Lydon, Reamonn, Lozej, Matija, (2016), “The flexibility of new hires’ earnings during a recession”, VoxEu, 2 Οκτωβρίου The evolution of earnings over the business cycle has important implications for consumption and welfare. This column shows that the earnings of new hires in Ireland – and in particular, new hires with less valuable outside options – are substantially more flexible than those of incumbents during a recession. The results indicate that …Read More

Drechsler, Itamar, Drechsel, Thomas, Marques-Ibanez, David, Schnabl, Philipp, (2016), “Who Borrows from the Lender of Last Resort?”, The Journal of Finance, 14 Σεπτεμβρίου We analyze lender of last resort (LOLR) lending during the European sovereign debt crisis. Using a novel data set on all central bank lending and collateral, we show that weakly capitalized banks took out more LOLR loans and used riskier collateral than strongly capitalized banks. We also find …Read More

Bergh, Andreas, Dackehag, Margareta, Rode, Martin, “Are OECD policy recommendations for public sector reform biased against welfare states? Evidence from a new database”, European Journal of Political Economy, 20 Σεπτεμβρίου Policy advice by the OECD has long been at the heart of academic debates on welfare state reform, with frequent claims questioning the ideological orientation of recommendations. This paper constructs an indicator of perceived reform need for 24 countries, quantifying the policy advice contained in …Read More

Bolton, Patrick, Freixas, Xavier, Gambacorta, Leonardo,  Mistrulli, Paolo Emilio, (2016), “Relationship and Transaction Lending in a Crisis”, The Review of Financial Studies, 7 Ιουνίου We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, allowing them to provide loans to profitable firms during a crisis. Because of the services they provide, operating costs of relationship banks are higher than those of …Read More

Alexandris Polomarkakis, Konstantinos, (2016), “The European VAT Oxymoron: A pragmatic solution for welfare, especially in times of crisis?”, Journal of International and Comparative Social Policy, 26 Αυγούστου VAT is an important but at the same time long neglected issue in social policy literature. The way in which taxes are levied has important implications for citizens in terms of equity and efficiency effects. Rate diversification is embedded in VAT planning across …Read More

Hatchondo, Juan Carlos, Martinez, Leonardo, Sosa-Padilla, César, (2016), “Debt Dilution and Sovereign Default Risk”, Journal of Political Economy, 31 Αυγούστου We measure the effects of debt dilution on sovereign default risk and study debt covenants that could mitigate these effects. We calibrate a baseline model with endogenous debt duration and default risk (in which debt can be diluted) using data from Spain. We find that debt dilution accounts for 78 percent of the …Read More

Felice, Giulia, (2016), “Size and composition of public investment, sectoral composition and growth”, European Journal of Political Economy, Σεπτέμβριος After providing some descriptive evidence on the relationship between the size and composition of public expenditure and the sectoral employment composition of the economy, this paper develops an endogenous growth model with two private sectors, where the government provides, as pure public goods, both infrastructure investment, directly affecting the productivity of private capital …Read More

S. Tavlas, George,(2016), “New perspectives on the Great Depression: a review essay”, Bank of Greece, 16 Σεπτεμβρίου The Great Depression was the most devastating and destructive economic event to afflict the global economy since the beginning of the twentieth century. What, then, were the origins of the Great Depression and what have we learned about the appropriate policy responses to economic depressions from that episode? This essay reviews two recently …Read More

Camba-Mendez, Gonzalo, Durré, Alain, Mongelli, Francesco Paolo , (2016), “Bank interest rate setting in the euro area during the Great Recession”, ECB Working Paper Series, 16 Σεπτεμβρίου This paper sheds light on how recent financial tensions in the euro area were ultimately reflected in bank interest rate setting. We make two new contributions. First, we develop a theoretical model capturing banks financing and the rate setting choices. Banks in the model …Read More

Kincaid, G. Russell, (2016), “Different lessons For Europe from American financial history–a counterpoint to Mr. Gaspar”, Journal of European Integration, 2 Σεπτεμβρίου Sovereign debt restructuring played a key role in placing the US federal government on a sound financial footing under its new Constitution in 1789. State governments in the US, like national governments in the euro area, do not have bankruptcy protection. US state governments have not defaulted since the …Read More