Conventional wisdom claims that fixed exchange rates provide more fiscal discipline than do flexible rates, but the recent experiences in Europe, the record of Sub-Saharan countries in the 1980s, and the history of stabilization attempts in Latin America cast empirical doubts on this wisdom. To...

We present a new empirical decomposition of the e.ects of financial liberalization on economic growth and on the incidence of crises. Our empirical estimates show that the direct e.ect of financial liberalization on growth by far outweighs the indirect e.ect via a higher propensity to crisis. We...

The Single Supervisory Mechanism was introduced to eliminate the common-pool problem and limit uncontrolled lending by national central banks (NCBs). We analyze its effectiveness. Second, we model how, by forbearing and providing refinancing credit, NCBs avoid domestic resolution costs and,...

Since the beginning of the financial crisis in 2007/8, new lending in the Euro-Area has slowed sharply and the old loans experienced "evergreening," i.e. bad loans have been rolled over rather than being liquidated. Even though ameliorating evergreening is key to promote lending for new...