International Financial Stability

Mike Tsionas

Chapter Chapter 24 in The Euro and International Financial Stability, 2014, pp 153-163 from Springer

Abstract: Abstract With competitive banking and/or freely moving interest rates in Europe, what would happen if elsewhere in the world, there was monetary or credit expansion and competition from foreign banks and financial institutions? If foreign governments (say the United States) continue to expand their deficits and/or the money base, a classical recession will take place to correct the misallocations of investment with its subsequent effects in factor and product markets. The recession would certainly affect European exports to the United States but it would promote them in countries that used to import from the United States. With no pressures upon the Euro coming from fragile financial markets, the appreciation of the dollar would only make the recession worse in the United States.

Keywords: Interest Rate; Financial Market; Central Bank; Financial Stability; Relative Prex (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:fimchp:978-3-319-01171-4_24

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DOI: 10.1007/978-3-319-01171-4_24

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