Jordi Schröder Bosch

Frances 'Cassandra' Coppola @francescoppola.bsky.social [ View ] Apr 09, 2024 at 11:14 UTC

My latest for The Mint magazine. Western economists think the natural state of an economy is stability. though shocks can temporarily destabilise it. But economic history shows the natural state of the global economy is instability, not stability. www.themintmagazine.com/the-illusion...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 09, 2024 at 08:23 UTC

A stronger than expected transmission of monetary policy to loan demand, downward revisions in March's inflation projections, and March's inflation at 2.4% should signal that the context is ripe for a cut on Thursday's Govco meeting.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 09, 2024 at 08:21 UTC

We observe a decline in loan demand by enterprises in Spain, Italy, and France. In Germany, there's a strong rebound of loan demand for house purchase:

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 09, 2024 at 08:20 UTC

Credit standards are either easing or entering neutral territory in most countries:

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 09, 2024 at 08:19 UTC

The ECB just released the Bank Lending Survey for Q1-2024. Importantly, loan demand by enterprises exhibits a more substantial decline than expected, underscoring the persistent impact of the ECB's monetary policy tightening. Some results disaggregated by countries below

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 08, 2024 at 06:42 UTC

"While there are many dumb ways of doing subsidy policy, the dumbest is not to have any subsidy policy at all"
www.ft.com/content/4d57...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:51 UTC

Worth noting that Cipollone underlines some of the points above in his latest speech, which I very much recommend: www.ecb.europa.eu/press/key/da...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:50 UTC

Summarising, wages need to keep increasing. This is not at odds with reaching the inflation target. Furthermore, it will prove macroeconomically beneficial for the euro area. For more, see my latest blog: www.positivemoney.eu/2024/04/wage...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:48 UTC

Hence, a strong labour market with solid wage growth can prove useful to increase productivity growth, which would give more leeway for wages to further increase.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:47 UTC

Finally, we are observing how in the US a strong labour market is being conducive of strong productivity gains. Changes in wages should not be viewed as independent from economic conditions. www.employamerica.org/blog/in-the-...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:44 UTC

Second, we have seen how unit profits increased during the current inflation bout. As a consequence, the wage share has decreased. This means that corporations have plenty of margin to absorb wage increases without passing it on to prices.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:41 UTC

Thinking in these terms has some drawbacks. irst, the equation above applies to domestic prices. The ECB targets the HICP, which encompasses goods produced both domestically and abroad. As the terms of trade improve, this leaves space for wages to keep rising.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:40 UTC

Basically, if wages increase, three things can happen: either prices rise, the wage share increases, or productivity increases. Assuming a 1-2% productivity growth and a constant wage share, a 3% wage growth would be in line with the 2% inflation target.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:37 UTC

It is important to note that the above stems from an accounting identity (an equation that must always hold) that states that the growth rate of domestic prices can be decomposed into productivity, nominal wages, and the wage share. jwmason.org/wp-content/u...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:36 UTC

Hence, it is imperative for nominal employee compensation to persistently outpace its historical trend to make up for lost ground. There's a moniker within central banking circles that wage growth over 3% is incompatible with a 2% inflation target.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 04, 2024 at 12:35 UTC

When discussing the recent rise in nominal employee compensation (left), we must contextualize it against the backdrop of inflation-adjusted figures (right). Despite the modest nature of its long-term growth, the latter remains significantly below its historical trend.

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 03, 2024 at 15:59 UTC

Here is the paper: edi.bard.edu/research/not...

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Jordi Schröder Bosch @jordischroeder.bsky.social [ View ] Apr 03, 2024 at 15:59 UTC

Too often, encountering the word "capital" in an essay initiates a guessing game to discern whether the authors are referring to capital equipment, financial flows, a social relationship, etc. @cthelala.bsky.social sets the record straight from the first footnote. We need more of this!

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