scholarly journals Capital inflows and euro area long-term interest rates

2015 ◽  
Vol 54 ◽  
pp. 186-204 ◽  
Author(s):  
Daniel Carvalho ◽  
Michael Fidora
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Capital Inflows

scholarly journals COVID-19 and Fiscal Policy in the Euro Area

2020 ◽  
Author(s):  
F. Busetto ◽  
Alfonso Dufour ◽  
Simone Varotto
Keyword(s):  
Fiscal Policy ◽  
Interest Rates ◽  
Euro Area ◽  
Financial Stability ◽  
Yield Curves ◽  
Fiscal Constraints ◽  
Debt Levels

In this chapter we document fiscal policy developments in the main euro area economies over the last two decades and highlight the dramatic changes triggered by the COVID-19 pandemic. We analyse how euro area yield curves respond to COVID-19 related expectations of fiscal expansion. We show how fiscal constraints may affect interest rates. Upward pressure on national yields from higher debt levels could compromise fiscal and financial stability in the long-term.

scholarly journals Expansionary or restrictive policies in the Eurozone? Dominating trends in the first two decades

2021 ◽  
Vol 71 (3) ◽  
pp. 405-430
Author(s):  
Joanna Stawska ◽  
Paulo Jorge Reis Mourao
Keyword(s):  
Economic Policy ◽  
Interest Rates ◽  
Euro Area ◽  
Structural Breaks ◽  
Fiscal Policies ◽  
Short Term ◽  
Monetary Policies ◽  
Switching Regimes ◽  
Monetary And Fiscal Policy

Abstract Our aim is to identify periods of restrictive versus expansionary economic policy in the euro area in the last two decades. We firstly conducted the study for identifying the dominant trend in fiscal policies and then in monetary policies. We studied several fiscal outputs, focusing on the cyclical adjusted primary balance. We also analysed the European long-term and short-term interest rates. The study was conducted for several windows, namely for 3-, 4- and 5-year periods. Additional procedures were conducted for robustness checks, namely the study of structural breaks in the analysed time series as well as a study of them recurring to Markov-Switching Regimes models. For most of the analysed periods and subperiods of the series, we concluded for the presence of expansionary policies either in the fiscal or in monetary European domains. Finally, the results and the analysis of dependencies in the euro area economy favour the evidence that economic authorities in the euro area have sought to coordinate monetary and fiscal policy to stabilise the economy.

scholarly journals Long-Run Retail Interest Rate Pass-Through In The Euro Area: The Effect Of The Financial Crisis

2015 ◽  
Vol 31 (5) ◽  
pp. 147
Author(s):  
Manel Mansour ◽  
David Heller ◽  
Moez Labidi ◽  
Amine Lahiani
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Euro Area ◽  
Time Horizon ◽  
Monthly Basis ◽  
Adjustment Mechanism ◽  
Long Run ◽  
Banking Market ◽  
Pass Through

This paper analyzes the long-run pass-through of money market rates to retail interest rates (both lending and deposit rates). We rely on fully harmonized data from MIR statistics (MFI Interest Rates) for 8 countries of the euro area. From January 2003 to February 2014, interest rates are observed on a monthly basis on new contracts related to the three largest segments of the banking market (consumer, mortgage, and Non-Financial Corporations - NFCs). The long-term pass-through is measured following the Phillips and Loretan (PL) approach which is proved to be more effective than the Engle-Granger OLS (EG-OLS) approach. We also investigate the effect of the financial crisis on the degree of the long-run pass-through. Results suggest that the financial crisis deepens the heterogeneity of the speed and degree of the bank rates adjustment mechanism. Moreover, within the same country, the characteristics of long-run pass-through differ both among banking products and time horizon.

Pre-poll investor jitters stress the US stock market

2020 ◽  
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
Euro Area ◽  
Emerging Market ◽  
Capital Inflows ◽  
Content Type ◽  
The Us ◽  
Bond Funds

Significance On September 3, the benchmark S&P 500 index suffered its sharpest fall since early June having gained more than 50% since March 23. Expectations for future volatility in the Nasdaq 100 index, a gauge that includes tech giants Apple and Amazon, this month hit a 16-year high relative to the rest of the stock market and remains elevated. Impacts The Federal Reserve’s move to target average inflation and tolerate periods of higher prices may keep interest rates ‘lower for longer’. The trade-weighted dollar has lost nearly 10% since March, helping the euro to surge and exacerbating euro-area disinflationary pressures. Capital inflows are starting to return to emerging market bond funds, which lost an unprecedented USD120bn earlier this year.

The stimulus schemes will stress the financial system

2020 ◽  
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Federal Reserve ◽  
Financial Stability ◽  
Asset Prices ◽  
Yield Curve ◽  
Corporate Debt ◽  
Content Type ◽  
Negative Interest Rates

Significance While the Federal Reserve (Fed) rejects negative interest rates, and instead considers yield-curve control, even the prospect of negative US rates is accentuating distortions in asset prices and fuelling concerns about global financial stability after the pandemic. Impacts The Fed’s decision to start buying corporate debt has led to a surge in bond issuance; many firms may struggle as the stimulus is unwound. Beyond Japan, the euro-area is nearest deflation; the ECB chief economist warns that demand will be low for some time. The VIX Index, a measure of upcoming US equities volatility, remains above its long-term average, but will be prone to spikes.

scholarly journals The impact of public debt on the long-term interest rates in the euro area member countries during 2003-2010

2011 ◽  
Vol 2 (3) ◽  
pp. 23-42
Author(s):  
Piotr Misztal
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Euro Area ◽  
Public Debt ◽  
Empirical Studies ◽  
Impulse Response Function ◽  
The Real ◽  
The Impact ◽  
The Relationship

The main aim of the article is to analyze the relationship between public debt and the real, long-term interest rates in the euro area member countries during 2003-2010. The first part dealt with theoretical analysis and the most important results of empirical studies concerning the relationship between public debt and the real, long-term interest rates. In the next part of article, there were examined the relationships between public debt and the real, long-term interest rates in the euro area countries by using the Vector Autoregression Model (VAR). There were estimated elasticity coefficients of the real, long-term interest rates to public debt and measured the impact strength of public debt to changes in the real, long-term interest rate in the euro area member countries using the impulse response function. This was followed by decomposition of the real, long-term interest rate to estimate the impact of public debt and the real, long-term interest rate changes on the volatility of the real, long-term interest rate in the euro area member countries.

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