This report covers the main results of the study carried out on behalf of the European Commission in accordance with the service contract RTD/DirC/C4/2009/0268794 of 9 June 2009. The main objective of this project was to study, and report to the European Commission and to its Advisory Group1,...

A central puzzle in international finance is that real exchange rates are volatile and, in stark contradiction to effcient risk-sharing, negatively correlated with cross-country consumption ratios. This paper shows that incomplete asset markets and a low price elasticity of tradables can account...

In this note we demonstrate that in affine models for bilateral exchange rates, the nature of return interdependence during crises depends on the tail properties of the fundamentals' distributions. We denote crisis linkages as either strong or weak, in the sense that the dependence remains or...

The European Neighbourhood and Partnership Instrument (ENPI) was created as a successor to the cooperation programmes TACIS (for the Eastern European countries) and MEDA (for the Mediterranean countries), with enlarged objectives and an increased budget. It was operational from January 2007, and...