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Exit strategies, capital flight and speculative attacks : Europe's version of the trilemma

Steiner, Andreas; Steinkamp, Sven; Westermann, Frank - 2017

In the winter 2011/12 a wave of internal capital flight prompted the ECB to abandon its exit strategy and to announce an unprecedented monetary expansion. We analyze this episode in several dimensions: (i) by providing an event-study analysis covering key variables from national central banks'...

Persistent link: https://www.econbiz.de/10011754245

Wage setting under different monetary regimes

Holden, Steinar - 2002

In an economy with large wage setters (like industry unions), the monetary regime affects the trade-off between consumer real wages and employment and profits faced by the wage setters. This paper shows that an exchange rate target, including participation in a monetary union, is likely to...

Persistent link: https://www.econbiz.de/10011408717

A risk allocation approach to optimal exchange rate policy

Mundaca, B. Gabriela (contributor); Strand, Jon (contributor) - 2004

We derive the optimal exchange rate policy for a small open economy subject to terms-oftrade shocks. Firm owners and workers are risk averse but workers more so. Wages are given or partially indexed in the short run, and capital markets are imperfect. The government sets the exchange rate to...

Persistent link: https://www.econbiz.de/10002524066

Overvalued : Swedish monetary policy in the 1930s

Rathke, Alexander; Straumann, Tobias; Woitek, Ulrich - 2011

This paper reconsiders the role of monetary policy in Sweden's strong recovery from the Great Depression. The Riksbank …, our findings suggest that Sweden avoided the worst excesses of the depression by conducting conservative rather than … innovative monetary policy. We find that, by keeping the Swedish krona undervalued to replenish foreign reserves, Sweden …

Persistent link: https://www.econbiz.de/10009489289

Monetary union, even higher integration, or back to national currencies?

Oikonomidēs, Geōrgios; Philippopulos, Apostolēs; … - 2016

This paper quantifies the welfare differences among a monetary union, flexible exchange rates (economic disintegration) and a monetary plus fiscal transfer union (higher economic integration). The vehicle of analysis is a medium-scale New Keynesian DSGE model consisting of two heterogeneous...

Persistent link: https://www.econbiz.de/10011430977

The sovereign default problem in the Eurozone : an insurance-based approach

Arnold, Nadjeschda Katharina; Rees, Ray - 2015

This paper argues that the Eurozone crisis stems from a risk management failure in the Eurosystem's design, and that applying insurance theory is useful. We model risk neutral agents choosing portfolios of government bonds of n countries in a monetary union and other assets. We firstly analyse a...

Persistent link: https://www.econbiz.de/10010533082

Smoothing asymmetric shocks vs. redistribution in the euro area : a simple proposal for dealing with mistrust in the euro area

Oksanen, Heikki - 2016 - This version 2016-03-22

The euro area will not have a centralised budget and smoothing of country-specific asymmetric shocks via private financial markets will develop only slowly. Mistrust among the governments has caused rigid, even pro-cyclical fiscal policies. Smoothing mechanisms are absent due to the fear that...

Persistent link: https://www.econbiz.de/10011444463

Fiscal transfers in a monetary union with exit option

Hefeker, Carsten; Neugart, Michael - 2015

It is widely debated whether a monetary union has to be accompanied by a fiscal transfer scheme to accommodate asymmetric shocks. We build a model of a monetary union with a central bank and two heterogeneous countries that are linked by a fiscal transfer scheme with repercussions on monetary...

Persistent link: https://www.econbiz.de/10010492336

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. We test the hypothesis that in the EMS the fragility arose from the absence of a credible lender of last resort in the foreign exchange markets while in the Eurozone it was...

Persistent link: https://www.econbiz.de/10010210104

Structural reforms and the enlargement of monetary union

Hefeker, Carsten - 2000

The paper addresses the question what effects the enlargement of a monetary union will have on necessary structural refoms in the (low distortion) member countries and the (high distortion) candidate country. While monetary union lowers reforms in the candidate country, members of the monetary...

Persistent link: https://www.econbiz.de/10009781545

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