Budget Deficit Spillover Effects in the Euro Area

2010 ◽  
Author(s):  
Shafik Hebous ◽  
Tom Zimmermann
Keyword(s):  
Euro Area ◽  
Budget Deficit ◽  
Spillover Effects

Unrest will complicate Macron’s reform agenda

2019 ◽  
Keyword(s):  
Euro Area ◽  
Budget Deficit ◽  
Economic Reforms ◽  
Content Type ◽  
Reform Agenda ◽  
High Ranking ◽  
Area Growth ◽  
Growth Prospects ◽  
High Ranking Official ◽  
Ability To Drive

Significance Fort will be the eighth high-ranking official to resign since Macron took office in 2017. This will raise further doubts over the credibility of Macron’s presidency and reform agenda. Impacts As the euro-area’s second-largest economy, France threatens euro-area growth prospects. Failure to control France’s budget deficit will result in conflict with Brussels. Such economic concerns will reduce Macron’s ability to drive EU political and economic reforms.

scholarly journals Macroeconomic stability as the condition for Bulgaria to join the euro area

Equilibrium ◽  
2019 ◽  
Vol 14 (2) ◽  
pp. 295-315
Author(s):  
Anna Moździerz
Keyword(s):  
Euro Area ◽  
Budget Deficit ◽  
Value Added ◽  
Economic Convergence ◽  
Convergence Criteria ◽  
Macroeconomic Imbalances ◽  
Macroeconomic Indicators ◽  
The Subject ◽  
Macroeconomic Stability

Research background: The subject of research is the macroeconomic situation of Bulgaria in the context of the country's preparations for joining the euro area. In 2018, the Bulgarian government approved a plan of preparations covering the period until the end of June 2019, which assumes that the country will join the ERM II mechanism in July 2019, and the euro area on 1 January 2022. Bulgaria meets four nominal convergence criteria regarding inflation, long-term interest rate, budget deficit and public debt. The national currency is pegged to the euro under the currency board arrangement. Despite this, the implementation of this optimistic scenario may be difficult because since the 2007 crisis, the European institutions pay more attention to macroeconomic stability and the sustainability of convergence. Purpose of the article: The aim of the article is to identify the factors destabilising macroeconomic equilibrium in Bulgaria, which are a potential obstacle to the adoption of the euro by Bulgaria on schedule. Methods: The research was based on the changes in selected macroeconomic indicators, as well as on the method used by the European Commission to detect macroeconomic imbalances. The observation and analysis covered the 2007–2018 period.  Findings & Value added: The research results indicate that the low level of socio-economic convergence of Bulgaria and macroeconomic imbalances may delay its membership in the monetary union. Therefore, while respecting the country's aspirations to join the euro area, one cannot ignore the risk of another destabilisation of the euro area. 

Spillover Effects of Sovereign Bond Purchases in the Euro Area

2021 ◽  
Author(s):  
Yvo Mudde ◽  
Anna SamarIna ◽  
Robert Vermeulen
Keyword(s):  
Euro Area ◽  
Spillover Effects ◽  
Sovereign Bond

MACROECONOMIC EFFECTS OF GREATER COMPETITION IN THE SERVICE SECTOR: THE CASE OF ITALY

2010 ◽  
Vol 14 (5) ◽  
pp. 677-708 ◽  
Author(s):  
L. Forni ◽  
A. Gerali ◽  
M. Pisani
Keyword(s):  
Euro Area ◽  
Service Sector ◽  
Monopolistic Competition ◽  
Spillover Effects ◽  
Dynamic Stochastic General Equilibrium ◽  
Services Sector ◽  
Long Run ◽  
Dynamic Stochastic ◽  
Nontradable Goods ◽  
Cross Country

In this paper we assess the effects of increasing competition in the service sector in one country of the euro area. We focus on Italy, which, based on cross-country comparisons, stands out as the country with the highest markups in nonmanufacturing industries among the OECD countries. We propose a two-region (Italy and the rest of the euro area) dynamic stochastic general equilibrium model where we introduce nontradable goods as a proxy for services and we allow for monopolistic competition in labor, manufacturing, and services markets. We then use the model to simulate the macroeconomic and spillover effects of increasing the degree of competition in the Italian services sector. According to the results, reducing the markups in services to the levels prevailing in the rest of the euro area induces in the long run an increase in Italian GDP equal to 11% and an increase in welfare (measured in terms of steady state consumption equivalents) of about 3.5%. Half of the GDP increase would be realized in the first three years. The spillover effects to the rest of the euro area are limited: consumption, investment, and GDP increases are relatively small.

scholarly journals Steering the Unsteerable? Aggregate Fiscal Stance and Spillover Effects in the Euro Area

2018 ◽  
Vol 53 (1) ◽  
pp. 41-46
Author(s):  
Stephan Freitag ◽  
Jörg Stosberg
Keyword(s):  
Euro Area ◽  
Spillover Effects

scholarly journals Liquidity risk: Intraday liquidity and price spillovers in euro area sovereign bond markets

2021 ◽  
Vol 11 (2) ◽  
pp. 18-31
Author(s):  
Linas Jurkšas ◽  
Deimantė Teresienė ◽  
Rasa Kanapickiene
Keyword(s):  
Euro Area ◽  
Spillover Effect ◽  
Spillover Effects ◽  
Market Liquidity ◽  
Bond Markets ◽  
Sovereign Bond ◽  
Sovereign Bonds ◽  
Intraday Data ◽  
The Cross ◽  
Sovereign Bond Markets

The purpose of this paper is to determine the cross-market liquidity and price spillover effects across euro area sovereign bond markets. The analysis is carried out with the constructed minute frequency order-book dataset from 2011 until 2018. This derived dataset covers the six largest euro area markets for benchmark 10-year sovereign bonds. To estimate the cross-market spillover effect between sovereign bonds, it was decided to use the empirical approach proposed by Diebold and Yilmaz (2012) and combine it with the vector error correction model (VECM). We also employed the panel regression model to identify why some bond markets had a higher spillover effect while others were smaller. The dependent variable was the daily average spillover effect of a particular bond. As the spillover effects vary highly across different bonds, country-specific fixed effects were used, and the clustered standard errors were calculated for robustness reasons. Lastly, the cross-market spillovers were analyzed daily to compare them with the results of the model with intraday data. The analysis was performed with rolling 100-day window variance decompositions and a 10-day forecast horizon for six sovereign bonds and the overnight indexed swap (OIS) market. The results of the created time-series model revealed that intraday cross-market spillovers exist but are relatively weak, especially in the case of liquidity spillovers. As the cross-market linkages became much more robust with the model using daily data, the liquidity or price disbalances between different markets are usually corrected on longer intervals than minutes. Distance between countries is the most important explanatory variable and is negatively linked to the magnitude of both liquidity and price spillovers. These findings should be of particular interest to bond market investors, risk managers, and analysts who try to scrutinize the liquidity and price transmission mechanism of sovereign bonds in their portfolios.

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