State-owned banks may help to soften the financing constraints of public sector entities and consequently become a factor that hampers fiscal discipline. Using a panel dataset, we find that a larger presence of state-owned banks in the banking system is associated with more credit to the public...

Five years after the first tremors in Europe's banking system, what makes the crisis unique is the absence of a democratically accountable decision-making framework; there is an 'executive deficit' that compounds Europe's democratic deficit. The author argues that the only way to resolve the...

We examine the fiscal footprint of macroprudential policy in euro area countries arising through the bond market channel (Reis, 2021). Using local projections, we estimate impulse responses of the fiscal balance to an unexpected tightening in macroprudential capital regulation. Our findings...

We examine the fiscal footprint of macroprudential policy in euro area countries arising through the bond market channel (Reis, 2021). Using local projections, we estimate impulse responses of the fiscal balance to an unexpected tightening in macroprudential capital regulation. Our findings...

The present paper contains a brief presentation and analysis, in a historical perspective through the lens of the recent major crises, of the legal framework governing the European Economic and Monetary Union (EMU), as well as current developments and challenges ahead. It is structured in three...

The paper builds a simplified model describing the economy of a currency union with decentralised national fiscal policy, where the main features characterising the policy-making are similar to those in EMU. National governments choose the size of deficit taking into account the two main rules...

The pandemic dealt a severe blow to the Italian people and their economy. GDP fell by nearly 9 percent in 2020, with much larger drops for contact-intensive services. Public and corporate debt increased strongly and preexisting vulnerabilities have likely worsened. The government is prioritizing...

This paper investigates common determinants of fiscal crises using a standard Early Warning System (EWS) approach, with a particular focus on the role of the financial sector. We find that the probability of a fiscal crisis decreases with the level of domestic credit (as a share of GDP), but...

This work examines the impacts which the Covid-19 pandemic brought to the stability of the European financial sector. Lockdowns, businesses unable to operate and uncertainty about how the pandemic would evolve fueled a sharp recession. From the lessons learned in the global financial crises and...