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The European Central Bank's asset purchase programs, while intended to stabilize the economy, may have unintended side effects on financial stability. This paper aims at gauging the effects on financial markets, the banking sector, and lending to non-financial firms. Using a structural vector...
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balance sheets. A negative shock to the balance sheets of asset-holders causes them to liquidate assets, lowering prices …
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stability. We model the default of a large bank and analyse the resulting contagion effects. This is compared to a common shock …
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