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The impact of FX central bank intervention in a noise trading framework
Beine, Michel; De Grauwe, Paul; Grimaldi, Marianna - 2005
In this paper we investigate the effects of central bank interventions (CBI) in a noise trading model with chartists and fundamentalists. We first estimate a model in which chartists extrapolate past returns and fundamentalists forecast a mean reverting dynamics of the exchange rate towards a...
Persistent link: https://www.econbiz.de/10010261316
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The Fragility of two Monetary Regimes: The European Monetary System and the Eurozone
Ji, Yuemei; De Grauwe, Paul - 2013
We analyze the similarities and the differences in the fragility of the European Monetary system (EMS) and the Eurozone … foreign exchange markets while in the Eurozone it was the absence of a lender of last resort in the long-term government bond … Eurozone the roles were reversed. The national central banks that became part of the Eurosystem were strengthened. This came at …
Persistent link: https://www.econbiz.de/10010328861
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The European Central Bank: Lender of last resort in the government bond markets?
De Grauwe, Paul - 2011
The sovereign debt crisis has made it clear that central banking is more than keeping inflation low. Central banks are also responsible for financial stability. An essential tool in maintaining financial stability is provided by the capacity of the central bank to be the lender of last resort in...
Persistent link: https://www.econbiz.de/10010286043
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Animal Spirits and the International Transmission of Business Cycles
De Grauwe, Paul; Ji, Yuemei - 2016
It is well-known that the high synchronization of the business cycles among industrial countries cannot easily be replicated in standard open economy macroeconomic models without assuming that the exogenous shocks hitting these countries are highly correlated. We develop a two-country behavioral...
Persistent link: https://www.econbiz.de/10011451425
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Has the Eurozone Become Less Fragile? Some Empirical Tests
De Grauwe, Paul; Ji, Yuemei - 2015
In this paper we provide empirical evidence documenting the nature of the Eurozone's fragility. We find that during … periods of turmoil, financial markets have tended to impose strong programs of austerity on member countries of the Eurozone … present in the Eurozone. Our policy conclusion is that the institutional changes that have been introduced in the Eurozone …
Persistent link: https://www.econbiz.de/10010480830
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Fiscal Rules, Financial Stability and Optimal Currency Areas
De Grauwe, Paul; Foresti, Pasquale - 2015
In this paper we suggest that Eurozone countries face a policy trade-off among: 1) a common rule imposing co … conclude that the intense fiscal rules that have been introduced in the Eurozone after the emergence of the debt crisis reduced …
Persistent link: https://www.econbiz.de/10010531865
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Self-fulfilling crises in the Eurozone: An empirical test
De Grauwe, Paul; Ji, Yuemei - 2012
We test the hypothesis that the government bond markets in the Eurozone are more fragile and more susceptible to self … countries in the Eurozone during 2010-11 was disconnected from underlying increases in the debt to GDP ratios and fiscal space … argue that this can drive member countries of the Eurozone into bad equilibria. We also find evidence that after years of …
Persistent link: https://www.econbiz.de/10010282067
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A fragile Eurozone in search of a better governance
De Grauwe, Paul - 2011
self-fulfilling multiple equilibria arise. I analyze the implications of this fragility for the governance of the Eurozone …
Persistent link: https://www.econbiz.de/10010285539
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A new two-pillar strategy for the ECB
De Grauwe, Paul; Gros, Daniel - 2009
The ECB has been arguing in the past that since there is no trade-off between price stability and financial stability, the pursuit of price stability is the best a central bank can do to also maintain financial stability. We argue that there is a potential trade-off between price stability and...
Persistent link: https://www.econbiz.de/10010266001
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Is monetary policy in the Eurozone less effective than in the US?
De Grauwe, Paul; Storti, Cláudia Costa - 2005
There is a wide consensus that the existence of structural rigidities in the Eurozone reduces the effectiveness of the … monetary policies in the US and the Eurozone countries. This consists in collecting the estimated transmission coefficients …
Persistent link: https://www.econbiz.de/10010276746