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Keywords:euro area 

Discussion Paper
The Different Paths of Greece and Spain to High Unemployment

Euro area GDP remains below its 2007 level due to the global financial meltdown and the subsequent sovereign debt crisis in the periphery countries. Unemployment rates make it clear that some countries have fared much worse than others—the rates in Spain and Greece today are over 25 percent and are much higher than rates in the next highest, Portugal (15.7 percent), and in the euro area (11.6 percent). Quite a change from 2007, when Spain and Greece had lower unemployment rates than the euro area as a whole. In this post, we show that while the unemployment rates in the two countries are ...
Liberty Street Economics , Paper 20121128

Working Paper
Cheap Talk and the Efficacy of the ECB’s Securities Market Programme: Did Bond Purchases Matter?

In 2010, in response to an ever-worsening fiscal crisis, the ECB began purchasing sovereign debt from troubled euro-area countries through its Securities Market Programme (SMP). This program was designed to improve market functioning and restore the monetary transmission mechanism within the euro area. This paper does not test those ideals. Rather, we test whether SMP purchases systematically lowered peripheral yields and spreads. We find limited evidence of purchase effects but large announcement effects. In addition, on days in which the ECB was believed to have made large purchases, yields ...
International Finance Discussion Papers , Paper 1139

Working Paper
Delphic and Odyssean Monetary Policy Shocks: Evidence from the Euro Area

We use financial intraday data to identify monetary policy surprises in the euro area. We find that monetary policy statements and press conferences after European Central Bank (ECB) Governing Council meetings convey information that moves the yield curve far out. Moreover, the nature of the information revealed in a narrow window around these statements and press conferences evolved over time. Until 2013, unexpected variations in future interest rates were positively correlated with the changes in market-based measure of inflation expectations consistent with news on future macroeconomic ...
Working Paper Series , Paper WP-2018-12

Discussion Paper
Foreign Borrowing in the Euro Area Periphery: The End Is Near

Current account deficits in euro area periphery countries have now largely disappeared. This represents a substantial adjustment. Only two years ago, deficits stood at nearly 10 percent of GDP in Greece and Portugal and 5 percent in Spain and Italy (see chart below). This sharp narrowing means that spending has been brought in line with income, largely righting an imbalance that had left these countries dependent on heavy foreign borrowing. However, adjustment has come at a sizable cost to growth, with lower domestic spending only partly offset by higher export sales. Downward pressure on ...
Liberty Street Economics , Paper 20130522

Journal Article
The balance of payments crisis in the euro area periphery

Countries in the euro area periphery borrowed heavily from abroad in the years leading up to the sovereign debt crisis, largely to finance increased consumption and housing investment. When the crisis hit in 2010, capital flight by private investors forced these countries to bring domestic spending back into line with domestic incomes?the same adjustment required of countries facing a typical balance of payments crisis. Nevertheless, adjustment to the pullback of private capital was not as harsh as might have been expected, owing to the workings of the euro area?s system for managing ...
Current Issues in Economics and Finance , Volume 20

Report
Trade invoicing in the accession countries: are they suited to the Euro?

Countries aspiring to join the euro area-the so-called accession countries-are increasingly binding their economic activity, external and internal, to the euro-area countries. This phenomenon is observed in the currency invoicing of international trade transactions, where accession countries have reduced their use of the U.S. dollar in invoicing such transactions. According to theory, the optimal invoicing choice for an accession country depends on its composition of exports and imports and on the macroeconomic fluctuations faced by its trade partners, with both factors bearing out the role ...
Staff Reports , Paper 222

Report
Money, credit, monetary policy, and the business cycle in the euro area: what has changed since the crisis?

This paper studies the relationship between the business cycle and financial intermediation in the euro area. We establish stylized facts and study their stability during the global financial crisis and the European sovereign debt crisis. Long-term interest rates have been exceptionally high and long-term loans and deposits exceptionally low since the Lehman collapse. Instead, short-term interest rates and short-term loans and deposits did not show abnormal dynamics in the course of the financial and sovereign debt crisis.
Staff Reports , Paper 885

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