failed austerity in europe the way out
... and especially in Spain, Greece, Portugal and Ireland. Confidence of households, non financial companies and financial markets has collapsed again. Despite some recent improvements resulting from belated policy initiatives, interest rates remain elevated and governments of Southern countries still f ...
... and especially in Spain, Greece, Portugal and Ireland. Confidence of households, non financial companies and financial markets has collapsed again. Despite some recent improvements resulting from belated policy initiatives, interest rates remain elevated and governments of Southern countries still f ...
here
... Economic Advisory Group at CESifo contributes to public debate over the crisis by analysing intra-European balance-of-payments imbalances as measured by the Target accounts. It discusses the difficult trade-off between short- and long-term risks faced by policymakers, and argues that the euro area c ...
... Economic Advisory Group at CESifo contributes to public debate over the crisis by analysing intra-European balance-of-payments imbalances as measured by the Target accounts. It discusses the difficult trade-off between short- and long-term risks faced by policymakers, and argues that the euro area c ...
What is the Risk of European Sovereign Debt Defaults? Fiscal
... whether the perception of relatively high sovereign debt default risk in the fiscally distressed Euro-area countries may be explained by existing past or current fundamentals of debt (deficit) relative to tax revenues— which we term fiscal space—and other economic determinants. An alternative explan ...
... whether the perception of relatively high sovereign debt default risk in the fiscally distressed Euro-area countries may be explained by existing past or current fundamentals of debt (deficit) relative to tax revenues— which we term fiscal space—and other economic determinants. An alternative explan ...
ABCD DISCUSSION PAPER SERIES www.cepr.org
... domestic private sector from sovereign default, caused by contagion or excessive risk concentration. The second type concerns rule of law externalities from sovereign default.8 3.1. Financial Stability and Macroeconomic Externalities 3.1.1. Contagion and Concentration risk Much has been made recentl ...
... domestic private sector from sovereign default, caused by contagion or excessive risk concentration. The second type concerns rule of law externalities from sovereign default.8 3.1. Financial Stability and Macroeconomic Externalities 3.1.1. Contagion and Concentration risk Much has been made recentl ...
Net debt supply shocks in the euro area and the - ECB
... further when the ECB began its purchases in March 2015. The downward impact on yields has been partly explained by policy-makers in terms of a “creation of scarcity” and by a reduction in the “overall duration risk borne by the market” (Cœuré, 2015). The first channel refers to the fact that the APP ...
... further when the ECB began its purchases in March 2015. The downward impact on yields has been partly explained by policy-makers in terms of a “creation of scarcity” and by a reduction in the “overall duration risk borne by the market” (Cœuré, 2015). The first channel refers to the fact that the APP ...
Institutions, Public Debt and Foreign Finance
... emerging economies has been accompanied by a reduction in the frequency of public defaults but, at the same time, by increasingly more severe private credit contractions after public default events. Interestingly, these post-default credit crunches appear to be more severe in countries with better ...
... emerging economies has been accompanied by a reduction in the frequency of public defaults but, at the same time, by increasingly more severe private credit contractions after public default events. Interestingly, these post-default credit crunches appear to be more severe in countries with better ...
Mauro Alessandro
... usually follow governments' defaults. Among other results, we find that countries either reaccess the markets in the first years after a default or have to wait much longer to do it, and that political stability significantly increases the chances of reaccessing the market. We present a political ec ...
... usually follow governments' defaults. Among other results, we find that countries either reaccess the markets in the first years after a default or have to wait much longer to do it, and that political stability significantly increases the chances of reaccessing the market. We present a political ec ...
Crunch Time: Fiscal Crises and the Role of Monetary Policy*
... primary government surplus that would be necessary to keep debt from continually growing as a percentage of GDP. We argue that if this required surplus is sufficiently far from a country’s historical experience and politically plausible levels, the government will begin to pay a premium to internati ...
... primary government surplus that would be necessary to keep debt from continually growing as a percentage of GDP. We argue that if this required surplus is sufficiently far from a country’s historical experience and politically plausible levels, the government will begin to pay a premium to internati ...
Convergence of Government Bond Yields in the
... in 1999, long-term government bond yields across the euro zone had largely converged to that of Germany (the euro zone’s largest economy). In general, the convergence of national yields to a stable level with reduced risk aids the overall economy, by allowing cheaper access to debt financing with le ...
... in 1999, long-term government bond yields across the euro zone had largely converged to that of Germany (the euro zone’s largest economy). In general, the convergence of national yields to a stable level with reduced risk aids the overall economy, by allowing cheaper access to debt financing with le ...
report - Standard Chartered Bank
... We argue that convergence in the past has been held back by structural rigidities and weak institutions, although there has been substantial progress in tackling both. The region’s underperformance in recent years was down to a policy squeeze and the shock of the first Greek crisis. Now, governments ...
... We argue that convergence in the past has been held back by structural rigidities and weak institutions, although there has been substantial progress in tackling both. The region’s underperformance in recent years was down to a policy squeeze and the shock of the first Greek crisis. Now, governments ...
Long-duration Bonds and Sovereign Defaults
... the disruptions in economic activity caused by a default decision. It has been argued that a sovereign default increases the borrowing cost of domestic firms and, thus, it reduces output. Using micro-level data, Arteta and Hale (2006) find that sovereign debt crises are systematically accompanied by ...
... the disruptions in economic activity caused by a default decision. It has been argued that a sovereign default increases the borrowing cost of domestic firms and, thus, it reduces output. Using micro-level data, Arteta and Hale (2006) find that sovereign debt crises are systematically accompanied by ...
Euro Area Policies: 2016 Article IV Consultation--Press Release
... The euro area recovery continues, supported by still low oil prices, a neutral fiscal stance, and accommodative monetary policy. Directors cautioned, however, that inflation and inflation expectations remain stubbornly low, raising adjustment challenges for debtors, and that crisis legacies of high ...
... The euro area recovery continues, supported by still low oil prices, a neutral fiscal stance, and accommodative monetary policy. Directors cautioned, however, that inflation and inflation expectations remain stubbornly low, raising adjustment challenges for debtors, and that crisis legacies of high ...
has no case
... The Greek finance minister, at that point, asked his German counterpart whether this would be acceptable to the German government. Schäuble answered in the negative. Clearly, the proposal to the Greek government by the three institutions, including the ECB, on how Athens should repay the ECB was a ...
... The Greek finance minister, at that point, asked his German counterpart whether this would be acceptable to the German government. Schäuble answered in the negative. Clearly, the proposal to the Greek government by the three institutions, including the ECB, on how Athens should repay the ECB was a ...
The Eurozone Crisis
... The significance of the Anglo Irish nationalisation as the other turning point is, at first, less evident. This was a small bank in a small eurozone country. But, it came in the wake of Lehman bankruptcy in September 2008 with banks worldwide in an elevated state of vulnerability and a widespread se ...
... The significance of the Anglo Irish nationalisation as the other turning point is, at first, less evident. This was a small bank in a small eurozone country. But, it came in the wake of Lehman bankruptcy in September 2008 with banks worldwide in an elevated state of vulnerability and a widespread se ...
Lessons from Its Recovery from the Bank-Sovereign Loop
... in the process saw the operation of the “sovereign-bank loop”—a vicious cycle where uncertainty about banks’ health fed into doubts around the sustainability of public debt, which only added to fears about the banks. The government lost access to market financing at manageable interest rates, and Ir ...
... in the process saw the operation of the “sovereign-bank loop”—a vicious cycle where uncertainty about banks’ health fed into doubts around the sustainability of public debt, which only added to fears about the banks. The government lost access to market financing at manageable interest rates, and Ir ...
Debt Limits and the Structure of Public Debt
... higher than ever. Average public debt in advanced economies has grown from a precrisis level of around 70 percent of GDP, to nearly 110 percent in 2016. At such levels, relatively small macroeconomic shocks, such as a typical recession, can cause debt vulnerabilities to increase substantially. There ...
... higher than ever. Average public debt in advanced economies has grown from a precrisis level of around 70 percent of GDP, to nearly 110 percent in 2016. At such levels, relatively small macroeconomic shocks, such as a typical recession, can cause debt vulnerabilities to increase substantially. There ...
Making a reality of GDP-linked sovereign bonds Authored by Bank
... public debt is at a post-second-world-war high (100% of GDP). For emerging markets, where GDP tends to be more volatile, public debt is at its highest since the 1980s (close to 50% of GDP), even before any potential, contingent fiscal liabilities are included such as state-owned enterprises and gove ...
... public debt is at a post-second-world-war high (100% of GDP). For emerging markets, where GDP tends to be more volatile, public debt is at its highest since the 1980s (close to 50% of GDP), even before any potential, contingent fiscal liabilities are included such as state-owned enterprises and gove ...
Soft budget constraint but no moral hazard? The Dutch local
... provide nationally uniform levels of essential public services as part of an attempt to guarantee equal standards of living to all citizens of the country, regardless of where they live. In order to provide a minimum level of public services, local governments must be provided with the proper financ ...
... provide nationally uniform levels of essential public services as part of an attempt to guarantee equal standards of living to all citizens of the country, regardless of where they live. In order to provide a minimum level of public services, local governments must be provided with the proper financ ...
Fiscal Austerity, Growth Prospects, and Sovereign CDS Spreads
... the global economy. While the recovery in the developed world remains sluggish, plagued by stubborn unemployment, tight credit, and weak business investment, the Eurozone has suffered most as its periphery countries were at the root of the sovereign debt crisis. Greece twice, Ireland, and Portugal w ...
... the global economy. While the recovery in the developed world remains sluggish, plagued by stubborn unemployment, tight credit, and weak business investment, the Eurozone has suffered most as its periphery countries were at the root of the sovereign debt crisis. Greece twice, Ireland, and Portugal w ...
Ending over-lending: assessing systemic risk with - ECB
... This paper introduces the relationship between the stock of total debt and the flow of gross saving of nations and their economic sectors to macroprudential analysis, particularly as an indicator of systemic risk and vulnerabilities. Data series for sectors’ and nations’ total debt, not only the pub ...
... This paper introduces the relationship between the stock of total debt and the flow of gross saving of nations and their economic sectors to macroprudential analysis, particularly as an indicator of systemic risk and vulnerabilities. Data series for sectors’ and nations’ total debt, not only the pub ...
Paying off government debt
... than it is today. Japan has seen no increase in nominal GDP for almost 20 years, so the Debt/GDP ratio has steadily risen. Japan has been unable to inflate its way out of its debt, but has paid miniscule interest rates to bondholders and absorbed much of the savings within the country. The governmen ...
... than it is today. Japan has seen no increase in nominal GDP for almost 20 years, so the Debt/GDP ratio has steadily risen. Japan has been unable to inflate its way out of its debt, but has paid miniscule interest rates to bondholders and absorbed much of the savings within the country. The governmen ...
Indexed Sovereign Debt: An Applied Framework
... Our calibration of the model with GDP-indexed debt to the Argentine economy for the period 1983-2000 shows that with GDP-indexed debt the government borrows more and, simultaneously, default is less likely than with non-contingent debt. We also show that welfare gains from substituting standard defa ...
... Our calibration of the model with GDP-indexed debt to the Argentine economy for the period 1983-2000 shows that with GDP-indexed debt the government borrows more and, simultaneously, default is less likely than with non-contingent debt. We also show that welfare gains from substituting standard defa ...
Heading into Trouble: A Comparison of the Latin
... in Latin America during the 80s. Furthermore, it discusses the implications of being part of a monetary union. This is in contrast to the Latin American crisis, where in each case, for example, the real exchange rate was a crucial buffer. More generally, being part of a monetary union significantly ...
... in Latin America during the 80s. Furthermore, it discusses the implications of being part of a monetary union. This is in contrast to the Latin American crisis, where in each case, for example, the real exchange rate was a crucial buffer. More generally, being part of a monetary union significantly ...
selection from a published volume from the of Economic Research
... In the last fifteen years, following the introduction of the euro and the resulting elimination of exchange rate risk among euro area members, European banks have increasingly “happily owned regional, rather than merely national, government bond portfolios” (The Economist 2012). In particular, banks ...
... In the last fifteen years, following the introduction of the euro and the resulting elimination of exchange rate risk among euro area members, European banks have increasingly “happily owned regional, rather than merely national, government bond portfolios” (The Economist 2012). In particular, banks ...
The Crisis Management of the ECB - Fritz Breuss
... control since the outbreak of the Euro crisis in 2010. In particular, the yields of government bonds of the peripheral countries - especially those of Greece, but also Ireland, Portugal and Spain - jumped up considerably. After the famous "Whatever-it-takes" speech by ECB President Mario Draghi in L ...
... control since the outbreak of the Euro crisis in 2010. In particular, the yields of government bonds of the peripheral countries - especially those of Greece, but also Ireland, Portugal and Spain - jumped up considerably. After the famous "Whatever-it-takes" speech by ECB President Mario Draghi in L ...
European debt crisis
The European debt crisis (often also referred to as the Eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of 2009. Several eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other Eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).The detailed causes of the debt crises varied. In several countries, private debts arising from a property bubble were transferred to sovereign debt as a result of banking system bailouts and government responses to slowing economies post-bubble. The structure of the eurozone as a currency union (i.e., one currency) without fiscal union (e.g., different tax and public pension rules) contributed to the crisis and limited the ability of European leaders to respond. European banks own a significant amount of sovereign debt, such that concerns regarding the solvency of banking systems or sovereigns are negatively reinforcing.As concerns intensified in early 2010 and thereafter, leading European nations implemented a series of financial support measures such as the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM). The ECB also contributed to solve the crisis by lowering interest rates and providing cheap loans of more than one trillion euro in order to maintain money flows between European banks. On 6 September 2012, the ECB calmed financial markets by announcing free unlimited support for all eurozone countries involved in a sovereign state bailout/precautionary programme from EFSF/ESM, through some yield lowering Outright Monetary Transactions (OMT).Return to economic growth and improved structural deficits enabled Ireland and Portugal to exit their bailout programmes in July 2014. Greece and Cyprus both managed to partly regain market access in 2014. Their bailout programme is scheduled to end in March 2016. Spain never officially received a bailout programme. It's rescue package from the ESM was earmarked for a bank recapitalization fund and did not include financial support for the government itself.The crisis had significant adverse economic effects and labour market effects, with unemployment rates in Greece and Spain reaching 27%, and was blamed for subdued economic growth, not only for the entire eurozone, but for the entire European Union. As such, it can be argued to have had a major political impact on the ruling governments in 9 out of 19 eurozone countries, contributing to power shifts in Greece, Ireland, France, Italy, Portugal, Spain, Slovenia, Slovakia, and the Netherlands.