Sebnem Kalemli-Ozcan, 13 February 2019

Şebnem Kalemli-Özcan of the University of Maryland talks about debt overhang as a big contributor to the low investment that persists in Europe ten years after the crisis, and why a big data approach is the best way to solve the problem.

Sebnem Kalemli-Ozcan, Luc Laeven, David Moreno, 15 January 2019

Euro area corporate sector investment collapsed post-crisis, especially in periphery countries. The column uses firm and bank data to investigate whether corporate debt accumulated during the boom years was responsible. Firms with higher leverage or firms that borrowed more decreased investment more, especially when linked to weak banks. These channels explain about 60% of the decline in aggregate corporate investment during the crisis.

Samba Mbaye, Marialuz Moreno Badia, Kyungla Chae, 12 January 2019

Since the financial crisis researchers have extensively explored the dangers of excessive public debt, but excessive private debt has received less attention. This column documents a common form of indirect private sector bailout that goes largely unnoticed. Whenever households and firms are caught in a debt overhang and need to deleverage, governments come to the rescue through a countercyclical rise in public debt. This indirect substitution takes place even in the absence of a crisis.

Giancarlo Corsetti, 11 October 2018

Giancarlo Corsetti of the University of Cambridge discusses the ADEMU project, which aimed at reassessing and strengthening the fiscal and monetary framework of EMU.

Chris Marsh, Dominik Nagly, George Pagoulatos, Elias Papaioannou, 17 November 2016

It is now seven years since the Greek crisis began. As well as reflecting the chronic deficiencies of its own institutions, the failings in Greece also reflect substantial shortcomings in international institutions. This column argues that it is time for all sides to move on, and proposes a simple debt operation for Greece that can deliver debt sustainability with minimal adjustments to the ESM operating procedures.

Giancarlo Corsetti, Lars Feld, Philip Lane, Lucrezia Reichlin, Hélène Rey, Dimitri Vayanos, Beatrice Weder di Mauro, 15 April 2015

The Eurozone’s problems of poor growth and the threat of financial instability are rooted in its very foundation. The authors of the inaugural Monitoring the Eurozone report, launched today, consider three means by which the Eurozone can protect itself from structural failure. Their recommendations, which do not require Treaty changes, are crucial in offsetting the major risks a repetition of the recent Crisis would present.

Brian Pinto, 17 December 2014

Since the Global Crisis, concerns have grown that advanced economies are suffering from secular stagnation. This column discusses the lessons that can be learnt from the economic transition of central and eastern Europe and the emerging-market crises of the late 1990s and early 2000s. Structural reform is particularly costly in the context of a debt overhang and an overvalued exchange rate. However, the crux is not debt restructuring per se, but whether economic governance changes credibly for the better following it.

Fergal McCann, Tara McIndoe-Calder, 23 September 2014

The role of credit-fuelled property booms in the Global Crisis has received much high-profile attention in recent years. Using data on Irish small and medium enterprises, this column highlights an additional channel through which such booms can impact post-crisis growth. Firms having difficulty repaying their property-related debts divert resources away from hiring and investment. Property booms thereby induce misallocation of resources in both the boom and the bust.

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