European Crisis: A New Tale of Center–Periphery Relations in the World of Financial Liberalization/Globalization?

O'Connell, Arturo

doi:10.1080/08911916.2015.1035986

Cited by 14 publications

(4 citation statements)

References 20 publications

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“…On the contrary, price movements have represented a risk in themselves, largely independent of real conditions: speculative thinking lies at the heart of how fi nance works (Lincei, 2020). After all, it was speculation that allowed large imbalances between core and periphery to accumulate during the 2000s, which ultimately became unsustainable, causing a major bank crisis in Spain, Portugal, Ireland and Germany -but not in Italy (O'Connell, 2015).…”

Section: Minimal Sovereignty Conditions: the Ecb As A Lender Of Last Resort And The Reform Of The Banking Unionmentioning

confidence: 99%

The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules

Costantini

2020

Intereconomics

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The debate about what, whether and when fi scal rules should be reinstated is of existential relevance for the European Union for at least two main reasons. First, the recovery is, or should be, a public good that governments must take care of (Shapiro, 2019). Previous attempts to privatise the burden of recovery have failed and a quick return to austerity entails serious economic, social, environmental, and probably political risks. Second, the European fi scal framework impacts much more than just the size of the budget defi cit. It infl uences defi ning aspects of the social contract, including universal access to healthcare, pensions, inheritance taxes and social mobility, youth employment and the gender divide.As much as economists, as citizens, should contribute to the discussion, the problem is essentially political (Roncaglia, 2015;Di Majo, 2020). But no fair intra-European debate can occur if the fi nancial stability of the euro area is not somewhat secured. This, alas, may amount to a conundrum.

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Section: Minimal Sovereignty Conditions: the Ecb As A Lender Of Last Resort And The Reform Of The Banking Unionmentioning

confidence: 99%

The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules

Costantini

2020

Intereconomics

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“…By the time the banking crisis and other economic pressures forced the question of further reform onto the agenda, divergences between the economies of the core and periphery within the eurozone had enormously intensified (Storm/Naastepad 2014;O'Connell 2015), changing the political equilibria and nullifying in fact the previous intergovernmental aspirations.…”

Section: The Ongoing Reforms the Economic Alarmism And The Remaininmentioning

confidence: 99%

Political economy of the Stability and Growth Pact

Costantini

2017

European Journal of Economics and Economic Policies: Intervention

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In spite of many claims that the European treaties cannot be reformed, European economic governance has evolved substantially over the last two decades. The process has erected an ever more complex system of rules, deadlines, and commitments conferring more power on the European Commission and other common institutions. This paper analyses the sequence of reforms to the Stability and Growth Pact, focusing on how reliance on shaky theory-laden macroeconomic estimates has played a crucial role in the whole process. The cyclically adjusted (or structural) budget estimate has provided scientific validation to behind-the-scenes political negotiations.

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“…On a more explanatory level, Shin's leverage framework has been directly deployed in a broad European crisis context (O'Connell, 2015), in European investment in the US shadow banking system (Shin, 2009, 2012), as well as case study analysis of the peripheral crisis (Everett, 2015). Often extending the leverage framework, a related literature focuses on carry trade possibilities available to core European banks.…”

Section: Accounting For Debt Flows: Trends and The Importance Of Banksmentioning

confidence: 99%

“…Lax regulation in Europe enabled proprietary gains as minimal to no capital charges needed to be held against bank holdings of assets in off-balance sheet vehicles. Similarly, for O'Connell (2015) and Hale and Obstfeld (2016) cheap extra-European borrowing among core banks for investment in higher-yielding peripheral debt products constituted a carry trade. Core banks' comparative advantage in lending to the periphery was facilitated by ECB loose monetary policy and reduced transaction costs through harmonization and liberalization of regulations Hale and Obstfeld (2016).…”

Section: Accounting For Debt Flows: Trends and The Importance Of Banksmentioning

confidence: 99%

Global banks or global investors? The case of European debt flows

Sweeney

2017

Competition & Change

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A consensus is emerging that in order to understand the global financial landscape one needs to pay attention to the key institutions that are said to dominate it, namely large banking entities. This paper challenges that consensus as applied to eurozone-centred debt flows. Though bank-centred approaches are well equipped to explain a significant portion of cross-border debt dynamics through carry trades, there is little evidence this constituted the central mechanism for channelling flows. The expansion of debt flows is instead explained by depressed returns on fixed income instruments and the ensuing asset-liability mismatches which led investors to move into financial sector debt and yield-producing securitized assets. An investor-centred as opposed to a bank-centred understanding of debt flows has important financial stability and policy implications.

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European Crisis: A New Tale of Center–Periphery Relations in the World of Financial Liberalization/Globalization?

Cited by 14 publications

References 20 publications

The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules

The Eurozone as a Trap and a Hostage: Obstacles and Prospects of the Debate on European Fiscal Rules

Political economy of the Stability and Growth Pact

Global banks or global investors? The case of European debt flows

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