Coherence of output gaps in the euro area: The impact of the COVID-19 shock.

Using the measures proposed by Mink et al. (2012), we reexamine the coherence of business cycles in the euro area using a long sample period. We also analyze the impact of the COVID-19 pandemic on business cycle coherence and examine whether our measures for business cycle coherence indicate a core versus periphery within EMU. Our results suggest that business cycle coherence did not increase monotonically. The COVID-19 pandemic made that the signs of the output gaps of euro area countries became more similar, but we find large differences in the amplitude of the output gaps across countries.

Has the COVID-19 pandemic affected public trust? Evidence for the US and the Netherlands.

Using two large-scale surveys among households, we examine the drivers of public trust in banks, insurance companies, BigTechs, and other people in the United States and the Netherlands, and analyse whether the COVID-19 pandemic has affected public trust. Our results suggest that the COVID-19 pandemic did not have much effect on trust in financial institutions in the US and the Netherlands. However, trust in BigTechs and trust in other people declined in both countries, especially in the US. Our regression results show that the relationship between respondents' characteristics and (changes in) trust differs across the US and the Netherlands. However, for both countries we find evidence that individuals with poor health have lower levels of trust than healthy people, and that trust among poor-health respondents dropped more during the pandemic. Furthermore, trust in other people is positively related to trust in banks, insurance companies, and BigTechs.

Effects of monetary policy announcements on term premia in the euro area during the COVID-19 pandemic.

We study the effects of the announcement of the ECB's Pandemic Emergency Purchase Programme (PEPP) on ten-year government bond term premia in eleven euro-area countries, while controlling for other ECB statements. We find that the term premia of government bonds in euro area countries with higher sovereign risk, as measured by sovereign CDS spreads, decreased more in response to the announcement of the PEPP. This occurred after these term premia had risen in response to a prior monetary policy press conference statement by the ECB president that the ECB was "not here to close spreads".

Political Regime and Human Capital: A Cross-Country Analysis.

We examine the relationship between different dimensions of the political regime in place and human capital using a two-step structural equation model. In the first step, we employ factor analysis on 16 human capital indicators to construct two new human capital measures (basic and advanced human capital). In the second step, we estimate the impact of our political variables on human capital, using a cross-sectional structural model for some 100 countries. We conclude that democracy is positively related to basic human capital, while regime instability has a negative link with basic human capital. Governance has a positive relationship with advanced human capital, while government instability has a negative link with advanced human capital. Finally, we also find an indirect positive effect of governance and democracy on both types of human capital through their effect on income. ELECTRONIC SUPPLEMENTARY MATERIAL: The online version of this article (doi:10.1007/s11205-011-9983-6) contains supplementary material, which is available to authorized users.

Measuring Health: A Multivariate Approach.

We examined the health status of 171 countries by employing factor analysis on various national health indicators for the period 2000-2005 to construct two new measures on health. The first measure is based on the health of individuals and the second on (the quality of) the health services. Our measures differ substantially from indicators used in previous studies on health and also lead to different rankings of countries. As rankings are not that informative without further information, we analyzed the distance between each country and the sample mean. Differences between countries are much more pronounced for our measure on health services than for our measure on the health of individuals. Using cluster analysis, we classified the countries in six homogenous groups.

Is the political system really related to health?

We analyze whether the political system and its stability are related to cross-country differences in health. We apply factor analysis on various national health indicators for a large sample of countries over the period 2000-2005 and use the outcomes of the factor analysis to construct two new health measures, i.e., the health of individuals and the quality of the health care sector. Using a cross-country structural equation model with various economic and demographic control variables, we examine the relationship between the type of regime and political stability on the one hand and health on the other. The political variables and the control variables are measured as averages over the period 1980-1999. Our results suggest that democracy has a positive relationship with the health of individuals, while regime instability has a negative relationship with the health of individuals. Government instability is negatively related to individual health via its link with the quality of the health care sector, while democracy is positively related with individual health through its link with income. Our main findings are confirmed by the results of a panel model and various sensitivity tests.