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Current account targeting hypothesis versus twin deficit hypothesis : the EMU experience of Portugal

Afonso, António; Coelho, José Carlos - 2021

We study the relationship between the government budget balance and the current account balance for Portugal, using quarterly data from 1999 to 2019. On the one hand, the causality tests find a unidirectional relation running from the current account balance to the government budget balance. On...

Persistent link: https://www.econbiz.de/10012595472

The role of fiscal policies for external imbalances : evidence from the European Union

Afonso, António; Coelho, José Carlos - 2021

two deficits is asymmetric and the negative impact of the recent Eurozone banking and sovereign debt crisis on the current … positive impact of the budget balance on the current account balance is higher in the cases of non-Eurozone countries, high … budget deficit countries, and low exports countries, whereas it is lower in the cases of Eurozone countries, low budget …

Persistent link: https://www.econbiz.de/10012504606

60 %, -4 % and 6 %, a tale of thresholds for EU fiscal and current account developments

Afonso, António; Coelho, José Carlos - 2021

that the relationship is bi-directional for the EU panelas a whole. Furthermore, we find that in Eurozone countries, before … is greater. Conversely, in non-Eurozone countries, after 2010, in countries with a current account balance-to-GDP ratio …

Persistent link: https://www.econbiz.de/10012649364

Fiscal and current account imbalances : the cases of Germany and Portugal

Afonso, António; Coelho, José Carlos - 2021

We investigate the bilateral relationship between government budget balances and current account balances for Portugal and Germany. We find that the response of the current account balance to the budget balance is greater in Portugal than in Germany. On the other hand, the response of the budget...

Persistent link: https://www.econbiz.de/10014293956

The monetary transmission mechanism in the Euro Area : has it changed with the EMU? : a VAR approach, with fiscal policy and financial stress considerations

Afonso, António; Silva, António Jorge - 2014

Persistent link: https://www.econbiz.de/10011554780

Monetary policy surprise shocks under different fiscal regimes : a panel analysis of the Euro Area

Afonso, António; Alves, José; Ionta, Serena - 2023

We study the effect of monetary policy surprise shocks on real output and the price level, conditioned on different fiscal stances in the period 2001Q4-2021Q4 for a panel of the 19 countries of the Euro Area. Applying local projection methodology, we find that the effect of monetary shocks...

Persistent link: https://www.econbiz.de/10014336399

Does monetary policy influence Euro area fiscal sustainability?

Afonso, António; Pereira, Francisco Gomes - 2024

This paper studies the impact of monetary policy on fiscal sustainability in the euro area. Our sample includes 12 euro area countries and covers the period from 2003:Q1 to 2022:Q4. We extend a fiscal reaction function (Bohn’s rule) by including the monetary policy stance as an interaction...

Persistent link: https://www.econbiz.de/10015046233

Sovereign risk dynamics in the EU : the time varying relevance of fiscal and external (im)balances

Afonso, António; Alves, José; Monteiro, Sofia - 2024

Acknowledging the potential detrimental impact that twin-deficits may have on sovereign risk, this study uses a two-step approach to assess the impact of fiscal and external sustainability on sovereign risk dynamics for a panel of 27 European Economies between 2001Q4 and 2022Q3. To do so, we...

Persistent link: https://www.econbiz.de/10014486806

Public finances solvency in the Euro Area : true or false?

Afonso, António; Coelho, José Carlos - 2022

We assess public finances solvency for Euro Area countries using quarterly data between 1999Q1 and 2020Q4. Through a country-by-country analysis, the answer to the title question is true. For most countries, (i) the primary budget balance reacts positively to the lagged public debt ratio and...

Persistent link: https://www.econbiz.de/10013365375

Fiscal sustainability and the role of inflation

Afonso, António; Alves, José; Matvejevs, Oļegs; … - 2023

We examine the relationship between inflation and fiscal sustainability with a two-step approach. In the first step, we estimate to estimate a country-specific time-varying measure of fiscal sustainability using the fiscal reaction function. This function captures the response of the primary...

Persistent link: https://www.econbiz.de/10014444867