https://www.esm.europa.eu/publications/debt-sustainability-focus-flows The EFSF/ESM provide loans to euro area countries that have lost sustainable market access or suffered shocks to their banking systems when these problems could spill over to other countries and even destabilise the entire single currency area. The EFSF/ESM have lent substantial funds in six...

https://www.esm.europa.eu/publications/accelerating-non-performing-loan-resolution NPLs in the euro area remain a barrier to full recovery and a potential source of instability to the financial system. They represent a problematic issue overall as they tie up bank capital, put pressure on banks’ profitability and funding costs, and burden corporates and households with at least...

https://www.esm.europa.eu/publications/regaining-competitiveness-programme-country-experiences The five euro area countries that requested financial assistance from the EFSF or ESM suffered from a number of problems. One key weakness that led some of them down the wrong path economically: a structural imbalance in their growth model. This model relied strongly on domestic demand fuelled by...

https://www.esm.europa.eu/publications/debt-stocks-meet-gross-financing-needs-flow-perspective-sustainability Download PDF: Working Paper 24 This paper shows that changes in gross financing needs have a significant effect on borrowing costs when debt stocks are high Authors: Carmine Gabriele, Aitor Erce, Marialena Athanasopoulou, Juan Rojas Abstract: It is well known that no single metric can provide...

https://www.esm.europa.eu/publications/esm-annual-report-2016 Download PDF: ESM Annual Report 2016 The annual report contains a description of the ESM's policies, activities, financial statements and economic developments in 2016. Additionally, it contains an external auditor's report and a report of the Board of Auditors. Excerpt of the Message from the...

https://www.esm.europa.eu/publications/comprehensive-scorecard-assessing-sovereign-vulnerabilities Download PDF: Working Paper 23 This paper presents a new framework for the early identification of sovereign vulnerabilities, based on a wide set of economic and financial indicators Authors: Rudolf Alvise Lennkh, Edmund Moshammer (European Stability Mechanism) and Vilém Valenta (European Stability...

https://www.esm.europa.eu/publications/selective-sovereign-defaults Author: Aitor Erce Abstract: Breaches in intercreditor equity are common ground during sovereign debt restructurings. In this paper I explore residence-based breaches by studying patterns of discrimination between residents and foreign creditors during debt restructurings. I frame the analysis with...

https://www.esm.europa.eu/publications/does-imf%E2%80%99s-official-support-affect-sovereign-bonds-maturities Author: Aitor Erce Abstract: This paper looks at whether the tendency of some governments to borrow short term is reinforced by financial support from the International Monetary Fund. I first present a model of sovereign debt issuance at various maturities featuring endogenous liquidity crises and...

https://www.esm.europa.eu/publications/linking-bank-crises-and-sovereign-defaults-evidence-emerging-markets Download PDF: Working Paper 22 This paper studies the mechanisms through which bank and sovereign distress feed into each other, using a large sample of emerging market economies over three decades Authors: Irina Balteanu (Bank of Spain) and Aitor Erce (European Stability Mechanism) Abstract: We...

https://www.esm.europa.eu/publications/macroeconomic-effects-official-debt-restructuring-evidence-paris-club Download PDF: Working Paper 21 This paper finds that official-sector creditors face policy trade-offs for debt relief provision between growth, fiscal prudence and market access Authors: Gong Cheng, Javier Diaz-Cassou and Aitor Erce Abstract: This paper presents new empirical results on the...

https://www.esm.europa.eu/publications/debt-collection-relief-provision-60-years-official-debt-restructurings-through-paris Download PDF: Working Paper 20 Download dataset This paper shows how over 60 years the Paris Club has evolved from a debt collector to a provider of sequential debt relief Authors: Gong Cheng, Javier Diaz-Cassou and Aitor Erce Abstract: Despite the frequency of official debt restructurings, little...

https://www.esm.europa.eu/publications/public-finances-and-long-term-growth-europe-evidence-panel-data-analysis Authors: Diego Romero-Ávila and Rolf Strauch Abstract This paper addresses the question whether public finance reform can affect trend growth in the EU-15. Focusing on time series patterns, we investigate whether there have been persistent trends in economic growth and fiscal variables over the last...

https://www.esm.europa.eu/publications/design-fiscal-rules-and-forms-governance-european-union-countries Authors: Mark Hallerberg, Rolf Strauch and Jürgen von Hagen Abstract This paper uses a new data set on budgetary institutions in Europe to examine the impact of fiscal rules and budget procedures in EU countries on public finances. It briefly describes the main pattern of budgetary institutions and...

https://www.esm.europa.eu/publications/fiscal-policy-events-and-interest-rate-swap-spreads-evidence-eu Authors: Antonio Afonso and Rolf Strauch Abstract This paper assesses the importance given in capital markets to the credibility of the European fiscal framework. We evaluate to which extent relevant fiscal policy events taking place in 2002 produced a reaction in the long-term bond segment of...

https://www.esm.europa.eu/publications/fiscal-governance-europe Author: Mark Hallerberg, Rolf Strauch and Jürgen von Hagen Abstract: This book presents a theoretical framework to discuss how governments coordinate budgeting decisions. There are two modes of fiscal governance conducive to greater fiscal discipline, a mode of delegation and a mode of contracts...

https://www.esm.europa.eu/publications/highly-efficient-regression-estimator-skewed-andor-heavy-tailed-distributed-errors Download PDF: Working Paper 19 This paper introduces a regression model for extreme events that can be useful for financial market analysis and prediction Authors: Lorenzo Ricci, Vincenzo Verardi and Catherine Vermandele Abstract: This paper proposes a simple maximum likelihood regression estimator...

https://www.esm.europa.eu/publications/role-fiscal-transfers-smoothing-regional-shocks-evidence-existing-federations Download PDF: Working Paper 18 This paper assesses the extent to which fiscal transfers smooth regional shocks in three large federations: the US, Canada and Australia Authors: Tigran Poghosyan, Abdelhak Senhadji and Carlo Cottarelli | International Monetary Fund Paper presented at ADEMU (A Dynamic...

https://www.esm.europa.eu/publications/international-risk-sharing-emu Download PDF: Working Paper 17 This paper demonstrates that the adoption of the euro has not increased the ability of Member States to smooth consumption. Authors: Alessandro Ferrari and Anna Rogantini Picco | European University Institute, Florence Paper presented at ADEMU (A Dynamic Economic and...

https://www.esm.europa.eu/publications/bailouts-moral-hazard-and-banks%E2%80%99-home-bias-sovereign-debt Download PDF: Working Paper 16 This paper shows that an increase in banks’ holdings of domestic sovereign debt decreases the ability of domestic sovereigns to successfully enact bailouts. Authors: Gaetano Gaballo | Banque de France Ariel Zetlin-Jones | Tepper School of Business Paper presented at...

https://www.esm.europa.eu/publications/firm-performance-and-foreign-debt-financing-and-during-crisis-evidence-firm-level-data Download PDF: Working Paper 15 This paper finds that foreign debt financing improved firm performance and mitigated the adverse effects of leverage for moderately leveraged firms in Slovenia before and during the recent crisis. Authors: Mateja Gabrijelčič | Bank of Slovenia Uroš Herman | GSEFM...