Ciccarelli, Matteo, Osbat, Chiara, (2017), “Low inflation in the euro area: Causes and consequences”, ECB Occasional Paper Series No 181, January This paper investigates the causes and consequences of low inflation in the euro area after 2012 and analyses whether monetary policy has been successful in dampening the risks associated to low inflation. The paper finds that the missing inflation was primarily due to cyclical factors – domestic in the earlier part of …Read More

Marques-Ibanez,David, van Leuvensteijn, Michiel, (2017), “Bank competition and financial stability: The role of financial innovation”, VoxEu, 3 February An unprecedented process of deregulation took place in the banking sector in the three decades prior to the Global Crisis. This column argues that during periods of intense bank competition, financial innovation can compound the adverse effects of competition on stability. Coupled with strong competition, the significant use of one such innovation – securitisation …Read More

Bańkowski,Krzysztof, Ferdinandusse, Marien, (2017), “Euro area fiscal stance”, ECB Occasional Paper Series No 182, January This paper analyses the appropriateness of the euro area fiscal stance. In this context, the paper presents the relevant definitions and how the euro area fiscal stance has evolved over time. Furthermore, it contains an evaluation of the appropriateness of the euro area aggregated fiscal stance set out in the European Commission’s Spring 2016 European Economic Forecast, concluding …Read More

Marcellino, Massimiliano, Abbate, Angela, (2017), “Reducing the ucnertainty around exchange rate forecasts: A new model”, VoxEu, 4 February Exchange rates are important contributors to business cycle fluctuations in open economies. Forecasting exchange rates is not an easy task, however, perhaps due to the instability of their relationship with economic drivers. This column introduces a model that also allows for changing volatility when forecasting exchange rates. Modelling time variation in the cross-rate relationships, …Read More

Darvas, Zsolt, (2017), “Why is it so hard to reach the EU’s ‘poverty’ target?”, Bruegel, 19 January The ‘poverty’ target set by the European Commission aims to lift “over 20 million people out of poverty” between 2008 and 2020 in the EU27. Progress to date against this target has been disappointing. Why is it so hard to reach the Europe 2020 ‘poverty’ target? What does the poverty indicator actually measure? Relevant …Read More

Christodoulakis, Nicos, (2016), “Aspects of Economic Governance in the Euro Area: Restoring Internal and External Balances”, Rivisteweb, 3 December The Economic Governance for the Euro Area is envisaged to be both an overseeing framework that enables the timely identification of oncoming trouble, as well as a correction mechanism that puts an economy hit by major shocks back in order. The paper discusses the relevance of prevention and correction mechanisms, and finds …Read More

Hassan, Fadi, di Mauro, Filippo, I.P. Ottaviano, Gianmarco, (2016), “Banks Credit and Productivity Growth in the EU”, European Investment Bank Working Papers 2016/05, 20 December Financial institutions are key to allocate capital to its most productive uses. In order to examine the relationship between bank credit and firm-level productivity in the context of different financial markets set-ups, we introduce a model of overlapping generations of entrepreneurs under complete and incomplete credit markets. …Read More

Cheng, Gong, Diaz-Cassou, Javier, Erce, Aitor, (2016), “From Debt Collection to Relief Provision: 60 Years of Official Debt Restructurings through the Paris Club”, European Stability Mechanism, 22 December Despite the frequency of official debt restructurings, little systematic evidence has been produced on their characteristics and implications. Using a dataset covering more than 400 Paris Club agreements, this paper aims to fill that gap. It provides a comprehensive description of the …Read More

Anastasiou, Dimitrios , Louri, Helen, Tsionas, Mike, (2017), “Non-Performing Loans In The Euro Area: Are Core-Periphery Banking Markets Fragmented?”, Bank Of Greece, December 2016 The objective of this study is to examine the causes of non-performing loans (NPLs) in the banking system of the euro area for the period 2003-2013 and distinguish between core and periphery country determinants. The increase in NPLs post crisis has put into question the robustness …Read More

Kozeniauskas, Nicholas, Veldkamp, Laura, (2017), “Unusual outcomes and uncertain times”, VoxEu, 3 January Uncertainty shocks are a major avenue of research in the quest to explain business cycles, as well as asset prices and financial crises. This column argues that three conceptually distinct types of uncertainty that are often modelled independently – ‘macro’ uncertainty about an aggregate variable such as GDP, ‘micro’ uncertainty about firms’ individual outcomes, and ‘higher-order’ uncertainty …Read More