Despite major recent advance in the literature on financial crises, the key role of central banks in the dynamics of financial crises are still not well understood. Our aim is to contribute to a better understanding of the dynamics of financial crises by explicitly modeling the strategic options...

This paper develops a market-based approach to implement so called Eurobonds, i.e. common sovereign debt securities of European Monetary Union (EMU) countries. By applying an asset-backed security (ABS) approach positive implications of a common bond can be achieved and negative incentives (e.g....

The European Stability Mechanism (ESM) is the permanent crisis prevention mechanism of the euro area. It was established in 2012 under considerable time pressure in an environment dominated by the financial crisis in the euro area. We analyze the costs of the current (suboptimal) design of the...

This paper develops a market-based approach to implement so called Eurobonds, i.e. common sovereign debt securities of European Monetary Union (EMU) countries. By applying an asset-backed security (ABS) approach positive implications of a common bond can be achieved and negative incentives (e.g....

The European Stability Mechanism (ESM) is the permanent crisis resolution mechanism for euro area countries. We analyze the costs of the current (suboptimal) refinancing design of the ESM and evaluate an alternative asset-backed securities (ABS) structure under different scenarios. Our...

We apply an infinite horizon intertemporal optimization model to a simple speculative attack framework. Thereby, the central bank faces a one control two-state variables optimization problem with endogenuous exit. By setting the interest rate the central bank can stimulate the economy or fend...

In this paper, we derive a modification of a forward-looking Taylor rule, which integrates two variables measuring the uncertainty of inflation and GDP growth forecasts into an otherwise standard New Keynesian model. We show that certainty-equivalence in New Keynesian models is a consequence of...

Die schwierigen Beratungen zu dem auf dem EU-Gipfel des Europäischen Rates im Juni beschlossenen Reformvertrag haben einmal mehr die Frage nach einer Europäischen Union der verschiedenen Geschwindigkeiten aufgeworfen. Entwickelt sich die EU bereits in diese Richtung und was wären die Vor- und...

Die schwierigen Beratungen zu dem auf dem EU-Gipfel des Europäischen Rates im Juni beschlossenen Reformvertrag haben einmal mehr die Frage nach einer Europäischen Union der verschiedenen Geschwindigkeiten aufgeworfen. Entwickelt sich die EU bereits in diese Richtung und was wären die Vor- und...