The financial crisis has highlighted the need for models that can identify counterparty risk exposures and shock transmission processes at the systemic level. We use the euro area financial accounts (flow of funds) data to construct a sector-level network of bilateral balance sheet exposures and...

We analyse the behaviour of euro area corporate sector probabilities of default under a wide range of domestic and global macro-financial shocks. Using the Global Vector Autoregressive (GVAR) model and constructing a linking satellite equation for firm-level Expected Default Frequencies (EDFs)...

We study monetary policy delegation in a framework where fiscal policy is determined endogenously and wages are negotiated by trade unions who face a trade-off between real wages and employment. If the median trade union voter is a senior member the nominal wages are too high to guarantee full...

In a stylized and analytically tractable model of the global economy, we first calculate the Pareto improvement when a country experiencing a favourable supply side shock consumes more against expected future output and spreads the risk by selling shares. With capital inflows to finance the 'New...