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Working Paper

Regional and global financial safety nets: the recent European experience and its implications for regional cooperation in Asia

Comparing and evaluating financial assistance programmes of four euro-area countries (Greece, Ireland, Portugal, and Cyprus) and three non-euro-area countries (Hungary, Latvia, and Romania) of the European Union in the aftermath of the 2007/08 global financial and economic crisis. Asian countries can draw several lessons from European experiences.

By: Date: April 20, 2017 Topic: European Macroeconomics & Governance

This paper compares financial assistance programmes of four euro-area countries (Greece, Ireland, Portugal, and Cyprus) and three non-euro-area countries (Hungary, Latvia, and Romania) of the European Union in the aftermath of the 2007/08 global financial and economic crisis—which were supported by the International Monetary Fund (IMF) and various European financing facilities. These programmes have distinct features compared with assistance programmes in other parts of the world, such as the size of imbalances, financing, unique cooperation of the IMF and various European facilities, and membership of a currency union in the case of euro-area countries. We evaluate the programmes by assessing their success in creating conditions to regain market access, the degree of compliance with loan conditionality, and actual economic performance relative to programme assumptions.

We conclude that the rate of compliance with loan conditionality was not a good predictor of programme success and that deviations from gross domestic product programme assumption correlate strongly with fiscal performance and unemployment, highlighting the key role of macroeconomic projections in programme design. While the Troika institutions succeeded in cooperating, there were major disputes among them in some cases, especially related to the assessment of fiscal sustainability and cross-country spillovers. Asian countries can draw several lessons from European experiences, including the coexistence of the IMF and regional safety nets, cooperation issues, systemic spillovers, and social implications of programme design.

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Opinion

Can households in the European Union make ends meet?

Half the households surveyed by Eurostat see themselves as unable to find the resources they would need to cope with an unexpected expense within a month, estimated by experts at €375 in the case of Greece.

By: Maria Demertzis, Marta Domínguez-Jiménez and Annamaria Lusardi Topic: Finance & Financial Regulation Date: July 24, 2020
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Policy Contribution

The financial fragility of European households in the time of COVID-19

The concept of household financial fragility emerged in the United States after the 2007-2008 financial crisis. It grew out of the need to understand whether households’ lack of capacity to face shocks could itself become a source of financial instability.

By: Maria Demertzis, Marta Domínguez-Jiménez and Annamaria Lusardi Topic: European Macroeconomics & Governance Date: July 2, 2020
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Past Event

Past Event

The role of the IMF in the post-COVID-19 fiscal stabilization and recovery

Fireside chat with Kristalina Georgieva, Managing Director, International Monetary Fund

Speakers: Henri de Castries, Kristalina Georgieva, Vazil Hudák, Robert Vass and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 15, 2020
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Opinion

Covid-19 and emerging economies: What to expect in the short- and medium-term

This article was originally published in the Observer Research Foundation. As Brazil, Russia, India and Mexico record the fast spread of the Covid-19 contagion, a third wave of the pandemic is reaching the emerging world. As a result, business sentiment has decreased in March and April in the region. What’s more, as emerging economies gradually […]

By: Alicia García-Herrero Topic: Global Economics & Governance Date: June 3, 2020
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Policy Contribution

COVID-19’s reality shock for external-funding dependent emerging economies

COVID-19 is by far the biggest challenge policymakers in emerging economies have had to deal with in recent history. Beyond the potentially large negative impact on these countries’ fiscal accounts, and the related solvency issues, worsening conditions for these countries’ external funding are a major challenge.

By: Alicia García-Herrero and Elina Ribakova Topic: Finance & Financial Regulation, Global Economics & Governance Date: May 28, 2020
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Podcast

Podcast

Singapore's experience in dealing with COVID-19

A conversation with Dr. Vivian Balakrishnan, Minister for Foreign Affairs of Singapore, on how this city-state has tackled the coronavirus.

By: The Sound of Economics Topic: Global Economics & Governance Date: May 19, 2020
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Past Event

Past Event

The Sound of Economics Live: Singapore's experience in dealing with COVID-19

A conversation with Dr. Vivian Balakrishnan, Minister for Foreign Affairs of Singapore, on how this city-state has tackled the coronavirus.

Speakers: Vivian Balakrishnan, Giuseppe Porcaro and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 19, 2020
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Podcast

Podcast

China’s economy after COVID-19

The first country to be hit by the current pandemic, China has been at the forefront of the fight against COVID-19. What have been its impacts on the Chinese economy? What does it represent, more broadly, to the global economy? Are global supply chains really starting to be put into question? Today, Giuseppe Porcaro is joined by Alicia García-Herrero and Yiping Huang, Professor of Economics and Finance at the Peking University.

By: The Sound of Economics Topic: Global Economics & Governance Date: May 6, 2020
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Opinion

Why are some stock markets in Asia less affected by coronavirus?

While Asian markets are in a sea of red, mainland China, New Zealand, Hong Kong and Taiwan are all defying the gravity.

By: Alicia García-Herrero and Gary Ng Topic: Global Economics & Governance Date: March 31, 2020
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External Publication

How has the macroeconomic imbalances procedure worked in practice to improve the resilience of the euro area?

This paper shows how the Macroeconomic Imbalances Procedure (MIP) could be streamlined and its underlying conceptual framework clarified. Implementation of the country-specific recommendations is low; their internal consistency is sometimes missing; despite past reforms, the MIP remains largely a countryby-country approach running the risk of aggravating the deflationary bias in the euro area. We recommend to streamline the scoreboard around a few meaningful indicators, involve national macro-prudential and productivity councils, better connect the various recommendations, simplify the language and further involve the Commission into national policy discussions. This document was prepared for the Economic Governance Support Unit at the request of the ECON Committee.

By: Agnès Bénassy-Quéré and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: March 24, 2020
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Blog Post

Be bold now: coronavirus, the Eurogroup and fiscal safety nets

This blog post sketches two scenarios: one in which countries provide a large fiscal safety net to companies and another in which they do not. Both lead to similar debt-to-GDP ratios in 2021, but the safety net leads to a smaller and shorter recession and a quicker rebound. We then discuss how to fund a large response without fragmenting the euro area. Until the lockdowns end, such measures should be implemented.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: March 17, 2020
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Opinion

Epidemic tests China’s supply chain dominance

Much has been written on the Wuhan coronavirus that causes the respiratory disease Covid-19, but very little is known yet about its impact on the global economy and, in particular, the global value chain. Still, one thing is clear: The shock is bigger than that caused by severe acute respiratory syndrome (SARS), for the simple reason that China is much more important for the global economy than it was then.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: February 17, 2020
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