Comments on: Segolene Royal Plays the Left’s Oh-So-Typical Final Card http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/ The Business End of the Blogosphere Sat, 22 Nov 2008 16:45:50 +0000 http://wordpress.org/?v=2.5 By: TBlumer http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114606 TBlumer Sun, 06 May 2007 15:31:28 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114606 I think France's inflexible labor markets and generous benefits to those who choose not to work are larger factors in driving the unemployment rate than anything B de F has or hasn't done. Given the structural problems, 8% unemployment may be France's definition of "full employment." I think France’s inflexible labor markets and generous benefits to those who choose not to work are larger factors in driving the unemployment rate than anything B de F has or hasn’t done. Given the structural problems, 8% unemployment may be France’s definition of “full employment.”

]]> By: Ivan Kitov http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114604 Ivan Kitov Sun, 06 May 2007 14:31:06 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114604 My point is a simple one. Some events during the last two years related to the riots in outskirts were primarily inspirated by high unemployment. Sarkozy played a crucial role in showing the state power and got some important points for this year elections. This high rate of unemployment was (unintentionally, by mistake may be) organized by the Banque de France in its wrong monetary policy (only in terms of high unemployment). The bank could replace the unemployment with high inflation, if did not establish this artificial reference value of 4.5% . (In my opinion, no level of inflation harms real economic growth, and inflation has to be as high as defined by the country-specific dependence on labor force increase, according to the relationships I put in previous post). All in all, the Banque de France created conditions and gave this big chance to Sarkozy. Among other important sources, I have to admit. My point is a simple one. Some events during the last two years related to the riots in outskirts were primarily inspirated by high unemployment. Sarkozy played a crucial role in showing the state power and got some important points for this year elections.
This high rate of unemployment was (unintentionally, by mistake may be) organized by the Banque de France in its wrong monetary policy (only in terms of high unemployment). The bank could replace the unemployment with high inflation, if did not establish this artificial reference value of 4.5% .
(In my opinion, no level of inflation harms real economic growth, and inflation has to be as high as defined by the country-specific dependence on labor force increase, according to the relationships I put in previous post).
All in all, the Banque de France created conditions and gave this big chance to Sarkozy. Among other important sources, I have to admit.

]]> By: TBlumer http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114602 TBlumer Sun, 06 May 2007 13:14:34 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114602 #6, you may be right, but I doubt very much that it's a major factor in Sarko's win. You also should try to explain things at a level that readers can more easily comprehend (that would include me). #6, you may be right, but I doubt very much that it’s a major factor in Sarko’s win. You also should try to explain things at a level that readers can more easily comprehend (that would include me).

]]> By: Ivan Kitov http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114599 Ivan Kitov Sun, 06 May 2007 11:41:35 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114599 I see the following driving force behind potential Sarkozy's win. The ECB and Banque de France are responsible for the high unemployment in France since 1995 when a limit on monetary supply was introduced – 4.5% per year (citation) Bank de France. (2004). Definition of the single monetary policy. Retrieved January 10, 2007 from http://www.banque-france.fr/gb/instit/sebc/1d.htm The reference value for monetary growth must be consistent with—and serve—the achievement of price stability. Furthermore, the reference value for monetary growth must take into account real GDP growth and changes in the velocity of circulation of money. The derivation of the reference value is based on the contributions to monetary growth resulting from the achievement of the ultimate objective of price stability (year-on-year increases of below 2%), and from the assumptions made for potential GDP growth (2-2.5% per annum) and the velocity of circulation (a trend decline of about 0.5-1% each year). Taking account of these two factors, the Governing Council decided to set the first reference value at 4.5%. There is an intrinsic trade-off between inflation and unemployment as both are driven by labor force change (same as in the USA): In France, GDPdeflator(t) = 4*dLF(t-4)/LF(t-4) - UE(t-4) + 0.095 LF is the labor force level; t-4 – current time lagged by 4 years; UE – unemployment rate. This relationship works after 1970 and gives R**2 of 0.92 between the predicted and measured inflation. Root mean square forecasting error for the period is of 1% at four year horizon. Because of nonstationarity of the involved time series the relationship is tested for cointegration and shows the existance of one cointegrating relation, as presented in http://ideas.repec.org/p/pra/mprapa/2736.html When one of the terms (inflation) in the equation is fixed by monetary authorities, the increase in labor force (which is exogenous driving force independent on inflation and unemployment) is channeled through the second term – unemployment. It should be around 4.5% with inflation about 8% during the last seven years. So, France has what it has. I see the following driving force behind potential Sarkozy’s win.
The ECB and Banque de France are responsible for the high unemployment in France since 1995 when a limit on monetary supply was introduced – 4.5% per year (citation)

Bank de France. (2004). Definition of the single monetary policy. Retrieved January 10, 2007 from
http://www.banque-france.fr/gb/instit/sebc/1d.htm

The reference value for monetary growth must be consistent with—and serve—the achievement of price stability. Furthermore, the reference value for monetary growth must take into account real GDP growth and changes in the velocity of circulation of money. The derivation of the reference value is based on the contributions to monetary growth resulting from the achievement of the ultimate objective of price stability (year-on-year increases of below 2%), and from the assumptions made for potential GDP growth (2-2.5% per annum) and the velocity of circulation (a trend decline of about 0.5-1% each year).
Taking account of these two factors, the Governing Council decided to set the first reference value at 4.5%.

There is an intrinsic trade-off between inflation and unemployment as both are driven by labor force change (same as in the USA):
In France,
GDPdeflator(t) = 4*dLF(t-4)/LF(t-4) - UE(t-4) + 0.095
LF is the labor force level; t-4 – current time lagged by 4 years; UE – unemployment rate.
This relationship works after 1970 and gives R**2 of 0.92 between the predicted and measured inflation. Root mean square forecasting error for the period is of 1% at four year horizon. Because of nonstationarity of the involved time series the relationship is tested for cointegration and shows the existance of one cointegrating relation, as presented in

http://ideas.repec.org/p/pra/mprapa/2736.html

When one of the terms (inflation) in the equation is fixed by monetary authorities, the increase in labor force (which is exogenous driving force independent on inflation and unemployment) is channeled through the second term – unemployment. It should be around 4.5% with inflation about 8% during the last seven years. So, France has what it has.

]]> By: TBlumer http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114593 TBlumer Sat, 05 May 2007 19:08:15 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114593 #4 Kevin, I generally agree with the distinction. Though I could chronicle near-misses here, I'll resist. #4 Kevin, I generally agree with the distinction. Though I could chronicle near-misses here, I’ll resist.

]]> By: Kevin http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114592 Kevin Sat, 05 May 2007 18:51:56 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114592 Now hold on. Don't confuse the "Left", which describes American progressives with "Leftists", which are Socialists. Now hold on. Don’t confuse the “Left”, which describes American progressives with “Leftists”, which are Socialists.

]]> By: NixGuy.com » French Elections: Threats of Violence for a Sarkozy Win http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114591 NixGuy.com » French Elections: Threats of Violence for a Sarkozy Win Sat, 05 May 2007 18:47:32 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114591 [...] Bizzyblog:  I say she’s inviting it (the violence), and she wants it. [...] […] Bizzyblog:  I say she’s inviting it (the violence), and she wants it. […]

]]> By: TBlumer http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114590 TBlumer Sat, 05 May 2007 18:44:49 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114590 #1, I'm a little surprised that the Mexican demos didn't work. #1, I’m a little surprised that the Mexican demos didn’t work.

]]> By: dave http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-oh-so-typical-final-card/#comment-114589 dave Sat, 05 May 2007 18:41:35 +0000 http://www.bizzyblog.com/2007/05/05/segolene-royal-plays-the-lefts-typical-final-card/#comment-114589 Same thing happened in Mexico with that dingbat leftist as well. Threaten violence unless they get their way. Same thing happened in Mexico with that dingbat leftist as well. Threaten violence unless they get their way.

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