Search Results
Journal Article
Is the international role of the dollar changing?
Facing a shortage of U.S. dollars and a growing need to support their dollar-denominated assets during the financial crisis, international firms increasingly turned to the foreign exchange swap market and other secured funding sources. An analysis of the ensuing strains in the swap market shows that the dollar "basis"--the premium international institutions pay for dollar funding--became persistently large and positive, chiefly as a result of the higher funding costs paid by smaller firms and non-U.S. banks. The widening of the basis underscores the severity and breadth of the crisis as ...
Working Paper
Who drove the boom in euro-denominated bond issues?
We make use of micro-level data for over 45,000 private bonds issued by over 5000 firms from 22 countries in 1990-2006 to analyze the impact that the launch of the EMU had on the currency denomination of the bond issues. To our knowledge, ours is the first systematic analysis of issue at the micro level. The use of the micro data allows us to distinguish between the response to the advent of the euro by new and seasoned bond issuers, and to condition on other issue characteristics. We find that the impact on new issuers is larger than on seasoned issuers and that most of the increase in the ...
Working Paper
Monetary and financial integration in the EMU: Push or pull?
A number of studies have recently noted that monetary integration in the European Monetary Union (EMU) has been accompanied by increased financial integration. This paper examines the channels through which monetary union increased financial integration, using international panel data on bilateral international commercial bank claims from 1998-2006. I decompose the relative increase in bilateral commercial bank claims among union members following monetary integration into three possible channels: A "borrower effect," as a country's EMU membership may leave its borrowers more creditworthy ...
Working Paper
Inflation persistence and optimal monetary policy in the euro area
In this paper we first present supporting evidence of the existence of heterogeneity in inflation dynamics across euro area countries. Based on the estimation of New Phillips Curves for five major countries of the euro area, we find that there is significant inertial (backward looking) behavior in inflation in four of them, while inflation in Germany has a dominant forward looking component. In the second part of the paper we present an optimizing agent model for the euro area emphasizing the heterogeneity in inflation persistence across regions. Allowing for such a backward looking component ...
Journal Article
The euro and inflation divergence in Europe
Journal Article
The EMU effect on the currency denomination of international bonds
This Economic Letter reviews recent work that focuses on micro-level data to study the impact of the launch of the EMU on the currency denomination of international bonds.
Journal Article
Global Uncertainty in the Wake of Brexit
Hakkio and Sly find that increased global uncertainty after Brexit will be a major concern for the United Kingdom, a modest concern for the euro area, and a minor concern for the United States.
Speech
The euro: engine for prosperity
Presentation to the European Banking & Financial Forum 2001, Czech National Bank Congress Center, Prague - March 27, 2001