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... (1) and (2), we can find equilibrium π * and r as a function of R, r * , τ . It is depicted as point A on Figure 1, where "Supply" denotes equation (1) and "Demand" denotes equation (2). ...
Context 2
... terms of our model, this would be reflected as a decline in τ for banks in C, but not in R, resulting in their ability to lend to borrowers in P at a lower equilibrium rate. The new equilibrium rate and threshold π are depicted on Figure 1 as point B. In this new equilibrium, the interest rate at which funds are available for country P borrowers is lower and more projects are financed, leading to economic and lending booms in P , just as we observed in the period between 2000 and 2007. Moreover, investment in P now has a lower average probability of success. ...
Context 3
... controls we included deal amounts, number of lenders in the syndicate, and year fixed effects. 37 Figure 11 shows a plot of the estimated year fixed effects from these regressions. 38 We find that while there was not much change in the regional composition of loan syndicates in the deals extended to other regions, there was a sharp drop during the EMU period in the probability of a FIN bank participating in lending to GIIPS, whether or not a CORE bank is also in a syndicate. ...
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... Studies have extensively discussed whether the uniform monetary framework had contributed to rising intraarea imbalances leading up to the 2010-2012 crisis. While there is evidence for endogenous incentives to accumulate credit risk (Hale -Obstfeld 2014), further questions arise about the channels of adjustment. Today, years after the turmoil and several bailout packages, it is essential to evaluate the core idea underlying the policies of the EU-IMF creditors. ...
... Monetary conditions too loose for some economies threaten with over-indebtedness and asset price bubbles. Due to the common financial framework, exposures tend to accumulate in the balance sheets of the intra-area financiers (Hale -Obstfeld 2014). This can trigger a zonelevel crisis if the endogenous incentive to pile up debts results in defaults eventually. ...
The euro crisis and its lessons are still not a closed chapter for economists and policy makers. The challenge to find the most appropriate ways to prevent intra-area imbalances is still on the top of the agenda. Nominal adjustment (internal devaluation) remains one of the most critical aspects of this debate. Many are indeed interested in whether austerity measures in several countries “made sense.” But much more is at stake here than evaluating the past. The true question is whether the eurozone can rely on nominal adjustment to align internal economic fluctuations. This paper contributes to the answer by investigating the size of price changes and their impacts on output and trade in the wake of the euro crisis. Selecting the most appropriate variables to measure competitive outcomes, the basic idea of “expansionary contraction” is tested. We rely on a comprehensive panel of all Eurozone member states in the post-crisis years (2010–2017). The results suggest that flexible price levels cannot be taken for granted, and a link to competitiveness is not self-evident, either. Other channels of adjustment may prove to be more important, but scaling them up will ultimately require a sound consensus on the future architecture of the euro.
... Eszter Boros foremost linked to the introduction of the single currency and is very similar to the findings made with regard to the euro crisis (Part 2). Hale -Obstfeld (2014) offer a model-like presentation of the fact that if the creation of a monetary block entails a decline in internal loan interest rates, it not only increases gross capital flows, but also increases the proportion of intra-area financing. According to the model, cheaper credit means that projects with lower potential for success are also launched. ...
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... Eszter Boros relationship illustrated in Figure 1 reflects the conclusions of Hale -Obstfeld (2014), according to which lending within the currency area shifts towards internal relations. ...
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... Hasonló folyamat írható le, ha az aszimmetria gyökere a finanszírozás árának hirtelen csökkenése, és ez az övezet egy része számára az addiginál alacsonyabb kamatokat jelent (vö. Hale -Obstfeld 2014). ...
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Kulcsszavak: egységes valutaövezet, optimális valutaövezetek, egyensúlytalanságok, euroövezeti kiigazodás
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