economy, namely a demand shock and a shock to bank capital. The main findings of the paper are as follows: i) Impulse …-response analysis shows that in response to a shock to bank capital, banks boost capital ratios by reducing their relative exposure to …) Historical shock decomposition analysis shows that bank capital shocks have contributed to increasing capital ratios since the …

Euro Area economies to a one percent shock in government consumption and business confidence. The evidence suggests that … even though the response to a government consumption shock is strong, a shock in expectations has an even greater effect …