What’s wrong with Europe?

Isabella Rota Baldini, Paolo Manasse,

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Mon, 11/04/2013

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US, productivity, Eurozone crisis

What’s wrong with Europe?

Isabella Rota Baldini, Paolo Manasse 04 November 2013

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The US and Europe: a tale of two cities

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Topics:  EU institutions

Tags:  US, productivity, Eurozone crisis

A fiscal perspective on EU sovereign credit ratings: Did the credit-rating agencies get them right?

Mike Wickens, Vito Polito 30 October 2013

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The financial crisis has put EU and US sovereign credit ratings centre-stage in a way not seen before. Previously, it was taken for granted that all Eurozone governments could borrow at more or less the same risk-free rate as Germany, and that Germany, the UK, and the US would be rated triple-A.

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Topics:  Global crisis International finance

Tags:  sovereign debt, Eurozone crisis, credit-rating agencies

International cooperation and central banks

Harold James 08 October 2013

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Tackling the aftermath of a major financial crisis, the origins of which lie in ‘global imbalances’ and whose transmission mechanisms are cross-national, seems prima facie to demand more substantial and institutionalised cooperation. However, in the five years since the collapse of Lehman Brothers, visions of what central banks can and should do have changed profoundly. In particular, the demand that they should play a much more vigorous and preemptive role in financial supervision has had made them more nationally focused and in consequence less prone to cooperate.

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Topics:  Global crisis International finance

Tags:  monetary policy, global imbalances, Central Banks, global crisis, policy coordination, Eurozone crisis

Credit rating agencies and the Eurozone Crisis: What is the value of sovereign ratings?

Norbert Gaillard 09 September 2013

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The inability of credit rating agencies to anticipate sovereign-debt crises and the tendency to overreact once financial difficulties have piled up are well-known phenomena. Ferri et al. (1999) show that the downgrades by Moody’s and S&P exacerbated the Asian crisis in 1997. Examining the Great Depression, Gaillard (2011) and Flandreau et al. (2011) find that major credit rating agencies did not lower sovereign credit ratings until 1931.

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Topics:  Europe's nations and regions Global crisis

Tags:  Eurozone crisis

Fiscal stimulus in times of high public debt: Reconsidering multipliers and twin deficits

Christiane Nickel, Andreas Tudyka 07 September 2013

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The stimulus impact of a government-spending shocks varies with the economic environment (Ilzetzki, Mendoza, and Végh 2013). One important determinant is the level of government indebtedness – particularly when the nation’s fiscal sustainability may be in doubt. The economic logic of this is straightforward.

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, Eurozone crisis

Sovereign default risk and banks in Europe’s monetary union

Harald Uhlig 05 September 2013

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With the one year anniversary of ECB President Draghi’s announcement to “do whatever it takes” and the announcement of the OMT (Outright Monetary Transactions) programme, bond yields have declined and fears of sovereign defaults have receded in countries such as Portugal, Spain and Italy. We all hope that this danger has passed!

But it may well be that we are just witnessing a brief calm before the storm returns. Right now, then, is a good opportunity to solidify what we have and to make the financial system in the Eurozone more robust against such risks in the future.

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Topics:  Global crisis International finance

Tags:  Eurozone crisis

External liabilities and crisis risk

Luis AV Catão, Gian Maria Milesi-Ferretti 04 September 2013

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Much has been written about the causes of the global financial crisis of 2008 – the role of the US subprime crisis as a triggering event, the generalised period of easy credit and financial excesses fuelling growing economic and financial vulnerabilities, the failures to properly regulate large systemic financial institutions. Nevertheless, our understanding of the intensity with which the crisis has affected different countries remains modest (Rose and Spiegel 2009, 2011).

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Topics:  Global crisis

Tags:  debt, Eurozone crisis, net external debt, liabilities

The downsizing dilemmas of European employers

Hendrik P van Dalen, Kène Henkens 28 August 2013

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Drastic measures are taken when managers formulate strategies to survive economic crises. Among these are downsizing, outsourcing, firing workers and cutting back on wages. But how do firms balance their interests against those of their workers?

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Topics:  Labour markets

Tags:  unemployment, Eurozone crisis, downsizing, hiring, firing

Is there a future for international banks?

Dirk Schoenmaker 25 August 2013

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The international, centralised, business model of banks has come under pressure after the global financial crisis. Supervisors are leaving their traditional consolidated approach, under which a bank as a whole is assessed. Instead, they are moving towards a stand-alone approach, under which the national subsidiaries are supervised separately. McCauley et al (2012) document this move from the international to the multinational bank model.

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Topics:  Global crisis International finance

Tags:  banking, Too big to fail, Eurozone crisis, international banks

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