Archive for July 27th, 2021

Vatican moving towards financial transparency

July 27, 2021

Interesting bit of news from Vatican. Within Vatican, there is Office of Administration of the Patrimony of the Apostolic (APSA) which oversees the Vatican properties. ASPA was created in 1967 and has for the first time released its annual report!

In 2020, profits were less than 51 million euros, while financial investments amounted to 1.778 billion euros; while contributions for the needs of the Roman Curia were halved from 41 to 20 million euros. Nonetheless, the figures were generally positive, considering the serious consequences of the pandemic.

For the first time since it was established in 1967, the Administration of the Patrimony of the Apostolic See – known from its Italian initials as “APSA” – has published its balance sheet. The document concerns the fiscal year of 2020. APSA’s president, Bishop Nunzio Galantino, explains that the decision to publish the budget stems from the “hope” of increasing confidence in the work of the Church, as well as the desire to transform the Dicastery, which was established by Paul VI, from a “structure that mainly offers services on demand” to a “proactive reality” in the way it administers the heritage entrusted to it. 

In an interview with Vatican Media, Bishop Galantino notes that this is not the first time that APSA has drawn up its balance sheet. “It was already done in the past,” he explained, with budgets being presented to supervisory bodies for approval. However, this is the first time the records have been made public. “It is certainly a step forward in terms of transparency,” the bishop said.

The president also noted that the decision by Pope Francis, enacted with a Motu proprio dated 28 December 2020, to transfer the funds and properties of the Secretariat of State to APSA. Bishop Galantino pointed out that decision involved not only “a transfer of material and competencies,” but the building of “a new culture that is not only administrative, which must gradually permeate” the dicastery.

The report details the work of the APSA during the months marked by the health emergency. It also provides useful information to refute false narratives about the size and value in use of the Holy See’s assets. It explains, for example, that it is thanks to the rental of prestigious properties in Paris and London that it was possible to grant a free loan to the Office of Papal Charities to obtain an historic building such as Palazzo Migliori, where the homeless are housed through the efforts of the Sant’Egidio Community.

The report is here. There is more to the story here.

How finance moves around religion is such a fascinating history.

 

Let me work from home, or I will find another job

July 27, 2021

Jose Maria Barrero, Nicholas Bloom and Steven Davis in this interestung voxeu post point how the pandemic has impacted the work patterns in US (perhaps forever).

They show via a survey that employees prefer to work for home and will switch jobs if they are asked to return full-time to office:

 

Fundamentals vs. policies: Can the US dollar’s dominance in global trade be dented?

July 27, 2021

Georgios Georgiadis, Helena Le Mezo, Arnaud Mehl and Cédric Tille in this ECB working paper analyse what drives USD’s dominance in trade:

The US dollar plays a dominant role in the invoicing of international trade, albeit not an exclusive one as more than half of global trade is invoiced in other currencies. Of particular interest are the euro, with a large role, and the renminbi, with a rising role. These two currencies are well suited to contrast the roles of economic fundamentals and policies, as European policy makers have taken a neutral stance in contrast to the promotion of the international role of the renminbi by the Chinese authorities. We assess the drivers of invoicing using the most recent and comprehensive data set for 115 countries over 1999-2019.

We find that standard mechanisms that foster use of a large economy’s currency predicted by theory – i.e. strategic complementarities in price setting and integration in cross-border value chains – underpin use of the dollar and the euro for trade with the United States and the euro area. These mechanisms also support the role of the dollar, but not the euro, in trade between non-US and non-euro area countries, making the dollar the globally dominant invoicing currency. Fundamentals and policies have played a contrasted role for the use of the renminbi.

We find that China’s integration into global trade has further strengthened the dominant status of the dollar at the expense of the euro. At the same time, the establishment of currency swap lines by the People’s Bank of China has been associated with increases in renminbi invoicing, with an adverse effect on dollar use that is larger than for the euro.

 

U.S. Healthcare: A Story of Rising Market Power, Barriers to Entry, and Supply Constraints

July 27, 2021

Li Lin, Mico Mrkaic and Anke Weber in this IMF WP analyse US healthcare system:

Healthcare in the United States is the most expensive in the world, with real per capita spending growth averaging 4 percent since 1980. This paper examines the role of market power of U.S. healthcare providers and pharmaceutical companies. It finds that markups (the ability to charge prices above marginal costs) for publicly listed firms in the U.S. healthcare sector have almost doubled since the early 1980s and that they explain up to a quarter of average annual real per capita healthcare spending growth.

The paper also finds evidence that the Affordable Care Act and Medicaid expansion were successful in raising coverage and expanding care, but may have had the undesirable side-effect of leading to labor cost increases: Hourly wages for healthcare practitioners are estimated to have increased by 2 to 3 percent more in Medicaid expansion states over a five-year period, which could be an indication that the supply of medical services is relatively inelastic, even over a long time horizon, to the boost to demand created by the Medicaid expansion.

These findings suggest that promoting more competition in healthcare markets and reducing barriers to entry can help contain healthcare costs.

 

Market Power and Monetary Policy Transmission

July 27, 2021

Romain A Duval ; Davide Furceri ; Raphael Lee ; Marina M. Tavares in this IMF working paper:

We show that firms’ market power dampens the response of their output to monetary policy shocks, using firm-level data for the United States and a large cross-country firm-level dataset for 14 advanced economies. The estimated impact of a firm’s markup on its response to a monetary policy shock is large enough to materially affect monetary policy transmission. We also find some evidence that the role of markup in monetary policy transmission, while independent from other channels, is greater for firms whose characteristics — notably size and age — are likely to be associated with greater financial constraints. We rationalize these findings through a simple partial equilibrium model in which borrowing constraints amplify disproportionately low-markup firms’ responses to changes in interest rates.


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