The Trader's Guide to the Euro Area: Economic Indicators, the ECB and the Euro Crisis

214 Pages·2013·1.9 MB·English

by  David J. Powell

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THE TRADER’S
GUIDE TO THE
EURO AREA
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THE TRADER’S
GUIDE TO THE
EURO AREA
Economic Indicators, the ECB and the Euro Crisis
David J. Powell
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© 2013 John Wiley & Sons Ltd
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Library of Congress Cataloging-in-Publication Data
Powell, David J., 1980-
Th e trader’s guide to the euro area : economic indicators, the ECB and the euro crisis / David J. Powell.
pages cm
Includes bibliographical references and index.
ISBN 978-1-118-44005-6 (cloth)
1. Investments—European Union countries. 2. Eurozone. 3. Finance—European Union
countries. 4. Financial crises—European Union countries. 5. Economic indicators—European
Union countries. 6. European Union countries—Economic conditions. I. Title.
HG5430.5.A3P69 2013
330.94—dc23
2013022398
A catalogue record for this book is available from the British Library.
ISBN 978-1-118-44005-6 (hbk) ISBN 978-1-118-44003-2 (ebk)
ISBN 978-1-118-44002-5 (ebk) ISBN 978-1-118-44004-9 (ebk)
Set in 11/13 AGaramondPro by MPS Limited, Chennai, India
Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK
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Contents
Acknowledgements ix
CHAPTER 1
Introduction 1
CHAPTER 2
Gross Domestic Product 5
Th e Expenditure Approach 5
Th e Output Method 10
Th e Income Method 11
GNP vs. GDP 11
Release Schedule 12
Trend Growth 15
Th e Business Cycle 16
Monetary Conditions Index 19
Eff ects of Monetary Policy on GDP 19
Eff ects of the Exchange Rate on GDP 21
Exchange-Rate Defl ators 23
CHAPTER 3
Coincident Indicators 27
PMI Surveys 27
Industrial Production 31
CHAPTER 4
Leading Indicators 35
Financial Conditions Index 35
Th e U.S. Business Cycle 38
ZEW Survey 39
Ifo Survey 41
M1 Money Supply Growth 52
v
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vi Contents
CHAPTER 5
Infl ation Measures 57
Consumer Price Index 57
Producer Price Index 63
Labor Costs 65
Money Supply 68
Infl ation Expectations 76
CHAPTER 6
The European Central Bank 83
Traffi c Light System 86
Mandate 88
Two-Pillar Strategy 90
Monetary Policy Implementation 91
Intervention in the Currency Markets 93
Taylor Rule 95
CHAPTER 7
Other Institutions 101
Council of the European Union 101
European Parliament 102
European Commission 102
Ecofi n 103
Eurogroup 103
European Council 104
CHAPTER 8
Euro Crisis 105
Origins 105
Optimal Currency Area Th eory 109
Fiscal Consolidation 111
Quantitative and Qualitative Easing 112
Government Bond Purchases 115
Measures of National Solvency 117
Target2 Balances 121
Resolution 123
Departure from the Euro Area 127
Tools for Analyzing Debt Sustainability 127
CHAPTER 9
Germany 133
Labor Market 133
Political Institutions 137
Political Parties 139
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Contents vii
CHAPTER 10
France 143
CHAPTER 11
United Kingdom 145
Th e Bank of England 145
Quantitative Easing 153
GDP 155
Infl ation Measures 157
House Prices 158
Political Institutions 164
CHAPTER 12
Switzerland 167
Th e Swiss National Bank 167
KOF Leading Indicator 168
CHAPTER 13
Sweden 171
CHAPTER 14
Norway 175
Bibliography 179
Index 197
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