The strong relation between sovereign and banking stress is frequently emphasised, especially since the start of the European sovereign debt crisis. This working paper sheds light on the determinants of the link. It studies the stock market performance and the holdings of government debt of the...

The euro area faces a double challenge: debt overhang and the need for price adjustment. This paper reviews the debt challenges in the household and corporate sectors and maps out some policy options. In particular, we document the increase in private debt prior to the crisis and consider how...

We analyse corporate balance sheet adjustment episodes in Germany and Japan, as well as a sample of 30 countries, using national account data. Corporate balance sheet adjustment tends to be long lasting and associated with a strong impact on current accounts, wages and investment. Adjustment...

The European Semester is a new institutional process that provides EU member states with ex-ante guidance on fiscal and structural objectives. The Semesterâ??s goals are ambitious and it is still uncertain how it will fit into the new EU economic governance framework. We find that member states...

Anna Iara and Guntram Wolff develop a model of sovereign spreads that are determined by the probability of default in interaction with the level of risk aversion. Estimation of the model confirms the central predictions. The legal basis for the rules, and mechanisms for enforcing them, are the...

This paper studies inflation persistence with time-varying coefficient autoregressions for twelve central European countries,in comparison with the United States and the euro area. Inflation persistence tends to be higher in times of high inflation. Since the oil price shocks, inflation...

As a background document for the Policy Contribution â??Compositional effects on productivity, labour cost and export adjustmentâ??, this working paper presents detailed results for 24 EU countries on: â?¢ The sectoral changes in the economy;â?¢ The unit labour costs (ULC) based real...

Click here for the most recently updated database The real effective exchange rate (REER), which measures the development of the real value of a countryâ??s currency against the basket of the trading partners of the country, is a frequently used variable in both theoretical and applied economic...

We study the transmission of monetary policy to macroeconomic variables with structural time-varying coefficient vector autoregressions in the Czech Republic, Hungary and Poland, in comparison with that in the euro area. These three countries have experienced changes in monetary policy regimes...

See comment 'Despite lower yields, euro-periphery is not yet out of the woods' This working paper details and updates the debt sustainability analysis of Darvas, Sapir and Wolff (2014) for Greece, Ireland and Portugal. The goal is not the calculation of a baseline scenario which best corresponds...