a/simmetrie – Italian Association for the Study of Economic Asymmetries

The impact of an exchange rate realignment on the trade balance – Euro vs. national currency

PB201401It is frequently claimed that the current EUR/USD exchange rate is too high and that a depreciation of the EUR against the USD would contribute to relieve the Eurozone economy from the current state of persistent crisis. Evidence provided by the a/simmetrie annual econometric model suggests that this claim is unsupported by the data, at least as far as the Italian economy is concerned. In fact, the size and sign of the trade elasticities show that the increases in net exports towards non-Eurozone countries, brought about by the depreciation of the euro, would be offset by an increase in net imports towards Eurozone countries, brought about by the increase in Italian domestic demand. To put it simply, in case of a depreciation of the EUR, the Italian economy would not only suffer a higher costs of energy (because of the depreciation vis-à-vis OPEC countries), but also spend in Germany much of the money it would earn by exporting in the US, Japan, and the emerging countries, with a net effect likely to be negative. (download the policy brief…)

Derivatives and non-financial companies: lessons from the financial crisis

s200_rodrigo.zeidanIn the last a/simmetrie working paper Rodrigo Zeidan (Fundaçao Dom Cabral and Nottingham University Business School China) asks why the hedging strategies carried out by non-financial companies have often resulted in hefty losses during the financial crisis. By analysing with a probit model a sample of companies located in the emerging markets. Zeidan finds that the size of the losses in the derivatives markets is influenced by asymmetric information in the companies’ governance, as well as from the management’s hybris, i.e., on overconfidence determined by the past trends in risk and returns, and favored by the remuneration structure. (download the working paper here…)

Lessons from Bretton Woods to the Eurozone

Bretton Woods1If Richard Nixon had not put it out of its misery on August 15th, 1971, the Bretton Wood system would have celebrated its 70th anniversary on last July 22nd. As Gianni Bulgari put it in Il Corriere della Sera (March 25th, 2014), a single currency like the euro, not supported by a single State, nor by a common political vision, basically amounts to a fixed exchange rate regime. The parable of the Bretton Woods fixed exchange system can therefore give us some interesting lessons on the Eurozone crisis. (continues in the media section…)

Frits Bolkestein on the current state of the Economic and Monetary Union

Bolkestein_21The keynote address held by Frits Bolkestein at the conference A Europe without the euro, organized by a/simmetrie in Rome on April 12th 2014. The former EU commissioner, and signatory of the European Solidarity Manifesto, explains the reasons that pushed Germany to support the single currency. By analyzing outcomes, Bolkestein argues that the idealistic project at the basis of the single currency has failed. Persevere in this error will not allow the overcoming of the economic crisis, nor to the member states of the North, nor to the members of the South.

Antoni Soy on the crisis in Spain

Soy3The speech held by Antoni Soy (University of Barcellona) at the conference A Europe without the Euro. Soy describes the critical situation of the Spanish economy, especially as far as the increase in unemployment and inequality is concerned. Moreover, he points out that the criticisms to austerity, in Spain as elsewhere, express a conservative position, namely, they are oriented to a defense of the single currency and of the current status quo. Quoting Frédéric Lordon, Soy concludes that national economic policies within the Eurozone are constrained by the deregulation of the international financial markets-

The Italian economy in the European semester

Realignmenta/simmetrie is currently developing an annual econometric model of the Italian economy, to be used for the medium-run scenario analysis of different economic policy decisions and of changes in the global macroeconomic framework. The purpose of this study is to evaluate the impact on the Italian economy of a possible reform of the European fiscal policy rules, in the light of the debate fostered by the Italian presidency of the EU. Among the topic investigated by a/simmetrie are the inflationary impact of a EUR/USD exchange rate realignment, and the consequences on the Italian trade balance of a depreciation of the euro. The results of these studies are submitted to the scrutiny of the scientific community, and disseminated among the general public, in order to contribute to the quality of the political debate in Italy and elsewhere.

The cooperation with the International Network for Economic Research

Jeffersona/simmetrie has cooperated to the organisation of the 16° Annual Conference of INFER (International Network for Economic Research), that took place in Pescara from May 29th to May 31st, 2014 (the picture shows Gary Jefferson’s keynote address in the Acerbo hall of Castle Chiola, Loreto Aprutino). This experience has strengthened the relations between the two associations. a/simmetrie president, Alberto Bagnai, has been confirmed as an INFER board member, and the two associations are now organising, along with the Institute for Advanced Studies in Vienna, a workshop on the asymmetries in the Eurozone (to be held on April 2015 at the Department of Economics of the Gabriele d’Annunzio University). The partnership with INFER, as well as that with the Centre for Globalisation research of the Queen Mary University in London (whose director, Prof. Brigitte Granville, has joined a/simmetrie Scientific Committee), certify the reputation of a/simmetrie as a qualified partner for the development of research project at an international level.

How to join?

Every person interested in a/simmetrie research programme and willing to comply with its bylaws can join the association.