Monetary Policy and Risk Taking
by Ignazio Angeloni on 15 February 2010
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Category: EXTERNAL PUBLICATIONS
Topics: Budgetary and monetary policies
In this paper Bruegel Visiting Scholar Ignazio Angeloni (European Central Bank), Ester Faia (Goethe University Frankfurt, Kiel IfW and CEPREMAP) and Marco Lo Duca (European Central Bank) examine the links between monetary policy, financial risk and the business cycle, combining data evidence and a new DSGE model with banks. The model includes banks (modeled as in Diamond and Rajan, JF 2000 and JPE 2001) and a financial accelerator (Bernanke et al., 1999 Handbook). A monetary expansion increases the propensity of banks to assume risks. In turn, financial risks affect economic activity and prices. This "risk-taking" channel of monetary transmission, absent in pure financial accelerator models, operates via the leverage decisions of banks. The model results match certain features of the data, as emerged in recent panel data studies and in our own time series estimates for the US and the euro area.
The Best Course for Greece is to Call in the Fund
by Jean Pisani-Ferry, André Sapir on 02 February 2010
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Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies, European and global governance
Director Jean Pisani-Ferry and Senior Fellow André Sapir argue that the best option to solve the 'Greek crisis' is to bring in the IMF for a stand-by agreement involving conditional lending to the Greek government. While the EU is hesitant to bring in the IMF, Pisani-Ferry and Sapir maintain that the IMF is better suited to handle the political problems that would accompany such a bailout. This op-ed was published in The Financial Times (2 Feb).
Retraites: réformer une bonne fois pour toutes
by Jean Pisani-Ferry on 01 February 2010
Download: French
Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies
In Le Monde, Director Jean Pisani-Ferry takes a look at the issue of retirement system reform in France in light of President Nicolas Sarkozy's proposed plans. Pisani-Ferry argues that reforming the retirement system is necessary to tackle rising public deficits and has the added advantage of not burdening current consumption.
Lessons From the Euro Area
by Zsolt Darvas on 21 January 2010
Download: Hungarian
Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies, New Member States, Enlargement and Neighbourhood
Writing in leading Hungarian business daily Világgazdaság, Resident Fellow Zsolt Darvas examines what the financial crisis has taught us about various euro-area economies and what lessons that holds for Hungary's possible accession into the euro zone. Despite the difficulties of Greece, Ireland and others, he argues, adopting the euro is still the best option for Hungary, while the Czech Republic and Poland would benefit from staying outside the euro area for a longer period.
Why Europe Struggles - And How it can Recover
by Jean Pisani-Ferry on 11 January 2010
Download: English
Category: OPINION PIECES AND COLUMNS
Topics: Budgetary and monetary policies
Director Jean Pisani-Ferry addresses the questions about Europe's structure, governance and competitiveness that arose from the financial crisis. Among them: Why was Europe hit so hard by the financial crisis? What does the crisis tell us about Europe's internal challenges? How lasting and severe will the fiscal and consequences be? What is the agenda for financial reform? This column was published in Chinese business magazine Century Weekly.