Financial conditions and economic activity: the potential impact of the targeted longer-term refinancing operations (TLTROS)

Hiona Balfoussia and Heather Gibson

No 194, Working Papers from Bank of Greece

Abstract: This paper explores the relationship between financial conditions and real economic activity in the euro area as a whole and for Greece in particular. We use a financial conditions index (see Angelopoulou et al., 2014) which is constructed using a wide range of prices, quantities, spreads and survey data in line with theory. We update the indices and use them within a VAR framework to estimate the potential impact of the TLTROs on aspects of economic activity. Our results suggest that financial conditions do have a significant effect on economic activity and thus the TLTROs, to the extent that they are designed to improve financial conditions, will provide a boost to the real economy.

Keywords: financial conditions; monetary policy; financial crisis; credit; non-standard measures (search for similar items in EconPapers)
JEL-codes: E51 E52 E61 E63 E65 (search for similar items in EconPapers)
Pages: 23
Date: 2015-07
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (7)

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Journal Article: Financial conditions and economic activity: the potential impact of the targeted long-term refinancing operations (TLTROs) (2016)
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