This study analyses whether expected budget deficits have an impact on interest rate swap spreads in France, Germany and Italy. We use monthly deficit forecasts from financial market participants to take the forward-looking behaviour of financial markets into account. Results of a SUR estimation...

We investigate the effect of fiscal institutions such as the strength of the finance minister in the budget process and deficits on interest spreads contained in bond yields of the countries now belonging to the Eurozone. Deficits significantly increase risk premia measured by relative swap...

We study the determinants of sovereign bond spreads in the euro area since the introduction of the euro. We show that an aggregate risk factor is a main driver of spreads. This factor also plays an important indirect role for risk spreads through its interaction with the size and structure of...

The first part of this paper outlines the concept of democratic accountability of central banks, and compares the legal accountability of the ECB with some other central banks (Bank of Canada, Bank of Japan, Bank of England and the Federal Reserve System). In the second part, we present a theory...

We analyse the interaction between private agents? uncertainty about inflation target and the central bank's data uncertainty. In our model, private agents update their perceived inflation target and the central bank estimates unobservable economic shocks as well as the perceived inflation...

Since the 2008 financial crisis burst, central banks have had an increasing role in ensuring liquidity on financial markets, acting as lender of last resort and maintaining a general, though still fragile equilibrium. Once the interest rate cuts were no more enough to ease monetary policy,...

In our attempt to understand the causes and consequences of the most critical international financial crisis of the 21st century which, besides crushing world economies, questioned the bases of the mainstream economic theories, we focused our attention on the solutions provided by the Austrian...

The accelerated deterioration of the worldwide economic climate which occurred as a consequence of the deepening financial crisis following the Lehman Brothers bankruptcy in the autumn of 2008 created a new context in which most central banks were forced to come up with unprecedented solutions....

Recent international financial crisis has highlighted the crucial importance of financial stability and showed clearly that ensuring price stability as an objective of monetary policy is a necessary but not a sufficient condition to ensure financial stability. In this context, there have been...

On the background of the current international financial crisis, the central banks of major developed countries took unprecedented action aimed at restoring the confidence in financial systems and at ensuring the normal functioning of the monetary policy transmission mechanism on the real...