This paper presents a survey of methods for assessing fiscal soundness, i.e. the capability of governments to honour their obligations in the short run and in the long run. The need for a comprehensive monitoring of fiscal soundness derives from the risks to economic stability that arise from...

In this paper, we discuss the consequences of taking inot account the variations of the natural real interest rate (rt*) in simple monetary policy rules. We also provide one possible model-based analysis of the level of rt* that has prevailed in the euro area since the early 1970s, and present...

In this paper we address the question on whether EMU has amplified or dampened intra euro area divergencies, by looking at a time-varying VAR model of Italy’s relative performance compared with the rest of the euro area, spanning from 1976 to 2009. Our main result is that EMU does not appear...

This paper develops a dynamic stochastic general equilibrium model with nominal rigidities, capital accumulation and finite lifetimes. The framework exhibits intergenerational wealth effects and is intended to investigate the macroeconomic implications of fiscal policy, which is specified by...

This paper presents a two period overlapping generations model with endogenous growth in the presence of a public sector with objectives of convergence for public debt and primary balance to GDP ratios. In order to ensure the existence of converging paths towards the target values of fiscal...

This paper investigates the financing conditions of non-financial corporations in theeuro area. We develop a new firm classification based on micro data by distinguishingbetween three groups of firms: unconstrained, relatively and absolutely constrainedfirms. We also provide further evidence on...

We test whether firms with a single bank are better shielded from loss of credit and investment cutsin periods of adverse cash flow shocks than firms with multiple bank relationships. Our estimatesof the cash flow sensitivity of investment show that both types of firms are equally subject...

Volatilities implied from interest rate swaptions are used to assess the size and thesign of the compensation for volatility risk, for dollar, euro and pound rates at a dailyfrequency, between October 1998 and August 2006. The measurement of the volatilityrisk premium rests on a simple model...

We study both theoretically and empirically the interdependence of lending decisions in differentcountry branches of a multinational bank. First, we model a bank that delegates the management of itsforeign unit to a local manager with non-transferable skills. The bank differs from other...

We analyze the interlinkages between foreign direct investment (FDI) and foreignportfolio investment (FPI) between Germany and the major economies. First, we show thatTobin’s q helps explaining the variation of the growth rate of the stock of FDI. Second, weshow that foreign and the home stock...