Research explores monetary policy, climate, migration

Recent research from Banca d'Italia assesses the transmission of the ECB's monetary tightening in 2022-23 to bank interest rates.

Findings indicate that policy rate increases were passed through to overnight deposit rates less than historical regularities imply.

Greater bank market power and a higher share of deposits tend to dampen this transmission, with market power effects being more persistent.

Another study evaluates the macroeconomic impact of energy transition subsidies in the euro area, considering global supply shocks to critical minerals.

Subsidies for renewable energy production have expansionary effects, though their magnitude is smaller if critical mineral supply from China declines without global offset.

The negative impact of increased mineral prices is limited in the short run if new renewable capacity installation is spread over time.

Furthermore, a review of econometric models for climate policies suggests that costs for eliminating greenhouse-gas emissions are manageable and would not dramatically reduce global growth prospects.

Policies affecting fossil-fuel energy prices are crucial, while monetary policies contribute marginally.

Other studies delve into the persistent effects of economic crises on human capital accumulation.

Exposure to schoolmates with unemployed parents reduces students' aspirations for university, worsens educational outcomes, and increases dropout risk.

Research also introduces a 'flight-to-safety index' (FLY) to measure global demand for safe assets, finding that switches towards lower sovereign bond riskiness are associated with economic expansions and lower public debt.

Additionally, a paper analyzes the effects of regional R&D subsidies in Southern Italy, showing that recipient firms tripled intangible assets and increased workforce by one-third.

The newsletter also recaps the 5th Human Capital Workshop and the 'Financial Stability and Regulation' conference, and announces forthcoming events like the 'Macro Migration Workshop' and the 'EPSI Conference'.