A Database : How the Euro Crisis Ended: Not with a (Fiscal) Bang But a Whimper

The importance of monetary and fiscal policy in reducing uncertainty during the Eurozone Crisis has been a controversial topic, hampered in part by the lack of data and thus empirical evidence. First, we add a database to this discussion that comprises daily official data on every policy action from 2007 to 2016 taken by the European Central Bank, the European Commission and other governmental actors as a free download. Then, we investigate the effect of fiscal policy in an event study analysis. We find that most measures that were designed to strengthen the existing Maastricht 1.0 framework of the EMU (e.g., fiscal compact) are not correlated with reducing yield spreads and do not have any causal effect on reducing uncertainty. Events signaling out financial stability and financial assistance among EMU member states (e.g., ESM) are likely to have that effect in comparison. After Germany’s Bundestag ratified the ESM and when the Federal Constitutional Court approved its legitimacy, GIIPS yield spreads significantly decreased