The Library
Financial and fiscal interaction in the Euro area crisis : this time was different
Tools
Caruso, Alberto, Reichlin, Lucrezia and Ricco, Giovanni (2018) Financial and fiscal interaction in the Euro area crisis : this time was different. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1167).
|
PDF (WERP)
WRAP-Financial-and-fiscal-interaction-in-the-Euro-area-Ricco-2018.pdf - Published Version - Requires a PDF viewer. Download (1986Kb) | Preview |
Official URL: https://warwick.ac.uk/fac/soc/economics/research/w...
Abstract
This paper highlights the anomalous characteristics of the Euro Area `twin crises' by contrasting the aggregate macroeconomic dynamics in the period 2009-2013 with the business cycle fluctuations of the previous decades. We report three stylised facts. First, the contraction in output was marked by an anomalous downfall in investment, while consumption, savings and unemployment followed their historical relation with GDP. Second, households' and financial corporations' debts, and house prices deviated from their pre-crisis trends. Third, the jump in the public deficit-GDP ratio in 2008-2009 was unprecedented and so was the fiscal consolidation that followed. Our analysis points to the financial nature of the crisis as a likely explanation for these facts. Importantly, the `anomaly' in public deficit is in large part explained by extraordinary measures in support of the financial sector, which show up in the stock-flow adjustments and reveal a key interaction between the fiscal and the financial sectors.
Item Type: | Working or Discussion Paper (Working Paper) | ||||||
---|---|---|---|---|---|---|---|
Subjects: | H Social Sciences > HB Economic Theory | ||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||
Library of Congress Subject Headings (LCSH): | Macroeconomics -- European Union countries , Global Financial Crisis, 2008-2009 -- European Union countries, Financial services industry -- European Union countries | ||||||
Series Name: | Warwick economics research papers series (WERPS) | ||||||
Publisher: | University of Warwick. Department of Economics | ||||||
Place of Publication: | Coventry | ||||||
ISSN: | 2059-4283 | ||||||
Official Date: | 18 June 2018 | ||||||
Dates: |
|
||||||
Number: | 1167 | ||||||
Institution: | University of Warwick | ||||||
Status: | Not Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Date of first compliant deposit: | 19 June 2018 | ||||||
Date of first compliant Open Access: | 19 June 2018 | ||||||
RIOXX Funder/Project Grant: |
|
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |
Downloads
Downloads per month over past year