European finance is becoming increasingly cross-border, while the European architecture for safeguarding financial stability —including decision-making processes for providing financial-stability public goods— have remained decentralized with some explicit mechanisms for coordination across...

This paper assesses whether domestic costs of reserve accumulation -and in particular monetary costs- constitute an eventual limit to the process in emerging markets. We find that sterilization is the first measure to deal with these costs. Then, we turn to study whether diminishing ability to...

Sovereign external assets (SEAs) comprise foreign exchange reserves and sovereign wealth funds (SWFs). The global stock of reserves reached 7 $trn in the second quarter of 2008, but data on SWF are rather elusive. Our estimation puts the SWFs at around 2,5 $trn dollars by 2007 and in the last...

In this paper a New Keynesian model is described and partially estimated for the euro area. The model is then used to analyze the stabilizing properties of alternative monetary policy rules for the euro area: instrument (Taylor-type) rules and targeting rules. Our main finding is that if...

The paper presents a theory of nominal asset prices for competitively owned oil. Focusing on monetary effects, with flexible oil prices the US dollar oil price should follow the aggregate US price level. But with rigid nominal oil prices, the nominal oil price jumps proportionally to nominal...

In recent years, for most emerging markets, public debt has decreased and its composition has evolved toward domestic currency. This progress is remarkable in terms of reduced financial vulnerability, which has been underpinned by favourable financing conditions and related deepening of local...

This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and product categories, in the euro area over the last fifteen years. Our results show that the transmission of exchange rate changes to import prices in the short run...

We analyze empirically whether the emergence of China as a large recipient of FDI has affected the amount of FDI received by Latin American countries. For the longest time span possible given data availability (from 1984 to 2001), we do not find a substitution from Latin American inward FDI to...

The computation of structural primary balances for the nine main Latin American countries and their comparison of their changes with their cyclical position during the period 1981 2004 confirms that fiscal policy is procyclical in the region. From this evidence, the paper shows strong evidence...

This paper investigates empirically whether there is a negative relationship between a country's risk premium and the balance sheet effect, as implied by recent theories emphasizing financial imperfections. We find evidence that balance sheet effects, stemming from the increase in the external...