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The Impact of Liquidity Regulation on Bank Intermediation

Bonner, Clemens; Eijffinger, Sylvester C W - C.E.P.R. Discussion Papers - 2012

We analyze the impact of non-compliance with a requirement similar to the Basel III Liquidity Coverage Ratio and its … non-compliance with a liquidity requirement causes banks to pay and charge higher interest rates as well as to increase … be affected by the requirement. While non-compliance with a liquidity requirement does not seem to directly affect …

Persistent link: https://www.econbiz.de/10011084639

Cross-border spillovers from fiscal stimulus

Corsetti, Giancarlo; Meier, André; Müller, Gernot - C.E.P.R. Discussion Papers - 2009

The global recession of 2008-09 has revived interest in the international repercussions of domestic policy choices. This paper focuses on the case of fiscal stimulus, investigating cross-border spillovers from an increase in exhaustive government spending on the basis of a two-country business...

Persistent link: https://www.econbiz.de/10008496454

Debt consolidation and fiscal stabilization of deep recessions

Corsetti, Giancarlo; Kuester, Keith; Meier, André; … - C.E.P.R. Discussion Papers - 2010

The global financial crisis of 2008-09 has sent public debt on sharply higher trajectories. With the economic recovery gradually taking hold, the focus is now shifting to fiscal "exit" strategies. Medium-term consolidation efforts are likely to include not only tax increases but also sizeable...

Persistent link: https://www.econbiz.de/10008468677

Floats, pegs and the transmission of fiscal policy

Corsetti, Giancarlo; Kuester, Keith; Müller, Gernot - C.E.P.R. Discussion Papers - 2011

According to conventional wisdom, fiscal policy is more effective under a fixed than under a flexible exchange rate regime. In this paper we reconsider the transmission of shocks to government spending across these regimes within a standard new-Keynesian model of a small open economy. Because of...

Persistent link: https://www.econbiz.de/10008784752

Sovereign Risk, Fiscal Policy, and Macroeconomic Stability

Corsetti, Giancarlo; Kuester, Keith; Meier, André; … - C.E.P.R. Discussion Papers - 2012

This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a 'sovereign risk channel' through which sovereign default risk raises funding costs in the...

Persistent link: https://www.econbiz.de/10011083641

Exchange rate regimes and fiscal multipliers

Born, Benjamin; Juessen, Falko; Müller, Gernot - C.E.P.R. Discussion Papers - 2012

Does the fiscal multiplier depend on the exchange rate regime and, if so, how strongly? To address this question, we first estimate a panel vector autoregression (VAR) model on time-series data for OECD countries. We identify the effects of unanticipated government spending shocks in countries...

Persistent link: https://www.econbiz.de/10011083977

Complementing Bagehot: Illiquidity and insolvency resolution

Eijffinger, Sylvester C W; Nijskens, Rob - C.E.P.R. Discussion Papers - 2011

During the recent financial crisis, central banks have provided liquidity and governments have set up rescue programmes … bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and monitors too little. A … central bank can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce an additional authority …

Persistent link: https://www.econbiz.de/10009320403

The lender of last resort: liquidity provision versus the possibility of bail-out

Eijffinger, Sylvester C W; Nijskens, Rob - C.E.P.R. Discussion Papers - 2010

banks have provided liquidity and ministries of finance have set up rescue programmes to restore confidence and stability …. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity … and takes excessive risk compared to the social optimum. A Lender of Last Resort can alleviate the liquidity problem, but …

Persistent link: https://www.econbiz.de/10008468710

A dynamic analysis of bank bailouts and constructive ambiguity

Eijffinger, Sylvester C W; Nijskens, Rob - C.E.P.R. Discussion Papers - 2012

to liquidity assistance as a solution to forbearance. Faced with a bank that chooses capital and liquidity, the … institution providing liquidity assistance can commit to a mixed strategy: never bailing out is too costly and therefore not … credible, while always bailing out causes moral hazard. In equilibrium, the bank chooses above minimum capital and liquidity …

Persistent link: https://www.econbiz.de/10011083609

Twin Deficits, Openness and the Business Cycle

Corsetti, Giancarlo; Müller, Gernot - C.E.P.R. Discussion Papers - 2007

In this paper, we study the co-movement of the government budget balance and the trade balance at business cycle frequencies. In a sample of 10 OECD countries we find that the correlation of the two time series is negative, but less so in more open economies. Moreover, for the US the...

Persistent link: https://www.econbiz.de/10005788960