We propose a parsimonious framework for real rigidities, in the form of strategic complementarities, that can generate real and nominal dynamics and match key features of the data across several literatures. Existing menu-cost models featuring strategic complementarities require unrealistically...

This perspective provides thoughts on the burgeoning interdisciplinary literature surrounding the COVID-19 pandemic and its impact on both individuals and firms with a particular focus on the heterogeneity in government responses. In particular, we discuss disparities in vaccine distribution,...

Banks are not immune from COVID-19. The economic downturn may drive some banks to the point of non-viability (PONV). If so, is the resolution regime in the Euro-area ready to respond?No, for banks may not have the right amount of the right kind of liabilities to make bail-in work. That could...

Since the global financial crisis Eurozone’s architectural flaws and risk segregating policies have raised an issue of euro sustainability for several member countries. This has often resulted in anti-Europeanist sentiments and rising consensus to populist parties. Italy, in particular, in...

Complete financial markets allow countries to share their consumption risks internationally, thereby creating welfare gains through lower volatility of aggregate consumption. This paper empirically looks at international consumption risk sharing and its determinants in a panel of 120 countries...

The present article contains a brief but comprehensive overview of the development of the Capital Markets Union (CMU) project in the EU to further deepen EU capital markets’ integration. After the Introduction, it first discusses the Commission’s 2015 CMU Action Plan and its follow-up,...

Many investors today cling to the hope that the Federal Reserve will abandon its aggressive contractionary monetary policy once markets begin to capitulate. Given the fundamental conditions at play, however, investors would be wise to abandon such fantasy. Instead, this paper argues that the...

This paper studies a newly compiled data set of annual balance sheets of more than 11,000 commercial banks across 17 advanced economies since 1870. The new data expose the central role of large banks for credit cycles and financial instability throughout modern financial history and the...

We propose a parsimonious framework for real rigidities, in the form of strategic complementarities, that can generate real and nominal dynamics and match key features of the data across several literatures. Existing menu-cost models featuring strategic complementarities require unrealistically...

Are financial intermediaries—in particular, banks—inherently unstable or fragile, and if so, why? We address this question theoretically by analyzing whether model economies with financial intermediation are more prone than those without it to multiple, cyclic, or stochastic equilibria. We...