The Euro and the Geography of International Debt Flows

Galina Hale and Maurice Obstfeld

No 2014-10, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Greater financial integration between core and peripheral EMU members had an effect on both sets of countries. Lower interest rates allowed peripheral countries to run bigger deficits, which inflated their economies by allowing credit booms. Core EMU countries took on extra foreign leverage to expose themselves to the peripherals. The result has been asset-price bubbles and collapses in some of the peripheral countries, area-wide banking crisis, and sovereign debt problems. We analyze the geography of international debt flows using multiple data sources and provide evidence that after the euro?s introduction, Core EMU countries increased their borrowing from outside of EMU and their lending to the EMU periphery.

Keywords: international debt; EMU; international banking; global imbalances; euro crisis (search for similar items in EconPapers)
JEL-codes: F32 F34 F36 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2014-04-14
New Economics Papers: this item is included in nep-eec, nep-ifn, nep-int, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Related works:
Journal Article: THE EURO AND THE GEOGRAPHY OF INTERNATIONAL DEBT FLOWS (2016)
Journal Article: The Euro and the Geography of International Debt Flows (2016)
Working Paper: The Euro and the Geography of International Debt Flows (2014)
Working Paper: The Euro and The Geography of International Debt Flows (2014)
Chapter: The Euro and the Geography of International Debt Flows (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2014-10

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DOI: 10.24148/wp2014-10

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