Disappearing government bond spreads in the eurozone – Back to normal?
De Grauwe, Paul Yuemei Ji. Since the announcement of the Outright Monetary Transactions (OMT) programme by Mario Draghi, President of the ECB, in 2012, the government bond spreads began a strong decline. This paper finds that most of this decline is due to the positive market sentiments that the OMT programme has triggered and is not […]
Why monetary policy matters: New UK narrative evidence
Cloyne, James, Hürtgen, Patrick. The effects of interest rate changes on output and inflation could be much larger than previously thought. Such evidence was suggested by Romer and Romer in their analysis of the US. This column provides similar estimates for the UK based on a novel real-time dataset. In response to a 1% increase in […]
How the euro changed the pattern of international debt flows
Hale, Galina, Obstfeld, Maurice. Large flows of bank lending from core countries in the Eurozone to the periphery lead to large financial imbalances. This column explains what motivated such financial flows. With the advent of the Eurozone, banks in core countries gained relative advantage in lending to the periphery, making such lending very attractive. They […]