Reforming the Architecture of EMU: Ensuring Stability in Europe

Haan, Jakob de; Hessel, Jeroen; Gilbert, Niels

doi:10.2139/ssrn.2520389

Cited by 11 publications

(19 citation statements)

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“…Third, we investigate if the buildup and correction of imbalances in price competitiveness, current accounts and budget de…cits in EMU can be related to medium-term rather than short-term ‡uctuations. According to the literature, these imbalances are at least partly related to medium-term oriented …nancial cycles (De Haan et al, 2015). A clear link between medium-term ‡uctuations and these imbalances would therefore be a further indication on their relevance for the functioning of EMU as an optimum currency area.…”

Section: Connection With Euro Area Imbalancesmentioning

confidence: 98%

“…It remains an important puzzle, however, how these benign views can be reconciled with the sovereign debt crisis, that hit the euro area severely and is sometimes seen as "the mother of all asymmetric shocks" (Krugman, 2012). The euro crisis was related to the buildup and correction of several large and long-lasting divergences: in the growth of credit and house prices, in price competitiveness, in current account balances and in budget de…cits (De Haan et al, 2015). It seems unrealistic that these divergences have left no mark on economic ‡uctuations.…”

Section: [Figure 1 Around Here]mentioning

confidence: 99%

“…Second, medium-term ‡uctuations could be related to the buildup and correction of macroeconomic imbalances in EMU. Imbalances in price competitiveness, current accounts and budget de…cits seem partly driven by asymmetric …nancial cycles (De Haan et al, 2015). Vice versa, especially the correction of these imbalances has had a longer-lasting e¤ect on GDP.…”

Section: The Monetary Union Perspectivementioning

confidence: 99%

“…Moreover, EMU is more bank-based and banks are more attached to their domestic market, which could amplify downturns if non-performing loans reduce local banks' lending capacity (Ho¤mann and Sorensen, 2015). Finally, EMU countries seem more vulnerable to capital ‡ight than US states, because government debt is issued at the decentralized level, the sovereign-bank nexus is relatively strong and a lender of last resort for sovereigns is lacking (De Haan et al, 2015).…”

Section: The Monetary Union Perspectivementioning

confidence: 99%

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Medium-Term Asymmetric Fluctuations and EMU as an Optimum Currency Area

Hessel

2019

SSRN Journal

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Section: Connection With Euro Area Imbalancesmentioning

confidence: 98%

Section: [Figure 1 Around Here]mentioning

confidence: 99%

Section: The Monetary Union Perspectivementioning

confidence: 99%

Section: The Monetary Union Perspectivementioning

confidence: 99%

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Medium-Term Asymmetric Fluctuations and EMU as an Optimum Currency Area

Hessel

2019

SSRN Journal

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“…It remains an important puzzle, however, how these benign views can be reconciled with the sovereign debt crisis, that hit the euro area severely and is sometimes seen as "the mother of all asymmetric shocks" (Krugman, 2012, p. 444). The euro crisis was related to the buildup and correction of several large and long-lasting divergences: in the growth of credit and house prices, in price competitiveness, in current account balances and in budget deficits (De Haan et al, 2016). It seems unrealistic that these divergences have left no mark on economic fluctuations.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Financial Factors in the Economic and Monetary Union

Hessel¹

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With this thesis a long-term desire has been fulfilled. Despite my deliberate choice to leave university and start working in the "real world" after I graduated, the idea to pursue a PhD always remained with me. I nevertheless shied away from openly starting such an ambitious grand project, and took a cautious approach instead. After a number of published and unpublished attempts over the years, the financial crisis and the sovereign debt crisis provided the inspiration for a clearly defined topic. Most economist will vividly remember this fascinating period, when conventional wisdoms were questioned and many new ideas took hold. In retrospect, writing a thesis certainly was not as difficult as I had feared, even though it took more time than I had hoped. Combining a thesis with daily policy work is a challenge, but doing this at DNB was a tremendous privilege. I took inspiration from the natural interaction between policy and research at DNB, and from the many colleagues that are familiar with and sympathetic to such a project. One particular example has been organizing a workshop on gross capital flows with Jolanda Peeters and Neeltje van Horen. The speech I wrote for that occasion contained several elements that form the heart of this thesis. I would also like to thank Job Swank, Paul Hilbers, Peter van Els, Christiaan Pattipeilohy and Saskia de Vries for their encouragement and for giving me time to-sometimes-prioritize research over policy. This thesis would not have been finished without the help of my supervisors, Jakob de Haan and Steven Brakman. Jakob's optimism and ability to have faith in people led to a natural assumption that I would manage and boosted my confidence. Steven has an eagle eye for texts and lines of reasoning that are not fully clear, which helped greatly to further improve my papers. I also want to express my gratitude to my co-authors. Leo de Haan and Jan Willem van den End for their work ethic and talent to channel ideas into a clear empirical strategy. Our cooperation made me realize that I was able to make valuable contributions to genuine research. Thanks also to Mariarosaria Comunale for her strong econometric skills and her continuous enthusiasm in tackling a topic that was quite unexplored and therefore not so clearly defined at the time. And finally Niels Gilbert for the countless fruitful discussions on EMU in our shared office, which have led to many policy notes, articles, papers and still unexplored ideas. Martin Admiraal and René Bierdrager provided excellent data assistance. Many thanks also go to the colleagues at the Raad van State (Council of State). Two secondments there helped me to look at EMU from other angles than just the economic one, and made me realize that the knowledge acquired with my academic work was also useful for policy advice to Dutch Parliament. In addition, I am grateful to the members of the assessment committee, Paul de Grauwe, Harry Garretsen and Kees Koedijk, for their willingness to read and comment on my manuscript. Finally, the contribution ...

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Greek government‐debt crisis events and European financial markets: News surprises on Greek bond yields and inter‐relations of European financial markets

et al. 2022

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We study the impact of Greek government‐debt crisis events on inter‐relations of European financial markets during the European sovereign debt crisis. To this end, we examine the effects of three categories of Greek government‐debt crisis events in the realized correlations and correlation jumps of government bonds, CDS, and stock indices of seven European countries (i.e., France, Germany, Greece, Ireland, Italy, Portugal, and Spain) via the respective dummy variables and news surprises on 2‐year, 5‐year, and 10‐year government bonds and CDS in a non‐parametric framework by employing Tobit regression models. According to the results, the direction of most impacts on correlations and correlation jumps is negative, suggesting that the Greek government‐debt crisis events reduced the homogeneity among member states in the Eurozone. We also investigate the types of Greek government‐debt crisis events that have the highest impacts on correlations and correlation jumps and find that the highest impacts mainly result from news originating from Greek and European sources.

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Reforming the Architecture of EMU: Ensuring Stability in Europe

Cited by 11 publications

References 68 publications

Medium-Term Asymmetric Fluctuations and EMU as an Optimum Currency Area

Medium-Term Asymmetric Fluctuations and EMU as an Optimum Currency Area

Financial Factors in the Economic and Monetary Union

Greek government‐debt crisis events and European financial markets: News surprises on Greek bond yields and inter‐relations of European financial markets

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