Showing 1 - 10 of 24
Standard theoretical arguments tell us that countries with relatively little capital benefit from financial integration as foreign capital flows in and speeds up the process of income convergence. We show in a calibrated neoclassical model that conventionally measured welfare gains from this...
Persistent link: https://www.econbiz.de/10005605034
We provide new estimates of the return on US external claims and liabilities using confidential, high-quality, security-level data. The excess return is positive on average, since claims are tilted toward higher return equities. The excess return is large and positive in normal times but large...
Persistent link: https://www.econbiz.de/10015328265
Global linkages are changing amidst elevated geopolitical tensions and a surge in policies directed at increasing supply chain resilience and national security. Using granular bilateral data, this paper provides new evidence of trade and investment fragmentation along geopolitical lines since...
Persistent link: https://www.econbiz.de/10015058520
Despite a formal 'no-bailout clause,' we estimate significant net present value transfers from the European Union to Cyprus, Greece, Ireland, Portugal, and Spain, ranging from roughly 0.5% (Ireland) to a whopping 43% (Greece) of 2010 output during the Eurozone crisis. We propose a model to...
Persistent link: https://www.econbiz.de/10015059348
This paper explores the feasibility of an idea proposed first by the German Council of Economic Experts in 2011 and revisited by Italian and French authorities in 2021: the one-off mutualization of some European legacy debt through the creation of a European Debt Management Agency (EDMA). The...
Persistent link: https://www.econbiz.de/10015059638
The surge in energy prices in 2022 has been a defining factor behind the increase in euro area inflation. We assess the impact of "unconventional fiscal policy," defined as the set of fiscal measures, possibly expansionary, motivated by a desire to mute the effects of the increase in energy...
Persistent link: https://www.econbiz.de/10015059180
We study the behavior of Covered Interest Parity (CIP) deviations - aka the CIP basis - in Emerging Markets (EM). A major challenge in computing the CIP basis in EM's lies in measuring local currency interest rates which are free of local credit risk. To do so, we construct a 'purified' CIP...
Persistent link: https://www.econbiz.de/10015411370
Using a simple model of international lending, we show that as long as the IMF lends at an actuarially fair interest rate and debtor governments maximize the welfare of their taxpayers, any changes in policy effort, capital flows, or borrowing costs in response to IMF crisis lending are...
Persistent link: https://www.econbiz.de/10005768820
The link between monetary policy and asset price movements has been of perennial interest to policymakers. In this paper, we consider the potential case for preemptive monetary restrictions when asset price reversals can have serious effects on real output. First, we present some stylized facts...
Persistent link: https://www.econbiz.de/10005769254
In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show however, that competition for repayment among lenders may result in a sovereign debt that is...
Persistent link: https://www.econbiz.de/10005769274