Coronavirus pandemic and tourism: Dynamic stochastic general equilibrium modeling of infectious disease outbreak.

This text aims to provide a survey of the state of knowledge in the broad area that includes the theories and facts of economic growth and economic fluctuations, as well as the consequences of monetary and fiscal policies for general economic conditions.

Handbook of macroeconomics

Europe’s financial structure has become strongly bank-based – far more so than in other economies. We document that an increase in the size of the banking system relative to equity and private bond markets is associated with more systemic risk and lower economic growth, particularly during housing market crises. We argue that these two phenomena arise owing to an amplification mechanism, by which banks overextend and misallocate credit when asset prices rise, and ration it when they drop. The paper concludes by discussing policy solutions to Europe’s “bank bias”, which include reducing regulatory favouritism towards banks, while simultaneously supporting the development of securities markets.

Bank Bias in Europe: Effects on Systemic Risk and Growth

textOn July 26, 2012 the ECB’s president Mario Draghi announced to do “whatever
it takes” to preserve the Euro and subsequently launched the Outright Monetary
Transactions (OMT) Program, which led to a significant increase in the value of
sovereign bonds issued by European periphery countries. As a result, the OMT announcement
indirectly recapitalized periphery country banks due to their significant
holdings of these bonds. However, the regained stability of the European banking
sector has not fully transferred into economic growth. We show that this development
can at least partially be explained by zombie lending motives of banks that
still remained undercapitalized after the OMT announcement. While banks that
benefited from the announcement increased their overall loan supply, this supply
was mostly targeted towards low-quality firms with pre-existing lending relationships
with these banks. As a result, there was no positive impact on real economic
activity like employment or investment. Instead, these firms mainly used the newly
acquired funds to build up cash reserves. Finally, we document that creditworthy
firms in industries with a prevalence of zombie firms suffered significantly from the
credit misallocation, which slowed down the economic recovery.

Whatever It Takes: The Real Effects of Unconventional Monetary Policy

On July 26, 2012 the ECB’s president Mario Draghi announced to do “whatever
it takes” to preserve the Euro and subsequently launched the Outright Monetary
Transactions (OMT) Program, which led to a significant increase in the value of
sovereign bonds issued by European periphery countries. As a result, the OMT announcement
indirectly recapitalized periphery country banks due to their significant
holdings of these bonds. However, the regained stability of the European banking
sector has not fully transferred into economic growth. We show that this development
can at least partially be explained by zombie lending motives of banks that
still remained undercapitalized after the OMT announcement. While banks that
benefited from the announcement increased their overall loan supply, this supply
was mostly targeted towards low-quality firms with pre-existing lending relationships
with these banks. As a result, there was no positive impact on real economic
activity like employment or investment. Instead, these firms mainly used the newly
acquired funds to build up cash reserves. Finally, we document that creditworthy
firms in industries with a prevalence of zombie firms suffered significantly from the
credit misallocation, which slowed down the economic recovery.

https://www.econstor.eu/bitstream/10419/158505/1/888135459.pdf

This paper evaluates the impact of the ECB’s unconventional policies on bank and government borrowing costs. We employ event-based regressions to assess and compare the effects of asset purchases and exceptional liquidity announcements on money markets, covered bond markets, and sovereign bond markets. The results show that (i) exceptional liquidity measures (three-year loans to banks and setting the ECB deposit rate to zero) significantly reduced persistent moneymarket tensions and that (ii) asset purchases were the most effective in lowering refinancing costs of banks and governments in the presence of high sovereign risk. Moreover, we show that the ECB asset purchases fed through into other asset prices: bank covered bond purchases diminished sovereign spreads, while sovereign bond purchases reduced covered bond spreads.

https://www.ijcb.org/journal/ijcb15q5a3.pdf

The ECB unconventional monetary policies: have they lowered market borrowing costs for banks and governments?

This paper evaluates the impact of all ECB unconventional monetary policies implemented between 2007 and 2012 on bank and government borrowing costs. We employ event-based regressions to measure the effect of each policy. The borrowing conditions for banks are represented by money market spreads and covered bond spreads while the sovereign bond spreads reflect government borrowing costs. The results show that sovereign bond purchasing programs (SMP, OMT) proved to be the most effective in lowering longer-term borrowing costs for both banks and governments with the largest impact in periphery euroarea countries. The strong impact in the euro-area periphery suggests that the central bank intervention in sovereign market is particularly effective when the sovereign risk is important. Furthermore, both covered bond purchase programs and 3-year loans to banks reduced bank refinancing costs.

The ECB Unconventional Monetary Policies: Have They Lowered Market Borrowing Costs for Banks and Governments?

https://mpra.ub.uni-muenchen.de/65643/1/MPRA_paper_65643.pdf

Disaster risk and preference shifts in a New Keynesian model

http://www.cepii.fr/PDF_PUB/wp/2014/wp2014-19.pdf

Corporate debt structure and economic recoveries

Unconventional monetary policies in the United States (2007-
2010) in the light of the Japanese experience (1999-2006). Were the Fed’s unconventional monetary policies effective during the 2007-2010 crisis? Have the ECB unconventional monetary policies lowered
market borrowing costs for banks and governments? Disaster Risk in a New Keynesian Model.

Urszula Szczerbowicz

Papers

The ECB unconventional monetary policies: have they lowered market borrowing costs for banks and governments?

The ECB Unconventional Monetary Policies: Have They Lowered Market Borrowing Costs for Banks and Governments?

Disaster risk and preference shifts in a New Keynesian model

Corporate debt structure and economic recoveries

Unconventional monetary policies