Transcript l*industria fotovoltaica italiana: caratteristiche strutturali e

Villa Mondragone International Economic Seminar
23-24 June 2016
Antonio Aquino
[email protected]
University of Calabria
Department of Economics, Statistics
and Finance
Introduction
 Since 1999 several European countries have adopted the
euro as a common currency.
 The European Monetary Union seemed to collapse in
2009-2010, afterwards the risk of a break-up was
greatly reduced.
Objectives
 To assess the roots of the Euro Zone crisis
 To examine the different economic dynamics of the
northern countries and the Mediterranean countries
with a special focus on price developments.
Background
 Price divergences across the Euro zone go back to the
early 2000s
 These divergences remained unnoticed until 2008,
when competitive imbalances had become so strong
that it appeared very difficult to restore a competitive
balance without a break-up of the monetary union.
 From 2009 to 2016 the competitive balance inside the
euro area was restored, at the cost of very deep
deflations in Southern countries, which caused a
reduction of relative money wages, at the cost of very
high unemployment.
Background
 Although the euro area crisis materialized during the
international financial crisis, its fundamental causes
were not related to this crisis but to its competitive
imbalances
 Cost, price and Current account imbalances inside the
euro zone progressively worsened for a decade from
1998 to 2008 without attracting the due attention from
European institutions
 Some of these imbalances were singled out
by "the
Economist" already in February 2005 in the article “A
single currency but many real exchange rates”.
Long term interest rates
in the Euro Zone from 1999 to 2007
 The most reliable indicator of financial market
sentiments about the stability of the euro is the
relationship between long-term interest rates in the
different countries of the euro zone.
 For Italy, France, Spain, Portugal and Ireland, the 10year nominal yield spreads to the German Bund was
less than 0.3% from 1998 to 2007;
 for Greece the spread decreased from 3.9% in 1998 to
0.3% in 2002, and remained at this level up to 2007.
Nominal interest rates on 10 years Gov bonds: spread
relative to Germany
20
15
10
5
-5
-10
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
13/4
0
Italy
France
Spain
Greece
Portugal
Ireland
Real interest rates on 10 years Gov bonds: spread
relative to Germany
20.00
15.00
10.00
5.00
Italy
France
Spain
Greece
Portugal
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
-10.00
2000
-5.00
1999
0.00
Ireland
Long term interest rates
in the Euro Zone from 2007 to 2012
 After 2007 the spread in long term interest rates
relative to Germany increased, particularly in real
interest rates: from -2.7% in 2008 to 22.5% in 2012 for
Greece, from -2.8% in 2006 to 10.9% in 2012 for
Portugal, from -3.7% in 2006 to 5.6% in 2012 for Spain,
from -2% in 2006 to 6.1% in 2011 for Ireland, from
-1.4% in 2006 to 4.1% in 2012 for Italy, from -1.9% in
2006 to 1.9% in 2013 for France.
Long term interest rates
in the Euro Zone from 2012 to 2016
 From 2012 to June 2016 the spread to Germany in long
term interest rates decreased from 1% to 0.4% for
France, from 4% to 1.3% for Italy, from 4.1% to 1.5% for
Spain, from 7% to 0.7% for Ireland, from 9% to 3.1%
for Portugal, from 21% to 7.4% for Greece).
The fundamental cause
of the euro zone crisis
 For almost a decade after the adoption of a common
currency, average prices increased significantly less in
Germany than in Italy, France, Spain, Greece, Portugal
and Ireland. The same had happened, with the only
exception of France, also in the decade before the start
of the European monetary union. Before 1999,
however, competitive imbalances caused by intercountry differences in inflation rates could be
eliminated by changes in nominal exchange rates, a
possibility no more available after the adoption of a
common currency.
The fundamental cause
of the euro zone crisis
 Starting from 2008 the competitive imbalances
gradually accumulated since the adoption of the euro
caused a progressive increase of the spread with
respect to Germany in long term interest rates, likely
because of the rising risk of a breakup of the euro area,
with the adoption by the countries in which inflation
had been greater (Italy, France, Spain, Greece,
Portugal and Ireland) of currencies depreciated with
respect to the currencies of the countries where prices
had increased less, such as Germany.
The fundamental cause
of the euro zone crisis
 With respect to the year before the adoption of the
euro, the divergent dynamics of the GDP deflator
caused a loss of price competitiveness with respect to
Germany up to 11% in 2008 for France, 18% in 2009 for
Italy, 20% in 2010 for Greece,
Portugal,
Spain.
28%
26%
in 2008 for
in 2006 for Ireland, 31% in 2008 for
Relative GDP deflator index with respect to Germany
133
128
123
118
113
108
103
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
98
ITA/GER
FRA/GER
SPA/GER
GRE/GER
POR/GER
IRE/GER
Towards a return to a Competitive
Equilibrium in the Euro Zone
 In recent years a substantial part of the competitive
imbalances in the euro zone have been reversed as a
consequence of very strong deflationary policies,
particularly in Greece and Spain where unemployment
rates have increased to exceptionally high levels (about
27% in 2013-14), and a slight increase in the German
inflation rate. In 2016 the residual loss in GDP price
competitiveness relative to Germany seems to be still
quite high for Spain and Portugal (19%) and Italy
(14%), while it has decreased to about 10% for Ireland,
5% for France, 2% for Greece.
Labour productivity and labour price
in the Euro Zone
 The dynamics of goods prices mainly depends upon the
difference between the rate of change of labour price and
the rate of change of labour productivity.
 The dynamics of productivity has been quite disappointing
in the euro zone after the adoption of the common
currency, with the exception of Greece up to 2007. From
1998 to 2007 labour productivity
has remained
substantially unchanged in Italy and Spain, has increased
about 10% in France and Germany, 12% in Portugal, 10% for
the whole euro zone. During the same period, labour
productivity increased substantially more in the USA
(20%), the United Kingdom (18%), and Japan (14%).
Labour productivity and labour price
in the Euro Zone
 The comparative dynamics of productivity in the euro
zone and the USA has been the more disappointing
since for most of the half century before the adoption
of the euro, productivity had increased significantly
more in European continental countries than in the
USA, and most economists forecasted that the
adoption of a common currency would have given a
strong burst to productivity in the euro countries,
whose GDP per capita had expected to overtake that
of the USA in about a decade.
Labour productivity and labour price
in the Euro Zone
 This forecast resulted to be completely wrong, and
during the decade after the adoption of the euro the
difference in GDP per capita between continental
western Europe and the USA instead of disappearing,
increased again quite substantially. Only Greece (27%)
and Ireland (26%) registered a greater increase in
productivity than the USA from 1998 to 2007.
(However it should be pointed out that the decrease in the
rate of growth of productivity in most continental
European countries and its increase in the USA had started
since the mid nineties of the 20th century.)
The dynamics of the labour cost
per unit of output
 In
Germany the rate of increase of average
compensations decreased to the same extent as that of
productivity, leaving substantially unchanged the
index of labor cost per unit of output from 1998 to
2007 (while the GDP deflator index increased by 10%).
During the same period, the index of labour cost per
unit of output (wage inflation), increased by 33% for
Ireland, 28% for Greece, 26% for Portugal, 25% for
Italy, 13% for France.
The dynamics of the labour cost
per unit of output
 In the case of Italy, Spain, Portugal and France the
greater increase in labor cost per unit of output from
1998 to 2007 was caused most likely by the unexpected
fall in the rate of increase of productivity. In Greece
and Ireland, instead, in spite of a rate of increase of
productivity quite high from 1999 to 2007, a still very
higher rate of increase of average compensations
caused a substantial increase in the unit labor cost of
output.
Productivity from 2007 to 2016
 The performance of productivity in the euro zone over the
years from 2007 to 2016 has been even more disappointing
than over the period 1998- 2007.
 The average total increase of productivity in nine years has
been as low as 2%
 From 2007 to 2016 labour productivity has decreased about
5% in Italy and 13% in Greece.
 In Germany labour productivity has remained substantially
unchanged from 2007 to 2016, in France it has increased
less than 4% in 9 years, and in Portugal about 5% in 9
years.
Index of labour productivity, 1998 = 100
150
140
130
120
110
100
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
90
Germany
Italy
France
Greece
Portugal
Ireland
Spain
The dynamics of wage inflation 2007-2016
 The index of wage inflation indicates a substantial
reduction of competitive disequilibria in the euro zone
from 2007 to 2016.
 The correction has been:
 complete for Ireland, also thanks to a substantial
increase in productivity.
 nearly complete for Greece despite a 13% productivity
drop, so that an exceptional reduction of nominal
compensations was necessary to restore a competitive
equilibrium for Greece
Wage inflation index with respects to Germany
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
138
133
128
123
118
113
108
103
98
ITA/GER
FRA/GER
SPA/GER
GRE/GER
POR/GER
IRE/GER
Index of nominal average compensations per employee
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
180
170
160
150
140
130
120
110
100
90
Germany
Greece
Italy
Portugal
France
Ireland
Spain
The dynamics of the labour cost
per unit of output
 A substantial reduction in relative unit labor cost of
production has been registered from 2007 to 2016 in
Portugal (index of wage inflation with respect to
Germany decreasing from 126 in 2008 to 106 in 2016)
and in Spain (from 136 in 2008 to 111 in 2016). Less
substantial was the recovery in labor cost
competitiveness for France (from 117 in 2011 to 112 in
2016) and for Italy (from 127 in 2008 to 121 in 2016).
The dynamics of GDP deflators
compared to that of wage inflation
 The competitiveness index based upon the GDP
implicit deflator shows a loss of competitiveness with
respect to Germany between 1998 and 2016 smaller
than the index based upon changes in productivity
and compensations of employees for Italy (6%), France
(6%) and Greece (3%); while the competitiveness
index based upon the GDP implicit deflator shows a
loss of competitiveness with respect to Germany
greater than the index based upon changes in
productivity and compensations of employees for
Spain (7%), Ireland (10%) and Portugal (13%).
The dynamics of GDP deflators
compared to that of wage inflation
 The above differences have mainly emerged after 2008,
since in 2008 the competitiveness index based upon
the GDP implicit deflator showed a loss of
competitiveness with respect to Germany smaller than
the index based upon changes in productivity and
compensations of employees for almost all countries:
Spain 3%, France 5%, Greece 7%, Italy 8%, Ireland
12%, while for Portugal there was no difference
between the two indexes.
Wage inflation/GDP deflator
112
107
102
97
92
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
87
ITA/GER
FRA/GER
SPA/GER
GRE/GER
POR/GER
IRE/GER
The balance of payments dynamics
 The evolution of competitive relations inside the euro
zone can be also detected on the basis of the balance
of payments dynamics.
 Germany registered current account deficits in the
first years of the euro (-1.8% of GDP in 2000),
afterwards it registered a growing surplus up to 6.8%
of GDP in 2007.
 Current account deficit increased from -3.3% of GDP
in 1999 to
-9.6% in 2007 for Spain and from -7% of
GDP in 2001 to -14.4% of GDP in 2008 for Greece.
 CA surplus registered in Italy and France in 1999
Current account balance as a percentage of GDP
10
5
-5
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
0
-10
-15
Germany
Italy
France
Spain
Greece
Portugal
The balance of payments dynamics
 From 2008 to 2016 all the crisis countries of the euro zone
have turned their negative current account balance in a
surplus.
 The greatest current account adjustment occurred in
Greece, Portugal, Spain and Ireland.
 In Greece the current account balance increased from
-14.4% of GDP in 2008 to +2.1% of GDP forecasted for 2016
 In Portugal the current account balance increased from
-12.1% of GDP in 2008 to +0.9% forecasted for 2016
 In Spain the current account balance increased from -9.6%
of GDP in 2007 to +1.2% forecasted for 2016.
The balance of payments dynamics
 For Italy and France the current account adjustment
began later, increasing from -3.5% of GDP in 2010 to
+1,7% in 2014 for Italy, and from -1.2% of GDP in 2012
to +0.2% in 2015 for France.
 Current account adjustments in Greece,
Spain,
Portugal, Ireland, Italy and France after 2007 were not
accompanied by a reduction of the current account
surplus of Germany, which, instead, increased from
5.4% of GDP in 2010 to 8.3% in 2015, but by an increase
in the current account surplus of the whole euro zone,
from -0.6% of GDP in 2008 to +3.8% in 2015.
Conclusions
 From the dynamics of current account balances, labour
costs and product prices in different countries of the euro
zone, it appears clear the fundamental cause of the crisis of
the euro zone in 2008-2010: an increasing competitive
disequilibrium between Germany and other countries of
the euro zone.
 This growing disequilibrium gave rise to the fear that
Greece, Spain, Portugal, Italy, Ireland, and perhaps also
France, could leave the euro to adopt national currencies
depreciated with respect to the euro in order to return to a
situation of competitive equilibrium with Germany.
Conclusions
 Over the years, however, it has been quite clear that in
order to remain in the euro zone the inhabitants of
Italy, Greece, Spain and Portugal have been willing to
accept very strong deflationary policies which seem to
have allowed to restore a substantial competitive
equilibrium through reductions unprecedented in
modern times in the rate of increase, and in the case of
Greece even in the level, of money wages, with very
high costs in terms of unemployment, in particular in
Greece and Spain (27% in 2014).
Conclusions
 The restored competitive equilibrium, together with the
direct effects of the decrease of home demand on imports
of goods and services, has led to a reversion of the
dynamics of trade balances and current account balances.
The trade balance has increased from -42 billion dollars in
2010 to +64 billion in 2014 for Italy, from -90 billion dollars
in 2007 to + 44 billion in 2013 for Spain, from -46 billion in
2008 to +1 billion forecasted in 2016 (the best results since
1995) for Greece, from -26 billion dollars in 2008 to +2
billion in 2013 in Portugal, from -73 billion dollars in 2011 to
- 14 billion forecasted for 2016 for France, from +19 billion
dollars in 2006 to +52 billion forecasted in 2016 for Ireland.
Conclusions
 These adjustments in trade balances have been
realized in spite of an increase in Germany's trade
surplus from 170 billion dollars in 2009 to nearly 262
billion forecasted for 2016. As a consequence the euro
zone has registered an increase in its trade surplus
from 131 billion dollars in 2006 to 500 billion in 2014
and to 554 billion forecasted for 2016. Outside the euro
zone, Japan's trade balance has decreased from a
surplus +74 billion dollars in 2007 to a deficit of 144
billion in 2014, decreasing afterwards to a deficit of 56
billion forecasted for 2016.
Thank You
Thank You