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Volume 14 (2015) Issue 1 - Quarterly report on the euro area. March 2015

Author(s): Directorate General for Economic and Financial Affairs (ECFIN). European Commission

Volume 14 (2015) Issue 1 - Quarterly report on the euro area. March 2015pdf(2 MB) Choose translations of the previous link 

The first section analyses recent developments in cross-border capital flows into and out of euro area Member States. Between 2008 and the summer of 2012 – when the ECB announced its OMT programme – a substantial proportion of cross-border financial flows was taken over by official financing by central banks or governments. Since the summer of 2012, net private financial flows have resumed, while official flows have generally come down, a sign of regained confidence in the euro area. However, the analysis of gross financial flows also indicates that the strong dynamics of cross-border financial asset acquisition observed in pre-crisis years has yet to return.

Cross-border capital flows in the euro area

The second section looks at the movement of workers between EU countries from the perspective of economic adjustment. The analysis shows that monetary unification in Europe was followed by an increase in the responsiveness of labour mobility to unemployment differences and to asymmetric demand shocks.

The third section discusses housing taxation from an efficiency and equity standpoint, highlighting the fiscal and macroeconomic consequences of current tax rules. It focuses on the economic distortions generated by exemptions and relief measures for owner-occupied housing and on tax breaks for mortgage interest payments.

The last section analyses the weakness of investment in the euro area since the start of the crisis. The complex dynamic relationship between investment and other macroeconomic variables is assessed via a relatively large Bayesian VAR model of 26 macroeconomic variables. The analysis confirms that the weakness of investment is mostly due to the very low level of growth in the recent past (a strong accelerator effect), relatively high real interest rates, and ongoing deleveraging in the private sector.


(Quarterly report on the euro area 1. March 2015. Brussels. PDF. 56pp. Tab. Graph. Free.)

KC-AK-15-001-EN-N (online)KC-AK-15-001-EN-C (print)
ISSN 1830-6403 (online) ISSN 1725-5759 (print)

JEL classification: A10, C10, C11, C15, C20, C32, C33, E20, E22, E27, E61, F15, F32, F34, F35, F39, F40, F45, H20, H23, J20, J60, J61, J68, R31

The Quarterly Report on the Euro Area is written by staff of the Directorate General for Economic and Financial Affairs (DG ECFIN). It is intended to contribute to a better understanding of economic developments in the euro area and to improve the quality of the public debate surrounding the area's economic policy.
The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.
Comments on the report would be gratefully received and should be sent to: ECFIN-QREA@ec.europa.eu

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