EconStor >
Universität Hamburg (UHH) >
Zentrum für Ökonomische und Soziologische Studien (ZÖSS), Universität Hamburg (UHH) >
Discussion Papers, Zentrum für Ökonomische und Soziologische Studien, Universität Hamburg (UHH) >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/60498
  
Title:The role of uncertainty in the euro crisis: A reconsideration of liquidity preference theory PDF Logo
Authors:Pusch, Toralf
Issue Date:2012
Series/Report no.:Discussion Papers, Zentrum für Ökonomische und Soziologische Studien 31
Abstract:An active role of fiscal policy has been rediscovered as a crisis remedy at the beginning of the financial crisis all over Europe. More recently, the Euro Crisis with its mounting governments' funding costs for a number of Southern EU member states and Ireland has called this strategy into question. As opposed to this view, the main point of this contribution is to elaborate a link between rising sovereign risk premia in the Eurozone and a major feature of the financial crisis - which culminated in elevated uncertainty after the Lehman collapse. Theoretically, this link is developed with a reference to Keynes' liquidity preference theory. Empirically, a high explanatory power of rising uncertainty in financial markets and detrimental effects of fiscal austerity for the evolution of sovereign risk spreads are demonstrated by means of panel regressions and supplementary correlation analyses.
JEL:E12
E62
G12
Document Type:Working Paper
Appears in Collections:Discussion Papers, Zentrum für Ökonomische und Soziologische Studien, Universität Hamburg (UHH)

Files in This Item:
File Description SizeFormat
721210171.pdf240.57 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/60498

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.