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Squaring the cycle- capital flows, financial cycles, and macro-prudential policy in the euro area

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  • Silvia Merler

Abstract

Highlights Before the financial and economic crisis, monetary policy unification and interest rate convergence resulted in the divergence of euro-area countries’ financial cycles. This divergence is deeply rooted in the financial integration spurred by currency union and strongly correlated with intra-euro area capital flows. Macro-prudential policy will need to deal with potentially divergent financial cycles, while catering for potential cross-border spillovers from domestic policies, which domestic authorities have little incentive...

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  • Silvia Merler, 2015. "Squaring the cycle- capital flows, financial cycles, and macro-prudential policy in the euro area," Working Papers 11000, Bruegel.
  • Handle: RePEc:bre:wpaper:11000
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    References listed on IDEAS

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    1. Philip R. Lane & Peter McQuade, 2014. "Domestic Credit Growth and International Capital Flows," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 218-252, January.
    2. David Aikman & Andrew G. Haldane & Benjamin D. Nelson, 2015. "Curbing the Credit Cycle," Economic Journal, Royal Economic Society, vol. 125(585), pages 1072-1109, June.
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