Jahr: 2018

Gunther Schnabl

Abstract

The paper scrutinizes the role of diverging fiscal policy stances for diverging current account positions in Europe with a focus on the European Monetary Union (EMU). In a heterogeneous monetary union fiscal policy has the task to absorb asymmetric shocks to ensure the efficacy of the one-size monetary policy. It is argued that since the early years of the European Monetary Union divergent fiscal policies combined with monetary expansion constituted a major determinant of current account divergence within the euro area, which finally led into the European debt and financial crisis. Panel regressions reveal a significant impact of fiscal policies on current account positions, which to a large extent are independent from the exchange rate regime and turn out to be contingent on monetary and fiscal policy mix. Based on the findings economic policy recommendations are presented.

Keywords: current account imbalances, Europe, European financial and debt crisis, European Monetary Union, exchange rate adjustment, fiscal policy, macroeconomic policy coordination.

JEL Codes: F32, F33, F42, H62.

Erschienen in

The Economists’ Voice, vol. 15, no. 1, 2018, pp. 20180026.

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David Herok; Gunther Schnabl

Abstract

Während die Arbeitslosigkeit in Europa stetig sinkt und immer weniger Unternehmen Insolvenz anmelden, wächst im Schatten der anhaltenden Flut des billigen Geldes durch die EZB die Anzahl von sogenannten Zombie -Banken, Zombie-Unternehmen und Zombie Staaten. Diese Entwicklung erinnert an eine Rückkehr zu planwirtschaftlichen Strukturen und erschwert den Ausstieg aus der sehr lockeren Geldpolitik. Nur ein Ausstieg kann jedoch entscheidend der fortschreitenden Zombiefizierung Einhalt zu gebieten, die die marktwirt-schaftlichen Prinzipien unterhöhlt, das Wachstum lähmt und den sozialen Frieden stört.

While unemployment and bankruptcies in Europe are steadily on decline, the number of so-called zombie banks, zombie companies and zombie states is growing in the shadow of the ECB's persistent ultra-easy monetary policy. This development is reminiscent of a return to planned economic structures and makes it much more difficult to exit from the very loose monetary policy. However, an exit is crucial to halting the zombification process which un-dermines free-market principles and growth, and disrupts social peace.

Keywords: Bank Regulation, ECB, Hayek, Interest Rates, Joseph Schumpeter, Monetary policy, Resource Allocation in Planning Economies, Zombie-Firms, Zombie-Lending.

JEL Codes: B31, E58, G28.

Erschienen in

Austrian Institute Paper 21 (2018).

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Raphael Fischer; Gunther Schnabl

Abstract

Both Japan and parts of the European Monetary Union have experienced boom and bust in stock and real estate markets, which have been followed by a lasting crisis. The paper analyses the role of a high degree of regional heterogeneity for public debt and monetary policy in the context of crisis. It is shown for Japan that the attempts to maintain regional cohesion via a regional transfer mechanism has contributed to the unprecedented rise in public debt and persistent monetary expansion. Econometric estimations show that in Japan regional redistribution of funds has ensured homogeneous living conditions across Japanese regions pre- and post-crisis. The side condition is monetary expansion. A similar effect could emerge in Europe, if the crisis persists.

Keywords: EMU Crisis, Japan, Monetary policy, Public debt, Regional redistribution.

JEL Codes: H20, H50, H70.

Erschienen in

International Economics and Economic Policy (April 2018), Volume 15, Issue 2, pp 405–428.

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Sophia Latsos; Gunther Schnabl

Abstract

The paper shows that currencies of countries with persistent current account surpluses and high foreign-currency denominated assets, such as the Swiss franc and the Japanese yen, are under persistent appreciation pressure, particularly when the centres of the world monetary system follow expansionary monetary policies. This limits the choice of exchange rate regime. Given flexible exchange rates, a negative risk premium on the domestic interest rate can emerge. Empirical estimations provide mixed evidence for a negative impact of net foreign asset positions and exchange rate uncertainty on interest rates of international creditor countries at the periphery of the world monetary system.

Keywords: appreciation pressure, exchange rate risk, Japanese yen, negative risk premium, self-fulfilling expectations, Swiss franc.

JEL Codes: F15, F31, F33.

Erschienen in

Int Econ Econ Policy 15, 261–280 (2018).

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Gunther Schnabl

Abstract

The world has moved into a low-interest rate trap. Since the mid1980s, asymmetric monetary policy patterns—that is, sharp interest rate cuts during crises and hesitant interest rate increases during the post-crisis recoveries—have pushed interest rates toward zero (Hoffmann and Schnabl 2011) (see Figure 1).1 With short-term interest rates having reached the zero bound, unconventional monetary policies (i.e., extensive government and corporate bond purchases) have nudged long-term interest rates further downward.

Erschienen in

Cato Journal 38 (2018), 2, 447-466..

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