The Impact of Syrian Refugees on the Lebanese Labor Market

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2016. The project is a required component of every master program.

Nagham Abdel Ahad and Gleb Bychkov

Master’s Program:

Macroeconomic Policy and Financial Markets

Paper Abstract:

In the light of the Syrian crisis which erupted in March 2011 and which is still on-going, many outcomes were and are still being produced. In this paper, we show particular interest in the refugee crisis that developed after the fast-tracked evolution of events in Syrian. More precisely, we shed light on the case of Lebanon, the small country on the Mediterranean, having an estimated native population of 4.55 million and hosting, at present, an estimated 1.15 million Syrian refugees on its territories, that is, more than 25% of its original population.

Our study focuses more specifically on the negative spillovers of the Syrian refugee inflow on the Lebanese labor market. Our objective is to build a model which we use to determine both the steady state in the Lebanese labor market prior to the Syrian refugee crisis and the equilibrium in the Lebanese labor market post the escalation of the refugee crisis. We therefore approach the dynamics of the labor market observing its reaction to the positive labor supply shock generated by the refugee influx. After calibrating the model, we watch closely the changes in our main variables of interest, namely, unemployment rates and wage levels, before and after the crisis.

In addition, we compare the results and the values our model gives for our variables of interest with the actual figures and data published or predicted by international reputable institutions, such as The World Bank and the Food and Agriculture Organization of the United Nations, for these same variables. Accordingly, we evaluate our model showing how far it succeeds in reflecting the reality of the situation and thus in predicting and generating figures as close as possible to the actual and true ones.


Refugee inflows into host countries and communities can have significant impacts on these hosts on many levels. In our paper, we approach this issue from an economic perspective. More specifically, we focus on labor economics and labor market dynamics. In this context, we consider the case of the Lebanese labor market invaded by Syrian refugees who have fled to Lebanon because of the on-going war in Syria. We build a model, we calibrate it, we get the results, and we discuss them and use them to evaluate the performance of our model.

While The World Bank estimates a 20 percent unemployment rate in Lebanon post-crisis (almost double the rate pre-crisis), our model estimates an approximate 6.68 percent.

We proceed afterwards with a thorough discussion centered around these contradictory observations and we also go over a couple of limitations our model has, all of which might be able to account to some extent to the inconsistency in figures. This idea is interesting as it opens horizons and broadens the scopes for this work as one might expand the model so as to include an informal sector or additional distinctions between Lebanese native workers and Syrian migrant workers. We did not engage in doing this activity given the time constraints that we had. However, such expansions of the model can add great value to this work and can pave the way for further understanding and more successful outcomes.

We view our paper as a first step towards developing a flexible quantitative model that integrates opposing forces and that allows for a proper welfare analysis. More analysis is clearly welcome.

Re-examining the Global Liquidity-Asset Prices Linkage: Case of G7

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2016. The project is a required component of every master program.

Ryan Jacildo and Ekaterina Rezepina

Master’s Program:

Macroeconomic Policy and Financial Markets

Paper Abstract:

Research concerning the linkage between global liquidity and domestic economic affairs is hardly new. Interestingly, however, it never gets old mainly because of its policy significance. The welfare impact of shocks to capital flows (may it be short or long-term) is by and large the bottom line of all the discussions. Inquiries about other pertinent issues such as global financial imbalance and asset price bubbles, international financial stability and global financial safety nets, and economic early warning systems are in one way or the other broadly tied with global liquidity. Indeed, the impact of shocks to global liquidity can be systemically disruptive. And because international financial landscape constantly changes (i.e. degree of linkages estimated in one period may not hold in the subsequent periods), regular spot checks are important. The aftershocks of the global financial crisis (GFC) in 2007/2008, for instance, re-emphasize the significance of understanding the consequences of fluxes in capital movement and the extent of these consequences in various settings and time periods.


The main motivation behind this study is to contribute to empirical literature on cross-border liquidity spillover effects on asset prices in light of broadening global economic integration. We decided to focus on the case of the Group of 7 (G7) economies (e.g. Canada, France, Germany, Italy, Japan, United Kingdom, and United States) and follow closely the earlier work of Darius and Radde (2010) – henceforth D&R. For the same set of economies, D&R looked at the relationship of global liquidity and asset prices before and after the “Great Moderation” period. In an attempt to provide an account of what happened after 2007, this study examines the behavior of the same variables until end of 2015 and checks whether there are significant changes to the magnitude of the pass though effects of global liquidity, particularly on the equity and property prices in recent years.


In light of the developments in the past decade that led central banks to flood the international financial system with liquidity, we deem it relevant to empirically re-examine the linkage between global liquidity and asset prices in large economies. To do the econometric analysis, we used available data from 1984q1 to 2015q4 and employed a VAR model following the specification suggested by D&R.

In the global analysis, we found that global liquidity has a positive significant impact on commodity prices using the sample from 1984q1 and 2015q4 but insignificant impact on equity prices. However, in our subsample analysis using the data from 1984q1 to 2007q4, our results showed that the impulse responses of both the CRB and the MSCI were positively significant and persistent while the impulse response function of house prices remained insignificant. Interestingly, D&R, which also used 1984q1 to 2007q4 as its Great Moderation subsample, found that the responses of commodity and equity prices to a liquidity shock were insignificant. In terms of the house prices, the results we obtained differed from those of D&R for periods from 1984q1 to 2007q4 in a sense that we found significantly negatively response to global liquidity albeit with a substantial lag of 16 quarters.


In our spillover analysis, we extended the model of D&R by adding the local stock prices to the model. For each economy, we ran the regression using data from 1984q1 to 2015q4 as well as from 1984q1 to 2007q4 (to serve as our pre-GFC subsample). The results of this exercise convey that the positive effect of a global liquidity shock on house prices in Japan obtained using data from 1984q1 to 2015q period disappears when only pre-GFC period is considered. In the full sample analysis both global and domestic liquidity did not affect stock prices in Japan, whereas the effect of global liquidity turned out to be positive for the pre-GFC period.

Notwithstanding the sample used (may it be full or pre-GFC), the effect of global liquidity on house prices in France stays significant and negative, while the negative impact of global liquidity on stock prices obtained using full sample disappears in pre-GFC subsample. In the case of the latter, the stock prices turned out to be significantly positively affected by local liquidity, while the inclusion of post crisis years made this response negatively significant with a substantial lag.

Lastly, the result of the pre-GFC subsample analysis involving the UK reveals that the effect of local liquidity shock on stock prices is not significant as opposed to full sample estimation when the effect was positive. Moreover, the variance decomposition dictates that global GDP growth rate explains the largest proportion of the volatility of stock prices in the UK.

Moving forward, one way to get a better understanding of the results would be to properly assess the country-level intertemporal idiosyncratic factors just like in the global analysis. Certainly, the nature and timing of these structural shifts can vary from one country to another. We likewise suggest trying different proxies for the global liquidity or run the model for the monthly data without house prices that are available only quarterly and the monthly proxy for GDP. Using monthly data would allow a closer analysis of dynamics in the post-GFC period. It would also be interesting to extend the scope of this exercise to emerging economies.

Brexit: BGSE Community Analysis

We want to know what the BGSE community is thinking and reading about the Brexit.


We invite all Barcelona GSE students and alumni to share their early reflections on the potential economic consequences of the UK’s recent vote to leave the EU. Did you focus on a related topic in your master project? Are you working at a think tank, central bank, or consulting firm where your projects will be impacted by this decision? Have you seen any articles or links that you found useful for understanding what lies ahead?

Here are a couple of pieces we’ve found to get the discussion going:

After Brexit: What next for the EMU, EU and UK?
(ADEMU webinar)

The BGSE participates in A Dynamic Economic and Monetary Union (ADEMU), a project of the EU Horizon 2020 Program. Last week, ADEMU researchers held a webinar to discuss the Brexit.


Europe has grown out of its crises when reason and solidarity have prevailed, but it has also been devastated by its crises when fear and nationalism have taken the lead. Brexit, in the aftermath of the euro crisis, brings this dichotomy back to the foreground. Since 2010 there have been important advances in the development of the Economic and Monetary Union (EMU) and flexible forms of participation have allowed other EU countries, reluctant to join the euro, to share the basic principles that define the EU and have a common presence in the interdependent global world.

According to the panelists, Brexit raises 3 crucial questions:

  1. Should the EMU be accelerated to become a centre of gravity within the EU, or slowed down to avoid a centrifugal diaspora? If accelerated, how?
  2. Should an ‘exit’ country be allowed free entry to the single market and other EU public goods without accepting freedom of movement?
  3. Should the EU remain as it is, or increase its capacity to offer common public services (Banking Union, border security, research funding, environment, etc.), or limit its scope of activity to the EU single and integrated market?

Webinar Panel:
– Joaquín Almunia (Former Vice-President of the European Commission, honorary president of the Barcelona GSE)
– Ramon Marimon (European University Institute and UPF – Barcelona GSE; ADEMU)
– Gorgio Monti (European University Institute; ADEMU)
– Morten Ravn (University College London; ADEMU)

Annika Zorn (European University Institute; Florence School of Banking & Finance)

From Brexit to the Future
(Joseph Stiglitz)

Nobel Laureate and Barcelona GSE Scientific Council member Joseph Stiglitz shares some reflections in the wake of the Brexit decision

What are you thoughts on Brexit?

We want to know what the BGSE community is thinking and reading about the Brexit. Please share your ideas, favorite sources for analysis, or observations from economists you respect in the comments below.

Systematic Component of Monetary Policy in Open Economy SVAR’s: A New Agnostic Identification Procedure

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2015. The project is a required component of every master program.

Adrian Ifrim and Önundur Páll Ragnarsson

Master’s Program:
Macroeconomic Policy and Financial Markets

Paper Abstract:

We propose a new identification method in open economy models by restricting both the systematic component of monetary policy and the IRFs to a monetary policy shock, at the same time remaining agnostic with respect to the effects of monetary policy shocks on output and open economy variables. We estimate the model for the U.S/U.K economies and find that a U.S monetary shock has a significant and permanent effect on output. Quantitatively a 0.4% annual increase in the interest rates causes output to contract by 1.2%. This contradicts the findings of Uhlig (2005) and Scholl and Uhlig (2008). We compute the long-run multipliers implied by the monetary policy reaction function and compare our identification with to the ones proposed by Uhlig (2005), Scholl and Uhlig (2008) and Arias et al. (2015). We argue that neither of the above schemes identify correctly the monetary policy shock since the latter overestimates the effects of the shock and the former implies a counterfactual behavior of monetary policy. We also find that the delayed overshooting puzzle is a robust feature of the data no matter what identification is chosen.

Read the paper or view presentation slides:

UK News Shocks and Business Cycles

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2015. The project is a required component of every master program.

Jorge Meliveo and Willy Scherrieble

Master’s Program:
Macroeconomic Policy and Financial Markets

Paper Abstract:

In this paper we use a structural Factor Augmented VAR (FAVAR) approach to estimate the effects of news shocks in a new institutional setting: the United Kingdom. We define news shocks as the stock price shock orthogonal to TFP that maximizes the forecast error variance of TFP at the 40 quarter horizon. We find that news shocks account for around 18 – 45% of the variance in output at business cycle frequencies. Furthermore, the predictions of our estimation are in line with the predictions of standard neoclassical business cycle theories, i.e. following a positive news shock, agents increase both consumption and leisure, hence, reducing the amount of hours worked. Our contribution is twofold: First, we enlarge the geographical investigation of the news shock literature by considering a new dataset for the UK. This is important since all major studies have exclusively focused on the US economy so far. Second, we address the problem of non-fundamentalness by comparing a VAR and FAVAR approach. We find that including factors to the VAR changes the results and generates negative co-movement between hours worked and consumption on impact. Furthermore, our results are in line with the findings of Barsky and Sims (2011) and Forni, Gambetti, and Sala (2014) for the US.

Presentation Slides:

Is Abenomics Firing at the Wrong Targets?

Barcelona GSE Macro alum Naomi Fink ’13 offers analysis of Japan’s recent structural reforms in The Diplomat this month.

Photo: Reuters

Barcelona GSE Macro alum Naomi Fink ’13 offers analysis of Japan’s recent structural reforms in The Diplomat this month:

Japan analyst Naomi Fink, chief executive of Europacifica Consulting, argues that stagnant “total factor productivity” (TFP) and unstable labor/capital shares of income are at the heart of the nation’s economic problems – and short-term fiscal and monetary adjustments simply “won’t cut it.”

Read the full analysis on The Diplomat

Photo Diary: Exams Winter 2015

How masters and PhD students are surviving finals this month…

Staking out a cozy corner in the library


It’s all about the snacks


Moments of Zen


A little help from our friends


Have a photo you’d like to share? Email it to or mention @barcelonagse on Twitter or Instagram

More Bruegel blogs by Barcelona GSE alumni

Barcelona GSE Voice

Plucking away

Thomas Walsh ’14 is a Research Assistant at Bruegel and graduate of the Barcelona GSE Master in Macroeconomic Policy and Financial Markets. His recent post on the think tank’s blog, co-authored with Research Fellow Grégory Claeys, examines recovery numbers for countries coming out of deep recessions:

The recovery in certain economies (particularly in the Baltics and more recently in the UK or Spain) is often attributed to decisive economic policies (e.g. quick structural adjustment in Latvia, quantitative easing in the UK or labour market reforms more recently in Spain). While this view may be true, a theory suggested by Milton Friedman in 1964 (and revisited in 1993) proposes a complementary hypothesis: these strong recoveries are just natural after particularly deep recessions…

Read the full post on The “Plucking Model” of recessions and recoveries 

Greek tragedy

Mr. Walsh also recently co-authored a post about the vulnerabilities of the Greek banking system on the think tank’s blog with Bruegel director Guntram Wolff: The Greek banking system: a tragedy in the making?

Wage woes [updated 20.03.15]

In case you missed it, here’s a post on German wages by another Macro alum from the Class of 2014, Allison Mandra, also at Bruegel: Is low inflation translating into lower wage growth in Germany already?

Update: Ms. Mandra has posted new analysis on German wages: updates and stalemates


If you’re a student or alum who blogs, send us links to your work and we’ll share them here on the Barcelona GSE Voice!

Greek Banks in the Headlines (Link Roundup) | Daily Updates

Evolution of news about Greek banks. Curated by @BankingUnion_eu (current student in the Master in Economics).


ECB collateral damages on Greece (Bruegel)

Greek banks will not have any liquidity problems, JP Morgan report‏ (Intelligent News)

Q&A: The ECB’s warning shot to Greece (Financial Times)

ECB turns off the taps, but Greek banks can still get funding (Open Europe)

Levine on Wall Street: Bearer Bonds and Greek Banks (BloombergView)

Greek banks hit after ECB snub, Athens rejects ‘blackmail’ (Reuters)

What are the implications of the ECB’s decision for Greek banks? (Macropolis)

Emergency Liquidity Assistance for Greek Banks: Explainer (BloombergBusiness)

What the ECB’s Move on Greek Government Debt Is Really All About (BloombergBusiness)

What you need to know about ECB’s Greek collateral decision (MarketWatch)

Eligibility of Greek bonds used as collateral in Eurosystem monetary policy operations (ECB Press Release)


European Central Bank resists latest Greek bailout plan (FT)

ECB set to back further liquidity assistance for Greek banks -paper (Reuters)

Greeks Spooked by Debt Clashes Put Cash Under Bathroom Tiles (Bloomberg)

ECB Readies Lifeline for Greek Banks (Handelsblatt)

The state of play with Greek banks’ liquidity (Macropolis)


Exclusive – Three Greek banks tap two billion euros in emergency funding: sources (Reuters)

Greek banks lifted by Syriza debt plan (FT)

First Germany, Now ECB Rejects “Latest Greek Bailout Plan” (Zero Hedge)


So Whose Problem Is Greek Debt, Anyway? (Forbes)

Greece Asks ECB to Keep Banks Afloat, Tsipras Pitches Deal (Bloomberg)

For Greece, Bank Trouble Looms Again as New Government Takes Shape (The New York Times)

What’s Going On with Greece and the ECB? (Medium)

31 JAN

ECB’s Liikanen – No lending to Greek banks if no deal by end of February (Reuters)

Greek Banks May Lose ECB Credit, Says Policy Maker Liikanen (The Wall Street Journal)

30 JAN

Greek bank debt plummets as investors head for the exit (Reuters)

Six things you need to know about Greek banks (CapX)

Europe’s Greek Test (The New York Times)

Greece Sets Up Cash Crunch for March Telling EU Financial Bailout Is Over (Bloomberg)

How Greece Can Run Out of Cash and What ECB’s Draghi Can Do (Bloomberg)

S&P warns on Greek banks (FT)

Greece’s New Government Is About To Start Debt Negotiations With Its Eurozone Partners (Business Insider)

29 JAN

Greek Markets Buckle. New Coalition Government Fans Investors’ Fears of Eurozone Exit (The Wall Street Journal)

Greek Bank Shares Edge Back Up Off Record Lows (The New York Times)

Greek banks find support after fall (FT)

Greek bank crisis leaves time short to strike debt deal (FT)

Greek Markets Steady as Banks Rebound (The Wall Street Journal)

Greek Banks Are Ticking Time Bombs (Bloomberg)

Greek bank deposits fall as pre-election tensions rise (Reuters)

Greek Bank Deposit Flight Said to Accelerate to Record (Bloomberg)

Greek Banks at Mercy of the Fates (The Wall Street Journal)

Greek Bonds Halt Slide as Banks Rally; Ireland Borrows for Free (Bloomberg)

Greek banks rebound amid debt talk hopes (The Telegraph)

28 JAN

Greek banks lose €8bn in three days since Syriza victory as liquidity crisis feared (The Telegraph)

Greek Stocks Crash, Bonds Plummet, Banks Have Worst Day Ever (Zero Hedge)

Thinking About the New Greek Crisis (The New York Times)

Greek Banks Have Just Lost A Third Of Their Value — Here’s Why (Forbes)

Greek banks are getting shattered (Business Insider)

Greek banks extend slide to peg back European shares (Reuters)

Greek bank stocks hit record lows after leftist poll win (Reuters)

Greek banks plunge as new government challenges bailout (CNN)

Now We ‘Know’ Greek Banks Are Really In Trouble (Zero Hedge)

ECB Supervisor Nouy Says Greek Banks Strong Enough to Survive (Bloomberg)

Renewed plunge in Greek banks hits European shares (Reuters)

Greek bank stocks and deposits hit by default fears (CNBC)

$11 Billion Wiped From Greek Banks on Nationalization Threat (Bloomberg)

Alumni reflections for the Barcelona GSE Class of 2015

alumniNicola Cofelice ’14

Macroeconomic Policy and Financial Markets
Research Assistant, CaixaBank (Barcelona)

Nicola gave the following remarks to the new students in the Barcelona GSE Class of 2015 earlier this fall at a welcome reception in Bellaterra.



Before I begin, let me join the faculty and the School staff and congratulate all of you for having been accepted to the Barcelona Graduate School of Economics; I have to admit that it’s a pleasure to give you the welcome speech as Alumni speaker from the previous year.

I remember sitting where you are now exactly 1 year ago: I had no idea what lay ahead of me, what challenges I was going to face and the new friends I was going to make. Like all of you, I was at the beginning of a new path: in my case, I had been working as an engineer for 5 years when I decided to join the master in Macro. But still, I had plenty of questions in my mind: am I going to be up to the level of the School? What am I going to learn? Will I have time to go back home from time to time or is the rhythm of the Master going to destroy me J?

Now, after 1 year, I have been asked to share with you my experience at Barcelona GSE, and I will do my best to give you a few pieces of advice that may help you during this year:

First: Be open to sharing your knowledge and experience!

One of the main assets of the Master is not only what you can learn from the professors, but also what you can learn from your classmates, and what your classmates can learn from you. Some of you may already have working experience, some of you may come from a different background (political science, mathematics, physics, engineering, etc.) and you must take advantage of this cultural mix. The faculty will encourage you to study and carry out the assignments in small groups and after studying Game Theory, I understood that cooperating and helping each other is better than competing against each other (well, at least not during an exam, where you are not allowed to do that J). So my advice is to be open-minded and share your knowledge with others.

Second: Don’t be scared to work with data analysis software!

The Barcelona GSE is well known not only for the rigorous mathematical and statistical approach but also for the computational skills that you are going to acquire. You will have the possibility to work with different software (i.e. Matlab, Gretl, Stata, to mention only a few) and the knowledge of this software may help you find a job afterwards: companies and universities are strongly interested in candidates who are able to perform data analysis and work with numbers. If you work in a company, your future manager may ask you to help him or her in taking the right decision under uncertainty; and you will need to be able to process the information that you have available, both quantitative and qualitative. If you opt for a career at the University, you may develop a model to better understand the phenomena that you are investigating; in both cases you will need the programming skills that you can learn and develop this year. So, again, my advice is: don’t be afraid to get your hands “dirty” with data analysis software.

Third: Get involved!

This is once in a life opportunity, and you must take fully advantage of it! You have the unique chance to share this experience with people from all around the world, with different cultures, ages and backgrounds. This is something I found fascinating and my advice is to enjoy this opportunity. Although the Master is demanding, having a day off in a city like Barcelona will help you to recover your energy, and I am sure you will spend some unforgettable evenings and nights with your classmates.

All right, that’s all from my side. Once again, congratulations to everyone and good luck.