier. In this respect, the bumpy road followed by the dollar against the euro during the last two years seems to be no exception. Nonetheless, a look at Figure 1 gives some interesting clues. It compares the rate of the euro in dollars and the difference in 3-month rates on the two currencies expected at a one year rolling horizon. Until last year, the two variables appear to have been strongly correlated. This should not be a complete surprise.

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Topics:  Exchange rates

Tags:  euro, dollar, foreign exchange, risk aversion

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