Download or read book Limited Asset Market Participation and the Euro Area Crisis An Empirical DSGE Model written by Alice Albonico and published by . This book was released on 2018 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate a medium scale DSGE model for the Euro area with Limited Asset Market Participation (LAMP). Our results suggest that in the recent EMU years LAMP is particularly sizeable (393 during 1993-2012) and important to understand business cycle features. The Bayes factor and the forecasting performance show that the LAMP model is preferred to its representative household counterpart. In the RA model the risk premium shock is the main driver of output volatility in order to match consumption correlation with output. In the LAMP model this role is played by the investment-specific shock, because Non-Ricardian households introduce a Keynesian multiplier effect and raise the correlation between consumption and investments. We also detect contractionary role of monetary policy shocks during the post-2007 years. In this period consumption of Non-Ricardian households fell dramatically, but this outcome might have been avoided by a more aggressive policy stance.

Download or read book Estimating a DSGE Model with Limited Asset Market Participation for the Euro Area written by Alice Albonico and published by . This book was released on 2014 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate a medium scale DSGE model for the Euro Area to gain intuition on the importance of Limited Asset Market Participation (LAMP). Our results suggest that LAMP is sizeable (39% of households over the 1993-2012 sample) and important to understand EMU business cycle, especially, in the light of the recent financial crisis. In comparison with the representative households counterpart, the LAMP model is preferred on the grounds of both the Bayes factor and the average forecasting performance. Given the tighter credit standards we might expect in the near future, the high proportion of LAMP households is likely to remain an important feature of EMU. We also find that the LAMP model leads to conclusions about the main determinants of EMU business cycle that are substantially different from those obtained under the representative agent hypothesis. Given these results, the LAMP hypothesis should be part and parcel of empirical DSGE models of the Euro area.

Download or read book Sovereign Risk and Belief Driven Fluctuations in the Euro Area written by Giancarlo Corsetti and published by International Monetary Fund. This book was released on 2013-11-06 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sovereign risk premia in several euro area countries have risen markedly since 2008, driving up credit spreads in the private sector as well. We propose a New Keynesian model of a two-region monetary union that accounts for this “sovereign risk channel.” The model is calibrated to the euro area as of mid-2012. We show that a combination of sovereign risk in one region and strongly procyclical fiscal policy at the aggregate level exacerbates the risk of belief-driven deflationary downturns. The model provides an argument in favor of coordinated, asymmetric fiscal stances as a way to prevent selffulfilling debt crises.

Download or read book Bayesian Econometrics written by Mauro Bernardi and published by MDPI. This book was released on 2020-12-28 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the advent of Markov chain Monte Carlo (MCMC) methods in the early 1990s, Bayesian methods have been proposed for a large and growing number of applications. One of the main advantages of Bayesian inference is the ability to deal with many different sources of uncertainty, including data, models, parameters and parameter restriction uncertainties, in a unified and coherent framework. This book contributes to this literature by collecting a set of carefully evaluated contributions that are grouped amongst two topics in financial economics. The first three papers refer to macro-finance issues for real economy, including the elasticity of factor substitution (ES) in the Cobb–Douglas production function, the effects of government public spending components, and quantitative easing, monetary policy and economics. The last three contributions focus on cryptocurrency and stock market predictability. All arguments are central ingredients in the current economic discussion and their importance has only been further emphasized by the COVID-19 crisis.

Download or read book Fiscal Multipliers and Informality written by Emilio Colombo and published by International Monetary Fund. This book was released on 2022-05-06 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the role of informality in affecting the magnitude of the fiscal multiplier in a panel of 141 countries, using the local projections method. We find a strong negative relationship between the degree of informality and the size of the fiscal multiplier. This result holds irrespective of the levels of economic development and institutional quality and is robust to additional country characteristics such as trade, financial openness and exchange rate regime. In a two-sector new- Keynesian model, we rationalize this result by showing that fiscal shocks raise the relative price of official goods, shifting demand towards the informal sector. This reallocation effect increases with the level of informality, because a larger informal sector is associated with a stronger appreciation of relative prices in response to fiscal shocks. Thus, informality raises the size of the unofficial multiplier. A higher degree of non-separability between public and private goods also contributes to rationalize the lower multipliers in high-informality countries.

Download or read book Financial Crises Explanations Types and Implications written by Mr.Stijn Claessens and published by International Monetary Fund. This book was released on 2013-01-30 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

Download or read book The European Monetary Union written by Nicola Acocella and published by Cambridge University Press. This book was released on 2020-08-27 with total page 489 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European Union is at a crossroads. This book analyzes the historical roots of the EU's monetary and financial institutions in order to better understand its struggle to maintain an economic and monetary union, as well as the ongoing problems facing the Euro. The institutions of the EU are based on the operation of free markets, a common monetary policy, and the European Central Bank. These founding policies have created many of the imbalances at the root of the ongoing European recession. Reemerging threats of populism and localism are poised to further disintegrate the European construction and may spark fierce opposition between countries. Acocella engages with these risks, suggesting detailed actions for reform within the EU and its institutions that may steer it away from further conflict, allowing it to better serve its member states and citizens.

Download or read book Economic Crisis in Europe written by Paul van den Noord and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European economy is emerging from its deepest recession since the 1930s. This volume, which brings together economic analysis from the European Commission services, explains how swift policy response avoided a financial meltdown. Europe also needs an improved co-ordinated crisis-management framework to help it respond to any similar situations that may arise in the future. Economic Crisis in Europe is a much-anticipated volume which shows that the beginnings of such a crisis-management framework are emerging, building on existing institutions and legislation and complemented by new initiatives.

Download or read book Governance Failure and Reform Attempts After the Global Economic Crisis of 2008 09 written by Leonid and published by Columbia University Press. This book was released on 2014-04-15 with total page 237 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global economic crisis of 2008/2009 has had a broad impact far beyond economic concerns. Most importantly, it has been seen as a crisis of governance and debates have not just questioned specific regulations, e.g. of global financial markets, but have additionally challenged the appropriateness of underlying governance concepts not only in global markets, but also at the national level. For the post-socialist countries, which adopted market-oriented governance mechanisms less than two decades ago, the global crisis was the first stress test after the post-socialist recovery. The contributions in this book focus on the impact of the crisis and related reform attempts in two important areas. The first area is financial and monetary policy, which is at the core of the global crisis of 2008/2009. The second area is relations between business and state actors, where corruption and weak institutional frameworks can both seriously hamper reform attempts. The volume comprises essential contributions on how the post-socialist countries have tried to cope with the first global economical crisis they saw themselves confronted with.

Download or read book The Chicago Plan Revisited written by Mr.Jaromir Benes and published by International Monetary Fund. This book was released on 2012-08-01 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher's claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.

Download or read book Inflation and Activity Two Explorations and their Monetary Policy Implications written by Mr.Olivier J. Blanchard and published by International Monetary Fund. This book was released on 2015-11-06 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore two issues triggered by the crisis. First, in most advanced countries, output remains far below the pre-recession trend, suggesting hysteresis. Second, while inflation has decreased, it has decreased less than anticipated, suggesting a breakdown of the relation between inflation and activity. To examine the first, we look at 122 recessions over the past 50 years in 23 countries. We find that a high proportion of them have been followed by lower output or even lower growth. To examine the second, we estimate a Phillips curve relation over the past 50 years for 20 countries. We find that the effect of unemployment on inflation, for given expected inflation, decreased until the early 1990s, but has remained roughly stable since then. We draw implications of our findings for monetary policy.

Download or read book Nonperforming Loans in Asia and Europe Causes Impacts and Resolution Strategies written by Asian Development Bank and published by Asian Development Bank. This book was released on 2021-12-01 with total page 262 pages. Available in PDF, EPUB and Kindle. Book excerpt: High and persistent levels of nonperforming loans (NPLs) have featured prominently in recent financial crises. This book traces NPL trends during and after crises, examines the economic impact of high NPLs, and compares the effectiveness of NPL resolution strategies across economies in Asia and Europe. The book distills important lessons from the experiences of economies using case studies and empirical investigation of ways to resolve NPLs. These findings can be invaluable in charting a course through the financial and economic fallout of the coronavirus disease (COVID-19) pandemic to recovery and sustained financial stability in Asia, Europe, and beyond.

Download or read book Monetary Policy Strategy written by Frederic S. Mishkin and published by MIT Press. This book was released on 2007 with total page 561 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book by a leading authority on monetary policy offers a unique view of the subject from the perspectives of both scholar and practitioner. Frederic Mishkin is not only an academic expert in the field but also a high-level policymaker. He is especially well positioned to discuss the changes in the conduct of monetary policy in recent years, in particular the turn to inflation targeting. Monetary Policy Strategydescribes his work over the last ten years, offering published papers, new introductory material, and a summing up, "Everything You Wanted to Know about Monetary Policy Strategy, But Were Afraid to Ask," which reflects on what we have learned about monetary policy over the last thirty years. Mishkin blends theory, econometric evidence, and extensive case studies of monetary policy in advanced and emerging market and transition economies. Throughout, his focus is on these key areas: the importance of price stability and a nominal anch fiscal and financial preconditions for achieving price stability; central bank independence as an additional precondition; central bank accountability; the rationale for inflation targeting; the optimal inflation target; central bank transparency and communication; and the role of asset prices in monetary policy.

Download or read book Financial Regulation in the EU written by Raphaël Douady and published by Springer. This book was released on 2017-08-29 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial regulation has dramatically evolved and strengthened since the crisis on both sides of the Atlantic, with enhanced international coordination through the G-20 and the Financial Stability Board and, at the regional level, a definite contribution from the European Union. However the new regulatory environment has its critics, with many divergent voices arguing that over-regulation has become a root cause of our current economic stagnation. This book provides a bigger picture view of the impact and future of financial regulation in the EU, exploring the relationship between microeconomic incentives and macroeconomic growth, regulation and financial integration, and the changes required in economic policy to further European integration. Bringing together contributions from law, economics and management science, it offers readers an accessible but rigorous understanding of the current state of play of the regulatory environment, and on the future challenges. Coverage will include: • A review of the recent regulatory changes from a legal and economic perspective • Analysis of how the economic model of financial institutions and entities is impacted by the new frameworks • How to improve securitization and new instruments under MIFID II • Issues in the enhanced supervision under delegated acts for AIFMD, CRR-CRD IV and Solvency II • How long term funding can be supplied in lieu of the non-conventional monetary policies • A new architecture for a safer and more efficient European financial system Financial Regulation in the EU provides much needed clarity on the impact of new financial regulation and the future of the economy, and will prove a must have reference for all those working in, researching and affected by these changes.

Download or read book Financial Crises written by Mr.Stijn Claessens and published by International Monetary Fund. This book was released on 2014-02-19 with total page 754 pages. Available in PDF, EPUB and Kindle. Book excerpt: The lingering effects of the economic crisis are still visible—this shows a clear need to improve our understanding of financial crises. This book surveys a wide range of crises, including banking, balance of payments, and sovereign debt crises. It begins with an overview of the various types of crises and introduces a comprehensive database of crises. Broad lessons on crisis prevention and management, as well as the short-term economic effects of crises, recessions, and recoveries, are discussed.

Download or read book Inflation Expectations written by Peter J. N. Sinclair and published by Routledge. This book was released on 2009-12-16 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.

Download or read book Monetary Policy Fiscal Policies and Labour Markets written by R. Beetsma and published by Cambridge University Press. This book was released on 2004-02-19 with total page 398 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following the birth of the European Monetary Union (EMU) economists are still divided in their assessment of the ability of its key institutions to provide macroeconomic stability and foster the reforms necessary to stimulate economic growth. In this collection, experts focus on issues of fiscal policy, monetary policy and labour markets and ask: Can the stability and growth pact provide an adequate framework for the conduct of national fiscal policies? Is the ECB reacting with competence and flexibility to a rapidly changing macroeconomic environment? How do national labour markets react to the macroeconomic institutions and what are the structural reforms needed in labour markets? Blending empirical and theoretical data, this book offers one of the most comprehensive surveys of research in macroeconomic policymaking within the EMU.