Sovereign risk and belief-driven fluctuations in the Euro area
"<span style="font-size: 9pt; font-family: Verdana, sans-serif; color: #505050; background-position: initial initial; background-repeat: initial initial;" lang="EN-GB">Sovereign risk premia in several euro area countries have risen markedly since 2008, driving up credi...
| Main Authors: | , , , |
|---|---|
| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Washington, DC
2013
IMF |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19122475124919406579-Sovereign-risk-and-belief-driv.htm |
| _version_ | 1771659898731364354 |
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| author | Corsetti, Giancarlo Kuester, Keith Meier, André Mueller, Gernot J. |
| author_facet | Corsetti, Giancarlo Kuester, Keith Meier, André Mueller, Gernot J. |
| collection | Library items |
| description | "<span style="font-size: 9pt; font-family: Verdana, sans-serif; color: #505050; background-position: initial initial; background-repeat: initial initial;" lang="EN-GB">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 calibrated to the euro area as of mid-2012. We show that a combination of sovereign risk in one region and strongly procyclical fiscal policy at the aggregate level exacerbates the risk of belief-driven deflationary downturns. The model provides an argument in favor of coordinated, asymmetric fiscal stances as a way to prevent selffulfilling debt crises."</span> |
| format | TEXT |
| geographic | EU countries |
| id | 19122475124919406579_4daf5d6c16764c43a3c9fae8e4a0a1c9 |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19122475124919406579_4daf5d6c16764c43a3c9fae8e4a0a1c9 |
| is_hierarchy_title | Sovereign risk and belief-driven fluctuations in the Euro area |
| language | English |
| physical | 48 p. Digital |
| publishDate | 2013 |
| publisher | Washington, DC IMF |
| spellingShingle | Corsetti, Giancarlo Kuester, Keith Meier, André Mueller, Gernot J. economic model fiscal policy monetary policy public debt Sovereign risk and belief-driven fluctuations in the Euro area |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=100910292819 |
| title | Sovereign risk and belief-driven fluctuations in the Euro area |
| topic | economic model fiscal policy monetary policy public debt |
| url | https://www.labourline.org/KENTIKA-19122475124919406579-Sovereign-risk-and-belief-driv.htm |