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The construction of the euro area left aside the question of a fiscal union, but the crisis re-opened the debate. Of the three classical functions of fiscal policy – provision of public goods, redistribution and stabilisation – only the last provides a clear justification for fiscal policy...
Persistent link: https://www.econbiz.de/10011439508
The general macroeconomic situation and weak inflation dynamics justified quantitative easing (QE) in the euro area. Doubts have emerged about its effectiveness as inflation has remained weak. However, we do not know where inflation would have been without QE and the still large slack in the...
Persistent link: https://www.econbiz.de/10011509099
The eurozone remains in a deep, largely macro-economic crisis. A robust global economy and falling oil prices have supported Europeś economy for some time, but by now it is clear that the eurozone will only be able to pull itself out of this crisis by means of more decisive action. One...
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United States, especially, do not separate economic interests from geopolitical interests in the same way the EU does. They … considers how the EU and its member states can better protect European economic sovereignty in a range of areas, including state … area, we recommend ways to improve the EU’s capacity to wield economic power, without advocating increased protectionism or …
Persistent link: https://www.econbiz.de/10012025345
Quantitative easing (QE) affects banks’ profitability in three main ways. First, as QE drives up bond prices, banks holding such bonds see their balance sheets strengthened. Second, QE reduces long-term yields and thereby reduces term spreads. With this, the lending-deposit ratio spread falls,...
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We study the vulnerability of 130 banks directly supervised by the European Central Bank's Single Supervisory Mechanism. Illustrative stress tests using banks' balance sheet data reveal that significant stress prevails in the euro area's smaller and medium-sized banks, many of them located in...
Persistent link: https://www.econbiz.de/10011296734
discrepancies between EU countries: countries with the same levels of house-price overvaluation have adopted very different … the next recession or reducing its impact, we argue that EU policymakers need to be better prepared to use discretionary …
Persistent link: https://www.econbiz.de/10012200629