Although recent research shows that the euro has spurred cross-border financial integration, the exact mechanisms remain unknown. We investigate the underlying channels of the euro's effect on financial integration using data on bilateral banking linkages among twenty industrial countries in the...

Standard theory predicts that financial integration leads to a lower degree of business cycle synchronization. Surprisingly, cross-country studies find the opposite. Our contribution is to document the theoretically predicted negative effect of financial integration on business cycle...

We study the effect of financial integration on the transmission of international business cycles. In a sample of 20 developed countries between 1978 and 2009 we find that, in periods without financial crises, increases in bilateral financial linkages are associated with more divergent output...

Policy impact studies often suffer from endogeneity problems. Consider the case of the ECB Securities Markets Programme. If Eurosystem interventions were triggered by sudden and strong price deteriorations, looking at daily (or weekly) price changes may bias downwards the correlation between...

Motivated by policy statements of central bankers, we propose to regard the central banker as a risk manager who aims at containing inflation and the deviation of output from potential within pre-specified bounds. We develop formal tools of risk management that may be used to quantify the risks...

In deciding a monetary policy stance, central bankers need to evaluate carefully the risks the current economic situation poses to price stability. We propose to regard the central banker as a risk manager who aims to contain inflation within pre-specified bounds. We develop formal tools of risk...

Does financial development result in capital being reallocated more rapidly to industries where it is most productive? We argue that if this was the case, financially developed countries should see faster growth in industries with investment opportunities due to global demand and productivity...

We investigate the role of national institutions on regional development in a novel framework. We exploit the fact that the arbitrary political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across different countries subjecting similar cultures,...

We investigate the role of deeply-rooted pre-colonial ethnic institutions in shaping comparative regional development within African countries. We combine information on the spatial distribution of ethnicities before colonization with regional variation in contemporary economic performance, as...

We examine the link between pre-colonial statehood and contemporary regional African development, as reflected in satellite images on light density at night. We employ a variety of historical maps to capture the former. Our within-country analysis reveals a strong positive correlation between...