DRIIE-International economics

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Browsing DRIIE-International economics by Subject "Financial crisis"

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    EURO zone crisis and EU governance: Tackling a flawed design and inadequate policy arrangements (an essay)
    (Akademiai Kiado, 2012-09) Dăianu, Daniel
    This paper focuses on the roots of strain in the European Monetary Union (EMU). It argues that there is need for a thorough reform of the EU governance structure in conjunction with radical changes in the regulation and supervision of financial markets. The EMU was sub-optimal from its debut and competitiveness gaps did not diminish against the backdrop of its inadequate policy and institutional design. The euro zone crisis is not related to fiscal negligence only; over-borrowing by the private sector and poor lending by banks, as well as a one-sided monetary policy also explain this debacle. The EMU needs to complement its common monetary policy with solid fiscal/budget underpinnings. Fiscal rules and sanctions are necessary, but not sufficient. A common treasury (a federal budget) is needed in order to help the EMU absorb shocks and forestall confidence crises. A joint system of regulation and supervision of financial markets should operate. Emergency measures have to be comprehensive and acknowledge the necessity of a lender of last resort; they have to combat vicious circles. Structural reforms and EMU level policies are needed to enhance competitiveness in various countries and foster convergence.
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    Revisiting limits and pitfalls of QE in the emerging markets
    (Institute for Economic Forecasing, 2022) Dăianu, Daniel; Alupoaiei, Alexie; Kubinschi, Matei
    The pandemic caused by COVID-19 is another huge blow to the world economy after the financial crisis that erupted in 2008. A health crisis has been interweaving with severe economic and social strain following a necessary lockdown for several months during 2020. Although most economies seem to have climbed out of the deep hole caused by The Shutdown, with a current strong economic rebound underway in large parts of the world economy, a longer-term recovery is likely to be difficult as it is surrounded by significant uncertainties and contradictory effects. This paper relies on the line of reasoning presented in Daianu (2020). It highlights the forceful and coordinated policy response in advanced economies in order to deal with the multiple shocks represented by COVID-19. Its main focus is on policy responses in the emerging economies, which have tried to replicate measures adopted in the advanced economies. The paper highlights significant differences between the advanced economies and the emerging economies, which must be considered when trying to adopt QE in the latter. The main inference is that there are limits and pitfalls for the emerging economies when it comes to practice the policy responses of the advanced economies.
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    When policies fuel economic cycles
    (Institute for Economic Forecasting, 2017-03) Dăianu, Daniel
    The Great Recession has brought back into the limelight the issue of cycles, of policies which fuel, or mitigate crises. There is a specter of much lower economic growth in the industrialized world. Central banks are over-burdened. This makes central bankers’ life much more complicated and obfuscates the borders between monetary policy and fiscal policy, especially when financial stability gets to center stage. New systemic risks show up in capital markets. The Eurozone has escaped collapse owing to ECB’s extraordinary operations and large macro-imbalance corrections in its periphery, but major threats persist. This paper focuses on economic cycles and policies in an international (European) context. The financial cycle is a key concept in the logic of this paper. The experience of European emerging economies is taken into account. Attention is paid to linkages between domestic cycles and financial cycles, drivers of financial cycles, finance deregulation and systemic risks, ultra low interest rates, the international policy regime and global stability.