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ECB Policy and Eurozone Fragility: Was De Grauwe Right?

Fuertes Α.-Μ., Kalotychou , Ε. & Saka, Ο. (2014) “ECB Policy and Eurozone Fragility: Was De Grauwe Right?“, Economic Policy, CEPS Working Documents, 20 Ιουνίου.

 

The authors test Paul De Grauwe’s eurozone fragility hypothesis using a time window around the announcement of the Outright Monetary Transactions (OMT) programme. The findings reveal significant contagion from Spain to other eurozone countries, but solely during the pre-announcement period. The authors conclude that in this case the OMT programme has succeeded in mitigating the self-fulfilling dynamics within the eurozone.

Ana-Maria Fuertes is Professor in Financial Econometrics at Cass Business School, City University London; Elena Kalotychou is a Senior Lecturer at Cass Business School, and Orkun Saka is a Doctoral Researcher at Cass Business School, City University London.

 

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