Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/99997
Authors: 
Potrafke, Niklas
Reischmann, Markus
Year of Publication: 
2014
Series/Report no.: 
Ifo Working Paper 185
Abstract: 
Using the recursive unit root test by Phillips et al. (2011) we show that the Target balances of the German Bundesbank have been explosive from the beginning of 2009 to the beginning of 2013. By implementing a full-allotment policy and reducing the required minimum quality of collaterals in October 2008, the European Central Bank (ECB) refinanced credits in the GIIPS countries (Greece, Ireland, Italy, Portugal and Spain) to a large extent. Private capital flowed out of the GIIPS countries, and the German Target claims increased significantly. Using the new test to identify multiple explosive periods by Phillips et al (2013) we find that the German Target claims also became explosive in autumn 2007 when the interbank market broke down for the first time.
Subjects: 
Eurosystem
Target
recursive unit root test
explosiveness
hidden debt
German Bundesbank
JEL: 
C22
E50
E58
F32
F34
H63
Document Type: 
Working Paper

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