Berthou, A. and Vicard, V., (2013), “Firms’ export dynamics: Experience vs. size”, European Central Bank, Working Paper Series, No. 1616, November. This paper provides evidence about the impact that size and experience in exporting have on firms’ dynamics, a critical input in models of firms dynamics. The analysis uses a census of French exports by firm-destination-product over the period 1994-2008 with a monthly frequency. We first uncover a large calendar …Read More

Dell’Ariccia, G. and Ratnovski, L., (2013), “Bailouts and Systemic Insurance”, International Monetary Fund, WP/13/233, November. We revisit the link between bailouts and bank risk taking. The expectation of government support to failing banks creates moral hazard—increases bank risk taking. However, when a bank’s success depends on both its effort and the overall stability of the banking system, a government’s commitment to shield banks from contagion may increase their incentives to …Read More

Pennings, S. and Pérez Ruiz, E., (2013), “Fiscal Consolidations and Growth: Does Speed Matter?”, International Monetary Fund, Working Paper No. 13/230, November. Should fiscal consolidations be front-loaded or proceed at a more steady pace, and how does this affect growth? We make an attempt to address this question using a three-step methodology. First, we modify a standard regression of growth on consolidation size to allow speed to affect the multiplier. …Read More

Corsetti, G., Kuester, K., Meier, A. and Müller, G., (2013), “Sovereign Risk and Belief-Driven Fluctuations in the Euro Area”, International Monetary Fund, IMF Working Paper, WP/13/227. Sovereign risk premia in several euro area countries have risen markedly since 2008, driving up credit spreads in the private sector as well. We propose a New Keynesian model of a two-region monetary union that accounts for this “sovereign risk channel.” The model is …Read More

Pegasiou, A., (2013), “The Cypriot Economic Collapse: More Than a Conventional South European Failure”, Mediterranean Politics, Volume 18, Issue 3, pp. 333-351. In trying to assess the causes behind Cyprus’s request for a financial bailout, the paper takes a step back and reviews the economy of the island within a comparative political economy framework. With reference made to varieties of capitalism (VoC) literature, the paper sets a twofold target. Initially, …Read More

In’t Veld, Y., (2013), “Fiscal consolidations and spillovers in the Euro are periphery and core”, European Commission, Directorate-General for Economic and Financial Affairs, Economic Papers 506, October. This paper uses a structural multi-country model to assess the impact of fiscal consolidation measures undertaken in 2011-13 in the EA periphery and core. The simulations assume ‘crisis’ conditions prevailing (high share of constrained households, ZLB). The GDP effects depend crucially on the …Read More

Anderson, D., Hunt, B. and Snudden, S., (2013), “Fiscal Consolidation in the Euro Area: How Much Can Structural Reforms Ease the Pain?”, International Monetary Fund, Working Paper No.13/211, October. The IMF’s Global Integrated Monetary and Fiscal model (GIMF) is used to examine the scope for structural reforms in the euro area to offset the negative impact of fiscal consolidation required to put public debt back on a sustainable path. The …Read More

Vuillemey, G. and Peltonen, T., (2013), “Disentagling the Bond-CDS Nexus: A stress test model of the CDS market”, European Central Bank, Working Paper No.1599, October. This paper presents a stress test model for the CDS market, with a focus on the interplay between banks’ bond and CDS holdings. The model enables the analysis of credit risk transfer mechanisms, includes features of market and liquidity risk, and allows for contagious propagation …Read More