IDEAS home Printed from https://ideas.repec.org/a/cbu/jrnlec/y2012v4ip220-229.html

Financial Stability And Price Stability: An Empirical Analysis In Euro Area

Author

Listed:
  • Cristi Spulbar

    (University of Craiova, Faculty of Economics and Business Administration)

  • Adriana Spinu

    (University of Craiova, Faculty of Economics and Business Administration)

  • Mihai Nitoi

    (University of Craiova, Faculty of Economics and Business Administration)

Abstract

In this paper we study the relationship between price stability and financial stability. We try to determine whether asset prices are useful indicators for determining future inflation rates and we analyze the tensions in the interbank market during the last five years by means of a GARCH (1,1) model. The results show that the interest rate leads to a decrease in the inflation rate, while oil and real estate prices give a positive impulse. Before the crisis, Euribor-Eoniaswap spread had a low volatility. But the intervention of central banks by injecting liquidity into the banking system led to a considerable increase in its volatility. Another explanation for the evolution of this phenomenon is due to the loss of control by the ECB on the MBR and Eoniaswap spread.

Suggested Citation

  • Cristi Spulbar & Adriana Spinu & Mihai Nitoi, 2012. "Financial Stability And Price Stability: An Empirical Analysis In Euro Area," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 220-229, December.
    • Handle: RePEc:cbu:jrnlec:y:2012:v:4i:p:220-229
    as

    Download full text from publisher

    File URL: http://www.utgjiu.ro/revista/ec/pdf/2012-04.I/38_SPULBAR%20Cristi.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jan Frait & Luboš Komárek & Zlatuše Komárková, 2011. "Monetary Policy in a Small Economy after Tsunami: A New Consensus on the Horizon?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(1), pages 5-33, January.
    2. Goodhart, C. A. E., 2010. "The Changing Role of Central Banks," Working Papers 11-27, University of Pennsylvania, Wharton School, Weiss Center.
    3. Duvvuri Subbarao, 2012. "Price stability, financial stability, and sovereign debt sustainability policy challenges from the new trilemma," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 5(2), pages 246-259, April.
    4. Nicoletta Batini & Eugen Tereanu, 2010. "Inflation targeting during asset and commodity price booms," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(1), pages 15-35, Spring.
    5. Christopher Kent & Philip Lowe, 1997. "Asset-price Bubbles and Monetary Policy," RBA Research Discussion Papers rdp9709, Reserve Bank of Australia.
    6. Shiratsuka, Shigenori, 1999. "Asset Price Fluctuation and Price Indices," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 17(3), pages 103-128, December.
    7. Charles Goodhart, 2010. "The changing role of central banks," BIS Working Papers 326, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tsvetomira Tsenova, 2014. "International monetary transmission with bank heterogeneity and default risk," Annals of Finance, Springer, vol. 10(2), pages 217-241, May.
    2. Gouriéroux, C. & Monfort, A. & Renne, J.-P., 2022. "Required Capital for Long-Run Risks," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    3. Kotaro Ishi & Mr. Kenji Fujita & Mr. Mark R. Stone, 2011. "Should Unconventional Balance Sheet Policies Be Added to the Central Bank toolkit? a Review of the Experience so Far," IMF Working Papers 2011/145, International Monetary Fund.
    4. repec:hal:spmain:info:hdl:2441/6ggbvnr6munghes9oasij6sc6 is not listed on IDEAS
    5. Donato Masciandaro, 2018. "Central Banks And Macroprudential Policies: Economics And Politics," BAFFI CAREFIN Working Papers 1878, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    6. repec:hal:wpspec:info:hdl:2441/6ggbvnr6munghes9ob627a1r2 is not listed on IDEAS
    7. Nicholas Crafts, 2014. "What Does the 1930s' Experience Tell Us about the Future of the Eurozone?," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 713-727, July.
    8. Bhattacharyya, Nikhilesh., 2012. "Monetary policy and employment in developing Asia," ILO Working Papers 994685223402676, International Labour Organization.
    9. Eva Zamrazilová, 2011. "Měnová politika: staré lekce, nové výzvy [Monetary Policy: Old Lessons and New Challenges]," Politická ekonomie, Prague University of Economics and Business, vol. 2011(1), pages 3-21.
    10. Daniela Gabor, 2011. "Paradigm shift? A critique of the IMF’s new approach to capital controls," Working Papers 1109, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    11. Postel-Vinay, Natacha, 2016. "What caused Chicago bank failures in the Great Depression? A look at the 1920s," LSE Research Online Documents on Economics 88844, London School of Economics and Political Science, LSE Library.
    12. Andrzej Raczko, 2017. "Elements of unconventional monetary policy at the European Central Bank (Elementy niekonwencjonalnej polityki pienieznej Europejskiego Banku Centralnego)," Research Reports, University of Warsaw, Faculty of Management, vol. 2(25), pages 74-83.
    13. Issing, Otmar, 2011. "Lessons for monetary policy: What should the consensus be?," CFS Working Paper Series 2011/13, Center for Financial Studies (CFS).
    14. Baer, Moritz & Campiglio, Emanuele & Deyris, Jérôme, 2021. "It takes two to dance: Institutional dynamics and climate-related financial policies," Ecological Economics, Elsevier, vol. 190(C).
    15. Dalla Pellegrina, L. & Masciandaro, D. & Pansini, R.V., 2013. "The central banker as prudential supervisor: Does independence matter?," Journal of Financial Stability, Elsevier, vol. 9(3), pages 415-427.
    16. Kroszner, R.S., 2012. "Stability, growth and regulatory reform," Financial Stability Review, Banque de France, issue 16, pages 77-93, April.
    17. Beck, Roland & Reinhardt, Dennis & Rebillard, Cyril & Ramos-Tallada, Julio & Peeters, Jolanda & Paternò, Francesco & Wörz, Julia & Beirne, John & Weissenseel, Lisa, 2015. "The side effects of national financial sector policies: framing the debate on financial protectionism," Occasional Paper Series 166, European Central Bank.
    18. Larissa Batrancea & Marcel Ciprian Pop & Malar Maran Rathnaswamy & Ioan Batrancea & Mircea-Iosif Rus, 2021. "An Empirical Investigation on the Transition Process toward a Green Economy," Sustainability, MDPI, vol. 13(23), pages 1-12, November.
    19. Ulrich Volz, 2015. "On the Future of Inflation Targeting in East Asia," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 638-652, August.
    20. Grégory Levieuge, 2005. "Politique monétaire et prix d'actifs," Revue de l'OFCE, Presses de Sciences-Po, vol. 93(2), pages 317-355.
    21. repec:hal:spmain:info:hdl:2441/53ccj34tat80tq7f6ff0qvvjtj is not listed on IDEAS
    22. Espino, Freddy, 2012. "Un Índice de Estabilidad Bancaria para Perú," Working Papers 2012-015, Banco Central de Reserva del Perú.
    23. Nobel Prize Committee, 2022. "Financial Intermediation and the Economy," Nobel Prize in Economics documents 2022-2, Nobel Prize Committee.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbu:jrnlec:y:2012:v:4i:p:220-229. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ecobici Nicolae The email address of this maintainer does not seem to be valid anymore. Please ask Ecobici Nicolae to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/fetgjro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.