Kollintzas, Tryphon; Tsoukalas, Konstantinos - C.E.P.R. Discussion Papers - 2015
Euro Area. We find that an increase in capital investment risk shock, results in a considerably deeper recession when … sovereign risk is also present. This result has three policy implications. First, Euro Area policies dealing with failing banks … loans to sovereigns, as long as there is no direct mechanism for financial sector rescues, Euro Area policies continue to …