The “Arab spring” aftermath calls for a closer look at the developments in the south Mediterranean countries. This paper develops and assesses alternative scenarios for the region up to the year 2030 with the employment of GEM-E3, a computable general equilibrium model. The scenarios...

This paper investigates the impact of foreign aid, external debt and governance on the economic growth by extending the Ramsey–Cass–Koopman's growth model in an open economy framework. Steady-state and short run analysis shows that external debt and foreign aid do not affect the growth rate...

Sweden was hit by a severe macroeconomic crisis in the early 1990s. GDP fell for three consecutive years in 1991-1993, unemployment increased by 9 percentage points, banks had to be nationalized, and public budget deficits exceeded 10 percent of GDP. The recovery was however quick. GDP growth...

We examine whether the introduction of the euro had a significant impact on the synchronization of business cycles among members of Economic and Monetary Union (EMU). Empirical evidence on this relationship is rare so far and suffers from methodical weaknesses, such as the absence of time...

Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a...

In this paper, I build a partial equilibrium model and uncover a relationship between regional macroeconomic fluctuations and bankruptcy resolution capacity that depends on the cyclicality of bankruptcy. If the frequency of bankruptcy is countercyclical, the model predicts that fluctuations are...

Self-employment comprises an important share of employment in many countries, and tends to expand during downturns through higher inflows from unemployment. Furthermore, countries with higher self-employment shares exhibit lower cyclical output persistence. I build a business cycle model with...

There is a demand for safe assets, either government bonds or private substitutes, for use as collateral. Government bonds are safe assets, given the government's power to tax, but their supply is driven by fiscal considerations, and does not necessarily meet the private demand for safe assets....

Economic growth involves metamorphosis of the financial system. Forms of banks and bank money change. These changes, if not addressed, leave the banking system vulnerable to crisis. There is no greater challenge in economics than to understand and prevent financial crises. The financial crisis...

In the past, industrial countries have tended to pursue countercyclical or, at worst, acyclical fiscal policy. In sharp contrast, emerging and developing countries have followed procyclical fiscal policy, thus exacerbating the underlying business cycle. We show that, over the last decade, about...