Global Banks, Fiscal Policy and International Business Cycles

Kollmann, Robert (2012): Global Banks, Fiscal Policy and International Business Cycles. Published in: Rethinking Global Economic Governance in Light of the Crisis: New Perspectives on Economic Policy Foundations, CEPR, 2012 (Richard Baldwin and David Vines, editors), ISBN 978-1-907142-52-9, pp.107-110 (2012): pp. 107-110.

Abstract

The worldwide financial crisis that erupted in 2007 has revealed the fragility of major financial institutions and it triggered the sharpest global recession since the 1930s. Before the crisis, standard macro theory largely abstracted from financial intermediaries, and macro forecasting models ignored information on bank balance sheets. The dramatic events since 2001 require a rethinking of the role of global finance for real activity, and will represent a challenge for economic research for years to come. This article describes recent research by the author that deals with these issues. That research develops novel theoretical and empirical analyses of the role of global banks for business cycles in the EU and in the world economy. These contributions also highlight the stabilising role of government support to banks, during a financial crisis.

• Item Type: MPRA Paper
• Language: English
• Keywords: global financial crisis, financial intermediaries, government support for banks
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; F - International Economics > F3 - International Finance; F - International Economics > F6 - Economic Impacts of Globalization

References

in't Veld, J. and Roeger, W. (2011), "Evaluating the Macroeconomic Effects of State Aids to Financial lnstitutions in the EU", Working Paper, European Commission.

Kollmann, R., Enders, Z. and Mueller, G. (2011), "Global banking and international business cycles", European Economic Review 55,407-426.

Kollmann, R. and Zeugner, S. (2011), "Leverage as a Predictor for Real Activity and Volatility," Journal of Economic Dynamics and Control, forthcoming.

Kollmann, R., Roeger, W., and in't Veld,J. (2012), "Fiscal Policy in a Financial Crisis: Standard Policy vs. Bank Rescue Measures", American Economic Review, forthcoming.

Kollmann,R., Ratto,M., Roeger, W. and in't Veld,J. (2012), "Banks, Fiscal Policy and the Financial Crisis", Working Paper, ECARES, Université Libre de Bruxelles.

Kollmann, R. (2012), "Global Banks, Financial Shocks and International Business Cycles: Evidence from an Estimated Model", Working Paper, ECARES, Université Libre de Bruxelles.

Laeven,L. and Valencia, F. (2011), "The Real Effects of Financial Sector Interventions During Crises", Working Paper ll/45, IMF.